Modern Law Magazine Issue 36 by Charlton Grant

The Business of Law

ISSUE 36 ISSN 2050-5744

Stephen Allen Hogan Lovells “I don’t think AI, alone, is going to revolutionise the industry, but I think the law firms who embrace AI will revolutionise the industry”

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Editorial Contributors Adam Bullion

Joe Egan

Head of Marketing InfoTrack

President Law Society of England and Wales

Alisa Gray

Director of Business Development Kaplan Altior

John Hogg

Managing Director Enlighten IC

Caroline Wallace

Mark Richardson

Colin Fowle

Richard Allen

Crispin Passmore

Rob Powell

Strategy Director Legal Services Board (LSB)

Managing Director Blue Car Technologies Limited

Executive Director, Policy and Education Solicitors Regulation Authority (SRA)

Elaine Baker DipPFS

Compliance Manager Informed Financial Planning

Professor Hugh Koch Clinical Psychologist and Director Hugh Koch Associates

Jacqueline Harvey Underwriter AmTrust Law

Technical Operations Manager VFS Legal Funding

Senior Consultant and Costs Lawyer Burcher Jennings Chief Executive Legal Ombudsman

Steve Hooper Founder LAWSEO

Susan Fairbrass Marketing Manager Geodesys

Yvonne Hirons Global CEO Perfect Portal

Jennifer Connell

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WELCOME

hen I attend a legal event I like to play a game called buzzword bingo. Normally my card contains words and phrases like blockchain, AI, machine learning, data and innovation. These kinds of subjects will always be mentioned in some capacity, and I have to fight the instinct to jump out of my chair and shout “LINE!” when they do. It goes to show two things: one, these types of disruption are coming, and they’re coming fast, and two, the fact that these topics warrant so much discussion means they are still a mystery to many in the sector.

We set out in this issue of Modern Law to demystify some of these hot topics for you. Take blockchain for example. To some it’s a magical silver bullet that will destroy all fraud and send legal services into warp speed, whereas others might look at it as nothing more than snake oil. The reality lies somewhere in the middle, particularly while the technology is still in its infancy. But we do know for sure that it’s everywhere, and not just in the legal sector either. Blockchain is making waves in financial services, security and healthcare, and it feels like most industries are finding ways to implement it, sometimes just because they can; someone has even put a Pokémon game on the blockchain to demonstrate the potential speed of microtransactions! With so much hype out there around this and other innovations, it is immensely difficult for firms to navigate the marketplace and distinguish between the good, the bad and the ugly, particularly when the cost of implementing new systems could become an extremely expensive misjudgement if they don’t work. So in this issue of Modern Law we’ve got a vast array of interviews, columns and articles covering AI, legal project management, blockchain, big data, cyber security, device encryption and all of that good stuff. As I hope you know by now, we’re always on the look out for new writers who might want to contribute to the innovation conversation, so please do get in touch if you’d like to give your take. Otherwise, I hope you enjoy this issue of Modern Law – if you’re playing your own game of buzzword bingo, I’m sure this one will get you a full house.

Writer Legit Claims

Issue 36 ISSN 2050-5744 Editor Brendan Gurrie

Editorial Assistant Poppy Green

Project Manager Martin Smith

Events Sales Kate McKittrick

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.

Issue 36

Brendan Gurrie, Editor, Modern Law Magazine. 01765 600909 | @ModernBrendan | brendan@charltongrant.co.uk www.modernlawmagazine.com

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MODERN LAW

CONTENTS NEWS

INTERVIEWS

EdiTorial Board

7 Stephanie Pagni talks news

11 Stephen Allen

Modern Law spoke to Stephen Allen, Hogan Lovells, about the continued digitalisation of law and what form he believes this will take in law firms, and whether these changes will be embraced by the sector.

15 David Fisher

David Fisher, Integra, spoke with Modern Law about the current state of blockchain in the legal sector, busting some of the myths that currently exist around the technology to outline the benefits it can have to law firms.

19 The Legal Services Board looks to the future

Caroline Wallace, Legal Services Board

21 Meeting law firm and service users needs â&#x20AC;&#x201C; indemnity insurance that fits the bill

Crispin Passmore, Solicitors Regulation Authority

23 The business opportunities in data protection

Joe Egan, Law Society of England and Wales

25 Factoring in technology

Richard Allen, Burcher Jennings

25 Getting past groupthink

Alisa Gray, Kaplan Altior

27 Keep your eye on AI

EDITORIAL BOARD contributors

Jennifer Connell, Legit Claims

27 The Amazon effect

Yvonne Hirons, Perfect Portal

29 Satisfying the millennial client

Adam Bullion, InfoTrack

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4 Modern Law

Issue 36

MODERN LAW

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EdiTorial Board

FEATURES

29 The AI revolution

36 Regional Focus: Scotland

53 Case Study – Eclipse

Scottish firm, Drummond Miller, selects Eclipse’s Proclaim Practice Management system in a substantial investment

Colin Fowle, Blue Car Technologies Limited

31 Making the most of social media Susan Fairbrass, Geodesys

31 Let’s get personal – have you got GDPR?

Mark Richardson, VFS Legal Funding

33 Blogging is the answer

Steve Hooper, LawSEO

33 Keeping up with compliance

Elaine Baker DipPFS, Informed Financial Planning

41 Increasing client engagement: getting the max benefit from law firm data Our resident Tech commentator Charles Christian writes…

John Hogg, Enlighten IC

34 Flexible working for a modern workforce

Rob Powell, Legal Ombudsman

53 Case Study - Future Climate Info

The Environmental Report for modern conveyancing

10 MINUTES WITH 54 10 minutes with... Andrew Stanton, Palisade Secure

42 The Bold Legal Group Modern Law Conveyancing Conference 2018

34 Can marketing be outsourced in a law firm?

Modern Law spoke to Alison Atack, the new President of the Law Society of Scotland about how the country is facing some of the challenges and opportunities that are also familiar to firms in England & Wales, including legal aid, technology and diversity.

We take a look at all the highlights of this year’s Bold Legal Group Modern Law Conveyancing Conference. Transparency, technology and cyber security were among the hot topics discussed at the third annual conference.

49 The Cappuccino factor

Jonathan Ashley, etiCloud

49 Mobile communications - how well are yours protected?

Dr Andy Lilly, Armour Communications

51 GDPR – could free online translation tools be putting your business at risk? In today’s fast-moving global economy, translation and interpreting services remain a vital part of doing business around the world. However, many companies still wonder why they should invest their time and money in a specialist language service provider when they can do it for themselves online, for free. Issue 36

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NEWS

Stephanie Pagni TALKS NEWS

Barclays has just announced its partnership with the Law Society and eighteen other partners, several of which are law firms, to create an incubator for legal technology start-ups. Stephanie Pagni, General Counsel for Barclays UK, explains what it will do and why the Barclays UK Legal team and the bank’s Eagle Labs team decided to collaborate to deliver the initiative. he decision was made after visiting a repurposed bank branch in Cambridge a little over a year ago. The red brick building isn’t much to look at, situated away from the university buildings on busy Chesterton Road, next to a carpet retailer offering shagpile and tufted loop. But inside is a different world.

As well as offering conventional bank services, this branch is home to a Barclays Eagle Lab – one of fifteen sites across the country that spur entrepreneurship and seek to foster growth and innovation amongst local communities by providing working space where start-ups can operate and grow, as well as other benefits such as mentoring and advice. The one in Chesterton Road, which was established two years ago, has a particular purpose and drive. Building on the concentration of high-tech businesses in so-called Silicon Fen, it is a dedicated incubator with a focus on technology start-ups, and today dwarfs the conventional part of the branch. Spend half an hour there, and you quickly realise its potential for co-creation and innovation. The lab is full of energy and focus. Access is available 24/7, reflecting its inhabitants’ dedication, while the networking events are renowned for their mentoring support and ability to connect the start-up firms with those motivated to help them succeed, as well as their intellectual curiosity and vitality. Word has spread, and today the site is over-subscribed, with start-ups queuing to inhabit its energising

atmosphere as part of their journey. Venture capital firms know the place well, and it has become a flagship for the wider Eagle Labs programme. Several of the start-ups that have thrived during their time in the Lab have innovated in financial technology, or fintech. Just as this field of technology is transforming banking, raising levels of service and innovation for customers and banks alike, law-tech promises to transform the legal world. Indeed, the Cambridge incubator is itself home to a few law-tech start-ups, pointing to the demand and potential in the field. However, the development of law-tech in the UK is to some extent embryonic. We have yet to see a transformational wave. What we envisaged was the potential for an Eagle Lab with a specific industry focus to help turbo-charge innovation in the sector and create a wider ecosystem. This could drive the desired transformation not just in a particular commercial sector of the legal industry, but across the industry more broadly. Barclays is committed as part of its Shared Growth Ambition to backing the UK economy, and the country has every reason to be a leader in the law-tech field. London is home to some of the best law firms in the world, its tech scene is dynamic and vibrant, and the skills that have made it a centre for fintech are applicable to law-tech.

The Eagle spreads its wings Just over a year after my visit to Cambridge, we have announced the Eagle Lab in Partnership with the Law Society. When it opens in Notting Hill in June, it will provide a home for law-tech start-ups, helping them develop and so benefiting the legal sector to drive innovation in the commercial context and in law-for-good causes.

Just as […] technology is transforming banking, raising levels of service and innovation for customers and banks alike, law-tech promises to transform the legal world Issue 36

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NEWS

Partnership provides an opportunity to actively participate in, and benefit from, technological changes that will inevitably change the industry There will be working space to support up to 100 individuals. The scope of work will be wide, with start-ups chosen to help develop services aimed at positive disruption in the fields of law-tech or reg-tech, and for law firms and companies more broadly, from the smallest to the largest. There will also be a law-for-good-causes component as we expect to attract a number of not-for-profit partners to collaborate in the Lab. Perhaps the most striking element of the Lab project so far is the remarkable range of partners it has attracted. In addition to the Law Society, they include several law firms, with more expected to sign up soon; University College London and The University of Liverpool; PwC, the professional services firm; and Legal Geek, the international law-tech start-up community. The diversity of partners is intentional as this is more likely to create a genuine ecosystem with a range of perspectives and creative solutions.

We know that diversity is more likely to drive greater levels of creativity and novel ways of thinking to tackle issues in a different way, to benefit the industry as a whole. Contributions from partners will vary depending on their nature and situation. From law firms, it may be collaboration to develop services or the opportunity to trial a new product in a real-world environment â&#x20AC;&#x201C; something that could benefit both parties. Our university partners will connect graduates and postgraduates interested in a range of issues, from those focused on the application of data science through to law students who want to engage in the legal industry of the future, while Legal Geek is known for its ability to create events that bring law-tech start-ups and innovators together to spark ideas.

A common vision However, all partners are united in their belief in the benefits of creating an ecosystem â&#x20AC;&#x201C; one that promotes the sharing of knowledge and creates opportunities for all. Our hope is that it will involve not just start-ups resident at the Lab, but also in time those that have gone on to larger success. Partners also all have the opportunity to influence the strategy, planned activities and focus of the overall initiatives. Perhaps most importantly, partnership provides an opportunity to actively participate in, and benefit from, technological changes that will inevitably change the industry. Barclays will supply the building, marketing and coordination, and also a range of other features and services to benefit start-ups. These include a dedicated manager to not just run the facility but also offer guidance or introductions. In addition, Barclays will offer start-ups support in terms of access to banking facilities, wider financial support and potential sources of fundraising â&#x20AC;&#x201C; though there is no obligation for start-ups to be Barclays customers. The bank will also consider and process applications for residency, with the hope that businesses will eventually flourish into fully fledged, mature businesses so that one day they will no longer require the support of the incubator environment. The aim is to have a broad range of start-ups working in different areas, but all with real potential. Applicants will be assessed on factors including their relevance, ambition, funding status and sustainability, how they believe they can benefit from the Lab, and their commitment to the ecosystem. The concept is certainly proving popular. Within two weeks of announcing the new Lab, we had received in excess of 30 applications for residency. We hope our fledgling law-tech Eagle Lab will soon be thriving, and will become the catalyst for transformation for a technology-savvy, super-smart UK legal industry. STEPHANIE PAGNI, General Counsel, Barclays UK.

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INTERVIEW

Stephen ALLEN

I donâ&#x20AC;&#x2122;t think AI, alone, is going to revolutionise the industry, but I think the law firms who embrace AI will revolutionise the industry

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INTERVIEW

The revenues from law firms will shift from being just service based to service and product based

Where has digitalisation had the biggest influence in the legal sector, and how has it altered the ways legal professionals carry out work?

