Making law firms publish average prices “is not perfect but it is needed”

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12 July 2016

Davies: shopping around is a weakness in the sector

Davies: shopping around is a weakness in the sector

The slow pace of change in the legal services market means “regulatory intervention” is needed to force firms to publish their average prices even though it is not a perfect solution, the voice of legal consumers has said.

The Legal Services Consumer Panel said this could also counter negative perceptions of lawyers.

Earlier this year the panel made a series of recommendations to the Legal Services Board (LSB) open up data in the legal market so as to help consumers make informed choices when selecting an adviser. However, the LSB responded cautiously to some of the headline recommendations around price, mystery shopping and complaints records.

In a newly published letter back to the board, consumer panel chair Elisabeth Davies said the need for regulatory intervention on price was bolstered by the LSB’s own recent research that found only 17% of providers advertised their price, and that those who did were generally cheaper than those who did not.

She said: “17% of the market is an unsatisfactorily small pool to shop from. Information on price is directly connected to the ability of consumers to shop around. Our annual tracker survey consistently tells us that price is a key choice factor for consumers yet we know that shopping around is a weakness in the sector, with only a quarter of consumers doing so.

“The slow pace of change in the legal services market has led us to conclude that regulatory intervention is needed. We therefore recommended that approved regulators should mandate for the publication of average cost of legal services. We accept that the average cost is not an indicator of actual price. We also agree that it may not be useful to all consumers.

“However, we are strongly of the view that it will be a useful indicator for some consumers, consumer groups or advisory bodies. Moreover, it could be the catalyst needed for consumers to make detailed enquiries about cost, thus forestalling the significant number of cases currently referred to the Legal Ombudsman service on cost complaints.”

Ms Davies said such indicator may also begin to address “negative perception” that legal advice was expensive, which itself acts as a barrier to accessing legal advice.

“We do not share the LSB’s worries that this information will place an undue burden on providers,” she added. “Providers of legal services run businesses dependent on this information.”

The panel’s report also suggested mystery shopping by the frontline regulators as a way to understand the type of service or advice consumers were receiving, particularly in high-risk areas of practice, and that the regulators publish complaints data in a way appropriate for their regulated communities – this may mean at a profession-wide level or on an individual firm level.

Ms Davies said she accepted that information provision may not start out perfectly.

“We have to be pragmatic. We will accept and urge others to release information that can be improved and refined over time, and this includes complaints data.”

The panel’s position has been strengthened by last week’s provisional report by the Competition and Markets Authority, which highlighted a lack of transparency about price and quality as the key barrier to competition in the law.

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