On June 2018, the Solicitors Regulation Authority (SRA) confirmed that new transparency rules will govern the way consumers of legal services are protected and communicated with by the legal sector. Accordingly, Transparency Rules published in October mandated that all SRA regulated law firms are required to publish information on their pricing for certain common services and provide other information to help empower consumers of legal services. These requirements will come into effect on 6 December 2018.
Although the Rules might appear as sudden and giving little implementation time, they were published as a response to the Competition and Markets Authority’s Recommendations made back in 2016. After concluding that there was a lack of upfront information, the recommendations pushed for increased price transparency in the legal services marketplace, so consumers and small businesses could view prices, gauge expertise and generally compare law firms to be able to make informed decisions about which one to choose.
To comply with the Rules, law firms must publish information on prices charged for services provided in certain practice areas. These practice areas include residential conveyancing, uncontested probate, summary motoring offences, employment tribunals for unfair or wrongful dismissal and immigration (except asylum applications). Services for small businesses such as debt recovery of up to £100,000, licensing applications for business premises and employment tribunals on unfair or wrongful dismissal are also subject to the Rules. However, the SRA has highlighted that this is only the first stage and that other areas of law may eventually be added to the list..
As regards the information on price required, the prices must be stated in a clear and understandable way, specify whether they are subject to VAT and show exactly what is covered by the price quoted. If a range of costs is published, then hourly rates and price-determining factors must be stipulated. In cases where a price generator or calculator is used, a quote must be provided directly to the consumer with no requirement to submit any personal details.
Under the Rules, law firms are not required to publish binding pricing for all case scenarios. With cases involving great complexity or other unforeseen circumstances, there is a room for manoeuvre. However, Outcome 1.13 of the SRA Code of Conduct (providing clients with the best possible information about the likely overall cost, both at the time of engagement and when appropriate as the matter progresses) and Outcome 8.1 (requirement for publicity to be accurate and not misleading) will both remain binding.
The Rules are not just about pricing, however. Consumers must be able to see which services are included in the price and which services might be reasonably expected to be included, but are not covered. Details such as the timeline and the key stages of the work need to be readily available as well.
Alongside these, consumers must also be able to find out about the individuals who will carry out the work, including their professional experience and qualifications. It is recommended to specify the nature, complexity and volume of cases the professionals have undertaken in the areas covered by the Rules. It is also useful to indicate who will supervise the individuals carrying out the work.
The SRA number of the firm a and a digital badge must also be published on the firm’s website, together with the complaints procedures. The badge is due to become a mandatory requirement by spring 2019.
All the information must be published on a law firm’s website in such a way that it is easy to find, accessible and clearly signposted. If a law firm does not have a website, the information must be available for distribution to consumers in another format (e.g. brochures). Consumers must have access to all data freely, without being required to disclose any personal details before obtaining it.
The SRA has published an illustrative list of templates on both price and service information. The templates can be found here: https://sra.org.uk/solicitors/guidance/ethics-guidance/price-transparency.page.
The new Rules will undoubtedly change the legal services landscape. Consumers will be heavily influenced by price comparison when choosing a law firm, rather than simply relying on personal recommendations or previous experience.
As much as the new transparency regime may seem a challenge, it may well be an opportunity. When addressing the new rules, a law firm can rethink its marketing strategy. As a first step, it is useful to decide whether the firm is seeking to position itself as a premium client service or to attract customers by offering the best price. If the marketing strategy properly addresses the desired objective, it is likely that the published price and service information will lead to a more profitable and efficient operation.
There are certain pricing tactics which will help to qualify and filter enquiries. Firstly, the firm’s website itself must reflect the chosen pricing model. All consumers are looking for value for money and it should be clear from the information on the website what benefits are offered by the firm. Does it offer the most competitive price, greater speed or convenience or more in-depth expertise?
Secondly, the website is an ideal way to promote a firm’s business. People expect to find information about the firm’s experience, brand and areas of specialism to recognise the best value service. It should provide detailed information about the people who work at the firm to establish trust. It also helps to highlight any legal awards, recognitions or accreditations and any past successes the firm may have had to build credibility as a legal service provider. Thirdly, firms should use social media platforms and references to publications as proof of business value.
Critics of the Rules point out that each legal transaction is different and price transparency requirements wrongly assume that legal services can be commoditised. Some view them as cumbersome and an additional regulatory burden, particularly given the time frame for implementation. However, mindsets must change, as consumers are clearly guiding the profession when it comes to the information they require to choose the right firm. Research has shown that embracing transparency can actually help to win business. After all, who would want to engage a firm without knowing the likely costs of doing so and the calibre of the professionals who will provide the service?
On 2 November 2018, CILEx as the independent regulator of members of CILEx and other individuals who are not members of CILEx, but who have practice rights in the legal sector was granted approval by the Legal Services Board to make changes to its regulatory arrangements to introduce new Transparency Rules. The Transparency Rules will initially apply to CILEx regulated firms providing residential conveyancing and/or probate.