Modern Law Magazine Issue 23 by Charlton Grant

The Business of Law

April 2016 | Issue 23 | ISSN 2050-5744 Regional Focus: Cardiff In the sixth instalment of Modern Law’s regional focus, Charlotte Parkinson, Modern Law speaks to the new President of Cardiff & District Law Society, Paul Hopkins. Strategies for profitability in law firms Andrew Otterburn considers the financial issues legal practitioners still have to consider - despite a period of buoyancy for many firms over the last year and a half.

“[The hourly rate] is never going to give a firm a competitive edge unless it is ruinously low” Stephen Gold

John Beggs QC “We won’t be cowed by hostile media commentary. The fundamental principle of the English Bar and a liberal democracy is that everyone is entitled to a strong defence”

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elcome to the latest issue of Modern Law. In this issue, I speak to John Beggs QC, the high-profile silk recently named in the Lawyer Hot 100, and currently representing Surrey Police in the Deepcut inquest, about his role as Head of Chambers at Serjeants’ Inn, how the set is innovating, and their decision to appoint a senior management team. The full interview with John appears on page 13 onwards. I also caught up with legal consultant, Stephen Gold, about his views on why the Top 200 firms will continue to pull away from the rest of the legal profession, and why pricing is not the dark out it is sometimes made out to be. The interview can be read in full from page 17. Continuing the consultancy focus for this issue is our news author Chris Bull, who takes an in depth look at the recent issues faced by a number of high-profile Alternative Business Structures (ABSs), including the Parabis Group and Slater & Gordon. Chris asks whether these problems are attributable to the ABS status, and whether firms should be generally wary about the personal injury market, in his article on page 7-8. Andrew Otterburn also looks at strategies for profitability in firms, and considers some innovative charging models in his article on page 59.

I would also like to take this opportunity to urge you to keep an eye out for Modern Law’s upcoming events. These include the annual Doctors Chambers Modern Law Conference, which takes place on 14th June at Old Trafford, Manchester United. To book tickets to the conference, visit www.modernlawevents.co.uk. We also have two upcoming Awards ceremonies - the practice area specific Eclipse Proclaim Modern Law Conveyancing Awards, which takes place at the Rum Warehouse, Liverpool on 14th July, and the Eclipse Proclaim Modern Law Awards, which is returning to the Hurlingham Club in London and takes place on 10th November. Nominations are open now for the Conveyancing Awards, and nominations open for the Modern Law Awards in June. For more information on how to submit an entry, visit www.modernlawevents.co.uk. I hope you enjoy this issue of Modern Law, as always if you have any feedback or ideas for a future edition, please do get in touch with me via the details below. Happy reading!

Charlotte Parkinson, Group Editor, Modern Law Magazine. @modernchar | 01765 600909 charlotte.parkinson@charltongrant.co.uk

Dates for your Diary: Doctors Chambers Modern Law Conference | Tuesday 14th June 2016 | Old Trafford, Manchester United Eclipse Proclaim Modern Law Conveyancing Awards | Thursday 14th July 2016 | The Rum Warehouse, Liverpool Eclipse Proclaim Modern Law Awards | Thursday 10th November 2016 | The Hurlingham Club, London

Modern Law Magazine

Issue 23 – April 2016 | ISSN 2050-5744

Project Director Kate McKittrick

Group Editor Charlotte Parkinson

Project Manager Rachael Pearson

Events Director Julia Todd

Production/Editorial Assistant Ebony Lawson

Project Manager John Margett

Events Sales Martin Smith

Contact t: 01765 600909 or e: info@modernlawmagazine.com Modern Law Events: www.modernlawevents.co.uk Modern Law Awards: www.modernlawawards.co.uk All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

ML // April 2016

CONTENTS 03-08 Intro & THE News

07 Chris Bull Talks News

ABSs in trouble. Chris Bull explains why that neither means the ABS model is failing or that the conventional law firm model is thriving.

11-20 The INTERVIEWS 11 Interview with...John Beggs QC

Charlotte Parkinson, Modern Law spoke to the the high-profile silk recently named in the Lawyer Hot 100, and currently representing Surrey Police in the Deepcut inquest, about his role as Head of Chambers at Serjeants’ Inn, how the set is innovating, and their decision to appoint a senior management team.

17 Interview with...Stephen Gold

Charlotte Parkinson, Modern Law, spoke to the Senior Partner turned consultant, about why the Top 200 firms will continue to pull away from the competition, why pricing is not the “dark art” it is sometimes made out to be, and comparing law firms to omelettes.

21-49 The views

23 Shaping the future

Julia Black, SRA Policy Committee

25 Q: After the event legal expenses

insurance - can it be an ‘answer’ to a threatened security application?

Matthew Williams, AmTrust Law

25 LSB: encouraging proportionate regulation of in-house lawyers

Kate Webb, Legal Services Board

27 An integrated strategy

Pippa Saunders, Laird Assessors

27 Keep Afloat of Flooding

Sarika Sangar, Conveyancing Data Solutions

29 Justice in the Age of Austerity

Robert Parness, Burcher Jennings

29 Reaping the rewards

Ross Weldon, Clio

31 Borrowing: it’s not black and white

Andy Poole, Armstrong Watson

31 A growing trend

David Simon, Triton Global

33 Back to the Future

Noel Inge, CILEx Law School

Editorial Columnists Andrew Otterburn Consultant Otterburn Legal Consulting

David Simon Chairman Triton Global

Andy Poole Legal Sector Partner Armstrong Watson

Dr Hugh Koch Clinical Psychologist and Director Matthew Claughton Hugh Koch Associates Managing Director Olliers Solicitors Jasvinder Jhumat Head of Corporate Business Matthew Williams AlldayPA Legal Head AmTrust Law Jo Hodges Director of Sales & Marketing Noel Inge Redbrick Solutions Managing Director CILEx Law School Kate Webb Head of Regulatory Reviews and Pippa Saunders Regulations Marketing Manager Legal Services Board (LSB) Laird Assessors

Angelo Piccirillo Solicitor-Partner & Co-founder AVRillo Solicitors Anthony Pearlgood Managing Director PHS Data Solutions Catherine Calder Director of Client Care Serjeants’ Inn Chambers Charles Christian Editor-in-Chief The Legal IT Insider Darren Gower Marketing Director Eclipse Legal Systems part of Capita plc

ML // April 2016

Mark Montgommery Customer Strategy & Marketing Director myhomemove

Kathryn Thomson Commercial Director VFS Legal

Rebecca Colley Operations Director Informed Financial Planning

Lesley Graves Managing Director Citadel Law

Robert Parness Costs Lawyer Burcher Jennings

Robin Selley In-house Lawyer Box Legal Ross Weldon Marketing Specialist Clio EMEA

Steve Arundale Commercial Head of Professional Services & Financial Institutions, Sectors & Specialist Business RBS & NatWest Commercial & Private Banking

Sarika Sangar Marketing Executive Conveyancing Data Solutions

Sucheet Amin Managing Director, Aequitas Legal Founder, inCase™

Scott Bozinis CEO InfoTrack

Will Kintish Founder Kintish

Simon Maydon Chartered Financial Planner Saunderson House

Zoe Holland Managing Director Zebra Legal

Stephen Robinson Managing Director Xyone Cyber Security

33 Technology: when and how?

Rebecca Colley, Informed Financial Planning

47 How will the recent case of Budana impact on M&A?

Zoe Holland, Zebra Legal

35 The three types of technical

49 Cyber Crime – A threat that cannot

innovation

Jazz Jhumat, AlldayPA

be ignored

35 The Checking-Out Check-List

51-62 The Features

Simon Maydon, Saunderson House

37 The future of funding

Kathryn Thomson, VFS Legal

51 Regional Focus: Cardiff

37 Making use of what you have

Sucheet Amin, Aequitas Legal & inCase™

39 Stamp Duty Rises for Buyers of Second Properties

Robin Selley, Box Legal

39 Getting to grips with business intelligence

Jo Hodges, Redbrick Solutions

them in 2016?

Hugh Koch, Hugh Koch Associates

40 Do the right thing

Nicola Jones, Athena Professional

41 The next generation

Matthew Claughton, Olliers Solicitors

41 Where to start with content

Angelo Piccirillo, AVRillo Solicitors Mark Montgommery, myhomemove

43 Tell your story

Catherine Calder, Serjeants’ Inn Chambers

45 Challenge and Evolve

Scott Bozinis, InfoTrack

46 Overcome your networking fears

Will Kintish, Kintish

Charles Christian explains why it’s not the ‘Big Bang’ but the cumulative ‘Little Bangs’ that add up.

law firms

Andrew Otterburn considers the financial issues legal practitioners still have to consider- despite a period of buoyancy for many firms over the last year and a half.

61 Tackling a major issue

question

Steve Arundale, NatWest

Phillip Griffiths explains why the rise of ABSs, an increase in technological innovations, remote working, strategic marketing and collaborative partnerships from the regional bar has put Wales centre stage for legal services provision.

59 Strategies for profitability in

45 To borrow or not? That is the

57 Tech Transformation

43 Overcoming barriers

Interview with...Paul Hopkins. In the sixth instalment of Modern Law’s regional focus, Charlotte Parkinson, Modern Law spoke to the new President of Cardiff & District Law Society, about keeping members connected to the business of law, and hopes for his tenure.

54 Regional Focus: All change!

40 Junior Lawyers: What’s motivating

Andrew Taylor, BeCyberSure

PHS Data Solutions Managing Director, Anthony Pearlgood, explains the implications of the Government’s digital revolution on the legal sector and the support available from third party providers.

62 5 minutes with...

Matthew Briggs, The Law Superstore

62 National practice implements

Proclaim to provide universal access to data across 278 miles

47 The legacy of the Legal Services Act 2007 is taking shape

Lesley Graves, Citadel Law

61 ML // April 2016

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Chris Bull Talks News

Chris Bull

talks news ABSs in trouble. Chris Bull explains why that neither means the ABS model is failing or that the conventional law firm model is thriving.

he legal news and opinion pages have been full of apparently incontrovertible evidence that demonstrates the failure of the externally funded, high-growth Alternative Business Structure (ABS). From Parabis in pre-pack administration in November, to massive losses announced by Slater and Gordon at the end of February and on to revenues halved at Minster Law in March, the large ABS model could be seen to be unravelling before our eyes. Tracts of the UK’s legal profession, as well as lawyers in the US and elsewhere watching the UK’s experiment, have been quick to say ‘we told you so; it was never going to work’. They suggest that these are the death-throes of a misguided attempt to transform the legal market by government diktat and outside capital, prefigured by earlier crises at the likes of Cooperative Legal Services and Quality Solicitors. I think that if we take a closer look, however, the scorecard for alternative business models isn’t quite so negative. As importantly, the conventional model of legal partnerships owned, managed and funded by their Partners, far from being triumphantly vindicated, is under severe pressure. New legal business models: some serious flaws exposed The last few years have certainly taught some hard, important lessons about new business models. Regulators are going to be busy picking up the pieces from the fallout of business failures, investors are already writing off many millions of pounds and the overall reputation of legal services in the eyes of the public has taken knocks; hardly what was needed with public confidence in lawyers far too low. At a practical level, three areas of concern require active and rapid action

by the regulators, The Law Society, banks and wider profession: • The risk of losing highly skilled and long-serving people from legacy firms that have been sucked into large new legal organisations, only for too many of them to find their futures at best uncertain • Failing clients, whose cases have changed hands and have genuine concerns that the new firms handling their case will not have the people, skills or funds to continue. Our regulators have to work together and make this their top priority • The legal industry (and profession’s) reputation: the Quindell saga in particular has exercised a fascination for the business pages in newspapers and online, and Slater & Gordon’s name is now better known for financial problems than any positive brand-building they have done in the last few years. Misplaced investment decisions The lion’s share of external investment into the legal sector has been focused on the Personal Injury (PI) market, and the major recent dramas are heavily concentrated in that space. The seeds of those crises owe a lot to the unique conditions of the PI market, rather than to the inherent ABS structure. Many of the big-bet decisions to invest and then expand these PI practices looked flawed, even at the time. When ABSs were first licensed it was already clear that PI was an highly uncertain market, firmly in the cross-hairs of government and the big insurers and with a high chance of reducing revenues and profits down the line. The market for PI law didn’t need outside investors to introduce aggressive commercial ventures or inappropriately close ties

‘The lion’s share of external investment into the legal sector has been focused on the Personal Injury (PI) market, and the major recent dramas are heavily concentrated in that space. The seeds of those crises owe a lot to the unique conditions of the PI market, rather than to the inherent ABS structure’

ML // April 2016

Chris Bull Talks News

‘Legal business structures and operations are transforming in a host of ways; attempts to portray this as a dog-fight between traditional partnerships and aggressive new ABSs is just myopic’ between referrers and lawyers – they already existed. Nevertheless, cash piled into PI, because it was the one part of the new legal investment market that looked a bit like a reliable, high volume, recurring revenue business opportunity – because, let’s be honest, it looked like the best place to make a quick buck. In Slater & Gordon’s case, there was a collective sense of watching a train wreck unfold before your eyes but being powerless to stop it; Quindell’s share price bobbed up and down, but mostly down, on the back of market scepticism and it was hard to see how the acquiring management team, investors or bankers really thought the deal represented value. A series of such decisions have rapidly undermined our confidence in the supposedly rational experts in the investor community. Meantime, new legal business models continue to prosper and multiply I don’t buy the argument that this cluster of flawed Personal Injury models demonstrate that opening up the legal services sector to more investment and greater competition has failed. There are now over 400 licensed ABSs, very few of whom seem to have been in financial difficulty. The majority are in fact refreshed incarnations of established and successful law firms flexing their ownership structure, not mega-corporate new entrants. Besides ABSs, we have seen a new generation of consolidator law firms emerge. Not all of them will be immune from the negative implications of growing too big too quickly, but the shape of the legal market has definitely been transformed as these new combinations become established amongst the UK’s largest firms, operating and structured in a different way to the traditional legal partnership. A parallel trend is for firms who don’t want to be swallowed up to join collaborative groups in order to compete with the big boys. Some of these are national (LawNet and Lawshare for example), some international (LexMundi and Interlaw), but they all leverage sharing of services and costs between independent firms. Other lawyers have flocked to the various types of virtual or distributed firms, offering them an umbrella within which to practice without being tied into employment, or partnership. Legal business structures and operations are

ML // April 2016

transforming in a host of ways; attempts to portray this as a dog-fight between traditional partnerships and aggressive new ABSs is just myopic. Are law firms investable? A string of unsuccessful investments into law firms might also tell us as much about the state of the objects of those investments as about the failings of the investors or regulators. It has driven me to reconsider whether law firms are actually an investable proposition. I wonder what the behaviour of Partners as owners tell us about how attractive law firms are as an investment? Law firm partnerships have swollen to once unimaginable sizes, but the convention that profit is distributed quickly and in full to the Partners is still standard practice. Capital contributions per Partner are modest as a proportion of annual profit/dividend yield, and in many firms the process of pushing through any increase in Partner capital is resisted pretty hard. These contributions remain the primary way of funding many firms, certainly, but it seems to me that the evidence suggests Partners aren’t keen to actually invest in their firms. If the current manager/ owners are reluctant to make additional investments, outside investors will rightly hesitate, especially when they reflect that much of the capital invested by Partners is borrowed from banks via loans secured against the reputation and assets of the firm, not the individual. Are law firms truly profitable? Investors are looking for a reliable, recurring and profitable income stream and an opportunity to share in profit improvements opportunities in the near term. Private Equity investors always want to probe just how to measure law firm profitability. Law firms are popularly regarded as highly profitable, generating high margins and posting impressive Profit per Equity Partner (PEP) numbers. But PEP is a pretty useless metric – a measure of profit that excludes the substantial cost of remuneration paid to the most skilled, busy and businesscritical workers. Most of what gets reported as PEP is nothing more or less than the regular remuneration for work and hours done by these senior workers. Firms have allowed the Partner label to distort how they analyse and report

business performance. It is shocking to me how few firms report profit without first deducting a realistic, market-tested Notional Partner Salary. Most worrying are those firms where Partners know their own annual earnings are below the going market rate. The right approach for management information would be to treat all Partner drawings as Notional Salary. The consequence is obvious and unpalatable, certainly for any investor; those firms are generating no profits and, as a business, are neither viable nor investable. Are law firms exposed to unacceptable flight risk? If their earnings dip with no prospect of going back up, Partners will look elsewhere to get their perceived market rate. In most cases, they can leave easily and the loss of one or two key Partners can rapidly escalate into a full-scale flight. In recent years, some big US firms in particular have collapsed as a result of this unravelling, but the UK has not been immune. These firm failures are more common, and as worrying, as the ABS crises. Firms can and do impose lock-in clauses, but often too late and unsuccessfully. That potential flight risk – your assets walking out of the door – represents a huge challenge to any investor or acquirer of a conventional legal firm. Time for a more balanced appraisal of both ABS and conventional law firm models It is time to be objective about some positive signs from introducing new models, which have increased solicitor’s funding options, enabled firms to bring senior non-solicitors into partnership, stimulated better business practices across the sector and introduced some better priced, more accessible legal services. Recent events, however, have exposed serious issues with some of the largest new businesses and some poor quality investment and due diligence decisions. At the same time, an honest appraisal of the default conventional law firm model shows some serious flaws (amongst the undeniable virtues), that combine to make many law firms an unattractive business investment. Chris Bull is an Executive Director at Kingsmead Square.

