Consumer panel recommends family law services offered on fixed fee basis
19 September, 2016
The Legal Services Consumer Panel (LSCP) has said that family law specialists should be required to work under fixed fees in order to improve transparency in the market.
It believes that family law is an area where regulators “should now consider mandating fixed fees” – a move that is likely to upset some firms.
The LSCP said it agreed generally with the Competition and Market Authority’s (CMA’s) interim report, which said that competition in the market was not working well.
“Consumers are not empowered with the information they need to shop around or choose the most appropriate legal service provider for their needs. Consequently, their ability to drive competition is hampered,” said the LSCP.
“Progress has been made, but it has been slow. Providers of legal services are not responding quickly enough to consumers’ need for transparency and predictability, particularly around key choice factors e.g. price and quality.
“This is increasingly concerning because our evidence shows that in some areas of high consumer vulnerability, for example asylum and immigration law, consumers now consider price to be equally as important as reputation, which has traditionally been the key choice factor.
Earlier in the year, the LSCP recommended to regulators that firms should be required to publish ‘average’ prices, arguing that it would empower consumers’ decision-making processes and increase competition.
Within its report to the CMA, the LSCP said lawyers claims about the difficulty of pricing work due to the variety of circumstances they face “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,” the LSCP added.
It continued: “Fixed fee is the optimum solution especially in areas like family law, where consumers are often at their most vulnerable. In May 2016 the panel published a report identifying three areas of law for the oversight regulator to prioritise in order to enable the market to best meet the demand for legal services.
“The panel asked approved regulators to consider how price transparency could be further encouraged in family law to ensure certainty and ease the burden on potentially vulnerable consumers.
“This is one area where the panel advises that approved regulators should now consider mandating fixed fees, or at the very least there should be an obligation on providers to display their average prices on their respective websites or make these available on request where they do not have a website.”
The Panel added that many other sectors such as retail banking and dentistry, where there was similar variation in service, had managed to create a fairer fixed fee solution.
The move towards fixed fee arrangements has been on-going for some time now and many firms already offer some of their services at a fixed cost. At Watson Buckle we have helped a number of businesses prepare strategies that incorporate fixed fees. If you would like to know more about our services for solicitors, please contact us.