There are two areas – one has been evolutionary, one has been revolutionary. The evolutionary aspect is the use of email and electronically shared documents. It is important to remember that these have enabled an increase in the volume of work and the size of deals. However, this has also made the needs of clients more immediate. Back in the day, you had to type out a contract and pop it in the post, or fax it, whereas now you can ping an email across, which has fundamentally changed the landscape of law. That is a great example of digitalisation being an enhancer of legal processes and a creator of more client work, rather than taking away work, which is what I think people are always focused on. Another area that has had a big impact is electronic discovery, which has been revolutionary, more so in the US, where the scale of litigation is huge. It has made cases come to a conclusion much more quickly, making it possible for more litigation and increasing the ability for regulators to ease questions out. Whilst we see a substantial amount of work that was previously done by lawyers now done by machines, I think that as well as creating capacity and speed this has created more demand. The rhetoric says there will be fewer lawyers, but when you see a revolution in any industry you see an increase in demand, not a reduction.

Q A

Are there currently areas of law firms that are ripe for digitalisation, and what form might this take?

The ability for law firms to mine their own content in a way that uses technology intelligently, whatever that knowledge may be. That ability for firms to use their own data to either improve services or delivery to a client is something that is ripe for digitalisation, but I don’t think it has been done completely yet.

What are the potential applications of the data obtained from increased digitalisation and tech use to improve client service or operational efficiencies?

There is a lot around legal trend analysis and being able to recognise more trends when you can look at the whole and not just individual matters, and there’s the ability to package work differently and to actually go to clients proactively to show them what is happening in the market. We are moving towards having a much greater view of the whole legal market and being able to proactively help clients avoid certain situations.

12 Modern Law

Q A

How is traditional law firm culture evolving, and how is this altering the sector’s attitudes towards new technologies?

There are a whole bunch of competing pressures to drive change. Obviously clients are demanding change, there is more legal work than ever before, plus there are limited budgets. We are obviously seeing the impact of millennials on the workforce; they have a different attitude towards the profession and what the profession might mean for them, and they have a want and a need to investigate things further and more widely. Then you are seeing the impact of new law coming into the space as well. Anyone who thinks that the technology is going to drive change is barking mad; technology is an enabler for change. We have had changes already, but there are more to come. Traditional law firms will vary massively, and increasingly you are hearing conversations around the sector about how we can be at the forefront of this change rather than having it subjected to us?

Q A

How are new technologies helping law firms meet the changing needs of their staff?

Our propensity for dealing with volume has increased massively, and our ability to process terabytes of data would have been impossible in the past. What new technologies have done, and I think firms are starting to understand this, is create a need for different professionals. We need data scientists, legal project managers and solution architects, to name just a few. What digitalisation never does is directly replace human beings. It does one particular thing and it only does that thing, so you have to restructure the process around the technology if you’re going to use it sensibly and understand what it can do. Different skillsets and professionals allow firms to adopt technology and still provide that level of risk assurance to clients. In the last five years, I’ve seen those with negative scepticism wanting to get ahead and embrace change. I’m seeing this not just from young partners, but from partners across the board.

Q A

Do you believe the impact of AI on law will be as large as the hype suggests? Where will AI have the biggest effect?

AI will have a profound effect on the way in which we deliver legal services. However, to suggest a machine can think, which is what a lot of the hype providers say, is ludicrous. The idea that it will be the end of lawyers and that you will have a machine that you feed something into and it is just going to give you the answer is nuts.

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INTERVIEW

I don’t think AI, alone, is going to revolutionise the industry, but I think the law firms who embrace AI will revolutionise the industry.

down where you bring all of the different elements together, and project management can do that.

Secondly, is it the best use of lawyers’ time to mine data, or do you want a professional to do that? I think it is better to have a professional do that. It is really important that we deliver excellent service to our clients, and the partner’s primary duty is getting the best possible legal result for the client, which enhances the service.

What do you identify as the biggest barriers in the legal sector to embracing AI and other similar technological innovations, and how might these be overcome?

There is some good tech out there and some not so good tech, and I imagine it is bewildering for anyone new coming into this. The ability to divide the imaginary and the reality is a barrier, and firms need to get support from the right people rather than someone who will stir the pot; work with an organisation that works with law firms and really understands them. Another barrier is cost; not the cost of the technology, but the cost of the lawyers’ hours invested into training in the technology. That is a big investment, and the returns are not guaranteed. There are also so many different types of technology, so where do you stick your money? Do you stick your money on automated documents, or do you stick it somewhere where there is a greater spend and a greater investment? There is a buyer’s dilemma.

How else do you envision the work of law firms and legal professionals becoming more streamlined in the years to come?

We will increasingly develop products. We are still predominately a service industry, particularly with the burgeoning amount of regulation that is out there, but I think law firms understanding and developing products that can help our clients comply with, understand and verify regulatory issues is becoming increasingly important. The revenues from law firms will shift from being just service based to service and product based.

STEPHEN ALLEN

Can you outline why legal project management is becoming more popular in the legal sector, and what benefits can LPM bring for firms that implement it successfully?

I look at LPM as a methodology or a professional that helps partners scope a matter, source a plan and put a budget together, monitor and manage performance against that scope and budget and obviously deal with client reporting and proposed action reviews as well. Why is it so important? I think it is important because clients are going to want us to price work differently, and they want us to deploy technology, so you need a plan. It can’t be just saying you understand how certain matters go; you need a plan that is broken

Stephen is a former lawyer who has devoted his career to delivering legal market change. Internationally recognised as a leading innovator, most recently by Legal Business, who named him the 2016 Legal Innovator of the Year, Stephen joined Hogan Lovells almost two years ago, as Global Head of Legal Service Delivery, from another global firm. At that firm, he created the Service Delivery & Quality Function, and before that he led the legal market advisory practice at PwC. Today, he is focused on delivering quality, efficiency and innovation to our own legal service delivery, with a particular focus on operational efficiency, in-house legal consulting; legal project management, work allocation, legal process reengineering legal service centres, flexible resourcing, service insight and machine learning and cognitive processing.

Anyone who thinks that the technology is going to drive change is barking mad; technology is an enabler for change

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INTERVIEW

David Fisher

Can you outline what is meant by the term blockchain, and why is the profile of this technology currently on the rise?

Blockchain refers to a type of decentralised database that is dramatically different than most databases currently in use. In particular, it is characterised by a write-only “distributed ledger”, which means that the data is replicated across up to thousands of copies, referred to as “nodes”, all synchronised by the code that runs the blockchain. The end result is a tamper-proof database that can be used for peer-to-peer transactions without the requirement for a central authority such as a bank or government agency. The revolutionary potential of blockchain technology is the ability of the technology to disintermediate virtually any type of transaction or transfer of value or information, reducing the cost, increasing the speed, and increasing the security of the interaction. Considering that we live in a world largely organised and managed by large organisations, the evolution to a peer-topeer digital world may disrupt everything from large companies to entire national governments.

What are the current applications of blockchain within a law firm, and what benefits can it bring to those firms that embrace it?

Blockchain technology is almost completely absent from the operation of law firms at the moment, but that’s also true of most companies. There are many proofs of concept in development, but the technology is still in its infancy in terms of production-scale deployment. This is something that is likely to change quite dramatically in coming years, and it will significantly impact things like verification of identity of individuals and entities, reconciliation of data between organisations, and data security. And when blockchain smart contracts start to reach wide scale adoption, entire new bodies of law practice are likely to emerge. The benefits to firms that embrace blockchain technology in their operations are likely to include more efficient legal service delivery to clients and improved data security.

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What are the biggest challenges around implementing blockchain solutions that firms considering this must address?

The greatest challenge to firms is that blockchain is a “network effect” business, meaning that it’s only really useful if many counterparties are also on the blockchain network, and as more parties join the network, it becomes still more useful. Unfortunately, this means that in the early days when very few parties are on the blockchain network, there is relatively limited utility. The technology will eventually become ubiquitous, however, and so firms that want to be early movers in order to seek competitive advantage should look for ways to use blockchain technology to augment existing software systems in ways that can deliver early benefits to clients. Given the typical partnership model of most law firms, proving early client value is critical in order to achieve broad support for this exciting, new technology.

How do the potential benefits of and access to blockchain differ between firms of varying size and/or specialism?

Blockchain technology in operations tends to deliver the greatest impact in the context of complex value chains with many participants. For law firms, this typically indicates large clients and complex matters, such as multi-party litigation. Additionally, the investments required to adapt software and to

The technology is still in its infancy in terms of productionscale deployment. This is something that is likely to change quite dramatically in coming years Modern Law 15

INTERVIEW

involve clients suggests that early adopters are likely to be larger firms, and this mirrors the experience in other industries. Unlike previous technology revolutions that started with small firms and eventually impacted large firms, blockchain is most commonly being pioneered by the very largest firms with the largest and most complex networks of counterparties. The reason for this is that they have vast, pre-existing networks, and blockchain is a network technology. As the technology becomes more mature, however, smaller firms will enjoy disproportionate benefits from being able to interact more efficiently with larger, complex clients, as blockchain eventually tends to flatten industries by reducing the value of large, centralised intermediaries. For example, a large corporation might find it to be more efficient to concentrate more legal work with a few large law firms, due to the expense and inefficiency of integrating the information systems of the various law firms with that of the corporation. As blockchain starts to replace centralised stores of data and systems, however, the relative cost and inefficiency of working with large numbers of smaller firms is likely to decline, and small firms may discover that their lower cost structures suddenly make them more competitive, without the penalty of technology friction that previously may have been an impediment. Additionally, blockchain technology is likely to lower technology costs in general, reducing the advantages of economies of scale in technology acquisition and operation that are currently enjoyed by larger firms.

Are there applications of blockchain technology within other industries or professions that the legal sector could seek to adopt?

Information is the currency of law. Where Wall St. is focused on moving units of value and ownership from one party to another, the legal industry moves data – contracts and documents and information, all of which represent value – from one party to another. Any blockchain technology in use in other industries that is focused on moving digital representations of value and information more efficiently and securely from one party to another is relevant to the legal industry. Said another way, all of blockchain technology is relevant to the legal industry, the very purpose of which is trusted interactions between otherwise untrusted counterparties. Blockchain technology, by its very nature, improves the security and efficiency of interactions between counterparties.

As a relatively new technology, are there misconceptions about blockchain, either within the legal sector or among the public that need to be addressed to help demystify it?

There are many misconceptions and misunderstandings about blockchain. The first is that it is an “application”, when in fact it is a description of a technology architecture for a distributed database, or distributed ledger. Another common misconception is that blockchain is cryptocurrency, such as bitcoin, when blockchain is just the technology that enables cryptocurrency applications. And finally, there is a great deal of misunderstanding of “smart contracts”, which are assumed to be like legal contracts, only better. In fact, smart contracts as currently implemented don’t resemble contracts at all, because they are just computer code that exists on a blockchain.

What is the role of the Global Legal Blockchain Consortium in promoting the role of blockchain technology in law, and how was the need for the group identified?

The Global Legal Blockchain Consortium was formed in August of 2017 for the purpose of gathering and aligning the interests of the global legal industry with respect to the application of blockchain technology to the “business of law”. This is an important distinction, because up until that point, blockchain’s relevance to the legal industry was primarily in the realm of “application of law” to blockchain. In other words, lawyers were called upon to interpret and apply existing laws to the implementation of blockchain technology in other industries. With the formation of the Global Legal Blockchain Consortium, the industry finally had an organisation dedicated to the operational application of blockchain technology-to-technology ecosystem of law, rather than the legal issues posed by blockchain technology. In other words, other industries had been applying blockchain technology to innovate in value creation and service delivery, but the legal industry was lagging. Fortunately, that is no longer the case.

In your experience, how does the pace of adoption of blockchain and other innovative technologies differ between international legal markets, and to what do you attribute any variations?

The adoption of general blockchain technology has been most dramatic with very large financial institutions and a variety of smaller governments, notably Estonia, Dubai, and Singapore. But when it comes to adoption of blockchain technology in international legal markets, it’s not clear that there is any significant distinction between markets. Given the pattern of blockchain development which first benefits the largest types of organisations, it seems likely that because the largest law firms are primarily in North America and the UK, the most significant legal market adoption of blockchain technology will probably first emerge in those, large, advanced markets, later arriving in smaller markets and smaller firms.

Can you explain what the recent Global Legal Hackathon involved, and what were some of the key outcomes from the event?