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11-20

The Interviews

Bridget Dolan, Katie Gollop and Mike Horne take silk Congratulations to Bridget, Katie and Mike and many thanks to clients who were good enough to participate as assessors in the QC selection process. This excellent news follows five other appointments since 2010 and brings the number of silks at Serjeants’ Inn Chambers to 13.

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Interview with... John Beggs QC

Interview with... John Beggs QC Charlotte Parkinson, Modern Law spoke to the the high-profile silk recently named in the Lawyer Hot 100, and currently representing Surrey Police in the Deepcut inquest, about his role as Head of Chambers at Serjeants’ Inn, how the set is innovating, and their decision to appoint a senior management team.

Serjeants’ Inn has grown considerably as a set during the last few years. To what do you attribute this growth and how do you attract leading practitioners to join the set? We have taken on 16 tenants over the last couple of years: this growth is a result of careful strategic planning to enable us to meet evolving client demands and to increase our commercial resilience. We attract leading practitioners primarily on the strength of our reputation in the profession - the calibre of our barristers and our cases - but applicants say that our progressive, sophisticated and friendly approach is also a draw. Do you plan to expand further?

Q A Q A

We certainly intend to expand further. We have a rigorous selection process however and it will take time. What do you think distinguishes the Serjeants’ Inn Police Law Team from the competition? The police team has, like its competitors, great experience and expertise in the sector. What distinguishes it is, first, its problem solving approach. The law in this field is complex and multifaceted. We provide clients who face difficult legal and reputational problems with practical and effective solutions, with regard not only to the complex law but also to the “politics” of the situation, public confidence and the media. Second, we are known to be robust in defending our police clients’

‘We have moved on from the traditional chambers structure to appoint a multi-disciplinary senior management team who have different specialisms whilst working closely together’

ML // April 2016

Interview with... John Beggs QC

‘We won’t be cowed by hostile media commentary. The fundamental principle of the English Bar and a liberal democracy is that everyone is entitled to a strong defence’ interests. Representing the police is not necessarily always fashionable and we are sometimes portrayed as the bad guys by the media. But we are committed to providing our clients with the defence they’re entitled to under the rule of law. Finally, we are also known for excellence in advocacy and trial tactics. Our oral advocacy is distinct and impressive and we get results. Chambers is a market leader in healthcare and police law. Is Chambers diversifying into other practice areas? Yes. In addition to police and healthcare, we are also market leaders in the rapidly growing fields of inquests and Inquiries as well as Court of Protection cases. We have developed a thriving practice in business and specialist crime: our cross examination skills in particular make us a logical choice for top-tier private criminal defence work. Equally, our medical product liability work is a natural development given our experience and expertise in the health sector. Our employment team is now gaining discernible traction and we have recently taken on some senior junior employment lawyers with the prospect of more recruits on the horizon: we have dealt with some key cases in the police employment field lately. Does Chambers do any international work? Yes, in both our medical and police practices. Foreign clients include the States of Jersey Police, the Hong Kong government and numerous medical clients out of the jurisdiction. I have advised Australian and Canadian clients, as well as authorities overseas, for example on public order issues arising out of major civil unrest. The healthcare team has close links with Hong Kong and provides advice and

Q A

representation on significant cases there as well as in other jurisdictions - current examples include Gibraltar and the Isle of Mann. Gerry Boyle appeared last month for a Northern Irish client in the first Supreme Court/House of Lords’ case on the ability of the Parliamentary and Health Services Ombudsman to award compensation. What was the strategy behind the move from your Fleet Street office to the Lutyens building in 2013? We recognised that we needed purpose-designed accommodation for a modern chambers in the 21 Century. Our former premises were quaint and charming, but became increasingly unfit for purpose. The new premises works much better for our barristers and staff: it provides a more flexible space to permit different kinds of tenant occupation at a lower cost and (because we are all on one largely open-plan floor) it has hugely improved communication, cohesion and collegiality. The new premises are also much better for our clients: we have vastly improved conference facilities and state of the art IT and AV equipment at their disposal. Why did the set appoint a senior management team and how does this work in terms of the day-to-day running of the chambers? We have moved on from the traditional chambers structure to appoint a multi-disciplinary senior management team who have different specialisms whilst working closely together. We have retained a Senior Clerk, Lee Johnson, who performs the traditional clerking functions (such as diarising and fixing fees) but, in Martin Dyke and Catherine Calder, we also have a Business Director and a Director of Client Care.

Q A

‘The hierarchical approach that the Bar traditionally took in its relationship with clients is a thing of the past’

ML // April 2016

They are both experienced solicitors who have also worked in management roles at the Bar for nearly 20 years. This works extremely well for us, as the vast majority of our clients are solicitors. Having taken care to work out the right structure and appoint the right people, we give them the autonomy they need to run the set as a successful business, which in turn releases our barristers to concentrate on their cases and clients. It certainly reduces the management workload for Angus Moon QC and me as the joint Heads of Chambers. Can you give me any specific examples of innovation at Serjeants’ Inn? There are many: a much more economic and flexible use of floor space, which drives down cost to members (and thus clients); a complete restructuring of our staff team to reflect the modern profession and changing client demands; very high quality IT facilities, including for clients; the introduction of numerous channels of communication within Chambers, such as our intranet. You have a client service team – why did you create a bespoke team and how does the team work with your clerks? We have made this investment to ensure that our service is always as strong as our legal expertise and because we wanted to build much closer, more strategic relationship with clients. Catherine and her team have put a lot of work into client consultation: we are trying to be much more active about finding out what clients want and to respond to that in a concrete way. The client service team works hand in glove with the clerks and they get on very well. We are all putting a much stronger emphasis on giving clients what they deserve and on the rare occasions that we don’t, we make sure that we react quickly and in a positive way. You have a focus on working in partnership with clients – can you tell me a little more about this?

Q A Q A

Interview with... John Beggs QC

We recognise that the hierarchical approach that the Bar traditionally took in its relationship with clients is a thing of the past. We are trying to be much more attentive and attuned to what clients are saying they need: we strive to work in genuine partnership with our clients, principally solicitors. But it’s a two-way process – we need to respond effectively and efficiently to client needs but equally they need to understand our position. For example we have the confidence to decline instructions when the barrister is simply too busy to take them on and do them justice. This requires self-confidence on the part of our staff and barristers, as it may disappoint a solicitor at the time, but in the long term, it builds better relations and brings better results. What else is different about the Serjeants’ Inn approach? We are often told that we are down-to-earth and unstuffy and I hope that is true.

Q A Q A

The set often deals with cases involving political, ethical or social issues. What are the particular challenges of these cases? The overwhelming challenge is that many of our clients are the subject of very significant media attacks, which of course now play out not only on television, radio and press but also online and on social media. This can place a strain on everyone involved but we won’t be cowed by hostile media commentary. The fundamental principle of the English Bar and a liberal democracy is that everyone is entitled to a strong defence. As long as it is carried out in an ethical way, it is our duty to our clients to provide robust advocacy. Serjeants’ Inn is supporting First 100 Years – can you tell us a little about this project and why you are supporting it? It is a fabulous, inclusive project highlighting the contribution of women to the legal profession and we are pleased to promote it. It is extremely timely for us with both Bridget Dolan and Katie Gollop taking silk this year: we want to evidence our commitment to equality and diversity in tangible terms. We have supported the initiative not just financially but also in a practical way, becoming involved in the organisation of many of their events, for example. What cases do you have coming up after the Deepcut inquest? I am appearing for the widow of Alexander Perepilichnyy in an inquest where Hermitage Capital Management is alleging that he was murdered by Russian gangsters (as per Alexander Litvinenko). Perepilichnyy was a Russian businessman who died in November 2012. I am also representing Essex Police in the defence of the claim brought by Michael Barrymore for wrongful arrest and false imprisonment after he was held on suspicion of the murder of Stuart Lubbock, who was found dead in the swimming pool of his house in March 2001. This case will be high profile and involves interesting issues of quantification.

Q A Q A

John Beggs QC John Beggs QC is one of the most sought-after silks at the Bar. He is recommended as the Star Individual for defendant police work by Chambers & Partners, which records that “he is probably the best cross-examiner outside the Criminal Bar” and that “he is so respected that it is normally a fight between authorities and defence lawyers to see who can approach him first to represent their clients.” He is one of The Lawyer’s Hot 100 this year. An acclaimed advocate and trial tactician, John’s expertise spans a wide range of legal fields encompassing civil and criminal litigation, public and administrative law including inquests, inquiries and judicial reviews, and employment and disciplinary proceedings. He has diversified into the corporate sphere and expanded into international markets, exporting his policing and public order expertise to advise governments overseas. He is particularly well regarded in the field of police law where he has appeared in most of the important cases of recent years (including the Marchioness and Leveson inquiries, the 7/7 London Bombings, Raoul Moat and Hillsborough inquests, and civil trials and JRs such as Duggan, Salter and Mackail (“Plebgate”). He is the go-to counsel for prosecuting or defending police officers in serious misconduct cases and for advice on operational matters including public order issues. He has a specialism in police pensions. Publications John is the co-author of the leading text “Police Misconduct, Complaints and Regulation”, published by the Oxford University Press in July 2009. The second edition is due later in 2016 and will address the substantial amendments to the regime since 2008 including public hearings and legal chairs. He is also the co-author of “Public Order: Law and Practice”, OUP 2012. Practice Summary John’s practice encompasses: Civil claims Judicial review Misconduct Employment (principally discrimination and whistleblowers’ claims) Inquests and inquiries Pensions Public order Criminal defence

ML // April 2016

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Interview with... Stephen Gold

Interview with... Stephen Gold Charlotte Parkinson, Modern Law, spoke to the Senior Partner turned consultant, about why the Top 200 firms will continue to pull away from the competition, why pricing is not the “dark art” it is sometimes made out to be, and comparing law firms to omelettes.

Q A

Do most firms now recognise the need to embrace the business of law?

Law firms have always recognised that they are businesses. Since the recession, they have recognised it in spades. Whether they always behave accordingly is another question. The record is mixed. Many law firms are superbly run, delivering a consistently great service and making good, sometimes exceptional, money for their owners. The best leaders are a match for anyone, in any sector, anywhere, and you can see this from the high street to the magic circle. However, in the same way that many of us know we should diet, but still scoff unfeasible quantities of chocolate, recognition does not always translate into action. The temptation to do what is comfortable quite often beats the need to do what is necessary. You see this in sloppy approaches to time recording, pricing, lock-up and cashflow, for example, or a reluctance to be involved with selling, or poor compliance with processes or systems. Part of the difficulty is the desire of pretty much every professional to be as autonomous as possible, senior people often being the worst offenders. And I would add two things; first, scratch the typical lawyer, and you find someone who is analytical, suspicious, risk-averse and terrified of personal failure, all qualities which make us great advisers, but are the antithesis of what is needed in a successful entrepreneur. Second, reinforcing that is a lack of training in business skills and knowledge. If we applied the same dedication to these as to the detail of our practice specialisms, the results would be transformational. I am not talking about taking a Harvard Ph.D. Lawyers who can read a balance sheet with confidence, or really understand the guts of how their firms operate financially are a minority in most firms. There is also a mixed record on strategy. There are only two key strategic questions: Where do we play? How do we win? In other words what markets should we be in and how do we stand out? Again, you see great examples of firms who have thought these questions through and answered them well. The top 200 firms UK-wide now have a 55% share of the market, but the market is still very fragmented, and within it are many firms in the “squeezed middle”, to borrow a phrase from the hapless Mr Miliband, who, like him, seem to have no clear strategy beyond trying to keep breathing. They may be perfectly competent, but can make no claim to be exceptional and are under the greatest threat.

‘Lawyers who can read a balance sheet with confidence, or really understand the guts of how their firms operate financially are a minority in most firms’

Q A

Through your consultancy, you work directly with partners and senior lawyers. Can you outline any recurring themes when speaking to senior people within firms – i.e. specific challenges/concerns?

The themes I have identified above present the biggest challenges. I have been lucky enough to work with firms ranging from global giants to small practices, and find the challenges tend to be the same in character, regardless of the size of firm. That was my experience in practice, growing from 2 people to 450 people. In big firms, strategic or operational decisions can be more complex, mistakes more costly and difficult to rectify. Dealing with large numbers of very smart, articulate people with strong opinions and separate interests requires diplomatic and leadership skills of the highest order. But against that, they can afford to invest

ML // April 2016

Interview with... Stephen Gold

‘I once saw the hourly rate compared to the last giant lizard still walking the earth after the asteroid had struck’ in a depth and quality of resources – people, technology, training, marketing, premises and so on, which smaller firms simply cannot match. Hence the clear blue water that now exists not just between the top 200 and the rest, but the top 50 and the other 150.

Q A

Do you think we are likely to see an increase in entrepreneurs entering the legal sector as we have in recent years? If so, why and are alternative business models good for the legal sector as a whole?

