Modern Law Magazine - Issue 2

The Business of Law

September 2012 | Issue 2 | ISSN 2050-5744

Dominic Regan urges lawyers to ‘change or else fail’ in light of ‘unstoppable’ reforms.

ABSfabulous: Are ABSs as compelling as the hype suggests?

COLPs and COFAs appointed? Now what? Modern Law offers a guide for compliance officers.

“Lawyers are as successful as they are smart and innovative. Now is the time to display these attributes and need to be aware of every opportunity to them on the open market.” Des Hudson Modern Law Magazine | September 2012 | Issue 2

James Caan

“Private equity investors aren’t looking to be pioneers – we’re looking to use methods we know will work in companies we know will grow; with charismatic leaders who can build real success.”

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Introduction

03

Welcome L

awyers aren’t looking for further debate on the ‘ifs, buts and maybes’, they need to know what they can do now - as a business - to withstand reform, increased competition and how to attract the right partners to guarantee successful margins. In this issue of Modern Law, we strive to bring you just that. As well as guidance and spotlights on where legal entities can improve, we’re offering readers a direct channel to exclusive knowledge and examples from national thought-leaders and specialists in the business of law.

It’s not something we want to keep to ourselves. From general law firms to niche and boutique practices, Modern Law has once again packaged the right mix of information and resources to help your business, now - not just prepare for the changes ahead. As James Caan – CEO of Hamilton Bradshaw, of Dragons’ Den fame and now a private equity investor into the legal sector – says, a shake-up is long overdue for legal services and will only enhance access to justice, client satisfaction and the profession itself.

Why law firms are such an exciting prospect for external funders like Caan’s outfit is clear – legal entities are making a success of themselves and there is room for further growth.

Des Hudson, Chief Executive of the Law Society, agrees – stressing that law firms should be looking to maximise opportunities through the new models available to them – so long as how they run the firm complies with the high standards and quality of service the sector is and should be known for.

Don’t let us keep you from reading on, save for the fact that as this is your outlet for knowledge and widening your business network, we’d like you to get involved. Let us know what you think: is there a topic you’d like us to cover or a feature that has got you riled? Do you want to be involved in the conversation? We’d love to hear from you and look forward to seeing you at one of the new Modern Law events we’re rolling out over the coming months. For more information, please visit www.modernlawmagazine.com.

Modern Law is the title for an exciting new era...

Emma Waddingham, Chief Editor

Modern Law Magazine

Issue 2 – September 2012 | ISSN 2050-5744

Chief Editor Emma Waddingham

Production Lindsey Thomson-Heley

Events Manager Julia Todd

Publisher Kate McKittrick

Editorial Department Antony Smith Stan Neal

Design Richard Berry

Events Co-ordinator Caroline Pritchard

Advertising Rachael Pearson

Modern Law Magazine is published

by Charlton Grant Ltd ©2012.

Contact t: 01765600909 or e: info@modernlawmagazine.com 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 // September 2012

04

Contents

CONTENTS 03-09 Intro & THE News 07 Dominic talks news

Dominic Regan prescribes his call to action to the legal sector in light of costs and litigation funding reforms steaming ahead for April 2013.

Change or fail...

11-16 The INTERVIEWS 11 Interview with... James Caan

The entrepreneur and a household name for the investment sector finds time to speak to Emma Waddingham about opportunities in the legal sector and being ‘investment ready’.

14 Interview with... Des Hudson

Chief Executive of the Law Society, Des Hudson, outlines what he believes to be the critical business of law issues for law firms.

19-31 The views

21 Are investors right to be excited

by the legal market?

Steven Arundale, Natwest

21 Conveyancing: there’s room for all

June Munroy, Council for Licensed Conveyancers

22 Keeping costs low in the

11

price war

Robert Parness, Paramount Legal Costs

22 The power brand has arrived

Angela Moores, Jarvis Family Law

23 Do power brands hold the

advantage?

David Bott, Bott & Co.

23 Allure of the ‘big brand’

Eddie Goldsmith, Goldsmith Williams

24 Price war conundrums

Charles Christian, The Orange Rag

24 Are solicitors sleepwalking into bigger PII problems?

20 Analysing feedback on

25 Direct Access: chambers’ USPs

referral fees

Richard Collins, Solicitors Regulation Authority

Martin Ellis, Prime Risk Solutions

25 Are lawyers applying their

Brian Rogers, Riliance software

14

Chris Owen, St Philips Chambers

20 The biggest challenge for COLPs...

07

financial analysis data effectively?