The Global Legal Hackathon was inspired by blockchain thinking – that the bigger and more diverse the network, the more valuable the network. What started as an idea, first announced in early December 2017, grew astonishingly quickly to a worldwide phenomenon encompassing 40 host cities in 22 countries, with approximately 5,000 participants. It was one of the largest hackathons in history, in any industry. While it was inspired by decentralised, blockchain-type thinking, it was not specifically focused on blockchain. Instead, its purpose was to gather a global community of like-minded legal industry innovators and entrepreneurs, providing a global platform for the best teams and ideas.

Issues such as data security, contract complexity, access to justice and cost of legal services are universal, around the world 16 Modern Law

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INTERVIEW

From the 600+ teams that participated in the late February 2017 events, the field was narrowed to 37 semi-finalists, and eventually 14 finalists, who traveled to New York for the final judging round at gala in April. Four winners were crowned, two each from the public benefit and private benefit categories, from Hong Kong, Hungary, and the United States. One of the most fascinating discoveries from the global event was the commonality of legal industry challenges, no matter the country or legal system. Issues such as data security, contract complexity, access to justice and cost of legal services are universal, around the world. The event was so successful that the second annual Global Legal Hackathon has been scheduled for February 2019, and we expect the number of city hosts and participants to more than double.

The legal market has traditionally been plagued by very high costs and inefficiencies, which has had the effect of limiting demand for services – a sort of “dead weight loss” in economic terms, where the demand for services is far greater that the ability of the market to deliver those services, due to structural factors in the market that have inhibited the market’s ability to adjust via innovation and cost reduction. As blockchain technology begins to overcome these structural inefficiencies, rather than reducing cost and revenues of law firms, the more likely outcome is explosion in demand for legal services. Blockchain is the technology that may finally democratise the consumption of legal services, improving the lives of billions of citizens of the world and forever transforming the legal industry that delivers those services. David Fisher is Founder & CEO of Integra and is a founder of the Global Legal Blockchain Consortium.

How do you predict blockchain technology will continue to evolve in the years to come, and what benefits will this bring the legal sector?

Blockchain technology is still very much in its infancy, and while it promises to impact or even disrupt commercial and governmental models around the world, it is going to take many years and many generations of the technology before the benefits are noticeable and ubiquitous. Over time, however, the efficiencies that it will bring to the way human beings interact with each other in the digital realm will release enormous amounts of value, and this will be experienced quite dramatically in the legal sector.

Information is the currency of law. Where Wall St. is focused on moving units of value and ownership from one party to another, the legal industry moves data Issue 36

Modern Law 17

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EDITORIAL BOARD

The Legal Services Board looks to the future A

number of editions ago we previewed our three year strategic plan. Our strategic objectives reflect our priorities for 2018-21 and are:

•

promoting the public interest through ensuring independent, effective and proportionate regulation

•

making it easier for all consumers to access the services they need and get redress, and

•

increasing innovation, growth and the diversity of services and providers.

We developed these objectives in light of what we and those who responded to our consultation see as the drivers for change that are expected to be at play in the legal services sector over the next few years. We reached these conclusions as a result of extensive research and stakeholder engagement initiatives, and it is important to develop a shared understanding of the factors driving change in the sector. The first driver identified is technology. We expect the impact of technology to continue to grow and for it to drive ongoing changes to the way that consumers engage with legal services. Key trends we believe are likely to include: -

an increased role for artificial intelligence in addressing legal problems

technology driving further commoditisation of legal services

‘big data’ potentially allowing providers to develop more personalised services, and

modernisation of the court system, with a focus on online dispute resolution and some use of online courts.

The second driver of change will be government and the economy. The UK is leaving the European Union, so legislative change to the current regulatory framework for legal services (the Legal Services Act 2007) seems unlikely for the time being. We remain of the opinion that the system is in need of reform. However, the sector needs to make the most of the current legal framework for now. What government focus there will be is likely to be through its “global Britain” initiative to maintain the international competitiveness of the England and Wales (E&W) legal sector. We have a role to play in supporting this initiative, including through emphasising the importance of professionalism, professional standards and independence in the sector and the fact that the E&W legal sector leads the way internationally in terms of openness to innovation.

There will no doubt be ongoing pressure on government spending, which will continue particularly to effect legal services providers who undertake publicly funded work and in the not-for-profit sector. The next driver of change we see is consumers and society. The LSB’s surveys have highlighted the high levels of unmet legal need that exist and which we expect to be an ongoing theme and challenge for the sector in the coming years. Consumers’ engagement with legal services differs considerably according to their profile and circumstances, and all consumers can on occasions find themselves in a position of vulnerability due to circumstances surrounding their legal problem. Keeping pace with this dynamic concept of consumer vulnerability will be challenging as legal services evolve in the years to come. More broadly, the population is growing and ageing, carrying over into more, but on average older, people needing to access and use legal services. The final driver of change we see is the providers of legal services themselves. The provider landscape has undergone significant change in recent years and we expect this to continue. Providers now have a wider choice of regulator and greater freedom in how they can be structured. Unregulated providers have a modest overall market share but there are segments of the market in which they have a greater foothold. The Competition and Markets Authority’s (CMA’s) market study on legal services (2016) found that competition in legal services for individual consumers and small businesses was not working well. The remedies proposed by the CMA are intended to have a significant impact on transparency in the market and the way in which providers engage with consumers on the price and service that they offer. The not-for-profit sector and providers reliant on legal aid funding are likely to experience ongoing financial pressure. Improving the diversity of regulated legal services providers will remain an ongoing challenge. Whilst the evidence is showing progress at entry level in many respects, progress in improving diversity at more senior levels of the professions is slow. We think that there will also be some additional demands on regulators and the profession, some of which are possible to foresee but others which will emerge in the coming years. How we respond to them will be key. We have outlined how we intend to respond to these challenges in our three year strategy. I would encourage you to have a look at it: https://bit.ly/2L5qzAF Caroline Wallace, Strategy Director, Legal Services Board.

We expect the impact of technology to continue to grow and for it to drive ongoing changes to the way that consumers engage with legal services Issue 36

Modern Law 19

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EDITORIAL BOARD

Meeting law firm and service users needs – indemnity insurance that fits the bill egal services matter to us all. They can help us at some of the most important and potentially vulnerable moments in our life - whether passing money onto loved ones, buying a house or handling a relationship breakdown.

While most people are happy with the service they receive, unfortunately sometimes things can and do go wrong. When this happens, it is crucial that the public are protected, which is why regulated firms are required to have appropriate professional indemnity insurance (PII) in place. That insurance does of course come at a cost, which will be passed on to the users of legal services. When so many people are struggling to access solicitors’ expertise, we need to be confident that the protections we require are set at the right level, and that they are not so expensive that they exclude the very people they are designed to safeguard. Our statutory obligations mean that we must make sure the obligations we put on firms are proportionate and targeted – that means removing obligations we cannot justify on available evidence. Analysis of 10 years’ worth of insurance claims suggests that many firms, especially smaller or niche providers, are being forced to buy cover for services they do not offer, or to a level which is way above their actual risk profile.

Getting the right level of cover Currently the minimum single claim limit is £2 million, or £3m if the firm is incorporated. Our data analysis revealed that 98 percent of PII claims against law firms over a ten-year period were for less £500,000. This means many firms are being forced to ‘over insure’ and incur the related costs. We want to help address this imbalance by reducing the minimum single claim limit to £500,000, or £1 million for conveyancing work. Since our rules will continue to require all firms to take out PII cover to a level appropriate to the work they are conducting, suggestions that this could lead to firms ‘under-insuring’ and thereby putting the public at risk are simply not true. A minimum term is just that, a minimum only applicable to those with no genuine need to have cover above this.

Firms that do not carry out any conveyancing work may question whether it is fair.

Protecting the public when firms close Making the decision to close a business is never easy. Many firms tell us that our current run off insurance requirements can be prohibitively expensive and make it even more difficult. This can mean a firm is forced to continue trading long after the owner wanted to close it. One-in-five of the cases in which the SRA intervenes into a firm is the result of a disorderly closure. Some insurers tell us that more than half of firms that close without a successor practice are failing to pay their run-off premiums. Where this happens the cost of maintaining these premiums falls on all wider firms, and in turn their clients. Addressing this issue is both in the public and profession’s interest. Our proposals seek to do this by capping minimum claim levels firms are required to insure against to levels more representative of claims that are likely to arise. That should save firms cost and make that closure decision more straightforward.

Striking the right balance We know how important it is that regulated firms offer some of the highest levels of protections of any professional services industry, safeguarding clients and their money. It is a key element for maintaining trust and confidence in law firms. It distinguishes regulated firms from the wider legal market. Nothing in our proposals would change this. Providing comprehensive cover should not mean forcing some firms to pay for levels of insurance they, and their clients, do not need. After all, the users of legal services ultimately pay for the protections, and if that means legal services are unaffordable it is the public that suffer and firms that miss out on clients. Our proposals get rid of the one size fits all approach, while making sure every firm is still required to take out levels of cover appropriate to their clients and the services they offer them. Crispin Passmore, Executive Director of Policy, Solicitors Regulation Authority (SRA).

One size does not fit all The majority of PII claims relate to a select few areas of work, yet our current rules make no distinction regarding the type of services individual firms engage in and must therefore insure for. For example, more than half of all claims we identified related to conveyancing issues, meaning these claims in turn are a major factor in influencing the overall cost of insurance claims. This means for existing ‘one size fits all’ insurance policies there is an inevitable element of cross subsidy between low and high-risk firms in the models used by insurers to calculate premiums.

Issue 36

Providing comprehensive cover should not mean forcing some firms to pay for levels of insurance they, and they clients, do not need Modern Law 21

EDITORIAL BOARD

The business opportunities in data protection Nearly twenty years ago, in the TV series The West Wing, lawyer and presidential advisor Sam Seaborn, played by Rob Lowe, claimed: “The next two decades are going to be [about] privacy. I’m talking about the internet. I’m talking about cell phones. I’m talking about health records and who’s gay and who’s not.” This was 1999, the year after the last Data Protection Act was enacted.

It is hard to imagine that screenwriter Aaron Sorkin would have foreseen the role that personal information would be playing in every facet of our lives two decades on. Data has become one of the most valuable assets of businesses around the world, driving product development, marketing segmentation and even how elections are fought.

The long transition to a digital economy and the development of disruptive new technologies are making a difference to how we work

But as the value has increased, the dangers of mishandling it have become obvious. Massive data breaches in offshore firms Appleby & Mossack Fonseca and the reputational damage to both firms and their clients have highlighted the importance of prioritising cyber security and data protection. Even global companies like Facebook are not immune to the perils of data breaches. Now, with the increased financial penalties under the General Data Protection Regulation (GDPR), there is an increased urgency to place data protection at the forefront of how we work.

business to provide support to clients on data protection processes and advising on ongoing compliance with the GDPR can set you apart from your competition. Training and upskilling programmes focused on understanding and implementing effective data protection processes will be a valuable investment, and the associated skills and knowledge may be an important consideration in future hiring decisions. Some lawyers may even choose to act as Data Protection Officers for organisations if they are sufficiently familiar with their data processing.

Compliance with the new regulations is a process, not a box ticking exercise that ended on 25th May. Data protection can no longer be considered the responsibility of a select few but is now a risk and compliance issue, which is being considered at the board level.

Law firms have had to adapt to changing markets in the past. The long transition to a digital economy and the development of disruptive new technologies are making a difference to how we work. This is just one more change to which we must adapt.

Research and media reports have consistently shown the confusion caused by misunderstanding of the GDPR and the new Data Protection Act. Panic has been a consistent feeling for businesses as they come to grips with a new regime and understand the implications across their operations. It is fair to say that data protection is now front and centre.

It might be frustrating, and it might be an expensive exercise, but it is important to see understanding the new data protection regime as an investment and opportunity to grow your business. Joe Egan, President, Law Society of England and Wales.

Despite the focus in the media on the penalties for noncompliance, the heaviest of which the Information Commissioner’s Office has been very clear will only be used against those who show deliberate disregard for the law, the regulations can, and should, also be considered a major business opportunity for firms. While you should prioritise putting your own house in order and develop your own compliance processes, it is worth considering what services you can offer your clients. As your clients face these challenging changes in the law, there are likely to be considerable opportunities for legal advisers with sufficient expertise in data protection. Developing your

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Modern Law 23

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EDITORIAL BOARD

Factoring in technology

Getting past groupthink

What are the main drivers of change in the legal sector currently, and what form are these changes taking?

