Modern Law Magazine 14 by Charlton Grant

The Business of Law

October 2014 | Issue 14 | ISSN 2050-5744 News: The Chairman of the Bar Council, Nicholas Lavender QC, explains how the cuts to civil legal aid have impacted access to justice and outlines three recent cases which confirm the Government have gone too far. The Next Chapter: Peter James explains why the landmark decision (to grant the ICAEW the ability to licence probate ABSs), marks the opening of a new chapter for the provision of legal services in England and Wales.

Modern Law Magazine | October 2014 | Issue 14

“New entrants, with new ways of meeting consumer demand, can only be a good thing. Our job is to support such innovation, whilst ensuring that standards and consumer protection are maintained at their very high level” Sheila Kumar

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WELCOME

y the time this issue of Modern Law lands on desks, the sector will be deep in the midst of PII renewals and ramping up towards the end of another year. As we start to look back on 2014, it is perhaps fitting that I spoke to the outgoing Chief Executive of the Legal Services Board, Chris Kenny, about the importance of running law firms as businesses and the future of regulation for the legal profession, as well as his achievements and regrets whilst in post at the ‘super-regulator’ (page 11). I also caught up with the Chief Executive of the Council for Licensed Conveyancers (CLC), Sheila Kumar, to find out how the organisation is supporting the conveyancing profession through the boom in the market, the current and continuing impact of new market entrants and how the role of the CLC is changing in the eyes of the profession (page 15). In mid-August the final parliamentary step was taken to approve the designation of the Institute of Chartered Accountants in England and Wales (ICAEW), as an approved regulator and licensing authority for probate. Peter James explains why this landmark decision marks the opening of a new chapter for the provision of legal services in England and Wales on page 48. Our Consultant Editor for

Modern Law Magazine

the IT Crowd, Charles Christian has taken a slightly different approach with our contributors for this issue, asking them to explain the vast array of different IT services and what they really mean, in the hope of clarifying any confusion around technology for our readers (from page 55 onwards). With this issue of Modern Law, we also have also produced a special supplement, which focuses on Alternative Business Structures (ABSs) and where they are now, over 2 years since the first licence was granted. The supplement also includes tips and tricks from those firms who have been through the licensing process, so our readers can keep pace of this growing section of the legal market. The annual Modern Law Awards also takes place on 15th October so I urge you to look out for the winners, who will be featured in the next issue. I hope you enjoy reading this issue of Modern Law and if you have any feedback, comments or suggestions, please get in touch with me via: charlotte.parkinson:charltongrant.co.uk or call 01765 600909.

Charlotte

Charlotte Parkinson, Group Editor, Modern Law Magazine.

Issue 14 – October 2014 | ISSN 2050-5744

Project Director Kate McKittrick

Group Editor Charlotte Parkinson

Advertising Martin Smith

Accounts Director Karl Mason

Events Director Julia Todd

Design Matthew Phillis

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

ML // October 2014

CONTENTS 03-08 INTRO & THE NEWS

07 Nicholas Lavender QC talks news

19 Interview with... Elliot Mocton

The Chairman of the Bar Council explains how the cuts to civil legal aid have impacted access to justice and outlines three recent cases which confirm the Government have gone too far.

11-21 THE INTERVIEWS 11 Interview with... Chris Kenny

The inaugural Chief Executive of the Legal Services Board leaves his post at the end of November. Charlotte Parkinson, Modern Law, caught up with him to find out about the importance of running firms as businesses and the future of regulation for the legal profession.

15 Interview with... Sheila Kumar

Charlotte Parkinson, Modern Law spoke to the Director at MRN Solicitors about how the firm has coped with change, supporting clients under pressure and why their budgeting solution, ‘Prophet Costs’, is a game changer.

Charlotte Parkinson, Modern Law, spoke to the Chief Executive of the Council for Licensed Conveyancers (CLC), to find out how the organisation is supporting the conveyancing profession through the boom in the market, the current and continuing impact of new market entrants and how the role of the CLC is changing in the eyes of the profession.

23-45 THE VIEWS 25 Opportunity Favours the Brave Steve Arundale, Royal Bank of Scotland/ NatWest

25 What is the ECHR challenge on ATE

premiums and success fees all about?

Matthew Williams, AmTrust Law

27 Planning and preparation John Graham, Legal Eye 27 Life in the EIP–All is not lost Richard Brown, Willis 29 One size fits all? Eddie Goldsmith, Goldsmith Williams Solicitors

29 Into the mix... Noel Inge, CILEx Law School

31 A shared vision Tony Brown, AGB Legal

EDITORIAL COLUMNISTS Adam Kossowski CEO Way With Words

Darren Gower Marketing Director Eclipse Legal Systems

Alex Bagnall Head of Commercial Litigation Costs Lawlords

David Bott Managing Partner Bott & Co

Andrew Roberts Managing Director SSG Legal

David Jabbari Managing Director, Consumer Law Parabis Group

Andy Poole Legal Sector Partner Armstrong Watson

Dez Derry CEO mmadigital

Barry Talbot Managing Director Informance Limited

Eddie Goldsmith Partner Goldsmith Williams

Charles Christian Editor-in-Chief The Legal IT Insider

George Bull Chair of Professional Practices Group Baker Tilly Tax and Accounting Limited

Daniel Morris Director Box Legal Limited

ML // October 2014

Dr Hugh Koch Chartered Clinical Psychologist and Director Hugh Koch Associates Jitendra Valera Chief Marketing Officer Advanced Legal Jo Hodges Head of Sales & Marketing Redbrick Solutions John Graham Associate Compliance Consultant Legal Eye Matthew Williams Head AmTrust Law Nagib Tharani Director of International Expansion Clio

Neil Clayton Head of Legal Services PSG Nicholas Lavender QC Chairman The Bar Council Noel Inge Managing Director CILEx Law School Paul Doble Chief Sales and Marketing Officer DX Peter James Head of Regulatory Policy ICAEW Richard Brown Executive Director Willis Richard Burcher Chairman Burcher Jennings

Steve Arundale Head of Professional Sectors and Financial Institutions, Business and Commercial Banking RBS & NatWest Sucheet Amin Managing Director Aequitas Legal & Founder of inCase™ Thomas Brauner CEO Speech Processing Solutions Tony Brown Owner AGB Legal Trevor Gilbert Chairman and CEO TRG Group (Trevor Gilbert & Associates)

31 Implementation of CPR: The

effects on Experts’ Practice and Experience

48 The next chapter In mid-August the final parliamentary

step was taken to approve the designation of the Institute of Chartered Accountants in England and Wales (ICAEW) as an approved regulator and licensing authority for probate. Peter James explains why this landmark decision marks the opening of a new chapter for the provision of legal services in England and Wales.

Dr Hugh Koch, Hugh Koch Associates

33 Intelligent thinking Dez Derry, mmadigital 33 Moving on... Andrew Roberts, SSG Legal 35 You ain’t seen nufin’ yet! George Bull, Baker Tilly Tax and Accounting Limited

51 Chambers Focus Modern Law spoke to two Barristers’

Chambers, Clerksroom and Cornerstone Barristers, to find out how the reforms to the legal sector have impacted their businesses, the continuing impact of cuts to legal aid and what they anticipate for the legal landscape in the next 1-3 years.

35 Starting from scratch Jitendra Valera, Advanced Legal 37 Planning for succession Andy Poole, Armstrong Watson 37 Is LEI part of the future of

Consumer Law?

David Jabbari, Parabis Group

54 The next level Charlotte Parkinson, Modern Law, spoke to Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita Plc, about the need for a joined-up IT strategy.

39 Fixed fees: Are they a panacea? Richard Burcher, Burcher Jennings 39 Grinding to a halt? Alex Bagnall, Lawlords 41 Adapt, survive and compete

Sucheet Amin, inCase™

41 Gone are the days Adam Kossowski, Way With Words 43 Why on earth would someone

become an expert witness? Trevor Gilbert, Trevor Gilbert & Associates

55-62 IT CROWD 57 I’ve looked at clouds from both

sides now…

Charles Christian, Legal IT Insider

59 The only acronym that matters… Jo Hodges, Redbrick Solutions 59 Keep it simple Darren Gower, Eclipse Legal Systems, part of Capita Plc

43 The silver lining? Daniel Morris, Box Legal Limited

60 The hybrid ideal Mike Batters, NETprotocol

44 The nature of the industry Paul Doble, DX

60 Modern application Nagib Tharani, Clio

44 Flexibility in a changing market... Neil Clayton, PSG

61 IT Managed Services Explained Barry Talbot, Informance Limited

45 The way forward David Bott, Bott & Co

62 5 minutes with... Professor Richard Susskind OBE

45 The next generation... Mark Montgomery, myhomemove

62 Bird & Lovibond chooses Proclaim Full-service law firm to implement

47-54 THE FEATURES

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47 How to stay on top Effective workflow management remains an essential part of running a business of any size, with firms needing to ensure that they keep their documents up to date, as Thomas Brauner reports.

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Nicholas Lavender QC Talks News

NICHOLAS LAVENDER QC

TALKS NEWS

The Chairman of the Bar Council explains how the cuts to civil legal aid have impacted access to justice and outlines three recent cases which confirm the Government have gone too far.

he cuts to civil legal aid introduced by the Government in, and since, April 2013 have had a major adverse effect on access to justice. The Government’s own figures confirm this, as does the report recently published by the Bar Council. Moreover, three recent judgments confirm that the Government has gone too far, with some of their changes being unlawful. Jackson LJ’s Warning Jackson LJ’s terms of reference did not include legal aid. Nevertheless, his final report, published on 14 January 2010, contained the following warning: “I do, however, stress the vital necessity of making no further cutbacks in legal aid availability or eligibility. The legal aid system plays a crucial role in promoting access to justice at proportionate cost on key areas. The statistics set out elsewhere in this report demonstrate that the overall costs of litigation on legal aid are substantially lower than the overall costs of litigation on conditional fee agreements. Since, in respect of a vast swathe of litigation, the costs of both sides are ultimately borne by the public, the maintenance of legal aid at no less than the present levels makes sound economic sense and is in the public interest.” Sadly, Jackson LJ’s warning was not heeded. LASPO and “Transforming Legal Aid” The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”), which came into force on 1 April 2013, removed large areas of civil and family law from the scope of legal aid. The April 2013 consultation

paper, euphemistically entitled “Transforming Legal Aid”, contained further proposals in relation to civil (as well as criminal) legal aid, including a residence test for legal aid claimants. These proposals were heavily criticised in a series of parliamentary debates, but the Government went ahead regardless. The Legal Aid Agency’s Statistics In June 2014 the Legal Aid Agency (“LAA”) published statistics for the 12 months from April 2013. The figures are striking. In 2012/13, legal aid provided legal help in 205,617 new family cases, but this fell to only 42,798 new family cases in 2013/14. The picture is the same in other areas, such as social welfare law, where there were 281,737 new legal aid cases in 2012/13, but only 52,703 in 2013/14. Overall, the number of new cases of legal help under legal aid fell from 592,368 in 2012/13 to only 172,501 in 2013/14. The Government had predicted a fall of about 65% from 2009/10 levels (when there were 942,882 new cases), but the actual fall has been more than 80%. No wonder that when Andrew Caplen and I gave evidence on this subject, one of the MPs on the Justice Committee, John McDonnell, said, “It’s not a problem, it’s a nightmare.” LASPO: One Year On On 17 September 2014, the Bar Council published a report (“LASPO: One Year On”) of the findings from a survey

of the effects of LASPO. The report portrays, through both a statistical analysis of survey responses and the results of a series of interviews, the profession’s experience of the effects of LASPO. Unsurprisingly, a majority of respondents reported that since April 2013 they were undertaking less legal aid work and seeing more litigants in person. Meanwhile, one of the principal alternatives to legal aid in civil cases, i.e. the conditional fee agreement, has become less viable as a result of other provisions of LASPO (i.e. precluding recovery of the success fee and the after-the-event insurance premium from the defendant). Exceptional Case Funding Section 10 of LASPO provides for exceptional case funding, which was intended to act as a safety net for those cases where legal aid is needed

ML // October 2014

Nicholas Lavender QC Talks News

but which LASPO took outside the scope of legal aid. It is available where the LAA makes a determination as provided for by section 10(3), either: “(a) that it is necessary to make the services available to the individual … because failure to do so would be a breach of: (i) the individual’s Convention rights (within the meaning of the Human Rights Act 1998), or (ii) any rights of the individual to the provision of legal services that are enforceable EU rights, or (b) that it is appropriate to do so, in the particular circumstances of the case, having regard to any risk that failure to do so would be such a breach.” A great disappointment of LASPO has been the paltry number of cases of exceptional case funding. Between April 2013 and March 2014 only 9 family cases were funded in this way, and out of 1,520 applications in that period in all types of case, only 16 were granted (other than for inquests, which are the subject of separate provision). One reason for this is simply that the form which a litigant needs to fill in if he wants to apply for exceptional case funding is too complicated. Another reason appears to be that the Legal Aid Agency has been applying the wrong test. In his judgment of 13 June 2014 in Gudanaviciene v Director of Legal Aid Casework [2014] EWHC 1840 (Admin) Collins J. considered the Lord Chancellor’s guidance on exceptional case funding and held that the guidance “is defective in that it sets too high a threshold.” Indeed, he went further and said that one of the LAA’s decisions to refuse exceptional case funding “shows how the very high threshold applied by the Guidance can produce a perverse decision.” Family Cases Some of the most difficult cases involving unrepresented defendants are those family cases where there is no representation for a party (usually the father) who is accused of rape or serious sexual assault. Not only may the father be unable to present his case effectively, but there is also a question whether it is appropriate for him to crossexamine the person he is accused of raping or assaulting. He would not be permitted to do so in a criminal trial (see section 34 of the Youth Justice and Criminal Evidence Act 1999), but it may not be possible to prevent him doing so in a family case (see Q v Q [2014] EWFC 31, at §75). The Bar Council’s report includes an account of one such case by a barrister sitting as a recorder. The mother accused the unrepresented father of raping her, and might well have been believed had the recorder not found (in papers received on the day of the hearing) evidence which showed that she was lying. Unable to represent himself effectively, the father had not drawn this crucial evidence to the Court’s attention. On 6 August 2014 Sir James Munby delivered a careful and thoughtful judgment in Q v Q [2014] EWFC 31, addressing the many problems which can arise in such cases. He said that he was inclined to think that one such father (in the case of Re C) required access to legal advice and representation and that, if no other funding was available, the cost would have to be borne by HM Courts and Tribunal

ML // October 2014

‘In 2012/13, legal aid provided legal help in 205,617 new family cases, but this fell to only 42,798 new family cases in 2013/14’ Service. He was able to reach this conclusion because of section 31G(6) of the Matrimonial and Family Proceedings Act 1984, which provides that: “Where in any proceedings in the family court it appears to the court that any party to the proceedings who is not legally represented is unable to examine or cross-examine a witness effectively, the court is to – (a) ascertain from that party the matters about which the witness may be able to depose or on which the witness ought to be cross-examined, and (b) put, or cause to be put, to the witness such questions in the interests of that party as may appear to the court to be proper.” Sir James Munby held that the obligation on the Court to “cause” questions to be put necessarily implied a power to direct that HMCTS pay for an advocate to do so. The Residence Test The Government proposed to introduce, by regulations made under LASPO, a residence test, such that no-one was eligible for legal aid unless they had been lawfully resident in the United Kingdom for at least 12 months. The Public Law Project challenged the Government’s power to do so. On 15 July 2014, Moses L.J. (with whom Collins and Jay JJ. agreed) gave judgment in the Divisional Court inR. (Public Law Project) v Secretary of State for Justice [2014] EWHC 2365 (Admin), holding that the residence test was unlawful, both because there was no power under LASPO to introduce such a test and because it was a case of unjustified discrimination. The Government argued that legal aid was no more than a form of social welfare or benefit and relied on the cases which establish that discriminatory selection in relation to the distribution of benefits is a matter for the judgment of Parliament and the Government. However, Moses L.J. disagreed, saying that “it seems to me that the provision of legal assistance is far from analogous to the distribution of welfare benefits.” The Government also argued that the residence test was justified because it improved public confidence in the legal aid system. Moses L.J. dismissed that argument, saying: “In the context of a discriminatory provision relating to legal assistance, invoking public confidence amounts to little more than reliance on public prejudice.” Nicholas Lavender QC is Chairman of the Bar Council.

