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By Richard Tromans,
The UK legal sector can sometimes assume that demand for legal services is universal, almost an intrinsic impulse for any civilised society; that any right-thinking person naturally would want to engage a solicitor to help them. But this image is far from the truth and the roots of the problem are implicitly economic. Very few people “want” to use a lawyer. And as any economist will tell you, business success is about meeting “wants”.
The Law Society found that in 2012 only 27% of adults had sought legal services over the last two years, of which 36% of all matters were for relatively straight-forward conveyancing or will writing work. The other leading demands were for Personal Injury (PI) claims, an area that under the Jackson Reforms is likely to decrease sharply; followed by probate and power of attorney. None of this is a “want” that a client is likely to have very often. In fact, if one were very pragmatic, even probate work may slow in the future as people live far longer. Moreover, a significant proportion of mortgage and re-mortgaging is carried out by licenced conveyancers, not solicitors, and wills can increasingly easily be downloaded from legal websites for a fraction of the cost a solicitor would charge.
The backbone of the British economy, small businesses, fares even worse than the general population as a willing buyer of legal services. As noted in a previous blog, Legal Services Board (LSB) research found that only 12% of small businesses sought out legal professionals even when they clearly had a “legal problem”. This is especially concerning, as BIS data shows there are hundreds of thousands of SME businesses in the UK and they employ around 60% of the UK’s private sector workforce. They also represent just under half of total private sector incomes, or about £1.55trn. Though, as we will discuss below, this may represent untapped demand rather than a dead end for business development, but more on that later.
In at least the way lawyers sell their services today, for many people lawyers are a distress purchase; like having to go to the dentist for a painful and costly extraction of a tooth, perhaps triggering the unexpected need for further treatment and more financial repercussions. And, according to a recent survey, one doesn’t entirely trust these “legal professionals” either. LSB research “Consumer use of Legal Services” found that only 42% of people expected lawyers to tell the truth, compared to 80% for doctors. Given that trust is essential to build and reinforce demand for a service, this is extremely relevant. This lack of trust may not necessarily be in relation to doubting the veracity of a lawyer’s work product, but rather the mistrust over what their services will actually cost. Consumers and owners of businesses, despite what many think are not stupid, after all “they” are “us”, ie they are well-versed in everything from buying houses to setting up private pensions. Many people are financially literate and more of us than ever before have experienced higher education. The deferential “don’t ask questions because you wouldn’t understand the answer” attitude of yesteryear is really quite out-of-date. Who today wants to buy a service from someone who cannot give a straight answer to the simplest economic question of all time: “How much does it cost?”
Lawyers no doubt see this mistrust as a sign of their clients’ ignorance. How foolish of clients not to understand the complexities of legal work, they may say. Clients would likely take this view as further proof that lawyers don’t communicate well and are not transparent about what they are actually doing for the money they are paid. In short, for many transacting with a lawyer it is an unwanted, unpleasant and often unpredictable experience. This is not a great advertisement. Though, it need not be like this.
A modest proposal
Taking into account the above, here is a modest proposal. Some may consider this impossible to implement, but there is no reason why this practice, which some firms are already fully committed to, should not be universal. The idea is this: full pricing transparency made publicly available on law firm websites, with fixed prices wherever possible. Where there is likely to be a high potential for a variable cost, eg such as litigation, then this should be explained with potential prices given and percentage chances of outcomes based on past experience added, to give clients something concrete to base a decision on.
Before the clamour of objections rise, let us consider the objections one by one. Problem number one will be that some lawyers claim it is impossible to give a price for a piece of work. This is the easiest cliché to demolish. Yes, there will be variation in the work you do, but unless you are a very eclectic attractor of abnormal clients there will be sufficient degree of similarity in types of matters for you to estimate a fixed price. This price will naturally take into account your costs, annual inflation and competition from similar service providers.
The second complaint may be that showing the public your prices will undermine your business. It is true that it may undermine the ability to “up prices” when you can think you can get away with it, but in the long term it will build client trust and loyalty, spreading a positive message via word of mouth through a network of individuals and businesses. That is priceless. Moreover, you are hardly giving away market intelligence to rivals. Do you really think the firm over the road does not know how much you charge?
Another complaint would be that putting prices in the public domain is “unseemly”, that it makes a “professional” appear to be on a par with people who “sell things”. Well, it may come as a shock, but you are selling things. And the argument that if you have to ask the price of something then you shouldn’t be in the shop, is really a terrible one. This issue will be especially felt by some large commercial law firms that believe transparency on price is not something that should be even considered. Why? Perhaps because a lack of transparency serves them well. Though their desire to keep pricing opaque does not look good in today’s brave new legal market of change and adaptation to client demand.
What would any of this gain, other than upsetting many lawyers? First it would do an enormous amount of good for the profession’s image. But, more importantly, it would see far greater demand for legal services across a range of client groups as people and companies felt reassured and empowered to engage with solicitors on a more equal footing, breaking down old barriers and working practices that if we are honest are simply a hangover from an era that has already passed. Would some law firms face greater price competition? Yes. Would this force some firms to offer better service and really think hard about their costs of production? Absolutely. But, is this a bad thing? For many years it would have been up to the profession to decide that question. However, in the future it will be the clients who decide, and we can bet what they will prefer: transparency.
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Richard helps law firms with important strategic decisions. He
advises on areas such as merger, practice development and geographical
expansion. He also provides assistance to law firms in relation to
organisational and operational issues.
Richard has spent over 16 years working in the legal sector focused
on the UK and global legal markets. He previously worked at Jomati as a
strategy consultant and authored the Jomati Report series between 2009
Prior to that, Richard worked at US-based, Hildebrandt International,
and also held senior, legal sector editorial roles in London and Paris.
0330 161 1234