How Much Should We Reveal About Ourselves?
The drive for more information
The question of how much information clients (or consumers as they seem to be called these days) should be given about a solicitors’ practice has again come to the fore with the publication this month of a Solicitors Regulation Authority (SRA) discussion paper entitled “Regulatory Data and Consumer Choice in Legal Services”[i]
The discussion paper, which was published on 20 October, puts forward a range of initial ideas designed to improve the amount and quality of information that is available to consumers about law firms and solicitors. Information which, the paper states, could help consumers make more informed choices and, somehow, result in a more competitive legal sector. The kind of information envisaged to be published would include qualifications, practicing restrictions, complaints data and insurance claims and even raises the spectre of solicitors being required to publish details of pricing.
The publication of the proposals comes as no surprise given the pressure that the SRA has come under recently from bodies such as the Competition and Markets Authority’s (CMA) and the Legal Services Consumers Panel (LSCP), to improve the level of information available for consumers.
In their January 2016 report entitled “Market Study into the Supply of Legal Services in England and Wales”[ii], the CMA set out their view that competition is enhanced when:
“consumers are empowered to shop around through access to readily available and accurate information about the products and services they are seeking and the various offers available in the market.”
“consumers who are able to make informed choices are better able to achieve value for money. “
In their report from February 2016, “Opening Up Data in Legal Services”[iii], the LSCP stated that they regard the legal sector as being a long way behind other sectors in publishing information, that the ways in which consumers need to access information are overly complicated and that more information, including information on pricing, needs to be produced.
The SRA’s stance is that it agrees that “a lack of clear, targeted information means it is difficult for consumers to compare providers and make informed choices” leading to, it claims, a dampening of competition in the sector. However, as will be seen later, it has resisted so far the pressure to require firms to disclose information about prices – a choice already welcomed by the Law Society[iv]
What Do Firms Need to Reveal at Present?
Before we can consider the impact of the requirement to reveal more data, we need to look briefly at what firms are required to reveal at present.
The amount of information currently required to be revealed by firms is not great, although this is augmented by information published by the Law Society, SRA and Solicitors Disciplinary Tribunal (SDT) – and to a lesser extent by the Legal Ombudsman (LeO).
The information that you are required to provide to the public in general (i.e. everyone including clients) is, in the main, set out in Chapter 8 of the SRA Code of Conduct 2011[v] (SRA Code). This requires that your letterhead, website and e-mails show the words “authorised and regulated by the Solicitors Regulation Authority” and that either:
- the firm’sregistered name and number is shown if it is an LLP or company, or
- the name under which it is licensed/authorised by the SRAand the number allocated to it by the SRA if it is a partnership or a recognised sole practice.
You must also ensure that:
- publicity in relation to your firm or in-house practice or for any other business is accurate and not misleading, and is not likely to diminish the trust the public places in you and in the provision of legal services; (Outcome O (8.1))
- your publicity relating to charges is clearly expressed and identifies whether VAT and disbursements are included; (Outcome O (8.2))
- you do not make unsolicited approaches in person or by telephone to members of the public in order to publicise your firm or in-house practice or another business; (Outcome O(8.3)) and
- clients and the public have appropriate information about you, your firm and how you are regulated; (Outcome O(8.4))
In addition, Outcome O (2.6) requires that you “have appropriate arrangements in place to ensure that you monitor, report and, where appropriate, publish workforce diversity data”.
Where clients are concerned, the amount of information that firms are required to provide goes up considerably. Many of these are set out in the SRA Code and include:
- whether and how the services you provide are regulated and how this affects the protections available to the client; (Outcome O (1.7))
- the right to complain and how complaintscan be made; (Outcome O (1.9))
- the right to complain to the Legal Ombudsman, the time frame for doing so and full details of how to contact the Legal Ombudsman; (Outcome O (1.10))
- matter progresses and the likely overall cost of their matter; (Outcome O (1.11))
- the right to challenge or complain about your bill and the circumstances in which they may be liable to pay interest on an unpaid bill; (Outcome O (1.12))
- the discovery of any act or omission which could give rise to a claim by them against you; (Outcome O (1.16)) and
- any financial or other interest which you have in referring the clientto another person or business; (Outcome O (6.2))
Information from Third Parties
In addition to what is revealed by the firm, the public also has access to data about the firm – principally through the Law Society’s “Find a Solicitor” service on their web site and from the SRA. The former provides details of the firm’s offices and contact details, SRA number, areas of practice, qualified staff and managers, languages spoken, facilities and accreditations. The latter provides a range of information in several different ways, including:
- Law firm search[vi] – a sort of reduced information version of the Law Society’s “Find a Solicitor”;
- Register of Licensed Bodies[vii] – a much more comprehensive database of alternative business structures (ABS) licensed by the SRA and which includes information on heads of legal practice and finance and administration, reserved activities undertaken, licence and registration details, practising addresses, terms of the licence under which they operate and any waivers held;
- Solicitor’s Record Check[viii] – where the SRA publishes decisions it has made (as opposed to findings of the SDT) which are published elsewhere;
- Recently published decisions[ix] – which sets out the 50 most-recently published regulatory decisions;
- A telephone service through the Contact Centre to allow the public to verify an individual solicitor’s practising status; and
- Various data-updating services for others publishing solicitor information.