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Interview with... Chris Kenny

Interview with... CHRIS KENNY

The inaugural Chief Executive of the Legal Services Board (LSB) leaves his post at the end of November. Charlotte Parkinson, Modern Law, caught up with him to find out about the importance of running firms as businesses and the future of regulation for the legal profession. Chris Kenny Chris Kenny took up post as the inaugural Chief Executive of the Legal Services Board in January 2009. His early career was in the Department of Health and the Treasury, where he held a variety of policy and management posts including Principal Private Secretary to the Secretary of State. As Oftel’s Director of Regulatory Policy and then Director of Compliance between 2000 and 2003, he worked on access and competition issues in the communications industry and led the initiative to establish the Telecoms Ombudsman. As Director of Life and Pensions for the Association of British Insurers from 2004 to 2006, he led the industry’s input into pensions strategy and a wide range of consumer issues. From 2007 to 2008, he managed the detailed work on Lord Hunt of Wirral’s independent review of the Financial Ombudsman Service. From 2007 to July 2013 Chris was a non-executive Director of Ombudsman Services Ltd.

Q A

What were the biggest changes/challenges that you experienced in the legal sector during your time as Chief Executive of the LSB?

The challenges for me were focussed on setting up the board. The legal sector thought everything was moving along at break-neck speed but compared to what I was used to (regulating financial services in-house), it felt phenomenally slow to me. Building the momentum to allow for greater flexibility in the market, in order to avoid potentially damaging implications from the recession was a real challenge, as was trying to implement changes in the face of scepticism and hostility from many people. It felt as though the regulators and their representative arms were fighting a continuous Guerrilla Warfare, making it a difficult climate to work in.

ML // October 2014

Interview with... Chris Kenny

‘The fact that we were making these changes at the time of the recession was helpful in some ways as it forced the profession to realise that they needed to look at their own business models’

Q A

How do you think the sector responded to the changing role of the LSB?

The fact that we were making these changes at the time of the recession was helpful in some ways as forced the profession to realise that they needed to look at their own business models. The changes in the market meant practitioners were no longer able to sit passively in the hope that a solid income would come their way; they suddenly realised they had to run as businesses as well as a profession.

Q A

How do you think the sector and consumers have coped with the deregulation of the legal services market? The sector is just beginning to realise the benefits and opportunities. Similarly, consumers are now beginning to see some national level brands driving competition, which they expect to see in most other markets but is relatively new for legal services. Consumers are also starting to see firms adopting a more proactive approach when things go wrong; having the Legal Ombudsman there seems to have encouraged firms to handle complaints better themselves, which is extremely heartening.

Q A

Do you think firms have realised the need to run as businesses, rather than relying on reputation to bring in work? I don’t quote Sir David Clementi very often, but there is a quote I recall, in which he outlined a brief conversation with a member of the legal profession, who remarked, “You don’t understand, we are not businesses, we are a profession”. Clementi supposedly stared at the person and said, “If you

don’t think you are running a business, pretty soon, you are not going to be”. That message has started to come across, although sometimes very painfully for firms which were relying on legal aid and those who are still coping with the Jackson reforms.

Q A

What is your biggest achievement as Chief Executive of the LSB?

We have been quick, we are proud of the fact that we set up the business quicker than the government thought we would and we set up the Ombudsman quicker than the government thought we would. We also licensed ABSs quicker than the government, financiers and the profession thought we would and we did that running on a budget which was reduced from £5million to £4million. I am proud of the fact that the LSB has shown itself to be a nimble organisation. I am also proud of the LSB’s research because, for an industry which is based around evidence, it is remarkable how little data there is about legal services. The material we produced about what consumers and small businesses want and on the nature of the market is world leading and sets the Gold Standard.

Q A

Is there anything you are working on between now and the end of your term in office?

We are working on a number of things that are of long term importance to the LSB. One is our strategic plan 2015/18. Another is a project we are just starting on the cost of regulation for lawyers. This particular project is probably the most important piece of work being carried out during my last few weeks in office as Chief Executive. We are going to investigate both the costs of regulation faced by legal services providers and

the costs of the regulators themselves (including the LSB). We are reaching out to the profession itself to seek their views on these two issues. It is important that we do this because in order to reduce the costs of regulation in legal services we actually need to identify (backed up by firm evidence) what those costs are. We can only do this with the help of the profession itself. To this end we have launched an online survey which gives lawyers the opportunity to tell us what they believe the cost of legal regulation is. Anyone wishing to participate in this survey should go to the LSB’s website (www. legalservicesboard.org.uk) where a link to it can be found.

What is your biggest regret looking back on your time as Chief Executive of the LSB? If you could have your time again, what is the one thing you would change?

One of my regrets is that we still find people who question why we are spending so much money on research; the crude answer is because nobody else is. At the moment, regulation and market development require data and we have got to keep on producing it until others do. The really big regret I have is that we didn’t manage to convince the government to regulate will writing. The evidence we produced, which showed that consumers were at risk from low standards by unlicensed solicitors and regulators was absolutely overwhelming and we ran into a brick wall because of a decision that was based on abstract ideology, rather than concrete evidence. In a different climate, the outcome may have been different but the reality is, there are still people out there who are potentially at risk. The process of culture change, to really think about the client and consumer, in all regulatory issues, still has a long way to go.

Do you think the regulation of will writers will be something the government will be forced to reconsider in the not too distant future?

‘The changes in the market meant practitioners were no longer able to sit passively in the hope that a solid income would come their way; they suddenly realised they had to run as businesses as well as a profession’ ML // October 2014

Interview with... Chris Kenny

‘The process of culture change, to really think about the client and consumer, in all regulatory issues, still has a long way to go’

They probably will, yes. I hope any reconsideration will not come off the back of a media panic or cases of absolutely appalling practice. We mapped out a proportionate solution that could have been put in place over 2 or 3 years, which seemed far better than implementing hasty and panicky legislation. There are people out there who are unregulated at the moment, crying out for regulation in order to remove the sharks from the industry and inject competition and diversity. It is a real pity that the opportunity to serve the public better has been lost in this case.

You are an advocate of a single regulator of legal services. Do you think a single regulator is a feasible and realistic possibility for the future?

Yes, definitely. There are roughly 1,000 people who regulate the legal profession and I think that is about 500 too many. The objective should be to regulate as cleanly, transparently and independently as possible. This cannot be achieved whilst there are still bodies tied to professional organisations, as long as this is still happening, a body, such as the LSB, is necessary. A regulator of regulators is a funny beast, we work in practice but we do not work in theory. A single body, clearly independent of government and the profession must be the right way to go in the longer term but at the moment, we have to make the existing system work; agreeing on common standards and ensuring their isn’t a race to the bottom.

Why did the LSB take the decision to join the UK Regulators Network (UKRN), what will the LBS gain through the membership?

has always centred on the standards which professionals should maintain and strive towards. Legal regulators were not necessarily aware of economic and market regulation, which is one of the benefits of joining the UKRN. I am hoping it will help the LSB learn from other parts of the economy and help the LSB avoid going down the wrong path.

Q A

To date, has the advent and subsequent introduction of ABSs had the desired/ intended impact?

Yes, some people thought Western Civilisation would end with the introduction of ABSs, which was extremely silly. It was quite clear that some firms desperately wanted to engage some of their workforce in ownership and some firms had really interesting plans for investment and needed to look beyond traditional sources of finance to get it. It was also clear that there were people from outside of the sector who could spot synergies and wanted to get in to the sector to enable a better end to end service. There are also lots of firms who didn’t need to do any of that but who needed some nudging to respond better and more flexibly to their customers. ABSs have

‘I do not think we need remotely the number of regulators we have currently, trying to explain to anybody outside of the law why there are 10 regulators is usually met by total disbelief’ brought in a degree of innovation to the sector and we have also seen a degree of innovation in response to ABSs from the rest of the sector. They have not sparked an overnight revolution but what they have done is increased innovation, development and competition, which slowly but surely is increasing the quality of service delivery to customers.

Do ‘big brand’ legal service providers have longevity in their position in the market place, or will they will retract from the market if they realise providing legal services may not be as lucrative as first thought?

When considering average earnings for partners across the board, as well as how well the law (relative to every other industry) has weathered the recession, this is a market where returns are potentially very attractive. Will there be some new entrants who enter the profession and retract? Yes, there will be because there are in every single market. Part of the reason for regulation is to ensure that clients are looked after when that happens. Entering this profession is something which needs to be done carefully, by taking a step back and acting in a measured way. One of the most interesting lessons looking at the Australian market is Slater & Gordon, who have clearly built a transferable model (particularly into the UK market). They have also made a fantastic contribution in Australia to access to justice.

The overall purpose of the LSB was as an oversight regulator. Do you think the legal sector will ever reach a point where the LSB and other regulators could realistically be phased out?

The legal sector will never be totally unregulated because the public responsibilities of the regulatory system are such that it must be policed. Having said that, I do not think we need remotely the number of regulators we have currently, trying to explain to anybody outside of the law why there are 10 regulators is usually met by total disbelief. The LSB should not be around forever but it cannot be phased out until there is totally independent regulation, it is imperative that there is a regulator who allows people space to innovate but who will come down like a ton of bricks if the public and consumer interest is threatened. That is what matters, rather than what the plaque on the door says or who is on the management board.

The short answer is because no man is an island. The history of legal regulation

ML // October 2014

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15/08/2013 14:17

Interview with... Sheila Kumar

Interview with... SHEILA KUMAR Charlotte Parkinson, Modern Law, spoke to the Chief Executive of the Council for Licensed Conveyancers (CLC), to find out how the organisation is supporting the conveyancing profession through the boom in the market, the current and continuing impact of new market entrants and how the role of the CLC is changing in the eyes of the profession. Sheila Kumar Sheila is the Chief Executive of the CLC. Prior to joining the CLC, Sheila was Group Director of Regulation at the Equality and Human Rights Commission. A lawyer with an extensive background in regulation, she led the team at the Ministry of Justice involved in the Clementi review; the independent review into regulation of the legal sector. She also held positions as Head of Competition and Head of Consumer Protection. Sheila has also been Director of Change, Delivery and Performance Excellence at the Law Society, developing the model for the separation of regulation and representation. In her most recent role, Sheila led the development of the Equality and Human Rights Commission as a modern regulatory body.

Q A

How is/has the role of the CLC changed given the current boom in the conveyancing market?

We have seen an increase in having to manage the risks that go with the boom. There are practice-based risks that go hand in hand with such a great increase in transactional rates following the crash in the market. Some of these risks can be associated with firms that have taken on too much work and are reluctant to turn work away. The CLC has been actively encouraging people to think long and hard about whether they genuinely have the capacity to deal with the demands of an increased workload. This is an issue which

ML // October 2014

Interview with... Sheila Kumar

‘New entrants, with new ways of meeting consumer demand can only be a good thing. Our job is to support such innovation, whilst ensuring that standards and consumer protection are maintained at their very high level’ is particularly prevalent following such a low period and firms have had to make very difficult decisions about their staff contingent. This has been the case for anyone who has been part of the conveyancing transaction, including surveyors. I have heard that some firms are putting up their prices as a means of managing demand. For over a year now, we have been looking at what we can do to ensure there is a sufficient supply of qualified conveyancers, to meet the demand of CLC regulated firms. We have also stayed in touch with licensed conveyancers who have left the profession during the downturn, to see whether they might consider returning to the market. We are also trying to future proof the sector and have reached a point where the number of students studying to enter the profession is back to pre-crash levels. We have also developed a new apprenticeship scheme for new recruits, school leavers and others who decide they want to take a different route into the profession and we anticipate the new scheme will come into play from early 2015. So far, we have seen that on aggregate, CLC regulated conveyancers have increased their turnover faster than the general market has recovered, meaning they have increased their market share over and above the rest of the market. We therefore need to ensure that, in line with that growth, there are a greater number of qualified providers who can undertake the work. The CLC is acutely aware of the risks and also of our role as a regulator, to ensure the consumer is adequately protected when they utilise a regulated service.

Q A

Could rising interest rates undo/outweigh the benefits of government schemes put in place to help first time buyers and other homeowners?

This is certainly a possibility but as, generally, the schemes centre more around helping people get deposits together, the increasing cost of mortgage repayment might take a while to have effect. The biggest concern for people, who are trying to secure a mortgage, should be to bear in mind the volatile nature of interest rates as a whole.

‘It is also important that all regulators work together to minimise risks for the profession but not lose sight of our key purpose; consumer protection’

Q A

Should schemes such as ‘Help to Buy’ be capped in order to prevent another boom in the housing market?

For us, as a regulator, this is not a central concern, having said that, we all want to avoid the kind of market that lead to the spectacular crash that began in 2007. Overall, there is no evidence that Help to Buy is causing a boom, mainly in the sense that the scheme is not really being used in London, which is where house prices

ML // October 2014

have increased the most. Outside of London, the picture is very different and many areas are still far from booming.

Q A

In the event of another market crash, do conveyancing firms have proper schemes in place to protect themselves? Have firms learnt from the last market crash?

