On 6 December 2018, the Solicitors Regulation Authority (SRA) in the United Kingdom issued new rules around pricing transparency. This was driven, in part, by complaints received concerning fees and costs charged and to give potential clients the opportunity to make more informed choices. Similar rules exist in many other jurisdictions.
Pricing Transparency Requirements Can Be Limited
At first glance, the rules were relatively limited in scope, applying to areas such as residential conveyancing, and certain immigration, employment tribunal, debt recovery and licensing applications. Firms are obliged to share information with clients on the nature of services offered and average cost of these (including any VAT or sales tax and disbursements) if no precise number can be provided. So far, so good – and all part of good client and matter management.
According to Paragraph 1.6 of the Transparency Rules, this information “must be clear and accessible, and in a prominent place” on the firm’s website. However, there is opportunity here for firms – not only in the UK – to embrace the broader theme addressed as well as the immediate practicalities.
Beyond compliance, pricing transparency is best practice
Pricing – done well – helps to strengthen client relationships. It should be viewed as a process, starting with a conversation with the prospective client and continuing throughout the duration of the matter (and potentially beyond). At the outset of any potential matter, firms should be striving to align goals and objectives with those of the client, and against as clearly defined a scope as possible, whether this is a major M&A transaction (not covered by the SRA rules) or a debt recovery (which is). This means active engagement with clients, to understand what is of most value to them and how we can best structure the work accordingly, while making an appropriate level of return. This is what we expect everyone else to do, so why not the legal profession? Also resist the temptation to add a list of extensive assumptions and caveats to any pricing provided. Good practice is no more than three to four key (and substantive) assumptions, rather than the legal equivalent of War and Peace.
Once the matter commences, there should be regular, clear client communication throughout, covering status of the matter, costs incurred to date, next steps and estimated future costs (in other words, good matter management). However, a recent research report suggests fewer than two percent of UK firms interviewed provide clients with budget updates throughout the budget cycle on 100% of matters.
No one likes surprise legal bills
Finally (and being mindful of the time of year) although surprises for Christmas are fun, no one likes to receive a law firm invoice that is higher than expected. Remembering the mantra of ‘no surprises’ serves us well. Invoicing is one of the most intimate (yet poorly executed) touch points in any client relationship. It is the ‘L’Oréal moment’. Is your firm ‘worth it’? Unfortunately, lawyers often see invoicing as an administrative burden rather than another client relationship and opportunity to market themselves more effectively (which are a number of leading law firms are beginning to do).
Whether you provide the legal services covered by the SRA or similar regulatory body’s rules or not, the concept of greater pricing transparency simply makes more business sense. Doesn’t it?
If you’ve enjoyed this article, we have other resources to help improve your firm’s pricing strategies:
- Read Stuart Dodds’ article on How to Reconnect the Cost and Value of Legal Services
- Download our free Legal Practice Management checklist
- Read this case study on Where to Start when it comes to improving your firm’s pricing