How can diversity within the legal profession contribute to new and innovative ways of thinking?

aving spoken at a legal conference in Milan this month, it was good as always to listen to the keynote address from Professor Richard Susskind entitled “The Future of the Professions”, being the title of his 2015 book co-written with his son Daniel.

iversity within the profession is improving but remains an aspiration. Last year the SRA revealed that 18% of lawyers in SRA regulated firms are from a black, Asian or minority background. In March of this year, the Law Society revealed that despite women outnumbering men in the legal profession for the first time in history, they remain significantly underrepresented both in senior positions and high paid practice areas such as corporate law.

Technology is undoubtedly the biggest disruptor in how lawyers will provide their services in the future. Professor Susskind states that to remain profitable, the choices are to either differentiate your offering to keep prices high, or secure high-volume work at narrower margins. The drive to more commoditised work necessitates streamlining internal operations to keep costs down and the obvious solution is technology. This is equally true of those labour-intensive tasks in complex work, such as disclosure and document management, where sophisticated software can search and identify content at a speed not humanly possible. As professor Susskind identifies, it is a common objection that reliance on technology diminishes the perceived contribution from human professionals. My daughter recounted to me recently the diminishing reliance on the physical law library in the chambers she works in and we think nothing of the obvious advantage in being able to survey rooms full of legal text and case law without ever leaving our desk. With the cost of legal services and the ever-reducing limitation on the recovery of costs in litigation, access to justice continues to be a growing concern. Technology enables legal services to be done often vastly more quickly and therefore more cheaply, with any human element being at a far lower level than would otherwise be the case. With the likes of IBM’s Watson, Artificial Intelligence can now predict the outcome of a trial with greater accuracy than a human lawyer. Some may be sceptical, yet we think nothing of reliance on our case management systems and the sophisticated management reports these can provide, which is no different in processing data more effectively and quickly than a human. We should welcome change and factor technology into our practice, project and pricing management, especially if we want to remain competitive. To quote again finally from Professor Susskind, “…those who embrace new technologies and novel ways of sourcing legal work are likely to trade successfully for many years yet, even if they are not occupied with the law jobs that most law schools currently anticipate for their graduates. I believe that lawyers, in order to survive and prosper, must respond creatively and forcefully to the shifting demands of what is a rapidly evolving legal marketplace.”

The SRA Risk Outlook 2017/18 identifies diversity as one of eight priority risks for all solicitors and law firms. It deems diversity in the profession to be essential to the preservation of high standards, the effective administration of justice and improved access to services. Given the SRA’s interest in encouraging diversity, it should be a high priority for every law firm and yet few offer regular training or mentoring and coaching programmes to embed it within workplace culture. The problem, perhaps, is that diversity is challenging. Diversity is not familiar, uniform or conforming. Research shows that diverse work groups often experience more friction and disagreement than those comprised of like-minded individuals from similar backgrounds. We are naturally drawn to the familiar because it’s comfortable and secure. Familiarity, comfort and security, however, do not make for innovation, or indeed good business. A lack of diversity makes us vulnerable to “groupthink” – the triumph of agreement over good sense and status over knowledge. The term was coined by social psychologist Irving Janis to describe the flawed and often dangerous decisions characteristic of highly cohesive and conforming groups. The official enquiry into the 1986 Challenger disaster, for example, attributed the cause to a faulty part and a “serious flaw in the decision making process leading up to the launch” – the need for conformity had overridden real engineering safety concerns. If rocket scientists can succumb to groupthink then so can we. Elon Musk and Jeff Bezos have recently made decisionmaking and meeting skills a hot topic. Consensus-making is clearly important but so too is diversity of opinion and the discouragement of self-censorship, the illusion of unanimity and collective rationalisation. Diverse groups may sometimes be harder to manage but they are also less vulnerable to complacency. The digital age presents the legal profession with myriad challenges, none of which feel familiar. Diversity is not just a macro-societal concern but an internal governance issue, which might just be the best way of keeping up with a changing world. ALISA GRAY, Director of Business Development, Kaplan Altior.

Richard Allen, Senior Consultant and Costs Lawyer, Burcher Jennings.

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EDITORIAL BOARD

Keep your eye on AI

The Amazon effect

How can artificial intelligence (AI) benefit a law firm’s workflows and processes?

awyers, like everyone else, are affected by the way technology is evolving to assist us and perform tasks in the digital landscape of business today. Not only is the requirement for data at an all-time high, but the intelligent application of systematic tools to analyse this data into useable forms has become even greater. In order for legal professionals to stay on top of their game and law firms to remain competitive among peers, the efficiency and speed with which cases are dealt with is ever increasing, creating a demand for the application of technological advances beyond the mere availability and use of data. And this is where AI comes into play.

o you use any of the following brands: Amazon, easyJet, Uber, AirBnB? If so, you’ll be aware that how we interact with brands has significantly changed. The days of visiting a store to buy something necessary are slowly disappearing. Why? Because there are more convenient methods to find what we need. I can’t remember the last time I called to organise a taxi.

So, how can AI benefit a law firm’s workflows and processes? “Constantly think about how you could be doing things better. Keep questioning yourself” - Elon Musk. What makes artificial intelligence so interesting is the application thereof to solve problems and continuously deliver better products and services. Simply stated, AI can be considered as the next generation of technologies, which carry out tests to evaluate data. This means that AI can be particularly effective at finding results when applied to interactions with users. For example, a chatbot on a law firm’s website can make a connection with a potential client and already collect the data and requirements of service based on a series of questions. Thus providing for the initial contact intelligently as well as collecting data essential for business. Are the lawyers of today ready to embrace AI? Other areas where AI is being applied in law: • Simplified methods of document discovery. Finding relevant information based on the AI program’s ability to sample data and identify what is relevant can be faster and more accurate. • Improved methods of legal research through automated searches that are remembered and indexed intelligently. • AI can assist in identifying patterns and mistakes (through learning) with contract and legal document analysis, thus streamlining tasks such as proofreading, error correction, and document organisation. In conclusion, it is easy to recognise that saving time can save money – but more importantly, spending less time on mundane tasks can improve productivity. If lawyers can save time they can spare their creative energy for addressing the more important aspects of each case. Not to mention the reduction in stress and improved workflows that is the obvious result. Jennifer Connell, Writer, Legit Claims.

These brands are changing how we want to communicate and engage on a day-to-day basis. We’ve become accustomed to digital communication including interactive websites, instant messaging, online portals, apps and other self-serving information platforms. We now expect to be contacted by digital methods rather than traditional by service providers. Technology has changed every industry. In an always-on culture many industries have reacted by acting fast and getting ahead in the market. The legal market is beginning to change with technology becoming a hot topic, but also with regulatory changes such as the recent news that the CLC will ask members to be more transparent with their fees. Whether publishing fees is the right approach or not, clients now expect better technology to enable their experience of your brand. The above-mentioned brands are open for business 24/7, responding quickly and accurately to client enquires at a time that is most convenient to them, including evenings and weekends. This plays into the legal market as well; research shows 59% of home movers obtain two or more quotes, compared to 24% from three years ago. Reality is, if a website cannot provide an accurate, instant quote, that new business will find a firm who can. I recently read research citing that the websites with instant conveyancing quoting tools received over 34% enquiries, but the ones with just a phone number and an email address received less than 5% enquiries from the site visitors. It’s not just experience, client service also needs to be addressed. Three years ago, clients expected you to call them with updates related to their case. However, a recent study on home movers proves the number of clients who want to communicate via phone calls is down by 30%, a huge drop in such a short period of time. Instead, home movers now want to communicate using digital communication, including channels such as WhatsApp and SMS, which is up by 86%. It’s time law firms consider how they can tie experience and service together to ensure clients return with their business. Yvonne Hirons, CEO, Perfect Portal.

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EDITORIAL BOARD

Satisfying the millennial client nderstanding millennials is a bit of a science. They aren’t like their predecessors; growing up between the analogue and digital age they appreciate quality service and place emphasis on experiences just as past generations have. As digital natives though, they have different expectations of how this is achieved, created by changes in technology that enable an ‘always on’ culture. With research showing a reduction to brand loyalty in this demographic, meaning a new breed of home mover in the 21st century, and for solicitors to maximise on opportunities, they need to understand how these millennial buyers want to be serviced.

A consumer study by SmarterHQ found only 7% of millennials identified themselves as brand loyalists. They’re looking for personalised experiences. Using technology to demonstrate your value in their home moving experience should be capitalised to engage with the next generation buyer. We recently commissioned a piece of consumer research, Home Moving in the Age of the Consumer, which found dealing with processes such as local and Land Registry searches, drawing up contracts and transferring funds were perceived as key areas where solicitors add value to the home moving experience. The research also found that millennials are looking for greater consultancy (50%) and regular communication throughout the home moving process (64%), showing how you communicate is almost as important as what you communicate, and it is the method used that will resonate with your millennial clients. Rather than a generation looking for instant gratification, millennials’ expectations reflect the flexibility technology offers them to complete processes at their convenience. This changing digital landscape opens a world of opportunity for firms. Using technology to service clients in ways they have come to expect will add value to their overall experience, and in turn drive repeat business in years to come. Notoriously dismissive toward brand loyalty, targeting new home movers is best focused on exceptional customer experience. Servicing millennial buyers should be viewed as a fresh opportunity, made easier with digital innovation. Smart technology can streamline processes enabling better communication with clients and allowing more time for relationship building. And with the Harvard Business Review finding it costs between five and twenty-five times more to acquire a new customer than to retain an existing one, prioritising brand loyalty should be paramount.

The AI revolution he world is on the brink of an AI revolution! Sadly we are not at Asimov levels of intelligence quite yet, but we are slowly getting there. In 2016 alone, tech giants Baidu and Google spent between $20B to $30B on AI, with 90% of this spent on R&D. Richard Susskind believes that we will not start seeing the benefits of AI in professional industries such as law until the 2020s.

The cost-saving benefits of these technologies promise to be huge. In a recent US study conducted by Thompson Routers, 69 percent of lawyers found that they were spending too much time on administrative tasks. AI presents an opportunity to streamline workflow and redirect lawyers’ attention to matters other than administration. The rise of machine learning has seen computers learn to easily defeat humans at games of skill such as poker, chess and most recently go by the sheer weight of games that they are able to analyse beforehand. The AI of the next decade will easily be able to proofread documents for spelling errors and handle document management. Doubtless these aspects of the job will not be missed by those lawyers who have had to wade through thousands of pages of contracts to check for consistent spelling. Moreover in the recent case of Pyrrho Investments Ltd and another v MWB Property Ltd and others [2016] EWHC 256 (Ch), predictive coding in electronic disclosure was approved by the UK courts. There remains a misconception amongst lawyers that AI will purely be used on non-legal administrative tasks. However, in the AI vs Lawyer Study conducted by several top US universities, AI (trained by tens of thousands of contracts) took on a team of experienced lawyers in analysing a Non-Disclosure-Agreement. The AI achieved a 94% accuracy rate compared to 85% and completed the task in 26 seconds as opposed to an average of 92 minutes for the lawyers. However, AI is not ready to replace the human aspects of a lawyer’s job quite yet. Meeting clients face to face and acting on their behalf will continue to be important aspects of a commercial lawyer’s job. COLIN FOWLE, Managing Director, Blue Car Technologies Limited.

Adam Bullion, General Manager of Marketing, InfoTrack.

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EDITORIAL BOARD

Making the most of social media How can social media be used to help lawyers build relationships and therefore help expand their firm? he legal sector has traditionally been one of the industries which places a high emphasis on offline networking. However, there is a significant rise in conveyancers capitalising on their social media networks to build connections and showcase expertise. Here are three key reasons why conveyancers need to engage with and utilise their social media channels:

Create a professional, yet personable brand Social media is a natural environment for conveyancers to engage with people who require or want to know more about the industry, leading to an increasing volume of potential prospects. Being accessible on social media will make you appear more approachable, which is key in an industry where client communication is crucial. People searching for conveyancers are likely to search for them online, so it is important your profile lives up to their expectations and makes you REAL. Add a little personality and include things which interest you outside of the working environment too. Have a plan of action A planned, proactive approach to your social media activity will enable you to find and connect with prospects more effectively. Your clients – existing and potential – are out there ready to have a conversation, and if you are not talking to them, your competitors will. Breaking news is often discovered first on social media, so it is a great tool to learn about government announcements or conveyancing news, which will impact your work. Keep in the loop with industry news and trends by following industry publications like Modern Law and join groups and communities too on LinkedIn. Find leads, build trusted relationships Build trust with peers and connections by sharing your expertise and offering relevant information to others. If you have written a blog post, share it, and if you are presenting at the latest legal event, tell your followers you are. One tweet or LinkedIn post showcasing your expertise could just lead to a face-to-face meeting. Conclusion Social media is a great platform for conveyancers to appear approachable, connect with clients, share information and keep up-to-date with industry news. Start conversations, share insights and use social media to stay in touch with people you meet and keep contacts warm and engaged. Geodesys has put together a whitepaper to help conveyancers navigate the online world. Susan Fairbrass, Marketing Manager, Geodesys.