The community regulated by the CLC coped very well with the last crash and that is probably because they concentrate solely on conveyancing, meaning they are more able to flex depending on transactional volume. There was certainly a decrease in transactions and a drop in mergers and acquisitions amongst medium sized firms. A good number of individuals stepped out of the profession but the overall number of firms has not diminished; interestingly, we did see a number of firms able to enter the market, even though it was at a low point. There is very strong evidence that the sector used the downturn wisely to prepare for the future and create more sustainable business models. Some regulated firms started to recover very early on and have actually outperformed the rest of the market.

Q A

What impact has the introduction of lender panels had on the market, to date?

We have some concerns about the introduction of lender panels because they can adopt a quasiregulatory approach and put restrictions on trade, especially when there are arbitrary limits on which professionals can act for lenders on the loan value they are able to be involved in. While we understand that lenders want to mitigate their own risks, it is important that all of the reasons for their existence ensure that the market can genuinely work to encourage people to enter it and to encourage competition, which is in the consumers’ interest. Lenders uniformly tell me how much trust they have in licensed conveyancers and in the CLC’s regulation so it is good to see that trust converted into access to panels. Our view is that regulation by a Legal Services Board (LSB) approved regulator should be guarantee enough for lenders. The impact of lender panels will, of course, be greater on smaller firms and sole practitioners but in actual fact the introduction of panels might simply be accelerating changes that were already taking effect in the market.

Q A

Plans to privatise the Land Registry have been stalled - what impact might this have on the market?

The CLC is almost agnostic about the legal framework for the Land Registry but our main concern is that any changes should not lead to worse service or increased cost to the end consumer. Any uncertainty is always unhelpful but in the case of the Land Registry, we know that there is work continuing and we hope that the key elements around service and costs will remain unaffected and that the level of service improves, or at least remains the same.

Interview with... Sheila Kumar

‘Through adopting a genuinely risk based approach, we expect that opportunities for innovation should grow further in the market’

Is the conveyancing market now a more attractive proposition for young professionals and what options are out there for young people trying to break into this market?

As the market recovery continues, conveyancing is a more attractive business and career proposition. One of the strengths of the CLC is that it allows people to gain a great qualification but potentially, after the appropriate time, to set up their own businesses. Our Apprenticeship scheme is really there to give school leavers a potential route that does not require a university degree and with rising student debt, we think it is important to keep the profession open to everyone who has the right skills and drive, regardless of whether they can afford to go to university. We have always encouraged diverse entry routes and we are always looking for other options to facilitate entry into the conveyancing market.

Does the CLC anticipate further new market entrants/ ABS firms to emerge into the conveyancing market and could these be to the detriment of the consumer, or would they increase consumer choice and therefore be a good thing?

Our fees have been frozen for 2 years and we are proposing that they won’t change this year either. We are always focussed on streamlining our services and delivering value for money. It is right that anybody who is involved in regulation always needs to consider the impact of their role. It is also important that all regulators work together to minimise risks for the profession but not lose sight of our key purpose; consumer protection.

Q A

What position do you see organisations such as the CLC taking in the market going forward?

Our strategy is to base ourselves on the strength of specialisation and aid understanding of the benefits organisations such as ours present to the profession. We are the only specialised regulator of conveyancing, property law and probate and the only specialist regulator of the real ‘general market’ legal services. Specialist regulation and specialist lawyers are delivering innovation in this changing market. Through adopting a genuinely risk based approach, we expect that opportunities for innovation should grow further in the market.

We very much hope that there will continue to be more new market entrants, as we were established to increase competition and innovation in the market. The very fact of our being has helped to prompt some of the changes that have absolutely been consumer facing. New entrants, with new ways of meeting consumer demand can only be a good thing. Our job is to support such innovation, whilst ensuring that standards and consumer protection are maintained at their very high level.

Are regulatory fees for the profession still too great a burden and how is the CLC approaching issues surrounding costs/regulation?

ML // October 2014

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Interview with... Elliot Mocton

Interview with... ELLIOT MOCTON Charlotte Parkinson, Modern Law spoke to the Director at MRN Solicitors about how the firm has coped with change, supporting clients under pressure and why their budgeting solution, ‘Prophet Costs’, is a game changer.

Q A

How are MRN Solicitors embracing opportunities for innovation in light of recent changes within the legal market?

MRN has always put innovation at the heart of the business. We saw the implementation of the Jackson reforms as an opportunity and we were the first costs firm to launch a bespoke and collaborative budgeting costs solution more commonly known as Prophet Costs.

Elliot Mocton Elliot Mocton qualified as a Solicitor in 2001 and started his own costs firm MRN in the same year. Ever since, he has played a pivotal role in managing and inspiring the success of the growing and winning teams at MRN Costs Solicitors. Long before the implementation of the Jackson reforms and whilst much of the legal sector was still in panic mode at the speed and extent of the proposed reforms, Elliot was already working towards a comprehensive and collaborative costs budgeting solution, which would provide solicitors the reassurance that budgets (when approached correctly), didn’t have to be daunting. Through a team effort, Prophet Costs was launched in early 2013 and dubbed by many leaders in the industry as a ‘game changer’; a solution precisely in line with what Jackson LJ had in mind. Apart from dealing with some of the most complex costs disputes, Elliot has lectured widely on some of the most challenging costs topics and is regularly called upon to advise firms at senior level. Through his pragmatic approach and sheer determination to deliver excellence and quality in every area of the business, he has helped MRN achieve its national reputation as a leading costs firm.

Q A

How does Prophet Costs support clients who are under pressures following the introduction of fixed costs?

Thankfully, for the last few years an overwhelming amount of our business has been specialising mainly on multi track cases, which attracts very different types of pressures than those cases which fall within fixed costs. Amongst the pressures faced by most of our clients is ensuring they have given sufficient consideration to their budgets and served them in proper time. The Prophet Costs programme has alleviated a considerable amount of the pressure, as the solicitor’s time spent considering the adequacy of their budgets has been reduced to a minimum through the collaborative and comprehensive approach we take to budgets.

Q A

Why is the Prophet Costs solution unique?

The focus of the programme was to comply with Jackson and engage the solicitor within the budgeting process so that on the one hand they have a full appreciation and understanding of the level of costs

‘MRN has always put innovation at the heart of the business. We saw the implementation of the Jackson reforms as an opportunity’ ML // October 2014

Interview with... Elliot Mocton

‘We have increased our IT spend 3 fold, as we see a significant drive towards online based costs services and electronic file transfers’ going in to each section of their budget and on the other managing to keep their time involvement to an absolute minimum. Prophet Costs does just that and the testimonials we have received from our clients speak volumes.

Q A

Have MRN increased internal investment and if so, in what areas of the practice?

Thankfully, the Prophet Costs programme has generated many new opportunities for the firm, which has meant we have had to increase our staffing levels by close on 20% in the last 6 months alone. We have increased our IT spend 3 fold, as we see a significant drive towards online based costs services and electronic file transfers. With servicing solicitors nationwide, it is imperative our systems are compatible and able to cope with significant size instructions.

Q A

Has the practice noticed an upturn in work, in light of reforms to the wider costs market place?

Our biggest growth area in the last 18 months has been within the Commercial Litigation sector. It has been a pleasure winning over the hearts and minds of the commercial lawyers and by the time they have experienced Prophet Costs they are back for more and sending their colleagues!

‘In light of the reforms, there are now very stringent rules on serving budgets within time and we all know the implications of late service. In-house departments often don’t have the necessary skill set and availability at short notice’

Q A

What are the advantages of outsourcing costs budgeting services, as opposed to recruiting inhouse departments?

As a firm, we provide services to law firms who have an in-house costs department and those who don’t. At MRN, we provide services to over 300 firms nationwide ranging from Nationals, City firms to small but significant High Street firms. The experience we gain from working with such a variety of solicitors, specialising in so many sectors is invaluable. We are often asked to undertake in house workshops with departments and offer them advice on best practices and what they could be doing to maximise the potential of their cases. In light of the reforms, there are now very stringent rules on serving budgets within time and we all know the implications of late service. In-house departments often

ML // October 2014

don’t have the necessary skill set and availability at short notice, which is something we as a firm do.

Q A

How do you see the legal services sector growing and developing and how will this impact both MRN and its clients?

With the greater transparency which is being demanded, I feel that the sector will be providing ever better quality work and improved client interactions. We feel that MRN has always prided itself in these two core areas and so face the future with optimism.

Q A

Where next for MRN?

We have something exciting in the pipeline, all I would say is watch this space!

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The Views

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THE VIEWS

The Views

Opportunity Favours the Brave

he economic position remains positive for legal firms and the majority of solicitors I meet tell me that they are busy, working long hours and their firms are doing well. Notwithstanding this, there appears to be a strong undercurrent of opinion suggesting that the legal sector remains volatile. Consolidation and an over lawyered market continues to grab headlines and we are all anticipating the next significant legal firm failure. I am not a great one for crystal ball gazing and predicting the future is far beyond my skill set but I am continually encouraged by the legal firms I meet who are embracing change and developing opportunity. I met one such firm recently, who have, from a standing start, grown revenue to £3m, provided employment for 40 soles, acquired a freehold premises and have a plan to grow revenue to £6m within three years. That’s an impressive performance for any business, let alone one that operates in a challenged and overcrowded sector. If you are suspecting that the business is carrying high levels of debt, then think again - it’s not. So what do the partners in this firm do that partners in other firms don’t do? They focus on two areas - business development and service. Business development activity is a critical and core component of their day to day activity. For this firm every client interaction is an opportunity to identify a potential new client and they are brave enough to ask for referrals and introductions time and time again. Of course, clients will not act as your ambassador unless the service they receive is outstanding and the firm focuses on that as a continual area of improvement. Late hours, weekend opening, digital updates and direct phone numbers are only a few ways in which the firm looks to deliver outstanding service. There is nothing new in this type of approach to client service but this firm executes it effectively and client satisfaction ranks above all other business objectives. I see enough examples, of which this is only one, to suggest that those firms who are truly brave enough to employ a business development strategy and put client satisfaction at the heart of their business have a positive and bright future. Steve Arundale, Commercial Head of Professional Services & Financial Institutions, Sectors & Specialist Business, Royal Bank of Scotland/NatWest, Commercial & Private Banking.

What is the ECHR challenge on ATE premiums and success fees all about? Article 6 and the right to a ‘fair trial’

oventry & Ors v Lawrence & Anor [2014] UKSC (Coventry) is a significant case, not only on development of the law of private nuisance, but also given the issue it has raised on recoverable ATE premiums (Premiums) and CFA success fees (SF) under the costs recovery regime introduced by UK legislation and subordinate legislation. The Supreme Court (SC) upheld a private nuisance claim against Defendants (D), operators of speedway and motocross events at a stadium and race track. As a result, D would have been liable to pay 60% of the Claimants’ (C’s) costs, including the Premium and the SF. D contended a requirement to pay those elements would amount to an infringement of D’s rights to a fair trial under article 6 of the European Convention on Human Rights (Convention), on the basis; • section 6 of the Human Rights Act 1998, requires the court as a public body to exercise its discretion when awarding costs in accordance with the Convention, save where otherwise required by primary legislation, and that secondary legislation (CPR and Practice Directions) must be dis-applied where it requires otherwise, and • article 6 would be infringed if the court required D to pay 60% of the Premium and SF. One authority relied on by D arose from a successful claim by Naomi Campbell against MGN Limited, publisher of the ‘Mirror’. MGN argued a requirement that if it were to pay, the SF would be incompatible with Convention article 10 as being a disproportionate interference with freedom of expression. In its decision in 1995, the House of Lords did not agree. However, when the point came before the European Court of Human Rights (ECtHR) in MGN Limited v United Kingdom (2011) 53 EHRR 5, it found unanimously that article 10 had been violated. It commented on the findings of the Jackson Review and, referred to what it saw as ‘deep flaws’ in the system and the provisions of the CPR. Lord Neuberger and a majority of the SC in Coventry considered the ECtHR comments provided some support for Ds argument, and the hearing on the issue was adjourned to allow representations from the Government. The outcome may potentially be of relevance, not only to the Government, and the parties in Coventry, but to those with current policies/agreements where recoverability continues to apply, to their opponents, and to those who have paid these elements in the past. There could be ‘knock on’ effects and the ‘fair trial’ point will no doubt be argued from each side of the ‘divide’. This is one to watch… [446]. Matthew Williams, Head of AmTrust Law. If you have any further questions regarding this or would like to discuss further with AmTrust Law please visit our LinkedIn Forum.

ML // October 2014

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The Views

Planning and preparation... Life in the EIP–All is not lost Time, cost and complexity are factors often underestimated in merger situations. How can firms ensure that pre and post-merger integration is a smooth process?

merger is when two or more entities are combined into one, the main purpose being the creation of synergy value. The Solicitors Regulation Authority has collected mounting evidence showing the legal profession is shrinking at a rapid pace in the face of competitive pressures. In 2012, there were 60% more mergers between law firms than in 2008, with 42% of the top-50 firms considering a merger to be very or fairly likely by 2016. Proper planning and preparation are key to ensuring that the proposed merger has every chance of succeeding. Many firms appoint an external specialist to guide them through the process. In the initial stages, a firm should: • Carry out a full SWOT analysis on their own firm to ascertain where they can make enhancements • Carefully select the target firm for the proposed merger • Assign a value to the target firm using Discounted Cash Flow methodology • Carry out full due diligence, considering financial, legal, operational, technological and personnel areas. This should also include analysis of the PII claims records of the target firm so there are no surprises to the merged entity, as the merged firm will take on all liabilities of the target firm following completion • Create a transition team who will lead the merger • Carefully plan and perform the integration.

e’ve seen another remarkable professional indemnity insurance renewal period this year. With the threat of regulatory change to minimum terms, a number of firms opted to delay their renewal until certainty over proposed changes were established.

Now, with the Legal Services Board (LSB) delaying any change in this renewal period, a number of firms are faced with either an extremely late renewal or renewal from within the Extended Indemnity Period. What to do for those in the EIP As if being in the EIP wasn’t stressful enough, obtaining coverage from a participating insurer this year will be especially difficult due to the higher volume of requests placed on rated insurers. For those facing this situation, it is imperative that you reach out to an experienced broker with a broad reach of available markets. Even if you have been unsuccessful in getting any quotes so far, underwriters now have the time to reconsider your application in more detail. There is always a story to tell them, just make sure that your message is reaching all available insurers in a clear manner. No doubt there will continue to be firms failing to gain coverage in the EIP and entering into the Cessation Period, a leading cause of which is a lack of professional help when presenting your firm’s risk to insurers. A key message to any firm is all is not lost, make sure you contact a specialist broker as soon as possible - as we draw closer to the end of October, the likelihood of obtaining reasonable coverage will diminish significantly, and only the Cessation Period awaits. Richard Brown, Executive Director, Legal Service Practice Group, Willis.

