Price Transparency Guidance has been introduced by the Law Society of Scotland and affects all law firms who provide “consumer facing” legal work. The guidance came into force on 31 January 2021. That means most high street law firms will need to disclose their fees and charging policies publicly on their website. If they don’t have a website, they need to make this information available by other means. That’s a whole lot of hassle for an awful lot of law firms! Does this mean that there will be a race to the bottom? Will lawyers try to outbid each other to try to win work by lowering their fees? Or, is this an opportunity to explain what service a client will get for the fee they pay?
How did the price transparency guidance come about?
Before we get into all of that, let’s look at some of the background. I was concerned for my clients when the Law Society of Scotland published its consultation into price transparency in 2018. Was the Society trying to compare the legal market in Scotland with that in England? The report on which they based their consultation was produced by the Competitions and Markets Authority into the working of the legal services market in England and Wales. This is a completely different market from the Scottish Market. It’s much larger – 10 times the size. It’s independently regulated. Importantly, it has many non-solicitor service providers. Not so the case in Scotland.
Like it or lump it, the Guidance is here and solicitors in Scotland need to follow it. The guidance states it’s not a rule. However, it does say “In the event of a complaint being raised in relation to the guidance, a solicitor would have to provide a reason for not following it”. Does this make it a rule by the back door? It’ll certainly be the easiest thing ever for the Society to police. Do you have a website? If the answer is yes and you don’t have price transparency pages, you’ve failed to follow the guidance. Nice and black and white.
Many solicitors in Scotland are resistant to change. It has taken a pandemic for them to embrace technology and engage with change. Some of that technology and those changes will stick once the pandemic has passed – soon, we hope. Solicitors in Scotland can be reticent when it comes to discussing their fees. To have to put them “out there” will probably seem very scary indeed!
What does compliance with the price transparency guidance mean?
If you have a website, you have to publish your fees for certain types of work. Those types of work are consumer-facing types of work. Those are the kind that almost every high street firm in Scotland provides. That means an awful lot of law firms will have to do some quick work to get something meaningful on their website.
Also, the costs you publish aren’t intended to be a binding quote. In the words of the Law Society of Scotland: “The price information published only needs to be an average or typical price.” However, don’t be fooled into thinking this exercise is easy.
The price transparency guidance states solicitors have to provide:
- details of the services included;
- details of any services that a consumer may reasonably expect to be included, given the nature of the work, but which are not, in fact, included;
- where hourly chargeable rates are applied, information about the level(s) of fee earner(s) who will undertake different parts of the work;
- where you publish a range of prices, the basis of your charges, and the types of factors which will determine the final price;
- a description of any likely outlay and its likely cost – or the method by which such cost is calculated;
- whether any fees or outlays attract VAT – and how this is calculated.
The guidance also states: “Where appropriate, the price information should make it clear, that the price is an average or typical price only and the final price will be dependent on the circumstances of the legal matter.”
This is pretty comprehensive and also pretty onerous. Now you know what you have to do. Is this a hassle? You bet it is – but this hassle may turn out to be a benefit in the long run!
Will price transparency drive a race to the bottom?
This has always been a worry for solicitors. What if other local firms charge less than me? Will I have to reduce my prices to match or beat what they’re charging? Price comparison has always been the temptation. Not so for those firms who have a low fee policy. Way back in the late eighties and early nineties we saw the emergence of low-cost conveyancing firms. They publicly announced their fees which generally undercut the market at that time. Not a lot has changed since then. To be fair, this was largely a “West of Scotland” problem.
The advent of low-cost conveyancers did lead to a sharp cut in fees for residential conveyancing. Many firms in Glasgow and the West of Scotland tried to compete with their low-cost colleagues. What they didn’t realise then was that their low-cost colleagues had a strategy. That strategy meant that whilst the initial price was low, it only covered the very basics of a conveyancing transaction. Anything that needed to be done in addition to that was chargeable. That meant, on many occasions, the low-cost conveyancers were generating larger fees than their fixed-fee competitors.
This time round, the position is very different. It’s not just the headline fee that’s shown, it’s the basis of the charge and, importantly, what’s included. This means that the actual costs will become transparent. If anything, rather than being a race to the bottom, especially for residential conveyancing, done properly, price transparency might mean a levelling up.
So, what are the opportunities?
The price transparency guidance allows you to explain the nature and range of services your firm provides. It’s not all about listing figures and allowing clients to do the sums. You need to lead them through the process of how your firm delivers its services. Firms can explain each process and demonstrate what’s included for the fee being charged. You don’t have to shirk from explaining when additional charges might be introduced and why that happens. For too long now, solicitors take ownership of their clients’ problems but don’t charge properly for sorting those problems out. Price transparency gives you an opportunity to address these things up front.
You have an opportunity to surround the pricing with clear information on other costs the client is obliged to pay. These are costs you don’t benefit from in any way but which, over the years, have become to be part of “what the lawyer charges” in the eyes of many clients. You can create clear separation between what your fee is and what other charges are. You can emphasise that you gain absolutely no benefit from any of these but are merely a collector of these charges which are then paid to the third parties involved.
When you work through your fee levels, you might just realise that there are opportunities to charge a little (or a lot!) more for certain elements of your services. If the price transparency guidance hadn’t been pushed onto you, would you have taken a good, hard look at how you charge for your services? Those solicitors I’ve worked with have reviewed their fees across their business – mostly in an upward direction!
Should solicitors in Scotland be worried about price transparency?
I don’t believe so – provided they follow the guidance properly. It gives them a great platform to talk about their services.
You can encourage clients to engage with your website and read about your services as well as the likely cost of their case. Solicitors can blog about their charges and post entries in their social media accounts to draw clients to their website.
Yes, it will be a hassle to put everything in place. However, that hassle might well lead to more clients and greater revenue.
To read the detail of the Law Society of Scotland price transparency guidance, please click here. If you have any questions about this, please give me a call on 07855 838395 or email me at email@example.com.