A threat which gets surprisingly little prominence is the accountants, who are back in the legal market with a vengeance. Already, the Big Four’s combined share of revenue of the top 10 law firms in each jurisdiction where they operate ranges from 4% in China and 6% in the UK, to 20% in Germany and 30% in Spain. The inequality of arms between the Big Four and Big Law is striking. Combined, the worldwide billings of PwC, Ernst & Young, Deloitte and KPMG are $120 billion, dwarfing the $89 billion of the world’s top 100 law firms. By headcount, PwC is the world’s 10th biggest legal practice, and plans to boost legal services revenue to $1 billion by 2020. With a combination of deep pockets, sophisticated business skills, global networks and client lists to die for, the accountants will be formidable adversaries. They are bound to become a major threat, not for “bet the farm” work, which is likely to stay with the magic circle, but for mainstream commercial and corporate law. Entrepreneurs will continue to look closely at private client services like probate, conveyancing and personal injury, and also business services. But I think they may be more cautious than they were at the beginning. There have been real successes, but also a number of high-profile players have come a cropper, or just bumped along below expectations. I have spoken to a number of private equity houses who say they would like to be involved, but have been unable to figure out how to build, scale and exit. The more legal service processes become susceptible to technology and less dependent on skilled human intervention, the greater will be the opportunity for non-lawyer providers. We have made a tentative start down that road, but there is a long way to travel, until, as widely predicted by “experts”, the global middle class is completely wiped out by machines around 2070. Are ABS models good for the legal sector as a whole? Well executed, they provide consumers with greater choice. In the comparatively rare cases where they have truly innovated, they have benefited the public and driven traditional firms to examine the way they operate. I strongly believe in choice, but if by “the legal sector” you mean law firms, generally they are a benefit in much the same way as a lion is a benefit to a wildebeest.

‘The inequality of arms between the Big Four and Big Law is striking’ ML // April 2016

Q A

What are the biggest barriers to law firms adopting an innovative approach to the delivery of legal services?

The biggest barrier is fear, and frankly, sometimes fear is a rational response for individuals. Change may be the right thing for the business, but not for them. “You can’t make an omelette without breaking eggs”, has a quite different resonance depending on whether you see yourself as the chef or the egg. I have a particular take on this. My firm specialised in work for institutions, which was driven by a new approach to process and the intensive use of technology. We had 450 people, but only 22 of them were lawyers. I am not suggesting for as moment this is a model for everyone, far from it, but it is an example of what can be done, and you can understand why traditional lawyers might be spooked by thinking this way. Incidentally, we were not an ABS, but an entirely conventional partnership. Law firm pricing is a hot topic just now, and this is welcome – not least to the consulting community! But there is a problem. Often, the iron law is disregarded that before price comes the process. Firms introduce “innovative” pricing models without looking first at how they produce and then wonder why their line is bottom in more ways than one. “AFA” in their world stands less for “Alternative Fee Agreement”, than “A Failed Attempt”. “Before price comes the process” applies to businesses of every kind. Look, for example, at how the big supermarkets have responded to the discounters: sweating to match them on price, they are still lumbered with their expensive traditional structures, while their leaner rivals steam on, offering terrific prices, but a basic environment and service levels which amount to precious Lidl. Since Richard Susskind coined the phrase “the more for less challenge” to describe the pressure on law firms to deliver more work for lower prices, it has become axiomatic to say this is the biggest problem facing the profession. But lately, a new phrase has entered the debate, “less for less” – a catchy way of stating an old truth, that the best response to pressure on price is to make the process more effective: reduce effort, time and cost, give the client a better experience and reap the rewards of more business and higher profits. Since the biggest cost by far is human beings, the spotlight has fallen pitilessly on how to have as much as possible done by more junior people, or by technology, without sacrificing quality. This focus is precisely why attempts at process improvement are so often resisted, not by people at the top, but by the middle tiers, who know a threat when they see one. It takes strong, determined leadership to overcome.

Q A

Have we seen the end of the hourly rate, or does it still have a place for certain types of legal services? Have you seen any firms utilising innovative charging models? I once saw the hourly rate compared to the last giant lizard still walking the earth after the asteroid had struck. Reports of its death have been greatly

Interview with... Stephen Gold

exaggerated, and it is going to be with us for a long time yet. It has its advantages, not least that it is easy to understand. For unusual work, or work of exceptional complexity, or work for large, sophisticated clients who have an institutional preference for being billed by the hour, it can be perfectly fine. That said, it is never going to give a firm a competitive edge unless it is ruinously low, and there are compelling arguments for alternatives, all of which I agree with. The most important thing is to be flexible. Pricing is not quantum physics. When you boil it down, there are only three ways to charge: hourly rate, fixed or contingent. Everything else is a variation on one of these themes. As Lord Justice Donaldson observed, it is an art not a science, in the sense that every time one has to be sensitive to the needs, attitudes and circumstances of the client. But those who describe it as a “dark art”, something complex and mysterious, have been watching too much Harry Potter. Apart from being closely matched to the client, and offering choice, for me the most important element is a clear link between the price and the value of the benefit. We are good at telling clients what we are going to do, much less so at spelling out how they will be better off for our having done it. As for innovation, in my firm, most of our relationships were governed by tightly-drawn service level agreements, which meant we paid significant penalties in loss of revenue if we failed to meet the required standards. I think clients find compelling a firm’s willingness to make an explicit service commitment and put its money where its mouth is. One might offer a specified percentage discount for falling short, or at the extreme, take the approach of the high-end Chicago litigation firm, Valorem. They have pioneered the “value adjustment line”, which invites any client who thinks the price too high, to insert and pay only what they consider the right figure. One might pause before doing this with certain clients! But it is a massive statement of the firm’s confidence, and seems to have been a great success for them.

Q A

Are we likely to see more firms merging, and are there any trends here in terms of the type of firms that are merging?

The evidence seems to be that with an improving economy, UK merger activity to cut costs and consolidate is down. Eighty-two percent of firms improved financial performance in 2015, compared to 2014. In a survey for the Gazette in mid-2015, only 60% of firms said that merger was on their radar. There is now more of a focus on growth, and the 14 mergers involving the Top 100 which took place in 2015 (down from 19 in 2014) reflect that. Interestingly, the picture in different in the US, which reported record levels of merger activity in the AmLaw 100 last year, again driven by growth, typically hoovering up niche firms seen as valuable additions to the larger practice. A number of UK mergers related to consolidation in the insurance sector, both claimant and defendant, and others, corporate and private client, were driven by expanding geographical spread, both nationally and internationally. It may be that more important than merger this year will be even fiercer competition for the most talented individuals and teams as chequebook firepower increases, and conversely, talented people in firms with mediocre performance will have compunction heading for richer pastures. The top 200 are likely to continue to pull away.

Stephen Gold Before discovering the law, my first job was in management at Marks & Spencer plc. It gave me experience of working in the real world, a passion for customer service and a tie collection which might charitably be described as “brave”. In 1981, aged 32, having just recovered from cancer, with my wife Ruth I founded Golds Solicitors, Glasgow, in a converted suburban shop. By 2007, we had grown to just under 450 people, and gained a reputation as one of the UK’s most innovative law firms. We were pioneers in using new process and technology, specialising in work for banks, insurers, and national organisations. Alongside the Glasgow office, a successful English practice was built from a base in Manchester, to make the firm one of the few Scottish firms to offer full UK coverage. I was senior partner and Golds’ best-known rainmaker, until we merged with national giant Irwin Mitchell in 2007, where I stayed for just under 3 years, first as a partner and then as a consultant, responsible for developing business in the firm’s financial services, corporate and commercial practice areas. Today, I run my own law firm consultancy and am retained as a non-exec, trusted adviser and mentor to well-known firms on both sides of the border. My specialist areas of practice reflect my career as a successful legal entrepreneur during a time of unprecedented change and are: • Strategy: analysing the firm, managing change, creating competitive advantage and dealing with the threats. • The rainmaking skills: how to develop successful relationships, market, price and sell legal services effectively. • People: mentoring and coaching senior people to achieve high performance in themselves and those they lead. • ABS: making the most of the opportunities. • Finance: maintaining margin, managing costs and growing the bottom line. • Merger: Having been personally involved in a pioneering merger, I advise regularly on mergers, on both sides of the border and cross-border. Contact: Braeton, Burnside Road, Whitecraigs, Glasgow G46 6TT T: 0044 7968 484232 E: stephen@stephengold.co.uk W: www.stephengold.co.uk Sk: Stephengold123

ML // April 2016

Corporate and Commercial

Supporting more British professional sector businesses than any other bank

market share

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Source: Primary banking relationship from Experian’s database (September 2015), derived from filed accounts for businesses £2M – £1Bn turnover.

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Information detailed reflects support provided by NatWest and Royal Bank of Scotland Corporate & Commercial

The Views

21-49

The Views

Tuesday 14th June 2016 Manchester United Football Club, Old Trafford “When the Chancellor of the Exchequer identified the “Northern Powerhouse” he may have been thinking more about improving transport links between Northern cities than recognising the massive financial contribution that legal businesses make to the nation’s GDP. So this year, reflecting the powerhouse of UK Law - especially in the Regions - the Modern Law Conference is being held in Manchester. With the EU Referendum only nine days around the corner, the conference will kick off with an In/Out debate on the consequences for UK law, the legal system and legal professionals, whatever the outcome of the vote, in which leading figures will speak for and against Brexit. Beyond the referendum, the ever changing world in which modern legal businesses operate presents new and daunting challenges that, in its usual probing style, the Modern Law Conference will examine with the help of a stellar line up of top speakers. Our Keynote speaker will be Tony Williams, founder of Jomati Consultants, whose regular research into trends in legal business provides signposts to success that cannot be ignored. The title of his address “Embracing Alternative Working Practices” will include the benefits of low cost centres in the Regions. Continuing the Powerhouse theme, during the rest of the day four panels of experts will explore current issues under four headings. Firstly, ‘Lawyer Power’, which will comprise speakers from leading law firms that have offices in London, the Regions and abroad. They will explain how to manage complex and profitable businesses that reflect the success of UK Law.

Secondly, ‘People Power’, which will include senior representatives of the Equality and Human Rights Commission and the Information Commissioner (both based in Manchester) as well as the Legal Services Consumer Panel and the Legal Ombudsman. They will explore current issues of human rights, diversity, privacy and data protection as well as the expectations of clients and resolution of their complaints. Thirdly, ‘ABS Power’, which will consider whether ABS legal businesses are enjoying advantages of their new structure, or whether there are unanticipated problems, particularly for a publicly quoted ABS. A panel of representatives of some of the best known ABSs will answer these and other topical questions. Finally, ‘Professional Power’, which will consider whether the legal professional bodies aspire to power when tackling Government on behalf of their members. This panel will ask how these bodies would cope if their membership subscriptions were voluntary and what their views are on a possible review of the Legal Services Act, nearly a decade old. Leaders of all the legal professional organisations will examine the power struggles ahead. An after lunch “spark talk” on ‘Football Power’, by Manchester United’s Director of Communications is also sure to be a highlight of the day.”

Conference Chairman, Michael Napier CBE QC (Hon)

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The Views

Shaping the future Julia Black, Chair of the SRA Policy Committee outlines how the regulator is establishing a blueprint for the future.

n the last edition of Modern Law Magazine, our Chief Executive, Paul Philip, outlined the busy year we have ahead of us. Our packed agenda includes work on how best to ensure new entrants to the profession meet consistent, high standards, and working with the Law Society on Government proposals to fully separate legal services regulators from representative bodies. What was also on our “to do” list was the overhaul of our regulatory approach, our “Looking to the Future” project. We have made considerable progress on this programme, and in this piece, we talk more about where we are and what our current thinking is. To recap, in November, we outlined our vision for the future of regulation through a phased review. We want to design an up-to-date and fit-for-purpose approach that will protect the public, increase flexibility for the profession in how they deliver legal services, and ensure solicitors remain competent and ethical.

core professional standards, with additional restrictions only when necessary, giving the profession simple, clear guidance on what we require. So, where are we now? In order to deliver our regulatory reform, we clearly need to radically rewrite sections of our Handbook. This redrafting of the Principles, the Code of Conduct and the Practice Framework Regulations should make obligations easier to understand and to navigate. The current SRA Code of Conduct is 30 pages long and applies equally to individuals, firms and managers and employees of those firms. In seeking a ‘one-size fits all’ approach, it has become long, confusing, and complicated, particularity for in-house solicitors. What we are proposing is to redraft the Code to make it very clear which requirements apply to solicitors and which requirements apply to firms.

Developing trends One of the key drivers for change is to allow more consumers to access the high-quality services that solicitors offer. Legal services are developing at an unprecedented rate and a major trend is the number of clients using the alternative legal market. This growing market allows unreserved legal activities to be provided to a variety of consumers. And our current rules mean that, incongruously, the only people unable to work in this market are solicitors. Clients are missing out on accessing the high-quality, professional services that solicitors deliver, and also the protections afforded by solicitor firms. Revamping our approach to regulation enables solicitors to explore this market - good for the profession and good for consumer choice.

The blueprint for the future To achieve our goals we clearly need to involve as many of you in the development of our approach as possible. There are numerous areas where, while we know there is an issue that needs to be addressed, we have yet to decide on the best solution. There are so many options, each with their own pros and cons (such as with the in-house issue mentioned earlier), that we will need your help identifying the best way forward. We have set up a specific reference group to assist with our work. The group helps shape our thinking, address tricky issues and comments on our proposed drafting. We are grateful for their input. We would welcome more participants, so those of you interested in helping to shape our work are urged to join. Information on how to get involved is available on our webpage www.sra.org.uk/ futures. You can also keep up to date with our thinking here. We will also be carrying out work to determine the likely economic, market, consumer and equality impacts of our proposals. This includes research and analysis of a range of data, including a comprehensive market analysis, reviewing a range of research on consumer behaviour, and examining what other regulators do. Formal consultation on the proposed changes will take place in the summer. There will be plenty of opportunities before and during this consultation for you to tell us what you think of our proposals. We look forward to working with you all as we lay down a blueprint for a bright future.

Simple, clear guidance We recognise that our regulation restricts some solicitors and their employers from pursuing delivery models that meet their needs and the needs of their consumers. Our proposals, for example, will open up the market for in-house solicitor teams, so that they too can provide services to the public. This is an idea that creates a great deal of discussion across the profession - both in the in-house and private practice sectors - debate that we want to draw out. Apart from creating new opportunities, our review will help us create a simpler, clearer and a more userfriendly Handbook for all solicitors. We want to move away from a prescriptive set of complex rules to focus on

‘We recognise that our regulation restricts some solicitors and their employers from pursuing delivery models that meet their needs and the needs of their consumers’

Julia Black is Chair of the SRA Policy Committee.

ML // April 2016

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The Views

Q: After the event legal expenses insurance - can it be an ‘answer’ to a threatened security application?

