25 July 2012Print This Post

Unfair contract proposals to force law firm transparency over costs

Hertzell: should be clear to consumers what they are committing themselves to

Law firms and others providing legal services to the public are to face new pressures over fee transparency as a result of proposals from the Law Commission aimed at protecting consumers from unfair terms hidden in small print.

A consultation issued today on unfair consumer contracts should apply to lawyers’ retainers and contracts from the likes of claims management companies, the Law Commission confirmed to Litigation Futures.

The commission said that fierce competition, fuelled by developments such as price-comparison websites, “can drive some traders to claim their products or services are cheaper than other suppliers’ while hiding the true cost of a contract in the small print.

“What at first appears to be a good price can quickly become an expensive burden when additional charges and hidden conditions start to mount up. Consumers can be surprised by unexpected charges or find themselves tied into lengthy contracts that no longer serve their purpose. And traders who are open and honest about their pricing can lose out to the competition.”

Under the Unfair Terms in Consumer Contracts Regulations 1999 all terms in consumer contracts may be challenged for fairness unless they are specifically exempt. The commission is proposing that terms relating to the price or to the main subject matter of the contract (the goods or services being purchased), should be exempt from challenge only if they are transparent and prominent in the original contract.

David Hertzell, the Law Commissioner leading on the project for England and Wales, said: “We know that the majority of consumers do not read contracts thoroughly before they sign them. They tend to focus on what appears to be the cost, expecting traders to make their money from the ticket price and not from charges that emerge later in the small print.

“We believe that it should be made clear to consumers what they are committing themselves to before they sign a contract.”

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