The post merger process is the most difficult phase. Items that are to be fully considered in order to achieve a successful merger include: • Finalising a common strategy for the new Organisation • Consolidating duplicate services. For example: IT systems, finance and personnel • Defining the new structure of the Organisation, including authority levels. In addition to the above, it is vital to lead the change using excellent communication from the start to the end of the process as many mergers have failed in the past owing to people not feeling involved and not having their issues resolved, with the resulting drop in productivity. Employees will naturally feel threatened by the proposed changes. Once everyone agrees on the reality and resistance is lowered, the merger will have the full buy-in to the required changes. Managing resistance is vital to the success of the merger. John Graham, Associate Compliance Consultant, Legal Eye.

ML // October 2014

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The Views

One size fits all?

can remember (in the dim and distant past) reading the Clementi report on the reform of legal services and pondering about the structure we would all be working within post reform implementation. I can also remember the debate raging within the legal press about the prospect of a single regulator of legal services and how that just couldn’t be done. Around about this time the Financial Services Authority (FSA – now the Financial Conduct Authority (FCA)) had become the single regulator for financial services and I remember thinking that the Legal Services Authority had a reasonable ring about it. When it came to pass, the Government decided to implement the system we work in now - with a Super Regulator which effectively regulates the Regulators - sounds a bit daft when you look at it like that! I do think the Legal Services Act, for all its complexity, is an improvement on what we had before but I did wonder at the time whether it was always intended to be a stepping stone to the real reform - to that of a single legal services regulator. When we see the (sometimes strained) relationships between the existing regulators (not to mention the dysfunctional “love” between the Law Society and the SRA), the sooner we settle this, once and for all, the better. The new Chair of the LSB has already come out in favour of the principle of a single regulator and I for one can only agree with him. He tells of an analogy with the engineering industry which has thousands of different sectors which co-exist under one regulator. Precious as all us lawyers are, I really can’t see what the big issue is in devising a set of rules of conduct to cover the different branches of the law. Bring it on, I say and we can then get some conformity across the different disciplines and a truly level playing field. The issue in my mind is easy - the hard part is trying to see whether we can regulate all legal activities, which is more difficult but absolutely necessary for the protection of the public. Eddie Goldsmith, Founding Partner, Goldsmith Williams Solicitors.

Into the mix... While the number of training options, such as apprenticeships for young people are increasing, are there enough places/training contracts available for trainees and how can the legal industry work to overcome the next problem in the chain of training for new lawyers?

his is a perennial question which never seems to receive a satisfactory answer. For some time, both the number of those seeking work in legal services and the industry’s ability to absorb them has been mismatched.

While austerity measures have been stringent in the public sector with resulting job cuts (especially in local authorities), there is little evidence to suggest in the legal services industry that the private sector has expanded sufficiently to compensate. As a result of rationalisation, the greater use of shared legal services between the public sector organisations has resulted in fewer opportunities for lawyers of all types. Indeed, it is questionable that should a broad match between supply and demand for legal staff be achieved, whether the skills required by the industry and those offered by potential employees would align. LETR picked up on this point in a slightly different context, noting that the ‘driving test’ approach to lawyers’ qualification, where an individual has to pass just once, carries inherent weaknesses. For example, it permits a practitioner of many years standing to switch practice areas without further training, despite perhaps having had little or no experience in the new area. Those seeking to enter the industry are confronted by an over-supply of LL.B and LPC graduates. Some employers see this as an opportunity to employ well-educated staff cheaply, while others eschew the churn of graduates, many of whom have eye-watering levels of student debt. Instead they prefer the stability of developing their own staff through the CILEx professional qualification, or for school leaver recruits, its associated apprenticeship programme. As a supporter of an expansion of workplace training and education, LETR endorsed the approach that CILEx has long advocated. That is, legal education in the workplace, especially on an incremental, unit by unit basis, is the most effective way of ensuring that training is sufficiently flexible to support an employer’s changing business needs. In this regard employers will have greater control over workplace training when new forms of apprenticeship (Trailblazers) are launched in 2017. These will give employers far greater say over the content of, and the skills acquired through, legal training. For employers then the answer to matching their needs against those of the future workforce is that they should consider apprenticeships as part of the mix, irrespective of whether the individual’s destination is as a paralegal, Chartered Legal Executive or solicitor. Noel Inge, Managing Director, CILEx Law School.

ML // October 2014

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The Views

A shared vision As the legal market begins to stabilise, some firms are beginning to face the reality that they have only planned strategically for the short/medium term; how should firms be developing long term business strategies and measurable goals in order to successfully move forward as profitable businesses?

f a firm has only planned strategically for the short/medium term, is that really a problem? I don’t believe it necessarily is, provided the plans have a clearly defined outcome, are based around realistic goals and are dynamic enough to enable the business to react quickly to market opportunities.

Conventional thinking would suggest that a 5 year rolling strategy is the way to go for medium to long term plans. The debate over what the time frames should be will continue, so my advice is create a plan that works for you and if that’s just 3 years and not 5, 10 or 15, then so be it. One thing I hope we all agree on is the adage ‘fail to plan = plan to fail’, so let’s accept it’s an absolute must to have a clearly defined business plan that encompasses strategic as well as tactical objectives and goals if a business is to have direction. Before putting pen to paper however there has to be a vision. There also has to be leadership, where the leaders share their vision, are passionate about what it is they envisage for their firm and then paint a picture for all staff to see and feel part of, as, all too often, vision, passion and strategy doesn’t leave the board room. Any successful strategy has direction, a desired destination, clear actions and outcomes, it must engage, galvanise and energise people behind a set of aligned objectives. So, how should firms be developing long term strategies and measurable goals? It starts with leadership and it ends with leadership, if the leaders of the business don’t have a vision, or if they do and it stays in the boardroom, then quite frankly any long term plan or strategy isn’t worth the paper it’s written on. Tony Brown, Owner, AGB Legal.

The overriding objective

n a survey recently carried out with a small sample of experienced medico-legal experts, opinions were sought as to whether the last 10 – 15 years have resulted in changes in practice consistent with the overriding objective of the CPR reforms suggested originally by Lord Woolf, with particular reference to ‘Part 35: Experts and Assessors’ which addressed the responsibilities and actions of experts. The seven key questions asked and the overall summary of responses are as follows: 1. Have experts been more focused on restricting evidence to ‘what is reasonably required to help resolve proceedings? Questions are more focused on narrower issues. A small cautionary note was that ‘a greater focus’ might reduce thoroughness and range of opinion. 2. Are experts restricting their evidence to evidence which is ‘within their expertise’? It was widely thought that experts did already (pre1999) restrict their evidence to ‘within their expertise’. However, the encouragement to maximise this was thought helpful. One particular example of how orthopaedic and psychological/psychiatric experts address chronic pain was mentioned. 3. Is the process of making written questions to experts working? It was felt that this was under-utilised and should be given a higher priority. 4. Is the process of getting answers to written questions from experts working (timely/ helpful/accurate)? A positive response: It was thought that high quality experts provide (and should provide), timely, succinct responses to sensible questions from lawyers. 5. Are single joint experts being used frequently enough, as was envisaged? Single, joint expert instructions are not as frequent as initial CPR recommendations predicted, although experts had a largely positive view of this mechanism. There was therefore low opportunity to develop the necessary skills of being a single joint expert. 6. Do reports adequately reflect the range of opinion? No real change has occurred here. One issue raised was whether a range of opinion should be made explicit in the expert’s report or, alternatively, made clear that the final opinion given has arisen from an implicit consideration of alternative views. 7. Does the Joint Opinion process work (clarifying different opinions, maximising apparent agreement, helping resolution)? It was widely acknowledged that since 1999, experts have improved in the quality and robustness of their opinions and therefore the Joint Opinion process itself. It would appear from practice and experience that the CPR changes have met with largely positive response from experts, with even more opportunity for further positive change. Lord Woolf would find this gratifying and this bodes well for further change and compliance. Dr Hugh Koch, Chartered Clinical Psychologist and Director of Hugh Koch Associates.

ML // October 2014

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The Views

Intelligent thinking

Moving on...

With the legal market place becoming ever more competitive, are smaller firms in danger of being ‘priced out’ of the opportunities created by digital marketing tools like Google Ads or Social Media Pay-per-Click (PPC) campaigns. What, if anything, can a smaller firm use to make sure they still have a chance to generate leads online?

Are law firms embracing opportunities for external funding? What are the options for law firms seeking investment and how can firms best prepare themselves for investment?

s more and more law firms wake up to the importance of digital marketing and promoting themselves online, there’s a big question about how best to do it. The problem we hear most from smaller law firms is that they simply don’t have the budgets to go it alone and partnering with larger firms or a CMC is their only option. It’s true the big players in the market have the budget to maximise their marketing reach but this doesn’t mean smaller firms are going to miss out. Naturally the big firms have larger budgets. They also have an ability to offer a wider variety of legal support. While this may sound like there’s no way a smaller firm can compete with that, smaller firms in fact have a lot more power than they think. Pay Per Click (PPC) campaigns on social media are proving to be an excellent way for smaller firms to attract leads when they focus on the niche areas of law. PPC on platforms like Facebook allow you to refine who your adverts target, meaning that you can target niche areas easily and only appear where you are most likely to gain interest. What’s more you only pay for the advert when an interested person clicks on it to find out more, something they’re only likely to do if they have a need for your service. Recent research shows that this intelligent thinking with your campaign can really reduce your costs. For example, looking specifically at general key words, on various digital marketing channels (AdWords, Facebook etc.) used by the personal injury sector generated 86 leads between March and August 2014 at a cost of £453 per lead. However for the same time period using keywords for niche areas of the same sector, 287 leads were gained for just £76. That’s over three times as many leads for just about a fifth of the cost. Different sectors will have different key words costing different rates, however, this research shows that by utilising what you as a small firm are good at (being able to focus on specific areas of law for a more expert offering), you can fully engage with potential new clients who want exactly what you provide, within the marketing budget you have available.

he short answer to this is a resounding no. In my daily rounds talking with managing partners about their plans, I am amazed at how conservative firms are about looking beyond the Banks. For all of the good talk, Banks are still touchy about lending, especially to LLPs. The Government’s Funding for Lending scheme has not unblocked the system, with only a fraction of Banks who signed up actually using it (The Guardian), so why not look elsewhere? Crowd Funding is now well-established, with savvy investors and organisations like Funding Circle and Money & Co, offering a flexible and professional alternative route. Crowdcube has so far overseen investments of over £37m and has over 88,000 registered investors looking for the right opportunity. Last week the Chilango Mexican restaurant chain raised £2.1m on Crowdcube from 749 investors who bought 4 year bonds paying 8% plus free Burritos. If this seems a little down market for Solicitors, in 2013 The Jockey Club raised over £24m in this manner, paying 7.75% (split 4.75% in cash and 3% in racing rewards) for a five year bond. Their original target was £15m. It seems pretty obvious to me that such investors would be attracted to a well-run firm with a good track record, especially if that firm also offered discounted legal services to the investors as part of the deal. A firm offering, say, an 8% return made up of 5% cash and 3% discounted services for the investor or their family would solve their funding issues at the drop of a hat, and without the oversight and pain of complying with their Bank’s central lending criteria. For the more adventurous, we are currently working with a Major US investment house managing over $60bn of assets, who are eyeing up the UK legal market and looking to pay 4 x 5 times profit for sizable minority holdings in a range of firms and sectors. The market has moved on and clever firms should move with it to escape the death grip of centralised Bank lending. Andrew Roberts, Managing Director, SSG Legal.

Dez Derry, CEO, mmadigital, online marketing for modern law firms.

ML // October 2014

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The Views

You ain’t seen nuffin’ yet! One of the key purposes of the liberalisation of legal services was to allow opportunities for innovation; have we seen innovation in its full capacity in the legal sector yet?

hile the consciously liberalising agenda of parts of the Legal Services Act has made a huge impact on the legal sector over the last seven years, other and diverse forces have also made themselves felt. These include the Jackson reforms, the great financial crisis, Legal Aid changes and rising expectations among purchasers of legal services. As is often said, change provides opportunity, and opportunity leads to innovation. Predictably, the first wave of change encompassed volume retail services such as personal injury. With Slater & Gordon and Co-operative Legal Services registered as two of the first ABSs, the market did not have long to wait for the arrival of the innovators. While Slater & Gordon, building on their experience in Australia, have developed a substantial personal injury practice in the UK through the execution of a successful consolidation play, and are now diversifying their service lines to secure more work from their clients, CLS has not fared so well. This of course was in part due to problems elsewhere in the Co-operative Group, but also demonstrated the difficulty of converting the opportunity to innovative into a commercial reality. In particular, the question as to how family law services can be delivered by a large ABS remains unanswered for now. Other early-stage innovators have changed their business models – Stobart Barristers for example no longer provide legal advice to the public – while some diversified service providers (Quindell, for example) have been the subject of financial controversy. This takes us to the heart of the question: innovation in any market requires capital, and in legal services we have seen many would-be new entrants failing to persuade capital providers that their ideas are worth backing. They learned the hard way that, while finance sources such as private equity funds were keen to take a stake in a well-run, profitable businesses with the prospect of a substantial gain on exit, innovative but unproven business models developed by individuals with no experience outside the profession were often too rich for them to stomach. As a result, the potential for innovation in legal services remains largely unfulfilled. Undoubtedly, as expectations mature and clearer trends emerge, innovation will continue. Large listed service providers and the Big Four accounting firms will undoubtedly have a role to play. So too will the demise of smaller and mid-tier firms who find it necessary to merge with others in an attempt to meet client needs in an increasingly competitive market.

Starting from scratch

any firms are still reacting to events and not planning strategic responses to the things we know are going to happen. The economy will strengthen – and one day it will weaken again. Competition will intensify. Demand for some legal services will increase, others will decline. Rules will change, like the management of court cases and the way work is paid for. Clients will expect more for less. The pace of change will increase. Strategic planning means being able to cope with these changes when they come (ideally, by helping to make them happen) even though not all the detail is known in advance. That means the plan needs some flexibility; but it certainly doesn’t mean planning is pointless. The strategic plan needs to encompass people, finance, facilities and customers. Obvious really, but it is surprising how often the wants and needs of clients are forgotten; when they should be front and centre. What clients want, when and how they want it (and how they want to pay for it) really drives everything. ‘Category Killers’ across all industries know this: Toys-R-Us with every toy imaginable under one roof killed off the local store, mobile phones with predictable monthly costs were unimaginable just ten years ago. So the first part of any strategic plan is to be realistic about the service and price/payment structure that can be delivered. It’s great to be the best, but be realistic. After that it’s deceptively simple – work out how to deliver what is required at a profit. That will dictate the operational requirements, mainly people and IT. Both will need facilities and support, but the options here are legion compared to a few years ago. People can work (almost) anywhere, and IT provision can be local, cloud or a combination. Remember there will be a cost in bringing work in, consider carefully how to make your services known. Set targets for key measurables – the cost of human resources and the time elapsed for each stage of the work; figures for client acquisition, retention and new instructions; and the success of business development activities. It’s amazing how starting from scratch changes the way you look at things. It’s difficult to get everything exactly right first time; and even if you do the competition will be watching and trying to do better. So the final thing to plan for is flexibility – be able to move resources between types of work as the economy and your opportunity dictates. Ensure that your IT infrastructure and systems are able to flex in terms of both capacity and capability for types of work, and ways of delivering it. Partner with people and organisations with a vision of the future, and the willingness to move quickly when parts of that vision need to change. Jitendra Valera, Chief Marketing Officer, Advanced Legal.