Issue 36

Let’s get personal – have you got GDPR? W

ith new data protection regulations now in force, is your firm keeping pace with the constantly shifting legislative landscape?

The current pace of legislative change in the legal sector is breath taking. For many law firms it can feel like a full-time occupation simply keeping up with developments in case law for their chosen areas of practice. Add to this the shifting costs landscape and it becomes easy, whilst focusing on core disciplines, to fall behind the curve in terms of business governance and regulation. The EU GDPR has just taken effect and, regardless of our changing relationship with Europe, will govern our approach to data protection for the foreseeable future. A primary aim of GDPR may originally have been to protect personal information from unscrupulous marketing practises, but it has a wide-ranging impact on all businesses, and most importantly on how you work with your clients going forwards. If your practise has a specialist in data protection law, then chances are you are already well prepared. For the many small firms without such a specialist, ensuring full compliance with the necessarily broad and vague terms of the GDPR can be almost impossible to manage alongside a full case load. An increasingly popular and very effective method of keeping pace with business change such as GDPR is to invest in a dedicated Practise Management professional, detached from the core legal function of the business. Giving that person the freedom to drive business and compliance policy alongside the legal partners has many advantages. It ensures you have someone dedicated to ensuring the firm is fully compliant with GDPR and all future legislative changes, whilst freeing up the legal partners’ time to maximise fee earning potential. Many firms also find having a non-legal specialist driving business management helps to identify efficiencies in process and corporate culture, to prevent the firm being left behind in the modern market. For smaller law firms, investing in practise management and legislative compliance can feel like a costly exercise, particularly when cash flow is already stretched to its limit. Many firms therefore turn to alternative funders such as VFS Legal Funding in order to unlock the cash flow they have tied up in case costs and disbursements. This enables the law firm to invest in the benefits of practice management, or indeed any other aspect of the business, without restricting their day to day operations. Paradoxically, this can actually help increase the law firm’s profitability in the long term. Mark Richardson, Technical Operations Manager, VFS Legal Funding.

Modern Law 31

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EDITORIAL BOARD

Blogging is the answer

Keeping up with compliance

How can law firm websites be made more engaging and useful for current and prospective clients to improve relationships and conversions?

What challenges do businesses face when trying to remain compliant among changing regulations?.

logging is the answer to this question. This is the one subject that makes all of our clients groan. No matter how much we tell them that it is the best way to improve traffic, conversion and helps with search engine rankings, it is the one thing we have to constantly chase and push hard to get from them.

Whereas a blog in the past has been a must have just because the SEO guru said so, a blog now can be used as an amazing tactic to get people’s answers to questions and bring targeted traffic to your website. There is a positive way you can blog and here is the best way to do it. 1. Look at questions that you are being asked by clients and about the subject that you are working on - put together a blog post that answers all the questions you are being asked. 2. Decide what media you are going to blog in. Gone are the days of a blog just being about text. Video works well, lists, checklists, collate professional opinion on subjects from colleagues etc. 3. Come up with a schedule for your blog and stick to it, who is creating content, when is it due, when will the post go out and how will it be distributed on social media to take advantage of traffic. 4. Don’t forget to include a call to action so they know you can help them further with their questions. By doing this you will then have extra fresh content going onto your website and search engines will love this. As you have answered the questions you will get the trust of those reading the expert opinion, which will help with your conversion rates. The fresh content will also mean that you will get the clients that you already have secured interested in other services that you offer and in turn convert current clients into longer term, more profitable clients. It is all about trust and the best way to do this is to instill your knowledge in plain English to those that need to have simple questions answered from the research they are doing online. When they find the answers they will trust the resource where they found it. Steve Hooper, Founder, LawSEO.

Issue 36

he challenges faced by businesses to remain compliant during changing regulation are three-fold: the amount of new regulations in many different areas occurring within a short space of time, regulatory meetings to finalise rules of international policy occurring within weeks of policy becoming law, which impact on the time available to write or amend process and procedures, and the FCA issuing policy statements instructing changes in regulation be implemented immediately. Added to this is the training implications for all employees.

Since June last year, we have had various new and updated regulation coming into force including the Anti-Money Laundering Regulations 2017 and MiFID II (Markets in Financial Instruments Directive II). GDPR (General Data Protection Regulation) will be followed by the Insurance Distribution Directive, although this has now been delayed until October 2018. Added to this, the FCA have issued various papers including a consultation paper on ‘Improving the quality of pension transfer advice’ and a policy statement on ‘Advising on Pension Transfers’. Whilst all of this change increases our workload to ensure we are compliant by specified dates, some regulation has had a lesser impact than others. For example, although we needed to adjust our procedures in line with the revised anti-money laundering legislation, the enhancements to the rules did not have a great impact on us due to the procedures we already had in place. The same cannot however be said for GDPR; although we fully comply with the current Data Protection legislation, the revised rules do mean we have had to review every single area of our business from HR to Marketing and everything else in between. Obviously all new regulation must be given equal importance with time taken to read and understand the requirements before preparing new procedures and implementing the necessary changes. This does however put stress on an already busy workforce. We have found the only way to deal with this ever shifting change in regulation is to plan well ahead of any deadlines and have a strong, dedicated team with a clear vision of the purpose of the required changes. The final step is to ensure all staff have had relevant training to understand how any changes impact on them. Elaine Baker DipPFS, Compliance Manager, Informed Financial Planning.

Modern Law 33

EDITORIAL BOARD

Can marketing be outsourced in a law firm? W

ith the current drive for efficiency in law firms, marketing isn’t immune to the pressures of delivering efficiency gains - and nor should it be!

For firms “bought in” to marketing and investing heavily for growth, this drive for efficiency has brought about a very interesting question to ponder, “Can marketing actually be outsourced in law firms yet deliver better results?” As usual, the answer is both “yes” and “no” with the real truth lying somewhere in between. There is no point outsourcing an entire department and then expecting external suppliers to simply do everything. Someone needs to ‘herd those cats’ internally as much as they need to manage those external agencies! A hybrid solution with a strong leader at the helm of a streamlined team can often be optimal, engaging with partners and striking the right tone for the firm’s marketing. They can also make sure plans are developed and external agencies used to deliver lead generation campaigns - best of all, they can ensure the results are measured within an inch of their lives! New technologies and approaches to marketing finally have the chance to prove that by optimising a law firm’s website for visitors to take action, publishing relevant content appealing to the needs of their audience and using channels such as social media, SEO, email and online advertising to get the message across, that quality leads can be generated. Move over ‘old school marketing’ shouting its message in an ‘inefficient’ manner and a big hello to an ‘inbound approach’ delivering leads and helping your law firm to grow. But can this new approach to legal marketing actually succeed? The 2016 report on “Trends Impacting The Legal Industry” found that most firms in the US are already outsourcing their marketing, with 62% happy to outsource their lead generation to external legal marketing agencies. Better still this new approach can also help to drive efficiency through reduced overheads and improved profit margins, never mind an increase in the number of leads generated and new clients for your firm.

Flexible working for a modern workforce Other than salary, what factors are important to the modern workforce and how can law firms embrace these to improve retention?

ttracting and retaining the right staff is a key element of organisational success, and one we at the Legal Ombudsman have been focusing on for the last twelve months.

The modern workforce is looking for flexibility. I have a six and four year old daughter and my wife is an NHS consultant, so like many colleagues I need to juggle family and caring commitments alongside a hectic work schedule. Other colleagues love the work but hate the journey to work, or simply want to have a better or different work/life balance. Flexibility needs to support achievement of business objectives. We allow many of our staff to work from home on a regular basis but subject to our rosters and, critically, them delivering good performance. Using flexibility to drive improvement in performance requires the right IT infrastructure to ensure working at home is at least as efficient and effective as being in the office. We have invested in cloud computing and telephony to connect people fully to the office wherever they are, and have achieved significant reductions in costs by rationalising our office space. Alongside this, we have invested in personal and career development. Investing in staff and clear career progression paths increases the likelihood that staff will want to remain with you. The final key area for us is promoting a positive office culture and working environment. With our staff we have developed a framework of values and behaviours, which set how we relate to each other and encourage us all to feedback on behaviour that isn’t in line with our values. It is essential to develop a positive culture of workplace wellbeing and mental health to support organisational performance, particularly as our staff handle emotional and stressful matters. We recently supported the #TimetoChange initiative and have developed a group of well-being champions who are available to colleagues if needed, alongside access to a range of resources including counselling if required. We really believe that supporting and developing our workforce is a key part of being a successful and modern organisation. We’re doing lots more besides the three areas set out above and we’re happy to share our learning. Rob Powell, Chief Executive, Legal Ombudsman.

A win win no matter what way you look at it! John Hogg, Managing Director, Enlighten IC. To find out more, please get in touch, or download a free copy of the ‘Definitive Guide To Legal Services Marketing’ at www.enlighten-ic.com.

34 Modern Law

Issue 36

WHY IS STAMP DUTY LAW SO CONFUSING?

and could your clients be due a refund?

Stamp Duty Land Tax is commonly known as Stamp Duty or SDLT and was introduced in 2003. It was initially a relatively straight forward duty to calculate, administer and collect until Parliament started to make changes to it.

he first significant change was in December 2014 and a subsequent change came into effect in April 2016 when the 3% surcharge on the purchase of second homes and buy-to-let investments was introduced. These changes have created uncertainty and complexity when calculating the duty due and so overpayments arise. Overpayments can be recovered from HM Revenue & Customs (“HMRC”) provided a claim is submitted within the required time frame which is generally 13 months after the purchase date.

What if one house has an annexe, or detached property in the grounds? There are complex rules surrounding the purchase of properties that include an annexe, basement flat, or other residential property in the grounds such as a detached holiday cottage, an apartment above a garage or even staff accommodation. Therefore, mistakes with the calculation are made and opportunities to claim statutory reliefs and allowances are overlooked. Take the following example:

Mr & Mrs Davies purchased a 3-bedroom house in June 2017 for £675,000. Attached to the house was a garage; the upper floor of which had been converted into a bedsit. The bedsit was not occupied on the purchase date but was suitable for use as self contained living accommodation. The couple did not own any other residential property and were advised to pay Stamp Duty of £23,750 on their purchase. We subsequently reviewed the purchase for them and confrmed the Stamp Duty charge should have been £13,750. Statutory reliefs and allowances were overlooked, and we were able to help the couple claim a £10,000 refund from HMRC. We are more than happy to have a conversation with those that fear their clients have overpaid and want our help to assist with claiming a refund on their behalf. If you also have clients that are about to embark on a similar purchase please get in touch so we can ensure you advise your clients to pay the right amount of Stamp Duty. Not too much and not too little.

Stephen Griffiths, Griffiths Allen Stamp Duty Advisers office@griffithsallen.co.uk

FEATURES

Regional Focus:

Scotland

What are the main challenges that legal professionals in Scotland are facing at the moment, and how are they tackling these?

The legal market here has gone through unprecedented change since the recession. We’ve got challenges that are also opportunities, especially as a consequence of the digital revolution; things are done in different ways and much more quickly, and that’s what clients are asking for. The legal profession has to adapt and innovate to make the most of these opportunities. Not everybody in the profession is geared up for that yet; but we’re getting there. We’ve got 1,200 law firms operating and 11,500 members, and that’s increasing every year. It’s a very diverse profession, and a key challenge for us is to make sure we meet an increasingly diverse range of needs. There are also a lot more paralegals and non-practising lawyers involved in law firms, and they’re all being encouraged to become members of the Society and have their own association. One challenge that is the same all over the UK is around legal aid. We’ve just had a legal aid review in Scotland, and some lawyers are being paid the same fees since 1992! So we do need a change, but we’re aware the budget isn’t available. It’s a huge challenge for solicitors and for clients who need access to justice. There have been changes to the police duty scheme, so solicitors have to attend interviews at police stations at all hours of the morning and the fees aren’t a fair reflection of the time and service. Often these solicitors have to appear in court the next morning. That’s a 24hour service that is difficult to resource, particularly for small firms and people with caring responsibilities 36 Modern Law

We’re working in conjunction with some of the bigger firms that have international aspirations and Scottish Development International to promote Scotland’s legal sector more widely in international markets A lot of positives have come out of the legal aid review, but a lot of our members are disappointed there are no recommendations for immediate changes to legal aid fees, though there was a recommendation that they should be having regular independent fee reviews. Our own research has shown that in housing cases like evictions due to rent or mortgage arrears, spending a pound on legal aid could generate a beneficial return of £11 for both recipient and wider society. There are comparative returns in criminal and family cases too, all crying out for legal aid. The next point of concern is Brexit. We remain a full member of the EU until further notice, and we will continue to monitor developments closely and to promote our members’ interests throughout the negotiations and during the implementation of the withdrawal agreement. We have to keep in mind that the client remains the most important part of all of this, and we’ll just have to work around whatever the outcome is.

