Go Compare the Money SuperMeerkat (or why I don't buy Wigster)
Thursday, August 19, 2010 at 7:00PM If you read the Law Society Gazette you probably saw this week's article about Wigster:-
"the first legal services price comparison website to give consumers instant details of costs..."
Leaving aside the fact that the Gazette chose to flag this as some kind of exclusive scoop (breaking news:- startup legal services company says yes to half-page of free publicity!) is this really quite as exciting as the article suggests?
I do actually think that price comparison sites will gain traction in the legal services market. It is a proven business model and one which a lot of people would love to apply to a fresh market.
There are two problems though. One for the businesses themselves and one for consumers.
The problem for the businesses is summed up in the title to this post. The barriers to entry for comparison sites aren't that high and the legal market is fragmented. In the face of this it is difficult to see how one brand is ever going to dominate the market. Wigster may be the latest new arrival, but there will be plenty of law firms willing to sign up with the next entrant... and the one after that.
The result will be the "Compare the Money SuperMeerkat..." syndrome all over again - a market saturated with comparison sites and no real reason to choose one over the others leading to an arms race of SEO and TV advertising budgets to try and build market share. Just Google "car insurance price comparison" for an illustration.
Incidentally, Wigster may need to work on their SEO as a Google search for the term currently pulls up this rather worrying definition from the Urban Dictionary [N(really)SFW] as the second result...
For consumers the issue is different... and it is the same reason why I don't use price comparison sites for insurance any longer.
Services which include a customer service element (like insurance if you are unfortunate enough to claim on it) aren't really commodities. The customer experience can vary wildly and what seems like a worthwhile saving at the point of purchase can prove very painful in the long run.
Car insurance is a good example (and the one which put an end to my price comparison website days). I saved £40 or so using a price comparison site which gave me a good quote for a well-known (and widely advertised) online insurer. Unfortunately a few months later I was hit from behind by another driver... and then I had to start actually dealing with the insurance company.
It took three separate visits to their authorised repairer to get the work done to a standard which I would accept and I spent about 20 minutes on hold or waited 2 days for an email response every time I had to try to contact the insurers to resolve the problem. A worthwhile saving? I certainly didn't think so at the time.
I now use Direct Line who famously eschew comparison sites, cost slightly more but actually answer their phones.
For legal services the customer service element is even more critical (as anyone who hasn't been able to get hold of their conveyancer at a critical stage in a house purchase will testify). I understand that Wigster will also host reviews on this and if they can get this part right then I think it will actually be a much more powerful feature than price comparison -- and if they can get it right in a way which others can't replicate then it could be the key to success.
In reality though I think the services which really shake up the market will look much more innovative than price comparison sites.
I have spent some time today looking at MinuteBox - a service which allows professionals to give advice by video in short time slots which fit around their other commitments. There are obviously big regulatory and risk management issues for legal professionals, but according to the founder of the service Josh Liu (@uniquejosh on Twitter) they are looking at ways to address this.
I could well be wrong, but I suspect that the businesses which will really shake up the legal services market may bear more resemblance to MinuteBox than to price comparison sites.
What do you think? Are price comparison sites going to rock the legal world... or merely lead to a lot more annoying TV ads?
Reader Comments (7)
I think you're right about such sites gaining traction (certainly for low value:high volume type work) but I think they're inherently flawed. I threw a blog post up about bid4fees yesterday.
Maybe Wigster should have researched their name a bit more thoroughly first (and at least checked out Urban Dictionary). Reminds me of when the French company Imerys took over from ECC about 10 years ago. During the mass lay-offs they instigated, everyone was quick to highlight that it's an anagram for 'misery'. Which also reminds me that BT Openreach is anagram for 'no cheaper' ... it was a BT exec who pointed that one out to me! ;-)
This just shows that everyone's experience is different. I was a long-standing Direct Line customer until I eventually became aware that I was being rooked something rotten with renewals that were totally out of kilter with those being offered to new customers. They just thought I'd keep paying and never offered me any loyalty discount or any incentive to stay. I used a comparison site to see what I could potentially be paying for the right level of cover - and to find a brand that I was comfortable dealing with. I know that some consumers will always go for the bottom price whatever, but I think you have to accept that most perhaps have the wit to appreciate that you get what you pay for, and that a final decision should be a balance of both price and performance/reputation/brand. I've had subsequent dealings with the new insurer and have never regretted my decision to use a bit of consumer power to get myself a better deal (not just financially but in terms of cover scope too). I think law firms also need to accept that one of the greatest fears of a potential customer is that as soon as they set foot through the door, the money clock will start ticking. If sites like wigster bring a bit more transparency and clarity to legal fees, and help inform the consumer about the viability of professional legal advice, then isn't that a good thing?
I take a more positive view of Wigster, but, with nothing online yet, who knows? It's a fascinating prospect from the lawyers' point of view... if Wigster (and/or other similar services) take off, will they force down prices and increase availability of fixed fees? I've jotted down a few thoughts at my blog. Personally, I'd love to see Wigster succeed, and I look forward to seeing whether it takes off (only 30 solicitors signed up so far, so I understand).