Depending on the circumstances it may be, or may help…

1. ‘Cover v security’– Historically security for costs focused on the provision of a ‘payment in’, bank guarantee or equivalent. Today ATE policies and derivatives of them are a prominent feature of the ‘security debate’. Cover for defendant’s cost is undoubtedly relevant to ability to pay, but cover is for the insured. A defendant is not a party to the policy. This juxtaposition is illustrated in the cases considered in the Harlequin Property case [2015]1. 2. The nature of cover provided by a ‘traditional’ policy means it is unlikely to provide security ‘equal to or better than’ a payment in/bank guarantee. Nevertheless, it seems the existence of ATE cover can have a bearing on security issues in various ways as part of the factual mix. i. CPR25.13 (2) – ‘threshold’ - It may be relevant as to whether a threshold condition is satisfied (per Geophysical on whether there was ‘reason to believe’ a company would be unable to pay). ii. CPR 25.13 (1) - discretion - It may be a factor for the court to take into account in the exercise of its discretionon whether to award security, or as to ‘how much’. 3. If a payment in/near equivalent is likely to be required then, depending on the insurer’s rating, one alternative may be provision of a deed of indemnity (DOI) (discussed in Verslot). This is increasingly common in practice as it provides an insurer/defendant connection, and disposes of ‘avoidance risk’. Another solution could be a policy endorsement excluding avoidance rights, providing for claims payments to a defendant and covering insolvency issues etc (see Harlequin). 4. Practicalities – As a DOI differs in nature from insurance an insured can expect to be charged for it. Similarly with an ‘endorsement solution’, and that charge may be in the premium (separately identified or not) or on another basis. If security may be an issue, it is worth flagging this to insurers with the application for cover and dealing with it (at least in principle) at that point. If left in abeyance there can be no guarantee a DOI or other solution will be available, or if it is, on what terms. Matthews Williams, Head of AmTrust Law. If you have any further questions regarding this or would like to discuss further with AmTrust, please visit our LinkedIn Forum: www. linkedin.com/company/amtrust-law 1. Harlequin Property (SVG) Limited and anor v Wilkins Kennedy (a firm) 2015 EWCH 1122 TCC (Harlequin) Al- Koronky and anor v Tie-Life Entertainment Group Ltd and anor [2006] ECCW Civ 1123 (AlKoronky) Belco Trading Co v Kondo and anor [2008] EWCA Civ 205 (Belco) Phillips Architects Ltd v Cornel Clark Riklin and anor [2010] EWHC 834(TCC) (Riklin) Verslot Dredging v HDI GerlingIndustrieVesicherungag AG [2013] EWHC 658 (Comm) (Verslot) Geophysical Service Centre Co v Dowell Schlumberger(ME) Inc [2013] EWHC 147 (TCC) (Geophysical)

LSB: encouraging proportionate regulation of in-house lawyers

here are currently over 25,000 in-house lawyers practising in England and Wales. Over the last 18 months, the Legal Services Board (LSB) has examined the legal regulators’ approaches to regulating this part of the profession. We know regulators take different approaches: some– Solicitors Regulation Authority, Bar Standards Board, Intellectual Property Regulation Board – have specific rules for those working in-house, but the details of these vary between regulators, others – CILEx Regulation, Council for Licensed Conveyancers - do not place any specific restrictions on those they authorise and who work in-house. The LSB’s analysis revealed that where there are specific rules they seem to go beyond the minimum level required by the Legal Services Act (the Act) and do so without clear evidence of the need for them. One of the drivers behind the introduction of the Act in 2007 was a desire to open up the legal services market to meet consumers’ needs more effectively. Concerns have been expressed that in-house practising restrictions limit innovation in the market and restrict choice for consumers. To help address this, the LSB recently published a statement of policy to support regulators as they make changes to their approach to in-house lawyers’ practice. It emphasises the importance of establishing an evidence base for adopting specific approaches, and developing rules that are consistent within and across different branches of the legal profession wherever possible. If regulators opt to change their approach to regulating in-house lawyers, the statement stresses the need to assess and manage any new risks to consumers’ interests that may emerge. The LSB intends to use these principles in its decision making processes. We expect the regulators to do the same when they consider rules for in-house lawyers. Unnecessary restrictions can increase the cost of regulation, reduce innovation and have potential to hamper access to justice. We believe that a more proportionate approach is needed and we expect the establishment of these principles to contribute to this goal. The LSB’s statement of policy on regulatory arrangements for in-house lawyers (based on section 15(4) of the Legal Services Act 2007) can be found here: http://www.legalservicesboard.org.uk/Projects/thematic_ review/pdf/201602_S15_Statement_Of_Policy.pdf Kate Webb, Head of Regulatory Reviews and Regulations, Legal Services Board (LSB).

ML // April 2016

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The Views

An integrated strategy Are law firms still neglecting to post informative content on their websites in order to increase website rankings and drive subsequent traffic? What are the most effective strategies for posting content/blogs online in terms of increasing a firms’ visibility to potential clients?

e work with over 200 Solicitors and some of them are fantastic at posting regular and informative content on their websites and social media profiles – others are not so consistent should we say. Most marketing teams are fully aware that developing and sharing informative and consistent content is an essential part of increasing a company’s visibility online. We’ve all heard the saying ‘content is king’. It is however essential that this content creation is part of a wider mix in order to be an ‘effective’ strategy. Content is king but content alone is not. So you’ve put an amazing blog on your website – how are you going to get people to read it? Content creation needs to be part of a funnel of marketing channels to ensure it is effective in terms of increasing a firm’s visibility to potential clients. Type? Another key point to think about in your strategy, is looking at the type of content you are sharing on your website and social media channels/blogs – are you turning your potential customers on or off? You want to increase your visibility to potential clients – not get them to go to another site. Keep content relevant and varied. Where? So you have your content, where are you going to share and promote it? In order for your strategy to be effective you need to work out where your potential customers will be to read it. Defining your target audience will help you decide on which channels you will use to promote your engaging content. Schedule? When are your potential customers online? Does your firm use a tool such as Buffer or Hootsuite to analyse the optimum times to share your amazing content? These powerful tools allow you to schedule your content to ensure that is being seen by as many of your potential customers as possible. There is no doubt that content is a key tool in terms of increasing website rankings, but a firm must not forget that it must develop a fully integrated marketing strategy based on its objectives to achieve real success and results. Pippa Saunders, Marketing Manager, Laird Assessors.

Keep Afloat of Flooding

he benefits of flooding are few and far between however, they deposit a fine silt (alluvium) onto the floodplain, making it extremely fertile and ideal for agriculture. Those that depend on flooding for their livelihood will see it as welcomed. Sadly in the UK, this tends not to be the case for many. According to the Environment Agency, over 5 million people live or work in properties, which are considered to be at risk of flooding. December 2015 was named the wettest month since Met Office records began. Buildings were destroyed and people were evacuated from their beloved homes leaving them in a state of despair. Sadly, many of these homes were destroyed including precious items within, bringing about another issue of landfills. Due to the carnage left behind by the floods, almost 30,000 tonnes of damaged household goods have been dumped in landfills. Appliances such as fridges and washing machines have been destroyed, as well as furniture and carpets. Individually, this waste is maintained and dealt with. However, when a number of these possessions are coming from an estimated 16,500 homes and businesses, a huge problem emerges with them being classed as ‘contaminated’ and non-recyclable. Many of these products contain numerous hazardous substances, that when broken down can filter into the soil and groundwater. Not a pleasant thought for many homeowners nearby. The damage caused by flooding, remains long after the waters have retreated. There are five main types of flooding that contribute to a flood risk. River flooding caused by burst banks; coastal: where the wind pushes waves further in land; groundwater: most likely to occur in low-lying areas underlain by permeable rocks; surface flooding: when rainwater does not drain away through the normal drainage systems, or soak into the ground and other flooding. With this number of contributing factors to the risk of flooding, the problem for buyers is that it is not always easy to determine if their property is at risk or not. A property doesn’t have to be close to the sea, river or be low lying ground to be at risk. Having local knowledge can be an advantage, however many insurers will look at the data representing the wider area surrounding the property in question before deciding whether they are prepared to insure and what premium they will charge. With the Law society placing more and more onus on property lawyers, to ascertain if the property will benefit from insurance in the event of a flood, flood reports are becoming more a matter of due diligence than best practice. Make sure your client is safe in the knowledge and aware of the risks surrounding their home. Sarika Sangar, Marketing Executive, Conveyancing Data Solutions.

Noel Inge, Managing Director, CILEx Law School.

ML // April 2016

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The Views

Justice in the Age of Austerity Austerity has been elevated to the position of a deity. Cheapness as an end in itself has become the order of the day. However, as with the wider doctrine of austerity, so the reforms in the arena of legal services seem to be driven by dogma without any coherent strategy or purpose.

e might want Ferraris to be cheaper so that we all may have one. But if the Italian government were to legislate a reduced price for Ferraris, how low would that price need to be before what you received was not what you thought you were buying?

Ostensibly, the goals of the RTA reforms were to weed out fraudulent claims and to reduce insurance premiums. There have always been severe penalties for dishonest claims, and rightly so. Furthermore, only the most naïve observer could believe that insurers would relay savings to customers rather than declaring higher profits and dividends. The Department of Health complains vociferously about the costs of clinical negligence cases. However, their propaganda is often devoid of context and disingenuous – the NHSLA is frequently its own worst enemy in terms of generating costs and no analysis has been done of costs following the abolition of success fees. Successive governments have bought into the narrative peddled by the insurance industry – fat cat lawyers growing rich at the expense of beleaguered premiums and tax payers – most recently pledging to crack down on lawyers bringing claims against “heroic” serving soldiers, following revelations of the destruction of exculpatory evidence in cases brought by Leigh Day. Again, there are, quite rightly, severe penalties for claimants and lawyers who attempt to mislead the Court; but what of the genuine claims? If it is the intent of government to make serving soldiers immune from suit then why not do that? Why choose to do it by bashing the legal profession for the inexcusable actions of the few? Proposals to fix costs in actions up to £250,000 appear to be a continuation of this blinkered process. If the aim were to make justice more accessible there would be some sense. However, the fixed costs implemented so far have been set at such low levels that the “Ferrari” is no longer a “Ferrari” or rather cheaper does not translate into access to justice but access to something rather less as long as your claim is in no way difficult. Added to the anti-Claimant, anti-lawyer rhetoric, the true if tacit purpose of the reforms would seem to be not access to justice but the deterrence of claims by ordinary injured claimants against Defendants who are usually insurers or government departments and who will always be able to afford lawyers.

Reaping the rewards Are law firms still neglecting to post informative content on their websites in order to increase website rankings and drive subsequent traffic? What are the most effective strategies for posting content/blogs online in terms of increasing a firm’s’ visibility to potential clients?

he short answer is yes, most UK law firms are failing to regularly post content on their websites. However, a study undertaken by eConsultancy in 2015 found that 32% of firms ranked Content Marketing as the most effective digital channel for their firm. This would indicate that although firms are aware of the importance of publishing content, they are still not doing it. Enacting a cohesive content strategy can be time consuming but it’s increasingly becoming recognised as the best marketing method for gaining new leads and increasing brand awareness. Here’s some tips to keep in mind as you seek to increase your firm’s visibility: 1. Think about your audience Effective content is written with the audience in mind. Take a look at how your clients find you, map their customer journey and then attempt to answer questions that may occur along that journey with your content. Online tools such as Huballin and Answer the Public can help with this research. 2. Don’t just focus on blogging Your website is often a potential client’s first impression of your firm so make it count. Build out your About Us page, write personal profiles for all employees, publish testimonials from happy clients, explain your services in detail, posts introductory videos. All of these can greatly help visitors understand who you are, what you do and how you’ll be able to help them. 3. Own your niche 86% of Google searches for legal services in the UK have a place name attached, ‘mergers and acquisitions London’, ‘Manchester family law’, ‘personal injury solicitor Hull’. Focus on becoming recognised as the local specialist in your practice area, writing content on the area you specialise in, in your locale. A recent study by the Alyn-Weiss Consultancy in the US showed that 70% of law firms had generated new business directly from their website. As little effort as 3 hours a week spent creating content can massively increase your visibility, build brand awareness and most importantly gain new clients. Ross Weldon, EMEA Marketing Specialist, Clio.

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ML // April 2016

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The Views

Borrowing: it’s not black and white Do you agree or disagree (and why) that law firms should consider increasing their borrowing whilst interest rates on loans from banks remain low?

ncluded within the published list of behaviours considered to be ‘bad’ by the SRA were: “Heavy dependence on high overdraft borrowings” “Short term borrowings to fund partners’ tax”

“Borrowings to fund VAT due to HMRC” In my view, it is impossible for the SRA to make such comments and for the very same reasons it is not possible to answer a general question on whether law firms should borrow more. The specific circumstances in each individual case for each individual firm would need to be assessed before determining whether it is possible for a law firm to increase its borrowings and also whether that would be an appropriate course of action. There are no black and white, right and wrong answers here. Whether law firms borrow or not is often dictated by the risk appetite of the owners of the firm, if not the direct needs of it. I tend to find that law firms fall into one of two camps – those that borrow and those that do not. That tends to be dictated by principles. Where a firm does borrow and something then goes wrong with the market or the business, then the scale of the borrowing often means that retrospective analysis would determine that borrowing to have been a ‘bad behaviour’. It can therefore be a ‘bad behaviour’ to borrow, or to increase borrowings, because there is more to repay to creditors in the event of business difficulties. However, where security can be provided for borrowings and/or it is clear to demonstrate an ability to repay the borrowings, then those borrowings could be an appropriate part of the working capital funding mix of a law firm. The key here is being able to demonstrate the ability to repay, which means that appropriate forecasts should be prepared as part of a business management tool to determine the working capital needs of the business; what the funding mix will look like; how and when the borrowings will be repaid; how the business will use the borrowings and what the benefit will be. Andy Poole is the Legal Sector Partner at Armstrong Watson, specialising exclusively in advising law firms. The Law Society has exclusively endorsed Armstrong Watson for the provision of accountancy services to law firms throughout the whole of the North of England.

A growing trend Recent research published by commercial property firm CBRE has shown Bristol is the largest legal hub outside of London, closely followed by Birmingham and Manchester. Do you expect to see an increase in ‘legal hubs’ outside the Capital, and what are the advantages/disadvantages of legal services provision on a regional level?

have to declare an interest: I have spent most of my professional career practising law in several of the legal hubs in question, only in later years transferring to the capital.

In a large part, the concept of legal hubs was propelled by the growth in the late 20th century of the national firms. These firms established an expertise in their home cities and then wanted to spread that expertise and reputation into other geographical areas. Since a number of “household name” law firms all were doing the same thing simultaneously, the concept of legal hubs became quickly established, with each such hub having a number of established national brands. This geographic expansion was not solely driven by a desire by the law firms for aggrandisement. They followed the moves of clients – sector by sector. Thus there was a period when Bristol attracted a lot of financial services companies and naturally the lawyers were keen to follow suit and boast matching specialisms in that location. The same applied a little later in Manchester when a number of insurers decided that it made sense to post a number of underwriting and claims functions to that city, leading to a boom in law firms with insurance departments. This has been replicated by Birmingham but less so in Leeds. There is of course illogicality here. In an age of electronic files and instant access by email, video and telephone, why do lawyers need to be close to their corporate clients? London has always convinced itself that much value is derived from having clients and service providers in close proximity, hence the insurance sector sticking closely to three streets in EC3, but it is hard to see that this is necessary in regional hubs, although my colleagues in Birmingham and Manchester still seem to spend a lot of time “getting to know the local market”! On a serious note, one of my major concerns as I look round the legal sector at the moment, is how long it will be possible for law firms to continue to operate anything more than a skeleton service in the capital. The cost of living and the time spent commuting is a major headache for young lawyers and the cost of premises is a nightmare for the firms. The growth of “north shoring” can only exacerbate this trend. David Simon, Chairman, Triton Global.

