14 February 2012Print This Post

Sprat and Mackerel Solicitors – purveyors of free advice

Posted by Duncan Finlyson of Legal Futures Associate Lawyers Defence Group

I am sure I cannot be the only one who has observed a growing trend amongst solicitors towards giving, or needing to be prepared to give, free advice.

Legal Futures has reported, for example, that some lawyers who sign up to US online document services that are setting up UK operations – Rocket Lawyer and LegalZoom – will be required to provide some document review services for free.

These are not isolated examples. Law Pivot puts forward a very similar message in the US, whilst a number of schemes in this country such as Justanswer, RightSolicitor and LawontheWeb all promote free advice.

From looking into these services more closely, the rationale behind them would appear to be akin to the sprat and the mackerel – do something for free and you will undoubtedly reap the rewards a hundred fold in terms of the paid work that will flood through your door. Pardon me if I remain a sceptic.

I did think of trying it in my local Marks and Spencer. Give me a tie for free. I’ll wear it for a while and if I like the quality I will come back and buy a suit. I am not sure that it would have worked. I know for a fact that the idea does not work with plumbers. Mine charged me for 20 minutes' work mending a leaking radiator even though he knew he was waiting to hear from me about having a new bathroom fitted.

The pressure to work for free

Why is it, then, that solicitors should be so determined to do work for free?

It often seems that the pressure to do work for nothing is one which is thrust upon lawyers from outside – mainly by other organisations keen to profit from the lawyer’s desperation/naivety/philanthropy/lack of self worth (delete whichever is inappropriate). Neither Justanswer nor RightSolicitor is owned by a lawyer and although LawontheWeb was set up by a solicitor, it is owned by EverythingLegal which is a registered claims management company (and was bought last year by legal expenses insurer DAS).

Lawyers tend not to be businessmen and rarely understand concepts of marketing, selling and advertising. If someone tells them that they have to offer something for free to attract clients to the firm, then many will accept this as the truth and do it. In all likelihood they are driven by fear that if they do not do it, then others will and as a result clients will go to the competitor who is offering the free advice.

Some lawyers do seem to be just a little too self-conscious about charging for the skill and expertise which they have all had to work very hard to gain? It is possible that many have become victims of the anti-lawyer lobby to such an extent that they have come to believe in their worthlessness.

Some think that by giving free advice for the small jobs, they are likely to ingratiate themselves with clients who will, as a result, choose them when the time comes for a large job to require handling.

There are even those who think that they have to establish their credibility as advisers by proving to clients that they know what they are talking about by giving away free advice.

None of these, I would suggest, are good reasons to do work for free.

The simple fact is that many people think that what you get is only worth what you pay for it and if you pay nothing, it is more than likely worth nothing. Thus, by giving clients and prospective clients free advice, all that the firm may be doing is devaluing that which they would later want to charge for.

Worse still, making the advice seem worthless may simply mean that the client then has no qualms about going elsewhere for other advice when the need arises because they don’t feel in any way obligated to the firm for the advice they have so far received.

Is there a case for free advice?

So should solicitors be offering to do work for free? Are there occasions when there is a business case to be made for doing work for free or is something that should be avoided at all costs?

The simple answer is yes – there are times when doing something for free is worthwhile. But it is a decision which should be taken for the right reasons and not from a general fear of being left behind or left out.

Pro bono work is a case in point. Legal Futures reported in January 2011 that pro bono work in 2010 had been worth an estimated at £475m, a rise of 19% on the year before, and represents 2.3% of the total gross fee income for private practice.

Many firms are part of LawWorks or other pro bono schemes such as the Solicitors Assistance Scheme and give free advice – either because they have a social conscience and genuinely want to help those who are needy and who cannot afford legal services or because they value the publicity which they can get from undertaking pro bono work.

This is totally different from doing work for a prospective client for free because the client is unlikely to be needy and therefore there is no social purpose in giving up a profit, and it is almost certain that the client will not tell anyone else how magnanimous the firm has been in doing the work for free, so there is no publicity value either.

Another area where firms may want to do work for free is as part of an overall service to a loyal and repeat client. If the firm regularly receives large commercial property jobs from a commercial client

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and the client wants to know the answer to what is a simple legal question, then it would possibly be seen as somewhat mean-spirited to raise a bill for that advice.

However, a better way might be to turn the informal arrangement into a formal one – especially if it starts to become a regular occurrence – by, for example, having a retainer agreement that scoops up all of the small bits of advice.

The third area where firms might justifiably want to give free advice is as a loss leader, although even here following the lead of the supermarkets in offering “two for one” or “buy one, get one free” might be a better option than “here you are – take it and I hope you return to buy one”, which most legal free advice seems to be.

