Legal services: Price and service transparency
By Emma Walker
Emma Walker assesses the need for firms to adopt transparency when providing certain legal services
In 2016, the Competition and Markets Authority (CMA) published an interim report as part of a study looking at the supply of legal services. It found that, in many cases, consumers had insufficient information to choose the ‘best’ option for legal services. In fact, research suggests only 10 per cent of people seek advice and support from legal professionals. A key reason many do not access help is down to a lack of accessible information.
Responding to the CMA’s research and recommendations, the Solicitors Regulation Authority (SRA) introduced new Transparency Rules in 2018. These were designed to improve public access to legal services, by ensuring more easy-to-understand information about legal service providers was available to consumers.
The rules mean all regulated law firms must publish certain information on price on certain services and consumer protections. As part of its reforms, the SRA introduced online tools designed to help the public find out more information about specific law firms and solicitors, including the SRA clickable logo and the Solicitors Register, which came in as part of the SRA’s wider programme of regulatory reform in November 2019.
Though the rules have been in place for several years, full compliance has yet to be achieved. With the oversight regulator, the Legal Services Board, calling for regulators including the SRA to take action against those not doing enough to provide the necessary information, what lies ahead on the transparency journey and what ethical features do or should characterise the trajectory?
The SRA’s Transparency Rules set out the price information those regulated by the SRA must make available to clients and potential clients, where they are offering services listed in rules 1.3 or 1.4 as part of their usual business.
The relevant services for individuals are: residential conveyancing; probate; immigration (except asylum); summary road traffic offences; and unfair or wrongful dismissal claims in the Employment Tribunal. For businesses, the services caught are: unfair or wrongful dismissal claims in the Employment Tribunal; debt recovery (up to £100,000); and licensing applications for business premises.
SRA-regulated practices providing these services need to include the total cost of the service or, where it is not possible, the ‘average’ cost or range of costs, whether VAT is included. If it is included, the amount that applies is the basis for the charge, including any hourly rates or fixed fees and any likely disbursements and associated VAT.
In the case of conditional fee or damages-based agreements, the costs information must include the circumstances in which the client has to pay for services, including from any damages they receive.
Information on costs goes hand in hand with information on services and firms also need to explain what services are included in the quoted price; any services that are not included where a client might reasonably expect them to be; key stages and typical timescales; and, the qualifications and experience of anyone carrying out the work and of their supervisors.
Putting rules into practice
To help firms consider how to put the rules into practice and meet their obligations, the SRA has published guidance on the subject, which was first published in October 2018 and last updated in August 2021.
The SRA can pay regard to its guidance, when exercising its regulatory functions, meaning firms offering the relevant services would do well to consider the guidance and adopt the aspects applicable to their practice or be ready to explain why their approach diverges from that suggested by the regulator.
The guidance reminds solicitors of their obligations under paragraph 8.7 of the Code of Conduct for Solicitors, RELs and RFLs, which requires them to provide clients with the best possible information about how their matter will be priced (reflected in paragraph 7.1 of the Code of Conduct for Firms).
The guidance provides advice on best practice and some templates, designed to help firms consider how to display the information they are required to provide to potential clients.
The SRA has been monitoring compliance with the rules through ‘web sweeps’ that review firm websites to see how they have been implementing the rules through publication of price and service information and by inviting firms to declare how they have been complying with the rules.
The regulator says its primary aim is to help and support firms to comply but that it will take enforcement action where firms do not meet their obligations in this area. This includes sanctioning firms with a rebuke or fine where a breach involves aggravating features such as a deliberate failure to comply with the rules despite a request to do so, or displaying deliberately vague, misleading or meaningless information.
When the rules were first introduced, many practitioners feared a race to the bottom with firms vying to undercut each other to win business. Others saw the rules as requiring an oversimplification of legal services that was insulting and impractical.
Many now see the rules as providing an opportunity for firms to differentiate their services from competitors and recognise this could result in firms improving their services and processes.
In October 2020, the SRA published a summary of its assessment of the impact of its Transparency Rules, which marked a year from them being fully implemented and forms part of the SRA’s wider five-year evaluation into the impact of 2019 reforms.
The summary indicates consumers were originally mistrustful of solicitors who did not offer any price information, with more than 50 per cent of respondents interpreting the lack of information as indicating the services would be unaffordable. Once prices were published, only 10 per cent of those surveyed thought instructing a solicitor would be unaffordable.
Filling the gaps
While it may be right to say consumers were mistrustful of solicitors who did not offer any price information, it would also be right to say consumers could be mistrustful of solicitors if the costs information they publish ultimately proves to be incorrect and the client experiences a gap between expectation and reality.
To meaningfully follow these rules, which set out the minimum price and service information that firms must provide, firms need to think carefully and deliberately about the information they publish.
There is a notable absence of references connecting the rules to the SRA’s tenets of ethical behaviour, namely the Principles. There is, however, merit in the SRA and profession naming and negotiating with the ethical principles said to underpin the rules, because it has the effect of anchoring them, and any developments, to guiding principles and translating them into what should be a common language between the regulator and regulated.
This enables firms and practitioners to identify how to implement rules appropriately and enable discussions that critically evaluate the purpose and effectiveness of the current rules, and any future ones.
Plotting the right course
Does comparability between services demand standardisation? If so, how does a profession offering identikit services enable it to act in a way that encourages equality diversity and inclusion (Principle 6) or in the best interests of each client (Principle 7)?
Conversely, do services become so bespoke that the ability to compare prices in any meaningful way evaporates? Or does the need to differentiate result in practitioners taking up practice areas they have little or no experience in, in order to capitalise on a practice area in demand or commanding comparably high prices? If so, how does this best serve the interests of each client?
To answer these and, undoubtedly, many other questions relevant to price and service transparency, conversations need to be grounded in and explicitly reference ethical principles, if we are to plot the right course as a profession and for our clients.
Emma Walker is a solicitor in Leigh Day’s Regulatory & Disciplinary team leighday.co.uk