Arthur Weir shares the secrets of success

Founder Member, Arthur Weir, shares the secrets of five decades of success

57 years after Holborn Law Society was founded (in 1962), I met with our original founder member, Arthur Weir, to discuss the Society’s successes over the decades. Now aged 86, Arthur is a past president of the Society, retired Deputy Chancery Master and charity trustee, who only put down his pen as Chair of the Law Reform Committee at the end of 2019. His reputation as one of the Society’s most outstanding members preceded him and it was clear from early in our conversation that the success of the Society and the legal profession depends on us all being a bit more like Arthur Weir.

It was fascinating to hear first-hand from Arthur about the metamorphosis of the Society; how Holborn Law Society and The City of Westminster Law Society were originally conceived together, although kept separate as there were too many members for one society. However, some large member firms relocated to the City of London and the administrative burden of running two societies increased, so the societies, whose aims had always been aligned, merged back together; and they have remained so ever since.

The Law Reform Committee

Some of the Society’s best work can be viewed through the eyes of the Law Reform Committee. Arthur recounted numerous instances of family cases involving child kidnapping by a parent and where the police refused to become involved; leaving him, his investigative skills and the court tipstaff (with their powers of arrest) to locate the missing child. Following its inception, he was asked by then president, Simon Mosley, to join the Law Reform Committee and he quickly had to draw on these experiences when the Committee dealt with a proposal for new legislation to assist with child abduction. In fact, such was their expertise that in 1972 the Lord Chancellor (Quintin Hogg, 2nd Viscount Hailsham) invited the Committee to meet to discuss the proposals.

The Law Reform Committee is indeed one of the most revered groups of its kind; renowned for providing detailed consultation responses on a variety of matters. A personal favourite of Arthur’s was the Capital and Income in Trusts report, where the Society’s arguments against a rule-based approach to the classification of corporate receipts by trustees received two pages of consideration in the final 2009 Law Commission response.

Flagship events and another encounter with Viscount Hailsham

The Society has always hosted several flagship annual events and a highlight was always the President’s Dinner. For Arthur, the best and one most full of laughter was the President’s Dinner in 1973, attended by the usual array of law lords, high court judges, the Master of the Rolls and the Lord Chancellor. At the dinner, the then president, Alfred Goldman, entertained the Lord Chancellor (Quintin Hogg, 2nd Viscount Hailsham) with an entry from the diary of the president’s father – recalling a chance meeting with Douglas Hogg, 1st Viscount Hailsham, where he had promised to send his son (the now Lord Chancellor), a new member to the bar at the time, a brief! The ongoing changes

Arthur observed countless changes in the Society and its members over the past five decades, a few of which he summarised as:

1. the increasing work demands on lawyers, leaving little if any time for matters of professional interest – this is why the work of the Society providing social and educational events in close proximity to members is vital; 2. a changing concept of professional loyalty; historically lawyers had a stronger loyalty to their firms and the profession than today where moving is more frequent and made easier. We are seeing a significant increase in colleagues working inhouse and the Society now provides a legal community for those counsel where that network might be absent in their place of work. Many members also report that they moved jobs or met new clients and intermediaries through the Society; and 3. the growing size of firms means that most are large enough to run lectures and events for their staff that were previously the preserve of local societies. As a result, the Society is constantly adapting to provide benefits outside of those provided by law firms – introductions to intermediaries; knowledge sharing discussions with counterparts at other firms; and marketing through awards and the magazine.

In a consumer-driven world Arthur noted that the temptation is to sell the Society as what it (and the legal profession) can do for its lawyers; however he believes that the Society has always been successful because its members pride themselves on considering what they can offer the profession (and society) and working on the Committees accordingly. The key is cooperation and that is why the Society is thriving, because it brings together people with a passion for creating a community and pooling the skills of the profession to make a difference.

As a past president, I asked Arthur for his advice to continue the success of the Society and he was resolute in his answer – to continue to reflect on how the profession looks and ensure that the Society relates to it. So it seemed fitting that as the current president, I interviewed him whilst holding my five month old baby daughter, discussing our celebrations to mark the centenary of the admission of female solicitors to the roll and the Society’s growing number of Committees and events to satisfy the interests of all members, including the new Equality, Diversity & Inclusion Committee launched this year. ■

A cautionary tale about reporting to the SRA

A few weeks ago I received a panicked phone call from a solicitor’s firm. “We need your help. We have a problem,” said the Head of Compliance.

