SRA widens scope of plans to make law firms publish prices

Websites: greater transparency

The Solicitors Regulation Authority (SRA) is planning to extend its plans to force law firms to publish prices from conveyancing, private client and divorce work, to personal injury, employment and motoring offences, it revealed today.

The SRA is also pressing ahead with plans to require firms to publish details of how to complain on their websites, while details of their internal first-tier complaints records might feature on a new dedicated register.

The SRA intends to publish the rest of its regulatory data about law firms in a separate digital register, and introduce compulsory badges so consumers can see more easily whether firms are regulated by the SRA and covered by the Compensation Fund.

Firms would also be required to state whether they held professional indemnity insurance.

The regulator announced in January that it intended to require firms to publish prices in “three or four” areas, including conveyancing, wills and divorce work, as part of its response to the study into the legal services market by the Competition and Markets Authority (CMA), with the aim of helping consumers better choose the right solicitor for them.

A consultation paper published by the SRA today widens the net considerably by including claimant personal injury work, employment tribunals and motoring offences.

Private client work would include wills, estate administration and powers of attorney. Family work would include both undefended divorces and financial disputes arising out of a divorce.

Prices for residential conveyancing would focus on sales, purchases and remortgages. Motoring offences are an unexpected addition to the list.

For small businesses, firms would have to publish their prices for employment tribunal and debt recovery work, along with licensing applications in relation to business premises.

Those without a website will have to provide the information to the public on request without the need for a consultation.

The SRA made it clear in the consultation paper that it is not backing down from its plans to allow solicitors to practise from unregulated firms, despite fierce criticism from the Law Society.

Solicitors in this situation would be required to tell clients that they were not subject to SRA rules on indemnity insurance, but apart from that it was “not proposing to impose” equivalent data publication requirements on them.

“We cannot impose requirements on firms we do not regulate. We are aware that this could be considered an unfair burden on regulated firms that will not exist for non-regulated providers.

“However, we believe that consumers value and will use the information we propose to mandate firms to publish to make purchasing decisions. If this is correct, it follows that publishing the information will be a competitive advantage for regulated firms, and that unregulated firms will come under pressure to publish similar information to compete.”

Firms would have to include disbursements and VAT in the prices they published, and instant calculators or “quote generators” could be used.

Where it was not practicable to give overall costs at the beginning, firms would give “any costs that are known”, such as hourly rates or the basis for unbundled services.

Where conditional fees or damages-based agreements were available, firms would be required to explain any payments clients would have to make from damages.

The SRA warned that any law firms offering “bait pricing”, or unrealistically low prices which were never available in practice, could breach the rules on price transparency as well as new rules on providing accurate publicity.

“We are aware that price alone tells the consumer nothing about quality,” the consultation said.

“However, price publication may help address views that legal services are not affordable. Firms are of course free and are encouraged to provide any additional information they want on the quality of the service they provide, going above what the proposed requirements ask…

“Information on price combined with clearer information about the protections regulated firms offer could assist clients in seeing the advantages of using a regulated firm.

“Where firms charge significantly different prices for the same type of service, consumers will be
able to question why.”

Firms would also have to publish “a clear, brief description” of the services, including indicative timescales and any affecting factors, if possible, and information about the different staff that deliver the services in the area.

Along with prices, law firms would have to publish details of how to complain to the firm and to the Legal Ombudsman (LeO) if things went wrong.

They would have to include the name of the person to whom the complaint should be addressed, the form it should take, timescales for handling the complaint and when a complaint would be referred to LeO.

The SRA said it intended to introduce two new compulsory badges or logos for law firms, one saying ‘SRA regulated’ the other ‘SRA Compensation Fund’.

The regulator also plans to set up two new digital registers. The first would contain all the “key regulatory data” it holds about solicitors and law firms. The second would contain sensitive data on internal first-tier complaints, and the consultation asks about how best to put this information into its proper context.

Both would be available for use by the public and by comparison websites.

Paul Philip, chief executive of the SRA, said: “In the last year, we have spoken to thousands of people and professionals to help us develop these plans. We have heard that price is important, but so is information about service and quality.

“We need to get the balance right. We do not want to impose unnecessary burdens on firm, or publish information that is unhelpful or too complex. Our approach could help support a more open, competitive market where people can make good choices and firms can grow and thrive.”

Meanwhile the CMA announced in its final report on digital comparison tools (DCTs) that it had opened a competition law investigation into a website’s contracts with home insurers, “which contain clauses that limit insurers’ ability to charge a lower price on one platform than on another”.

The CMA’s final report on the issue was focussed on car insurance, home insurance, energy, broadband, flights, and credit cards, and only “touched upon” other sectors like legal services, although the CMA said “much of its analysis applies more broadly”.

The CMA recommended that sector regulators “consider ways to free up more data and make it easier for consumers to use DCTs, in order to support more consumer engagement and better informed choice”.

It also recommended that regulators seek to “improve the effectiveness of quality metrics in order to mitigate against the risk of hollowing-out (a reduction of product quality as a result of an undue focus on price)”.

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