Jo Hodges, Redbrick Solutions

Editorial Columnists Alan Nesbit Managing Partner Nesbit Law Group

Professor Dominic Regan Legal commentator, trainer and costs expert

Martin Ellis Managing Director Prime Risk Solutions

Eddie Goldsmith Partner Goldsmith Williams

Matthew Williams Head of AmTrust Law AmTrust Financial Services.

Elmear McCartan Solicitor Ralli Solicitors

Natalie Rodgers Managing Director Scala Business Development

Darren Gower Eclipse Legal Systems

Faye Soden Director Legal Marketing Experts

Neil Inge Managing Director ILEX Tutorial College

Bernard George Director Socrates Training

David Bott Managing Partner Bott & Co

Jaunita Gobby Director Legal Eye Ltd

Nick Ingham Legal Manager Anglia Research Services

Barry Talbot Managing Director Informance Limited

David McNamara Managing Director SOS Legal

Jo Hodges Managing Director RedBrick Solutions

Nick Hodges Managing Director Oyez Professional Services

Andrew Stenning Managing Director Searches UK Angela Moore Partner Jarvis Family Law Antony Smith Director Legal Project Management

ML // September 2012

Brian Rogers Director of regulation and compliance service Riliance software Charles Christian Editor in chief The Orange Rag Chris Owen CEO St Philips Chambers

Richard Collins Executive Director Solicitors Regulation Authority Robert Parness Costs Lawyer Paramount Legal Costs

Contents

27 Where do I start?

Bernard George, Socrates Training

Nick Hodges, Oyez Professional Services

49 Out with the old

27 Back office benefits

29 Risk & Compliance: the latest buzz

A growing number of progressive lawyers are shrinking their costs, reducing risk and building powerful competitive advantage, writes Richard Hinton.

51-62 BUSiNESS MANAGEMENT

Andrew Stenning, Searches UK

29 Focusing on the outcome

52 Click & Go

31 Who holds the advantage in client

53 How can case management help

Nick Ingham, Anglia Research Services

service and compliance?

Eimear McCartan, Ralli

Mark Edwards, Rocket Lawyer

deliver lower operational costs?

David McNamara, SOS Legal

31 Will chambers and ABSs target

54 Are lawyers assessing their

CILEx qualified jobseekers?

Noel Inge, ILEX Tutorial College

32 The future of commercial ATE

Matthew Williams, AmTrust Financial Services

Barry Talbot, Informance Ltd.

54 Competing with the big

ticket brands

Alan Nesbit, Nesbit Law

55 ‘Power brands’: a risk to the

Rob Hailstone, Bold Legal Group

33-51 The Features 35 Believe, succeed, grow

Chris Fry, talks about the self-belief and collaboration required to grow a new law firm.

37 Stand & deliver

Can we help overcome prospective clients’ inhibitions and suspicions about the legal profession? Ian Dodd reports.

39 Carving an ABS niche

Elizabeth Eagles, explains how the ABS model is set to protect a niche client base.

41 Change of guard

Are the current changes to the civil justice system for the good of the people? Dr Victoria Handley reports.

43 ABSfabulous

Emma Waddingham reports on litigation funding plans for now and in a post Jackson world.

well-being of my business

Neil Hudgell, Neil Hudgell Solicitors

55 A great British service

Natalie Rodgers, Scala Business Development

56 The missing link in brand identity

Faye Soden, Legal Marketing Experts

57 Implementing Legal Project

Management

41

Anthony Smith, Legal Project Management

57 Boosting growth

Eclipse Legal

58 Preaching to the converted

Ted Sangster warns about the importance of professional standards in the use of interpreters

60 Survival of the fittest

Are ABSs as compelling as the hype indicates? Anthony Smith finds out.

45 Sink or swim

31

data effectively?

32 Lender panels, the situation’s as clear as mud!

05

Jitendra Valera looks at brand differentiation, business models and new technology combinations for business survival

62 COLPs & COFAs: what next?

By now, firms are waiting for COLP and COFA appointment confirmations, but this is no time to rest, as our expert panel reports.

49 ML // September 2012

Dominic talks news

07

DOM REGAN news Preparing for the big bang Professor Dominic Regan urges lawyers to ‘change or else fail’ in light of unstoppable judiciary led reforms for justice at proportionate cost.

T

he declaration that general damages will increase by 10% where judgment is given after 1st April 2013 is just the latest sign of imminent and unstoppable reform.

The announcement was made in the case of Simmons V Castle (2012) EWCA Civ.1039 by the biggest hitters in the business and this was not coincidental. The Lord Chief Justice, the Vice-President of the Appeal Court and the Master of the Rolls, was as potent a trio as one could muster and do not forget that the Master of the Rolls is to be sworn in as head honcho in the Supreme Court on October 1st 2012. The intention was to make it clear that this piece of the Jackson jigsaw was supported to the hilt and anyone thinking that the courts would be amenable to challenges should not waste their breath.

