Are the SRA’s Price Transparency Rules Enough?

The SRA price transparency rules came into effect in December 2018. They mark a genuine attempt by the SRA in the way law firms are supposed to market themselves and expect to win new business. However, it is now clear that (at least in the area of employment law), law firms are paying lip service to the new rules and that an important opportunity has been missed.

The SRA’s intention was that law firms should be much more open about their pricing than they might have been in the past, to keep pace with a fast-changing legal services market and to remain competitive. Those that fail to be transparent on fees and to move with the times will not only face enforcement action by the SRA but are likely to struggle commercially.

At Constantine Law, we welcomed the rules. We are strong advocates of transparency, both in terms of providing total clarity to the client in terms of cost, and in the way that we work; our lean business model strips out fixed cost and passes on cost savings to the client. For the innovative law firm, the SRA price transparency rules present a real opportunity to differentiate that firm in what is a highly competitive marketplace

What are the new transparency rules and who do they apply to?

The new rules require all regulated law firms in England and Wales to proactively publish extensive information relating to service and pricing across a number of common practice areas. This information will need to be clearly displayed on a firm’s website in an accessible and prominent location. However, this is clearly not happening.

The rules cover many of the main areas of work for consumer-facing law firms, including residential conveyancing, probate, immigration (excluding asylum), motoring offences and employment tribunal claims for unfair and/or wrongful dismissal. Firms acting for small businesses will also be covered in relation to debt recovery services (up to £100,000), licensing applications for business premises and, again in the employment sphere, defending claims for unfair and/or wrongful dismissal.

Firms are required to publish the total cost of services (or, where this is not practicable, the average costs or range of costs), the basis for the charges (including any hourly rates or fixed fees), details of the services included (and not included) in the cost, probable additional costs such as disbursements, likely timescales for key stages of work and details of the experience and qualifications of those carrying out the work. All firms, regardless of practice area, will also be required to publish regulatory and complaint-related information on their websites. However, it seems clear that many firms are not doing this.

Constantine Law, as an adviser to businesses and individuals, is subject to the new rules because we provide employment law advice in relation to unfair and/or wrongful dismissal claims.

The intention behind the SRA’s rules

The stated aim of the new rules is to ensure consumers have the information they need to make an informed choice as to their legal services provider, including understanding what the likely costs of a matter might be. According to the SRA, one-quarter of all complaints dealt with by the Legal Ombudsman relate to costs.

In approving the SRA’s proposals, the Legal Services Board stated that the new rules should also help to promote competition and contribute to improving access to justice.

The legal sector still adopts a very traditional (and guarded) approach to pricing. The new rules are intended to inform a client’s expectations in terms of pricing, at the outset of a matter. Over time, new clients are likely to place greater emphasis on pricing when choosing a lawyer than they may have done previously. Clients may also adapt the way in which they actively search for an adviser; it is now second nature for consumers to refer to price comparison websites when choosing certain service providers.

Many law firms don’t welcome price transparency

It is striking that the majority of respondents to the SRA’s consultation did not agree with the price transparency proposals. This is because many firms adopt a “producer knows best” mindset and would prefer opacity.  Many law firms resent what they see as an unnecessary exercise in transparency and compliance.

And it is certainly the case that their response to the SRA proposal is underwhelming: an initial trawl of competitor websites demonstrates that many employment law firms have not provided remotely comparable information on pricing to ours.  We have published hourly rates and a detailed grid of expected charges in a typical Employment Tribunal claim. Few other firms have done this. On the contrary, their guidance, on Tribunal pricing, is either too general (or vague) to be helpful, or non-existent.

But some law firms embrace price transparency

For Constantine Law, however, price transparency is an important exercise in client engagement.  We have provided more information in relation to Employment Tribunal claims than any other firm that I know of.

We saw the SRA rules, not as a threat but as an opportunity to differentiate ourselves from the competition. Since being founded in 2015, Constantine Law has re-engineered the way that legal services are delivered. Our entrepreneurial approach enables us to provide first-class employment and business immigration lawyers at 60% of the cost of traditional firms. We achieve this by working to a lean business model, eliminating most of the fixed costs of many firms, using smart technology and offering innovative pricing structures. The main beneficiary to our new way of working is the client, and our approach stands in stark contrast to most of the profession. With research conducted by YouGov and Europe Economics for the SRA confirming that 68% of small businesses identify potential cost as a barrier to using professional legal services, the new SRA rules can benefit firms that are brave and transparent on pricing.

This article was first published as the ‘Thought Leader’ column, in the April edition of Lawyer Monthly magazine