ML // April 2016

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The Views

Back to the future In light of the SRA’s proposals to launch a Solicitors Qualifying Examination (SQE), Anthony Bradney, Professor of Law at Keele University has warned that if the introduction goes ahead, solicitors risk losing their reputations because they would no longer need to be graduates. Do you agree?

emonstrating the standard that a solicitor should reach to be considered competent has been subject to considerable debate recently, partly as a result of the SRA’s consultation on the proposed Solicitors’ Qualification Exam (SQE). A centrally set two part test is the preferred method by which the SRA will determine initial fitness to practice in the future. In principle, providing a candidate can pass the SQE, there will be no requirement for a law degree or LPC. Interestingly, the SRA proposal says that there should be no exemption from the either part of the test. It is a contentious proposal which would effectively reduce a law degree to a preparation course in anticipation of the part 1 test. The part 1 test will evaluate the candidate’s ‘functioning legal knowledge’, which will comprise ethical issues along with the ability to apply legal principles to a problem. What the critics of the SRA’s proposal have failed to acknowledge is the fact that the solicitors’ branch of the legal profession has never been exclusively graduate: for some time it was possible to qualify via five years’ articles and more recently, through being a Chartered Legal Executive. The angst is probably greatest among those in the higher education sector, perhaps because the SRA’s proposal implicitly criticises the quality of some law graduates. Professor Bradney’s comments in response perpetuate at least one myth about standards: that those who have completed a law degree somehow have reached higher levels of educational attainment than those who have come through other routes. There is no evidence to suggest that non-graduates have diluted standards in the solicitors’ branch of the profession, and indeed it is frequently acknowledged by lecturers on the LPC that Chartered Legal Executives converting to the solicitors’ branch often outperform their graduate peers. One reason for this might be that CILEx itself uses a centrally set and marked test for evaluating the knowledge component of its qualification. As the originator of apprenticeships in law, CILEx also has considerable experience of testing competence in the workplace, which will also feature in the SQE. If the SRA’s proposal comes to fruition it will be interesting to see whether the movement towards greater emphasis on skills and applied knowledge, which feature as part of the CILEx qualification, are more widely adapted by those delivering law degree programmes. It’s a terrible cliché, but perhaps the SQE is a case of back to the future. Noel Inge, Managing Director, CILEx Law School.

Technology: when and how? How can firms overcome barriers to innovation/ embracing technology in order to remain competitive?

K Law firms are typically run by experienced, mature solicitors who today are faced with a wealth of challenges to their business; the Legal Aid changes, reserved activities now open to accountants, increased regulation and the Jackson reforms to name a few. Innovation and technology are typically low on the list of priorities, however, should be ignored at owners’ peril. Technology is one area of expertise that has become increasingly crucial for smaller firms. The digital transformation has affected most aspects of modern life, especially from a business perspective. From daily admin processes and workflows to optimising content, small businesses need to make optimal use of the technologies available to remain competitive in their markets. I was speaking to some Solicitors last week about targeted marketing to certain types of client to create more new business opportunities. Because of the lack of integrated IT in their firm, such marketing meant someone would have to trawl through hundreds of archived files to work out which clients had written LPAs, had trust structures in place etc. With a back office IT system with client data this should simply be a report download and/or a spreadsheet. I queried with the Solicitors – and indeed have had such conversations regularly before – what the problem was with IT in their profession. The typical responses came back as expected; “we always think of these things but they never get implemented. The owners/partners/directors are too busy to implement…” It appears to be a common problem. The decision makers in the business are client facing, do not have the capacity to implement technology solutions or consider the innovative ideas they hear. The legal profession is changing and the competition it faces from unregulated Will Writers, Accountants and other law firms is increasing. As a client facing business owner I have sympathy, it is easy to get caught up in daily firefighting, your own client workload and IT always falls to the bottom of a busy to do list. The answer is ensuring you have someone in the business who does – whether that’s an IT Manager if the firm is large enough or simply a Practice Manager for smaller firms, someone who has not got their head full of client matters and can focus on increasing the firm’s efficiency, HR, marketing strategies and IT management. IT is not just about organisation but can revolutionise the way you market to your clients, set a consistent image for your firm to attract new business and significantly increase the efficiency of internal processes and compliance. It is not about whether you should embrace technology but when and how you are going to do it. Rebecca Colley, Operations Director, Informed Financial Planning.

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The Views

The three types of technical innovation 1. Incremental Innovation Simple technical innovation easily put into place, that speeds up efficiencies. An example of incremental innovation is how AlldayPA works with law firms, ensuring costly lawyers are only ever engaged when our PA’s have triaged responses from clients. This involves our technology and our staff ‘stepping in’ on your behalf, technology is too expensive to buy yourself but easily affordable as a service. 2. Breakthrough Innovation This is significant innovation that makes an impact to the business and generates greater revenue. An example of this is how conveyancing firms integrate with our systems at AlldayPA so our PA’s see exactly where the conveyancing procedure is in real-time. When our PA’s answer the calls from your clients we can inform the caller of the current stage of the case, without wasting a second of a lawyers or paralegals time. 3. Radical Innovation This is genuine futuristic technical innovation. Artificial intelligence is talked about but many years away. Instant messaging with AI responses for facts and stats will in time - mean PA’s will be used for the more human interactions, or to provide businesses with that extra special personal touch of the human voice, when they want to differentiate and also when the customer really needs it. Law firms must learn to embrace change full-stop. If you don’t, the technical industry will force you to change when it is too late, just like technology forced the music industry to change, and the traditional farming industries, which are now on the cusp of being revolutionised by technology. It is a matter of when, not if. Learn to love change and what technology brings your way, not fear it. Little born out of fear is ever good anyway, either at a professional or personal level. Jazz Jhumat, Head of Corporate Business and Financial Adviser, AlldayPA.

The Checking-Out Check-List

o much of the financial planning industry is reliant on mortality and, while an actuary can quite accurately predict the long-term liabilities of a particular pension or insurance fund, estimating the timing of our own demise is not quite so easy.

There are, however, a number of actions we can take to ensure that our surviving family is not left with a number of difficulties at an already difficult time. There are some obvious documents that should be kept up to date: Wills, Expressions of Wishes, Powers of Attorney. A private client lawyer will tell you: the one thing worse than dying is dying intestate. Almost as important, make sure that someone knows where to find all of these documents. In a similar vein, make sure that you have a list of important contacts and think about having a replica list with your financial adviser, accountant and/or lawyer. Your financial adviser should have details of all your life, pension, investment and insurance policies. You might wish to provide a list of banks with whom you have accounts too, so that funds can be available when your family might need them most. Bear in mind that single accounts are often frozen on death, but joint accounts are not. How long could your spouse or partner survive on the money in their accounts if all of your own accounts were frozen? Similarly, are there insurance premiums that would need to be paid after your death that should therefore be paid from a joint account rather than your sole account? Where you have life policies or old-style Retirement Annuity Contracts (RACs), make sure these are under trust so the funds can usually be released to the appropriate people before Grant of Probate. Without trusts, you could be giving up 40% of the value of these policies to HMRC as inheritance tax. Last but not least, if you are in poor health, where practical, think about transferring those assets with large gains into your sole name. Their cost for CGT purposes will be rebased to their current value on death, potentially saving enormous amounts of tax in the future. Simon Maydon, Chartered Financial Planner, Saunderson House.

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The Views

The future of funding Do you agree or disagree (and why) that law firms should consider increasing their borrowing whilst interest rates on loans from banks remain low?

ince the 2013 reforms and the recent recession, law firms have had to sharpen up to stay in the game.

Law firms are learning the hard way that you can no longer wait for work to come to you. Old lucrative lines of work may no longer exist and partner drawings and salaries can no longer be what they once were. Sadly the majority of those that have failed to diversify, concentrate on marketing and cut back on expenses have suffered significant, if not catastrophic consequences; in 2014, SRA interventions were up 13% from 2013. Historically, funding lines were used for WIP and disbursements, however when the recession hit, many of the high street banks made the decision to withdraw this funding. Many law firms saw their overdrafts slashed almost overnight which left them in precarious positions. Banks are slowly coming back into the market but with a very cautious approach. In the interim, specialist market lenders have seen a sharp growth in take up of their various products specifically geared towards easing the ever increasing cash flow burden for law firms. The question is, are the banks who are offering ‘low’ interest rates even funding the legal sector at the moment? As I said earlier, if they are, it’s on a small scale and certainly not open to all law firms. What has become apparent is that any funding lines secured by law firms need to be carefully managed by both the law firm and the lender and on this basis funding can help a law firm thrive, but beware, if you don’t choose the correct funder or line of funding where you can be confident that the lending is not risky and is fully compliant then law firms should look to borrow whilst resting easy that the sharp withdrawal of funding lines felt in recent years should not be repeated. VFS Legal offers fully underwritten, compliant specialist funding to the legal market. Law firms can be confident that risky lending will not leave them feeling unsure about the future of their funding lines, leaving them free to concentrate on running their business with confidence. Kathryn Thomson, Commercial Director, VFS Legal.

Making use of what you have How can firms overcome barriers to innovation/ embracing technology in order to remain competitive?

n order to understand what the barriers are, I think it is vital to get a real grasp of what a firm wants to achieve when it comes to innovation/ embracing technology.

It is all too easy to jump into a project without having really considered what the clients want first and more importantly, why. Furthermore, without a real appreciation of the benefits and return on investment, a firm cannot truly decide whether the barriers are worth overcoming. If we take an example that a firm wants to be more accessible to its clients. The first step is to validate that idea. Get a survey out to the firm’s client base. It will give an opportunity to ask a lot of questions as well as determine the engagement level and demographics of respondents. In that survey, it would be wise to ask, “are we always available to answer your questions” and “if we aren’t available, do we always call you back at a time convenient to you?” – A “yes” to either of these questions might indicate that you don’t need to be any more accessible to your clients. Once the idea has been validated, find out how to be more accessible. It could be not closing the telephone lines during lunchtime (there are still firms that do this!). Or it could be something more challenging like after hours service or 24/7 online access. Working out the possible solutions and cost is important at this stage. However equally important is considering the return on investment, scalability and associated risks. However to answer this question I believe the one key aspect to overcoming barriers is to involve more than just the senior management/decision makers. Within our firms, we have access to a wealth of talent. In my own firm, I find that they are all too willing to be involved in more than just their daily duties. It gives them an opportunity to not only develop but demonstrate their other skills and impress their employer. By accessing their perspective and ideas, firms will have more to work with, more ideas, more solutions and most importantly resources. Firms see innovation and technology as expensive and not necessarily supporting the acquisition of new business. A lot of technology focuses on internal systems and processes which ultimately introduce cost savings. It can be difficult to identify the full impact of any such cost savings but a well implemented plan of action coupled with effective use of people already within the business will make a difference. Sucheet Amin, Managing Director, Aequitas Legal & Founder of inCase™.

ML // April 2016

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The Views

Stamp Duty Rises for Buyers of Second Properties

re you planning on buying a holiday home, a property for the kids, or thinking of investing in a buy-to-let property? If the answer is yes to any of the above, are you aware of the new stamp duty from the 1 April when a controversial extra 3 per cent stamp duty charge is introduced?

This brainchild of the Chancellor George Osborne could add thousands to buy-to-let property transactions. The Treasury had a consultation running on the reforms and that closed on February 1. But this has all gone under the radar of many and the new policy will be outlined at the 2016 Budget on March 16. The Chancellor says the extra money raised would be used to help first-time buyers and pay for more affordable housing. Who will be affected? Anyone buying a property which will not be their main residence or replacing an existing property they don’t live in, is likely to get caught up in the changes. It is not just buy-tolet landlords that will be hit with this increase in stamp duty but anyone owning a second home. This could be parents buying a property for their children or a couple purchasing a home together where one is already a homeowner. If you’re considering buying an additional residential property you may have to pay an extra 3% points in stamp duty from the 1 April. The surcharge applies on top of the current stamp duty rates. If you would like to speak to us about any these changes please get in touch. So with all of these additional expenses it might seem even more prudent to think about protecting your risk when buying a second property. Our MoveSafe Abortive Insurance (http://www.boxlegal.co.uk/movesafe/) is available to both residential sellers and purchasers and applies to all Freehold and Leasehold transactions. The MoveSafe Abortive Insurance policy provides protection against loss of legal and survey fees should the sale or purchase not go through. Moving house is stressful enough without the threat of wasted expenditure! Robin Selley, In-house Lawyer, Box Legal.

Getting to grips with business intelligence

ith law firms’ profitability being squeezed by alternative entrants to the market and consumer demands for fixed fee work, the benefits of powerful business intelligence solutions in delivering key strategies and measuring success in order to sustain profitability are more essential than ever.

Quality of data is key to mining meaningful business intelligence. And meaningful really is the key here. Most systems will dump data into Excel for you – but no one bothers doing so because very few stakeholders will have the time to spend trying to make sense of it all. Business intelligence systems need to pull data from all areas of your business and present them to you in an easy to understand yet comprehensive way that means something. The fact is that most firms already have this data – they just don’t have it in one place and don’t know what to do with it to make it mean something to them. Those firms that think business intelligence systems are unnecessary often don’t appreciate how far reaching they really are. Good business intelligence leads to strong strategic decisions in all areas of the business, from business development to finance. Firms are better able to assess and manage risky matters, which is great for compliance and PII, and they can compare how effective individual solicitors are compared to colleagues, which will ultimately feed through to HR planning. There are other benefits of good business intelligence systems too. Our clients have found that just by implementing integrated practice management and business intelligence solutions they are increasing their profit margin by as much as 50% just by ensuring they are billing correctly, capturing all of their fees for items that are often overlooked such as emails and telephone calls and ensuring disbursements are passed on correctly. All firms will tell you the hourly sale rate of their fee earners, but how many know cost and profit margins per fee earner? To effectively deliver alternative fee arrangements you need to be able to look at historical profit margins to work out how much you can skim from your quotes – many firms just guess and end up finding themselves out of pocket. The good news is that once firms get to grips with the wealth of information they now have at their fingertips, they can make strategic plans to ensure they deliver clear competitive advantage that will see them successfully improving services to clients and increasing profitability over the next few years. Jo Hodges, Sales & Marketing Director, Redbrick Solutions.