Indeed, this leads me to make one more observation which is fundamental for every practitioner to recognise. It is the key to all understanding and it is simply this. Uniquely, the reforms now enshrined in the Legal Aid Act 2012 were set in motion, not by Government but by the judiciary. It was the then Master of the Rolls who turned to the newly appointed Lord Justice Jackson in despair and asked for a report on how justice could be achieved efficiently at proportionate cost. This is critical because the Jackson reforms are driven by the Judiciary, the very body which will soon have to apply and uphold those changes.

Without exception, I have heard so many judges express utter admiration for the labours of Jackson.

The Judiciary is certain to be fully

supportive of what is coming. They will look after their own and I do not mean that in a pejorative sense. I was present at the launch of the Jackson report when Lord Neuberger Master of the Rolls said that the talking was over and it was time to get on. In recent judgments both he and Ward LJ have said - in terms - the sooner we implement the better. So, it is a done deal.

Armed for change What can practitioners do to prepare for this big bang? When I put the question to the man himself earlier this year, Sir Rupert told me that budgeting was to be a fundamental, essential skill for all to master. It is intended that where a defence is served after 1st April 2013 in a multi-track action, the parties will be required to swap and submit to the court a budget form, indicating two things: who will work on this claim (grades and charging rates to be identified) and what work will they do? This will then show how much time and money will be invested in disclosure, witness statements et al.

No Immunity I was fortunate to sit at the knee of His Honour Judge Simon Brown QC who, as part of a judicial pilot, has been managing costs in the Birmingham Mercantile Court. It is no coincidence

that the Barclays LIBOR litigation has been commenced in that venue which is noted for speed and efficiency.

Jackson was adamant that litigation be treated like any other project and that meant planning and costing the steps at the outset. No one will be immune from penetrating questions about, for example: the need for experts; their cost; whether electronic disclosure

“Thanks to various pilot schemes we already have two interesting decisions which just emphasise the need to budget accurately or else suffer horrifically.”

ML // September 2012

08

Dominic talks news

“Change or you will fail, for certain.” has been visited, and; generally how can this dispute be resolved at a fair, proportionate cost?

Thanks to various pilot schemes we already have two interesting decisions which just emphasise the need to budget accurately or else suffer horrifically. In Henry V News Group International LTD (2012) EWHC 90218, the Senior Costs Judge delivered the first ever decision in this arena. It was a defamation action and, as such, was caught by an early budgeting pilot scheme.

The claimant submitted a bill which was 18 times higher than budgeted for witness statements and eight times higher for disclosure. The extra costs were nearly £300,000. Despite expressing the clear view that the additional spend was justified the Judge held the claimant to the budget. What, one might ask, is the point of imposing a budget only to ignore it? The lesson is blindingly clear. If the approved budget, for whatever reason, seems to be no longer accurate then get back to court and seek approval for revised figures.

In this solitary case we see a significant sum of costs reasonably incurred being disallowed. That should bring the importance of mastering this skill obvious to all.

More recently, HH J Simon Brown delivered judgment on 15th August 2012 in the case of Safetynet Security LTD v Coppage (2012) EWHC B11. After giving judgment for the claimant (and this detail does not appear in the transcript but I have personally verified it with the learned Judge) it was decided that as the spend was within the court approved budget a detailed assessment would be an expensive and futile exercise.

Accordingly, a final costs order was made within minutes of the substantive judgment being delivered and the claimant came away knowing that by the end of that month his costs would be due. This has the tremendous benefit of good cashflow as well as putting everything to bed at once. Again, get your budget wrong and you will never secure these advantages.

Addressing the budget will also provoke consideration of proportionality. The Jackson mantra is that the spend should be commensurate with the amount at stake. Proportionality, whilst fundamental, reaches further than budgeting.

However, because the former is of universal application, whilst (as we have seen) it is only in the multi-track that budgeting occurs.

No fixed costs for Fast-Track One key Jackson recommendation is not coming, certainly not next April and all I hear suggests that it has been jettisoned altogether. No fixed costs for fast –track work! This was proposed by Lord Woolf and strongly reiterated by Sir Rupert.

The dilemma is obvious. Where are proportionality arguments most likely to arise but in fast–track which is the lowest tier of costs bearing activity?

By definition, the damages cannot exceed £25,000 so, inevitably, the balance between quantum of costs and of damages will be more pronounced here than anywhere else. Had fixed costs been introduced this dilemma would never, ever

ML // September 2012

arise for the costs would be spelt out and that would be that. I suspect that Lord Justice Jackson will be more dismayed about this omission than anything else. It screams out as an invitation to litigate over costs.

