Response to the SRA: Looking to the future
Resolution endorses the Law Society’s response of December 2017 and our response should be read in conjunction with that. We respond in more detail to questions 1 to 4 and 9 and 10 as set out below.
Responses to consultation questions
In which of the services suggested do you think we should proceed initially with requirements for price publication and are there any other additional categories that we should consider?
Although we are setting out our views on some of the detail proposed in the consultation on price and service information, Resolution has overall concerns about the benefit of information that:
a) is likely to be incapable of dealing with value/quality of advice and service rather than just price and
b) may have to be so caveated as to confuse rather than clarify. Websites should be simple to use and clear. The need to set out all the caveats for a fixed fee for anything other than perhaps a straightforward undefended divorce, or all the caveats for hourly rates, would mean websites soon becoming clogged with detail.
“There is scarcely anything in the world that some man cannot make a little worse, and sell a little more cheaply. The person who buys on price alone is this man’s lawful prey” — John Ruskin English critic, essayist, and reformer (1819-1900)
The consultation risks a “one size” fits all”/”dumbing down” approach to the services provided by regulated firms and solicitors.
When quoting on price, whether fixed fees or hourly rates, firms have to take into account factors like certainty, outcome, complexity, the importance to the client, and urgency. It is hard to see how that can ever translate to a price menu.
If the SRA still decides to proceed it should do so initially in the services which are arguably most commoditised and where online information is most likely to be easily understandable and comparable. This could include undefended divorce (not including, for example, advice on crossjurisdictional matters) which is usually a straight forward legal process (whether acting for the petitioner or the respondent) and will become a largely digitised process.
Firms should be free to publish price information on dealing with finances on divorce if they wish to do so and offered supporting good practice guidance. But we have real difficulty with proceeding with requirements for price publication for financial disputes arising out of divorce.
This is not a commoditised service in that the range of work is wide. There can be so many variables between cases and how they are resolved and these variables are not always clear to either clients or legal representatives at the outset. Resulting online and intermediary comparisons in this category would not necessarily be comparing like with like.
It is worth noting that many firms have already spent much time thinking about whether fixed fees can be made to work in divorce finance cases. The vast range of variables means that the “fixed”
fees would be so heavily caveated as to be meaningless, or would have to be fixed at such a high rate that the majority of clients will pay more, and a small minority will pay less.
Firms should of course be providing an informed costs estimate to clients for this category of service and others at the outset. But we consider that requiring publication of detailed information on
firms’ websites pre any engagement with the client would have to be caveated so heavily, or the range of possible total costs so wide, as to be lacking in certainty.
There are many factors that could affect costs. For example, the way in which the increasing number of litigants in person deal with matters can heavily impact on the costs of the represented party, say because the unrepresented party won’t agree any simple efficiency measures for fear of giving something away. This makes costs harder to predict at the outset. Additionally, the manner in which both parties seek to try to resolve the dispute can have a significant impact on costs, for instance where parties are willing to provide disclosure on a consensual basis this can significantly
reduce costs compared to cases where obtaining full and frank financial disclosure presents difficulties.
In our members’ experience, there would potentially be such a wide range of costs for, for example, going to a First Appointment and for each of the other stages and different hearings, that publication of average costs is likely to mislead clients. Average costs can be skewed by cases where, for instance, detailed pension actuary or forensic accountant reports are prepared in contrast to cases involving just one property. There is a difference in cost, and in cost benefit, between low, medium and high value financial remedy proceedings.
As the consultation paper recognises, price transparency and other publication requirements before the point of engaging with a firm do not necessarily mean that consumers can judge the benefits of using and quality of the service. Without additional information that benefits consumer choice, such as on specialist accreditation, we are also concerned that comparisons or comparison tools would mean that potential clients only looked at the cheapest option. Whilst the consultation paper identifies this challenge and others with price publication, those challenges do not appear to us to be fully addressed.
In whatever way the SRA decides to proceed, we would ask the SRA to provide full information on how the impact of any price publication requirements will be gauged, over what time period and
when the evaluation will be shared.
Do you agree with our proposed principles of price transparency?
As stated in response to Question 1, we are setting out our views on some of the detail proposed, but we have overall concerns about the proposals as set out in the Law Society’s December 2017
It is welcome that the principles recognise where it is not practicable to give the total cost at the beginning. However, there are also difficulties around showing hourly rates (see particularly the third and final draft principles) on websites for reasons about differentiating between price and quality/value. There is a difference between quoting fixed fees for say undefended divorce and giving hourly rates. The firm can take a view (subject to exceptions which the SRA fairly recognise might apply) about the work involved in a fixed fee and it can reflect the hourly rates if indeed that is the basis upon which the firm fixes it (many will have undefended divorce as a loss leader).
The suggestion is that hourly rates would be quoted for different types of fee earner but often the rate will vary depending on office location or complexity/urgency. Perhaps a range could be given
but this doesn’t really help provide clarity and transparency as the actual rate would still fall to be discussed on an individual basis.
The first draft principle might refer to showing total cost ‘where possible’ rather than ‘where practicable’.
We don’t think the currently proposed second principle on online quote generators is or should be a principle.