Issue 36

FEATURES

What has been the key positive or negative area of change in the Scottish legal market in the past decade, and how have professionals in the area responded to this?

The changes we predicted would come about have come about, and that’s the consolidation of private practice, the use of technology and the entry of global firms, and that’s all positive. The negative would be the reductions in public spending, which has an effect on legal aid. And in terms of the future, the growing commoditisation of legal services means it won’t be long before we get the TripAdvisor equivalent for law firms – customer service is an important component of the legal package. Artificial intelligence is becoming increasingly relevant and already certain services can be carried out online.

There’s the question of gender balance; in Scotland, 51% of entrants into the legal profession are women, but when you look at professionals in their forties the number of women dramatically drops off. We’re creating our Profile of the Profession (PoP) at the moment, which looks at diversity and inclusion, a topic close to my heart. We’ve got voluntary equality standards on our website, including pay gap information, but there are still some women not getting to where they should because there’s still a lot of discrimination and bias, whether at a conscious or unconscious level. We need to make sure our profession is as diverse as the public that we’re protecting. The regulatory legislation governing Scottish solicitors is 38 years old, and we’ve had one or two tweaks to it, but it’s just not fit for purpose in this age. We are competing with Brexit for time in the legislative programme, and we are pushing for the Scottish government to bring our regulation up to date. We continue to emphasise that the legal sector in Scotland sits at the very heart of the economy; it accounts for tens of thousands of high quality jobs and provides a major contribution to the economy of around £1.5 billion per year.

What are your core aims as a President of the Law Society of Scotland?

We have a Leading Legal Excellence strategy in place, and we’re about halfway through that. It’s very ambitious, so I want to carry that on. The main points would be access to justice and making sure people get advice and can have their rights protected, modernising the legislation around regulation and keeping the legal profession at the heart of a thriving community. Underpinning all of this is the education side of things; we have to attract the right students and get into schools to let them know more about legal careers and the law more generally.

We’ve set up the Lawscot Foundation, and in our first year we had enough money to fund a whole degree for eight people, which gave them a fantastic start. Some of these youngsters have faced many challenges at an early age and financial circumstances may have prevented them from getting to university if it wasn’t for this help with funds, so that’s something we’ll continue to raise money for.

We have to attract the right students and get into schools to let them know more about legal careers and the law more generally Issue 36

Modern Law 37

FEATURES

At the other end we need to look more at succession planning. We have members in their eighties practising law. It’s amazing that they manage to keep up with all the new regulations and technology; I know I would struggle. As President, I’ll visit all of our local faculties. I encourage them to ask me questions and my email is always open.

How have the needs of legal professionals in Scotland changed in the last five years?

We’ve got to make sure we’re up to date in terms of technology, training and member support. Some members say they get too much information, but I think that’s much better than not getting enough. We run a lot of CPD courses, with technology being a major area of focus, and that’s how we need to look after our members.

Have client expectations changed in Scotland, and to what do you attribute any such changes?

Certainly. Modern communications mean that clients expect things much more quickly. It used to be that a fax required an immediate response, but that’s nothing now compared to the amount of emails you get at all hours of the day. Managed properly, these are great ways of communicating. There are cost implications there as well, because clients are used to going online and finding comparable costs on other services. We’re currently consulting on the feasibility of being more transparent about fees. It’s difficult to estimate some costs, but there are ways of making them more accessible to the public, and I think there will be more demand for that. Clients expect a high level of knowledge of black letter law as a given, but they also have high expectations about services delivery and communication. It’s something we as a society take on board because we’re very keen to ensure every lawyer gives good service, and that’s what our Leading Legal Excellence strategy is all about.

How does the Law Society of Scotland maintain its relevance to the profession?

We’re already looking ahead to the years after our current strategy finishes. The challenges we predicted in 2011 have all come to fruition now, so we’ve gone through the same process for beyond 2020. We have to ask the profession what they think of that too. We have polls every year to help us understand what the profession thinks of us. Three quarters of our members think we’re effective at informing the legal profession, and 95% think we should retain our dual role of looking after the public as well as the profession. 73% have a very favourable or a fairly favourable opinion of the Society’s work.

There have been changes to the police duty scheme, so solicitors have to attend interviews at police stations at all hours of the morning and the fees aren’t a fair reflection of the time and service

38 Modern Law

Issue 36

FEATURES

Scottish Legal International has just been launched. We’re working in conjunction with some of the bigger firms that have international aspirations and Scottish Development International to promote Scotland’s legal sector more widely in international markets.

How do you feel the pace of innovation differs in the Scottish legal market compared to other regions?

ABSs don’t yet exist in Scotland like they do in England; the regulatory framework has been approved by the Scottish Government, they are yet to be authorised, but we should be able to accept ABSs soon. There might be a good take up; some high street firms could benefit from diversifying their services.

There are also a lot more paralegals and non-practising lawyers involved in law firms, and they’re all being encouraged to become members of the Society and have their own association

We’ve had devolution for 20 years and there’s lots of legislative change there. Solicitors respond to Scottish law changes as well as UK ones. As a body, there is always work to be done working alongside government influencing legislation, and as time has gone on we’ve got a better relationship with the devolved parliament, so we can build on that.

How do you think the legal profession is perceived by the public? Does the Law Society of Scotland have a part to play in building relationships on this level?

Our polls show that solicitors are viewed positively in Scotland, contrary to what people might believe. 95% of clients say they have trust in their own solicitor, 86% of the public say they trust the solicitor profession as a whole and 80% would recommend their solicitor to family and friends. This gives us a good idea of what the Scottish public thinks of us and what we can do to make legal services even better for them.

Do you feel that the Law Society of Scotland has a voice in wider conversations in the UK?

We do a great deal of work in the public interest and seek to influence the creation of a fairer and more just society by responding to consultations and providing evidence to both the UK and Scottish governments. We’ve responded to 109 consultations in the past year, commented on 19 bills and proposed 52 amendments. We’re involved with the Council of Bars and Law Societies of Europe (CCBE), and one of our past presidents was also a president of the CCBE. It’s very important that we’re part of that UK delegation.

What does the future look like for the legal professionals in Scotland?

We need to ensure that the profession continues to grow. 62% in our poll say they’re optimistic about the future, particularly in-house solicitors, who now account for almost a third of the profession; a sector which was not effected quite so immediately by the recession. Legal aid firms were less optimistic, but the legal aid review may help in that area once it’s finalised. We will continue to offer guidance on the impact of technology, both the opportunities and risks, and we want more paralegals and legal executives to benefit from the services and support we can offer. In terms of supporting our members, we want our products and services to help them innovate, grow and deliver world-class legal services to meet the challenges of the digital age.

Alison Atack is President of the Law Society of Scotland.

Issue 36

Alison Atack Alison Atack joined the Society’s Council in May 1998 representing solicitors in Glasgow and Strathkelvin and has also been a member of the Regulatory Committee and is the current convener of the Client Protection Sub-Committee. She retired as a partner at Lindsays in March 2018 and has detailed knowledge and experience of private client work, including succession planning and agricultural property.

Modern Law 39

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FEATURES

Increasing client engagement: getting the max benefit from law firm data Our resident Tech commentator Charles Christian writes… kay, so by now you should have hopefully resolved any GDPR data privacy compliance issues your firm faced (and please don’t say “GDPR who?”), but what are you going to do with all that lovely personal information you hold on your clients?

The big issue most legal practices face is although their client/ matter records may be physically (or virtually) stored on a central database, this information is effectively trapped in vertical silos. Thus, for example, the private client department may know all there is to know about “Client X” but this information is rarely shared with other departments. True, it is technically still accessible by lawyers working in other departments, but the reality of modern legal practice is that they are far too busy dealing with their own clients to have time to check if other departments have recently taken on interesting new clients. Why is this important? Because of “cross-selling” – in other words that “Client X” I just mentioned may well be someone who would be interested in the services offered by other departments within a firm. For instance, take a high net-worth individual who has just made a new will and set up a trust fund for his or her children. Where did their wealth come from? A local or regional business he owns? In which case they may potentially have commercial property issues, planning issues, IP (intellectual property) issues, employment law issues, product liability issues, contractual disputes, to mention just a few areas of concern. Now clearly, a firm does not want to launch an “open season” on its new clients, with every department bombarding them with “use our services” emails and invitations to networking events, but there is scope for a coordinated business-development/marketing approach. Sadly, this is not an issue in most firms, as most firms just act in a matter for a client but then never contact them again. Ever! Not even where there is a legitimate reason for making contact… such as a gentle reminder that it is ten years (or whatever) since they last made a will and that now might be a time to review and update it.

Issue 36

Most firms just act in a matter for a client but then never contact them again. Ever! Not even where there is a legitimate reason for making contact There are a number of reasons why cross-selling is important. The first and most obvious reason being that it allows you to maximise the potential fee-generating capacity of that client, remembering that the more work you do for a client, the less likely they are to go elsewhere. (Obviously this assumes you do a good job for them and at a competitive rate!). To put it crudely: the more you get your hooks into a client, the more they will see you as their go-to lawyers. It is also worth noting that the more work you do for a client, as well as the longer you retain them as a client, the more profitable they become: because you know all about them and their business and don’t have to keep starting over from scratch with know-yourclient type questionnaires and trying to work out what exactly it is they do for a living (and, if you retain a healthy portfolio of existing clients, the firm doesn’t have to devote resources to winning new clients to replace the ones it has lost). The second reason is straightforward commercial survival, because if you don’t reel in a client with cross-selling, you expose yourself to the risk of them being poached by another legal services supplier who is better at marketing and business development than you. And, in the current market, the organisations proving themselves the most adept at cross-selling are non-traditional legal service providers and ABS operations. You’ve got that data: now use it to leverage the maximum benefit. Charles Christian is the Editor-at-Large of the Legal IT Insider newsletter and also talks about Tech & Geek Stuff on Twitter at @ChristianUncut

Modern Law 41

FEATURES

We take a look at all the highlights of this yearâ&#x20AC;&#x2122;s Bold Legal Group Modern Law Conveyancing Conference. Transparency, technology and cyber security were among the hot topics discussed at the third annual conference. 42 Modern Law

Issue 36

FEATURES One year ago, Tony Piccorillo, Partner at AVRillo, closed Modern Law’s annual conveyancing conference with the acknowledgement that we live in changing times. On 2nd May this year, Rob Hailstone, Founder and CEO of the Bold Legal Group, stood at the front of the Royal College of Physicians lecture theatre and began the day by quoting Bob Dylan: “The times they are a-changin’”. Clearly the past twelve months have seen no relenting from the wave of transformation that is flooding through the conveyancing sector, and this is what the 2018 Bold Legal Group Modern Law Conveyancing Conference aimed to address. Hailstone, who chaired the conference, claimed that the lyric had never been truer for property lawyers, as both the responsibilities of their jobs and the risks that come with this only continue to increase. Because of this, Hailstone said, attracting and keeping clients is more important for conveyancers than ever, and transparency could be one way of doing this, having become a “buzzword” in the sector as of late. Hailstone explained that isolated firms will find a new generation of clients who want mobile services, and those firms “will have to adapt”. Hailstone emphasised the need for firms to be “smart and efficient” amid market challenges and said that conveyancers shouldn’t be afraid to charge fairly for their services, but he also reminded attendees to consider that buying a house is a person’s biggest purchase.