George Bull, Chair of Professional Practices Group, Baker Tilly Tax and Accounting Limited.

ML // October 2014

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The Views

Planning for succession... One of the SRA’s bad behaviours in relation to financial stability is: “all net profits drawn with no reserve pot retained”. Should my practice maintain a capital reserve?

enerally speaking, it is a good idea to retain reserves to invest in the future success of businesses and also to provide a buffer against unexpected future events. However, this is difficult to achieve in practice. The norm in professional practices is for the owners of the business, usually the partners, to change on a fairly regular basis. That might mean new partners being admitted and partners retiring, but it also includes changes in profit sharing between the partners. Given that, it is hardly surprising that partners wish to fully allocate profits in each and every year. There are also taxation and succession issues to take into account here. Firstly, tax is charged on partners in partnerships and members in LLP’s on the profits earned, not the amounts withdrawn. There is therefore no incentive to leave a reserve pot. That is one of the reasons that many practices are now looking to incorporate as limited companies. In a limited company, the owners are only taxed on the amounts withdrawn and the company pays a lower rate of tax on the amounts retained. Secondly, professional practices should always be planning for succession. Partners tend to have large capital account balances that they would like to have repaid upon retirement. If profits are not paid out as they are generated, those capital accounts will increase, making it more difficult to pay out retiring partners. Finally, if the reserve pot is designed to be used to reinvest in the business for future growth, how would a partner approaching retirement be incentivised to do that? That is a particularly difficult question to answer when goodwill is generally not paid upon retirement as it is viewed as another block to succession - but that is a large topic for another day. Andy Poole is the Legal Sector Partner at Armstrong Watson, specialising exclusively in advising law firms. Andy heads the legal sector team at Armstrong Watson, which has 15 offices and over 400 people. The legal sector team advises law firms throughout the UK on strategic, structural and other business improvement issues as well as providing efficient accounting, tax and SRA accounts rules services. Further information can be found at: www. armstrongwatson.co.uk/legalsector.

Is LEI part of the future of Consumer Law?

ver the last 18 months, the debate about consumer law has moved from whether to launch a consumer law offering to how to do it. In particular, organisations that already offer a home or motor legal expenses insurance (LEI) product are wondering how they should integrate additional standalone consumer legal services - such as conveyancing, probate or family law with their LEI product. We all know the problems with LEI. The Financial Conduct Authority (FCA) is concerned about low claims ratios. Legal suppliers, many of whom offered cut price rates on LEI to insurers in return for profitable motor books pre-Jackson, struggle to provide the right quality of legal support at the low fixed rates. Lastly, there is not much logic to why certain things are in an LEI product, e.g. employment law, and others are out of it, e.g. probate. The supporters of LEI argue that it is a fairly priced product, given the very generous indemnity provided. They also point to the value of the many free services – legal helplines, free wills, suites of online legal documents – that LEI policyholders receive. The question is not so much whether LEI is or is not a good product but how insurers, or other entrants to the consumer legal market, construct an attractive and valuable legal offering to their customers. Does this require an LEI element? My view is that an LEI element is a key part of an attractive consumer legal services offering, whether that element comes from a home or motor policy, or is part of a standalone LEI or membership product. This is partly because of the intrinsic value of the indemnity approach, and partly because it will be very hard to take these products out of the home or motor insurance value proposition. Such an approach also offers great opportunities to cross-sell new discounted standalone legal services to customers, and to wrap up a complete consumer legal services offering in a lifetime membership or loyalty scheme. All of this applies just as strongly to employee benefits programmes as it does to direct to consumer offerings. David Jabbari, Managing Director, Consumer Law, Parabis Group.

ML // October 2014

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The Views

Fixed fees: Are they a panacea?

t won’t have escaped anyone’s notice that more law firms are jumping on the fixed fee bandwagon, from Riverview Law to Quality Solicitors, to most recently, Nabarro’s announcement that they will be offering fixed fees on dispute resolution work. From the client’s perspective, fixed fees bring considerable benefits including budgetary certainty and cost control. The downside is that, depending on how the firm decides to allocate price risk, the client could end up paying more than they would have if the matter had been priced on a conventional, hourly rate basis. From the firm’s perspective, there doesn’t actually appear to be much of an upside (although there can be), other than the fact that offering fixed fees may be a point of differentiation and therefore attract more work. The downside is that for a variety of reasons, (including poor analytics, poor project management and unrealistic optimism bordering on naivety), firms often end up with quite significant write-offs once they have committed to a fixed fee. Fixed fees can be very good for both the firm and the client but there is a right and wrong way to assess them, communicate them to clients and execute them. Examples where this is being done well are relatively rare. Some have made very good progress on the analytics side but the way in which the fixed fee proposal is communicated and executed fails to maximise the opportunity and can irritate or alienate the client. These firms that have nailed their colours to the mast about fixed fees have rather missed the point. Unfortunately, most lawyers are oblivious to the fact that there are at least 15 different pricing strategies and considerably more combinations of those strategies that could be deployed if they had the knowledge and the skills to do so. To my way of thinking, moving from a model where the predominant offering is hourly rates, to a model where the predominant offering is fixed fees, misses the whole point. We should have the capability to offer a customised and bespoke pricing solution to each client on each file. Richard Burcher, Chairman, Burcher Jennings.

Grinding to a halt? The Supreme Court has recently given a strong indication that the regime whereby a CFA-funded party was able to recover a success fee and insurance premium may have breached the human rights of that party’s opponent. How is this likely to affect the ongoing conduct of cases in which such additional liabilities remain ostensibly recoverable?

n Coventry v Lawrence (No 2) [2014] UKSC 46, Lord Neuberger expressed a view that the regime which existed before 1 April 2013, which allowed successful CFAfunded receiving parties to recover a success fee and ATE insurance premium from their opponents (the Recoverability Regime), may be incompatible with the paying party’s human rights. Although additional liabilities are no longer recoverable, in respect of CFAs executed on or after 1 April 2013, there remains a substantial number of legacy cases in which CFAs were entered into before this date. Coventry has been adjourned to allow interested parties - including the government - an opportunity, to intervene. The Supreme Court has made it clear that it is contemplating making a Declaration of Incompatibility (DOI) under s.4 of the Human Rights Act (HRA) 1998. Initially, many commentators considered that all detailed assessment proceedings, to which the Recoverability Regime applied, would grind to a halt until the issue was resolved. Indeed, many sets of Points of Dispute were served, suggesting that the receiving party should either concede their entitlement to additional liabilities immediately or face an interminable wait, whilst the Coventry issues were resolved, in order to receive any payment whatsoever. Thankfully, the en masse adjournment of assessment proceedings is unlikely. Even if a DOI is made, CFA-funded parties will remain entitled to recover additional liabilities. This is because s.4(6) of the HRA provides that the DOI will not affect the validity, continuing operation or enforcement of the recoverability regime. The question then becomes: what recourse, if any, would paying parties who have had to pay additional liabilities have and against whom? It seems likely that any paying party (which has been required to pay additional liabilities), may be able to bring a claim against the government. It has been suggested that the level of the government’s exposure in respect of such claims runs into the tens of billions of pounds. One interesting point which arises is whether any claims could actually be brought in view of the one-year limitation period imposed by s.7(5) of the HRA. There is provision for this limitation period to be extended, but only if the Court considers it equitable to do so. Alex Bagnall, Head of Commercial Litigation Costs, Lawlords.

ML // October 2014

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The Views

Adapt, survive and compete... One of the key purposes of the liberalisation of legal services was to allow opportunities for innovation; have we seen innovation in its full capacity in the legal sector yet?

or too long, legal services had been reluctant to innovate, although strict regulation was not the single factor behind his. Willingness on behalf of the profession to embrace innovation played its part and whilst much has changed within legal services to create the opportunity to innovate, my concern is that parts of the profession have yet to fully embrace these opportunities. Provision of legal services has come a long way with digital signing technology and video conferencing as examples. Equally, marketing legal services has advanced from online strategies and client portals to fully outsourced functions and automated document production. Further still, new and complex structures in the form of ABSs have been allowed to compete in what was once a protected arena. However, far too many organisations are still not taking action. On my travels last year as President of the Manchester Law Society, I was able to meet a variety of solicitors and stakeholders in this industry and the majority accepted the need to innovate and adapt to survive and compete. Yet most of those who knew they needed to do something were held back by the fear of taking action as well as the cost – it was all too new and unchartered territory. It was a lot easier to assume that to innovate was a costly exercise, only accessible to large firms with deep pockets. No appreciation was given to the value a particular project might bring back into the business that would far outstrip the initial costs of developing and implementing a new idea. Having said that, this perception is weakening but it has slowed the speed at which the legal industry has been able to innovate new ideas. As a result, I don’t think we have seen the full capacity of the legal sector to innovate and I’m not sure we ever will. With the huge leaps in technology, the fast changing attitudes of consumers of legal services and the approach of young lawyers embracing the commercial side of the businesses they work for, I think we are going to see a lot more innovation in the coming years. Sucheet Amin – Managing Director Aequitas Legal & Founder of inCase™.

Gone are the days

oday, law schools are producing lawyers comfortable with techissues such as cyber security, digital currency regulations and data restrictions, attorneys who are not only verbally articulate but who operate fluently in a legal environment transformed by technology. Digital dictation, one aspect of processing workflow for law firms, is no longer merely a nice-to-have, but rather an essential requirement for improving client services. Effective integration of dictation technology has a direct impact on the bottom line through its time-saving benefits. Lawyers can record the action required for clients quickly and efficiently, getting information directly where it needs to be. Dictating a letter or meeting notes straight away minimises incorrect or incomplete information. Recordings can be marked as ‘urgent’ and sent for immediate processing or considered for critical decisions. Lawyers can record, edit, send, receive and manage dictation from multiple offices, from cars or courtrooms, dictating on the move, reviewing documents securely with mobile devices. The crux of the matter for any law firm with digital dictation solutions that then involve a textual record, or transcript of the recordings, is the accuracy of such a textual record. In other words, the question for law firms isn’t: ‘Do we need a digital dictation solution?’. The question is: ‘How can we ensure an accurate textual record of the recording?’. The main problem, until recently, is that digital solutions are off-the-shelf and one-size-fits-all. This software still requires ‘training’ in the nuances of a particular speaker and terminology applicable to an industry such as law. The results? Inaccuracies; lost time; unreliability and ultimately, frustration. Technology requires people so it’s a question of the complementary relationship of the two and how they are integrated that creates a solution with the highest possible combination of speed and accuracy. This integration allows companies to utilise technology in a more dependable way, without risks associated with poor accuracy of off-the-shelf solutions, as the technology is managed by people in the right spaces of the workflow process, who then customise specific client requirements without compromising speed and accuracy. Digital is the right way to go, the only way for the necessary productivity and efficiencies of modern law firms, for improved workload management, critical speed, high levels of accuracy and security of information. But the future of technology, while hugely driven by software, needs the insurance of operating accurately and effectively - with a human element. Adam Kossowski, CEO, Way With Words.

ML // October 2014

The Views

Why on earth would someone become an expert witness?

ot something the average entrepreneur or business person might consider but sometimes needs must. In my case, there was most definitely a need back in the 90’s when my core business was spiralling down big time during the recession. I recall my bank had encouraged me to take out business loans, only for me to find the interest escalating to 20%. Expert witnesses come in all shapes and sizes, mainly individuals with specific knowledge of a subject. Rather like the TV show Mastermind, “Tonight, John, my specialist subject is Jane Eyre, Chapter 4, and this quote; ‘I am glad you are no relation of mine…’”. Leaving aside people like orthopaedic surgeons or accountants, who are qualified through long training and experience, a lot of experts arrive at this point from many years’ experience. Nevertheless, operating successfully in one area does not necessarily mean to say that operating in another will be equally successful. It’s all very well being called down from ones eyrie to cast a professional opinion, but quite another to morph this in to a real business. But once established, I soon discovered it was a licence to print money, quite immoral of course but this happy state of affairs continued until Lord Woolf’s reforms which, although I thought laudable and appropriate, resulted in my auditor cancelling all diarised luncheon dates with me in protest, at the advent of a potentially significant reduction in his fees. In order for costs to be proportionate there was a surge of joint instructions which lasted for just a few years, but is sadly not the case any longer. If any employment expert tells you their split of instructions is 33%, 33%, 33%, you should take it with a pinch of salt. I have been in the service industry for all of my self-employed years and I try to bring these qualities to my practice, which is why we are ISO9001 and 14001 accredited. It’s not just about knowledge and experience; it’s all to do with service delivery. We say what we will do, do it and deliver beyond expectations every time. My new business venture has lasted 25 years so far and while it may no longer be a licence to print money it is sound, has a deservedly excellent reputation, and continues to deliver beyond expectation. Would I set up as a new expert today? Probably not, there are wider business opportunities, easier ways to make a living, technology has evolved and my aches and pains are beginning to intrude. But I really, really enjoy meeting people and there are none so diverse as claimants so maybe, just maybe.

The silver lining? There has been a significant rise in Clinical Negligence claims following the introduction of the Jackson reforms. What impact will this rise have on the After the Event Insurance industry?

ne unexpected knock-on effect of the Jackson reforms is the reported 18% rise in the number of Clinical Negligence claims registered with the NHS Litigation Authority. Why would this be the case? Well, it is due to the fact that, following the introduction of fixed costs, relatively speaking, Clinical Negligence cases are now significantly more profitable to solicitors than RTA and Accidents at Work, meaning solicitors’ resources have been shifted into advertising. The Jackson reforms of course left the door open for victims of clinical negligence with regard to After the Event Insurance. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 allowed an ATE Insurance policy restricted to initial liability and causation investigations, to be recovered from a losing defendant. This means that, often, there are now two ATE policies for every one clinical claim – one for the defendant to pay and a later one, covering subsequent costs and disbursement risks, payable from clients’ damages. What effect then does this rise have on ATE insurers? Well, they are worried. The calculation of the recoverable and non-recoverable post-Jackson premiums was based on significant historical statistical data. That data was drawn from working with experienced Clinical Negligence solicitors. Now, it appears there are many new solicitors attempting to make clinical claims. These may be firms not experienced in pursuing claims against the NHS. Surely though, After the Event Insurers will simply remain loyal to their clinical negligence lawyers? However, as other solicitors enter the market, the pool of ‘good’ claims is diluted, leaving the experienced practitioner short of work, meaning they are tempted to take on more marginal work to make up the numbers. Strangely, this all comes at a time where we await a Court ruling on the allowable recoverable clinical negligence premium. This increased insurance risk could have a silver lining when the courts come to consider what the true insurance cost payable by losing defendants should be. Daniel Morris, Director, Box Legal Limited.