In the case of a loss leader, however, it is necessary to think it through thoroughly and not just embark upon that course of action on a whim. Issues to be considered include:

  • What it is the firm is offering?
  • To whom is it being offered?
  • Why is it being offered?
  • For how long it is to be offered?
  • How is it to be promoted both before the event and afterwards?

Additionally, firms will also need to:

  • be sure that those to whom the free advice is being offered know what it is really worth (so that they value it appropriately);
  • monitor the effectiveness of the offer so as to make a judgement as to whether it is a cost-effective course of action; and
  • ensure that the free offer does not undermine any paid for offerings that the firm may have – for example, retainers with third-party organisations who realise they are paying for what others get for free.

The fourth area where firms might want to think about giving some free advice is where that advice is very much of a preliminary nature – in other words it is the kind of information that a client might need in order to decide whether to obtain legal advice or not.

However, even here firms may wish to be extremely circumspect in how they describe the advice, perhaps referring to it as a “preliminary fact-find” or a “diagnostic interview” designed to identify the potential issues should the prospective client choose to instruct rather than as “preliminary advice”, which carries with it connotations of the person already having become a client.

The final area where free advice might be justified is in connection with a separately promoted service or feature that the firm uses as a means of advertising itself. An example of this might be to have a blog where generic advice about an area of expertise is provided as a way of promoting that expertise. Here the firm would be in control of the topics that are addressed, the amount of information that is imparted about each topic and, to a degree, the extent to which that information can be used – for example by expressly stating that it is not intended to act as legal advice and that anyone requiring advice about the topic should contact the firm.

Indeed, this latter is the way that many law firm websites now operate, included our own Lawyers Defence Group website.

Here Be Dragons

However, everyone should be very careful about how free advice is given. Just because it is free does not mean that the firm will not be liable for it should the advice turn out to be wrong.

The recently decided Court of Appeal case of Padden v Bevan Ashford [2011] EWCA Civ 1616 should, if nothing else, cause all solicitors to pause and give serious thought to whether they can afford to undertake work for free at all. This is especially so if the only way in which the free work can be undertaken is by entrusting it to those who may be a less expensive resource for the firm or by the firm not going through the normal steps of involved in the usual file opening and case recording system.

The case, which was essentially one concerning professional negligence, revolved around whether the firm was liable for not advising a client fully at the time of signing a document even though “free advice” had already been given by a newly qualified solicitor who advised the claimant not to proceed with a transaction.

In his judgment the Master of the Rolls, Lord Neuberger, emphasised the fact that just because advice was free did not relieve the firm from the responsibility of giving full advice and did not prevent the firm from being subject to the “core minimum” duties set out by Lord Nicholls in Royal Bank of Scotland plc v Etridge (No2) [2001] UKHL 44, [2002] 2 AC 773. He said: “I do not think that their duty was any different from what it would have been if they had charged.”

It is vital, therefore, that firms follow closely their own procedures when undertaking free work and, if necessary, treat the matter as if it were a fee-paying client. If the client cannot or will not provide sufficient information to enable a considered response to be given, then decline to advise rather than guess.

Make sure that if any advice is given, that the limitations upon it are clearly brought to the attention of the client and if necessary, be prepared to follow up that advice in writing.

The Law Society has issued guidance on preliminary interviews covering issues such as conflict checks, identity information, costs advice (including that the interview is free where appropriate) and duties of confidentiality. This can be found in the society’s practice notes. It is quite possible that having read through this many will decide that free work is not something they want to risk!

Above all, be circumspect. Remember that there is little to be gained from a prospective client who has been given bad advice – whether they have paid for it or not.

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5 Responses to “Sprat and Mackerel Solicitors – purveyors of free advice”

  1. You’re right, most lawyers are not marketers and they need to understand and instigate the points you cover.

    They also need to focus on the free consultation and make sure all staff understand the sales process. This does not mean expecting the client to commit immediately – keeping in touch with them (email newsletter subject targeted? Real letters? Invites to seminars?) means that they can be unpaid salespeople for the lawyers’ excellent service.

    Of course a marketing strategy will also demonstrate the clear advantages for committing to paid advice as soon as appropriate.

    Used passively, a free consultation can very often suffer from the problems you point out, but used actively it can attract business.

    Pre-anything, a firm needs to identify its unique selling points (USPs) – why should a client come to your law firm and not another?

  2. Doug Young on February 14th, 2012 at 8:16 am
  3. Spot on – and well said.

    I have only once set up a free advice service that was valuable and did what it said on the tin for the clients who used it – it was a Law Centre in South London in the 80s. The advice was specialist and the target ‘market’ clearly identifiable and ‘segmented’. It did some good and genuinely met some unmet legal needs – for over a decade. Frankly the not very numerous offers of pro bono support from local and city solicitors were always well meant but much more bother than they were worth – free does not mean easy or even cheap.

