The true cost of will writing
As competition increases, Lisa Davies advises firms to abandon the idea of will drafting as a loss-leader and develop the courage to be â€˜reassuringly expensive'
We are all familiar with the idea of a loss-leader: a product or service offered at below cost price to attract customers, hoping they will make up that loss by purchasing profitable goods and services in future.
For solicitors’ practices, there are various services priced on a fixed-fee basis in accordance with this model, perhaps most notably will drafting.
However, while we follow the first half of the strategy – offering our services at a loss to attract new clients – we often overlook the second part where we turn those clients into purchasers of our profitable services.
Will drafting is perceived as leading to probate, but for this to be the case you need to store the will for an indefinite period, and the cost of storage should be added to the original loss incurred in drafting.
Even if you retain the testator as your client from writing the will until death, there is nothing preventing the executor from retrieving the will and going elsewhere for the estate administration.You may lose out to a national company with a large marketing budget or another firm local to your deceased client’s executor in another part of the country. Or perhaps no one in the family realises there was a will and the estate is administered under intestacy.
DIY probate is also on the rise. From the Ministry of Justice’s quarterly statistics bulletin we know that between April and June 2016, 64 per cent of grant applications were made by solicitors and 36 per cent in person. The split has hovered around 65:35 for years, meaning there is statistically around a one-third chance that the will you stored will be probated by a lay person.
Possibly there is a propensity towards lay applications among estates where the will was not professionally drafted. But I think it would be common ground among private client practitioners that there is a growing tendency for family members to shop around or have a go themselves.
If you are not securing the probate work, what else can will drafting lead to? Many cite lasting powers of attorney, but research for the Office of the Public Guardian, ‘The future of lasting power of attorney’ (March 2014), reported that while 42 per cent of respondents surveyed said they would go to a solicitor for information or help with an application, 31 per cent said they would go online, and a further 25 per cent said they would approach the Citizens Advice Bureau. Not overly promising then.
There are more hidden costs to consider when pricing up the loss will drafting incurs.
The Law Society practice note on professional indemnity insurance lists wills and probate among the ‘high-risk’ areas of work. We are therefore paying more for our PII and laying ourselves open to negligence suits associated with the wills we draft.
A report by the Legal Ombudsman states that wills and probate work accounted for 13 per cent of the complaints it resolved in 2015, making it the third highest source of complaints by area of law.
So what do we charge for this high-risk, low-return service?
The Money Advice Service (a free service set up by the government) tells visitors to its website that ‘a simple will drawn up by a solicitor can cost between £100 and £200’. Cheap though this is, there are firms charging even less. A potential client recently informed me that my own (modest) charge was outrageous as she had paid a solicitor just £40 for a will two years ago.
We face competition at every turn, from banks and trade unions offering free wills to customers and members to charities running ‘free wills’ campaigns, stationers selling DIY will packs, the online market, and the growing numbers of unregulated will writers. A YouGov survey indicated that one-third of the will-writing market is unregulated and the Legal Services Consumer Panel estimated in 2011 that around 180,000 wills each year are written by unregulated providers. Not burdened with the same compliance issues or PII, they can afford to undercut the market.
If we abandon the idea of wills being a loss-leader, then we can charge reasonable fees that reflect the expertise, time, care, and customer service we offer, and perhaps we can start to make wills profitable. However, we should adopt this approach together as a profession, otherwise the few who pioneer it will lose out, as they would be vastly more expensive than their competitors.
If we develop the courage to be ‘reassuringly expensive’, then we all stand to gain, including our clients, who will find a greater choice of qualified experts willing to practise in an area currently relegated to the most junior lawyers in the firm.It is time to be brave and value our work, because if we don’t, how can we expect others to?
Lisa Davies is a senior associate at Sinclairslaw