High-street law firms at boiling point

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July 11, 2011

 

In deep water

By Marilyn Stowe

The high street is about to reach breaking point, warns Marilyn Stowe

Do you remember the movie Jaws? There you are, swimming in a clear blue sea. The sun is beating down and all is well. You see an apparently harmless ripple in the water. You ignore it. Then, suddenly, from nowhere a tailfin appears – and before you know it the shark has struck. Something similar could be about to happen on the high street.

More than 80 per cent of consumers would rather instruct a solicitor to handle their divorce, according to a recent report by RTS Media (see solicitorsjournal.com/family), but, as comforting as such surveys are, now is not to the time to pat yourself on the back and rest assured that things are going to carry on as they always have. The consumer is always in the market for a cheap, fast deal. And why not? If an item can be piled high and sold cheap, it is going to outsell the more expensive service, no matter how many warnings are issued about how value is best represented by quality and experience.

For standalone, high street law firms the sharks are closing in. Retail giants that are planning to make legal services available from their stores have a head start: they can offer any service they choose, at a cheaper price. They don’t even need to make a profit on a divorce if, once the customer is through the door, he or she can be sold additional products.

 

Easy pickings

The Co-operative and others planning to offer one-stop ‘Tesco divorce’ services are not going to find it particularly tough to break into the legal market. They already know how to sell – and how to sell in volume. Look at what can happen when a supermarket rolls into town: small shopkeepers who are unable to compete with the low prices go out of business. The shopkeepers may have been nice people to know, but customers are fickle and will go where the bargains are. There is no reason why should it be any different for law firms.

If high street brands really are going to offer legal services, perhaps it can only ever be a loss leader to them. I gather that many intend to offer fixed-fee ‘products’, and I suspect they will have no wish to become tied up in complex, protracted disputes. My guess is that these brands will pursue the section of the market currently awash with online divorce firms that aim to make the divorce process and a financial consent order as procedurally easy as possible. How many injustices occur, simply because couples are seduced by the cheapness of such arrangements, I shudder to think.

Even so, offering a low-cost form of divorce for ‘straightforward’ cases will undoubtedly get couples across the threshold. In these circumstances, how will high street family lawyers be able to compete for the same section of the market? High street brands have large marketing budgets and will be able to offer their services for a fraction of the fee. High street lawyers cannot possibly follow suit. For those who were formerly dependent on legal aid, it will be a further blow that could put some out of business altogether.

 

Alarm bells

The legal market is in turmoil and is facing meltdown in the high street. Look at the conveyancing market: it stood up to the onslaught of one-stop estate agents relatively well, but has had the stuffing knocked out of it by the banks.

Savage cuts to the legal aid budget mean that family work is also affected. With legal aid slashed to a minimum – who could have imagined that ten years ago? – what will happen if and when straightforward divorce work is hived off by supermarket chains? Which firms, with overheads and salaries to pay, can afford to take on more complex cases with no prospect of any financial return? Firms just can’t do it. Neither, I suspect, can a retail giant, whose inroads into the divorce market would surely be tailored to quick, easy returns.

So what is left for a high street lawyer? If the government continues to restrict access to the courts, what kind of legal system will we be left with and what kind of lawyers will we need in the future? Private children cases would be in the past. Would high street family lawyers be restricted to care cases for those who wish to work with children, and financial settlements for those rich enough to ensure that their cases were fully investigated?

The future in store for thousands of high street lawyers is far from the bright picture painted by the RTS Media survey. I have taken off my rose-tinted spectacles and I am seeing those ripples in the water for the warning signs they are.

 

Marilyn Stowe is principal at Stowe Family Law