Could Law Firm Price Comparison Sites Push Smaller Firms Out of Business?

Law firm price comparison sites are important marketing avenues but they are raising questions about whether large firms will monopolise the practice and drive smaller law firms out of business.

Law Society vice president Lubna Shuja told the Law Society’s annual risk and compliance conference this week that

“In other markets, top comparison tools put commercial conditions on suppliers that can lead to higher costs. Larger firms could end up monopolising these sites, shutting smaller firms out of the market and leading to an increase in prices, less choice and adverse impacts on access to justice,” she said.

“The Law Society cautions against mandatory signposting through digital comparison tools. Regulators must ensure they operate fairly and that consumers, firms and practitioners alike have trust and confidence in them.’

Many smaller firms are operated by black and minority ethnic lawyers, with over one-third of sole practitioners are Asian, Black or minority ethnic backgrounds and they could be seriously damaged by such moves.

Shuja said that issues in creating “meaningful benchmarks” to measure the quality of law firms’ offerings could also damage the sector as a whole.

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Last year the SRA launched a pilot study on digital comparison tools, focusing on conveyancing and employment. Some 70 law firms and 10 sites, including TrustPilot, have taken part. This followed a 2020 Competition and Markets Authority review of its five-year-old market study of legal services, which found a mixed picture on consumer engagement.

Lubna-Shuja

‘At the Society we agree consumers should be able to access information on [the quality of customer service] and other objective regulatory data,’ said Shuja. ‘However, it is difficult to develop meaningful benchmarks across a diverse range of practice areas that provide a snapshot of what quality service should look like across the whole sector.’

The problem with fake reviews and ‘the warped picture’ that can occur could create additional problems. “For example, success rates in divorce or litigation are dependent on underlying factors which are often outside the control of the solicitor. With wills and trusts work, how do we clarify what success looks looks like? Similarly, complaints to [the ombudsman] tend to be more related to conveyancing and estate agents have an interest because they refer to solicitors and often use preferred panels. This could have a knock-on effect on lawyers not taking on certain areas of law or difficult cases. And that in turn could impact on access to justice.”

Shuja also stressed that new transparency measures ‘must not be onerous’ for smaller firms and sole practitioners. ‘Some 35% of sole practitioners and 22% of partners in smaller firms are from Black, Asian or minority ethnic backgrounds. And they already face a disproportionate number of regulatory referrals. They are also more likely to be serving challenging communities in higher areas of deprivation. So there is a real diversity angle here too.’

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