New price disclosure rules for solicitors
The rules aim to address the perception that people and businesses struggle to find clear information about the services firms offer and overestimate the costs of using a law firm.
From 6 December, SRA regulated firms will be required to:
- publish price and service information for certain legal services they provide
- publish information on how they handle complaints
- display the SRA digital badge on their website (mandatory from spring 2019).
Price and service information
Any regulated firm which publicises the fact that it offers any of the services below is required to present clear and understandable price and service information in a prominent area of the firm's website (or make that information available on request if the firm does not have a website, for example, in a leaflet).
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The new requirements are that the firm gives the consumer an understanding of the likely costs prior to engagement, by:
- providing a total cost or, if this is not possible, an average or range of costs
- explaining the basis of charges, including any hourly rate or fixed fees
- highlighting likely disbursements, and their costs
- being clear on whether VAT is included
- explaining when clients may have to make payments for conditional or damages-based fee structures.
In addition to price information, firms are also required to provide clarity on what the firm is providing:
- explaining what services are included for the quoted price
- highlighting any services not included within the price, which a client may reasonably expect to be
- including information on key stages and typical timescales of these
- publishing the qualifications and experience of anyone carrying out the work and of their supervisors.
This may be just the start. Comments from the SRA indicate that the scope of services may extend in the future with firms encouraged to voluntarily publish information on additional legal services they offer.
Action to take
The requirement to publish ‘standard’ price and service information for what is often a bespoke service, creates an administrative burden, particularly the initial analysis and collation of price data. Some practical points to consider are:
- Simple, concise narrative will both assist the reader and ensure that subsequent updates to your cost model and rates are not an ongoing burden.
- When providing price information, setting out your background assumptions is important. For example, stating that the cost illustration provided for a conveyance is based on the purchase of a £500,000 freehold property with no title issues or adverse findings from local searches. You should then list factors which may increase the overall cost, such as missing documents or defective title.
- As it is likely that the published cost (or average or range of costs) will be different to the actual cost charged to the client for their specific circumstances, we recommend you make this fact clear to avoid any confusion at the billing stage.
- Careful consideration is required as to how publishing price and service information can be used a positive marketing tool. Whilst many firms may see the requirements as a compliance burden, providing clarity over the firm’s pricing model may also create an opportunity and competitive edge if done in the right way. Clearly, the converse is also true.
The Law Society has also provided a useful Price and Service Transparency Practice Note for its members.
For more information please contact Ross Prince or your usual contact.