“We think one of our senior solicitors has done something really daft,” she continued, suddenly becoming uncharacteristically sheepish.

“Oh? In what way?” I replied, in my best attempt to elicit information through open questioning.

“Well…you’ll never believe this…it’s completely out of character, mind you…I don’t know what came over him really…”

Intriguing.

“He’s sent a witnessed document to the other side, which he simply can’t have executed properly because we – and the other side – know that the client is overseas at the moment. So they are suggesting that it has been falsely witnessed.”

Dramatic pause.

“What do we do?”

All this happened before the introduction of the SRA Standards and Regulations on 25 November 2019. Had the same happened now, the outcome might have been very different.

On the face of it, and without knowing the full facts, sending out a misleading document that purported to be witnessed could be an act of dishonesty. Dishonesty, if picked up by the regulators, will be taken very seriously as a breach of the SRA Principles and is more likely than not to result in a strike-off at the SDT.

The firm has a duty to report serious breaches to the SRA. However, as we all know, context is all. Facts matter. And to form a sensible conclusion about a person’s behaviour and whether something serious enough to report has in fact happened, one needs to conduct at least some investigation.

22 CENTRAL LONDON LAWYER This is where the new reporting duties may cause some problems. For the first time, solicitors are required to “report promptly…any facts or matters that you reasonably believe are capable of amounting to a serious breach…” (Para 7.7 of the Code of Conduct for Solicitors).

The words “promptly” and “capable of” are important here. They suggest that we should be making reports to the regulator before we have concluded our investigations.

The rules go on to say that we must “inform the SRA promptly of any facts or matters that you reasonably believe should be brought to its attention in order that it may investigate…” (Para 7.8 of the Code of Conduct for Solicitors).

“Should” is subjective, but clearly any suggestion of potential dishonesty is going to be caught.

Which means that the guilty party in our scenario would have, almost certainly, been reported by his firm, and thereafter subjected to a lengthy (and potentially costly) SRA investigation.

As it turns out, a fairly swift investigation showed that there was a completely innocent explanation. There was perhaps an element of recklessness and human error, but no intention to deceive. The other side accepted the explanation, and no harm was done.

Under the new rules, withholding a prompt pre-investigation report to the SRA would be much harder to defend. ■

Jonathon Bray Director

Jonathon Bray supports COLPs, COFAs and ABSs in risk and compliance.

What does the Fifth Money Laundering Directive (5MLD) mean for solicitors?

In case you didn’t already know, 5MLD is due to come into effect on 10 January 2020. 5MLD will amend and strengthen the current Money Laundering Regulations (MLRs).

There is a danger that many firms will have overlooked 5MLD because their attention has been taken up by the implementation of the new SRA Standards and Regulations.

All firms – and individual solicitors, thanks to the new SRA rules – have a professional duty to comply with the AML regime if it applies to them. Most SRA-regulated law firms (around 7,000) are already caught by the current MLRs. Having been disappointed by the profession’s apparent relaxed approach to AML, the SRA has set up an internal task force to target compliance with the MLRs.

Statutory compliance with 5LD is not to be confused with the new SRA requirement to identify your client (Rule 8.1 of the Code of Conduct for Solicitors). That is a separate rule that applies to all work, regardless of whether it falls into the scope of the MLRs. It is an absolute minimum that all solicitors now have to follow. (Yes, even litigators.)

5MLD is not as big a leap as the last overhaul in 2017. Here are the changes that will be most relevant to solicitors:

1. Expanding the requirement to conduct customer due diligence (CDD) on clients already known to you (e.g. when the client’s details change), and on companies and trusts (including proof of registration on mandatory beneficial ownership registers – the ‘PSC’ register at Companies House).

2. Additional due diligence requirements when dealing with high risk jurisdictions – including what is known as ‘super-enhanced due diligence’.

3. Reliable electronic verification systems are explicitly permitted to be used in CDD.

4. More certainty over PEPs – the government is required to give us information about the PEPworthy roles and positions.

5. Increasing transparency in beneficial ownership through expansion of the registration requirements for companies and trusts, and the availability for their inspection. This will include an obligation on solicitors to notify Companies House of any discrepancies between the official ‘PSC’ register and the information held by you.