SPEAKERS Jeremy Cousins

Peter Dodge

Kate Faulkner

Paula Higgins

Rob Hailstone

Stephen Ferrie

Matt Prior

Graham Murphy

Everything will change

Kate Faulkner, Property Market Analyst and Commentator, gave the keynote address at this year’s conference. Faulkner was able to draw on her research across the housing market to forecast the future of the industry. She began by telling attendees that “everything is about to change”, and if everyone in the property sector accepts this notion then it can work together to drive the change itself. Faulkner predicted that while some things will stay the same, like shortages of homes in some areas, the need for high street agents and the legal aspects of a transaction, new challenges will arise. These include the fact that people will move less frequently and that the country needs to fit “four generations of people into three generations of housing”. Faulkner cited 3D printing as one possible remedy to this, as the technology could enable homes to be printed in 24 hours, and these would need conveyancers too. Technology was said to be a big driver of evolution, with Faulkner listing AI, blockchain, information portals and home MOTs as initiatives that could improve the home moving process for consumers. Faulkner gave particular credit to the Land Registry for their work on automation. However, she also warned that something unforeseen could cause disruption in the sector and that therefore “flexibility” and “careful consideration” of new developments will be important for conveyancers. As a result of the gig economy, Faulkner expected renting to become more popular with an increased volume of tenants; the alternatives for many would be “living with family, social housing or homelessness”. There are now 3 million more privately rented houses than in 2000, Faulkner said, and therefore buy to let clients are a big market for conveyancers. Faulkner echoed Hailstone,

Times they are indeed changing, and this has never rung more true for property lawyers than now

Rob Hailstone, Bold Legal Group

Issue 36

Modern Law 43

FEATURES

There is a premium to be paid for a service that will tell the public they need the careful attention of a professional who knows the market

Peter Dodge, Radcliffe Chambers

claiming that “transparency is key” to help first time buyers, because the public and the media don’t understand what it is conveyancers do. She also agreed with Hailstone that conveyancers can be underpaid because of a consumer perception that “cheaper is better”, and that clients can look at conveyancers as getting in the way of things. Conveyancers therefore need to get their communication right, Faulkner said, before she stressed the value of working together to make the sector’s key messages consistent.

A layered approach to cyber

Improving the process

Lucy started by warning attendees that “no business is exempt” from cyber risk and that “everyone is a potential target”. She explained that the volume of cyber crime increased in 2017 and that disruption, reputation damage and financial loss are all potential consequences of a breach. Lucy claimed that data is a “valuable target” and that this would become more the case as it’s predicted there will be 11 billion connected devices by the end of the year. Types of cyber attack can include ransomware and DDOS, data breaches and supply chain and email compromises. Lucy referenced Yahoo’s data breach, the largest of all time, with names, emails, DOBs and security questions of all 3 billion of its accounts compromised, an incident that ultimately reduced the company’s sale price by £350m.

Paula Higgins, Chief Executive of the HomeOwners Alliance, joined Faulkner to discuss improving the home buying process for the client. Higgins explained that the Alliance champions the interest of homeowners, and that the group had identified high amounts of cost and stress for them in the current system. Higgins quoted the staggering statistic that failed sales cost homeowners “£500m per year”, with an “average of £2,700 lost per failed sale”. Higgins blamed this partially on a lack of transparency and one-stop shops for consumers, and also on that fact that “the redress system can be confusing”. Higgins alluded to government interest in a reservation agreement to stop sales falling through, in which a small sum of money would be paid at the point of offer to prevent withdrawal, and said this could be one way to improve client confidence. Higgins also believed that the different parties involved in a transaction don’t speak to each other enough. Faulkner agreed, explaining government working groups on the home buying process want to hear from every sector. She felt this would help to improve consumer knowledge of conveyancing too, as currently the public “don’t understand the dangers of cheap conveyancing”, somewhat owing to a lack of independent commentators in property compared to other industries. Faulkner claimed “everyone thinks everyone else is overpaid” in the market and that a guide for the public would reduce inconsistencies in service. She invited conveyancers to suggest what would need to be included in estate agent qualifications and a government guide for consumers. Faulkner was surprised that more firms don’t raise their profile at property shows to get in front of the consumer, because “business is done at a local level” and consumers still want that face-to-face interaction.

Cyber security is an area that has become even more crucial in the last year, and that’s what the Cyber Awareness Training discussion examined in more depth. Lucy T, Partnership Lead (Economic Sectors) and Economy & Society Team, National Cyber Security Centre and Graham Murphy, former CQS Product Manager at the Law Society of England & Wales and current Bold Legal Group Consultant, were on hand to deliver this awareness.

However, it was social engineering attacks that were said to be the biggest threats to conveyancing firms. Lucy described these as a low cost and high return method for criminals in which access is granted to hackers by staff members, largely through phishing emails. Lucy told attendees that awareness of phishing can stop traditional attacks, but social media is making deception more difficult to detect. Murphy provided a case study in which a firm lost £35,000 from one phishing email because the accounts team lost sight of internal procedures when they believed they were speaking to their director. Murphy advised attendees to “always follow procedures, irrespective of what an email might say”. The attendees were told that there’s no one solution for cyber protection, but that a layered approach would provide the most defence. This approach consisted of four layers: 1. Make it difficult to reach staff by using anti-spoofing controls and email filtering. 2. Make users the strongest link, not the weakest; phishing emails are getting harder to detect, and eventually somebody will click on one. Tailor training around awareness and detection and make it creative. Develop a good reporting culture; staff worried about being fired for clicking a suspicious link won’t report it. 3. Protect from undetected emails that are engaged with by using antivirus and firewalls to stop malware that gets through. Use hard to guess passwords and two factor authentication/multiple layers of login. 4. Respond quickly to incidents, using good monitoring to detect incidents quickly and making sure everyone in the firm is clear on their roles when something does happen.

Everything is about to change over the next five years

Kate Faulkner

44 Modern Law

Issue 36

FEATURES

We want to get to a point where you have serious buyers buying from serious sellers

Matt Prior, DCLG

Murphy explained that one financial services firm that had implemented these layers was sent 2,000 phishing emails. These were blocked at each layer so that ultimately only one malicious email got through, which was quickly identified and deleted. Murphy named DMARC as a key piece of cyber security software. It was developed by PayPal to combat payment fraud by preventing spoofing, and it was recently implemented by HMRC, the most spoofed UK domain. Murphy acknowledged that the software is “highly technical” and can be complex, but that it is very effective, with 200,000 organisations implementing it, a figure growing by 15% each month. While AI is lauded as a potentially huge benefit for law firms, Murphy looked at the other side of the coin and revealed that some criminals are utilising AI to identify the nuances of their targets’ language to more accurately spoof them in phishing attacks. Lucy advised firms who need further support and guidance to visit the NCSC website.

Look at VAT

The Brabners case has been a hot topic in the conveyancing sector this year, and Stephen Ferrie, VAT Consultant, Armstrong Watson spoke to attendees about the position of VAT on disbursements. Ferrie explained that the subject has come to the fore recently so that firms can avoid inadvertently falling foul of HMRC and receiving fines, as was the situation for Brabners LLP. The firm had a VAT inspection in which search fees and disbursements were queried by HMRC. Their assessment was appealed by the firm with the support of the Law Society, but was ultimately upheld. Ferrie said the Law Society is considering the implications of this, but that HMRC guidance states that a firm is acting as an agent of the client when they’ve paid a third party. The Law Society is engaging with HMRC about the issue, but in the meantime Ferrie advised attendees to ask three questions when deciding if an item is a disbursement or a recharge: Does it meet HMRCs eight conditions, can it still be passed on free of VAT, and have you reviewed any potential exposure to VAT on disclosure?

it’s not part of their role, echoing Hailstone’s earlier statement that the role of the conveyancer keeps growing.

The government’s take

After lunch, the attendees heard from Matt Prior of the Department for Communities and Local Government. Prior provided an update on the government’s call for evidence on improving the home buying and selling process. He began by outlining that on average people move once every twenty years, and that therefore “the process is unfamiliar” to consumers and they are “heavily reliant” on professionals. Prior stated that 40% of buyers/sellers experience delays, and that the government is therefore calling for quicker, cheaper and less stressful house buying. The results of the DCLG consultation showed there was no silver bullet to achieve this, but that it identified a need to improve the present system and “build a system for the future”. Prior explained that the government can’t do this on their own and that the market needs to work together to improve the system. He claimed the government agrees with calls for increased transparency, and the consultation revealed estate agents would support this is if all fees were standardised. The public felt banning referral fees would aid transparency, but the profession was concerned this would just “make those fees invisible”, and that taking them away would slow the process down further because clients couldn’t find a conveyancer. Prior told attendees that consumers can’t distinguish between conveyancers and will choose by “recommendation, locality or price” and aren’t able to make an informed decision. It was believed there should be key metrics such as “completion time, fees and qualifications” to enable that informed choice. The public also

The audience had lots of questions for Ferrie, and during this session it was suggested by one attendee that if firms are charging VAT for a job, it implies they shouldn’t be doing that work and that

Issue 36

Modern Law 45

FEATURES

disliked the idea of buyers and sellers using the same conveyancers, and they were concerned about the risk of fraud that comes with e-signatures, though they supported these otherwise. Prior said that receiving mortgage and lending decisions in principle was popular among respondents to the consultation and that this would promote “serious buyers buying from serious sellers”. Prior acknowledged the “overwhelming raft of information” given to consumers and the subsequent appetite for a standardised government guide to let the public know the correct questions to ask and the things they need to be sale-ready. Prior also discussed the polarising notion of a reservation agreement brought up earlier in the day by Higgins, explaining that this already happened in high value property transactions and could tackle gazumping. Prior finished by telling attendees that some things were jobs for the industry to do themselves, such as building IT systems or introducing new technology, but he stressed that improving the home buying process would require a collective effort from all stakeholders.

Closing the conference

Lucy T, NCSC

for them. Cousins claimed they are “sly” and “understand the system”, but that there are always certain hallmarks that should alert solicitors to fraud. Dodge felt there was a public concern around fraud, calling it “the elephant in the room” during transactions. However, Dodge told attendees that as part of their obligations they were expected to have such “difficult conversations”, but that this could be used by firms as a marketing opportunity to demonstrate how diligent they are to clients. Hailstone closed the conference by highlighting some of the key outcomes, including the need for increased transparency, the fact that fewer people are moving and the potential introduction of reservation agreements. The times are indeed a-changin’, but following the Bold Legal Group Modern Law Conveyancing Conference it would seem that the answer to this change isn’t blowin’ in the wind, but instead lies in sector-wide collaboration for a more secure, streamlined and sustainable home buying system. Modern Law would like to thank everyone who attended, sponsored and spoke at this year’s conference.

Headline Sponsor

The last speakers the conveyancers in attendance heard from were Jeremy Cousins QC and Peter Dodge, Barrister at Radcliffe Chambers, who acted for Mishcon De Reya in the groundbreaking Dreamvar case. The Court of Appeal’s decision on the case was handed down shortly after the conference, but the speakers were able to shed light into the activity of rogue vendors. Attendees were told rogue vendors chose their targets carefully, fearing “far greater scrutiny” around properties above the £1-2m bracket but feeling properties worth less than this were too low value

No business is exempt from a cyber attack

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46 Modern Law

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Issue 36

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The cappuccino factor W

hile GDPR has been our core focus for near on a full twelve months, have we taken our eye off the ball? Three things we know for certain: 1. Cyber-crime is rife! 2. Cyber-crime is rife in the legal industry! 3. Cyber-crime is rife in the legal industry and we all know someone who has been caught out! Cyber-security needs to be an everyday focus and everyone’s concern. This can be a challenge when we are all trying to do our dayjobs but there are a number of relatively easy things we can do. A simple exercise is to ask yourself these basic questions: 1. Where does my data reside…all of it! (Software, files, emails, backups etc.) 2. Who has access to it? (Internal/external) 3. What relationship do you have with those who have access? (Legal contract, service level agreement, employment contract) First bit of advice Lock down your data in one place; a well-managed server and private or public clouds are all relevant options, each having positives and negatives. I prefer private clouds, as they are more secure, affordable and have a legally binding contract and SLAs. Be sure you have the correct level of security for your firm. 4. How does information enter your firm and by whom? (Case updates, emails, USB sticks, website downloads) 5. Who has access to it and how do you know they are adhering to your security policies? (Staff, contractors)

6. Are you encrypting emails that include important data and how do you ensure the intended recipient can open the email?

