The announcement that all 200 members of Quality Solicitors are to abandon hourly rates in favour of fixed fees has the potential to be a game changer. I say potential, because something else needs to happen before an even more significant change occurs.
I have long been dubious about the merits of the QS model. I could see the benefits of pooled marketing budgets and the consequent raising of profile. I had no doubt that the brand would attract more work for the member firms. I questioned, however, what was the point of taking on new instructions if the way in which they were processed was the same as ever, because clients would not be impressed and would be unlikely to return.
In the many years I have been working with law firms in the introduction, application and improvement of technology, two universal truths invariably emerge. The first is that a steady influx of clients willing to pay hourly charges is a disincentive for lawyers to adopt new working practices, especially the committed use of technology and the delegation of tasks that do not warrant a highly qualified hourly rate.
The second truth is a corollary of the first: fixed fees change this outlook. It has long been the case with residential conveyancing, which has been remunerated largely through fixed fees for decades now. On the whole, firms undertaking this work arrange themselves and their IT in a way that gives them a fighting chance of making a profit. Yet under the same roof, their colleagues enjoying the luxury of hourly rates eschew these practices.
The lessons learned here are what cause me to refer to the QS initiative in terms of potential rather than certainty. They say that even litigation will be charged at fixed fees and this highlights the absolute necessity of analysing all processes and identifying where technology and delegation can be introduced to make the work profitable. It is no use adopting the strategy that some high profile new entrants have of trumpeting fixed fees, which are in reality a calculation of what the hourly rate model would have produced and then some more. That might wash in certain commercial sectors, but not in the consumer market.
Slater & Gordon have demonstrated how hard the battle for the hearts and minds of consumers will be fought. If QS firms are to win a good share of the market, they have to adopt Part 2 of the strategy. This will include self-service online, streamlined internal processes and charging only for those parts of the work that is of real value to clients.
I await with great interest the unfolding of that strategy.