Trevor Gilbert, Chairman, Trevor Gilbert & Associates.

ML // October 2014

The Views

The nature of the industry What data protection responsibilities do law firms have, and how should they demonstrate these to avoid security breaches?

or law firms, client confidentiality and secure processes are an integral part of the service they provide and nature of the industry. For this reason, when the security of information is threatened, there is a critical breakdown in the trust bestowed upon firms by their clients.

Recently, there has been a worryingly high number of data breaches reported in the legal industry, resulting in the Information Commissioners Office (ICO) warning that action must be taken to keep personal data secure. The warning echoes a similar caution from Edward Snowden in July, when he urged lawyers, accountants, and other professionals handling personal data to update their confidentiality measures following the spy surveillance revelations. In particular, he warned that the ongoing development of new cyber platforms and technologies meant that digital communications were no longer safe from infringement or privacy breaches. In its 2014 Information Security Survey, DX commissioned research into legal departments and law firms to gain insight into current attitudes and concerns surrounding data protection. 26% said they felt no risk to data security from criminal attacks, showing a lacking awareness of threats. Furthermore, the study found that aside from malicious attacks, human error was commonly responsible for security breaches, with 55% of those questioned aware of emails being sent to the wrong address - 80% of those to at least one external recipient. These figures demonstrate the need for secure email encryption in the transferring of confidential data across the internet, just as a courier service would be used to send physical documents. The apparent complacency is set to be addressed by the enforcement of new EU General Data Protection Regulations, due to be agreed next year and implemented in 2017. The amendments to the 1995 draft will attend to the advances of email communication, and strengthen the need for encryption services to be utilised. In addition to bringing necessary updates, the new EU rulings also highlight the importance of data protection and prioritise its regulation within firms, which will suffer severe penalties for not complying. As such, encryption will be seen as a baseline procedure, not only in answer to regulatory requirements and to avoid substantial penalties, but more critically to maintain the reputations of firms and the legal industry by providing secure services, guaranteed confidentiality, and the crucial confidence of clients. Paul Doble, Chief Sales and Marketing officer at DX, a leading independent mail, parcels and logistics end-to-end network operator.

ML // October 2014

Flexibility in a changing market... Q: One of the key purposes of the liberalisation of legal services was to allow opportunities for innovation; have we seen innovation in its full capacity in the legal sector yet? A: Many have perceived the offspring of legal practice and commercial enterprise as a combination of the worst genes of each parent – businesses trying to be legal experts and vice versa; real innovation will begin when each realises the positive contribution that they can make and focuses on the needs of their customer – when they have worked out who their customer is. Q: Is there any more room in the market for new legal entrants? A: As the older legal incumbents evolve, they will become the new entrants in the legal market – if they do not evolve they will become extinct and will be replaced in the food chain by the more adaptable stakeholders who have been waiting in the shadow of the dinosaurs. Similarly, businesses wishing to become an ABS would be wise to absorb experience and knowledge from established sources rather than trying to reinvent the wheel. Q: As the legal market begins to stabilise, some firms are beginning to face the reality that they have only planned strategically for the short/medium term; how should firms be developing long term business strategies and measurable goals in order to successfully move forward as profitable businesses? A: The business ethic in legal practice has developed exponentially over the past twenty five years. Similarly, archaic time-based charging methods are being superseded by whole-job pricing. The modern lawyer must recognise the value of outsourcing work that does not require a formal legal qualification. The external provider allows more flexibility in a changing market and is perhaps a wiser long term strategy. Q: At the Modern Law Conference in April 2014, Professor Richard Susskind said; “we are neither witnessing an Evolution or Revolution but an incremental transition in the market.” Do you agree and if so, why? A: Not necessarily - revolution would not be accepted by the various ranks of the legal establishment; evolution requires replacement of the original. Neither would be accommodating of the well-performing established entities in legal provision. By “incremental transition”, I can only think that Professor Susskind means “slow and episodic evolution” – so it is in fact a type of evolution; it is indeed likely to be market driven as the legislators and regulators seem to be reactive rather than proactive. Neil Clayton is Head of Legal Services at market leading conveyancing Search Provider, PSG. He is the in-house adviser on all legal aspects affecting the business and wider sector.

The Views

The way forward

The next generation...

While the number of training options, such as apprenticeships for young people are increasing, are there enough places/training contracts available for trainees and how can the legal industry work to overcome the next problem in the chain of training for new lawyers?

While the number of training options, such as apprenticeships for young people, are increasing, are there enough places/training contracts available for trainees in conveyancing and how can/are the legal industry work to overcome the next problem in the chain of training for new lawyers?

he Times has reported that 17,500 law graduates will be competing for 5,000 jobs ‘in law’. It follows that, for the vast majority, the chance to ‘get in the door’ and prove oneself on merit to partners or chambers has never looked so bleak. Many in practice feel that there are too many law schools and too many graduates and that a degree does not hold the weight that it used to. The training contract, as the traditional route, post LLB/ GDL and LPC, is diminishing at a tremendous rate. In 2010 the law gazette reported that there were 70 applicants for every contract open to new graduates and presumably, it has only got worse. Pupillage is even more elusive, with reports of less than 300 in England and Wales this year. So if traineeships and pupilages are so rare, what are the alternatives to allow the legal industry to train new lawyers? If you wish to practice law as a litigator (Solicitor) not an advocate (Barrister) there is an alternative route that has become very relevant in the past 5 years. The Chartered Institute of Legal Executives affords a budding lawyer the opportunity to both work and qualify at the same time. Under the Legal Services Act 2007, Chartered Legal Executive lawyers are ‘authorised persons’ undertaking ‘reserved legal activities’, alongside solicitors and barristers. A Chartered Legal Executive lawyer specialises in a particular area of law, and will have been trained to the same standard as a solicitor in that area. Over three years the individual would finalise academic training at foundation level, HND and then degree level (level 6); all the while earning whilst training and most likely having their course work and exams paid for by their firm. If they wanted to become a solicitor they could eventually cross qualify as a solicitor via practising as a Fellow of the Institute. For those who have undertaken the LPC or BPTC you can bypass the academic stage by paying the fee and become a graduate member immediately. Would Solicitors look down their noses at CILEx, I don’t think so, but with the current landscape so bleak could CILEx be the answer? One last point is that another avenue has opened allowing Legal Cost Lawyers to be ‘authorised persons’ undertaking ‘reserved legal activities, so this too may be the way forward especially as costs are the lifeblood of any firm. David Bott, Senior Partner, Bott & Co.

n the aftermath of the 2007 financial crisis, UK housing transactions halved and many experienced professionals left the conveyancing market as law firms downsized their conveyancing departments. The market consolidation that followed has reduced the number of firms active in conveyancing from c.8000 in 2008 to only c.6000 in the last year. It’s understandable that non-conveyancing partners in many multi-disciplinary firms have felt reluctant to invest in recruiting and developing the next generation of conveyancers but, in this environment, a modest uplift in transaction volumes has created real pressure in the market due to the lack of capacity – there is a desperate need for more investment in training across the market. One solution to increasing training is internal Learning and Development Academies such as that launched by myhomemove in January 2013; a move followed by a small number of firms including Beaumont Legal and DC Law. Each year myhomemove welcomes around 100 trainees into our academy, providing them with CLC and SRA accredited training, ensuring they have a clear career path through which to develop their skills.This kind of investment has required a strong commitment to growth and the determination to achieve the accreditations that will, in future, allow us to train on behalf of other firms, playing our part in rebuilding the pool of conveyancing talent necessary for a healthy market. According to Lawcareers.Net and The Apprenticeship Vacancy Matching Service, there are currently 36 legal apprenticeship positions available across the country offered by individual firms. With the roll-out of the ‘Trailblazer Apprenticeships’ more positions will become available to those without degrees; however there is still a concern that most firms can only place one or two people at a time, failing to address the sector-wide need for more legal professionals. Taking on a trainee requires substantial investment from the employer. However, in our experience, it’s worth it. Of the 100 trainees who joined us last year, over 85% are now working conveyancers, carrying a collective caseload of over 4,500 files. Having the academy has enabled us to grow our business, plan for the future and provide the level of customer service expected by the UK’s leading conveyancing provider. Training and apprenticeship bodies can only provide the framework for change, the desire to see that change translated into a greater number of legal professionals working in the sector can only come from within – so if you have the opportunity to offer a number of trainees a position, we’d highly recommend you do. Mark Montgomery, Customer Strategy & Marketing Director, myhomemove.

ML // October 2014

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THE FEATURES HOW TO STAY ON TOP

Effective workflow management remains an essential part of running a business of any size, with firms needing to ensure that they keep their documents up to date, as Thomas Brauner reports.

ocument management is a key part of the management process, with firms keen to find resources that help to streamline their workflow. Digital Dictation has become more prevalent in recent years, with the classic technology given a modern boost. Dictation devices have always been popular, allowing businesses to keep comprehensive records of conversations, minutes and any other relevant data. However, the previous technology suffered from a host of flaws: tapes had a tendency to deteriorate after excessive use, the small tapes could easily be lost and a lack of information about the tapes (such as their length or importance) hindered workflow. Digital dictation, though, has become an invaluable resource for many firms, offering a number of key benefits: • The digital recordings don’t deteriorate, and multiple copies can be easily created. This guards against unfortunate data loss • Digital data can be sent back and forth securely via e-mail and through the cloud: information can reach the other side of the world instantly • Information on the recordings – including length, topics and importance – is available immediately.

Modern technology The above points, though relevant, are applicable only to the devices themselves. Modern digital recording technology is now able to take the initial recording and blend it with the latest cloud technology in order to create what has become known as digital workflow. Philips – a company that has been at the cutting edge of the dictation market for over 60 years – boasts a number of tools that combine traditional dictation with modern technology in order to aid workflow. SpeechLive, for instance, enables users to directly upload dictations to the cloud so that they can be accessed from anywhere. This digital workflow offers easy to use systems that give constant access to dictation files, where priorities can be simply set for which dictations are more urgent than others and the backup and restore functions give extra reassurance that files will not be lost. The new SpeechScribe system, meanwhile, enables users to send off their dictations (again, through the cloud) and to have the transcriptions completed remotely by professional audio typists and then returned. Security is a key issue for a company using the cloud to hold any of their documentation. SpeechScribe, for instance, always works using the latest and most secure versions of HTTPS security connection protocols, with all stored data automatically encrypted in real time. Files can be encrypted multiple times, including as they are being recorded, to ensure that confidentially will not be breached. The cloud has played a key part in the development of the technology, with the transcription services a perfect example. Users are able to send files directly using their digital dictation device or even the Philips smart phone app, with the

transcriptions of the dictation being returned also using the cloud. This enables the files to be accessed from anywhere. For companies that don’t have the capacity to transcribe files in house, it’s a cost and time-effective tool. The key question, of course, is how all this new technology can actually be applied to the modern SME. One demonstration comes from Allsop property consultants. Founded in 1906, and with more than 160 fee-earners, they needed to adapt their technology to speed up their administration. Previously, Allsop had used the traditional dictation tapes system, but have progressed to using wireless dictating devices, to meet their requirement for flexible workflow. Using SpeechMike Premium, which is configured with the SpeechLive system, dictations are saved in the cloud, and securely encrypted. This means that the Allsop team can be much more flexible and when working from home or visiting different properties, the reports can be filed immediately after each visit. Staff in the office can then be typing each report, speeding up the administration considerably. The software also tracks the status of work, meaning that those who are out of the office can see how the transcription of files is progressing, keeping a close eye on productivity. Richard Bouchier, Partner at Allsop, said: “What is great is that when I am out on inspections, I can dictate my reports, send it straight up to the secretary and it’s done by the time I’m back in the office.” Thomas Brauner is CEO of Speech Processing Solutions.

ML // October 2014

The Features

THE NEXT CHAPTER In mid-August the final parliamentary step was taken to approve the designation of the Institute of Chartered Accountants in England and Wales (ICAEW) as an approved regulator and licensing authority for probate. Peter James explains why this landmark decision marks the opening of a new chapter for the provision of legal services in England and Wales. recommended it to the Lord Chancellor on 11 December 2013. The Lord Chancellor, having 90 days under the act to make a recommendation to Parliament, signalled approval on 6 March 2014. And then there was the parliamentary process which required a lengthy drafting process with the Ministry of Justice, as well as trying to carve out time in a busy parliamentary timescale. One notes that the statutory order for the licensing authority was raised on the last day of the summer sitting (22 July 2014), otherwise this would not have gone through until much later in the year. The ICAEW has had to be persistent and patient to get this

‘Accountants have been providing estate administration services for a number of years and the probate piece has been an outsourced element of the service that could have been easily performed in house but for the fact it was reserved to the legal profession’

he designation to approve the ICAEW as a licensing authority not only results in accountants with the appropriate qualification, training and experience in being able to carry out the reserved legal service of probate, but also facilitates accountancy-led mixed practices with practising lawyers under the supervision of an accounting regulator. The intention of the ICAEW to apply for designation was signalled as long ago as June 2012 when they announced a public consultation around the application. Behind that consultation was a number of months’ investment in building the application and discussing the more difficult elements of it with the Legal Services Board (LSB). Yet over two years have elapsed since that consultation before the designations, which on the face of it seems remarkably slow progress. A lengthy process However when one examines the timescales and statutory consultations laid down by the Legal Services Act 2007 (the Act) and the LSB for processing applications, one starts to understand more fully why this should be the case. After conclusion of their own public consultation, the ICAEW had to consult with the Lord Chief Justice and the Legal Services Consumer Panel. The LSB themselves set a timeframe of up to one year (extendable) and having received the application on 12 December 2012 actually

ML // October 2014

far. It will be accepting applications from late September, and accountancy firms applying will be in particular seeking to extend the range of services they can provide around the administration of estates. Over a quarter of the firms registered with the ICAEW for Practice Assurance are known to be carrying out work in this sector. For the consumer this provides a one stop shop with the services for an executor extending from the point of death through to the distribution of the estate. Although the probate part is a small piece of this, the regulatory arrangements bring compensation cover for the consumer and legal privilege, should it be required across the full service. There is concern that accountants have little knowledge of this area and the consumer could be short changed by firms licensed by the new regulator. However this is to overlook the fact that accountants have been providing estate administration services for a number of years and the probate piece has been an outsourced element of the service that could have been easily performed in house but for the fact it was reserved to the legal profession. The risks around client money apply equally to estate administration as well as to the proving of the will, yet the ICAEW’s experience of firm misdemeanours in this area

The Features

‘The ICAEW have indicated that as part of their research there have been over 200 expressions of interest by firms in applying for the licensing, and expect that up to a third of those will have applied before the end of this year’ has been low and they believe this reflects the ethical and technical conscientiousness of their members, as well as the scrutiny afforded by a regular monitoring programme. The requirement for contribution to a compensation fund and access to the Legal Ombudsman are additional obligations imposed by the ICAEW licensing arrangements on applicant firms which bring added consumer comfort. Changing the shape of the profession Once the accountancy firms have established themselves in this area, it is likely that they will start looking at the market around wills and will writing. This would complete the range of services offered to high wealth individuals in estate planning pre death and estate administration after death. Only a small number of accountancy firms currently operate in this area (estimated at less than 5%) and expertise is limited. The firms themselves recognise this is not a traditional area of proficiency and considerable training or import of expertise would be required. Nevertheless the marketing opportunities, wider experience in dealing directly with probate and possible government innovation around inheritance taxation may accelerate the interest in this field. For mixed practices where only some of the principals will be authorised for probate, the licensing arrangements for these so called alternative business structures (ABS) will change the shape of accountancy services across a number of areas outside probate and estate administration. This is because fully qualified lawyers will, in future, be able to participate in these practices and provide client service directly as lawyers on non-reserved legal services as well as the probate service itself. This complements the accountancy service offerings and offers a wider one stop shop opportunity.

