The SRA has now published its guidance on the new price transparency rules which are due to take effect in December. With less than two months to go until the rules will be in place, firms would be well advised to start planning now for the changes which lie in wait.
The price transparency rules have been greeted as an unwelcome burden by most firms but are justified by the regulator on the basis of their much publicised market research which shows that the profession is seen as being unapproachable by most individual and small business clients, and that the access to justice which the Legal Services Act 2007 obliges all legal regulators to promote is currently proving to be unsatisfactory. Their view is that better price information will help to address the problem.
The guidance provides details of what the SRA will expect to see on firms’ websites in order to be compliant. It is extensive and to a certain extent can be viewed as “best practice”, but as with all SRA guidance if it is not followed it will be necessary to explain how compliance was achieved in other ways. The guidance also provides templates for firms to adapt to their particular circumstances in relation to the specified services.
To what do the price transparency rules relate?
The price transparency rules relate to the following services:
For members of the public
- Residential conveyancing (Freehold sale or purchase, leasehold sale or purchase, mortgages and re-mortgages);
- Probate (uncontested cases with all assets in the UK);
- Motoring offences (summary only offences);
- Employment tribunals (claims for unfair or wrongful dismissal);
- Immigration (excluding asylum applications);
For small businesses
- Debt recovery (up to £100,000);
- Employment tribunals (defending claims for unfair or wrongful dismissal);
- Licensing applications for business premises (new applications or varying existing licenses).
What information must be given
In relation to these services the following information must be given:
- the total cost of the service or, where not practicable, the average cost or range of costs;
- the basis for the charges, including any hourly rates or fixed fees;
- the experience and qualifications of anyone carrying out the work, and of their supervisors;
- a description of, and the cost of, any likely disbursements, and where the actual cost of a disbursement is not known, the average cost or range of costs;
- whether any fees or disbursements attract VAT and if so the amount of VAT they attract;
- details of what services are included in the price displayed, including the key stages of the matter and likely timescales for each stage, and details of any services that might reasonably be expected to be included in the price displayed but are not; and
- in relation to conditional fee or damages-based agreements, the circumstances in which clients may have to make any payments themselves for the services (including from any damages).
Costs information published under this rule must be clear and accessible and must appear in a prominent place on a firm’s website. It is already a requirement at Outcome 1.13 of the Code of Conduct for clients to be provided with the best possible information about the overall costs of a matter but the Transparency Rules do go further than this. They require specific figures for the overall cost to be provided, the only wriggle room being that the average cost, or a range of costs, could be provided as an alternative. However, if a firm publishes a range of costs, it will need to set out the basis for its charges, including any hourly rates and the types of factors that will determine what the final price will be.
Additional Price Transparency Information
Other additional price transparency information which must now be provided on a firm’s website will, of course, also need to feature in your client retainer letters and it is important that there are no obvious discrepancies between the two sources of information. As well as the required details of the fees that will be charged it will be necessary to provide a detailed profile of every fee earner who might be involved with that area of work also. It will be important to institute a regular review process for what will now be shown on the website for these purposes as the required information will be subject to change and includes:
- the number of years’ post qualification experience the fee earner has;
- the estimated numbers or examples of cases they have dealt with in given areas;
- their percentage breakdown of time spent in different areas of work; and
- the level of complexity or the types of issues they typically deal with.
It follows that in addition to preparing or updating the partner and fee earner details on your website in advance of the implementation date you should also conduct a review of your various retainer precedents in use across the firm to ensure that the website information tallies with the more detailed proposals then made to clients when instructions are received. This is likely also to require a stricter control on the mandatory use of standard and approved retainers than is currently the case in many firms.
If undertaking a more fundamental review of your retainer drafts and any terms of business documents please note that a set of retainer letter templates has now been added to our re-launched website and our advice on terms of business documentation has now been updated at Factsheet 7.
The SRA’s full guidance can be accessed at – www.sra.org.uk/solicitors/guidance/ethics-guidance/pricetransparency.page