In Practice Pricing legal services for profit By Costs Working Group of the Law Society and the Financial Management Research Centre. The effect of undercutting has had in some cases an alarming impact on the profitability of firms. So much so that some legal firms are now unable to continue to compete for market share of what used to be 'staple' products such as conveyancing and litigation.
Competition is good in any industry.
However reduction in profitability clearly impacts on the level of service provided by the profession and the ability to invest in and develop new products. Traditionally, as price increases, the nature of the work reflects greater specialisation. Fluctuations in charging for specialised work affect fewer lawyers than fluctuations in charging for traditionally low cost work. However, work which is regarded by the client as not requiring the same degree of expertise or skill, such as a conveyance, becomes what is known as 'a grudge purchase' and the work is more price sensitive. In other words, clients will shop around for the best price.