ABSs not cheaper

Some interesting research conducted for the Legal Services Board by OMB Research has caught a few headlines.  It’s on an interesting topic, is the liberalisation of legal services stimulated by the Legal Services Act leading to a better deal for consumers? More specifically (because the quality side of the better deal is beyond the research’s remit) have prices come down? The answer is a tentative no.

The big baby of the LSA2007 is the creation of ABSs.  Whatever their potential benefits (I think there are some), they have not (yet) been associated with lower prices a key finding from this research was:

“There were no significant differences between the prices of Alternative Business Structures and other firms.”

Fixed pricing of legal services is associated with lower prices (this is not as much of a no brainer as one might expect: it is plausible that those pricing their fees on a fixed basis price in a larger margin to cope with variation in the cost of doing somewhat variable work and that – as a result – this might drive up costs).

Oh and legal services like beer (and perhaps baked beans) is more expensive in the South East. Serves Mr Farage right.

So unless one sees fixed pricing in wills, conveyancing and simple divorces as a product of the Legal Services Act then these results don’t suggest the Act has made services cheaper (and so more accessible).  For my part, it is possible that the Act was one catalyst for the increased use of fixed fees, as more directly is the decline in legal aid in family work post LASPO for instance, but I do not see in this research evidence that the Act has had a significant, still less a dramatic impact on price.

What the research suggests does impact on price is consumers shopping around and the 17% of firms who display their prices on their websites, because, as the research notes, “firms who do display prices on their websites are generally cheaper than those who do not.” ABSs (or more likely a strong consumer referral website) may yet lead a consumer revolution, but there is little sign of it yet on price – at least on this research.

 

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