Cruising in

The decision by Saga and the AA to offer a wide portfolio of legal services to the general public is a momentous event on the route to ABS day in October next year. It was a small step for the insurance giants that could be a giant leap for the legal profession.

AA and Saga, both part of Acromas group, have teamed up with law firm Cogent Law and document-assembly provider Epoq to offer a near-complete set of online legal services ranging from will writing and divorce to complaints about faulty goods and powers of attorney.

What is on the face of it a major break into the solicitor profession’s stronghold is only seen as a natural extension of the services the AA is offering to members, according to AA spokesperson Ian Crowder. Meanwhile, for law firms, once the effect of the initial impact has subsided, it could be just the kind of shock therapy they needed to wake up from their apathy.

Most of the services on offer will be available free of charge to the 80 per cent of AA’s one million customers who have chosen to take the optional legal expenses insurance on top of their home insurance. They will also be offered to the general public who will be able to purchase one-off services at prices comparable to those already available from other online legal providers. The model is the same for Saga.

Some of the services come attached with a review function, where a Cogent lawyer will review the document produced on the basis of the Epoq software and verify its suitability for the client’s circumstances.

Lawyers readily recognise the potential threat to their share of the legal services cake but they also point out the new services are no different from existing off-the-shelf products and that online services simply cannot replace face to face. They are also circumspect about a business model that requires high-volume turnaround to cover incompressible costs.

“You can already buy a cheap will from the Post Office, and Which? has been offering similar services for a while,” says Jonathan Smithers, head of property at CooperBurnett.

John Baden-Daintree, chief executive and partner at QualitySolicitors Burroughs Day, in Bristol, also warns that, unlike most firms, the new entrants can afford to wait for their investment to mature over time because of their marketing power and funds.

But this does not necessarily toll the bell for high street lawyers. Smithers suggests that it could work at a certain level but not with complex issues, where clients would still need to see a solicitor.

Baden-Daintree also remains convinced that in many instances clients need the reassurance provided by solicitors as “trusted advisers”. “People – both as individuals and when running a business – still want the ability to see, and chat through their legal concerns with, a solicitor. Often they just want to be reassured of their legal position. But they also want to know if they should be pursuing a right or protecting an interest. They want more than an anonymous ‘free’ telephone helpline service – and they are prepared to pay.”

But Baden-Daintree, a co-founder of the QualitySolicitors franchise, finds relative comfort in the QS brand, which he reckons is the solution that will most appeal to the public.

He compares solicitors to doctors, saying that while patients can now easily Google their symptoms, it is reassuring to talk about them with the specialist. “Often an online service or ‘free’ helpline will not feel appropriate. Clients need to feel at ease about stepping into or contacting a QS firm. They need to know they can get the type of ‘trusted adviser’ session they seek – at a cost that seems to be appropriate for the value to them of the advice.”

Battle of the brands

Baden-Daintree says professional brands like QS will offer some protection against the large retailer brands, but he also suggests that law firms and the profession as a whole could do more to raise solicitors’ profiles.

“Traditional firms can do cheap wills but people aren’t aware of it, partly because they simply aren’t aware of the issue, partly because there is a perception that it is a cost they cannot afford, and partly because firms don’t market themselves properly,” he says.

The trick for law firms, according to Baden-Daintree, is to package their services in a way that is attractive to the public – in the same way that AA and Saga are doing. “We must get our act together; it’s not just about marketing budgets, it’s about the service we provide,” he says. This is where brands like QS come in: helping member firms come together under one umbrella to put the message across to clients. “People don’t know what they’re getting; we have to make them realise through QS that they get the same level of service – and the onus is on traditional firms to bridge that gap, and it means, among other things, that solicitors will have to offer more fixed-price services.”

As with so many woes in the sector, part of the problem can be traced back to referrals. The profession as a whole has failed singularly to manage the already trusted solicitor brand and has allowed it to be devalued, according to Andrew Lund, senior partner at Rees Page. “Solicitors tend to like doing the technical stuff and not be too concerned about where the work is coming from, which has allowed others to enter the market,” he says.

To wean itself off the dependency relationship in the property sector, Rees Page’s response was to set up an estate agency business to avoid being cut out of the referral network. This may not be an option suitable for all firms in Britain, but it underlines the need for firms to take a more active approach to counter the big brands’ gradual creep into the legal services sector.

Several high street banks such as Barclays already have active small business services bundle including legal services covering employment law and contracts, attracting thousands of clients away from solicitors’ firms.

“I don’t see many lawyers putting out bundles in the same way,” says Richard Cohen, solicitor and chief executive of Epoq, the company behind the technology supporting the AA/Saga deal with Cogent Law. “Small and medium-size firms are still offering mostly bespoke one-off services and are missing out on the opportunity, allowing potential clients to be taken away.”

AA, Saga, banks and insurance companies start from a different standpoint from law firms. They already have a range of non-legal services they are offering to a quasi-captive market. It is an insidious process that lawyers aren’t noticing, according to Cohen, which is a particularly strong reason why firms should not delay reviewing the way they deliver services.

Law firms have the advantage of the solicitor brand and they should leverage it, Cohen says: “When people think they have a legal problem they don’t say ‘let’s see what the bank says’, they will think about going to a solicitor.”

Cohen agrees that size can be an issue but he points out that some firms already offer packaged services for conveyancing, taking the rough with the smooth, where straightforward cases balance out the longer, more complex ones. He also suggests that the rise in mergers between smaller firms, allowing them to reach a minimum scale to think differently, is only the beginning.

“There is a two-year window where we’ll see more mergers; firms will have the chance to review their capital arrangements and partners will need to invest profits back into their firms rather than take them out as dividend, but there are real opportunities,” he says. And there are other factors to consider before law firms can be written off the legal services market. The cost of running legal services of the type offered by AA/Saga is such that very high volumes of business are required.

According to Jonathan Smithers, basic compliance and regulatory costs are around £50 per new client. On this basis, offering a will for £59.99 is hardly worth it.

Then there is the issue of professional indemnity: who carries that cost. If law firms continue to shoulder this burden, either they will have to have even more careful screening processes in place or be prepared to see their insurance costs rise.

Smithers remains a strong believer in quality over cost and he says the biggest mistake firms can make is to start competing with AA and Saga on price. His own firms, like many in more affluent parts of the country, has chosen to focus on higher earners who will remain more likely to prefer tailored advice.

The AA/Saga legal offering will undoubtedly eat into law firms’ market share but it could also help raise the solicitor brand as clients with serious legal problems will still for some time want face-to-face interaction with a lawyer. It might even prompt firms that haven’t already stepped outside their front door to check out what’s happening in the big world out there to do just that. Whether they want to join QS-type brands or remain independent local brands, this is the key to survival because there is no way they will be able to compete on price.