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Elisabeth DaviesIntervention needed on price transparency

"Without big data, you are blind and deaf and in the middle of a freeway." - Geoffrey Moore, author and consultant

21 July 2016

 

The interim report of the much awaited Competition and Markets Authority's review into the legal services market has confirmed that consumers need access to better information to help them make informed decisions. This is an objective that the Panel has been pursuing since we were established. Our most recent work on 'open data' assesses what additional information, beyond basic data, could be provided to consumers to help them make informed decisions. In looking at what is available in other sectors, we found the legal sector wanting, not just in terms of what is available, but also in the way information is presented.

This week the Panel published our sixth annual tracker survey. It shows that just one in four consumers are shopping around before procuring legal services. What particularly concerns us is how this figure has not changed over the last four years.The pace of change is sluggish, partly because consumers don't have the information they need to be active participants in the market.

This isn't surprising when you consider that only 17% of providers advertise their price, according to recent LSB research. Since we published our report on open data we've heard numerous arguments against price transparency and we've heard about the challenges of pricing legal services. Our tracker survey continues to show that fixed fees are on the increase, because this is what consumers want. We know fixed fees cannot be offered in all cases, but shouldn't providers of services be able to give clients a range of prices, using previous experience and professional expertise to cost appropriately?

We're not blind to the challenges of increased price transparency. However there must be scope to improve estimation processes and improve communication with clients to ensure that any wild variations between estimates and actuals are well understood. Providers of legal services run businesses dependent on this information.

Information provision may not start out perfectly. We have to be pragmatic. We recognise that it won't be feasible to publish prices in the same way for every area of law. And we accept that the average cost is not an indicator of actual price. But it's a start and it could be the catalyst needed for consumers to make detailed enquiries about cost.

There's a broader context to this too. Of all the complaints that are escalated to the Legal Ombudsman, 26% are about costs issues. Plus, we know that the perception of high cost acts as a barrier to accessing legal advice. According to the LSB's recent legal needs survey, 10% of consumers fail to seek legal advice because of their perception of high cost.

So how do we move forward? There is no single blueprint for information provision - no template that can simply be replicated. We recognise that there are challenges for each regulator, and that the information must be contextualised to make it meaningful for both consumers and businesses. Regulators and businesses must do more to understand consumers. They must research which information consumers prioritise and concerted effort must be applied to presenting this information in the most effective way. And then businesses or regulators using information must go back and evaluate - did it work? For all consumers? Or just a specific segment or group of consumers?

It is hard to argue against the need for regulatory intervention when the market is simply not responding to consumer needs. Without intervention this information will not get into the public domain, and the ability of consumers to shop around, compare, and truly drive competition will continue to be curtailed. The Panel will continue to engage with the CMA to ensure that the final remedies it proposes offer lasting change in the sector.

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