The market implications of these changes are yet to be fully explored; the SRA have authorised a few ABSs, but not on the scale likely to be taken on by the ICAEW. Initially their licensing will be focused on accountancy firms and the top up (by designated accounting principles) of their training to undertake the probate element as part of their service. However the recruitment of lawyers into the practice and possibly other professionals could widen the scope of service and blur the lines between a number of the professions as the ABS as a phenomenon evolves. Looking ahead These changes can have impact at the large firm level and the small firm level, though large firm merger activity is not currently anticipated as part of that process. The changes are likely to be incremental for the large firms, whilst on the High Street the sole practitioner in either accountancy or legal services will diminish as the benefits of joint marketing and shared services are appreciated. Those ABS small practices could well be shaped by newly established partnerships as the economic arrangements for the legacy partnerships, such as their PII cover and ownership rules, may not be conducive to a multidisciplinary practice. The ICAEW have indicated that as part of their research there have been over 200 expressions of interest by firms in applying for the licensing, and expect that up to a third of those will have applied before the end of this year. A pilot exercise during the summer with just over a dozen firms has ironed out quirks in the application process, and these firms are well-placed to have their updated applications approved in the next few weeks. Longer term there are over 2,000 ICAEW member firms supplying estate administration services, and more of these are expected to take part once the business case and benefits have been fully understood. Medium term, the ICAEW is looking to extend its licensing powers to a further number of reserved services, and is researching the relevance of these to the current accountancy service offerings. It is hoping that the approval process and timescales for these designations will not be quite so arduous as that for their probate licence. Peter James is ICAEW Head of Regulatory Policy.

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ML // October 2014

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The Features

CHAMBERS FOCUS Modern Law spoke to two Barristers’ Chambers, Clerksroom and Cornerstone Barristers, to find out how the reforms to the legal sector have impacted their businesses, the continuing impact of cuts to legal aid and what they anticipate for the legal landscape in the next 1-3 years.

Stephen Ward

are looking for barristers to accept work on a ‘no win, no fee, no uplift’ basis and, more importantly, fixed costs and a ‘pay when paid’ contract. Understandably, most solicitors now expect barristers to work on these terms as standard, which we can deliver thanks to Warren Foot being a limited company with a streamlined, commercialised decision-making process.

Pandora’s Box t’s clear the profession is facing significant re-adjustment. It’s been said that barristers’ chambers are at the bottom of the ladder when it comes to addressing change be it the Jackson reforms or the radicalising composition of the marketplace. However, in the preJackson era many chambers were already positioning themselves as ‘national’ sets, with bases in various regions. They conducted work for solicitors across England and Wales, regardless of geographical boundaries.

This has allowed for flexibility for some chambers as they extend beyond their traditional regional networks. The idea of the circuit is also a fairly archaic one as large solicitor brands generate work across the country, issue out of various courts and look for quality and commercial reasoning as well as specialist services when instructing chambers. However as budgets are squeezed, the extended travel costs and inconsistent fee arrangements - which often come with sets that position themselves as ‘national’ - may become an unattractive proposition for some clients. Thanks to Jackson and new/increasing competition, we’ve seen a substantial change in the way solicitors use our services which has led us to change our marketing strategy. Our clients

Our strength, over all others, is that we’re the only chambers to be truly national. This is because we have barristers based in every part of the country, operating from home under our innovative approach to client care – which includes our ‘no travel charge’ policy, where not recoverable. Our clients understand and highly value that point. Something we’re incredibly proud of is the hugely positive reaction to our model from ABSs and new entrants, such as the BGL Group (Compare the Market) and others, which form our biggest client pool. These types of client are (quite rightly) very demanding, national clients so we work in new ways to meet their demands. Our national presence, quality service, 24/7 opening and non-geographically limited location are key to our successes. It’s the result of listening to clients’ needs and being able to respond and deliver effectively and meaningfully. Reforms and procurement pressures dictate that capacity, fees, availability as well as the ‘hygiene’ points of quality, professionalism and customer care - are the real head turners for chambers’ clients. These are the conditions that, when applied (or not) will dictate which chambers will survive and thrive and those that won’t. Pandora’s Box has been opened, with new regulations, opportunities and

markets available to all chambers. It’s a time to keep our eyes wide open as ABSs take effect, direct access becomes the norm and firms (and chambers) merge, close and redevelop their own business models. Stephen Ward, Managing Director, Clerksroom. Forcing change… The business of law has never been more competitive than it is now. Whereas in the past, the Bar struggled to recognise that it must be willing to compete, that is no longer the case. Barristers are competing with solicitors, there is no question and they are doing it more openly and in increasingly innovative ways. They recognise that it is not enough to put

‘Those solicitors that complain about the growth in direct access to the Bar should focus instead on why clients should be tempted to go to a barrister direct in the first place’ Warren Foot on a seminar once a year, just as it is not enough simply to win cases and be a good lawyer (important though that still is!). Barristers are having to spend more and more of their time thinking about their clients (lay as well as professional) and communicating with them even when they do not have a case on the stocks. In other words, they are having to spend more time thinking their relationships. Many find this far harder than dealing with the most complex legal conundrum. However, an increasing number don’t and those individuals are seeing a big positive change in the way they are perceived by their clients and consequently, the work they receive.

ML // October 2014

The Features

The business of law has never been more competitive than it is now’ Stephen Ward

professional fee negotiators removed from the point of delivery who can agree a fair, value based fee that provides certainty to the client. Taking longer to do the work then becomes the risk of the barrister rather than the client.

There is no question that the provision of legal services is a buyer’s market. It is that fact that is forcing Barristers to change. All lawyers have to get used to providing a service that suits their clients and not themselves. Those solicitors that complain about the growth in direct access to the Bar should focus instead on why clients should be tempted to go to a barrister direct in the first place. Unless they do that, they will lose ground still further when entity regulation is introduced allowing barristers to structure themselves in whatever way they want. That is bound to blur the lines between solicitors and barristers in the eyes of the public even further.

Of course, solicitors and barristers will continue to provide distinct and separate services. Solicitors will continue to instruct barristers and barristers, increasingly, will be able to refer work to solicitors and will do so happily. However, it is inevitable that they will increasingly compete for the same work. That will make the client the winner, and rightly so.

Of course, price will play a big part in how clients will choose to buy legal services but that does not necessarily require lawyers to cut prices to the bone. It does however mean they must be ever more proactive about adding real value. For that reason, in my view, the greatest challenge for solicitors is doing away with chargeable hour’s targets and focusing instead on value billing. That is not to say they should do away with chargeable hours altogether but they must change the way fee earner performance is measured and move away from a culture that rewards inefficiency through taking as long as possible to get a job done. The Bar is far more adept at this. Yes, barristers can charge by the hour if the client wants but where they don’t, they have

Warren Foot was formerly Managing Partner of Tarlo Lyons and London Office Senior Partner at Blake Lapthorn. He is now Chief Executive of Cornerstone Barristers.

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The Features

THE NEXT LEVEL

Charlotte Parkinson, Modern Law, spoke to Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita Plc, about the need for a joined-up IT strategy.

Darren Gower

he scope of change in the legal services market is far from slowing down and the market is still witnessing a number of new entrants into the market, as well as a sustained level of exits. In light of such fundamental change, many firms are looking to new ways of running their businesses, whether as Alternative Business Structures (ABSs) or through new, pan-sector partnerships and alliances. Though the initial uptake

(taking effect from the end of September 2014). The ICAEW anticipates swathes of applications following official licensing approval and this decision could certainly change the shape of legal services on a Charlotte Parkinson scale which has not yet been seen in the sector to date. But whether your firm is an ABS, traditional partnership or anything in between, the increasing reliance on a full spectrum, joined up technology offering is a key component in the chain of your firms offering and it’s certainly not going to go away. Whilst some firms remain set in their ways, resisting the need to accept that continual review and often fundamental operational

‘By implementing a single solution across the practice, firms are assured of consistent data, a standardised quality approach, and access to meaningful and usable information for cross and up-selling purposes’ Darren Gower of applications for ABS licensing was slower than anticipated, the Solicitors Regulation Authority (SRA) and the Council for Licensed Conveyancers (CLC) have hinted that they anticipate the pace of applications to pick up now that the new process has had a chance to bed-in to the sector. The Institute of Chartered Accountants in England and Wales (ICAEW) have also recently been granted approval to licence these new business structures

changes are now a necessary factor in the daily running of modern law firms, others are beginning to wake up to opportunities born through times of such significant change. Effectively utilising your firms Practice Management Software (PMS), as part of a strategic business or operational shift, can assist in overcoming a whole range of issues that would be encountered if the firm was operating across a number of varying systems. Ranging from

Work faster, smarter and more efficiently with Eclipse Matter Management Software Practice Management Software Case Management Software Process Management Software

secure file opening and flexible CRM systems through to ongoing matter management and the ability to visualise key practice performance indicators, a joined-up software offering is of paramount importance to the future success of your firm. Not only can a coherent, full spectrum software offering pay dividends for those who work within the firm, saving time and money, the likelihood is that if the inner-workings of your firm are well run and coherent, your clients will also reap the dividends. Technology can drive your firms’ competitiveness and in light of the flux in the market, could be the enabler you have been looking for to propel your firm to the next level. Darren Gower, Eclipse Legal Systems, comments: “One of the biggest issues we see when being engaged by law firms of all sizes - is a piecemeal approach to software. Different departments using different software systems often creates chaos, there is no central pool of data or history to analyse, making your data (what should be gold dust!), nigh on impossible to utilise. By implementing a single solution across the practice, firms are assured of consistent data, a standardised quality approach, and access to meaningful and usable information for cross and up-selling purposes.” 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.

To find out more Call 01274 704 100 or visit eclipselegal.co.uk

IT Crowd

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IT CROWD

ML // October 2014

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IT Crowd

I’VE LOOKED AT CLOUDS FROM BOTH SIDES NOW Our resident IT guru Charles Christian writes…

was talking to the CTO of a major US legal software vendor recently and he said “Have you ever looked up at the clouds in the sky? You never see two clouds that look the same. That’s why they call it ‘cloud computing’ because no two cloud offerings are exactly the same!”

Although possibly rather more whimsical in his choice of language than the average tech company executive, he does make a very valid point because I have yet to encounter any vendor whose definition of cloud computing is the same as one of their competitors in the market. Just a matter of semantics you say? Well, up to a point Lord Copper (we’re sticking with the literary references today) but if you look at legal IT industry ‘war stories’ (aka those tales of disputes between suppliers and law firms) by far the most frequent cause of disagreement is where there has been a disconnect between what the firm thought it was buying and what the supplier actually sold them. Sometimes it is the result of a mutual misunderstanding. Sometimes it is the result of a misrepresentation (contract lawyers can insert their own flavor here) by an overeager salesman. And sometimes it is the fault of defective research and due diligence and/or unrealistic expectations by the law firm. Whatever the cause, it all ends in tears because the firm didn’t get what it thought it was getting. It used to be case management software that was the principle source of these disputes, with firms thinking they were getting ready-to-run out-of-the-box solutions only to discover they were buying toolsets that would require months of additional expense, by way customisation and consultancy, to achieve the desired result. Now we come to cloud computing. Thanks to the rise of social media, apps, smartphones and Apple iPads, the average lawyer is now far more clued-up on the nature and capabilities of technology than they ever used to be. One consequence is they also have practical experience of consumer-grade cloud services and paying utility-type pricing to use those services. (Utility-type pricing equals pay-as-you-go – like your energy bills, you pay more in winter when you need more heat and use more fuel but less in summer when you can switch off the central heating.) Then we come to the legal software market and discover that not only are some products and services, which are clearly not cloud services, are being promoted as ‘cloud services’

but also that many of the so-called cloud services on offer provide a far more constrained and restricted deal than the cloud services available in the broader consumer sector. The latest buzzword… There is an unfortunate tendency for some vendors to slap the words ‘Cloud Computing’ on their services, in the same way that the Kevin-the-Teenagers of this world slap gofaster stickers on their clapped out cars. Cloud computing is trendy, it’s the latest buzzword, let’s jump on the hype bandwagon as its certain to fool a few law firms. (OK, I will concede that some vendors are confused by what is meant by cloud computing.)

‘By far the most frequent cause of disagreement is where there has been a disconnect between what the firm thought it was buying and what the supplier actually sold them’ There are even more chances of misunderstanding when firms assume the phrase ‘cloud computing’ as synonymous with Software-as-a-Service (or Saas, which goes back to the earlier point about utility pricing) where you have the flexibility to both increase and decrease the number of users working with a particular application and not be saddled with extensive minimum licence terms commitments which are almost as inflexible (and as out of touch with the realities of the modern legal industry) as the traditional installed software model. So what can be done about it? In the longer-term, the market is changing and all legal sector cloud service providers will have to offer fully flexible, multi-tenancy, SaaS, utility-pricing terms if they are to remain competitive. In the shorter term, whoever within a law firm is negotiating with suppliers needs to ask a number of questions – and keep on asking them until they get clear answers that fully explain all the nuances – namely: • We are are looking for an alternative to the traditional, inhouse managed, on premise installed IT solution – are you offering us a managed service, a hosted service or a cloud service? • In the case of a cloud service, is this private cloud, community cloud, public cloud or hybrid cloud? • Are the cloud services being offered on an on-demand Software-as-a-Service? • Are the cloud services being offered on a multi-tenancy basis? That way, the firm will avoid any nasty surprises and not find itself the subject of industry war stories in years to come. Charles Christian is Editor-in-Chief of the Legal IT Insider.