    In commerce, every other use of ‘free’ is usually troublesome and often indicative of a marketing executive on a learning spree. In legal services – you get what you pay for – free advice is plentiful and often needs double checking; and yes, I do mean the likes of ACAS – but not, funnily enough, the EEF. Seeking to attract clients with ‘free’ anything – usually only attracts cheapskates who will have all the loyalty of a hungry cat. Be wary of insurance backed propositions in particular as they are old hands at offering free services which involve other peoples time and risk – remember Hambro in the 70s? Its a long standing tactic that they use well, but it rarely if ever does anything other than commoditise the advisers’ skill.

    If that’s what you want to build a practice on, let alone an ABS, good luck. There are better alternatives – and plenty of them.

  4. David R Johnston on February 14th, 2012 at 11:10 am
  5. Interesting article and good that you raised this. definitely a topic that requires thinking through. One or two thoughts to add another dimension.

    Firstly, while the principle for many offers of free advice is undoubtedly to convert the client into a fee-paying client, categorising that as “sprat to catch a mackerel” is I think a little simplistic. If a client has an existing relationship with a law firm, there are likely to be “switching costs” involved with trying another lawyer. These might be as low as just changing routine, briefing the lawyer on relevant matters or providing more background information. In some cases they might be significant – transferring current files and archived documents over, losing the tacit knowledge that the firm has built up over a course of dealing and potentially significant time from the client in re-briefing lawyers and building new relationships. Offering free initial advice and consultations is one way of trying to overcome those switching costs. Inertia is a powerful force (just look at the banks) and lawyers need to make it easy for new clients to join them.

    Similarly, much of legal service is an “experience good” – no matter how compelling the marketing message, as a client it’s difficult to judge the service without experiencing it. trying the service for free allows the client to get a sense of working with the lawyer and reduces some of the perceived risk that is associated with “an unknown quantity”.

    Thirdly, while I do agree that in some circumstances giving away goods and services for free can damage the perception of value, I don’t think it’s fair to generalise and say this is true in all cases. When I was in-house, pretty much every law firm that pitched to me was prepared to do some up-front work for free. Does that mean that in some way it affected my perception of how good a top ten law firm was? Absolutely not.

    Finally, the other point to consider is that the market is fundamentally changing, and what one organisation can afford to offer for free, might not be appropriate for another to replicate, but it still cannot be ignored. The arrival of new entrants into the market will undoubtedly drive down prices for some services, and it may well be that some of the new entrants, with potentially large amounts of capital, lean operational models and large scale can afford to offer free services in order to drive market share, brand recognition and pile pressure on smaller, less resilient players. The cost to them of offering these services is likely to be lower than a traditional law firm, and in the case of the larger ones, their ability to fund a short term loss-making operation is likely to be higher than a traditional law firm. Irrespective of whether this is a good thing or not, if the market price is tending towards free, then the firm needs to address that in one way or another.

    So, what’s my point? My point is that in some circumstances there may well be good reasons to offer free advice, and doing so will not necessarily damage the perceived value of your firm or advice in the eyes of a client. The caveat is that I absolutely agree that the firm needs to understand what the cost of sale is, what the return on the investment is, and have a plan for consolidating and developing the resulting relationships.

  6. Mark Smith on February 15th, 2012 at 11:02 am
  7. Some wise points in this article and comments. My own view is that the ‘freemium’ type model for legal services will continue to build for a while, taking momentum from other emerging business models as the legal sector deregulates. But I suspect there will be a backlash within a couple of years with the realisation by clients that free legal advice has its practical limits, and by lawyers that this may not be the most effective client relationship development tool. Time will tell!

  8. Nicola Proudlock on February 16th, 2012 at 12:45 pm
  9. A “free” transaction is a part of the conversational armoury. Its not hard or to get offered any information or knowledge for free. The ground rules I would advise for any “freebie are about ensuring the establishment of mutual trust and self control.

    Trust has many elements but a central part of a conversation that will have a potential transactional act at its heart is the rule of No Mutual Mystification. Simply stated this means that both sides should have every opportunity to clarity and confirm what they understand and the right to say “no” if they do not feel confident that they understand.

    Control does not mean being controlling. Control here means maximising the efficiency and effectiveness of your ability to help. Predominantly, this should take the form of a mutually agreed agenda accompanying the avoidance of any mystification and this agenda, regulary reviewed and refreshed will make it clear what “IOU” might be expected from any transaction and on what criteria the IOU would be cashed.

    So a pro bono IOU might simply be that you will want to talk in appropriate terms and in appropriate circumstances about the nature of the work undertaken, or it might not. If you are offering a free consultation it is important you accept your responsibility UP FRONT to be clear about any limitiation on that consultancy and what your expected consequences of that consultancy are that you would expect. If there are none you should feel as obliged to say so as if there were some. Sometimes thinking about that simple act will ensure you are controlling the value you put on your knowledge.

  10. Jonathan Russell on February 17th, 2012 at 11:03 am