Following on from the SRA’s initial proposal for legal price publication, Crispin Passmore has stated that conveyancing may be one of the first legal areas to be subject to the new conditions.
Yesterday (26/01/17), the SRA executive director for policy stated that a consultation could begin as soon as summer; this would include new rules designed to bring firms in line with the Competition and Markets Authority report. Published last month, the report highlighted the need for regulators to introduce a “step-change” in standards of transparency, enabling clients to easily compare the service and prices of the legal market.
Speaking at the Westminster Legal Policy Forum, Mr Passmore stated that a “careful” approach would be taken, with the measures being implemented in phases.
He stated that: “We are not going to say all law firms must publish every price… You can discuss which areas it might be, evaluate it, work with behavioural scientists and develop it over a period of time.”
Since the Forum, he has further spoken to Legal Futures, commenting on the legal areas likely to subjected to the changes first. Passmore highlighted that the first phase would focus on three or four areas of law, such as conveyancing, divorce and wills.
In addition to this, several areas of business law may be chosen, including commercial leases or terms of sale for a small business.
He considered the need for reasonable price standardisation across firms, telling Legal Futures: “We’ll be talking to law firms about the different areas that would work, and what would not.
“There’s no point in picking something massively bespoke. It’s got to be reasonably standard.”
He reiterated that rather than a fixed fee structure, firms would provide an hourly rate along with a time scale, stressing that new rules would not “force people to charge in a particular way”.
Mr Passmore also stated that legal price publication was not a new concept.
“It’s already happening. Firms can either resist these sorts of changes or embrace them. That’s a decision for every firm to take. The customers will decide, not me.”
Despite the supposed consumer demand for the new rules to be implemented, the proposal did not go down well with other panel members at the forum.
Chair of the Law Society’s small firms division, Sally Azarmi stated that detailing hourly rates was simply “not viable”.
She went on to say that prior to regulatory changes being brought in, smaller firms should receive support and be listened to.
“They just don’t have the facilities and manpower to deal with so many fundamental changes.”
Also opposed to the idea was Professor Cosmo Graham. The director of the Centre for Consumers and Essential Service at Leicester University highlighted that consumer experience will not necessarily be improved by providing more information.
The “choice overload” would not always mean the right decisions would be made, with the Professor stating that instead the rules would “create an incentive for providers to produce complex pricing structures”.
He went on to express doubts in the capabilities of regulators establishing rules which would satisfy the CMA.
“They are asking a bunch of regulators to work together – that is very difficult given the differences in scale,’ he said. ‘I am not sure the recommendations as put forward will make the difference. More information on its own doesn’t necessarily lead to better outcomes for consumers. It is the problem of choice overload which is particularly when you have complex problems and a lack of expertise”
Lexoo chief executive, Daniel van Binsbergen, also queried the ideas, stating that forcing firms to embrace transparency was not an effective way to facilitate consumer awareness of legal costs.
Running on a platform based online, Lexoo provides clients with a choice of lawyers which they can choose from, based on price and reviews.
Highlighting the conditions needed for a shift in the market, Van Binsbergen stated: “It is not necessary to force lawyers to provide pricing up front as long as there is an environment which companies can operate and offer transparent services. As soon as clients get used to that level there will be a complete shift. I am in favour of the market solving that instead of lawyers coming up with very difficult [cost] grids.”
