Are You Transparent?

Introduction

It is now over six months since the SRA introduced its Price Transparency Regulations, which came into force on 6 December 2018, and whilst many firms have implemented those rules to a greater or lesser extent, a substantial number are still failing to comply entirely.  Quite how many are non-compliant has been revealed recently by the SRA who last week published the results of their Transparency Rules Web Sweep showing that nearly one-fifth of firms have made no attempt to comply with the rules at all.

Given how visible lack of transparency compliance is – after all websites are easily accessed  by everyone – and given that the SRA provided everyone with a heads up that it would be carrying out random transparency sweeps in its Enforcement Strategy published in February of this year, perhaps it is all the more surprising that so many firms have chosen to do so little.

Not that transparency is alone in being the object of SRA scrutiny in recent months.  A review of the extent to which firms involved in trust and company service provider work were complying with anti-money laundering requirements was begun by the SRA in 2018. The results of the first tranche of reviews showed that almost half had an inadequate firm risk assessment and almost a quarter had inadequate processes to manage risks around Politically Exposed Persons.

Going forward, it can only be a matter of time before the SRA starts to look at other areas of compliance.  They have indicated in their Enforcement Strategy that it is their intention to conduct thematic reviews of other areas of risk.  How long before they start to look at whether firms are dealing adequately with the threat posed by cybercrime, identity fraud scams, diversity policies and steps to avoid tax evasion, investment fraud – even training and professional competence?

Transparency web sweep

The review of solicitor compliance with the Transparency Rules involved the SRA sampling the websites of 500 law firms to see to what extent they were publishing price and service information for those legal services referred to in the Transparency regulations, namely:

• Residential conveyancing
• Probate
• Motoring offences
• Immigration
• Employment tribunals (public and businesses)
• Licensing applications (businesses)
• Debt recovery (businesses)

And the extent to which they were carrying details of their complaints procedure and when and how complaints could be made to the Legal Ombudsman and SRA.

The results showed that not as many firms as they had expected were complying.

500 law firm websites were randomly selected for the review covering a variety of firm types, locations and sizes including firms who provided at least one of the services covered by the rules as well as 118 firms who did not publicise that they offered any of the services referred to above.  In the case of the latter, checking was limited to whether they provided the required complaints information.

The sweep revealed that over 10% of the websites selected (53) were either not working or still under construction. Of the remaining 447 sites

• 25% were fully compliant with every aspect of the Transparency Rules,
• 58% were partially compliant, and
• 17% were not complying with the rules at all.

The least compliant sector was those firms carrying out immigration work where 33% were not compliant at all and only 12% were fully compliant, whilst the most compliant sector was those firms undertaking licensing applications for business where only 10% were not compliant at all.

The most common areas of non-compliance were a failure to:

• publish the required complaints information,
• specify the amount of VAT applied to costs and disbursements,
• display information on key stages and/or timescales, and
• provide a description or costs of likely disbursements.

It was revealed that over half (52%) of the firms checked were not displaying any complaints information.  Amongst those firms carrying out conveyancing work, roughly half failed to provide information on key stages and timescales whilst amongst firms offering motoring offence work, around three quarters (75%) failed to provide a description or cost of likely disbursements.

Why the poor showing?

Given that websites are such a publicly accessible source of information, and given the ease with which the SRA can check on compliance, why then has the profession performed so badly in terms of transparency compliance?

There is likely to be a number of factors, including:

• Lack of time. Many firms, especially the smaller ones, struggle to cope with regulatory requirements that continue to become more onerous and time consuming.  Where it is a choice between client work and regulation then, for most firms, client work wins since it is that which pays the bills and dissatisfied clients are a further drain on resources and time.
• Lack of knowledge. Many firms have a website, but it is not something which they keep up to date or know how to amend.  Many will have lost contact with the original designer of the website and not know what to do to update or change it.
• Inability to interpret the rule. Despite being a transparency rule, the rule itself is not totally clear as to what is required – a fact backed up by the number of firms which clearly thought they had complied when in fact they had not. Many firms believe that only those firms carrying out the work in the seven relevant areas need to comply with the rules – which is not the case as complaints information and details about the LeO/SRA are required across the board.  Others have stated the view that they believe that having a form through which clients can receive a personalised quotation for costs is adequate.  It is not.
• Regulation fatigue. Linked to lack of time, many solicitors have reached the stage where they cannot summon up the enthusiasm for yet another regulatory requirement coming in the wake, as it did, of changes to anti-money laundering regulations, financial services rules, data protection requirements, anti-fraud provisions and changes to provisions surrounding aspects of litigation such as PPI and criminal advocacy.
• Lightning-strike syndrome. Many solicitors appear to operate in the clear belief that bad things only happen to other firms or those who are either larger, do a different type of work, are based somewhere else in the country, etc. It is the same problem that explains why so many firms still do not have effective cybersecurity policies and processes or which firmly believe the SRA will never check to see whether they are training staff adequately.
• It’s irrelevant. There is strong contingent of solicitors who still cling to the view that documenting processes and policies, providing adequate information to clients, planning ahead, keeping regulatory data up-to-date is all a waste of time. After all, provided the firm does the work, does it matter whether the client is ambushed on costs, doesn’t know what is happening, doesn’t know to whom to complain and isn’t aware of their rights in the event that things do not go to plan?

