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Transparency: avoiding a race to the bottom

25 June, 2018

By Sheila Kumar, CEO of the Council for Licensed Conveyancers (CLC) and chair of the Legal Services Remedies Programme Implementation Group, set up in response to the CMA’s recommendations for improvements

Transparency is a word that lawyers are hearing a lot, thanks to the Competition and Markets Authority (CMA), who thinks the legal services sector is “not working well for individual consumers and small businesses”.

The CMA believes consumers “find it hard to make informed choices because there is very little transparency about price, service and quality… This lack of transparency weakens competition between providers.”

Many lawyers, particularly conveyancers, would say there is no shortage of competition – even of the cut-throat variety. However, from the consumer’s perspective, having so many players in the market makes life harder if there is no easy way to compare them all. The risk then is that they are driven by price as the clearest way to differentiate.

This causes a series of other problems. Does the quote include disbursements or not? Is it a guarantee or an estimate? And most importantly, what about the other elements of a law firm’s offering, such as quality of service?

Key to this is consistency across the market. If this transparency push is to succeed, all of the different legal regulators will have to approach it in a similar way.

Indeed, there is a working group made up of all the regulators to try and ensure this. But nobody wants legal services to become a race to the bottom where whoever offers the lowest fee wins, irrespective of the quality of the service delivered.

There is plenty of research to suggest that only a minority of consumers choose the cheapest lawyer. Yet, the CMA is watching and firms have to improve the way they promote the features and quality of their services and show how they may differ from others.

Demonstrating quality of service is not easy. In financial services, for example, consumers can see the number of complaints made against providers. But these are in the thousands.

The numbers of complaints in legal services are low – the Legal Ombudsman handles around 7,000 cases a year (there are around 150,000 regulated lawyers), fewer than 30 of which are against firms regulated by the CLC. And not all of those are upheld either.

So, what might be meaningful? We are now exploring initiatives such as star ratings, with which we are all familiar. This could be alongside lawyers publishing client feedback either on their own websites, or via comparison websites. This is going to be an iterative process.

Lawyers should be free to run their businesses how they want. But equally, regulators act in the public interest first and foremost. There is a balance to be found, and the end result must be a legal market where consumers can easily find and choose the right lawyer for them.

This article was first published by Mortgage Finance Gazette