In addition, the SDT also publish information about findings made by them which is accessible from their web site[x] and the LeO publishes information on complaints made[xi] – although actual firms are not specifically named.
What are the SRA Proposing?
The SRA’s discussion paper puts forward a case for increasing the amount of information that firms should be required to provide to the consumer. The proposal divides that data into two types:
- Core data – which would be compulsory, and
- Additional data – which would be voluntary.
So far as core data is concerned this would include:
- Basic regulatory
- Enforcement action
- Complaint, and
- Insurance claims
whilst the additional data would include:
- Quality information
- Price information
- Service delivery
The rationale behind this, the SRA claim, is that by providing more data and being more transparent law firms could increase the willingness of the public to engage with them – for example by providing them with reassurance that the firm is not subject to disciplinary proceedings and by highlighting the actual cost of dealing with a matter rather than some imagined cost that would put the public off dealing with the law firm.
To back this up, the SRA state that following research undertaken on behalf of the Legal Services Board and the Law Society earlier in the year (“Online survey of individuals’ handling of legal issues in England and Wales 2015”[xii]) 83% of individuals with a legal issue did not receive help from a legal professional whilst a separate report entitled “The legal needs of small businesses” commissioned by the Legal Services Board in 2015[xiii] revealed that only 13% of businesses viewed lawyers as cost effective despite total annual losses to small firms due to legal problems being estimated at £9.79bn.
A further, perhaps slightly more controversial, reason for firms needing to be more specific about the information that applies to them comes from proposals not yet implemented but put forward by the SRA to allow solicitors to deliver non-reserved legal activities from within an unauthorised organisation. There is still considerable doubt being expressed as to the advisability of this strategy going forward and as to what benefit the SRA think this will deliver to the public. That said, however, then if this proposal does become reality then there will inevitably need to be an increase in consumer access to transparent information about legal providers.
What will this mean in practice?
So far as core data is concerned, the main issues are likely to involve requirements to publish information about complaints and insurance claims since both regulatory data and enforcement action data are already made available elsewhere.
Basic Regulatory Data
Basic regulatory information is already published by both the SRA and the Law Society and that which the SRA is proposing to publish is only what is already being made available through the “Find a Solicitor” resource on the Law Society web site.
Enforcement Action Data
So far as data about enforcement action is concerned the main change would be that consumers should not have to consult multiple resources to find out the information in question. This is something that the LSCP highlighted in their “Opening Up Data in Legal Services” when they stated:
“In the legal sector consumers are expected to go to multiple sites. For example, a consumer searching for a solicitor on the Solicitors Regulation Authority’s (SRA) website will be redirected to the Law Society’s website. If the consumer finds a solicitor on the Law Society’s website but wants to check whether the solicitor has had any enforcement action against him/her, the consumer will have to go back to the SRA’s website, and to another section of the website. This situation is neither effective nor consumer focussed and does not serve to reinforce independence between the regulatory and representative arm.”
The proposal by the SRA is that there should be one digital register which contains:
- findings against a regulated individual or firm,
- referrals to the SDT,
- outcomes of SDT hearings,
- conditions on practising certificates,
- restrictions on licences, and
- any other information that is publishable under the SRA publications policy.
Where things start to become a bit more controversial is in relation to the publishing of information about complaints and insurance claims.
It has, for some time, been the view of the LSCP that solicitors should make consumers aware of complaints and that, as they stated in recommendation of the “Opening Up Data in Legal Services” report, “Approved Regulators should make the collation and publication of first-tier complaints a regulatory requirement and mandate for its publication”.
In support of this proposal are the arguments that publishing complaint data would not only enable consumers to select legal services providers based on their complaints track record (as indeed they can already do in the case of other providers such as financial services and electricity supply) but would also encourage firms to better handle complaints and take steps to eradicate the practices leading to those complaints.
Ranged against this proposal are several objections, many of which have been put forward in relation to other sectors that have since moved on to a system of disclosing complaints. Those objections include:
- Without additional contextual information, the complaint data will not be able to be understood – for example a large firm is going to receive more complaints than a small firm or a firm that deals with potentially contentious cases is likely to receive more complaints than one that handles either non-contentious or commercial cases.
- Not all complaints are valid and genuine and increasingly firms are finding that clients complain as a means of reducing or avoiding costs.
- The administrative burden which will be placed upon firms, especially smaller firms, means that there will be an increased overhead which would have to be reflected in prices and increased work which could, ironically, lead to the firm being less able to deliver a good service to clients;
- Unscrupulous firms could manipulate data to the disadvantage of more honest firms. Thus, for example, the number of complaints disclosed would be dependent upon how complaints were defined within the firm.
- Accepted business wisdom is that firms should encourage complaints as it is a means of highlighting potential shortcomings in service. By requiring firms to disclose complaints, many could look for ways of discouraging clients from complaining and thus lose a valuable business resource.