ML // October 2014

IT Crowd

The only acronym that matters… It is increasingly apparent that law firms are confused by the different terminology different legal software suppliers use to describe what are apparently the same thing. So, can you please provide a short definition for each (or at least some) of the following technologies/ concepts that are alternatives to the traditional, in-house managed, on premise, installed IT solution...

he legal world is full of jargon and acronyms, add to this melting pot a whole heap of technical jargon and it is no wonder firms looking to invest in technology can find their heads spinning! A few of the most common terms are:

Managed Services This is basically an outsourced IT department, perfect for smaller firms without the budget to employ their own in house IT department. Firms can rely on a managed services provider to look after everything IT related, or specific parts of it. It can be more cost effective and efficient to outsource, particularly if a fee earners valuable time is being taken up managing your IT presently. Hosted Services Hosted Service providers run your systems for you over the internet. They will own the infrastructure and administrative burden and provide access to you, either on a dedicated or shared service model. With a dedicated hosting environment, you will be provided with a dedicated server to host your systems, whereas a shared model means (yes, you guessed it!) you will share a server with other businesses and pool resources. Cloud Very similar to Hosted and easily confused - you are accessing your systems via the internet as you would with a Hosted Service but there are a few differences - Cloud technology can be more flexible and bought ‘on demand’ by the minute or hour, you can add or remove servers very easily making it very flexible. The service is fully managed by the Cloud provider, again meaning the firm doesn’t need to invest in hardware or manpower to manage their IT. Software as a Service SaaS is a distribution model whereby software is hosted by the service provider and made available to firms via the internet. The main benefits of SaaS are that it provides consistency for users because they will all be using the same version, updates can be delivered automatically and it is easy to manage. The only acronym that matters! Firms will all have different requirements which will make one delivery method preferable over any other, but all firms need only to worry about one acronym - ROI! Before buying any technology solution, firms should ensure they are clear on the issues they are trying to fix with that technology and choose a provider that understands these issues.

Keep it simple It is increasingly apparent that law firms are confused by the different terminology different legal software suppliers use to describe what are, apparently, the same thing. So, can you please provide a short definition for each (or at least some) of the following technologies/ concepts that are alternatives to the traditional, in-house managed, on premise, installed IT solution... - Managed Services - Hosted Services - Cloud Computing - Software as a Service - Multi-tenancy

’m going to keep this very simple! I’m no techie, but I do have the pleasure of speaking to lots and lots of lawyers (of varying technical abilities) about the case and practice management software solutions available to them. To the layman, where the software is ‘installed’ tends to fall into one of two categories: ‘on-premise’ (so on your own server in your own offices) or ‘cloud’ (so stored off-premises at a cloud/hosting provider and accessed via an internet connection). There are of course degrees of complexity between these two poles, but for the vast majority of IT-using lawyers, this is the distinction: ‘onpremise’ v ‘cloud’. And from here it’s a case of horses for courses - some practices will want a cloud solution for a range of reasons, a selection of which are: • Accessibility (from any PC with an internet connection) and the ability to maintain the use of ‘older’ PCs and hardware, given that accessing a cloud system is much less dependent upon the speed and specification of the PC • Low reliance on IT infrastructure - a reduced need to look after servers, communications, and so on. Other practices will want an on-premise solution for a range of reasons, again a selection of which are: • The knowledge that their data resides on-site, and the perceived security that gives • Negating the reliance on a stable and ever-present internet connection to access their case and practice management systems. So there we have it, hopefully that wasn’t too simplistic for the more technically minded of you, but there is often a need within IT to cut through the jargon and present the options as simply as possible! Darren Gower, Marketing Director, Eclipse Legal Systems, part of Capita Plc.

Jo Hodges, Head of Sales and Marketing, Redbrick Solutions. ML // October 2014

IT Crowd

The hybrid ideal M

any law firms still prefer to operate a non-premise solution, with servers, storage, applications and desktops owned and located in-house. Historically, IT teams have the majority of the skills needed to manage and maintain these systems day-to-day, but as systems become more demanding and complex, dedicated in-house skills are more difficult and expensive to maintain. Managed Services from a 3rd party would provide all the resources and specialist skills to support and administer a specific technology or IT Function, such as Network Security, for a fixed cost. The organisation benefits through predictable expenditure, as generally the costs of Managed Service contracts are less than employing additional IT Staff. Many software vendors offer their application as “Software as a Service” (SaaS), as an alternative to on-premise deployments. Applications such as Case Management or e-mail security are hosted off-site, managed and accessed remotely – for example within a Web Browser. The overall cost of IT is reduced and is made more predictable, as an organisation does not need to purchase additional infrastructure on-premise. Further cost savings are achieved as less IT administration is required. Typically, pay on a usage basis allows greater flexibility with less or no initial capital outlay and as a consequence the migration to SaaS has been very successful. The success of SaaS and improvements in global communications have driven the rise of a greater number of ‘Cloud’ or ‘Hosted’ options, which move more and more IT systems traditionally held on site into remote Data Centres. These ‘Cloud’ or ‘Hosted’ systems can range from individual services, such as off-site backups or e-mail systems, through to entire IT systems, where users access all applications from a single remote working interface. In many cases the ‘Cloud’ or ‘Hosted’ systems incorporate a Managed Service model, where the services provider maintains all equipment and operations on behalf of multiple clients. ‘Cloud’ or ‘Hosted’ services generally incorporate Disaster Recovery solutions as standard, increasing the business benefits. In contrast to the historical on-premise systems that would be highly customised by IT Teams, the ‘Cloud’ and ‘Hosted’ systems tend to operate on a more standardised deployment. As the ‘Cloud’ or ‘Hosted’ services continue to develop, ‘Hybrid Cloud’ services are also growing, giving businesses the ability to seamlessly blend systems that span onpremise and ‘Cloud’ deployments to deliver the benefits of both deployment models. Mike Batters, Technical Director and Co-Founder, NETprotocol.

ML // October 2014

Modern applicaton The market is becoming saturated with many terms for legal software that conflate the manner in which this software is maintained and delivered, especially when the software is no longer managed by an in-house team. This causes a fair amount of confusion to current and prospective users of software. These days the following terms are banded around, often interchangeably: - Managed Services - Hosted Services - Cloud Computing - Multi-tenancy - Software as a Service

anaged Services: Can be anything that is managed by third party. A modern cloud application is a managed service.

Hosted Services are typically one step down from managed services - you typically rent or own the equipment, but manage it yourself. Hosted services are often managed, but this is not guaranteed, and extra fees can apply. In particular, remote hosted services are often confused with cloud services. While a modern cloud application is hosted, it leverages pooled resources as described below. A confusing phrase these days is the term “Cloud-Hybrid”. In Clio’s experience – this term means software designed for a single server that is remotely hosted on infrastructure you purchase or rent. Cloud computing is internet-based computing in which large groups of remote servers are networked to allow sharing of data-processing tasks, centralised data storage, and online access to computer services or resources. Clouds can be classified as public, private or hybrid. Multi-Tenancy is a trait often associated with Cloud computing. By pooling and sharing resources across a set of servers - costs are dramatically lowered. Software as a Service, or SaaS, also called cloud applications - are the end user applications that rely on the above traits. Modern SaaS software provides the customer with an application that is managed, hosted in the cloud, often on multi-tenant architecture - in the form of simple subscription pricing, usually priced per user on a monthly basis. There are no hidden fees as everything in included in the price. Nagib Tharani, Director of International Expansion, Clio.

IT Crowd

IT Managed Services Explained T

he downturn in the UK economy - which started in 2008 and has only recently started to improve - led to many law firms making changes to their structures, particularly in service departments such as IT. This has led to many firms making decisions about future investments in technology, meaning new IT projects are under increased pressure to be fulfilled. Historically, key IT projects simply fall off a firm’s priority list because their success is very dependent on having the right, skilled people available to implement the solution. This means firms are turning to different ways of investing in technology, such as entering into a managed service agreement with an IT vendor. Managed services can mean different things to different people and this will depend on the actual service being purchased and the type of technology being implemented. Managed services shouldn’t be confused with hosting services, although it is possible for a managed service to include a hosting of the environment, be that in the cloud or on-site.

a cost, and which provides outstanding business-value to the firm. The value of this managed service must be easily measured, as mentioned earlier, it could also include hosting services either supplied by the vendor or a thirdparty cloud computing company such as Rackspace, Amazon or Microsoft Azure. What managed services offer is a good opportunity for law firms to have a key solution implemented with minimal waiting time before it is up and running. In most cases the installation and implementation of the solution is carried out almost entirely by the vendor. Clearly, if the solution requires the input of the firm, then there will be a period of time when the firm’s staff will be working with the vendor, but this will potentially be measured in days, rather than months which can potentially save the firm a lot of money. If you are looking into a managed service, we have the experience of providing law firms with flexible, customised services that manage and enhance their QlikView solutions. Barry Talbot, Managing Director, Informance Limited – a Qlik Certified Partner Solution Provider.

In our understanding of providing IT solutions to law firms, managed services refer to the implementation of a technology solution that is looked after by the vendor, at

Specialist Accountants for the Legal Profession The Legal Sector is undergoing an unprecedented period of change with the Legal Services Act, Legal Aid Reform, Regulatory Reform, Personal Injury Reform and difficult trading conditions. Armstrong Watson has a specialist team focusing exclusively on the legal profession that understands the issues and provides proactive advice including: • Formulating strategy • Benchmarking • Law firm mergers and acquisitions • Limited company and LLP conversions • Lock-up reviews to free up your hard earned cash • Partnership disputes • Training courses There are many other ways we can help improve your business, contact us to arrange an initial meeting: Andy Poole, Legal Sector Partner Email: andy.poole@armstrongwatson.co.uk www.armstrongwatson.co.uk/legalsector Armstrong Watson Accountants and Financial Advisers is a trading style Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in England and Wales No. 8800970. Registered office: 15 Victoria Place, Carlisle, CA1 1EW

IT Crowd

5 minutes with... Professor Richard Susskind OBE Q A

Did you expect the legal services sector to change so drastically when you started working in it? My interest in change in the legal sector dates to 1981, when I was studying law at Glasgow University. I wrote an undergraduate dissertation on computers and the judiciary, looking largely at the potential of artificial intelligence for legal problem-solving. I was sure within a few weeks of study that change for lawyers and the courts would be drastic but I had no sense then of the timings. That came in the mid-1990s, when I wrote a book called, ‘The Future of Law’ and set out my 20 year predictions of law and legal services. I can formally be called to account in 2016 but I don’t think my predictions will be far out. We will see far more change in law in the next decade than we witnessed in the last century. What has been the key positive or negative impact of the liberalisation of legal services?

The great benefit of liberalisation has been the generation of a new energy in the legal marketplace – new people, new thinking, new business models, and an enthusiasm for delivering ‘more for less’. Bill Gates once said, and I paraphrase, that less happens in two years than you expect with IT but more happens in ten. I think it will be the same with liberalisation. Its impact, like all major public policy reforms, should be evaluated over decades and not months.

Q A

Who inspires you and why?

I tend to be inspired most by people in sport. Currently, I am in awe of Mo Farah (his final laps are so quick) and Rory McIlroy (he hits the ball so far and yet so straight). I run and play golf and so have some sense of just how entirely remarkable they are. What inspires me in both these individuals is the combination of phenomenal talent with titanic effort and hard work.

Q A

Have you had a mentor? If so, what was the most valuable piece of advice they gave you? I have never been mentored formally but I have the benefit of crucial guidance from several very

fine individuals: from Robin Downie (my philosophy professor at Glasgow University), from Colin Tapper (my doctoral supervisor at Oxford), and from Sir Brian Neill (the former Court of Appeal judge who led the introduction of IT into our courts). From each, although in different contexts, I learned a simple message – to persevere in the face of scepticism. For 25 years, my thinking on legal technology was opposed by the mainstream (the last 5 years have been different). Their counsel helped me to persist in predicting a future that I felt was all but inevitable.

Q A

If you were not in your current position, what would you be doing? It is often more frustrating than productive to dwell on the road not taken ... but I would like to have been a novelist. And may yet be. Professor Richard Susskind OBE is an author, speaker, and independent adviser to major professional firms and to national governments.

Bird & Lovibond chooses Proclaim Full-service law firm to implement Eclipse’s Proclaim Practice Management Solution

ird & Lovibond Solicitors is implementing the Proclaim Practice Management Software Solution from Eclipse Legal Systems. Based Darren Gower in Middlesex with branches in Uxbridge, Ruislip and Greenford, Bird & Lovibond Solicitors is a growing multidisciplinary law firm with a proud tradition of providing excellent service to both private clients and commercial organisations. The Proclaim Practice Management solution will be rolled out to all staff, ensuring a secure and consistent approach across all matters. Eclipse will conduct a full data migration from the incumbent system, allowing

ML // October 2014

integrated firm-wide financial management toolsets to be utilised, including the Proclaim Credit Control Centre module - boosting efficiency and providing detailed analysis of the firm’s operations. Bird & Lovibond will also take advantage of the Proclaim Compliance solution, ensuring effective risk management throughout the lifecycle of each matter. To streamline nonprescriptive work areas such as Employment and Matrimonial, the firm will adopt Proclaim’s Matter Management platform. Bird & Lovibond will further benefit from seamless digital dictation courtesy of Proclaim’s integration with BigHand. David Trood, Partner at Bird & Lovibond, comments:

“It is crucial that we achieve our goal of staying ahead of the competition and strengthening our enviable reputation for outstanding client service. Proclaim will be fundamental to our success, providing a flexible single solution embraced by everyone at our 3 offices, guaranteeing a consistent approach for all our work areas. Efficiency will be transferred allowing us to take on more cases and spend less time on nonvalue adding tasks, freeing up more quality time for each client.” For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, via: darren.gower@eclipselegal.co.uk or call 01274 704100.

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Work faster, smarter and more efficiently with Eclipse Eclipse is the leading provider of Case Management, Practice Management, Matter Management and Process Management Software in the UK. So if you want to make your practice more effective,

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Matter Management Software Stay in control of your practice’s non-prescriptive, complex and bespoke work areas, with client and matter inception, document production and data storage all in one place.

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Case Management Software Manage active cases, streamline processes and deliver a superb experience to clients, with Case Management Software that can be tailored to the individual needs of your business.

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Eclipse’s Proclaim solution is in use by 20,000 legal professionals in over 700 organisations.

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Call 01274 704 100 visit eclipselegal.co.uk email info@eclipselegal.co.uk