For many solicitors, however, it is probably not an intention not to comply so much as not having yet got around to complying.  Six months may seem like long time to the SRA for firm’s to get their act together.  For many it is not.  It may have taken many of them years to get used to the concept of needing a website – some still have not.  For others, it is the fact that they rely on non-technological methods of communicating with clients and see reliance upon the Internet as being very much a secondary means to speaking to the client and telling the information when asked to do so.

What is to be the SRA’s response to the transparency sweep?

So, what does the SRA plan to do next?  They have indicated that they will be writing to all firms whose websites were identified as not being fully complaint and explaining to them the steps that need to be taken to achieve compliance.

Those whose websites were not compliant will be checked again in two months’ time and if they are still not compliant then the SRA will consider what further regulatory action needs to be taken.  This could include enforcement action where required.

Those whose websites were partially compliant will have made clear to them the areas that require further attention and they will be targeted again in future web sweeps to check that the required changes have been made.

It is the SRA’s intention to carry regular six-monthly web sweeps, reviewing 600 law firm websites on each sweep. While this will continue to cover a representative cross-section there will also be a higher proportion of firms providing immigration services – at least until those firms providing these services cease to be the highest risk sector.  They also plan to conduct a thematic review into this area during 2020.

How to comply

The web sweep has indicated that the majority of firms are not fully compliant, so what should those firms be doing to achieve compliance.

For those who have yet to do anything, the answer is simple – make a start.  The SRA is likely to be far more understanding of the firm that has tried and not quite got there as opposed to not having tried at all.  If you really do not know where to start, Infolegal can provide guidance and assistance ranging from advice as to what to do through to carrying out the whole task for you.  For more information contact Duncan Finlyson (duncanfinlyson@infolegal.co.uk).  The SRA has published guidance as to what is expected of firms at https://sra.org.uk/solicitors/guidance/ethics-guidance/price-transparency.page.

For those that have made a start the SRA has provided six key tips:

1. Always include the charging basis for your prices including the typical cost of the service (the total cost, a range of costs, or an average cost) and the basis that you use to charge (such as an hourly rate or a scale cost). Publishing one without the other will not make you compliant.

2. Describe the credentials of people who carry out the legal work for each of the legal services covered including experience and qualifications.

   You need to ensure that this is easy to find on your website (for example a link from your published price to this information) and bear in mind you need to provide information about anyone involved in carrying out the legal work which might go beyond partners or solicitors. Individuals don’t need to be named in all cases – for example if you have a large team of paralegals, but their type of experience and qualifications do need to be given.

3. Don’t forget that any disbursements likely to be incurred must be listed along with the cost for each one. Where the disbursement cost is genuinely unknown, you must provide an average or likely range of costs. Providing a single example of a typical disbursement when you know there are likely to be others or saying that the cost of disbursements will be worked out when instructions are accepted is inadequate.
4. Make sure it is clear whether your costs and disbursements attract VAT and if so how much the VAT will be. As a minimum, you must say which costs attract VAT and the rate that VAT will be charged at (usually 20%) and if services to overseas clients are offered make the position on VAT clear. Simply stating that “fees exclude VAT where applicable” is not compliant.
5. Make sure any price information is both easy to read and in a prominent place on the website. Hiding the prices in an obscure link in the footer of the page or as part of an unconnected menu item will not be compliant.
6. Remember all firms must include the required information about their complaints procedure, and information about the Legal Ombudsman and SRA. It does not just apply to those caught by the other provisions.

Getting Help

If you are in any doubt as to what you need to include on your website, how it should be worded, or how it can be included then Infolegal can assist you.  We are happy to liaise with your web designers or take over managing your website on your behalf.  We can even create a sub-site covering costs so that all you need to do is to change the link on your site to point to it.

If you would like further assistance with this or an indication as to the likely cost, please contact Duncan Finlyson (duncanfinlyson@infolegal.co.uk).