ML // April 2016

The Views

Junior Lawyers: What’s motivating them in 2016? How can firms ensure they are attracting the next generation of junior lawyers, who are not necessarily motivated by Partner status?

eveloping a professional career is an exciting prospect, whether this be in the legal or medical profession. Training, both academic and in-service, raises an expectation of future working that is motivating, rewarding and stimulating. Junior lawyers will be both similar and different to their predecessors, but how? ‘New generation’ lawyers are likely to be more ‘tech-savvy’ and be skilled in using digital means of communication such as LinkedIn, Facebook, website technology, and other digital methods of rapid and brief communication. In the culture of ‘customer-responsiveness’ and ‘supplier responsibility’, new-generation lawyers will not show deference to the long hour, work-over-family culture that was around in the 1970s/80s. A recent roundtable discussion held by the Law Gazette (February 2016) for junior lawyers, indicated they were good communicators, interested in prioritising family life and ambitious, but in the context of being valued not just aspirational, hence were less motivated by internal law firm politics. So if the traditional expectations are not held as strongly now by ‘new-gen.’ lawyers, what will they ‘vote for’, and be committed to? My Top 4 lists of contemporary motivators for new-gen. lawyers are: • Being part of a ‘continuous quality improvement’ culture in which they have a voice about customerresponsiveness and within-firm lawyer empowerment. • Technology-awareness in which digital case management and marketing is valued. • In-service training and mentoring, either in a traditional way e.g. (courses, ‘parental’ supervision) or by the more collegiate peer-supervision facility of two colleagues offering advice to each other. • Regular appraisal of case management, communication and aspirational objectives so that individual and Firm goals can be in equilibrium with each other, and lawyers can feel excited about objectives for the year ahead. Junior lawyers will want to develop marketable skills which allow them to progress in their current firms but also give them confidence to ‘vote with their feet’ if appropriate. Many qualifying and experienced lawyers and barristers feel happy to be doing what they do. They feel lucky, enjoy the excitement/pressure of ‘only being as good as your last case/brief’ – a balance of freedom, enjoyment and concern about awaited work. Law, like medicine, is still an incredibly worthwhile profession – junior lawyers, like junior doctors will have ‘contemporary’ expectations that need to be listened to.

Do the right thing All law firms are obliged to comply with the SRA’s new approach to CPD from November 1st 2016. How are firms responding to this change?

any firms are taking the opportunity presented by changes in the SRA’s CPD regulations, which come into force on 1st November 2016, to review the way they manage their people. Tweaking how CPD is measured only goes so far. How do you go about getting people to give their best whilst they are at work? How do you make sure that business skills, as well as technical know-how are on the agenda? In particular, how do you create a disposition towards the kind of flexibility of thought and action, which an evolving legal market increasingly demands? These are tough questions for a sector in which people management has for a long time equated to expecting people to “do the right thing”. The inherent decency and procedural rectitude of many members of the profession finds them struggling to actively manage change, hold people to account for their actions constructively, or demonstrate authentic appreciation for outstanding performance. None of these things look difficult on paper; all of them can be difficult to do well. CPD regulations now require solicitors to be able to declare themselves competent in a variety of ways, which are relevant to their practice. The SRA’s Statement of Solicitor Competence is a guide, but firms can write their own descriptors of “good looks like”. Making the most of this change means looking at business strategy and working out the ways people will need to behave, and the attributes and skills they need to demonstrate, in order to realise that strategy. Professional development alone is not enough to drive business performance. Taking a strategic approach to how to get the best from people involves having a hard look at a range of factors which influence performance; organisational design, recruitment practice, performance management, reward and recognition, as well as development programmes which support and challenge people to learn and improve their practice. So many things about law firm structures make managing people difficult; old hierarchies die hard, technical expertise is no guarantee of leadership ability, and why would those who can bill the highest fees spend time on people management tasks they do not enjoy? Shifting mind-sets is not just about getting CPD right. It is about thinking strategically to work out how people can best contribute to the business, and equipping them with the skills to realise their own potential and to help others do the same. Nicola Jones, Director, Athena Professional.

Dr Hugh Koch, Clinical Psychologist, and Director at Hugh Koch Associates.

ML // April 2016

The Views

The next generation How firms can ensure they attract the next generation of junior lawyers, who are not necessarily motivated by partner status?

any of the current generation of young lawyers have different priorities, aspirations and interests to the older generation, expectations vary and not all share the ambition of partnership. Yet for the partners and owners of law firms, the success of their practice and succession within their practice may be seen as being dependent upon the next generation mirroring their ambitions and expectations of several decades ago. So what can firms do to attract the next generation? As individuals, lawyers are all different. At Olliers, we make it clear that there is no rigid template for progression. We recruit and attract complementary not competing personalities. Some may be natural born playmakers, capable of attracting clients, whereas others thrive on office-based work. It is crucial to recognise the importance of differing talents. We value youth and harness the knowledge and life experience of today’s millennials. They may be far more sophisticated in areas of social media and have a better grasp and understanding of YouTube, Twitter, LinkedIn and Facebook and how it can be maximised - both socially and professionally. Olliers recognise that whilst many young lawyers may not aspire to partnership, all lawyers want to be seen as being excellent at what they do. Maximum encouragement is given to ensuring that lawyers develop excellence in specific areas. For example, Olliers have abandoned the SRA’s CPD regime in favour of Continuing Competence. Rather than comply with 16 hours CPD our lawyers are encouraged to look at career development and where they want to be over the next three years. Every quarter we look at how that is progressing and what is required to achieve objectives, whether through web content, blog items, course presentation, promotion through social media, shadowing counsel in new areas or traditional CPD. We consider all requests for flexibility. 60% of our staff work flexibly. This may reflect reduced hours or remote working, something made simple through cloud based servers, digital dictation and digitalisation of the Criminal Justice System.

Where to start with content

ore and more of the world are turning to the internet for information. So much so that we live in a world of information overload where only the best content stands out. People are looking for quick fixes, easily accessible and easy to understand information. Look at the Independent newspaper that stopped printing the hard copy of their newspaper recently. As solicitors, we are beginning to wake up to the fact that the internet will play a big part in our business. Changes are happening continuously and social media is one aspect of those changes, I literally woke up to this a few years back. I was away for Christmas and woke looking for a read to stimulate my brain after so much television, food and drink. I took a look at Paul Hayek’s extract from a book on social media for lawyers. It was fascinating and from there I went on to attend social media courses and meet many experts in this industry, which has led me onto a journey where our firm interact on social media daily, and also changing our website twice to make it more interesting and interactive for our customers. Our initial worry was the amount of time this would take and how beneficial it would be to clients or us. How could we afford to give away all this time in writing and getting to grips with this new media when and at the same do our paying work? And yes, you will have to give away free because you won’t see direct returns on this investment. We decided that we had to start somewhere, so we took a decision to invest part of our firm and time into this. We committed and then started to build our brand and identity online so we could communicate with current and future clients. You need to get to grips with the art of writing good blogs. Go on copywriting courses; read books, the more the better. Eventually you will get an insight of how to develop your own style. Once you start blogging, whom do you focus on? Identify your audience. Then write for that audience. Try to encourage your audience to ask questions and interact with you. If you get too technical this will risk confusing or alienating your audience from reading future material. Informative content is a tool for you and a resource for your audience; this is what you should aim for! Angelo Piccirillo, Solicitor-Partner & Co-founder, AVRillo Solicitors.

We realise many younger lawyers have not adopted the traditional career ambition of 30 years ago. Recognising this has allowed us to achieve a thriving practice with a balance of mature and younger lawyers even if not all aspire to ownership of the firm. Matthew Claughton, Managing Director, Olliers Solicitors.

ML // April 2016

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The Views

Overcoming Barriers How can firms overcome barriers to innovation / embracing technology in order to remain competitive?

hile there is significant innovation taking place in the legal sector, the resistance of large numbers of firms to embrace technology demonstrates that there are indeed barriers that need to be overcome.

One of the key barriers is a simple lack of knowledge about what is possible which innovations might add value to the business and how to identify what is going to work? Knowledge gathering can be a good tactic to getting the process started and there are many international conferences and educational trips organised by innovative technology firms, through which key people in the business can learn about new technology that is coming to the fore. Ownership of and commitment to innovation are absolutely key to making it happen. Some firms, including our own, have set up specific Innovation Boards using external experts and a broad range of staff from within the business. The Innovation Board can be charged with delivering a number of new initiatives per year, but has to start with an open-ended commitment to supporting the ideas which emerge. You have to work at innovation - it’s one thing to have an idea and another completely to execute it successfully. Firms that are successful at innovation have to embrace failure on a regular basis - the key is to fail and learn fast and move on to the next opportunity. Investment commitment is another challenge especially within traditional partnership organisations. Unfortunately, the most senior and influential partners in many businesses, often also have the shortest investment timeframes in mind. This can make it very difficult for the next generation of partners, so legal businesses need to organise themselves in ways that allow sufficient influence to this group when it comes to innovation. If innovation is about remaining competitive then it needs a degree of focus - what are the problems we are trying to solve for our customers or our business? In terms of prioritisation, how much impact can an innovation in one specific area have? The very first step to overcoming barriers to embracing innovation and technology is recognising its necessity and this requires a lack of complacency about the role of lawyers, which is missing within many parts of the industry.

Tell your story

n this edition focusing on legal innovation, we thought it would be appropriate to dedicate our column to the Tell Your Story campaign: this is a new initiative from First 100 Years, the ambitious video history project which Serjeants’ Inn Chambers is privileged to support.

First 100 Years, founded by Dana Denis-Smith, was inspired by a photograph taken at the partners’ dinner of a major City firm in the 1980s. It shows one lone female lawyer surrounded by over 100 male colleagues. That lawyer was Dorothy Livingston, a competition law specialist who is now a consultant at Herbert Smith Freehills. The project, which is supported by the Law Society and the Bar Council, will produce 100 short films featuring trailblazing female lawyers as a British Library exhibition to mark the 2019 centenary of the Sex Disqualification (Removal) Act, which paved the way for women to enter the profession. It celebrates powerful female role models, provides a platform for debate and establishes a valuable archive for the future. The Tell Your Story campaign asks lawyers to record their own experiences and observations on a new archive on the First 100 Years website. As Dana comments, “at the heart of the project are 100 incredible stories charting the journey of women in law. From famous names such as Baroness Hale and Shami Chakrabarti to the unknown stars of tomorrow, this ground-breaking history project is capturing what female lawyers have endured and achieved since 1919. But one story is missing; yours. So please share your story with the First 100 Years and be a part of history right now”. Stories posted so far provide personal illustrations of the everyday challenges women can face – including an account from a woman who was serenaded by senior male barristers with a chorus of “I’ve got a lovely bunch of coconuts” every time she left court as a pupil. Yet there are also some encouraging reflections on progress made in recent years and practical advice, for example on keeping up client relations during maternity leave. We would urge you to visit http://first100years.org.uk/ to read more and to tell your story. Catherine Calder, Solicitor and Director of Client Care, Serjeants’ Inn Chambers.

Mark Montgomery, Customer Strategy and Marketing Director, myhomemove.

ML // April 2016

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The Views

To borrow or not? That is the question

iven low levels of inflation and global economic headwinds, the bank base rate is now not expected to rise until December 2018. The cost of borrowing is therefore likely to remain at an all-time low for some time to come facilitating investment across the legal sector.

In the summer of last year, the FT published an article suggesting that British law firms had taken their debt to record levels with total borrowings at £7 Billion, up 28% since 2011. This corresponds with our own experience with borrowings up 15% in 2015. That growth in debt has been supported by way of revolving credit facilities for larger firms and term debt for smaller firms. However, the level of borrowing witnessed by way of overdraft has actually reduced over the last two years suggesting that generally, cash flow has been positive and borrowings have been taken in support of specific investment projects. There have and continue to be many positive reasons why firms are looking to raise new debt. Many have looked to invest in their domestic or international footprint with some enjoying merger success, others have looked to progress a growth strategy involving lateral hires and of course many firms have looked to fund investment in technology. For some firms, changing trading conditions are driving new borrowing habits. Litigation and the associated disbursement costs are certainly absorbing significant cash sums for a number of firms many of which appear to have been unprepared for the associated cash implications. We also continue to see firms wishing to borrow for less favourable reasons such as the funding of rent, tax and VAT given insufficient provisioning and in many cases, aggressive drawings which have depleted cash reserves. We are not seeing any evidence to suggest that banks have a reduced appetite to support the lending needs of law firms. For many firms the opportunity to enhance performance by way of debt funded investment represents a very viable business objective. However, firms must be able to clearly articulate how the debt will improve their business opportunity. This could take many forms, ranging from property improvements through to people development and technology related business efficiency.

Challenge and Evolve

ver heard the old saying, work smarter, not harder? In busy industries like conveyancing, where staff are notoriously overworked and the workload is heavily process focused, it is easy to see how retaining talent can be difficult. I believe that workloads and workplace culture can be improved by challenging and evolving current processes to work smarter, not harder. In early 2015, Mark Carver issued a piece via the Law Society, “Conveyancing – is the reward worth the risk?” where he noted several interesting facts. Firstly, conveyancers are earning less now than they did a decade ago - with conveyancing fees increasing on average by almost 37%, which is still below standard inflation. Secondly, conveyancers are facing significantly more potential risks, due to conveyancing fees having not been updated in accordance with the risk of exposure to a negligent transaction. Additionally, external pressures on conveyancers such as unrealistic expectations from customers, time pressures, keeping costs low and having to justify their value can often mean demoralising and unrewarding work. Several years ago, a BBC study even listed conveyancing among the top 10 “Charges that make consumers scratch their head”. Now, more than ever, it is imperative to change these perceptions to attract and retain talent. To do so, practices must look after their staff, listen to their workflow issues and provide them with technology that creates efficiencies for both the business and individual. By introducing enjoyable technology within firms to create more productive workflows, lawyers can alleviate many of the pain points including long hours, excessive workloads, and stress. The follow on effect of implementing enjoyable technology, often has a far reaching and positive impact on the whole organisation, raising the morale and creating a positive environment. Encouraging improvements in internal processes, and working in an environment where everything is being done to challenge the ways in which conveyancing is done, will see conveyancing practices evolve and benefit as a result. Scott Bozinis, CEO, InfoTrack. For information please visit our website www.infotrack.co.uk or call us on 020 7922 5777.

Investing wisely is key. Firms need to consider whether now is the right time to invest in their business. If debt is managed carefully and targeted against specific and measurable objectives, it can help facilitate growth. Steve Arundale, Commercial Head of Professional Services, Large Corporates & Sectors, Royal Bank of Scotland/ NatWest, Commercial & Private Banking.

ML // April 2016

The Views

Overcome your networking fears

hen you walk into a room full of strangers, at a networking event, do you ever start off having ‘solo’ conversations that go something like this? • “I don’t know enough about xxxx.” • “How am I going to break the ice, because I don’t know anyone, do I?” • “I’ve no right to be in front of all those people; I’m too junior to represent the firm.” • “Nobody’s going to talk to me.” • “What if I’m asked something and I don’t know the answer?” The majority of people have this conversation simply because we all have two key fears in our lives; fear of rejection and the fear of failure. These fears represent false expectations, as most people who attend business events are friendly, personable and welcoming. When have you been rejected at a business event? After all every one is there to spot opportunities, build or reinforce relationships. Yes, there will be a tiny proportion of rude people; those who decide you’re not important enough and start looking around the room. Don’t stay around, excuse yourself and go and find the ‘nice’ people who deserve your company. When you walk into the room it’s time for a rethink.

Change the script • “Yes I am a little nervous, but I guess so are most other people.” • “I’m going to be friendly, courteous and polite; that way people will like me quickly.” • “I’m going to smile, give good eye contact, shake hands and aim to remember people’s names. This will help me create a good first impression.” • “It’s a business event so I suppose everyone is here to meet new contacts.” • “I’m going to spend more time being interested by asking questions rather than talking too much about myself.” • “I’m going to positively look for potential opportunities and follow them up.” But why should you fail? Fail at what exactly? It’s not an examination or you are the defendant in a trial being judged. It’s just a group of people, most of whom will be polite, friendly and welcoming. Focus on them and enjoy your networking. Will Kintish, leading UK authority on effective and confident networking, Kintish. If you’d like Will to speak at your conference or training workshops, call him on 0161 773 3727. Visit www.kintish.co.uk for further free and valuable information on all aspects of networking.

