ABSs and fixed fees are answer to charities' legal advice deficit, says consumer panel report

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By Legal Futures

6 December 2011

Davies: information needs to be better co-ordinated and signposted

Alternative business structures (ABSs) could be decisive in helping smaller charities access legal advice with fixed fees, according to research which shows many lack understanding of their legal needs and cannot afford solicitors.

The study, commissioned by the Legal Services Consumer Panel (LSCP), said there could be a gap in the market to service this sector. It surveyed 812 decision-makers in charities with an income of under £1m – which is representative of well over 85% of the UK’s more than 160,000 charities.

The study’s purpose was to discover the extent to which small charities understand their legal needs, what the barriers are to accessing legal advice, and to highlight the levels of satisfaction among those bodies which do obtain legal help.

The research found that half of the charity executives consulted had little or no understanding of laws applying to them, and that many would use a solicitor if they could afford to. When they did, they were overwhelmingly satisfied or very satisfied with the service (84%) and just 4% were dissatisfied.

Even the smallest charities were found to have “a wide range of legal obligations”, ranging from compliance with laws on trustees, constitutional matters and investments, to property and employment matters. More than a third of small charities (37%) would choose to use a solicitor as a first port of call, but almost the same number (36%) named cost as a barrier.

Just under a third (32%) said they paid full rate for their solicitor, with 24% paying a reduced rate and 20% receiving pro bono advice. There is strong reliance on the Charity Commission and umbrella bodies for access to free information and support, but there is concern that funding cuts may reduce the ability of these organisations to maintain this provision. Pro bono work is greatly appreciated, but the smallest charities find it difficult to obtain this or attract legally trained trustees.

Elisabeth Davies, the panel’s chairwoman, said: “Small charities tell us they are drowning in information and struggle to know what their legal responsibilities are. Although there are some useful guides, information needs to be better co-ordinated and signposted.

“It’s great news that small charities are pleased with the service they receive from solicitors, but cost prevents many from accessing this advice at all. Where pro bono advice is not available, they want fixed-fee services to give them much-needed certainty about what buying legal advice will cost.”

The authors of the study, which was carried out for the panel by MVA Consultancy, said ABSs could help charities in future by emphasising a “consumer-friendly, fixed-fee approach”, which they pointed out was already a model adopted by new groupings of lawyers such as QualitySolicitors, HighStreetLawyer and face2face Solicitors.

They speculated: “There may be a place in this market for a provider that focuses on cost-effective charity specialist advice. Competition from these new providers will in turn force traditional firms to rethink their marketing and pricing strategies, which could also be to the benefit of small charities.”

The authors recommended incentives be put in place to stimulate more pro bono work, “such as recognition of such work as continuing professional development”, and creating new awards for providers.

At the same time, it was suggested, measures should be adopted to “ensure that pro bono work provided to charities is of sufficient quality”. This could involve enhanced supervision of junior staff and monitoring of satisfaction levels with the service.

The legal profession should also be encouraged to “recognise small charities as a key consumer of legal services”, and address their concerns about value for money and transparency of pricing, the authors said.

Sam Younger, chief executive of the Charity Commission, welcomed the research. “Charities often need legal advice, not just about charity law but other matters such as health and safety or employment law. Whilst it is concerning that some smaller charities are unaware of when they need to seek advice, it is perhaps unsurprising that they struggle to keep abreast of all the issues they need to know about.”

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