I have spoken previously
about every modern generation thinking that they are in the centre of a period of
unprecedented change when in fact much of what we think is significant turns
out to be irrelevant. I have also said that change happens in two ways – gradually
and then suddenly. So, when we think about the SRA’s
requirement
for regulated firms to publish certain prices I ask myself if
this is important or not, evidence of ‘gradually’ building towards ‘sudden’
change?
Perhaps we are moving slowly from a market
where lawyers choose clients towards a future where information flows mean that
clients can compare and choose their legal provider more confidently. I don’t
know if that is right, but I am sure that a law firm that is transparent about
price, clear about their offer and its value, and is able to connect and resonate
with potential customers will have a great opportunity to thrive.
It is probably unfair to characterise the past
in this way, but it seems to me that historically clients have taken some
comfort in law firms all being the same. And the prescriptive regulatory regime
did not incentivise difference anyway. But choice is increasing and perhaps in
the future the challenge for legal business will be to stand out. How to do this?
I think that the answer varies across the broad
legal market, but, perhaps, within almost every sector, the one requirement is
to deliver great value. That is not the same as low prices. When we look at the SRA
obligations
on firms, we can say that (at least in the markets where these
obligations bite) that while publishing price is compulsory, the value
proposition is your choice. That is your differentiator in a crowded and
confusing market.
We know from the SRA that compliance
with these new requirements is weak, and that they will ramp up enforcement. I
would encourage firms to read the rules
of course, and the SRA’s guidance.
But at least as important is to read the enforcement
strategy. That is how you find out how seriously the SRA takes this sort of
thing. Wilful non-compliance, failure to co-operate with SRA, failure to put
the breach right, failure to respond to reminders or instruction to comply, and
ignoring a warning notice may all be likely to push the seriousness up the
scale significantly.
Given the publicity, gentle first steps by the
SRA, and clear warnings, there are not going to be many firms getting a gentle
reminder when the SRA next comes visiting. You might as well
comply. But the real question is how do you turn this from a conversation with
your potential customers about price to one about value? What is value anyway? -Well Google it and you might find advice from a wiki through to McKinsey. My view is that it is about the whole customer experience and how they value your service - what it means and achieves for them and how they value the problem or issue you are helping with. People do not experience problems in the same way so might value your solutions differently. They assume that you know the law - that is not quality, let alone value.
A good place to start is with a
thorough understanding of what the research
tells us
about how consumers make choices. Is it different for small business than for individual
clients? How do they respond to price information, or a lack of it? Where do they get recommendations from? How
might they choose their law firm? Are brands important? Some of this is done for
you – for example, the SRA Digital
Badge
allows you to distinguish yourself from unregulated business even if
they employ solicitors. But firms need to go much further and connect directly with
potential clients.
Similarly, it is good to think through why
most firms do not reveal their prices on their website now. Even if customers
do value this level of transparency there is little point in going first in a fragmented market where
consumers are used to a lack of price transparency - it is hard to be rewarded
with more consumers. That changes when all firms are required to publish prices. Some firms have told me that they like to be able to
offer discounts to those that cannot afford the usual price – especially in
family work. A sceptic (and I am not one) might suggest that this is the same
as overcharging those that can afford more than the lowest price. I am told
that experts call this price gouging.
More convincing is that the firm can spot the
complicating factors and give a more accurate price if they meet the client
first. But if that was a truly convincing argument, we might see firms consistently
offer a fixed price because they had factored in the complexity and risk. Or at
least they would be able to put those factors on the website to help potential
customers understand their case and the risks.
I’d like to think that at least some firms
will ask what is to be gained from meeting price transparency obligations well?
It might be an opportunity to sell on quality. Or to sell on customer service.
And it might be a new way to demonstrate that you listen as a firm – even to complaints. For some firms it might be that working with comparison sites brings. Anew stream of high quality customers at lower acquisition costs.
The SRA obligations are a minimum not a
maximum. Firms that really think about how the obligations impact their value
offer, the uniqueness of their offer, the relevance of their service and how it
resonates with the customers they most want, should be rewarded in the longer
term if they can communicate that effectively and widely. Those that offer meaningless information on a carefully hidden page will
be passed over by any clients that value the information. Why lose those customers? We might expect to see awareness of price transparency among consumers increase over the next year or two. So is it better to move early and have tested different approaches before it becomes a bet the farm decision?
There seem to me to be several questions for
firms to pose in order to make this a positive experience supporting the growth of their
business rather than a painful process that gets tougher and tougher.
-What are your prices
and what drives variation? Do you really know the cost of revenue for each
product line, or your cost of client acquisition?
-What is it that makes
you good value – the price, the service, the quality? And can you evidence
that?
-How are you going to
articulate the value offer? How does it fit with your brand and other products?
How do you communicate this through regular client engagement, advertising,
social media and your website?
- Can you make a one-off
gain by promoting your price based on being transparent?
- How does this fit with
your overall business strategy?
I am sure you
have more questions and answers than in this short blog. But if the CMA
does
not see progress it may impose tougher measures to drive consumer choice – just
look at banks, insurance and utilities to see what happens if the CMA and regulators think consumers cannot shop around.