Thanks for the comments on this.
I found Andrew's comment interesting that:-
"one of the greatest fears of a potential customer is that as soon as they set foot through the door, the money clock will start ticking. If sites like wigster bring a bit more transparency and clarity to legal fees, and help inform the consumer about the viability of professional legal advice, then isn't that a good thing?"
I think this is a valid point and certainly this is one of the issues which solicitors do need to address.
However, I suspect there is actually quite a small sub-set of legal work where firms are actually able to instantly quote fixed prices up front on the basis of some limited information provided by the client (which is what is required for a comparison site to operate in the way which Wigster intends to).
There may be other examples, but things like residential conveyancing, will writing, lasting powers of attorney and maybe some straightforward divorce matters spring to mind.
With more complex matters I don't think that an instant fixed fee quote is viable. It is a bit llike the difference between getting a fixed price from the garage for servicing my car and expecting the mechanic to give me an instant fixed price for fixing my engine without looking under the bonnet when I drive in with it making a funny noise. This isn't to say that I don't think law firms can/should offer fixed fees for these matters - just that they need a lot more information about the matter before they can provide the quote.
Even within the first subset though my concern is that it is easy to compare prices (assuming enough firms sign up and agree to participate) but much less easy to compare value.
When you engage a solicitor to buy your house (for example) you are actually buying quite a complex bundle of services. At the most basic level you need the transfer of the legal title to be dealt with properly and title to be investigated. However, you also want to be kept up to date, have your phone calls and emails answered propmptly etc.
An evaluation or feedback system which is based on client feedback may be reasonably reilable so far as the "customer service" elements are concerned (although it may be hard to compare this with the service offered by other firms unless you use a lot of solicitors) but it will be very hard for a client to comment on whether the legal aspects have been dealt with properly at the time they rate the transaction because any issues may well not become apparent for some time (e.g. until they come to sell the house years later).
This was the basis of my original comment that for Wigster (or any other comparison site) to be a real success it needs to really nail this feedback / quality side... which is actually much more difficult than the price comparison.
In the insurance market customers may rely more on brands to make an informed choice (as Andrew suggests), but how many law firms at this moment in time have a sufficiently strong brand to allow customers to do this?
I will certainly be interested to see what Wigster looks like when it goes live - and in particular the quality / value side of the service.
Hi Jon,
I do believe that it is possible to charge fixed fees for more complex work. As an IT Pro I am often asked to quote fixed fee for complex pieces of work where not all the requirements are known. As a profession we have developed techniques to better asses risk, tease out needs and problems early in the process and hedge across our portfolio of projects. I think the legal sector is behind in this regard, and I think this is part of what Susskind means about when he talks about a need for better legal project management. I am convinced the more challenging market will drive research and evaluation of new techniques that will benefit all of us in the end.
Mark.
Thanks Mark
I may have expressly myself poorly, but I agree with you that more complex legal work can be the subject of fixed fee arrangements (in fact I have blogged about this in the past).
What I am really talking about here is making it subject to an instant fixed fee quote based on the very limited information which can be collected via a price comparison site. In my view this particular arrangement is limited to fairly straightforward work.
For something like a shareholders agreement (for example) there is a huge variation in the complexity and how much bespoke drafting is required. I don't believe that at the moment a fully automated system can take the client's requirements via a web form and come up with an instant quote.
This is not to say that the work can't be done on a fixed fee - just that some more information needs to be collected up front (either in the traditional way or online) and then some lawyer input is needed to review this and maybe ask a few pertinent questions to clarify exactly what the client needs.
At this stage you have what is necessary to scope out the work, specify any assumptions and quote a fixed price.
I presume that for complex IT projects you follow a fairly similar process to get detailed information about the project and the client's requirements before you can produce a fixed fee proposal - and probably it wouldn't be possible to do this via some kind of comparison shopping site without you ever having the chance to speak to or interact with the client?
In theory a client could just email you all the necessary information straight off and ask for a quote, but I imagine that in IT as in law they are likely to need at least a bit of guidance as to the kind of issues they should be looking at and the information you need - as apart from the most sophisticated clients you will have a much better idea of this than they do.
The legal sector is behind in this anyway as you say (it is still not at all unusual to hear lawyers who do say that complex work just "cannot be done" on a fixed fee as if law were somehow unrelated to any other form of business), but I think this is a slightly different issue than the price comparison one.
Jon,
It seems we are in violent agreement then!
Yes, for complex IT projects we follow a structured process that will get us to a level of confidence where we can quote fixed fee. And yes, the client always needs some guidance to begin with, even the sophisticated ones.
In the IT world, the effective equivalent of the comparison site is the “AppStore”. I have watched as average prices of Apps have consistently fallen, and it’s become harder and harder to make a profit in that environment. There are some famed cases of course where early movers have made fortunes. In that regard, I think the Law Society Gazette article is accurate: There is a short term opportunity for some law firms who execute well, to build a brand and make a large profit very quickly from sites like Wigster. But, you also need a complementary strategy for long term success based on cross-selling and up-selling to the new clients you gain from that channel.
Mark.