1 September 2010

Revealed: SRA complaints sparked Law Society guidance on “headline pricing”

Solicitors Regulation Authority (SRA) complaints two years ago about the way some conveyancing law firms were advertising their prices led the Law Society to issue guidance last week on “headline pricing”, Legal Futures has discovered.

The society’s practice note – which is targeted at conveyancers in particular – was issued because “some solicitors are unclear as to what must be included in headline prices”. It said potentially misleading cost information may also arise where additional charges are later “bolted on”, or where items are referred to as disbursements when they are not.

Research done by Legal Futures has found that in 2008, the SRA wrote to 15 conveyancing firms to complain about their use of headline prices, which the SRA said contravened the requirement in rule 7.02 of the Code of Conduct. This says they should be clearly expressed and in particular should be clear whether disbursements and VAT are included.

Some of the firms complained to the Law Society that the SRA was disproportionate in its interpretation of the rule, arguing that consumers were used to headline prices in other sectors and that restricting their use would give licensed conveyancers a commercial advantage. This in turn led to an online survey and also questions in the annual law firm omnibus survey to better understand solicitors’ view on the subject. These found:

• The majority of solicitors neither used nor supported the use of headline prices for conveyancing services;
• A small minority of respondents advertise their costs excluding all disbursements; a larger minority exclude non-standard disbursements;
• Over half of respondents thought advertising excluding all disbursements would contravene rule 7; 21% of online respondents said quoting costs exclusive of non-standard disbursements only would contravene rule 7; and
• Most solicitors said the SRA should clarify the advertising requirements under rule 7.

The report considered by Law Society’s rules and ethics committee expressed the view that the findings did not support lobbying the SRA to change its interpretation of 7.02, and that advertising prices exclusive of any disbursements is contrary to 7.02. This is not reflected in the practice note.

The committee suggested that the SRA consider reviewing its guidance and that work begin on the practice note, including a clear explanation of what constituted a disbursement. Instead, the SRA provided examples of conduct which would not comply with rule 7, which have informed the practice note.

To see the practice note, click here.

Tags: conveyancing, headline pricing, Solicitors Regulation Authority

One Response to “Revealed: SRA complaints sparked Law Society guidance on “headline pricing””

1. This sort of problem may provide an example of the difficulties posed by outcome based regulation and races to the bottom that the LSB will take some persuading to resolve….?

   http://lawyerwatch.wordpress.com/2010/09/01/headline-pricing-problems-for-the-sra-and-the-lsb/

Richard Moorhead on September 1st, 2010 at 9:25 am