But won’t Brexit mean that the EU’s AML regime becomes irrelevant?

Unlikely. We now know that 5MLD will be in force before the UK leaves the EU. Looking to the future, it is hard to envisage a scenario where the UK government does not at least keep in step with the EU’s rules on AML. In fact, the Sixth Money Laundering Directive (6MLD) is due to be implemented at the end of 2020. ■

Interest on Client Money. Another new rule?

In recent years we have seen the rules regarding interest on client money change several times. In the early 2000’s a firm was required to account to the client for any interest accrued over £20.00. Then in 2008 and after the recession hit, it appeared that the SRA understood that reaching a £20.00 mark for interest was unlikely and stated that the £20.00 rule was no longer in effect but the firm had to have a strict policy which accounted for client interest. We’re now in 2020 and the new SRA Accounts Rules are fully in place, with a much-reduced document overall.

The rule as it stands today is shown below:

Rule 7: Payment of interest

7. You account to clients or third parties for a fair sum of interest on any client money held by you on their behalf. 8. You may by a written agreement come to a different arrangement with the client or the third party for whom the money is held as to the payment of interest, but you must provide sufficient information to enable them to give informed consent.

This is a departure from the policy rule and a significant departure from the £20.00 rule from the early 2000’s. It is still up to the firm to decide what is a “fair” sum of interest but there is no longer a need for a strict, separate written policy surrounding client interest alone.

Whilst this seems a lot easier, it is always recommended that a firm have some documentation which covers Rule 7. This ensures clients have been treated fairly and understand fully the position with the firm. Having the firm’s default position in the standard terms and conditions is a good place to start, ensuring that from the outset the client understands whether the firm pays interest, and if so, how much. It is worth bearing in mind

that under this rule, the firm does not have to pay any interest, providing there is an explanation as to why. Reference to the current financial climate is a “fair” reason as to why it will not be paid on standard matters. If there is a specific matter involving significant sums of money, then bespoke terms and conditions should be drawn and sent to the client at the beginning of the case. This demonstrates transparency over interest on client money from the outset. This documentation gives the client the opportunity to contact the firm if they are unhappy with the interest arrangements, opening discussion before the case starts if necessary.

Like many of the new rules, on the face of it, it appears that everything is simpler. I would counter this interpretation by saying rather than “simpler” it’s more that the SRA is giving firms more responsibility to come up with their own approach and determination about what is “fair”. This does not necessarily mean that the firm should be any less vigilant. Good documentation and transparency with clients are essential from the outset. Utilising documents such as the standard T&C’s to accommodate interest policies is a great way to streamline rules like this one.

I always recommend reading further into the new rules rather than take them at “face-value”. Whilst the SRA have simplified the rules, it does not mean that the firm should be any less vigilant on the implementation of them. Erring on the side of caution is usually the safest course of action. Being able to demonstrate that the firm complies with the simplified rules via its own policies is essential. ■

Alex Simons New Business Manager, The Law Factory LLP

Lessons learnt by our PII Brokers & Client Managers in 2019

It’s no secret that the market has hardened, capacity is not what it used to be, and firms are finding it increasingly difficult to obtain competitive quotations. With this in mind, we thought we would share some of the key points that we learnt in 2019 in relation to the application process of your Professional Indemnity Insurance.

