Unbundling has the potential to increase access to justice and help firms attract new clients, but awareness among lawyers and consumers is low, research by the Solicitors Regulation Authority (SRA) has found.
The regulator is to look at whether the word ‘unbundling’ needs changing to help consumers better understand the concept of lawyers only being instructed to handle certain aspects of a matter, with the client doing the rest themselves.
An SRA webinar yesterday on unbundling gave a preview of the research and family law pilot it conducted, which is to be published in full in the coming weeks.
Jackie Griffiths, head of regulatory policy, said the SRA found that awareness of unbundled services was low – while 26% of firms responding to a survey offered them, 40% had not heard of the idea, a figure that rose to 80% among consumers who have not done it.
But, she said, “unbundling has the potential to increase access to justice, which is particularly relevant given cost of living crisis”, with 21% of those who had used unbundled services saying they would not have been able to seek advice without it.
Those earning more than £60,000 were less likely to unbundle but this did not mean it was only attractive to the very lowest earners, Ms Griffiths said – 45% of those who had unbundled earned more than £40,000.
She suggested that this was because users needed “a certain amount of confidence and capability”, and “you might expect that those who are higher earners” may have that.
It was also attractive to “those who like to have more control”.
There was no significant difference in consumer satisfaction, with four in five happy with the services provided by both unbundled and traditional providers.
The main benefit for firms was more clients, while unbundling could also help those firms committed to access to justice and looking for ways to enhance it, Ms Griffiths said.
Prominent among providers’ concerns was the potential impact on their professional indemnity insurance premiums. An allied worry was the risk of the lawyer being liable for negligence when it was the consumer’s failure that was the cause.
Ms Griffiths said there had been a couple of reported cases which had heightened these concerns but the SRA’s analysis was that they turned on their specific facts and that “there are things firms can do to make sure the accountability and responsibilities are clear”.
Paul Smith, senior risk management consultant at Travelers Europe, told the webinar that the insurer had not seen much unbundled work being done “but we expect that to increase over time”.
He said there were “clear drivers as to why people are attracted to it”, such as economic pressures and the wider trend in legal services of – as Professor Richard Susskind would put it – the ‘decomposition’ of legal matters into discrete tasks handled by different people.
But this new form of service delivery would throw up issues around “communication, co-ordination, clarity and assumptions” – who is doing what and when. “Assumptions can be lethal.”
The retainer was a vital issue, Mr Smith said. “How is it being structured? Is it clear as to who is going to do what?” And then there were issues that came up in any matter, such as the client’s expectations and how clear the factual matrix was.
There was a danger of “jumping in” to help the consumer in an unbundled relationship. “You want to avoid the situation where you’ve set up a really clear retainer and then engage in conduct which suggests the retainer has been expanded.”
This was not just an unbundling issue, he added: “The whole idea of scope and staying within scope sometimes gets lost. There is a need for discipline to stop stepping over the line.”
If the lawyer came close to it, Mr Smith advised, they should renegotiate the retainer. “It may be that unbundling isn’t working and you have to ask client how they want to play it.”
Though Travelers did not specifically ask firms whether they unbundled, “if you’re making a fair presentation of your firm as a risk, then I think it’s a good thing to flag it up because it does represent a change in the way services are being delivered and it does throw up risks which, if not new, are in a different context.”
Lawyers were also concerned about determining a client’s capability to handle some of the work themselves and how to divide it, although Ms Griffiths said there were technology and systems to help with this, “so it’s not insurmountable”.
Lola Bello, manager of the Legal Services Consumer Panel, told the webinar that it has always been supportive of unbundling as “one part of the solution” to dealing with unmet legal need and access to justice, with its own research showing that people can save up to 40% in fees and also feel “empowered” by being more involved in their own matters.
While she stressed that “it’s not for everybody”, Ms Bello said there was scope for more people to unbundle. She advised that the barriers be tackled before the focus turned to improving awareness.
Ms Griffiths said the SRA was feeding the findings into the Legal Services Board’s review of financial protection arrangements for consumers and would be looking to develop firm guidance and consumer information.
There will be roundtables with the Law Society, consumer panel, advice agencies and charities, one of the goals of which will be to consider whether the term ‘unbundling’ could be improved. “People see it often as an inferior service,” Ms Griffiths said.
The regulator will also explore the “practicalities” of firms advertising unbundled options – most firms only offer them if client asks or they are the only way forward.
Ms Griffiths said the focus was currently on individual consumers but the SRA may look to move on to business clients too, especially as they may be more likely to have the confidence and capability needed.
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.