SRA looks to “harness the potential of unbundling”

Philip: Law firms could benefit from unbundling

The Solicitors Regulation Authority (SRA) wants to “harness the potential of unbundling to broaden access to legal services and increase consumer choice”, it said yesterday.

In a major report, the regulator said unbundling – when the tasks that make up a service are divided between the consumer and provider – has “the potential to increase access to justice by providing legal services to those who would not have otherwise engaged a lawyer”.

It went on: “There are also other consumers who can benefit from unbundled legal services, such as those who want more control of their case.

“Moreover, there are potential benefits of undertaking unbundling for legal service providers because they have the opportunity to attract more consumers.”

The regulator said its work indicated that increased awareness, transparency and clarity – particularly around solicitors’ professional indemnity insurance (PII) – could encourage more unbundling.

As part of this, it is exploring “targeted advertising” to raise awareness among consumers.

It will also look to find a replacement term that better explains the concept – some 80% of consumers and 40% of law firms said in surveys that they were unaware of unbundling.

The report is the results of a family law pilot involving 18 law firms, a charity and a tech start-up, surveys of 114 law firms and of 674 consumers – half who had used unbundled and half only traditional services – as well as interviews and roundtables.

Just over a quarter of the firms surveyed offered unbundling and three-quarters of them saw benefits, mostly attracting more clients due to lower charges and a more flexible service. Some 36% of those already offering unbundling wanted to do more.

The pilot firms were also keen to scale up their unbundled offering, but a lack of funds and resources – particularly appropriate technology – were the main barriers.

Generally, the firms did not publicise or specify whether they offered unbundled services on their websites. They were used in “more readily standardised legal matters” for clients who were looking for specific support on a certain part of their case.

“This can create time pressures and burdens on the legal services provider to check and verify work they may not have been involved in,” the SRA said. “However, firms also explained that unbundling is a volumes-based business which could be profitable.”

Firms expressed a general concern over business models which claimed to include legally trained staff to guide consumers through their unbundled legal matter.

“They believed that there were no solicitors or barristers involved in these types of business structures and that this could mislead consumers who expected access to legally trained professionals.”

Solicitors’ other concerns included PII, implications if the client did not carry out their activity correctly or on time, determining a client’s capability to do the work, agreeing how to apportion the work, and regulatory implications.

Of the 337 consumers who had used unbundled services, those earning more than £60,000 a year were “significantly less likely to unbundle”, possibly because they could afford traditional legal advice.

But 68% of those who had used an unbundled service said they were likely to do it the next time they needed legal advice, compared to 37% of those who had not.

There was also no significant difference in the satisfaction of the two groups, with those who unbundled more likely to recommend their provider to a friend.

A quarter of those who unbundled did so because they could not afford for a law firm to do all the work, while 21% said they would not have engaged a legal services provider but for unbundling.

The research indicated that providers were able to successfully divide responsibility for tasks and provide clarity as to costs: almost 90% of consumers were clear as to what they had to do.

Nearly three-quarters gathered information/documents and over half said their provider checked their work.

The reasons other consumers gave for not wanting to unbundle included lack of confidence and being happy to pay for the work.

The SRA pledged to help with improving awareness of unbundling among both consumers and legal service providers – initially publishing information for consumers and exploring “the feasibility of targeted advertising” – and working with the Law Society, Legal Services Consumer Panel and others to seek an alternative to the term unbundling that is “more understandable”.

It will talk to advice agencies and charities about how they can help consumers to ask their legal services provider about unbundling “where it is appropriate to their needs”.

The SRA said: “We will explore options for firms to advertise the availability of unbundling more routinely to consumers.

“As a first step, we will conduct consumer testing to understand the impacts of legal service providers advertising unbundling as a service they would consider offering to consumers.”

Insurers told the regulator that clear systems which “evidence the scope of the retainer” would reduce the risk, with which technology could help. “Our discussions highlighted the need to continue our engagement with insurers to build a better understanding.”

The SRA is developing guidance on unbundling which “will include how to minimise the risk of legal action”.

On technology, it said: “Some legal services providers struggle to scale their workload due to challenges in validating and verifying consumer information.

“Although we have seen legal services providers who have invested in online portals to help them with this, others report that a lack of resources hinders their investment in technology.

“We continue to see growth in new platforms that allow consumers to create and manage casework themselves… To help firms, we will support and showcase technological solutions and good practice in unbundling.”

SRA chief executive Paul Philip said: ‘Our findings suggest that unbundling has the potential to make some legal services more affordable for those on low incomes, while law firms could benefit too as it would increase their client base.

“Unbundling won’t work for everyone, but raising awareness would help people to make good choices. We will also explore whether we can do more to address the concerns that may be stopping firms from offering this way of working.”

Law Society president Lubna Shuja said it was doing its own work in this area, examining if unbundling could help to close the justice gap.

She added: “Some practitioners have already started to deliver forms of unbundled services. However, concerns remain around the risk of being found negligent for things the solicitor believed fell outside the retainer.

“This risk needs to be addressed as it is one of the biggest barriers to the prospects of unbundled services being used more widely.”

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