Readers will be aware of the Competition and Markets Authority’s call to improve the price and service transparency offered to clients by law firms. They will also be aware that both the Solicitors Regulation Authority (SRA) and the specialist property law regulator, CLC have responded with new regulations that come into effect on 6th December this year in several areas of law.
Anecdotally, firms have been reticent to act with haste and are only now bringing themselves into line with the new regulations.
Responses are coalescing around two distinct schools of thought. First are the myopic, compliance-fixated who see this whole initiative as yet another unwelcome and unwarranted imposition on the profession. They have consequently been quick to explore the bare minimum requirements associated with compliance.
Second are the entrepreneurial spirits who see real competitive benefits in embracing these challenges. For this group, there is a realisation that the authorities are simply offering a benevolent nudge. This is after all how the market is increasingly asking to engage with mainstream consumer professional service providers.
Is it all about price?
This second group recognises and shares the widely-held view that being judged purely on price is anathema. They hold that the value firms provide is much broader than simply a price. Instead of railing against the injustice of it all, these firms are picking up the ball they’ve been passed and are sourcing new datasets that help to contextualise price in a meaningful way.
What new performance datasets are available?
In relation to residential conveyancing, regulators have toyed with first tier complaints data and with the HM Land Registry (HMLR) requisitions data as possible datasets to require firms to share but have commendably rejected the notion. So where else can firms look for objective, comparable data? The answer is HMLR where transaction data can be aggregated, averaged and even displayed on an interactive map to give a measure of a firm’s conveyancing operation.
Review, review, review
As well as operational performance, the entrepreneurial firms are embracing the world of third-party reviews. Seen by some as a threat, reviews are nothing more than an electronic manifestation of a conveyancer’s oldest and most revered marketing tool – word of mouth (although in this new incarnation, with a right of reply). They instil confidence and drive business.
Impact on panel referral fees
Do these new regulations impact on the referral market? Yes, they do, but probably not as much as the government’s separately expressed intention to make estate agents disclose and quantify up front any referral fees, they expect to earn from a conveyancing referral.
In the context of the new transparency regulations, firms will have to ensure they disclose any referral fees they pay (as they do today typically in their client engagement communication) but this time on their websites or presumably (and importantly) on any other website where their fees are displayed.
This means that firms will have to be prepared to make the case for the ‘value’ they represent to the consumer. I don't think it'll be enough to say, "We're passing on a marketing cost that we incur" if there isn't a discernible client benefit to go with it.
Build or buy?
Given the date, no firm that hasn't already done so, can now develop a solution themselves that meets the deadline. The SRA has offered some comfort around an initially relaxed enforcement regime which means that firms might still undertake their own project (particularly if they are solely focused on compliance rather than competition) and deliver early in the new year. This doesn't, of course, avoid the cost and time associated with an in-house web development project.
Others will look outside their business for managed solutions - the best of which will, as I've argued, contextualise price with performance and client review data, to allow firms that argue strongly that price isn't an accurate measure of the value they supply, to make the wider case.