- Firms could feel pressured into reaching compromises with potentially complaining clients that they would not have done had there not been a duty upon them to declare complaints. Savvy clients could even use the duty to disclose as a way of compelling firms to agree to things they would not otherwise have done.
The discussion paper does set out some of the proposals that the SRA has for countering these objections including setting a minimum level at which complaints should be reported, relating the complaint number to the number of cases handled and looking at the burden that this will place upon smaller firms. It also suggests that there may need to be a dual publishing of complaint data – aggregated by the SRA and individually by the firm in question.
Insurance Claims Data
The final compulsory or core data category is that of insurance claims. The SRA take the view that the number of negligence claims made by clients to which the firm’s insurers have made payments is an indicator of the quality of the firm. Whilst the publication of this data would certainly increase transparency, there are inevitably counter arguments, the main two of which are that:
- it could dissuade firms from bringing potential negligence claims to the attention of clients (as currently required by Outcome O (1.16))
- the act of negligence could be historic in so far that it related to a specific fee-earner that is no longer with the firm or a practice or procedure that the firm has amended in the light of the claim against it.
The first of the voluntary areas of information is quality. This is something that the LSCP are keen on and which they dealt with in their “Opening Up Data in Legal Services” report, although they do admit that it is a difficult concept to address and not one which consumers are likely to be able to draw conclusions about easily. The suggestion from the SRA is that it might be limited to information about accreditations and panel membership – something which is already dealt with to an extent by the Law Society “Find a Solicitor” service and which many firms already refer to on web sites. Moving forward, however, it is possible that it could be the thin end of the wedge to firms being licensed by, as the LSCP put it “activity and periodic accreditation.”
Areas of Practice and Specialism
This is, like quality, an area where many firms and the Law Society “Find a Solicitor” service already provide information. Whilst there, it is true, a few firms left who do not overtly specify what they do – especially those who do not have web sites – most refer on their web sites to the work that they can take on. Thanks to regulatory and insurance pressures few are going to lay claim to an expertise in areas they do not deal with. Any requirement in relation to this would be made more valuable if it were to be accompanied by information as to numbers or proportions of cases handled sectors – for example by adopting a similar approach to that used by web and design companies who use “thermometer” or “circle” diagrams to show the relative levels of expertise and involvement in particular areas of work.
Of all the suggestions, price information is likely to be the most contentious for many firms and thankfully, so far, it is one that the SRA has shied away from making compulsory.
Price transparency remains one of the key features in consumer information of the LSCP and the CMA and so it is even more remarkable that the SRA has held its ground on this one. The Law Society was quick to come out in favour of the stance taken by the SRA, stating that “’average prices’ will not help clients to make informed choices about the services they buy”.
In their argument for price information the LSCP has accused the providers of legal services of “not responding quickly enough to consumers’ need for transparency and predictability, particularly around key choice factors for example price” and has stated that unless there is regulatory intervention they do not believe that providers will be incentivised to be transparent on price. This, they claim, will lead to “uncertainties that fuel the perception of high legal costs, even where this is not the case” and will, as a consequence, “deter even more consumers from seeking legal advice.”
Where fixed fees are not feasible, the LSCP states, 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.
Most practitioners will see immediate problems with a compulsory approach to pricing. The very nature of legal service provision makes it that the cost of a matter will depend, to a large extent, on the level of service provided – and a basic service where the client receives little in the way of updates can be delivered far more cost-effectively than one where the client is contacted on a regular basis. This may be something that many clients will fail to be able to appreciate.
Moreover, as many firms have found to their cost, quoting prices can lead to a price war with the consequent downward spiral of costs and the associated risk that firms become uneconomic.
That said, however, there is a strong business case for fixed pricing wherever it is possible to do it since this provides a certainty for clients that could encourage rather than dissuade instructions. Many firms are moving to fixed-price models, especially in more routine cases, and many are adopting a lose on the swings but gain on the roundabouts attitude towards the work that they do.
Despite this, however, many firms will take the view that quoting prices should be a market-driven thing rather than a regulation driven one.
There is a strong element of these proposals which firms should welcome. Consumers hold far more power today than they have in the past and the increasing transparency in many markets risks leaving lawyers perceived as dinosaurs when it comes to modern business practices.
Those more progressive firms who have seen that greater transparency can be converted into more work will not be bothered by these proposals as many are already publishing much of the data. Perhaps a regulatory approach, therefore, is needed so that those in the profession who are more resistant to change will be forced to “compete” with those firms on a more equal footing.
There is a strong inclination on the part of many in the law to assume that clients do not and will never understand what lawyers do and why they charge what they do. That is probably to underestimate the ability of the public to adapt. One has only to look at the speed at which the public has adapted to the internet revolution. In a world where many have switched effortlessly to online banking, online purchasing, online interaction with government and online socialising, can it really be a valid argument that those same people cannot be made to realise that not all law firms are the same and not all prices that are the lowest are also the best?