Competition watchdog urged to study customer review websites in legal market

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3 November 2016

Buckley: customer review websites particularly important in legal market

Buckley: customer review websites particularly important in legal market

The Legal Services Board (LSB) has called on the Competition and Markets Authority (CMA) to extend a study of comparison websites to include customer review sites, given their particular sensitivity in the legal market.

The CMA, which has separately been studying the legal services market, launched a study in September of ‘digital comparison tools’ (DCTs) across a range of sectors – including legal services. DCTs include comparison websites and apps.

In a letter to the CMA, LSB chief executive Neil Buckley noted that its interim legal services report had identified how the absence of DCTs acted “as a barrier to comparison and search”, in turn limiting competition.

Mr Buckley went on: “Our principal focus to date has been on reducing barriers to the effective functioning of DCTs in legal services.

“Some of the DCTs that are attempting to operate in the sector have submitted to the CMA that ‘many legal service providers do not see transparency in pricing or consumer feedback as in their best interest’.”

Mr Buckley said that as well as “cultural factors and low consumer empowerment”, other “embedded features” of the legal services market were limiting growth of comparison websites.

“These features include a fragmented supplier base, lack of standardisation of fees and charging structures, lack of standardised services in some cases, and low technological sophistication in providers’ websites.”

Mr Buckley said that, given the “thousands of businesses operating in a range of sub-segments”, it would be helpful if the CMA considered how competition and consumer protection issues might differ in the legal sector.

He said customer review websites were “particularly important” in the legal services market, since surveys suggested that “reputation and expertise are as important as price (and sometimes more so) as factors which determine consumers’ choice of provider”.

Mr Buckley predicted that websites combining quality and price information would emerge for legal services, and it would be helpful if the CMA could “bring together its conclusions” on comparison and review websites, “so the overall conclusions make sense”.

The CMA’s focus is mainly on the energy sector, current bank accounts and motor insurance, but payday lending, hotel booking and legal services will be included. It expects to draw conclusions which apply across “multiple sectors”, but review or feedback driven websites were excluded since they had been studied before.

Meanwhile, a survey by the Law Superstore, which describes itself as “the UK’s first and only legal services comparison website”, found that only 9% of consumers were confident that they understood the price of common legal services, such as conveyancing, divorce, wills and probate.

The survey, carried out by Opinium, was based on a poll of over 2,000 consumers, of whom almost 1,300 had used a legal service.

Some 26% said they had not used a legal service when they should have done, while 22% had put their own case together.

Consumers in the survey greatly overestimated some legal fees. For example they estimated that the average cost of a divorce as £2,300, compared to the £722 which featured in a report by the Legal Services Consumer Panel (LSCP) earlier this year.

The average fee for the sale and purchase of a house was estimated at £1,867, compared to £1,283, and £829 for probate, compared to £804.

A large majority of consumers (80%) supported law firms displaying prices on their websites. When asked what they were looking for from a law firm, 51% said value for money, compared to 21% looking for the lowest price.

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