In the old days, if a business had an employment law question or a health and safety compliance issue, it consulted a firm of solicitors. Most firms of solicitors could be relied on to give sound advice – but not necessarily quickly – and to charge a handsome fee for time spent working on resolving the problem.
If an employment problem resulted in a tribunal claim then the same firm would gladly defend it – and again charge a handsome fee for doing so. If the business lost the employment tribunal claim, then the business was left to pick up the tab.
But then fixed fee outsourced legal services providers arrived. These specialist firms weren’t just legal advisors, they offered a range of services to help HR departments run smoother and help companies avoid claims of all kinds.
The new breed of fixed fee firms offered fast, accurate employment law and health and safety advice, plus insure the risks of claims, so that there would be no extra charges for defending employment tribunal claims or health and safety prosecutions. Any compensation awarded by an employment tribunal would be met by the insurers, not the defending employer.
For a few years everything was great and employers who tried fixed fee legal services outsourcing lived happily ever after. However, the story did not end there.
Some folk, who might be said to have an interest in supporting firms of solicitors, questioned the ability of the new specialist fixed fee firms. So much so, that the last Labour government decided to spend over £1m in research costs finding out if there was a market failure in fixed fee advice services for small and medium businesses (SMEs).
So the government research team put a big spotlight on the specialist fixed fee firms and work they were doing for SMEs, which had traditionally been carried out by firms of solicitors. Such a sceptical spotlight was likely to be revealing surely?
Overall, the Government reported a high level of satisfaction among businesses that used insured advice – basically, company managers and owners were happy with the quality of the advice they have received.
The findings were startling. Behind the scenes, there were several vested interests lobbying hard to prove that pure law firms must inherently be better quality than the fixed fee specialists. The research proved that solicitors are not necessarily offering better value advice and that SMEs like what they’re getting from the fixed fee specialists.
So there was no market failure. This government research demonstrates that professional fixed fee firms are the winners in this market. In the words of legal industry commentator David Johnston:
“They have shown a degree of innovation, client empathy, commercial risk management and perseverance that simply could not have been predicted. It certainly could not have been designed by Government as it stumped the brightest and best from the legal market place. The high water mark of the last administration’s pride revealed one of the legal service industry’s best run markets – probably just where the government (and many firms of solicitors) least expected it.”
