Lawyers are not that keen on being tied up by a fixed fee
Posted by Neil Rose, Editor, Legal Futures
It’s all rather quiet on the alternative business structure (ABS) front right now but don’t be fooled into thinking that nothing is happening.
The Solicitors Regulation Authority has received around 50 stage-one applications for licensing in the first two weeks and is now starting to send out the main application form, which I understand is something of a whopper. I wonder how many of the 50 are people who just want to see the form and don’t necessarily have an immediate intention to form an ABS.
Some of the obvious suspects have already thrown their hat into the ring, such as the Co-op, Irwin Mitchell and DAS, but it is the identity of the rest that is more intriguing. One I came across yesterday is a financial services company with various service lines that simply sees a business opportunity in the law and is setting up a firm to do personal injury and other work.
We won’t have too long to wait to find out the first ABS – the SRA has already set the date for a reception towards the end of next month to celebrate the landmark. But even before then we can expect to start seeing signs of the plates shifting under the legal world. Much though I would like to tell all, at the moment I can’t, but there are some big names, both in terms of organisations and the individuals involved, with something to announce soon.
Various developing trends will be reinforced too, such as giving away more free initial help, and of course more technology – coming back to my thesis that we are moving to a time when clients (both consumers and businesses) will pay for the core legal advice but not the process. The market for legal services is likely to grow as it becomes more accessible, and the battle is over market share.
But let nobody assume that all the legal advice – perhaps not even the majority of it – will be provided by what we recognise at the moment as qualified lawyers. As the website RoadTrafficRepresentation shows, it may not even be given by people.
Large businesses, either because they have to for financial reasons – such as insurance companies, which need more control over the claims process – or simply because they can, are approaching legal work afresh. Different cost bases, different mentality, different way of doing things, unfettered by the traditional practice of law. And different ways of charging for it too.
Speaking as a small business owner who has approached a few different solicitors in the last year or so, this won’t be unwelcome. There was the firm that gave me a fixed fee which turned out to be the three hours of the fee-earner at his hourly rate, and then asked for more when we went over three hours.
Another solicitor who did do some work on a fixed fee was not slow to tell me that she had spent considerably more time on it than she had expected. I don’t know why she felt the need to share her unhappiness and ‘virtue’ at realising she had to stick to her original quote.
Then there was the ‘virtual’ law firm that charged £200 an hour travelling time if we weren’t able to go and meet the fee-earner at their home (we needed a face-to-face meeting to discuss our instructions). Those who find clients pesky should note that this is an effective way not to get work.
So I await SRA ABSs eagerly for two reasons: as the editor of Legal Futures, hoping to keep breaking the news of them, but also as a micro-business owner who has seen first-hand that the way things are done right now could surely be much improved upon.
