1. Price transparency and cost complaints Jason Chapman Ombudsman
Welcome and introductions

2. New price transparency rules How to avoid cost complaints
How to respond to complaints
Resolving complaints
In this session, we will cover (above) 2

3. Price transparency rules
Price and service information must be displayed for certain areas of law
Price information must be clear and easy to understand
Service information must be clear – what is included?
Displayed on a website if available or in other formats if not
Just as an overview, although I am sure you are all familiar with the new rules:
From Dec 2018 the new transparency requirements say that price information must be displayed online (or in other formats if website is not available) as well as complaints information for certain areas of law, which are:
- Conveyancing (residential)
- Probate (uncontested)
- Motoring offences (summary offences)
- Immigration (excluding asylum)
- Employment tribunals (unfair/wrongful dismissal)
- Debt recovery (up to £100,000)
- Licensing applications (business premises)
Price information should be clear and easy to understand
Service information must also be displayed and easy to understand – explaining what is included in the service. 3

4. 3 Better Information and transparency rules are a positive step:
When complaints are so often about communication, having that level of transparency from the start will promote dialogue between consumers and service providers, and help consumers to have more confidence in those they look to for legal services.
17% of LeO complaints related to poor comms between 2017/18 and 15% related to poor costs info
And with consumers in all sectors getting more aware of what they should expect in a service it will help service providers to manage expectations from the start.
Costs:
We know that cost is an important factor in choosing a service provider. According to Legal Services Consumer Panel (LSCP) tracker survey results last year 72% of respondents said that price was the most important aspect when choosing a service provider.
But we also know that price is important throughout the instruction - not enough to tell people at the beginning. What happens if the situation changes? The LSCP tracker also showed that trust in the sector could be improved with only 45% of consumers saying they trust lawyers to tell the truth.  
- When investigating complaints we will take account price transparency information displayed, if it is relevant to the complaint.
If the actual cost of the work is going to be different to the advertised cost on the website, you need to ensure you tell your customers the reason for the difference.
Key areas of costs complaints.
- Unrealistic estimates
- Estimates being exceeded without customers knowledge
- Lack of clear cost information when it is a long instruction
- Poor explanation of things - such as CFA’s and Part 36 Offers
- Unclear about what the estimate or final bill covers – it is important that consumers have a rough idea of what they are paying for (whether that is professional fees / disbursements)
During 2018 over 600 Ombudsman decisions were made about cost issues and almost half were upheld. 3

5. How to avoid cost complaints
Pre engagement:
Providing information
Communication
Costs
Providing info:
Before a consumer formally instructs a lawyer it is important to provide clear info on costs
We will take into account website information (transparency) provided as part of our investigations – info should be clear and not misleading
Lots of things can affect the cost of work and it is not easy to list them all, but we would expect to see expected costs for a typical instruction and what other factors could affect this displayed clearly.
Tip – keep a list of changes to website info – if a customer makes a complaint in future about info displayed – it could support your case
A bill should never come as a surprise to a customer – run through charging structures and explain process
Case study: Mr B went onto firm N’s website to get an online estimate for his house purchase. The website advertised a price match offer if another firm provided a lower quote. Mr B found a quote from another firm for £995. He sent this to firm N expecting to benefit from their price match offer. Firm N completed his house purchase but sent him a bill for £1,500. When we looked into the case we felt that the information on firm N’s website had been misleading. The firm agreed to informally resolve the complaint and reduce the price to fulfil their price match offer.
Communication:
Initial consultation meeting – make any charges for this service clear before the appointment is made and the charges should be reasonable
We have seen cases where firms have not made it clear a consultation will be charged and so the consumer has assumed it was a free service. As some firms do offer the initial consultation as free, it not unreasonable for a customer to be unsure of what to expect.
Explain the legal process
Explain customers options
Costs:
Estimates - be realistic – manage expectations
VAT, disbursements and additional costs – make it clear
Case funding arrangements
Cost benefit analysis
Case study: Mr Q approached a solicitor to provide him with advice in an employment case. He paid £1,000 and the solicitor said he would tell him if the costs increased. The final invoice was for £5,000 but he only received £2,000 compensation from his employer. Mr Q had paid invoices on a monthly basis but there was no evidence the solicitor had given a clear idea of what his costs might come to, or what level of compensation he could expect. We felt the firm had not managed Mr Q’s expectations or given him enough information to decide whether his case was worth pursuing. 5

