As of 6th December 2018, the Solicitors Regulation Authority (SRA) have introduced price transparency rules which apply to firms and practitioners who work in a range of legal areas.
These areas cover both individuals and commercial clients who offer services in the following areas:
The new rules mandate that price information on these areas of practice needs to be presented prominently and in a clear and easy to understand format. With the aim of transparency in mind, there is a requirement to provide a total cost, or range of costs including the basis for this range, including any hourly rates which apply. If there are different methods of these services being delivered which affect the price, such as higher fees for face-to-face meetings, this also needs to be specified. It must also be stated whether prices include VAT.
As an addition this, where online quote generators are used, this quote cannot require additional contact, such as making it a necessary requirement to call to discuss the quote.
However, there is a recognition that these quotes do not have to be absolute, as the SRA specify that quotes are not expected to be binding for every scenario, as there it is recognised that legal matters differ in complexity and that clients may not follow the advice given.
The impact of price transparency?
While it is mandatory that solicitors adhere to these rules, research conducted on behalf of the SRA by YouGov and Europe Economics suggests that price transparency may increase law firms market share. As there is an assumption that the cost of using a solicitor is higher than it is in reality, and there is a tendency to seek information about legal services providers online, transparent pricing is seen as something which can inform potential customers prior to any engagement and aid them in making decisions.
While these rules won’t affect every law firm or solicitor, one of the SRA’s aims is that it promotes a culture of openness and firms start to voluntarily post their fees for areas of practice that aren’t mandated.
However, there are concerns from practitioners that these new rules are flawed. One concern is that posting a generalised set of fees is unlikely to provide potential customers with more than a benchmark, as different legal issues have different levels of complexity and so a stated fee is unlikely to be applicable. A broader concern is that it could promote a ‘race to the bottom’, as it introduces the potential for firms to attempt to undercut each other in terms of price which may lead to compromises in the level of service delivered.
The impact that these changes have on the provision of the legal services which they cover is something that will only become apparent over time, and if they are ultimately a positive change for the industry, or if the concerns which have been voiced come to pass.
How has your firm prepared for these changes? Do you expect to be affected by them? Contact us at email@example.com to share your thoughts.