Tuesday, 27 July 2010

No Move, No Fee

Staying with Solicitors charges, I recently came across a potential Client rejecting a conveyancing quote simply because the firm in question did not offer a "no move, no fee" service. I must confess that at the time I thought the firm was right. Conveyancers are already doing more work for less, without having to underwrite the housing market, especially in the current downturn. Why should Solicitors take the hit (again)? However, having thought about it and done some research, now I am not too sure.

I think it is fair to say that most Clients these days expect their Estate Agent to offer "no sale, no fee", so why should Solicitors be any different? After all, Agents stand to lose their marketing spend, not to mention their time and resources. The difference, of course, is the potential return. To compensate them for taking such risks, Agents invariably charge a commission based on a percentage of the sale price. True, advertising can be expensive and both the volume and frequency of work may be less, but, nevertheless, I figure that the Agents' mark up is more than comparable with the Solicitors' fixed fee, especially for higher value properties, which no doubt make up for the cheaper ones. The flip side, of course, is that most law firms get paid regardless of the outcome. Furthermore, their disbursements are also paid by the Client. So, in summary, it seems to be all about a risk/reward analysis. Agents risk getting nothing and insure against this eventuality, whereas most Solicitors prefer a certain, lesser amount.

However, the tide seems to be turning. Plenty of volume Conveyancers are now offering "no completion, no fee", without seemingly impacting on price, although the small print of such schemes and, and in some instances, the associated insurance policy, may not be quite what they seem. More importantly, High Street firms are now getting in on the act, sometimes charging no more than usual and waiving their fees (but not disbursements) in full if the transaction falls through. Other schemes charge more, in a similar vein to the Agents, either in the form of an upfront additional payment, or higher overall charges. The point is that Solicitors realise the benefits to both parties. The Client secures piece of mind and the firm gets the potential business in an increasingly competitive marketplace flooded with IT savvy "legal tourists". Factor in the possibility of cross-selling other legal services and the business model seems to make sense if the apparent uptake is anything to go by. The exact terms will undoubtedly depend on the circumstances, but the scheme will, at least initially, be one of your unique selling points differentiating yourself from most, if not all, of your local competitors. Don't get left behind. Trailblaze and let the rest follow.

Monday, 26 July 2010

Solicitors Referrals

According to a recent global study, lawyer to lawyer referrals "...constitute a vitally important income stream for many law firms". However, for the vast majority of small to medium sized High Street practices, I suspect that this could not be further from the truth. In my experience, Solicitors are somewhat reluctant/wary to refer work to their fellow professionals, even though they have no expertise/capacity to do the work themselves! Perhaps it is an intrinsic fear that the other firm will "poach" their Client. Maybe they are worried that they will look "desperate" touting for business. Whatever the reasons, they certainly have no commercial basis. Who would not want to make money from unwanted enquiries, either via a referral fee or profit share or a reciprocal arrangement? Is the business case not overwhelming, especially as no third parties are involved and the Solicitors Code of Conduct actually helps for once?

So, if the concept is a "no brainer", how are you going to develop formal/informal referral relationships? One easy solution is to join Solicitors Referrals, the national referral network between Solicitors. Annual membership starts at just £100 plus VAT and the first 25 subscriptions to SearchLite are completely FREE. What are you waiting for?

Tuesday, 13 July 2010

Solicitors Charges: Act or Actor?

For all those familiar with the BBC2 programme, "Mary Queen of Shops", the phrase "point of difference" will strike a chord. How can small, independent retailers differentiate themselves from, and compete with, the supermarkets and other so called "big boys" when price is a non starter? Descriptions such as "local", "experience", "quality" and "service" are often the key and I firmly believe that these "benefits" can be equally applied to the legal profession, especially with the imminent arrival of what has been dubbed "Tesco law". Previous posts have touched on this and will be expanded on in the future. For the time being though, I want to concentrate on one specific aspect: should Solicitors charge based on who does the work or the end result?