Developing the networking skills of the legal profession

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The Views

The legacy of the Legal Services Act 2007 is taking shape

later & Gordon must be the poster child of the Legal Services Act 2007 (LSA) and its intended liberalisation of the legal profession. Look at the ‘LSA Checklist’ boxes they have successfully ticked: • Licensed ABS; • Non lawyer owners; • World’s first publicly listed law firm; • Legal market consolidator with aggressive acquisition strategy; • Consumer giant. So what’s next for this innovative business model? What legacy will it leave in legal history when we consider the LSA’s impact upon the profession? On 2 March 2016 The Sydney Morning Herald’s headline, ‘Slater & Gordon under bank pressure to settle cases’, featured an article stating ‘Analysts at Macquarie Bank said the firm would be expected to settle as many cases as possible in the next month to soothe the concerns of its bankers’. In the same week, lawyers running those cases were faced with media reports of office closures and redundancies - hardly soothing for them. These actions raise a number of questions and potential consequences: • Can staff perform well in these conditions? • Have things been made cataclysmically worse for the firm by their own bankers unwittingly downgrading years of lawyers’ hard work to bargain bucket value? • Is the UK insurance industry in party mode at the prospect of saving hundreds of thousands of pounds negotiating S&G’s costs claims down? • Will more financial losses and WIP write down follow? In terms of savings, salary costs will certainly decrease through redundancies; some staff may leave having simply had enough. If that happens S&G may find itself in an overtrading scenario. A reduced headcount may struggle managing increased caseloads and claims lifecycle may slow, as will cash receipts. Clients and staff are S&G’s true assets. Without drastic action and significant investment in these assets, the doomsday scenario could see S&G exit from the legal sector via disposal into law firms with an appetite for distressed acquisition. Further redundancies will surely follow. The bank has made clear that it’s make or break time in a way that will make it even harder for the firm to generate much needed cash. S&G and their bankers are making pivotal decisions – propelling themselves towards their ultimate LSA legacy destination. If this ABS poster child is its own undoing, it will leave a legacy so often demonstrated in history that being first to market does not guarantee success.

How will the recent case of Budana impact on M&A?

he recent case of Budana v. Leeds Teaching Hospital NHS Trust, concerning the validity of CFA Assignment, will undoubtedly have some impact on M&A in the personal injury sector. The case specifically dealt with the validity of CFA assignment from selling firms to buying firms. This is an important decision for the personal injury sector, as the sector continues to consolidate. District Judge Besford held that, being bound by the case of Jenkins v. Young Brothers, CFA transfers between firms are permitted, but in this case the Retainer came to an end before the CFA was assigned, meaning the assignment failed. This was due to the language in the letter written to the Claimant regarding the transfer of cases as part of an M&A transaction. The question in Budana was therefore whether the letter intended to terminate the retainer. In my opinion, it is difficult to see this intention and is likely to go to Appeal as a result. From Budana, it is clear firms within any M&A process have to be very careful about the advice/letters given to Claimants on transfer of the cases, alongside a continuing uncertainty about the assignment of CFAs. Good M&A practice for acquiring firms should be to ensure there is a fall back retainer and as such they enter into a back up CFA that is compliant with the law post LASPO, so if the CFA assignment is ruled invalid, there is a CFA in existence. There is no definitive answer to the issue of CFA Assignment at present. Although satellite cases assist, for each case in support of an argument, another goes against. Only a definitive answer from the Supreme Court can, in reality, settle the current uncertainty, something hopefully occurring soon, as the case of Budana is highly likely to be appealed. Therefore, although acquisitions in the market have continued to flourish, the uncertainty over CFA assignment adds risk to such a transaction, reducing the price of cases. Zoe Holland, Managing Director, Zebra Legal.

Lesley Graves, Managing Director, Citadel Law.

ML // April 2016

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The Views

Cyber Crime – A threat that cannot be ignored “It is a very sad thing that nowadays there is so little useless information around”. Oscar Wilde

he British Government has declared cybercrime a ‘Tier 1 Strategic Threat’. New laws are being enacted here and in many other countries. Most have key aspects in common: They, 1) Carry swingeing penalties (including criminal conviction) for non-compliance – particularly where negligence is involved; 2) Carry heavy revenue based fines; 3) Seek to single out and name responsible individuals where negligence is involved (almost all breaches), and; 4) Most have, or seek, surprisingly extensive crossjurisdictional reach. The risk to us all from cyber crime is high and exponentially rising. Any and all data has a value. Criminals are determined to steal whatever they can. Once they have it, they have an efficient market in the deep-web on which to trade it. By the end of this decade, it is estimated that the global cost of cyber crime will substantially exceed $2 trillion – if each of those $’s represented 1 second of time, that would be equivalent to over 62,000 years. The target of the cyber criminal’s interest is not always obvious. They may be after something that you have, but they may just be looking for a stepping stone to another objective – as many as 80% of all breaches in larger enterprises are traced MLM23 Legatsat Cicayda HP AD.pdf

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back to somewhere in the supply chain – a spoofed (hijacked) email address, for example, may provide exactly what they need. Otherwise, just finding a flaw in your processes will provide the opening they need. No enterprise is too small to be of interest to cyber criminals. Regardless of what a slick salesman might tell you, there is no silver bullet which will protect a potential victim from the attentions of a determined hacker. Crucially though, around four out of five breaches have their genesis in human error (or, less frequently, a malicious act). This is known as the ‘insider threat’. Therefore, a huge proportion of any company’s risk can be managed down by removing, or at least significantly reducing, that insider threat. Criminals are in the business of making money. They go where the money is. Like any business, they are driven by risk and reward. Every difficulty that they face achieving that goal will go towards reducing their interest in targeting a particular victim – after all, there is always someone else who has not bothered. By implementing a concatenated ‘Information Security’ plan which looks at all of your security issues (including cyber), supported by an actively managed governance regime, you become a less interesting target for cyber criminals. Then you can get on with business. Andrew Taylor, CEO, BeCyberSure.

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51-62

The Features REGIONAL FOCUS:

Cardiff

Interview with... Paul Hopkins In the sixth instalment of Modern Law’s regional focus, Charlotte Parkinson, Modern Law spoke to the new President of Cardiff & District Law Society, about keeping members connected to the business of law, and hopes for his tenure.

What are the main challenges Cardiff & District Law Society faces at the moment and why?

Cardiff & District Law Society was founded in 1886 and is the largest local law society in Wales with over 1500 members. The Membership covers the greater Cardiff area including Barry and Penarth. The Society is a member of the Confederation of South Wales Law Societies and the Associated Law Societies of Wales. The Society covers a large cross section of legal interests and firm sizes, including sole general practitioners, mid-sized specialist crime and family practices and large commercial firms based in the city. We also attract the membership of national legal brands and Alternative Business Structure models. Each of these types of firm or legal business has its own distinct issues and interests that need to be serviced and represented by the Society. One of the main challenges for the Society is ensuring that the services and benefits offered to this diverse membership are relevant to their respective interests. In addition, the Society recognises that resources are finite and that our members have many other financial commitments. The challenge is therefore to ensure that the services provided by the Society are of interest to, beneficial and attractive to the Members and provide value for money.

What are your core aims during your tenure as President of Cardiff & District Law Society?

A core aim must be to make every effort to ensure that the Society represents the interests of its Members as effectively and efficiently

‘More can be done to reach out to our members and one of my core aims will be to improve on the Society’s existing communication with its members’ as possible and provides services and benefits of value to the membership generally. Unlike many local law societies, Cardiff & District Law Society does not have a permanent home. Currently the Wales office of the Law Society accommodates meetings of the Society including council meetings and the various committees meet at the offices of council members. As President I would like the Society to find a permanent home. We are currently exploring a number of possible options. Communication with the membership is also key.

The Society currently communicates effectively with members through social media (predominately Twitter), regular e-newsletters to Members, a hard copy bi-monthly publication called Legal News, which covers legal issues and social events and a recently re-vamped and regularly updated website. However, more can be done to reach out to our members and one of my core aims will be to improve on the Society’s existing communication with its members. We are currently reforming how we interact with our ever-growing (and ever-digitised)

ML // April 2016

The Features

‘I am looking to use technology to improve the financial information available to council (i.e. decision-making) members and to the membership generally, with the aim of securing long-term financial sustainability for the Society’ membership across a variety of communication platforms and social events, to ensure our members fully benefit from and understand the value they receive from their membership. The Society is in a reasonably healthy financial position. However, I would like to see greater transparency in relation to the Society’s finances. I am looking to use technology to improve the financial information available to council (i.e. decision-making) members and to the membership generally, with the aim of securing long-term financial sustainability for the Society.

Q A

How have the needs of members changed over the last three years?

The last three years have been very challenging for the legal profession in South Wales and nationally. Issues such as changes to legal aid funding, court closures, dramatic increases in court fees, criminal legal aid duty contracts, conveyancing panels and the changes to the regulatory environment have had a significant impact on members. This has inevitably resulted in changes to legal service delivery and within the legal market and to pressure on Members to adjust to this rapidly evolving environment. Cardiff & District has the highest population of lawyers in Wales but we as a Society are conscious of the legal deserts that are arising elsewhere across the Country. The Society has developed positive links with other local regional law societies through, for example, its membership of the Confederation of South Wales Law Societies as well as with Monmouthshire Law Society, which stretches across South East Wales including Newport, Monmouth, Torfaen and Blaenau Gwent. This helps us to provide support and meet the

needs of the profession both locally and in the wider region and by being able to answer members’ questions, highlight best practice and share pressing legal and other issues.

How do you and the team at Cardiff & District Law Society ensure the Society maintains its relevance to the profession?

The Society has a number of working committees comprised of council members and co-opted members drawn from the membership. These committees assist in forming policies, dealing with issues that affect the profession and responding to Government, SRA and Law Society consultations. There is also close contact and liaison between the local judiciary and the Society on issues affecting the operation of the local courts. Additionally, the Society looks to the future through regular contact and liaison with the local Junior Lawyer’s Division, which is represented at Cardiff & District Law Society monthly Council meetings. Members are also entitled to free CPD courses run by the Society and discounts on Kaplan Altior courses and courses run by the Confederation of South Wales Law Societies. In addition we are also about to relaunch our education proposition for members, to move away from the oversubscribed marketplace of CPD technical legal training and, instead, offer a series of professional and legal business growth and support conferences, seminars and events. We want to see our membership ‘thrive, not survive’ and we hope to be able to give them the tools to do that. We are working closely with trusted advisers and our sponsors to deliver business-critical and relevant advice from marketing and business

‘Cardiff & District has the highest population of lawyers in Wales but we as a Society are conscious of the legal deserts that are arising elsewhere across the Country’ ML // April 2016

development to financing cases, recruitment, expansion, costs and processes. It is also important to provide the membership with a varied social programme so, in addition to our President’s Annual Dinner in April, the Society organises regular smaller social events during the year, including a very popular children’s event at Christmas. Members of Cardiff & District Law Society also receive a platinum membership card, which entitles them to benefits and discounts from various local businesses, including local restaurants, hotels and shops.

What are the aims of the Law Society 2020 Discussion and what do you hope it will achieve?

The Law Society Strategy 20152018 appears to promote a positive vision and strategy for the profession. However, the proof is in the delivery. There remains a considerable amount of scepticism about whether and how the Law Society will be able to deliver this strategy. In particular there are ongoing concerns that the Law Society is failing to speak up effectively for the profession on key issues such as access to justice, protecting the legal market and the independence of the legal profession. There also remain reservations about the Law Society structure and governance.

How important is the role of regional Law Societies in representing, supporting and promoting the needs of practitioners on a national level?

Regional law societies such as Cardiff & District Law Society have a critical role to play in representing and supporting local practitioners on a national level. The Society’s knowledge and understanding of local issues affecting members is invaluable and the Society regularly puts forward local views and contributes to national debates on issues of importance to the profession. Our contribution

The Features

‘The Society actively contributes to the on-going devolution debate and recently hosted a series of seminars on the subject involving key players such as the Counsel General for Wales’ has recently included responding to national consultations on referral fees in criminal matters, consumer credit activities, protecting clients’ financial interests and PI insurance and proposals for introducing the Solicitors’ Qualification Examination. There is an added dimension in Wales in relation to devolution, the Welsh Government and the creation of a distinct Welsh body of law. The Society actively contributes to the on-going devolution debate and recently hosted a series of seminars on the subject involving key players such as the Counsel General for Wales.

How do you think solicitors are perceived by the public? Do regional Law Societies have a part to play in building relationships on this level?

Unfortunately the public perception of the legal profession is not good at the moment. Much of this is driven by the perception that legal services are hugely expensive and do not deliver value for money. There has also generally been a dumbing down and commoditisation of legal services, which we as a profession have been slow to address. We have also not been effective in promoting ourselves and the positive contribution that we make to the wider society. At a local level, regional law societies can deliver a positive message about the work of the profession and seek to address these misconceptions by showcasing the fantastic pro bono work, charitable fundraising and CSR initiatives undertaken by legal professionals.

Do you feel that Cardiff & District Law Society has a voice in wider conversations with the Law Society?

Yes we do. The Society works closely with the Wales Office of the Law Society and with Chancery Lane to ensure our member’s views are taken into account in relation to the various issues that affect the Profession. This is achieved through responding to consultations or hosting a meeting with the Chief Executive of the Law

‘There is no doubt that there is a wealth of young bright talent coming out of the local colleges and universities’ Society. We are also fortunate that the Law Society Council Member for South Wales (David Dixon) sits on the Society Council and is an immediate past-President. David provides a direct link into the operation and activities of Chancery Lane and provides regular reports to council and the membership.

What does the future look like for the legal profession, on a regional and national level?

It is not always possible to judge what will happen next but I am generally optimistic about the future notwithstanding the challenges facing the legal profession both regionally and nationally. Our members are resilient, still here, willing and prepared to support one another and collaborate across the boundaries of the regions. Although ongoing issues relating to regulation and access to the profession, market liberalisation, funding of legal services, central government

intervention and the impact of technology continue to have an inevitable impact on the profession, it is generally in a healthy position and well placed for the future. In South Wales, we are seeing increased recruitment and growth across all sectors and there is no doubt that there is a wealth of young bright talent coming out of the local colleges and universities. Nevertheless, the profession needs to continue to evolve, innovate and adapt to changes in the global and national business economic environment, within wider society generally, to developments in technology and processes and to the ever changing political agenda. Cardiff & District Law Society is well placed to continue to support its members in this process by keeping members informed, connected to the realities of the business of law and able to support and sustain each other, whatever is thrown at us.