1. Complete your Proposal Form in good time. We suggest getting started 4 – 6 weeks in advance of your renewal date in order to give yourself the best chance at multiple options. As the year goes on capacity dwindles and Insurers are not as hungry to write new business. This can often result in increased premiums and lack of Insurer options. 2. Choose your Broker wisely. You do not want to be limited to only one or two Insurers so it is key that you ask who they have access to, who they intend to approach and whether the Insurers they seek to obtain a quotation from are ‘A’ rated. 3. Work closely with your Broker, being open and honest about your firm and the work you undertake. An experienced Broker will work closely with you throughout the process, will understand the risk and know how to present it with clarity to an Insurer. This will ultimately result in less questions and confusion, making it a straightforward application. Poorly presented, it could lead to delays, subjectivities and even a decline. If this happens it is never easy to get the Insurer to review your application again. 4. Do not approach too many Brokers, especially if they have access to the same markets. This will mean insurers are viewing your proposal form on numerous occasions from various sources, which may result in them not taking the risk seriously enough. if this happens, Insurers are not likely to prioritise your application. At Hera Indemnity we have the widest access to insurers therefore limiting the number of Brokers you would need to approach. 5. Provide as much information as you possibly can. Insurers will typically ask for the following as standard; • Accounts for the last completed financial year, which matches the stated turnover within your Proposal. We often see conflicting Proposal Forms and Audited Accounts, this is sometimes due to declaring profit instead of turnover in error! • Claim summaries no older than three months, covering the last six years • Any procedures or cyber insurance policies in place to mitigate cyber risk • For new firms, C.V.’s of key personnel, Cash Flow Forecast and a Business Plan 6. Highlight any material changes from previous years, give detailed explanations on any major claims and what remedial action has been undertaken to prevent a repeat of this claim. 7. Close-off any notifications on the claim summaries which are sometimes left open unnecessarily. 8. Check the policy wording to ensure you are aware of any exclusions and exactly what your policy will provide cover for. ■

John Kilmartin Head of Marketing, Hera Indemnity

How might financial advisers assist solicitors with the SRA’s Technology focus

There is no doubt that solicitors are more aware of the need to be referring clients to highly qualified financial planners. Legal advice often goes hand in hand with financial planning advice and customers are increasingly expecting more holistic advice and a joined-up approach to problem solving. The new SRA Standards and Regulation encourage solicitors to demonstrate why they believe a referral to a third party to be in that client’s best interests and as a very minimum, they should be recording that they have recommended that the client needs to seek complimentary financial advice.

In the past, such client referrals to financial planners have frequently been haphazard. They have perhaps taken the form of e-mail, letter, phone call or even the dreaded, proffering of a few business cards. These practices, whilst common place, in the old world are not ideal in the new regime which requires established firm-wide processes, as outlined in the Firm’s Code of Conduct.

Where there is a financial interest, or if the solicitor practice is referring to a ‘Separate’ business, (financially connected,) the SRA insist that the client’s consent be documented. However,

Your search for the right financial planning partner starts here.

given GDPR covering the transfer of client data and indeed where clients may be deemed vulnerable, best practice would be that the solicitor has recorded the client’s approval, even when the referral is being made to an unconnected third party.

A month before the new rules were implemented in November 2019, the SRA published its Corporate Strategy document and resulting consultation for 2020-23 and it was no surprise, given their increased onus on regulatory systems and structured process that ‘Technology’ has been confirmed a major theme. The regulator is keen their firms embrace and use technology to reinforce their processes and in turn improve client service and outcomes.

Now that we are firmly in the new year, the management of solicitor practices and the COLP, will have established their referral processes and selected appropriate partners having undertaken thorough due diligence. These will have been communicated to all partners, associates, fee earners or indeed anyone in the business who may need to refer clients outside the business.

Now that the SRA is looking to how the profession might embrace new technology, it is fortuitous that there are superb and extremely secure systems and portals that can not only assist solicitors to make compliant introductions to financial planning partners, or other selected third parties but also to allow private communication between the two professionals or firms. Such systems can be personalised for the relationship to incorporate referral templates, client consent letters and other pertinent documents.

There can therefore be a built-in audit trail for the solicitor firm to use, when they receive the signed client consent letters. Indeed, all client introductions, letters and client notes can be stored in one place. A place, which can be accessed online with a secure username and password. The fabulous news for solicitors is that financial planning firms they work with may have access to the technology, be paying for it and then able to offer access to the legal firms they work with at no charge.

Now therefore, seems an opportune time, having recently decided which third parties are in your firm’s approved referral processes, to consider how to record such referrals professionally and how to keep ongoing channels of communication open, two way and secure. This is not the place to recommend one system over another and you may even have a system you currently use that can be adapted to create your own audit trail. However, as I said previously, good quality financial planning partners might well have the technology already and be able to share that with the solicitors they work with. ■

David Seager Managing Director of SIFA Professional

Achieve your 2020 vision with dedicated legal accounts software

As 2020 is the start of a new decade, it’s an apt time to map out your professional objectives for the years ahead. Have you crystalised your 2020 vision? Is IT an essential component in your strategic plan? Your firm’s success may depend upon it. Embracing the power of technology reaps myriad benefits and IT is the best future proofing you can invest in.

