Credit Management November 2018

OPINION
THE PRICE
IS RIGHT?
Solicitors are to publish pricing
online from December but will this
limit choice?
AUTHOR – James Perry
WORKING life as
a debt recovery Solicitor
is a rich tapestry of
clients whose business
threads are every imaginable
colour, debtors
every imaginable material and chances of
success (based on numerous other variables)
every imaginable shape and size. That variety,
which I get to enjoy every working day, is the
reason why I do what I do. How then, I ask myself,
as I read the Solicitors Regulation Authority
(SRA) guidance published on 2 October am
I going to maintain client choice (and act in
my client’s best interests) to accommodate all
sectors and all debt types when I am forced by
the SRA to publish my pricing online in
December?
My clients are not numbers to me. They
are each unique and I want to be able to treat
them as such so I can properly look after them
by pricing accordingly. Some of you might say
well of course he doesn’t want to publish his
figures, but believe me there is far more to this
than that. The big problem is the number of
products I sell, all of which are individual and
unique depending on my client. I fully support
transparency, but exactly how am I going to
price for the client who pulls up in a truck
with papers strewn in the back and gives no
explanation, while at the same time also pricing
for the client who sends me the info as data that
plugs straight into my case management system
and automatically generates that first letter?
How do I then price for everyone in between?
I’m normally quite good at this sort of
problem but today’s riddle is baffling. If I pick
a mean average to simplify things and make
my life easy then my really good clients, who
do everything they are told, are going to suffer
because the not so good ones will always
increase the average cost. Everyone naturally
quotes for that worse-case scenario because we
know the bad job will always drain the profit
out of the good jobs. Solicitors are of course
naturally risk-averse and intimately aware of
the potential risks. That kind of awareness
will also drive up a price where there could be
problems. It means I have to caveat everything
I price to get my point across but then that just
begins to look messy. This is evidenced by my
waste paper basket which is overflowing with
drafts at the moment!
DRAWING BOARD
I think a big rethink is seriously required that
takes full account of all the practical problems.
There needs to be an understanding that we are
trying to balance a great number of things here.
If a solution to a problem is not always going
to be linear then it should never be treated as
being linear. We need to step back and think
carefully about whether publishing low fees
just to win work will put teams out of business
(and/or ruin good service levels) or alternatively
whether publishing high fees will put people
off completely and mean people choose not
to access justice. These rules will certainly
damage net recoveries because instead of me
listening to a future client and bending to their
needs (as I do now), they will have no choice
but to accept what we think might work, and
we will have to stick to what we have published
on our websites. Unfortunately, the publishing
of prices locks you in to that price and I think
that makes the whole thing too rigid. The
customer’s needs will no longer be able to come
first because the regulations will get in the way
of the principle. This is what happens when we
start treating services as pure products; where
the dividing lines have to be set.
For example, how will a procurement
exercise work? It looks as though it will be
pretty short and sweet because if you want to
drive a price down for a service caught by the
regulation then you can only drive it down as far
as the price that is published by the lawyer on
their website. If you wanted to offer something
lower wouldn't the lawyer have to amend the
website first, and then wouldn't they start to get
a barrage of calls when they do from existing
clients paying higher prices? The chaos this
could create is obvious.
Sometimes we cost according to what
our enforcement charges will be but these
regulations do not include enforcement costs
– which is odd given that this is the easier
part of the puzzle to cost. This creates another
problem because some of our lower prices at
the front-end are based on the fees charged at
The Recognised Standard / www.cicm.com / November 2018 / PAGE 18