Regulators must act now to force law firms to reveal what they charge for services, the sector’s consumer watchdog has said, suggesting that solicitors emulate dentists in posting price lists.
In its response to the Competition and Markets Authority’s interim report into legal services, the Legal Services Consumer Panel says a ‘chronically weak demand side’ is hindering competition in the legal sector.
‘Providers of legal services are not responding quickly enough to consumers’ need for transparency and predictability, particularly around key choice factors for example price and quality,’ the panel’s chair Elisabeth Davies (pictured) states.
The panel says it remains ‘convinced that regulatory intervention is needed’ to ‘redress the current imbalance and apportion risk between providers and consumers fairly’.
Without such intervention, ‘we do not believe that providers will be incentivised to be transparent on price.
‘The risk will continue to be borne disproportionately by consumers, and the uncertainties that fuel the perception of high legal costs, even where this is not the case, will deter even more consumers from seeking legal advice.’
Where fixed fees are not feasible, the response states that firms should provide on their website (and where they do not have a website, on request) the average cost of the services they provide in each area.
The response cites dentistry as a sector where such intervention was necessary.
‘This is in an industry where there are already rules requiring dentists to prominently display price lists in their surgeries and set out treatment costs upfront. Yet the government deems it appropriate to intervene because research found that 51% of people visiting their dentists did not see a price list and one in five were not clear about costs ahead of their treatment.
‘In comparison, we know that only 17% of legal services providers display prices on their website – in our view this is a compelling reason for intervention.’
Anticipating the argument by the Law Society and other professional bodies that complex legal services do not lend themselves to price lists, the panel’s response says: ‘Some suggest that it is impossible for legal professionals to cost services because of the variation in the work they do.
‘However, this argument disproportionately shifts the risks on to consumers, who are already disadvantaged by virtue of information asymmetry. Moreover, this is not a credible argument when one considers the experience and knowledge firms have in understanding the different directions cases might go in, along with the likely price implications.’
It notes that ‘there is an arm of the profession, costs lawyers, dedicated to understanding and advising on legal costs. Cost lawyers are a resource for firms to draw on when costing services and they should be used as such.’