Publishing prices is likely to encourage small businesses that are wary of the cost of legal advice to start using lawyers, new research has suggested.
It also said the new transparency regime may help law firms to win more business, both from competitors who do not embrace it.
The Solicitors Regulation Authority (SRA) has published the research on the day that it released its guidance to firms on how to comply with the transparency rules that come into force in December.
Requiring firms to publish certain price and service information, they cover a specified range of consumer and business legal services, the latter being employment tribunal work (defending claims for unfair or wrongful dismissal), debt recovery up to the value of £100,000, and licensing applications for business premises.
YouGov, working with Europe Economics, surveyed 1,004 small business owners/managers and then conducted a randomised control trial with 3,000 small business owners/managers which tested how publishing price information affected their choice of provider. A small business was defined as having up to 49 employees.
They found that solicitors were perceived as being expensive, both in absolute terms and relative to other service providers, with 60% of those polled saying the perception of cost was a barrier to seeking legal advice.
A lack of readily available price information, and the complexity of information currently available, were also significant factors.
More than 50% of small businesses stated that they would be more inclined to contact a solicitor who published price information on their website.
The research said that those with employment-related problems were currently far more likely to seek help from an HR/employment consultant, or even go it alone, than instruct a solicitor.
The DIY approach was also favoured when dealing with debt problems, although perhaps unsurprisingly, the larger a business, or more money involved in a debt recovery issue, the more likely it was to engage with a solicitor.
Searching the market was important. Whilst existing business contacts were the most common way to find a lawyer, searching the internet was the second most popular method.
Most would still conduct a market search even if they had the option of relying on a solicitor they had already used for personal legal issues
The research showed that when price information on debt recovery was published by different providers, solicitors were the preferred option for bigger debts even though they were more expensive.
The researchers concluded: “Firms should see publishing prices as a business opportunity, and not purely a compliance issue.
“This research suggests that those firms that do publish price information could benefit from increased contact from small businesses as their expectations about the costs of using a solicitor is lower when costs are publicly available.
“And firms that publish price information may gain, or at least retain, market share in an increasingly competitive market.”
The SRA guidance contains a series of templates that firms can use.
Its publication comes on the heels of that of the Council for Licensed Conveyancers, and there is a notable difference between the two regulators’ approach to online estimate generators.
The council said generators should produce an instant estimate directly to the consumer without them having have to provide contact details to receive a call-back or email for an estimate
Solicitors, by contrast, need only “consider how consumers like to interact with price information, for example research shows that when using an online price generator people do not like being forced to provide personal information such as email addresses or phone numbers”.
The SRA published similar research in relation to conveyancing clients earlier this year.
Law Society president Christina Blacklaws responded to publication of the guidance by pointing out that solicitors did not have much time to comply.
She said: “Given the short time some firms have to cover a lot of ground – and the uncertainty surrounding what adjustments they may have to make for Brexit – we’d encourage the SRA to take a light approach to enforcement in the first months.”