LeO Offer Updated Advice On Regulatory Compliance In Pre-Engagement Phase
Having investigated 1,560 conveyancing related complaints last year alone, the Legal Ombudsman (LeO) have been reiterating the advice they offer to law firms in a bid to reduce this number in the future.
Of the total, only 600 complaints pertained to a costs issues. However, during 2018, over 300 of these costs complaints were upheld by LeO with the complainant being offered a level of redress.
In 2018/19, 13% of all complaints made to LeO concerned costs. In comparison, this figure reduced to just 9% of conveyancing related complaints.
In the majority, consumers were frustrated with the level of communication all legal service providers were able to offer their client with 36% of all complaints involving communication issues. However, this figure rises to 41% when it comes to those complaining about their conveyancing process.
Overall, a fifth of all legal complaints and conveyancing complaints involved delays to the legal work.
In many cases complaints concerning costs and communication were inextricably linked. The main causes generally involved unrealistic estimates around price or time scales, estimates exceeding without customer knowledge, a lack of clear cost information when it is a long transaction, unclear bills and a poor explanation of certain aspects of the work to the consumer.
The Residential Conveyancing Thematic Review, conducted by the Solicitors Regulatory Authority (SRA), has found that many conveyancing transactions are costing a lot more money than the initial quote that was made to the client. In 34% of cases, the initial quote did not include fees for additional work; work that the SRA believe should have been anticipated and incorporated into the original quote.
Additional fees were charged for electronic ID checks, administering gifted deposits, processing bank transfers amongst other work the SRA deemed to be standard procedural tasks. The concern for customers being forced to find additional funds at an already difficult time was levied by the firms involved. Where these fees are a guaranteed part of the conveyancing process, it has been argued they should be absorbed in the overall cost.
In regards to mark-ups being added to the overall costs a bank charged for a telegraphic transfer, it was found that 37% of firms did not openly and transparently reveal this surcharge and in some cases this resulted in fees that were ten times more than the original bank charge.
The Legal Ombudsman, through their revised ‘Guide for lawyers. An Ombudsman’s view of good costs service,’ have emphasised the importance of ensuring any pre-engagement with a client, usually through a company website, is up to date, relevant and accurate as LeO will refer to a law firm’s web presence to help inform their decisions.
LeO recommend making a ‘record of the information displayed on your website, and when and how it changes,’ as this would make it easier for a consumer to explain their discontent to a law firm and could avoid the matter progressing to LeO, or could support a law firm’s case.
LeO are clear that a website should be able to offer the consumer the expected costs for a ‘typical instruction,’ offering ‘typical’ examples of the various things that could affect the price.
Whilst LeO were keen for a breakdown of additional costs or disbursements to be advertised on the website, it advised law firms to really consider what costs should be taken out of the usual service cost.
A generic disbursement cost would be deemed unacceptable as it fails to fully inform the consumer of how their money is broken down. Similarly, costs such as photocopying could be consumed within the overall estimated cost and should not be included as an extra.
Any cost, such as land registry costs, incurred during all instructions, should be included in a clear list of disbursements likely to affect the price. Overall, these costs should be ‘clear’ and ‘unambiguous’ for the consumer.
Once instructed, LeO emphasised the importance of the client care letter as a way of providing transparent and understandable information regarding the instruction process including:
- what the quoted fee is;
- whether it is a fixed fee or an estimate;
- the disbursements likely to be incurred;
- why the customer has decided to engage the lawyer;
- the course of action the customer has chosen;
- what work will (and won’t) be carried out;
- the standards and timescales for the work;
- the likely costs based on the information provided; and
- where any of this differs from the information on the website or in other previously-shared materials, and if so – why this has happened;
- information of how a consumer will be billed if a sale falls through
Overall, customers who were unable to seek redress after making complaints to LeO were denied their case progressing further because the information they were provided was clear, unambiguous and understandable from pre-engagement all the way through to completion.
Providing mis-leading information on a firms’ website, the business’ most powerful marketing tool, will create a strained relationship with the consumer as the service is carried out. It is therefore imperative for regulators, LeO and the consumer to be provided with accurate information from the outset to ensure all regulatory responsibilities are upheld.
Does your law firm offer clear and accurate service and price information during the pre-engagement phase of a transaction?