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Legal services are an important revenue stream

When Lord Falconer’s plan to deregulate the legal services profession was first announced in March 2005, it was immediately dubbed the ‘Tesco law’.

Why? Because his plan paved the way for commercial businesses such as supermarkets to own and run legal firms.

His proposals, which come into effect when the Legal Services Act is fully implemented in 2012, have been largely welcomed by the legal profession and consumer groups because greater competition will drive down prices, raise standards and make legal services more accessible to the public.

The legal services sector has been ripe for reform for many years. Although the British legal system is the envy of the world, it is only the wealthy or the poor – who have access to legal aid – who can indulge their time with lawyers. For everyone else, contact with lawyers is kept to a necessary minimum.

But consumers do need to deal with lawyers every now and again to sort out wills, personal injury claims and arrange conveyancing on their homes. And it is exactly these services the supermarkets will target in due course.

In a few years we’ll be able to buy legal services off the shelf in a supermarket in the same way we buy a tin of beans or loaf of bread. We’re not there yet but there are moves afoot. Moneysupermarket. com has recently announced it is to start selling legal sales leads to law firms.

It’s a logical development for a company that deals daily with thousands of customers who are buying financial products and need conveyancing support.

These customers may also need wills or to make personal injury claims, and adding legal services to a price comparison website makes sense.

The market for these services is estimated to be worth £10bn and others are following suit, such as the Yorkshire which has launched a comparison website on conveyancing solicitors.

So what do these developments mean for mortgage brokers?

First, consumers are going to become far more aware that they can shop around for legal services and do not have to accept the first law firm offered to them. As a result, brokers need to be able to offer their clients choice.

Second, consumers will also realise that legal prices can be compared and that they can choose a low-cost option.

And because of this brokers need to be able to offer clients competitively priced legal deals. But the danger with comparison sites is they can create the impression that the quality of services and suppliers is all the same, which is not true.

Legal firms vary dramatically, from those that can offer fast, efficient, high quality services to those that still believe it is acceptable to process cases at a ponderous pace. This may suit them, but not their clients.

So brokers need to first and foremost understand which firms they and their clients can rely on.

Legal services are going to represent an increasingly important revenue stream for brokers over the coming years. So now is the time to make sure you can offer your clients not just a cheap legal deal, but also one which you know will not cause them or you any problems.


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