Newsletter – September 2020

Spotlight on… being upfront about costs

I’m in no doubt about the importance of clear pricing information of legal services. I was the Chair of the Legal Services Consumer Panel in the run up to the publishing of the Competition and Markets Authority’s review into the legal services market and, following the publication of the Panel’s report on open data, heard numerous arguments against price transparency alongside the challenges of pricing legal services.

This was back in 2016 when I said: “Far too many consumers, including some of the most vulnerable, are faced with the uncertainty of not knowing what their legal services will cost. This has to change and we look forward to seeing what measures will improve the information available.” In returning to the legal services market in April 2020, and as the Chair of the Office for Legal Complaints, I was immediately interested in what has changed in relation to price transparency. Are consumers shopping around before procuring legal services? How many providers are advertising their price? And above all, how many of the complaints escalated to the Legal Ombudsman are about cost issues?

I’ve clearly come to the right place. The Legal Ombudsman is an advocate for clear price information upfront and welcomed the publication in late 2018 of the Solicitors Regulation Authority’s new rules, and guidance by regulators such as the CLSB, which place an emphasis on clear online price information that can support consumers when they choose their legal service provider. Given that 19% of complaints made by consumers are about costs, there is a need to ensure clear costs information is available throughout a transaction.

The Legal Ombudsman has recently updated its costs guidance to ensure legal service providers are aware of the importance of providing clear costs information to customers throughout their legal transaction; from the initial costs information through to changes in costs and the final invoice.

Looking at a range of areas and examples of complaints investigated in recent years, the guidance emphasises that a customer should never be surprised by the invoices they receive from their service provider. Key areas highlighted include:

– A clear charging structure that consumers can understand

As well as understanding how they are going to be charged it is important that customers understand the disbursements that are included in a fixed cost or initial estimate, and therefore what might be included later if circumstances change. For example, understanding the standard searches which are covered in a conveyancing transaction, and the specialist ones which are not.

– Estimates updated following a case review

Situations change, which can have an impact on the costs. Service providers should keep estimates under regular review and tell customers if circumstances mean that the estimate needs revising.

One such example is the case of Miss F, who instructed firm E to do the conveyancing on a leasehold property. The firm provided a client care letter and estimate of £700. The instruction later changed as Miss F wanted the firm to negotiate the sale of the freehold instead. The firm mentioned in an email that the new work would cost £1,750 but they did not specify what this would cover and did not issue an updated client care letter. The negotiations became protracted and Miss F eventually decided to swap firms. Firm E sent her an invoice for £2,750. The Legal Ombudsman found that although the firm had done substantial work, there was poor service, as they had not been clear what the estimate would cover. Firm E agreed to reduce their fees to £2,300.

– Careful explanation of different funding options

There are times when a customer may have the option of funding their case through an insurance policy, union membership or legal aid. Where these are options the Legal Ombudsman will look for evidence to see if this has been discussed and customers understand the implications of these arrangements.

– Clearly setting out the potential cost implications of the different options

The Legal Ombudsman sees many cases where customers have options about different ways to proceed which could have a significant impact on their final invoice. When these cases are investigated the focus is on looking for evidence that shows customers have received information which enables them to make a choice.

– The provision of a reasonable estimate

An estimate is just that, and there isn’t an expectation that it’s a completely accurate reflection of the final cost. But there is an expectation that customers receive a reasonable estimate based on the information available at the time.

In a recent case the Legal Ombudsman was asked to investigate, Mr B asked firm A to represent him to evict tenants from one of his properties. Mr B did not receive a client care letter or an initial estimate at the beginning of the case, although he was later told that his costs would be around £10,000. Shortly before the trial he was told that the costs were likely to be £15,000 for the firm’s fees and barrister’s costs. His final costs were £20,000, but he had never received anything in writing from the firm. The firm agreed that they had not provided Mr B with any clear information about the costs in his case and they offered to reduce their fees to their first estimate of £10,000 plus VAT. The Legal Ombudsman agreed that this was a reasonable remedy.

Reflecting on this, what strikes me is that none of this is particularly new or radical. It does nonetheless speak to what it means to be a consumer of any service. And when you put it like that, when would you ever agree to pay for a service without knowing what it’s going to cost? This is let alone a really important service and of course this goes to the heart of some of the unique elements of the legal services transaction; what it means to be vulnerable and the asymmetry of power and information that exists at the outset.

When I first expressed an interest in the OLC role I was questioned by some about my impartiality and a perception that I would be on the side of the complainant. I was clear then – as I’m clear now – that there is no innate incompatibility between being customer focused and being impartial. Gone are the days when Ombudsman schemes used to say they couldn’t show empathy. The language now is rightly that of meeting the needs of customers – both complainants and service providers – and a recognition that the Legal Ombudsman does need to be responsive to complainants but the decision it makes must be impartial.

My understanding of the needs of complainants does not impact on the role of objective complaints handling but it does mean I understand the challenges facing complainants and that’s a good thing, reinforcing the independence of the Ombudsman from the sector, and ultimately contributing to ensuring greater transparency and clarity around legal costs.

Elisabeth Davies, Chair, Office for Legal Complaints

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