September 7, 2013
Pricey solicitors are being snubbed in favour of online start-ups and trusted high street brands by people who want straightforward legal services – such as a quickie divorce or the writing of a will.
Lawyers working for the top firms charged clients £19billion over the past year, according to industry magazine Legal Business.
But household names such as the Co-op, which boast massive numbers of loyal customers, are now permitted to offer legal services thanks to a change in the law and the main beneficiary is the consumer.
It costs hundreds of pounds rather than thousands for a divorce and you can get £600 off the cost of drawing up a power of attorney – a document that allows a friend or relative to take control of someone’s financial affairs if they are suffering from an illness such as dementia.
The Co-op was quick to get involved. The 169-year-old mutual was granted a licence under what is known as ‘Alternative Business Structures’ last year. This is commonly called ‘Tesco Law’, although the supermarket giant does not currently offer legal services.
The effects of this reform are only just starting to be felt as people become aware of the greater legal choice on offer.
Helen Box, 41, of Lancing, West Sussex, was surprised to find that she could rely on the Co-op for more than her daily essentials when she spotted an advert for its legal services at one of its cashpoint machines.
After paying £180 for a jargon-ridden consultation with a local solicitor for advice on divorce, she gave the Co-op a try.
Helen, who works as a personal assistant and payroll manager for a firm of accountants and is a mother to Sam, 14, says: ‘I was bewildered when I walked away from the solicitors and all I had was an invoice and some leaflets that made no sense.
‘I checked out the Co-op’s website, which said it offered a fixed-fee service. This was important because I needed to be sure I wasn’t going to spend more than a certain limit.
‘I learned more about the divorce process after 45 minutes on the phone during a free consultation than I did after a paid-for hour face-to-face meeting with the firm of solicitors.’
She paid about £900 – including fixed court fees which can total more than £300 – and she was guided through the procedure from start to finish.
‘Everything was straightforward and done via email and over the phone,’ she says.
Other companies given the green light to launch legal services include telecoms giant BT, insurer Admiral and life and protection insurer Ageas. Insurance group Direct Line is also keen to get in on the act.
The Solicitors Regulation Authority has so far issued 182 licences and hundreds more are at application stage.
Many of the applications are from solicitors’ firms that want to take advantage of the new rules because it means they can change the management structure of their businesses.
In some cases these firms want to promote non-lawyer employees who have worked hard to build up the company.
Other company bosses are seeking to merge their business acumen with the professional skills of solicitors in order to bring affordable legal services to customers in a more modern way.
One firm hoping to tap into this market is Google-backed Rocket Lawyer, which originated in San Francisco and launched in the UK late last year.
It creates legal documents – such as for writing a will or an agreement for homeowners taking in a lodger.
This is complemented by free online guides and access to ‘on-call’ solicitors for those who need more help – setting the company apart from maverick websites offering basic templates in the do-it-yourself market at rock- bottom prices, which experts do not recommend.
Mark Edwards, vice president of Rocket Lawyer, says: ‘The Legal Services Act came into force last year with the aim of encouraging competition.
‘Retailers, banks and insurers could come into this sphere to provide more choice and make the market more competitive.
‘This has happened in other walks of life, so why not with law? People need easier access to the law.’
For £25 a month customers can access the legal documents they need – with many targeted at entrepreneurs starting a business.
They get one free 30-minute consultation with a solicitor per month and discounts on additional legal fees.
Some online companies offering legal help have caught the attention of regulators, who warn that customers relying on self-help and bog-standard template documents put themselves at risk.
A spokeswoman for The Law Society says: ‘The outcome may not be as good for the client if a solicitor is not there to ask the right questions.
‘Users may think they are getting the right product, but it may not achieve what they want and in some circumstances it could be invalid.’
As with any shopping done online, customers should check that the firm is reputable and regulated.
Visit The Law Society website for more details at lawsociety.org.uk or the Legal Ombudsman at legalombudsman.org.uk.
Online barristers can be cheaper than solicitors
Another change in the legal marketplace that is gathering momentum is ‘Direct Access’, which allows customers to bypass the services of a solicitor and use a barrister instead.
Customers have been able to do this since the law changed in 2004 but few do.
New online companies, such as myBarrister and Absolute Barrister, are now highlighting the service.
Henri Petignat, 54, a father-of-two and an IT analyst for a financial services company in London, has enlisted the help of a professional from myBarrister for his divorce.
He says: ‘What I really like is that I am in full control.
‘I know exactly what is going on, can ask questions via email and also stay in control of cost.’
Jonathan Maskew, director of myBarrister, says: ‘Direct Access barristers are able to do many of the things a solicitor does, but often more quickly and expertly thanks to their specialism in a specific field.
‘Clear pricing is also appealing with many barristers happy to agree fixed fees in advance so you can avoid unexpected costs.’
Using Direct Access can nearly halve the costs of a divorce, from more than £13,000 to £7,000 for a fully contested divorce, according to figures from Absolute Barrister, with administration fees for emails and phone calls stripped down from more than £200 an hour to zero.
However, there are demands on the customer, who will have to be prepared to do a lot of the paperwork themselves under the guidance of a barrister.
Henri adds: ‘It does require a bit of time and you have to be on the ball.’