NEW HORIZONS: HOW CONSUMER BEHAVIOUR IN LEGAL SERVICES IS CHANGING
The legal services commercial world continues to change rapidly with new uses of technology, the implementation of the Legal Services Act and the imperative of staying profitable in an increasingly competitive market. Businesses must remain flexible and adaptable to the realities of changing consumer behaviour. For Legal Practices, and especially for the smaller high street practitioners, these changes coupled with the fall out of the Credit Crunch in the last 3 years has seen some businesses brought to their knees.
The risks faced by the legal profession were increased this week when the Government announced measures proposing the most drastic cuts to legal aid in its 60-year history. They are seeking to reduce the number of civil law cases by 547,000 a year in what ministers describe as an attempt to save money and "discourage a culture of litigation".
If you then take into account the added threats of new Alternative Business Structures with their household branding and marketing muscle entering into the market, the resulting price pressure that increased competition brings, and the new ways that legal services are now being delivered to clients especially when financed and managed by lawyers, it is not surprising that the industry expects thousands of traditional solicitor practices to cease trading.
Surviving in the Jungle
To meet these challenges the astute and swift footed legal service provider must look at the basic rules of every business – how can I generate more business and what can I do to cut costs? The focus in this article is on the opportunities and threats to the specific sector of Trusts and Estates and on building revenue and leveraging new channels which are regularly springing up on web based platforms.
The traditional way for lawyers to manage their business is a more passive approach - use their own client banks, continually market to existing clients, and use press, public relations and word of month to ensure that their specialists skills are known and understood in the market. They can then sit back and wait for clients with disputes or legal problems to approach them. This still works for certain areas of the law where skill and expertise attracts a premium and the client wants the best possible chance of achieving their objectives at any price.
However for those areas of the law which are becoming more and more commoditised such as conveyancing, personal injury claims, and wills and probate, the reactive and defensive approach simply does not work any more. Clients are looking for empowerment and access to more information, they are very price conscious, and want a competitive fee structure and they have high expectations of the level of service they require.
Web based advice and price comparison sites
Over a number of years, businesses have experimented with different ways to use the internet to drive business into their offices. Variations of the models include:
• Free information sites giving links to other sites, technical data and extracts from journals and articles to support the client. Useful but not very customer friendly
• Web sites that will recommend specialist firms to handle your enquiry – the client gives a brief explanation of their issue and the site will refer a law firm. The recipient of the business pays a referral fee to the site and relies on the web site to have provided the most suitable recommendation
• Web sites trading under generic names appropriate to the specific service they are offering which are built and financed by professional firms of solicitors. Although entry costs can be expensive, this channel is low cost and provides a simple B to C interface which previously may not have been available.
• Web sites built to offer additional services such as the ability to look at the progress of your conveyance or to submit online enquiries or data. Kings Court the Probate Specialist have taken this strategy even further and now offer clients and partners 24 by 7 access into their Estate Administration Case Management system which gives realtime financial data on Estate Accounts, correspondence and time lines on the progress of the case.
• Price comparison sites which simply give the client the cheapest price for a type of service – not necessarily the best indicator of the quality of the service. Again a referral fee is paid by the instructed legal firm to the web site
• A new and welcome addition is a price comparison site that will actually match the appropriate service to the client. Probatesupermarket.com is a service comparison website for probate specialist services. Through a network including nationwide suppliers as well as local probate firms throughout Great Britain, the site brings a unique offering to the market including practical and logistical guidance to those who wish to do their own probate; a comprehensive fully-inclusive fixed price service, along with an aftercare service for the family of the deceased and other beneficiaries.
DIY Probate
Another noticeable trend in the market is the increase in the number of non –professional executors who want to save money on the probate fees and are willing to give “Estate Administration a go”.
As well as the circumstantial evidence in the market place and business forums, the statistics from the Probate Court point towards this trend. Each year since 2007, the number of grant applications made by solicitors has fallen while the number of personal applications has increased.
Part of this change may be attributed to the relaxation in the requirements of financial institutions but there is definitely a move towards saving money by making a personal application.
The DIY Probate can work for those cases where the tax compliance and reporting is straightforward, and the members of the family who are making the application (The Personal Representatives) have the time to do the work and attend at the Court. Where this approach can fall down is understanding the complexities of an intestacy, trying to administer higher value estates including trusts, and dealing with overseas assets, businesses or any other more complex assets.
There are a number of resources that the DIY Executor can use to assist them in their endeavours to obtain a grant.
• Official government helplines have become more consumer orientated and user friendly. Example of these are the HMRC Inheritance Tax and Probate helpline and the Probate Service where you can download the appropriate forms.
• Direct Gov, the official UK web site for government public services has over the years improved markedly and offers good information in a structured format on what you need to do to apply for a grant of representation
• Kings Court, Probate Specialists offer a helpline to the general public giving technical legal and tax support, together with practical advice on issues arising from bereavement
• Specialist sites offering more focussed help and assistance in completing probate and tax forms. There may be a small fee to pay for these services. For example the Probate Assist Service offered by Probatesupermarket.com is in tiers and for a small fee the consumer can choose the level they want. If an Estate turns out to be more complex, the consumer can go to the next tier.
There are of course risks for those wishing to make personal applications both the executors or family in an intestacy, and for the beneficiaries putting the estate in the hands of others who are not insured and do not have the professional knowledge or technical skills. There has also been evidence of the mal-administration of an estate dealt with by a well meaning member of the family and resulting in assets being distributed to the wrong beneficiaries or tax penalties being incurred. The fact that the Personal Representative knows the family well does not necessarily mean that they understand who is entitled to receive what!
The growth in helplines and well structured and informative websites will reduce these risks and will support the DIY Executor. The canny consumer will continue to demand more for their money and if they see an opportunity to save on professional fees and have the time and inclination they will undoubtedly adopt the DIY approach. The trick will of course be to recognise their limitations and know when to raise their hand for help.
Whatever route is taken, the number of options and services definitely gives more power and more choice to the consumer!
William Feeny is a Director at Kings Court Trust Corporation. You can reach him on 01225 787107 or at william.feeny@trustcorporation.com