On 1 February, the Law Society of Scotland published its Price Transparency Guidance to address some of the 2016 Competition & Markets Authority report findings, which suggested that consumers are disadvantaged by the lack of readily available price information from legal services providers.
The guidance aims to “improve price transparency for legal services and encourage solicitors to proactively publish information to help consumers in Scotland to make better informed choices”. It applies to all consumer-facing legal practice areas, focusing on employment, conveyancing, wills and family practice. It suggests that pricing information should be available when the consumer is seeking to make an informed choice across several practice units, and again at the point of instruction. For most firms, this will mean publishing pricing information on their websites and confirming it in a terms of business letter. The guidance says it should indicate average or typical costs for transaction types and allow consumers to have an informed understanding of the likely cost of services.
When we established our employment practice Ergo Law in 2016, from the outset we decided to offer fixed fees whenever possible (for businesses and employees). We always discuss likely fees with prospective clients, usually at initial enquiry stage, before we are formally engaged.
It’s fair to say that law firms have been uncomfortable about openly advertising costs for a number of reasons, and this is reflected in the difficulty many solicitors experience in talking to clients about fees. First, solicitors advising in areas such as employment or family law often know of their client’s (difficult) financial circumstances, and this can make it hard to have an objective conversation about costs. Secondly, law firms have to compete against other regulated firms and increasingly against unregulated businesses providing legal services, which are often quick to suggest that traditional law firms are the expensive (and outdated) option. It can be difficult for law firms to present a price and be confident that the consumer can differentiate between types of providers and understand the benefits of taking advice from a regulated firm.
With greater price transparency, consumer-facing firms should see the benefit of clients being better informed about the likely costs of legal advice, not least in terms of fewer client complaints about fees at the end of a transaction. Openness about fees should enhance trust between solicitor and client, and the overall relationship. It is important that clients feel comfortable about discussing costs at all stages – demystifying solicitors’ fees will hopefully encourage consumers to take legal advice when necessary, rather than deterring them.
In our experience, whilst a conversation about fees might not feel comfortable, particularly when a client is in a crisis situation and potentially self-funding, it becomes even less comfortable if you haven’t tackled it at the outset. Solicitors should not fear competition from the firm down the street simply because their fees are visible to the public and the profession. Law firms, like other service providers, differ in their service levels, their client base and their fees. Price is not the only factor in the client’s decision about which firm to instruct. As a firm, we have made a concerted effort to distinguish the type of service we provide and to appeal to our target market for reasons other than cost; greater price transparency may make this increasingly important.
We have found that most clients prefer a fixed fee arrangement, as it provides certainty for those who may have heard anecdotal accounts of legal fees spiralling out of control. There is a temptation within the profession to see fixed fee offerings as a race to the bottom in terms of pricing, but that isn’t necessarily true. Any fixed fee quote should factor in the risk to the firm that the work will take longer or be more complex than anticipated. If the work is properly scoped, and the client understands what is and is not included in the quote, a fixed fee agreement should work well for both sides. As a firm, we have learned that it is possible to build flexibility into feeing arrangements while providing certainty for clients.
This may include utilising a variety of different fee arrangements in a single matter, such as fixed fees for certain elements and hourly rates for others.
There are few industries that charge on an hourly rate basis, with its inherent uncertainty and with so little pricing transparency at an early stage. We have found that the majority of consumers purchasing legal advice behave no differently than when they are shopping around for any other goods or services and that, while cost is important, certainty and openness around cost are equally so.
Emma Reid and Cathy Donald are founders of Ergo Law, and carry out the majority of instructions on a fixed fee or capped fee basis