6. How to avoid cost complaints
Engagement and throughout:
Client care letter
Terms and conditions
Delivery of service
Manage expectations and communicate
Client care letter:
- Once a consumer has decided to engage a lawyer, both parties need to understand the terms of engagement – what will be provided and on what basis. Client care letter is key to our evidence. We would be looking at…
To make the letter explicit about services offered and costs, it should include information on:
- 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 of the case based on the information within the letter; and
- where any of this differs from the information on the website or in other previously-shared materials, why this has happened.
Cost info should include anything required under regulators rules if the work falls under transparency rules
T&Cs:
- In particular, we would want lawyers to be explicit about any conditions they are attaching to their service or any risk or liability for costs customers may incur in the future.
- In our work, we have seen many examples of terms and conditions which are difficult to understand. Information should be presented in a clear way, using simple language, proportionate to the complexity of the case.
 - If a customer may have difficulties understanding the technical detail, we want to see evidence that the lawyer has taken the time to explain the document. If there’s something in small print that should have been expressly covered, we are likely to consider this unreasonable.
Delivery of service:
Managing cost changes - updates before the estimate is exceeded
Price caps and affordability – evidence of discussions
Overall costs – we can judge if size of costs were reasonable
Commonly, when the complaint is that the bill was excessive, it is really a reflection that the customer wasn’t expecting the bill to be as high as it was. That’s about the cost information, rather than the costs themselves, and we will be looking at what the customer should reasonably have expected to pay, based on what information they had. We would also ask for an explanation if the estimate and overall costs were different, and question why they were allowed to increase without this being explained.
Manage expectations throughout instructions and communicate any changes!! We see plenty of cases where updates on costs were not given at key points during instruction.
An example of a reasonable update on costs:
Firm B acted for Mr C in a litigation matter. The firm agreed a fee of £500 + VAT (£600) to consider and prepare papers for Mr C’s court appearance, based on the evidence and responses Mr C had already obtained in his correspondence with the other side. The other side’s lawyers wrote to firm B and provided more, significant information. This information raised questions about the claim itself and would warrant consideration, investigation and response by the firm. Firm B rightly explained this to Mr C, explaining that this was not work covered by the original agreement. As such, the firm was entitled to ask Mr C to pay a further £600 for this additional work and we decided that the service was reasonable as a result. 6

7. How to avoid cost complaints
Ending instruction:
Better billing
Records of payments
One of the common reasons for complaint is the transparency of costs, which could be avoided by better billing.
- We look for evidence that the costs identified were actually incurred during the lifetime of the case.
- We would expect the lawyer to produce clear evidence to support the bill.
- The explanation that work was done unbilled and unrecorded over evenings and weekends does not always convince us that the billing was fair. It is the lawyer’s responsibility to account properly for items charged or set out in the bill.
- Finally, we would look to tie back the billing to the terms and conditions identified at the beginning of the service. If the bill contains additional costs which were not identified before the service began, it may be that we would consider that it was unreasonable to charge them at the end of the case.
Example: If a lawyer produces a bill which says ‘work done between the 24 July and 18 August’ and doesn’t provide any further detail, we would consider this vague. We would want to know what the nature of the work was and will ask the lawyer to produce his or her ledgers as evidence that it had been done.
Records of payments:
- Disputes about payments made (cash payments) onus on lawyer to provide evidence and clear records – confirmation of payments
We have some new cost guidance coming out soon – which will be available on our website!!! 7

8. Responding to complaints
1. Listen
Is a complaint being made?
What are the reasons for the complaint?
2. Inform
Acknowledge and explain the process
Reassure about any worries
3. Respond
What did you find out?
How will you put things right?
Send final response within 8 weeks
Signpost
4. Learn
Any lessons for staff or firm?
Basic principles of responding to complaints detailed on slide 8

9. What does a good response look like?
General points
Simple, clear, jargon free
Professional and courteous tone
Be timely
Appreciate feedback
What are the issues you have considered?
What are your conclusions?
Disagree - say so and set out your reasons
Agree acknowledge and explain why
Don’t be afraid to apologise – not an admission of liability (scheme rules 5.21)
Acknowledge stress or inconvenience caused
How do you intend to resolve the complaint?
Next steps:
Options if customer disagrees?
Final response? Include full details for the Legal Ombudsman. 9

10. Deciding on poor service and impact
Two stage test:
Was the service reasonable in the circumstances
2) Did the poor service have an impact on the
consumer or outcome of the work?
In assessing whether the service was reasonable, we will take into account the relevant code of conduct, such as the Solicitors Accounts Rules. We won’t determine whether there has been a breach of the rules, but it helps us to draw fair conclusions based on what is expected in a service.
Two stage test 10

11. Putting the consumer back in the position they would have been in
Putting things right?
Putting the consumer back in the position they would have been in
Apology
Can be useful at first tier
Rarely used by LeO
First tier remedies
Possibility to be more creative / personal approach ie flowers, vouchers
Financial loss
Direct and provable loss
(Loss of opportunity)
(Speculative loss)
LeO can award up to £50,000
Refund of fees
Has the work added value?
Can be affected by customers knowledge and understanding
No limit, not included in £50,000
Non-financial loss
Acknowledge worry, inconvenience, stress
Context and person specific
Affected by length of poor service, response of service provider to issues
Included within £50,000 limit. Usually no more than £1,000 BUT can be more
Putting work right
Is it suitable for the firm, or another person to re-do the work, or carry it out by a suitable deadline?
Note we have guidance on ‘our approach to putting things right’ available on our website 11

12. Feeding back to the profession
Visit our website for news, research, decisions and a
dedicated section for Lawyers –
Publications - Thematic reports, guidance and consultations
LeO news – sign up to receive it through our website
Social media – LinkedIn and –
Again some key guidance to be aware of available on our website:
Our approach to putting things right
Signposting consumers to the Legal ombudsman
Our approach to determining complaints – which details the key factors we take into account when investigating complaints)
Cost guidance – coming soon!!! 12

13. Thank you support@legalombudsman.org.uk