The price comparison website market has become highly competitive in the last few months and it is inevitable that the range of products and services on offer will soon extend into the legal market. The likes of Moneysupermarket and TESCOcompare are already planning to compare routine work like wills and conveyancing and it is only a matter of time before price comparison will be possible for other legal services. Commentators predict that major intermediaries are set to dominate this new market. Are they right or can lawyers themselves establish first mover advantage in this £10bn market?
Unlike insurance, utilities or car hire services, price comparison websites have not so far been able to devise a way of standardising lawyers’ fees. This may be because lawyers traditionally charge by the hour. Without uniform categorisation of levels of seniority and control over how work is allocated, comparison of hourly rates is a largely meaningless exercise. Another barrier to entry into the market is the ongoing “service” nature of legal advice. A client choosing a low hourly rate has no guarantee about the lawyer’s expertise or the quality of his or her work.
But perhaps lawyers can judge how to compare legal costs better than non-lawyers? They would know what other factors to include in the comparison, apart from simple costs. That is what my company, First Law, has been doing for several years, with increasing success.
Daily representation fee
How First Law compares legal services
Since 1999, First Law has been offering a law firm comparison service with a broader scope than simply price comparison. From the outset our objective was to help clients in three main areas – expertise, service and value. As lawyers ourselves, we realised that technical
competence and a good standard of service were as important as price. So we set about designing systems that could evaluate all these aspects together and produce rankings that reflected an appropriate mix of assessment criteria.
Until recently, we undertook a separate evaluation process for every new instruction we received. We had concluded that because of the diversity of legal disciplines and the different industry sectors, a “one size fits all” approach would not work. However, over the last few years there has been an increasing trend for clients to act in consortia, bringing together more legal disciplines in a single exercise than has occurred before. This was the key development that we needed to bring greater standardisation to our comparison service, as it allowed us to populate our database with a critical mass of information.
In 2007, as part of a large tender exercise we undertook for a group of local authorities, we required participating lawyers to provide fixed prices for a wide range of work. Each area of law was characterised by a different procedure or practice that had to be reflected in the way pricing information was obtained. It required a thorough understanding of the legal profession, and extensive consultation with clients who instruct lawyers regularly, to develop the framework of fixed fees.
From this we created a one-stop price comparison search tool for legal services, where fixed fees replace the usual hourly rates. We had to co-ordinate the supply of information from lawyers very carefully so that it arrived in full for different levels of seniority of fee-earner, from newly qualified to senior partner, in the right electronic format and covering all areas of law. Then, inputting data electronically, checking its accuracy and testing all aspects of the search functionality took hundreds of working hours.
Database of services and costs
The database is fully searchable, comprising over 200,000 items of data, involving 63 independent barristers’ chambers and over 1,000 individual lawyers. Users can now undertake like-for-like fee comparisons at a glance. Early trials of the database suggest its spreadsheet format can be used easily on most computer systems and that it can be adapted for online use.
The database also addresses a shortcoming found on other price comparison websites – the lawyers have been evaluated in a prior tender exercise and they have signed up to a comprehensive service level agreement that remains in force for the next four years, so their competence and quality are assured.
An alternative would have been for us to design a bespoke online system to create the search functionality. However, we realised that it could take a very significant investment in programming time to develop the numerous features already created for existing software. We decided that it would not make sense to reinvent the wheel in this way. We quickly concluded that Excel would be the application of choice. Spreadsheets are widely available and well understood. By using existing technology we were able to make quick progress at very little cost.
We have recorded thousands of fixed prices for both advocacy and advisory work in 14 areas of law – administrative, child care, civil litigation, community care, corporate governance, criminal litigation, education, employment, housing, licensing, planning, procurement, property and trusts and charities. In each category the pricing options are appropriately tailored to the kind of work most commonly undertaken, reflecting different disciplines, courts and specialisms. There is also an in-built mechanism that allows for the easy re-calculation of prices in accordance with annual reviews.
First Law has been at the cutting edge of profession-led innovation in the legal sector since its inception in 1999. We were the first to act as an independent adviser on tender exercises for legal services and we are again first in creating a sophisticated price comparison tool. Companies outside legal have some catching up to do.
Anthony Armitage is a practising solicitor and a director at legal consultants First Law.
Email aa@firstlaw.co.uk.
