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 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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