Do they bear comparison?

On 9 May 2013 the Legal Services Consumer Panel published its 'Good Practice Standards' for legal comparison websites, which it has developed in consultation with the Solicitors Regulation Authority (SRA) and the Council for Licensed Conveyancers (CLC).

These are a set of 20 voluntary standards designed to ensure that legal comparison websites are clear, useful and operate fairly for consumers, and are owned, controlled and managed independently of legal service providers. Legal comparison websites can voluntarily sign-up to the standards, which mean self-certifying that they comply. So far, five legal comparison websites have signed up. The standards operate by way of voluntary self-regulation.

While anything that promotes '¨consumer choice and clarity is to be welcomed, there are a number of risks associated with this scheme.

First, there is a risk that the scheme will give more credibility to price comparison websites and therefore make it more likely that customers will focus exclusively on the headline price rather than on other factors such as the quality of the work or the experience of the lawyer acting.

In order to seek to guard against this, the original draft standards had included at paragraph 9 that "Consumers should be able to compare providers on information other than price, e.g. quality and service features".

The final version watered this down so that paragraph 9 now provides that to enable such other comparisons is "best practice". Presumably this means that a website can sign up to the standards but decide not to implement this "best practice".

But when it comes to any professional service, price is only one (albeit important) factor. Moreover, price comparison websites risk that legal services providers engage in misleading pricing, advertising a low headline price which, after the client instructs the provider, is later subject to various additions.

The Legal Services Panel referred to this risk in its February 2012 report (although '¨it incorrectly described these extra charges '¨as "disbursements". )

There is nothing wrong with charging in addition for disbursements i.e. payments made by the service provider to third parties on behalf of the client, such as stamp duty, estate agent fees etc.

The suggestion in the Legal Services Panel's report that providers are able to provide a fixed fee including disbursements appears unrealistic, as it is not clear how a provider would know at the time of instruction what the disbursements '¨would be. However, other extra charges for profit costs, such as for administration, photocopying, are charges that a client would not expect to be charged in addition to the headline price, (unless the headline price made very clear that such additional charges would be incurred).

Secondly, sign up to the scheme is '¨entirely voluntary. In addition, no legal services regulator monitors whether those who sign up actually comply with the standards or has any regulatory powers to take action against websites who sign up, but do not comply.

This is necessarily the case because neither the Legal Services Board (LSB) nor any of the approved regulators have regulatory reach over legal comparison websites. Only persons who provide reserved legal activities are subject to regulation, and providing legal information, recommendations or even advice is not a reserved legal activity.

The risk, however, is that consumers '¨will take too much comfort from the fact '¨that a website has signed up to the standards and will mistakenly think that such standards have teeth and can be enforced by a regulator.

However, there is a way in which the approved regulators can indirectly give the standards some teeth, as solicitors, licensed conveyancers and other authorised persons are within regulatory reach, even if the websites are not. So, for example:-

 If a solicitor or an entity regulated by the SRA also owned, controlled or managed a legal comparison website that would arguably breach rule 3 of the SRA Code of Conduct (conflicts of interest). Voluntary rule 5 of the standards is therefore indirectly enforceable via the SRA Code of Conduct. The SRA could also consider adding the operation of a legal services website to the definition of prohibited separate business activities in the SRA Code of Conduct. This would support voluntary rule 5.

 The Legal Service Panel's February 2012 report discusses the risks of legal services providers "gaming" legal comparison websites, for example by writing reviews about themselves or blocking bad reviews. Such conduct would arguably breach the Principles of the SRA Code of Conduct and/or rule 1 of the SRA Code of Conduct.

The publication of the standards is well intentioned but there is scope for confusion, as consumers may not appreciate that the standards do not have teeth given that legal comparison websites do not fall within regulatory reach.

However, legal services regulators may be able to enforce the voluntary standards indirectly by taking action against those they do regulate.

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