Second bit of advice The point where the flow of data traverses your core network is inherently the most venerable point. To combat this venerability a great option is to use a ‘triple play’ system offering Multi-Factor Authentication, Enterprise email encryption & forensic archive, and an enterprise web-filtering system. These are not expensive; collectively they should not cost you more than £12 per person per month. The triple play solution helps your staff feel more confident and gives them more control. Want to get even further ahead? Heightened cyber-security utilising Machine Learning Artificial Intelligence to counteract the latest threats is now readily available to take the fight to the cyber-criminals. Cyber-security is now mature, it is reliable and it is reasonably priced. For less than a cappuccino-a-day, you can avoid being the next victim. There is no excuse not to protect you, your practice and your clients. Jonathan Ashley is the founder of etiCloud, a successful IT company focused on providing Cloud-based private business environments to the legal industry. While actively involved in the day-to-day running of etiCloud, Jonathan also works as a consultant providing advice on prevalent technology trends.

Mobile communications - how well are yours protected? T

Protecting sensitive client information has always been important, and now with GDPR, even more so. Your client information may be securely protected while in your office, but what about when you are between meetings and catching up on calls as you go? Mobile phone comms are relatively easy to hack, and you’d never know, until a vital piece of information turns up when you least expect it and has a dramatic impact on a case. While there are services that claim to provide secure messaging and calls within private groups, it’s important to consider how they work, who has access to the data and whether they offer the levels of security required to protect confidential client/lawyer conversations. Selecting the right application to ensure secure enterprise communications can be challenging – encryption, identity and data protection (GDPR), and managing the lifespan of messages are some key considerations. Here is a guide to selecting the best solution: 1. Beware of hackers A secure, centrally managed app can protect mobile communications (whether voice, text, documents, video or conference) from interception. 2. Protecting your data Your data may be encrypted, but what about the ‘metadata’

Issue 36

– the date and time of calls and messages, phone numbers of recipients, locations, contact lists.

hese days a voice call is just another piece of data: it can be easily intercepted, and you’d never know.

3. When the message has gone, it’s gone

Sometimes it’s critical that only the intended recipient sees certain sensitive messages. Ensure that you can set a time frame for when your messages are automatically deleted.

4. Checking caller identity

When setting up an app with a two-step verification code, ensure it can’t be intercepted – distribute multi-part authentication via separate channels.

5. There’s a cost to being free Apps like WhatsApp may be free, but there is a price to pay – you have no control over where your information is stored, and many such companies sell/use/market your data. Consider each of these points before deploying any app or solution to ensure that your conversations and messages remain private. Free apps have their place for leisure, but when it comes to your clients’ confidential information, you certainly can’t put your trust in something you can’t control. Dr Andy Lilly is CTO and Co-founder of Armour Communications.

For more information visit: www.armourcomms.com

Modern Law 49

Conveyancing searches?

Geodesys. All you need to know. For the past 20 years, Geodesys has provided a wide range of conveyancing searches and services to clients nationwide. The result? Indispensable peace of mind. Whether your transaction is local, regional or further afield, our unique and insightful service is available to you.

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GDPR – could free online translation tools be putting your business at risk? In today’s fast-moving global economy, translation and interpreting services remain a vital part of doing business around the world. However, many companies still wonder why they should invest their time and money in a specialist language service provider when they can do it for themselves online, for free. ith General Data Protection Regulation (GDPR) setting new, stricter rules to improve the management, processing and protection of the personal data of European citizens, knowing you can rely on confidential translation and data security has never mattered more than it does today.

Despite being more compliance-focused than most, the legal sector is not immune to the dangers of a post-GDPR world. And while this presents challenges, it’s also a huge opportunity for businesses that get it right.

Consumers are more empowered than ever, and they need to know that their chosen law firm takes their data privacy just as seriously as they do

Translations for the legal sector need to be precise, accurate and exact, with confidentiality at the heart of the process. Consumers are more empowered than ever, and they need to know that their chosen law firm takes their data privacy just as seriously as they do. From miscommunication to invalid insight, there’s a laundry list of reasons why free online tools are never the best choice for accurate translations. However, even if they did provide adequate, error-free content, there is also an underlying security threat that could put your business in breach of the new GDPR legislation. In July 2014, Don DePalma of the Common Sense Advisory warned that free online machine translation tools could inadvertently result in a data leak, with companies unwittingly making confidential information available to the world-wide web. De Palma, who is responsible for developing preeminent market research in the language services sector, explained that the manner in which sensitive data or confidential information can leak is twofold. Firstly, information can be stolen “in transit” by transferring or accessing it over unsecured public Wi-Fi hotspots or by storing it on cloud servers. Last September, Statoil, Norway’s state oil company, discovered that sensitive company information (including GDPR-protected personal data) was floating around online in the cloud. How did this happen? Employees were using the free, public machine translation available on Translate.com to get rough translations of foreign language documents. Less considered, however, is what online machine translation providers do with the data users input.

Have a read of their data use agreements and you will find free, opensource machine translation engines have a worldwide license to use, host, store and publish all of your content. With one of the underlining principles of the strict GDPR framework being to understand and control the customer data you hold, why you hold it, where it is, and who has access to it, if you use an online tool to translate sensitive information, you could well find yourself in breach of the new guidelines and heavily fined if found guilty of doing so. It is important to ask yourself whether the explicit consent of the customer is required to process their data in this manner, and if you and your client wouldn’t be comfortable with the information you’re translating becoming publicly available, it is probably best to steer clear! In order to protect and preserve your clients’ best interests, it is wise to use a trusted Language Service Provider for all of your translation needs. As well as ensuring your sensitive documents are translated by a highly skilled, qualified, mother tongue linguist who is familiar with legal terminology, language service providers can also guarantee that your documents remain confidential. Reputable providers will have binding non-disclosure agreements with their translation teams and material will only ever be shared with the linguist carrying out the work. The use of encrypted emails will also ensure secure communication and delivery, allowing you to be confident in the fact your data is in safe hands. Dan Peachey, Commercial Director, Intonation/City Legal

Translations.

Proclaim encompasses Practice, Case and Matter Management, and is the only system to be endorsed by the Law Society.

25,000 people can’t be wrong

Issue 34 36 Issue

01274 704 100 www.eclipselegal.co.uk

Modern Law Law 51 51 Modern

Our automotive expertise will reveal the full picture ...

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CASE STUDIES

Scottish firm, Drummond Miller, selects Eclipse’s Proclaim Practice Management system in a substantial investment eavyweight Scottish firm, Drummond Miller, has selected the Proclaim Practice Management system from Eclipse Legal Systems, the sole Law Society Endorsed legal software provider.

With offices in six locations throughout Scotland, and over 100 staff, Drummond Miller has a long-standing reputation of excellence in various areas of law. The firm recognises the level of importance its clients place on their cases, and is committed to providing a high standard of service - delivering common sense legal advice and practical solutions to all client requirements. In the six-figure deal, Drummond Miller will replace its incumbent legal software system with Eclipse’s Proclaim Practice Management Software solution. In order to cater for the variety of work areas within the practice, preconfigured case management modules will be rolled out firm-wide for the conveyancing, private client, medical negligence, family law and probate teams, serving to provide a core centralised productivity suite throughout. As part of the installation process, Eclipse will also conduct a complete data migration, allowing the integrated Proclaim practice accounting and financial toolset to be implemented, resulting in increased efficiency and an ‘at-a-glance’ view of operational effectiveness. Ian Hartley, Chief Operations Officer at Drummond Miller,

comments: “We undertook a thorough selection process. I was impressed from the very first time I saw Eclipse’s Proclaim system as it’s much more intuitive than its rivals. This is an investment for the long term for us and it was the fact that it is so easy to use, as well as the future-proofing that made it a natural choice.” To accommodate the legislative requirements in Scottish law, Eclipse’s experienced in-house consultancy team will work closely with Drummond Miller to ensure that workflows and documents fully cater for all bespoke requirements. Ian continues: “The fact that Eclipse has an experienced in-house team with the ability to truly bespoke the system – and in line with Scottish law – goes to show why it’s the market-leader. Once implemented, Proclaim will provide us with a comprehensive solution to improve internal efficiencies and seamlessly enhance client service. This is an integral part of our growth strategy.” Eclipse’s Sales Director, Chris Buckle, adds: “As a leading and thoroughly reputable practice, Drummond Miller was quite rightly extremely rigorous in its selection process for a firm-wide solution. The fact that we can provide the practice with what it requires now – and what it aims for moving forward – is a testament to the strength and adaptability of our Proclaim solution and its position in the legal sector market.” For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal.co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk

The Environmental Report for modern conveyancing H

ere at Future Climate Info (FCI) we pride ourselves in creating environmental reports that meet the needs of conveyancers and homebuyers.

In 2014, FCI was borne out of focus groups with property professionals to enhance the market and address failings with environmental reports. The verdict showed that there was a growing need for a clearer more comprehensive search for residential and commercial conveyancing and by using our extensive experience, we made a step change in standards and addressed common issues – bringing to the market a new innovative environmental report for the modern conveyancer.

map quality and a modernised presentation of the findings – all contributing to a fully enhanced and user-friendly experience. With our FCI search products, we help clients comply with good practice and oversight requirements, which include all current environmental risks using a complete ‘modular’ approach. We cover all the key datasets with a professional opinion from our expert team on the risks in every section of the report. We save clients time, effort and money – FCI is the future of environmental searches. By Future Climate Info

Now four years on, our clients continue to be at the forefront of everything that we do, and we understand the growing pressures that conveyancers face every day. We recognise the importance of staying up to date with emerging environmental risks, creating new partnerships to constantly introduce the latest datasets and keeping up with the digital demands to ensure we update clients faster than ever before. In March 2018, we embarked on an exciting project to bring our residential and commercial environmental reports even more up to date by introducing a report redesign. By doing so, this has offered our clients and end-users clearer result wording, improved

Issue 36 34 Issue

Modern Law Law 53 53 Modern

10 MINUTES WITH

Andrew Stanton Q A

Did you expect the legal services sector to change so drastically when you started working in it?

We are relatively new to the legal sector, but with our background in the financial sector we are seeing the same type of changes and challenges that occurred following that sector’s liberation, and I do expect there to be further changes as the sector modifies. Adoption of new technology will be key to growth as newer generations expect this as standard, not as an add on.

Q A

What has been the key positive or negative impact of the liberalisation of legal services?

Adoption of new technology will be key to growth as newer generations expect this as standard, not as an add on

Adapting to transparency, again more down to our experiences living through this within the finance sector, understanding and being able to demonstrate every action to outside parties requires a fundamental shift in mindset. Those that adapt can use this as a powerful message to their clients, while those that cling on to “the old way” have struggled in the long term.

Q A

Who inspires you and why?

Elon Musk. He has a vision (or a number of visions), states them publicly and motivates others to come along for the ride. He is not afraid to be challenged on his thoughts and actively encourages it as it leads to a better outcome. I think his HyperLoop idea for example is a classic case of describing a target and allowing others to generate the enthusiasm and lateral thinking to get us there. That said, sometimes I feel he takes some of the day to day challenges a little too lightly, which can lead to a disconnect between him and his investors. On balance though he has succeeded more times than people predicted he would fail.

Q A

Have you had a mentor? If so, what was the most valuable piece of advice they gave you?

I had an extremely good mentor for approximately ten years. His most valuable piece of advice was to give repetitive work to the laziest person, as they will always find optimum way of doing it! This has been proved to be correct many, many times – the follow up to that is then to reward that person as they normally have either saved the company money or delivered a great service to our customers day after day after day over tasks which so easily can be overlooked or poorly delivered.

Q A

If you were not in your current position, what would you be doing?

I would combine two of my passions: wine and cooking. I would set up a vineyard and cookery school. One of the few benefits of global warming is that the current climate around northern France is moving north to southern England, and therefore it is possible now (well, over the next ten years or so) to grow the grape varieties here in the UK. I am also a passionate home chef and enjoy creating new dishes using local ingredients and like to inspire others to try without fear of failure. Andrew Stanton is Managing Director of PalisadeSECURE.

54 Modern Law

Issue 36

How do you know you are currently secure?

An estimated 80% of hacks could have been prevented if the available security patch had been applied.

What do you currently do to stop your data being breached?

Having strong pre-attack policies significantly reduces the risk of a successful attack.

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25,000 people can’t be wrong

Eclipse’s Proclaim system is the solution of choice for 25,000 legal professionals in over 1,000 organisations. Proclaim encompasses Practice, Case and Matter Management, and is the only system to be endorsed by the Law Society. From new start-ups to industry heavyweights, Proclaim is the system of choice for forward-thinking law firms. • Fully integrated Practice Management Software solution • End-to-end case and matter management workflow processes • Ready-to-go workflows for specific practice areas • SAR-compliant legal accounting • Fast to implement, easy to use

01274 704 100 Email: info@eclipselegal.co.uk