ML // April 2016

The Features

REGIONAL FOCUS

All change!

peak to any clerk in a Welsh barristers’ chambers about what it’s like to do business here and the conversation will usually turn to competition with London chambers. Speak to most Welsh firms and those with the capacity to deliver complex commercial law advice (for instance) will tell you a similar story – that it’s generally assumed ‘London is better’. It’s often the reason existing regional talent migrates to the City and why many professionals at the Bar have dual chambers tenancies straddling the ‘quality of life’ regions to the ‘big money’ smoke. However, to my mind and to the minds of the more positive, go-getting practitioners, there are plenty of things to be excited about in the regions. These include some unique positions thanks to the implementation of the Legal Services Act 2007, which has played a significant role in the redistribution of success in the business of law. Over the past five years in Wales alone, we have seen the meteoric rise of home grown Alternative Business Structures, white-labelled and outsourced legal services, ‘on-shoring’ of legal service brands and the sustainable expansion of leading Welsh legal brands into London. ABSs, such as NewLaw (based in Cardiff), have created joint ventures with national brands - allowing them to obtain work beyond their Welsh headquarters. Combine this with an increase in technological innovations, remote working, more strategic marketing and collaborative partnerships from the regional bar, and the result is a blurring of boundaries and nationwide competition! As far as we’re concerned, blurring the boundaries is a long-awaited and fantastic outcome. We’re able to open doors in parts of England that have remained somewhat inaccessible for us in previous years. This is due to the fact that we’re able to evidence our work with successful national brands here in Wales as well as specialist cases and client referrals of quality care and practice. This is how it should be. Cymru am Byth (Wales Forever)? Wales is always an interesting place to practice law and increasingly so thanks to mounting ‘Wexit’ discussions regarding the continued separation of powers to the Welsh jurisdiction. As a chambers we want what’s best for our clients, wherever they come from. However, we can’t ignore these discussions, nor the impact that the wider separation of powers has had and will have. However, the Welsh Government cannot control the legal market (yet) and parts of Wales are taking the brunt of the impact from LASPO and, to some extent, consolidation. A

ML // April 2016

recent publication has confirmed what many of us here have long known about deserts of legal provision in Wales. The Wales Manifesto for Advice, published by the Law Commission (established by the Legal Action Group) says recruitment into training, legal practice and specialisation in the rural legal economy is ‘inadequate’ to provide for the longer term. We’re not sure that specialisation is always key for vulnerable communities but we know that Access to Justice Wales, the judiciary, academia, the Bar and practitioners are all working hard to find a solution while ensuring access to justice.

‘The Welsh Government cannot control the legal market (yet) and parts of Wales are taking the brunt of the impact from LASPO’ On stage Welsh chambers have been on the national stage for a while now, thanks to some strategic and well-placed business development campaigns over the past few years. Like any business, we identify growing markets and target our relationship development and efforts to understand where our clients plan to be in the next 10 years; what kind of support they will need, where our fees sit within that framework and what type of expertise (from legal to people skills) we need to attract. We’re incredibly lucky and you won’t hear us complaining. Two of the largest legal capitals outside of the overburdened and sometimes overpriced London are Manchester and Cardiff – both regarded for their high level of civil litigation instructions. These cities have (perhaps unwittingly) supported each other in the perception battle regarding ‘London is best’. The success of other large regional sets that have expanded and, like us, are used by clients far outside their original base, have all proved the value of hard work, marketing, effective client relationships and quality products. Collectively, the success of regional sets has also had a positive impact on perceptions of (and level of instructions to) barristers practicing outside of London. It is our belief that ‘it’s the people that make the place’ and, like a true B2B, feel this has been the core of our success here in Wales and now across the bridge. The level of trust and honesty clients have with us, combined with our ability to service a business-focused brief and provide the right product, has paid off over the years and we don’t intend to let our doubters stop us. Vive le revolution! Phillip Griffiths is Senior Clerk at 30 Park Place.

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The Features

TECH TRANSFORMATION – IT’S NOT THE “BIG BANG” BUT THE CUMULATIVE “LITTLE BANGS” THAT ADD UP Our resident IT guru Charles Christian writes…

ne of the big issues that has always vexed law firms and legal service providers is calculating the return on investment (RoI) from technology. It stands to reason that if you are going to voluntarily1 spend £100,000 on new software, you want the benefit (even taking into account any capital allowances etc) to be worth more than £100,000 otherwise why bother with all the disruption that will inevitably arise? A paradigm shift The difficulty is law firm managements and partners are frequently over-sold the benefits of new technology leaving everyone anticipating some major “Big Bang” like paradigm shift in productivity and profitability, which is never then realised. For example, if you buy a document management system, it will be pitched as moving your practice into the era of “matter-centric computing” – or something similar. But, it is just a better filing system for legal paperwork, in effect the digital equivalent of the steel filing cabinets you’ve had in your firm since at least 1916. Instead, the management of the firm can frequently find itself having to explain (particularly to partners or investors who would rather the money had gone on paying them an increased share of the profits) that the firm is now enjoying a lot of “warm and fuzzy” but otherwise hard to define benefits. The weasel-words often used are that it means the firm “can deliver an even better service to its clients.” Well obviously!

The fact is that apart from email about 20 years ago, there have been no new technologies that have transformed the way that legal practices operate. There are no “killer apps” out there waiting to revolutionise “lawyering.” And neither are there any technologies that will radically change the economics of legal practice by, for example (and this remains the dream of many lawyers) allowing them to sack all their secretaries and support staff and delegate their administration to a couple of computers. So what has been going on? The answer is not “Big Bang” but “Little Bang” and the realisation some technologies can bring minor benefits that, once spread across a whole firm, have a substantial cumulative effect. And, if the firm invests in multiple technologies of this nature, the incremental impact can transform a firm in terms of making a more productive use of fee earner time and reducing lawyer to support staff ratios. Take time recording, if a system ensures every fee earner records just 15 more minutes of billable time every day, then over the course of 12 months in a 50 fee earner practice that is over 3000 extra billable hours – more than the entire billable output of two fee earners during a year. It is the same story with case management. The ability to control, automate and delegate means expensive qualified lawyers are not wasting their days on low-value routine administration and firms are able to handle higher volumes of work than previously – but without having to recruit more staff and while still enjoying a healthy profit margin.

Ditto digital dictation and speech recognition. Yes, we do still have secretaries and PAs in law firms but their workloads have changed and the need for temps, floaters and frequent overtime has been reduced – and work is being turned around and sent off to the client far quicker than was previously the case. The secret with all these changes is that the technology may not be dramatically transforming the way a firm operates (or Big Bang) but it is allowing firms to do what they always have done but in a more efficient, cost effective, less labour and time intensive fashion that both increases productivity and reduces administrative overheads. And this all adds up to an increase in profit margins, which should be the objective of any firm hoping to remain competitive in the current market for legal services. Turnover is vanity but profits are sanity and the drip-drip cumulative effect of many incremental changes is a better way of realising your return on investment in technology than betting the farm on an over-ambitious grandiose project. And if you need any further convincing, just look at DAC Beachcroft who earlier this year wrote off £4.39 million on a failed “Big Bang” IT project! Charles Christian is the Editor-at-Large of the Legal IT Insider & tweets about #tech and #legalit at @ChristianUncut 1. By “voluntarily”, I mean an investment you chose to make, as distinct from one you are compelled to make for reasons of professional regulation or compliance, which are best viewed as being part of the cost of doing business.

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The Features

Strategies for profitability in law firms Andrew Otterburn considers the financial issues legal practitioners still have to consider - despite a period of buoyancy for many firms over the last year and a half.

he last 18 months has been good for most law firms with both profitability and cash flow improving. There are significant issues, especially around staff retention and attraction, and also succession planning, but most firms have done well. There are also issues concerning certain areas of work, in particular the improved performance of many firms has been driven by a buoyant property market, and that may in due course slow. Additionally, some of the firms that have expanded the fastest in the last five years have been ones concentrating on personal injury and the changes announced in 2015 regarding the increased Portal threshold to £25,000, increased small claims limit to £5,000, and removal of whiplash claims, will impact severely on these firms. The possible introduction of fixed fees in clinical injury is a further cause for concern. So overall, profitability has improved, however there are growing risks that firms need to understand if this is to be maintained. As always, running a successful business depends on a small number of key areas. Key areas to focus on Based on my consultancy work with firms across the UK I believe there is a need to focus on four key areas if profitability is to be maintained and strengthened. There is a need for: • Effective leadership – both at the top of the firm and in the various departments and teams; • A clear plan – one that enables the firm to be responsive to change and develop a business that is perceived as being different by clients; • Openness and good communication with staff, in particular your lawyers.

The more these people understand the business the better they can contribute to it; • Effective financial management – you need a good grasp of the figures. What gets measured gets done Effective financial management is important however you need to make sure you focus on the right figures. In most firms what gets measured gets done, and too much focus on the wrong things can have unintended consequences. For example: • too much focus on individual fees will impact on team working; • too much focus on chargeable hours will impact on time spent on marketing. Some of the very useful figures to report on and make sure everyone understands are, for each team or department: • gross margin %; • chargeable hours v budget – utilisation; • average hourly fee achieved; • Debtor and work in progress days. Managing cash flow Many firms have become cash rich over the last two years however that position can easily be reversed. It is important to understand your cash profits rather than your accounts profit and to ensure drawings do not exceed the cash profits of the firm. It is also important to make sure everyone understands the numbers – training for associates and more junior lawyers on areas like working capital management can be hugely beneficial. Once they “get it” they are often very good at getting cash in and become better at scoping and charging for work. The starting point is training. The winners and losers post LSA Many people do not fully appreciated the degree of consolidation that has taken place in the market since the Legal Services Act in 2007. There are still approximately 10,000 firms in England & Wales however there has been a significant concentration of work in a smaller number of larger

firms. Around half of the 10,000 firms are very small with annual fees of under £200,000. 70% of these have annual fees of under £100,000. Small firms may account for a large percentage of the total number of firms but they account for a small share of the market. Most of the consumer and SME legal market is provided by the 2,000 or so firms with annual turnover in excess of £1m. A much more consolidated market than is sometimes realised. Some of these firms are doing very well. Some of the larger firms that have emerged since LSA 2007, perhaps with turnover of £5m - £10m are proving to be highly successful, profitable and innovative. They are often focused on “High Street” consumer and SME work, but are doing it well and locally. These firms are clearly some of the winners and are starting to evolve locally recognised brands. The key for their ongoing success will be: • Continuing to build their brand in their target market area; • Strengthening leadership and ensuring succession is in place; • Developing and refining their business plan; • Effective financial management; • Effective leadership and communications. Of these, effective leadership is way and ahead the most important. Andrew Otterburn is a leading law firm management consultant who has advised around 250 law firms and barristers chambers in the UK and Ireland. He has undertaken extensive consultancy work for the Law Society of England & Wales, the Legal Services Commission and the Ministry of Justice. He is Vice Chair of the Executive Committee of the Law Management Section and a founding member of the Law Consultancy Network.

ML // April 2016

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The Features

Tackling a major issue PHS Data Solutions Managing Director, Anthony Pearlgood, explains the implications of the Government’s digital revolution on the legal sector and the support available from third party providers.

he UK Government has embarked on a major investment programme to make the public sector digital by default from 2020. In the November 2015 budget statement it was confirmed that over £700 million will be invested to fully digitise the courts and create a more modern estate. For those in the legal profession it will not have gone unnoticed that these changes have been ongoing for some time which significantly predates the spending announcement. This is because the Ministry of Justice (MoJ) was an early digital adopter and is now in the midst of change, which is transforming the service and also the way in which those in the legal sector interact with it. Addressing existing issues Government Ministers argue that the plan will allow greater public access, cut the cost of government, improve public sector efficiency and address the growing issue of paper storage and security. The high reliance on paper is certainly a major issue; to understand the scale of the problem it is worth noting that the MoJ produces around 160 million sheets of paper a year, which if stacked together would be roughly higher than Mount Everest and which all needs housing. The flipside is that all legal practices involved in court and or interaction with the justice system will need to communicate digitally. This could be as simple as filing all court papers online, arranging a prison visit to see a defendant or the use of digital evidence

in court. Of course some Government agencies like the Land Registry have been digital for many years but for those not used to digital filing, or representing a defendant through a video link beamed into a courthouse, these changes could come as a shock. These changes have already led to an increase in third party document conversion and storage, and this will inevitably grow significantly over the next few years. Most private legal practices already have some type of digital process even if it is as simple as scanning documents in preparation for digital court filing, or as the Supreme Court so eloquently says ‘electronic means!’ Demonstrating a robust approach As the general public become more informed of the changes taking place at the MoJ, it is likely that the security of digital documents will come under increased media scrutiny. This could well spread to private practice. The sensitivities surrounding much of the legal profession’s processes means that solicitors, barristers and those acting on their behalf will need to demonstrate to clients how carefully they handle, process and store delicate or potentially damaging information. Previously, would-be spoilers had to physically break-in and crack a safe combination but now they could potentially access sensitive documents online unless security is robust. This is where an experienced digital third party provider comes into its own because a good supplier will be accredited and already have the infrastructure, internet security, secure storage capacity, vetted staff and insurance in place to quickly handle even the most challenging of work. As an example, PHS Data Solutions

‘The MoJ produces around 160 million sheets of paper a year, which if stacked together would be roughly higher than Mount Everest and which all needs housing’

has been working in partnership with legal practices for a number of years to ensure that every link in their information chain is strong and secure, for total peace of mind. One of the key areas in which a third party supplier like PHS Data Solutions can help is through the provision of professional document scanning and capture services, which are used by a cross section of solicitors and law firms. At PHS Data Solutions, the bureaus around the country are accredited to ISO27001 for Information Security, as well as ISO9001 for operating procedures, with all employees’ disclosure checked and security cleared. Your supplier should also be able to upload digital images to a secure online electronic document management system. For example, at PHS Data Solutions, images can be uploaded for quick and easy retrieval from multiple locations and/or users and documents can be indexed by case reference number, surname, court date or other criteria to ensure clients can find them quickly and easily using simple keyword terms. Don’t fall at the last hurdle The penultimate question to ask is about legal document storage over a short or long term basis. Documents held by PHS Data Solutions are 100% secure and fully protected against theft, fire and flood thanks to early smoke detection apparatus, flood detection sensors and 24-hour remote CCTV monitoring. This is all backed up with guaranteed digital retrieval of documents within two hours of the initial request. Lastly, do ensure that any wouldbe provider complies with all relevant legislation, such as the Data Protection Act or else an otherwise credible supplier could fall at the last critical hurdle. For more information visit www.phsdatasolutions.co.uk or phone 0800 376 4422. Anthony Pearlgood is Managing Director at PHS Data Solutions.

ML // April 2016

5 Minutes with...

5 minutes with... Matthew Briggs Q Q A A Q A Q Q A A Did you expect the legal services sector to change so drastically when you started working in it? I’m not sure I had any definitive expectations at all. I did know however that there were (and still are) huge opportunities for progressive firms and innovative individuals to thrive in what can only be described as a risk averse and lethargic sector.

What has been the key positive or negative impact of the liberalisation of legal services? Being able to create a blend of legal and non-legal leadership talent, all with some ‘skin in the game’ running a law firm. However, having a blend of skills is not necessarily the silver bullet for overnight success.

Who inspires you and why?

Jack Welch – timeless leadership qualities, plus he’s created more millionaires who used to work for him than any other corporate leader in history. Have you had a mentor? If so, what was the most valuable piece of advice they gave you? Yes, I’ve had mentors and now I mentor others. Best advice; the ability to energise others to deliver, whilst having the courage to execute difficult decisions. If you were not in your current position, what would you be doing? Probably a pleural career, helping early stage businesses (and law firms) create differentiation, thrive and build exit value.

Matthew Briggs is CEO of The Law Superstore. 0344 576 1670 | thelawsuperstore.co.uk

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