Take conveyancing as an example. I am buying a house and approach a local law firm. Barring any unforeseen complications, the process should be relatively standard involving a Contract, Searches, Enquiries and probably a Mortgage. However, a Partner will be handling my case from start to finish and the fees reflect their qualifications and experience. Another local practice charges less, but most aspects of the transaction are dealt with by a "Conveyancing Executive" under the supervision of a Solicitor (not necessarily a Partner). Does it really matter to me who actually performs the work? I suspect that for the vast majority of Clients, the answer is no. In my experience, Clients regard the Solicitors firm as acting for them, rather than the individual fee earner. In fact, most Clients would probably be blissfully unaware of the fee earner's status. True, such information must be given at the outset, but how many Clients absorb it in practice? So, the upshot is that, to coin a phrase from the realm of negligence, it is the act being done, rather than the actor performing it, that is key. Consequently, in this particular area of law at least, price is crucial at a local level and firms should consider charging the market rate regardless, as well as delegating routine tasks to Paralegals. This may mean additional staffing costs, but this should be offset by the increased capacity and workload.

To be honest, I think the same is true in almost all other instances where the case invariably involves a set pattern and fees can, therefore, be fixed. I am thinking of uncontested divorces, basic Wills, obtaining a Grant of Probate, Compromise Agreements and the like. The ability/capability to do the job properly is a given. If you have different levels of fee earners all practising say family law, why should one charge more than the other, unless the particular facts of the case call for their specific intellect or expertise? On the other hand, different charging rates can be justified where the amount of work involved and/or complexity are unknown and time based charging is utilised.

In summary, will the individuals qualifications and experience add real value? If yes, qualifications, experience and hourly rates are still relevant, otherwise constant fixed fees across the board, coupled with standardisation and delegation, are the answer.

Monday, 12 July 2010

How Can Solicitors Compete?

In a previous post, I suggested that most High Street conveyancing Solicitors simply cannot compete on price and should not even attempt to do so. So, how else can such firms survive in the ever changing legal marketplace? Here are just a few ideas:

1. Identify both your existing and "wish list" Clients and, in each case, determine the type/s of service they (not you) actually want and what they are willing to pay (not how much you want to charge). Unless and until you have performed this exercise, you are simply fumbling around in the dark, unable to reach your target audience with any degree of precision. It is impossible to "be all things to all people". Armed with such information, why not offer different levels of service to different Client types?

2. Differentiate your practice. What is your unique selling proposition? Why should potential Clients choose your firm over its competitors, especially if you are more expensive? How can you justify higher charges? What additional benefits do you provide and why are they important? You could, for example, emphasise that you are:

2.1 Partner led;

2.2 Qualified;

2.3 Experienced;

2.4 Regulated; and/or

2.5 Local.

Furthermore, you offer:

2.6 A personal service; and

2.7 The protection afforded by both professional indemnity insurance and the Solicitors Compensation Fund.

You may also have embraced IT.

Perhaps, you visit Clients at home or in hospital.

3. Now you know your target audience and distinguishing features, promote your own brand, rather than someone else's. Take advantage of the new opportunities created by social media and social networking.

4. Consider offering a truly fixed price, irrespective of whether it is a sale or purchase, freehold or leasehold, with or without a mortgage etc. First, research the types and values of properties in your target area. Next calculate your average fee. Practice/case management systems should help in both respects. Finally, ensure that the average fee remains competitive for the most common type/s of transactions and that the estimated loss of income related to low value transactions will at least be met by the potential increased number of higher value matters.

5. Arrange the Energy Performance Certificate and then refund its cost (about £50) if you deal with the conveyancing. A group of local firms could join together for advertising and marketing purposes and still offer Clients freedom of choice between local, quality firms. Such a proposition could also alert unsuspecting potential Clients to the alternative being advanced by third parties.

6. Offer a free Will or a discount against other legal services, especially those not provided by your competitors. Provided you meet/manage Clients' expectations, this should, over the medium to long term, produce dividends, cultivating brand loyalty. Clients will, in time, regard you as their "family Solicitor" and recommend you to others.

7. Offer Clients a referral fee or other financial incentive for all new instructions introduced by them.

Of course, with the exceptions of 4. and 5., all of these ideas are of general application.