If 2020 is the year in which your digital evolution takes place, don’t search high and low for multiple solutions. Your quest begins and ends with Quill. We’ll show why you should choose our dedicated legal accounts software (and more!) to achieve your 2020 goals…

Imagine software that verifies your clients’ identity in real time as part of the inception process. The 5th EU Anti-Money Laundering (AML) Directive brings more onerous responsibilities relating to money laundering. Online identification checking is preferable to paper-based verification. Online checking is reliable, secure and quick whereas manual checking is open to fraudulent activity and time intensive.

Interactive, our practice management software solution, already does this. With AML and credit screens as part of the client inception workflow, undertake due diligence to help ensure your clients’ identities are legitimate and they have appropriate funds without having to re-type pertinent details.

Imagine software that validates bank accounts and sort codes of payees for every transaction. Getting the right money to the right client, opposition, counsel or supplier is fraught with risk. Bearing in mind too that the revised SRA Accounts Rules still make protection of monies the major regulatory priority, keeping in and transferring finances to the right place is absolutely vital.

Interactive already does this. Tight integration from the e-chit created by your fee earner through to your online banking software means every account number and sort code are verified in real time using a banking industry modulus check. This financial data is encrypted within the database and made available to leading internet banking applications without the need to rekey data; all part-and-parcel of our MoneyChain feature.

Imagine software that notifies you money’s been received into your client account through on-screen alerts. Plus, having the ability to transmit payment files to your internet banking system. Strengthened monetary security and streamlined financial management via these two features assists even further in meeting your SRA obligations and improving your cashiering team’s efficiency respectively.

Interactive already does this. Optional functionality within MoneyChain affords greater transparency, closer safeguarding and simplified transactions.

Imagine software that’s compatible with Making Tax Digital (MTD) for VAT. HMRC’s MTD for VAT scheme was devised to eliminate paper processes by moving to digital VAT record keeping and returns. Compatibility means you’re able to log and exchange data electronically with HMRC.

26 CENTRAL LONDON LAWYER Interactive already does this. Having been through HMRC’s recognition process, Interactive’s legal accounting features allow you to submit VAT returns directly in accordance with MTD. Imagine software that permits time recording from your phone. With your practice management system on your smartphone, you can realise your remote working ambitions and boost earning potential by recording time on the go. You have all the same reassurances about cybersecurity as logins match those used for your desktop application.

Interactive already does this. Besides stopwatches on our smartphone app, you have anywhere, anytime access to see client and matter information, add new clients and matters, authorise e-chits and view recent documents.

Imagine software that presents your key performance indicators populated with up-to-date data. Monitoring actual against forecasted performance is a major challenge, yet it’s a must for business growth.

Interactive already does this. A personalised dashboard displays summary listings, quick stats and charts with drilldown to in-depth detail. With pre-defined reports and bespoke reporting options, really get to grips with progress and optimise development opportunities.

Imagine software that’s supported by an all-encompassing portfolio of outsourcing services. Imagine outsourced cashiering that enables you to offload your bookkeeping function to a specialist team of cashiers thereby leaving you free to focus on business-critical priorities. Imagine third-party managed accounts assistance for SRA-compliant money management which gives you extended choice and reduced regulatory risk. Imagine outsourced payroll that handles your salaries, payslips, pension and paperwork according to latest guidelines. Imagine outsourced typing that empowers dictation from a smartphone app and receipt of expertly typedup documents by speedy return direct to your document management system.

Yup, you guessed it, Quill already does this.

In this milestone year, ditch the old and welcome in the new. If there’s one resolution you make, select Quill as your technology partner. Our software, with raft of bolt-on extras, is exactly what you need to accomplish digital (and back office) transformation in 2020 and beyond. ■

Julian Bryan Managing Director, Quill Pinpoint

Julian Bryan joined Quill as Managing Director in 2012 and was also the Chair of the Legal Software Suppliers Association from 2016 to 2019. Quill has been a leading provider of legal accounting and case management software, and the UK’s largest supplier of outsourced legal cashiering services to the legal profession for over 40 years.