DemandCost of Services
What prices do consumers pay?
The RIR found very limited information on prices beyond guideline hourly rates (GHRs), and no information in relation to any other authorised persons. Hourly rates give no indication of the actual price a consumer may pay for the whole case and fail to take account of other additional costs such as Land Registry Search charges. Therefore these are not deemed to be sufficient to establishing what prices consumer pay. This remains a significant knowledge gap.
Other research shows the importance of the perception of costs in determining how consumers engage with legal services. Research looking at individual consumers found that: ”in relation to the statement ‘lawyers charges are reasonable for the work they do’ the data indicates that individuals who had no experience of using a lawyer to obtain advice were more likely to agree or strongly agree that rates were fair, as opposed to those who had experience with advice seeking from a lawyer. What is also of note, is that irrespective of a respondent’s level of engagement, those who obtained all the advice they needed reflected a similar level of disagreement that lawyers charges were reasonable when compared with those who did not obtain advice. Suggesting that attitudes to lawyer’s charges are not wholly based on the experience or outcome of advice seeking1.” Perceived high cost is seen as main barrier to accessing legal services for small businesses as well.2
A 2007 survey reports on public perceptions of barristers as expensive finding that 85% of barristers believe the public thinks that they are well paid and 80% of barristers think the public see them as expensive to use. But they feel this is not a fair representation – only 27% of barristers believe they really are well paid, while only 22% think they are expensive to use. In reality, the public falls somewhere in between – with around half (56%) saying barristers are expensive and 60% saying they are well paid.3
The RIR found no published prices for legal services. A range of research provides some limited descriptions of prices paid:
- “The fee for conveyancing can be expressed either as a fixed amount or as a percentage of the price of a property. On average it will cost about £750 to a buyer and £550 to a seller, but this depends on the value of the property and on whether it is leasehold property, in which case it is more expensive4.”
- Cost of providing free advice after death of person was variously put at between £900 and £4,442 per case, depending on the matter. The cost of actually providing legal advice was around £1,095 per case5.
- Research in 20036 found that Solicitors median private price per hour for family was £99, Conveyancing,probate, wills, trusts & personal Injury was £83, Housing and employment was £91, commercial and litigation was £106.
- The 2011 LSCP investigation into will writing7 found a range of different price for wills depending on the provider used.
|Market share||Principle delivery channels||Price for a single will|
|Will writing companies||10%||In the home||£50-100|
|Self completion will providers||13%||Stationers|
|Financial service providers||7%||In branch|
|Other||4%||Self completion questionnaires sent to solcitors||Free or discounted|
Changes in prices overtime
Available information suggest prices increasing over time, at least in some areas:
- Commenting on the impact of increased referral fees, one 2010 report states, “there was no evidence that increases in referral fees had led to an increase in the price of legal services. Price does not play a strong role in personal injury cases because of the prevalence of “no-win-no-fee” agreements, but the majority of motor cases go through prescribed cost and fast track regimes in which legal fees are regulated.8“
- A 2009 survey of 81 in house counsel stated, “46% of respondents saying that law firm partners charge them more than £350 (€450) per hour for routine work and 77% saying they are charged the same for transactional instructions, it is perhaps not surprising that 70% describe transactional fees as being too high and 63% saying the same about the cost of routine legal work9.”
- Looking at law firms in the US, a 2008 report highlights an upward trend in the cost of securing legal services: “Over the last decade, corporate firms have increased their hourly rates by 6-8 percent annually, nearly double the rate of inflation. Such rate increases have been a driving force behind the increased profitability of many large and midsized law firms. In one sample, rate increases accounted for two thirds of revenue gains achieved between 2003 and 200410.”
The only price measures available over a reasonable time period time relate to hourly rates charged:
- The ONS recently developed an experimental prices index11. This is currently based on 161 legal practices.
- Guideline Hourly Rates (GHRs) determined by the Master of the Rolls for Civil Costs.
- Annual hourly rates survey of larger corporate solicitors firms, undertaken by Jim Diamond (JDS)12.
All three measures relate mainly to prices paid by business consumers, as opposed to individual consumers. All three measures point to small percentage increases in hourly rates comparing 2007/8 to 2010/11. The ONS index measures the cost of legal services
delivered by all types of legal service providers with more than 10 employees, to business consumers of legal services.
This index reports a 2.8% increase in prices between 2009/2010 and 1.5% for Q1 2010/11. The chart below plots the changes in the GHRs and the changes in the Annual Hourly rates survey for partners at Magic Circle and Major Law firms. GHRs have risen by 18% between 2006/7 and 2010/11. All prices rises are above or at inflation as measured by the CPI.
Prices for business legal services are rising.
Consumer preference for fixed fees
Some commentary highlights increasing resistance from clients to pay by the hour, with increasing number wanting fixed fees to provide certainty.13 Further research shows that consumers would much prefer fixed fees or no win no fee to other ways of paying for legal services, with only 2% of respondents preferring to pay by the hour compared to 47% of respondents preferring fixed fees and 38% no win no fee14.
Recent research looking at individual consumers, suggests that fixed fees are more commonly used in Conveyancing and Will writing, compared to Family cases. This research found that some form of fee was quoted for 88% of matters The main exception was accident or injury claims, which made up 9% of matters. In these claims, only 25% had fees quoted upfront while in 48% of cases no fees were quoted and in 28% of cases the person said that they were told that there would be no fee15.
|Convey-ancing||Will writing||Probate||Family||Accident or injury||Other matters||Total|
|No fee quoted||4%||9%||18%||5%||48%||14%||10%|
|Told would not have to pay||-||1%||-||-||28%||8%||3%|
The 2012 consumer survey found that consumers paid a range of different prices, shown below. Changes in prices over time are not know, but available measures suggest prices are rising, at least as fast as inflation.