The draft seventh principle might be better worded ‘If a fixed fee is given, there should be a detailed ‘job’ description of what the price includes and excludes, and in what circumstances (if any) it will be exceeded and may have to be revised.’
NB There is no substitute for an accurate estimate. The SRA should also consider giving more guidance to firms around the issue of fixed fees and transparency, particularly in terms of the client understanding the level of fee earner who will undertake the work and how to balance that against cost. For example, the client should have the opportunity to choose between paying a fixed fee where that is offered by the firm but the work may be undertaken by a junior fee earner, and paying for a service at the hourly rate of a more experienced fee earner.
The proposed final principle is not clearly drafted at all. We also fear that firms might lack clarity around compliance and be concerned around justifying what they have not done on the basis that it would be misleading.
Regarding the draft guidance, our comments are:
This might refer to a divorce application rather than petition.
This should specify whether it includes or excludes advising on the supporting fact for the divorce.
Examples of likely exceptions could be given, such as advising on jurisdictional issues on divorce.
We suggest that there should be reference to process server fees that are sometimes necessarily incurred even in an undefended divorce. These can be difficult to gauge depending on how easy it is to serve a party.
There is a view that, where fixed fees are offered for the Petitioner, it could be seen as discriminatory/unethical if no fixed fee service is also available to the Respondent for completion of the Acknowledgment of service.
Financial disputes arising out of divorce As indicated in response to question 1, we have specific concerns about the SRA’s proposed price publication requirement in this area.
It will usually not be possible to give a likely overall price for the financial elements of a case until a client has been seen and their case has been properly assessed. Nor would firms feel able to give a range of average prices based on their experience without seeing the client.
We also think that the current draft guidance on price and service transparency could be read as being largely about the price of making and contesting an application to court for a financial remedy order. This won’t necessarily provide that helpful or complete a picture for consumers in terms of all the options for resolving financial issues on divorce, of how they are often resolved (certainly if people use a Resolution member), and of the factors to be taken into account in choosing the right option for you including affordability.
Information should be easy to read and understand but not so limited as to focus, potentially in an off putting way, on the likely most expensive option which might inadvertently discourage the use of a regulated firm at all.
If the SRA proceeds, we think it will be important to provide a far clearer explanation of what is meant by financial disputes arising out of divorce for these purposes for both clients and firms. For example, does this mean the price or average price of:
- all of the different DR processes which the firm offers and/or refers to (including but not limited to mediation) to seek to reach an agreement and/or
- for dealing with a consent order and/or
- for dealing if necessary with the different stages of a contested court application which may or may not result in full or partial settlement at any stage during proceedings and before the final hearing?
But that is too large an amount of untailored and caveated information for firms to provide online and for consumers to digest and understand especially when there are existing online and other resources, such as Resolution leaflets, on options available.
The proposed list of factors and circumstances that could affect costs could helpfully be expanded, such as unrepresented party, albeit that might heavily caveat the online information provided.
Is there a need for any specific exemption from the price publication proposals for firms dealing exclusively with large commercial clients? If so how should any exemption be defined and operate?
We are concerned overall at the benefits of what is being suggested by the consultation.
If the SRA proceeds to implementation of any price publication requirements, it would though be unethical to implement such an exemption, for example, for commercial firms undertaking family
work – any transparency principles should apply to all firms engaged in any relevant category of work. Any other approach would be divisive and the definition very difficult.
Nor do we see the need for such an exemption. For example, high net worth individuals requiring any services that could be included in price requirements should be entitled to the same type of information. They may be better served by specialist lawyers in a particular area than firms focused on large corporate clients only occasionally carrying out a different type of work.
Do you agree with our proposals to introduce requirements in relation to description, staff, stages and timescales in any legal services where we decide to require price publication?
Description of services and stages might provide some context for consumers although it will not provide the full context to compare services, such as in relation to quality of service and expertise.
For example, fixed fees are only useful to the consumer if they are fairly priced and the consumer should have the detail to decide whether they are getting value for money. The mere publication of
the fixed fee doesn’t allow someone to ascertain whether there is any real benefit to them to instruct on that basis or to make a fair comparison between firms on price and level of service.
Regarding putting details of staff on websites, many small firms struggle with resource to make changes to their websites including having to pay outside providers. Having to keep them up to date with every change of staff/maternity leave etc. on top of changes in the stated pricing structures would be adding to their cost base without a proportionate benefit to the consumer.
Timescales in relation to concluding different types of court proceedings should really be the same whichever firm is instructed, but these can change or be inconsistent across different courts. That information would arguably be better accessed through publication of public information by HMCTS.
For the reasons stated in response to questions 1 and 2 we have concerns about the price and service information proposals overall. We do not consider that financial disputes arising out of divorce should be included in any legal services requiring price publication.
Do you agree with the proposal for firms to publish details of how to complain?
Our view is that this is not appropriate on a website giving information to someone who may or may not choose to instruct the firm. It is unlikely to impact on the consumer’s choice and would be another website change for firms to fund. We support the existing client care letter requirements which we consider are sufficient.
Do you agree with our proposal that firms should publish details of how to complain to the Legal Ombudsman?
Our view is that this is not appropriate on a website giving information to someone who may or may not choose to instruct the firm. It is unlikely to impact on the consumer’s choice and would be another website change for firms to fund.