Insurance and client capability are “main barriers” to unbundling

Unbundling: Technology could help

The availability of professional indemnity insurance and the capability of clients are the main concerns for law firms looking at unbundled services, research has indicated.

Technology could be one way of allaying insurers’ concerns but the types of firms offering unbundled services may struggle to afford it.

The initial findings of the Solicitors Regulation Authority’s (SRA) family law unbundling pilot were discussed at a recent meeting of the Legal Services Consumer Panel, according to its published minutes.

The pilot involved 20 mainly small and medium-sized law firms, a charity and a technology start-up, while YouGov has conducted consumer research.

Unbundling is seen as one way to help people who cannot afford a lawyer for their entire matter but could seek advice on specific issues as they handle the case themselves.

We reported last year that a pilot version of an unbundled family law service for litigants in person enabled them to save 70% on legal fees and was to be expanded, while the panel’s annual tracker survey found last year that Covid led to an increase in the number of those prepared to use unbundled services, from 14% before the pandemic to 19% after.

The SRA pilot indicated that the majority of unbundling clients were vulnerable. “This makes a difference to accountability for the solicitor because they need more help to understand things,” the panel reported.

Indeed, some firms did not advertise an unbundled service because they wanted to gauge the client’s capability before offering it.

The client profile in turn increased the risk to indemnity insurers, who were “very worried about unbundling, specifically where consumers could make an error that would increase their risk”, the minutes said.

This highlighted the importance of ensuring the scope of the retainer was “extremely clear”.

The pilot highlighted the role of technology in assisting with unbundling. “For instance, one firm uses software where clients will provide information online before they even meet with a lawyer and then ask questions and segment each user based on their answers.

“Interestingly, insurance companies find there is less risk where a firm uses technology because there is an audit trail.”

But there was concern that smaller law firms might struggle to invest in technology because what was needed for unbundling could not be bought off the shelf, while involving technology raised other capability issues for some clients.

The minutes noted that providers had the same types of concerns when the panel first looked at unbundling several years ago, and the SRA was now considering guidance and “more specific transparency rules” as part of the work.

“It is also important to recognise that the unregulated sector is the fastest growing area in unbundled services,” the panel said.

The SRA said some solicitors saw unbundling as a way to increase access to justice – but did not always call it that. As a result, the regulator will investigate how well the term is understood in the profession as well as with consumers.

The panel is to explore whether Citizens Advice or the Legal Choices website will include information about unbundling as an avenue to legal services for those with limited resource.

The consumer panel has been interested in unbundling for a long time. Research it carried out in 2014 suggested that one in five of all legal transactions involved some element of unbundling, while an exploratory study it published the following year with the Legal Services Board found that consumers using unbundled services generally reported a positive experience.

Last year, the panel issued a report highlighting the “untapped potential” of unbundling, followed up by a roundtable that said regulators could do more to unlock this.

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