What way forward for Solicitors?

7 09 2009

Last week I gave a talk to solicitors and practice managers at a workshop addressing the issues arising from the Legal Services Act 2007 (“LSA”) and, in particular, what the implications of the so-called “Tesco law” will be for firms.  There was some good discussion between all the delegates and there have also been some interesting comments left on the earlier post I wrote on the subject.

The LSA or, to be more precise, Alternative Business Structures (ABSs) will mean different things to different people, depending upon where you are positioned in the profession.  For instance, the Magic Circle firms will not be at all concerned by the prospect of “Tesco law” offering wills and residential conveyancing as they no longer do that sort of “private client” work. They probably have no need for external injections of capital from non-lawyers either.  They are, however, concerned that other legal markets will remain tightly regulated and will not be able to enter into multidisciplinary partnerships in the US, for example.  Smaller law firms who are not interested in cross-border work may well welcome the opportunities that private equity can provide – perhaps to fund an upgrade of IT systems as one delegate suggested to me.  For firms that are prepared to dilute the partner’s/member’s ownership by allowing in non-lawyers the introduction of ABSs is potentially exciting. The message that came through is that Tesco Law offers opportunities to these sorts of firms.

There was consensus though that for the smaller law firms, based on the high street and relying on “commoditised” legal services (e.g. wills/probate and conveyancing) for their bread and butter, Tesco law is a threat.  All delegates were sure that high street firm of solicitors as we now know them offers a quality service to clients but competing with Tesco law on price grounds alone would be an unwinnable battle.  Many high street practitioners face the future with dread. 

I don’t think this necessarily has to be the case, particularly for practitioners undertaking non-commoditised work (by which I broadly mean family disputes, all litigation apart from lowish-value road traffic accident personal injury claims and anything with any emotional involvement in for the client).  Clients are increasingly price-sensitive but they also want a quality service: the “dial one for wills. Dial two for conveyancing and dial 3 if your ex-partner won’t let you see the kids this weekend” type approach just won’t work for most people. One of the respondents to my earlier post, John Flood suggests this may be too complacent though – what will happen if Trade Unions, who are used to funding personal injury litigation, decide to get involved more directly and either buy into a law firm or set up a new business structure with a Citizens Advice Bureau or Law Centre? I think that is a good point albeit I can’t see that a Trade Union would want to get involved where it couldn’t recover its costs from the losing party.  In other words they may be happy to fund personal injury litigation but not a bitterly fought costly residence/contact dispute between parents. 

Clients  may initially want to adopt a Tesco law solution but they won’t do so again if the service they get is cheap and unimpressive.  Many of the delegates at the workshop made the point, strongly, that the potential clients using Tesco Law in the first place (before getting disillusioned) would represent a huge loss to the profession.  I agree and, in my view solicitors need to be promoting themselves much more pro-actively to compete against this.

 Change is on the way and it doesn’t necessarily have to mean the destruction of the profession.  I will suggest how they can do that without utilising massive financial cost in my next post.  As ever I would welcome your comments on these issues; please feel free to let me know what you think, or email me directly at michaelscutt@dalelangley.co.uk or phone on 0207 464 8433   

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“Tesco Law” – not the threat that solicitors fear?

3 06 2009

The headline on this week’s Law Society Gazette, the house magazine for solicitors, is “Consumers sceptical about “Tesco law” (1).  Poll research carried out by ComRes, a polling company, on behalf of the Solicitors Regulation Authority apparently reveals that 69% of its respondents have reservations about the quality of legal services that would be provided by banks and supermarkets once the legal market is deregulated, the so-called “Tesco law” scenario which has brought many high-street firms of solicitors out in a cold sweat.  Many lawyers see it as being the beginning of the end for high street firms that rely on domestic conveyancing to earn their crust as they would simply not be able to compete on price with a large scale operation that could “sausage process” huge volumes of transactions.  I haven’t seen the full report and if anyone knows the link to it please pass it on.

Most solicitors dealing with members of the public (i.e as opposed to corporate lawyers acting for large businesses) pride themselves on being able to give a personal service to clients and to empathise with them, something which Tesco law will never do.  However, people are price sensitive, especially in the current climate, and that may well be the decisive factor for many.  I think that whereas consumers may be prepared to instruct Tescos to draft their will for them, or even to buy/sell their house, they won’t be interested in using Tescos to conduct their divorce or any legal dispute where there is any emotional involvement for them (e.g a serious personal injury, a building dispute or, dare I say it, a claim for unfair dismissal).  In those cases I think most people would prefer to use a solicitor, but this may turn out to be a forlorn hope; we shall see.  

There was another heartening statistic from the report. 83% of people who had used a solicitor in the last five years was said to be satisfied with the service they received.  Call me a pessimist but I would have guessed this figure to be much lower.   It must reflect the huge focus there has been over the years by solicitors to provide a good service to their clients and to treat them as individuals, rather than cattle fodder; that’s how my firm endeavours to work and we get most of our new clients in through word of mouth recommendation.  We hardly ever advertise and do not accept or pay for work from claims farmers.  I do think though that the days of the solicitor general practitioner are over.  There is simply too much law out there for anyone to be able to cover all of it.  When I qualified, fifteen years ago, I did personal injury, crime, conveyancing, wills and probate, general litigation, and anything else that came through the door.  It didn’t really work then and it certainly doesn’t now.  These days I only do employment, related litigation and some Claimant personal injury work.  The way forward is to know your subject well and to specialise.  The fairly encouraging results of this survey suggest we might just get the chance to do this.

I feel another poll coming on, please feel free to contribute and/or to comment,

 

P.S The report shows ethnic minorities regard the ability of banks and supermarkets to provide legal services more favourably, although no explanation is reported as to why this might be.  Are solicitors institutionally racist?  I sincerely hope not and don’t believe it to be the case.  Does it reflect the increased chance that ethnic minorities are not as well off in comparison with the majority and thus cannot afford to employ a solicitor?  Much more likely in my view.

(1) Law Society Gazette 28th May 2009 – http://www.lawgazette.co.uk/news/survey-finds-consumers-sceptical-about-banks-and-supermarkets-legal-services