Price transparency – is your firm prepared?
We all know that competition for legal services is getting hotter. Whether we like it or not the SRA is requiring price transparency in respect of certain legal services from December 2018. From the private client practitioner’s perspective these include the collection and distribution of assets belonging to a person following their death, where these are within the UK and the matters are not contested.
Are you ready to share your pricing structure and service delivery details with the world? Before you launch into compliance there is still time to develop a more reasoned strategy. Instead of only addressing price remember that many people are more concerned that we are regulated, insured and can demonstrate expertise and empathy.
How did we get here?
The Competition & Markets Authority published its final report of its market study into legal services in December 2016 – it concluded the market was not working well for individuals and small businesses because of the lack of upfront information. The Legal Services Board tried to encourage regulators to voluntarily introduce improvements in their sector but when this did not materialise it insisted on change.
The SRA and other frontline regulators consulted on proposals. The Law Society commissioned research on consumer behaviour in relation to the purchase of legal services as part of these consultations.
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In June 2018 the SRA published its final decision: to require law firms to publish their prices and service information on their websites from December 2018. The Law Society has provided a briefing for members on the announcement by the SRA in June 2018 of their decision.
A report by the London Economics and YouGov for the Law Society is now available on consumer behaviour – google ‘The science behind consumer bias research for the Law Society’ and you will be able to download the report. To read a summary of the research findings see the Article in the Gazette by Jo Egan.
The article indicates that consumers:
- Preferences can change based on the complexity of legal needs
- Decisions on which legal services provider to select can change based on protections and regulation
- Want different things in different areas of law
- Do not always read the small print
- Assume that all legal service providers are regulated equally
Building a strategy for compliance
There a few key questions you need to ask yourself:
- What benefits does the client gain by using your firm? This is what you must emphasise, not just price.
- What criteria do your clients use for buying decisions e.g. price, speed of delivery, convenience or reliability? Address these issues in preparing your strategy.
- What value do your clients place on receiving the benefits you provide? Ask them!
- What distinguishes your firm’s offering from the competition? To what extent can people access a unique bundle of services from your firm, which is not available from your competitors? Consider how to harness collaboration with other services and use them as part of delivery an excellent service to clients e.g. negotiate a special commission rate with a local estate agent for selling probate properties.
Two crucial points to consider when setting prices
Price point & volume
- You must identify the price and sales levels you need to set to make sure your business is profitable
- It is no good budgeting the running of your practice on the basis that you need each person to undertake 1200 hours of chargeable time but then set fixed fees which mean for every job they write off 50% of the chargeable hours spent on the matter
- Can you use a suitable benchmark to reveal where your service stands compared with your competition? Maybe your accountant acts for other law firms and can provide some objective feedback.
- We can easily convince ourselves we are perfect – not easy to admit you are imperfect and inefficient.
- Sensible feedback can put a firm on the road to improved performance.
Aiming for Quality in Legal Services
The Legal Services Board Consumer Panel said in their report Quality in Legal Services in November 2010:
“Quality in legal services means combining up-to-date legal knowledge and skills with good client care to deliver advice in a way that is useful. Whilst some aspects of good service are visible, consumers lack the expertise to judge technical matters and so focus on client care. They assume that legal advisors are competent and that someone is making sure standards are being maintained.”
These words provide a useful toolbox for reviewing your firm’s offering and pricing it appropriately:
Are you able to say as a result that you have “Expert lawyers specialising in complex ……. Enquiries” because that would be a useful place to start on your web site.
Pity the consumer
Since consumers are unable to judge the quality of legal services for themselves they will often fall back on recommendations from other advisers, family & friends which means you will benefit if you:
- Invest time and resources in getting to know referrers of business better
- Supply them with jargon free information about your service to share with their clients
- Incentivise staff and clients to refer people to your firm
My new book to help your client and help you
Consumers use a combination of methods to find a legal service provider:
- Recommendations from trusted sources – trust is an important driver
- Without a trusted recommendation consumers will commonly conduct online searches using search engines and search terms such as solicitor, lawyer, Wills so make sure you use these terms – e.g.. expert lawyers specialising in administering complex estate enquiries
- Searching online is rarely the only source of information – consumers like to talk to you, either by phone or face-to-face to get a sense of rapport/approachability – particularly important if the consumer feels their situation is complex. This means upskilling professionals to sell themselves and the firm to clients on the telephone and offer a short, free face-to-face meeting to assess what the problems are. This is so beneficial to build trust and enable you to quote a more accurate fee.
- Factsheets, terms of business, retainer letters …. Consumers admit they do not read the small print so how important are they? We do have to consider the minimum but perhaps we can afford to strip them down to as limited as possible and write them in plain English.
All the above should tell you that it is essential to invest in making sure your website is always up to date, useful and simple to read and navigate. You must also ensure all client facing staff are trained to explain services in a clear fashion and are able to sell the service in a professional way.
You have no choice but to review all paperwork and reduce its length where possible, emphasising the important facts that clients need to know:
- That you are insured
- That you are regulated by SRA & explain what they do
- That you are experts in legal services
- The price tariffs
- What the client needs to do next
- How the complaints system works
Is price the only determining factor?
People tend to focus on price when comparing providers to the detriment of other more important information. This is because we humans have a limited attention span so we focus on features which stand out. We also tend to undervalue the likelihood of a high impact event occurring such as the loss of a practice storing their Will and the differing levels of compensation available.
The more vulnerable and lower social level consumers will focus on price. It is important to decide to which potential social group you are targeting your particular services and adjust your offering accordingly.
If you wish to target the more vulnerable and lower social level consumers then you will have to focus on simple services only and set modest fixed fees – which means using IT and lower grade staff who are well supervised.
If you wish to target higher social level consumers you will have to have highly skilled staff who can demonstrate significant expertise and promote that rather than the price.
The research commissioned by the Law Society shows that consumers’ choice of legal service provider can change if the consumer is informed about the nature of legal services and/or they consider sometimes things can go wrong.
Since people access legal services rarely there is little ‘learning from experience’ which means they need education and information about legal service provision. A simple way to inform them is to direct them to my latest book, The Street-wise Guide to Getting the Best from your Lawyer:
I am really hoping it helps the consumer become your client and helps you understand what the client finds difficult about accessing and using legal services. You can even sell some copies from your reception desk. Click on the link for more information.
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