This time next week, the UK would have lived through twenty-four hours of price transparency in the legal sector.
The numerous commentators on this issue have speculated that firms will be divided between those that consider price as the defining factor for acquiring new business and ‘race to the bottom’, whereas other firms will consider the expertise they offer and the reasons why their prices are justified.
Whilst many law firms plan the implementation process over the measures they will be putting in place to comply and thrive with new regulations, it is interesting to consider the implications on the consumer.
As the market will become more competitive, firms will need to emphasise their specialisms and expertise in order to justify their prices. Failing to consider a firm’s unique offering, could persuade them to make it the price they charge, and a potential price war could ensue.
One of the great motivators for the reforms was giving the consumer greater information and choice. The worry remains that greater price information could do very little to help a consumer choose the appropriate legal provider.
Kate Faulkner, Managing Director of Property Checklist, said: “This sounds like a great idea on the one hand, but the problem is that consumers don’t really understand what they are paying for and see conveyancing as a ‘commodity purchase’ they pay the minimum they can for, whereas all experts know it’s about the service and individual expertise around new builds, leasehold etc that is key to finding a good legal person.
“Interestingly this was introduced on tenant fees in the lettings market and was an utter failure which cost the industry millions, few if any prosecutions were made on agents who didn’t comply and then the government decided to ban them altogether wasting years of everyone’s time and money.
“When I talk to consumers about the cost of legals, they don’t really understand what they are paying for. Some legal companies include everything like stamp duty or extra charges for shared ownership/leasehold and some don’t. So, the key benefit would be if all charges are consistently costed and explained to consumers, they have more of a chance of comparing like with like.
“I think it will be a frustrating time initially, but hopefully with new services coming through that do a comparison not just on price, but on service too, this will actually in the long term be a good thing as consumers will start to learn the difference between a ‘good legal company’ and a ‘poor one’, not just basing their decision on price. If we can achieve this, hopefully the sector can charge a reasonable rate for the work they do rather than a ‘rock bottom’ price to secure business.
“Consumers shouldn’t go just on price! If they are buying a leasehold property, they should deal with a leasehold expert, same for new builds, finding someone that can challenge the builder’s contract for them will ensure they get the greatest value for money. It is only when they have 2-3 potential and viable legal companies that will look after them, that prices will become a factor.”
Kate Burt, Senior Compliance Manager at Legal Eye, said: “Many firms do see this as an opportunity to showcase the experience of their teams, their expertise and the unique value of their particular service. From the firms that I have spoken to, there appears to be no appetite for a ‘race to the bottom’ and in my view fees are unlikely to be reduced as a result of the requirement to publicise.”
Although the deadline is fast approaching, a recent report claimed that up to half of small to medium sized firms still felt ill-prepared for price transparency and remained confused as to what it meant to be fully transparent.
Kate Burt added: “Firms are required to publish certain details about their pricing and service for each work type that falls within the scope of the Transparency Regulations. The experience and qualifications of individuals who are likely to carry out the work and their supervisors should also be set out. In addition to this firms are now required to publish their complaints procedure on their website.
“SRA regulated firms will be required to display the new SRA digital badge on their website which is available to download from 6th December. It is not however compulsory to display this badge until Spring 2019. CLC regulated firms are already utilising their own digital badge with apparent success.”
Law firms will need to become adept at highlighting their skills and experience and use this to effectively convert potential enquiries confidently and quickly.
Is your firm ready to not only comply with the new regulations but use them to thrive and expand your client base?
Converting Enquires are able to offer bespoke training that will ensure your firm is able to confidently explain the service offering your firm can provide to the consumer in such a competitive market. Click here to find out more about the unique webinar run by the market leading expert, Professor Ian Cooper.