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Testing the Waters

Reserving probate and estate administration services will cause ripples in the marketplace, but ABSs will make more waves.

There have been many interesting developments in the legal services market over the past year, with Will writing, probate and estate administration being at the forefront of such discussions.  Following further research published earlier this year, Jennifer Wilcox, Marketing Executive at Kings Court Trust, investigates calls to make probate and estate administration services reserved legal activities.

The Legal Services Board (LSB), which last year called for Will writing to be reserved, has carried out additional research to examine whether the scope of reserved legal activities should be amended yet further to include probate and estate administration work.

Reserved legal activities can only be carried out by authorised persons under the Legal Services Act 2007.  The task of extracting a grant of probate or letters of administration is already a reserved activity, but the LSB has recommended that the whole of the administration of an estate should also be a reserved activity.

Survey results (YouGov report and IFF research report) showed support for regulation of probate and estate administration and the momentum seems to be firmly in favour of making this work reserved.

Customer care

The principal reasons for this are to ensure better all-round customer service and to offer greater levels of consumer protection.  I have no doubts that we are on the same page there.  Keeping customers happy must surely be a key concern for all service-orientated businesses and is not confined only to the legal services industry.

Regular communication and a high level of customer care are hugely important throughout the probate and estate administration process, particularly as the LSB report cited recommendation and trust, above price, as being the most important considerations when looking to appoint a professional.

However, from the survey results it is clear to see that this is not always happening.  Fourteen per cent of consumers surveyed expressed themselves as dissatisfied with the service they received during the administration period, particularly around the areas of communication, clarity on costs and timeliness.

Delays in the administration process proved to be a common complaint among consumers, so providers need to be both quick to administer the estate and honest about how long it will take.  We need to be more open with our customers, educate them, and manage their expectations from the outset, so that everyone is clear on what will happen and when.

Price and the way costs are managed were also identified as areas for concern.  It is assumed by many people making a personal probate application that costs for professional probate services are very high;  over one quarter of DIY respondents cited high professional costs as a reason for doing it themselves, but the majority giving this reason didn’t get a quote from a provider.

There is a perception of high costs, but this is not the case in many respects.  Many providers offer different levels of service to tailor around the needs of each individual customer and will offer a fixed price for estate administration.

Surprisingly, the survey states that only a third of consumers were offered a fixed cost.  Generally, clients paying for professional probate services at an hourly rate or on a percentage basis will end up paying significantly more than those who have been quoted a fixed fee.

The next statistic is even more shocking.  In 12 per cent of cases, there was no mention of costs at all – the consumer was not even provided with a rough estimate beforehand, which means the final bill would likely have come as a bit of a shock.

Breakdown cover

I would be highly dissatisfied with this approach.  You wouldn’t buy any other product or service without knowing roughly how much it will be, so why should probate and estate administration be any different?

I am a strong advocate for the fixed-price model as the fairest and most transparent pricing method.  Clients should be given a written breakdown of the fixed fee after the initial face-to-face meeting, reassuring them that there are no hidden costs and no ticking meter for every letter or phone call.  This is what I would expect, and believe that all consumers should expect, from any professional legal services provider.

Overall then, it appears that solicitors and non-solicitors alike must step up.  Increased regulation is one way to combat some of these concerns and monitor improvement on an ongoing basis.

The LSB report highlighted a lack of understanding among consumers regarding regulation so there is also a need for public education.  Eighty-four per cent of consumers surveyed believed they purchased services from a regulated provider.  It was generally assumed – only a small minority knew for sure.

However, interviews found that most consumers consider regulation to be very important, with some even choosing to pay for a more expensive service over that of a non-regulated provider.  It might simply be the case that providers are ahead of their clients, who need more time to get used to the idea of alternative methods of delivery, rather than the traditional solicitor. It may also indicate that those firms that are unregulated will lose out in the long term.

Increased regulation would ensure that we are all working to the same high standards and will offer much greater protection for the consumer, particularly if something does go wrong.  As a consumer, I would definitely want this assurance and most respondents agreed.

However, I wouldn’t want my costs to go up drastically to compensate for this by way of the company passing on to me, their customer, some of the costs associated with regulation, which is what some providers may decide to do.

I predict that the progressive service providers will be able to mitigate this by increasing business efficiencies to manage cost while still delivering service improvement.  Nonetheless, this will be an important consideration for the LSB in its decision-making process.

Silver service

Despite the potentially large financial implications for businesses, I think regulation is the only way forward.  Of course, if the LSB does decide to reserve, that doesn’t mean a monopoly for solicitors – far from it.  Currently, solicitors do hold the majority share in the probate and estate administration market, but this is fast changing due to the rise in alternative business structures (ABSs) offering probate and estate administration.

From a provider point of view, increased regulation will mean the opportunity for more non-solicitor firms to become regulated and to compete on the same level as solicitors, with the ultimate aim of delivering more choice and higher service standards to the end customer.  This would impact positively on consumer confidence and would, in turn, have a knock-on effect in terms of provider reputation.  In this respect, increased competition within the market and regulation of the sector can only be a good thing for all concerned.

Kings Court Trust welcomes the new regulatory environment and the proposed regulation of Will writing and estate administration.  Accordingly, we have applied to become regulated to conduct probate business under the new regime and our application has been approved by the Council for Licensed Conveyancers (CLC) and commences on 1 August 2012.

At the time of writing, we have already seen seven companies granted an ABS licence, of which the latest was a Will writer, so it is clear that the legal services market as a whole is embarking on a period of change and responding to what families both want and expect.

It is difficult to tell exactly how far away the market is from meeting the objectives of the Legal Services Act.  I do agree there remains room for improvement in terms of client service and I think all professional probate providers can learn something from the findings of the LSB reports.

The decision to make probate and estate administration reserved activities may be a difficult judgment call for the Legal Services Board, not least in achieving the right balance between the desirability of extra consumer protection and the adverse impact of possibly higher cost owing to regulatory compliance.

However, one thing’s for sure, we have yet to see the full extent of the challenge some ABSs could pose in the market and the results of the survey could look very different in a few years’ time.

This article was first published in Private Client Advisor - www.privateclientadvisor.co.uk.