From my latest Solicitors Journal column “Family Business”, 10/05/2013.
The Co-op’s growth and hold on the legal services market is slowly increasing. So how can small firms survive, asks Marilyn Stowe
In recent months this column has chronicled the travails, opportunities and challenges faced by our profession in 2013 and beyond. In truth, the future faced by high street firms continues to give me cause for concern. Lack of confidence in the economy, an axe-happy government and ‘Tesco Law’ have come together in a perfect storm. But at least there is one glimmer of hope. I’ll bet I’m not the only one who was delighted by the recent collapse of the Co-operative’s bid to buy hundreds of Lloyds branches up and down the country.
It is fair to say that among UK consumers, the Co-op benefits from a good brand reputation. Its nationwide network of banks, supermarkets and convenience stores count their ‘ethical’ credentials as one of their biggest selling points. Its bankers are extremely selective about where funds are invested; the shops source food from British suppliers. In recent times, however, solicitors in England and Wales have started to regard this household name in a different light. When we used to think of the Co-op, we used to think of free range eggs and low-cost business banking; these days, with Co-op Legal Services in the picture, the long-term vision is more akin to The Day of the Triffids.
Machine rolls on
The Co-op aims to become the country’s biggest provider of legal services by 2022, with plans to hire 3,000 staff. It began its campaign in earnest last year with the launch of cut-price DIY divorce kits: call the Co-op’s new legal hotline, pay 99 and you will be posted a set of forms along with a step-by-step guide to managing your own divorce. Add-ons include 50 for a Co-op family lawyer to read through your documents, and 150 for an hour of legal advice over the telephone, or face-to-face in central London. The Co-op’s legal arm provides other bread-and-butter law services too: will writing, probate, conveyancing, personal injury and employment advice.
As many of us know from experience, family law is far from black and white. It is difficult to package divorce in the same way that you can a house purchase or a will. In many cases, skill and judgment are crucial to the outcome. But the prices are low, and the Co-op machine rolls on. It recently landed a government contract to provide the new Legal Aid Agency’s telephone advice service, and has announced plans to provide face-to-face family law advice at 78 locations across England and Wales.
In theory, the Co-op’s 750m deal to buy 632 Lloyds Banks branches was all about creating a “new high street bank”, but the details of the deal made me shudder. At present, the Co-op has 342 branches, and has revealed plans to offer legal advice through all of them. Had the Lloyds bid gone ahead, it would have almost tripled the Co-op’s high street banking presence in this country. The Co-op said that there were no plans to provide legal services through the additional branches. But in practice, for how long would this have been the case? And what would it have meant for traditional high street law firms?
Over and over again we have seen what happens to small, independently-owned food shops when a supermarket comes to town: the supermarkets pile ’em high and sell ’em cheap. Meanwhile the small shops are run by hardworking locals who may provide a better level of customer service, but many of them cannot compete on price and they close.
The Co-op pulled out of its bank deal at the end of April, citing the “worsened economic outlook”. My hunch is that many town centre firms have had a lucky escape. I continue to fear, however, that law firms may be the next in a long line of traditional high street fixtures to fade away. If they go, taking all their years of hard-earned experience, goodwill and local expertise, what then? Clients and lawyers alike will lose out.
This article was first published by Solicitors Journal, and is reproduced by kind permission