Whatever is proportionate?

Professional risk There is one more subtlety that has been overlooked in the stampede and that is the much greater risk of professional negligence claims in all litigation. This will arise because the Rules committee has discarded the current CPR 3.9 which informs the exercise of discretion on applications to forgive default.

The Jackson view was that the Judiciary was a bunch of pansies which would sob quietly and fall for hard luck stories as to why orders made centuries ago had never been honoured. No more. The new emphasis will be upon compliance and the need to respect the court and, in so doing, abide by timetables. I guarantee a firm if not vicious approach to default. The failure to abide, unless by an order, will be akin to a suicide note.

The Woolf reforms were, at the time, perceived as the most drastic ever and who at the time could disagree? I may be wrong but I think that Jackson dwarfs everything that has gone before. Change or you will fail, for certain. www.profdominicregan.blogspot.com

By Professor Dominic Regan.

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Interview

11

Interview with...

JAMES CAAN James Caan, entrepreneur and CEO of Hamilton Bradshaw, recently became the first private equity investor (PEI) to commit to the legal sector, through its investment into Knights solicitors.

Emma Waddingham speaks to the former Dragons’ Den investor about why PEIs are attracted to the legal market and where they can make a difference.

Why is the legal sector such an attractive market to private equity investors?

It’s a very exciting sector with fantastic people and an industry absolutely right for change. Technology and communications has revolutionised business but the legal world has been left behind – providing real opportunity for growth in firms. For those firms with innovative leadership and vision, there’s real opportunity to expand, providing opportunities for both solicitors and investors; it’s very clear firms don’t want to be left behind and are looking at new ways to fund and steer their future developments - such

as private equity.

However, there’s clearly a huge difference between the thousands of firms in the sector but only a small percentage break the mould and become highly profitable law firms.

Private equity investors know that opportunities are there but why is it so many law firms can’t break through?

Being successful or not is mainly down to lawyers themselves. Lawyers are brilliant technicians and but this doesn’t necessarily translate into being a great entrepreneur by spotting when and how to grow their firm. Some may not even want to grow. Of course we’re not interested in these, but for those firms with a vision to deliver services, develop projects and grow the business, there is an opportunity to

be a fantastic law firm.

Successful firms with 20-40 people have the potential to be much larger firms if they have the right leaders, vision, willingness to grow and commitment to auctioning marketing plans. Private equity investors aren’t looking to be pioneers – we’re looking to use methods we know will work in companies we know will grow.

So what can firms and individual solicitors do to be investment ready?

We can make firms go from good to great but we need to see stand-out leaderships and organisations with a willingness and aspiration to change. We instantly

ML // September 2012

12

Interview

“Law firms are having too many one night stands with clients and failing to build deep and meaningful relationships... Clients will be unaware of other departments, services and brand values, meaning they may not come back to you for a different matter.” recognised this in Knights and discounted many firms because they lacked leadership potential and clear vision of where they want to be. There’s no point, for us, to work with a firm that doesn’t want to grow - private equity investment isn’t for complacent lawyers.

As well as leaders in management, we also look for individuals within the firm who might be better suited to a leadership role, individuals who stand out will be used as a catalyst for change across the firm, helping bring everyone on board.

You wouldn’t want to change the culture of the firm entirely – the reason we’re attracted to a firm is it’s success – the culture is part of that success. But development requires firm-wide engagement and that’s what stand-out individuals and leaders can help to do.

What was Hamilton Bradshaw’s unique selling point for Knights?

We’re an exciting opportunity to bring additional and valuable expertise on board – not just direct funding for projects. Helping to redefine, strengthen and grow a legal brand is matched by years of success in marketing and sales strategies – something that most firms would love to do but don’t necessarily have the expertise or align those skills in the most effective way.

We know how to build a professional services firm up – I built up my first business out of a broom cupboard - and have proven talent in this field – it will be the same in our application to the legal sector.

Solicitors’ application of marketing, especially brand awareness and value, is often criticised. What are firms failing to get right and what benefits can be gained by addressing tactics?

The use of PR by law firms is often totally misdirected and focused at the legal trade press – fine if you’re a B2B firm or referral based but the PR performed by agencies on behalf of law firms and written by firms themselves for the national and regional press is often wide of the mark. Media relations isn’t a core subject for lawyers, however they must identify their market place and core area of the firm and channel PR efforts to the right audience. If you operate in the commercial sector, define and target your band to corporate organisations and gain visibility in their arena. This is something firms consistently fail to do.

At Knights, brand awareness was a top priority in the first month of investment. An event to attract 40 top corporate clients that Knights wanted to work with – using Hamilton Bradshaw and my own brand and connections as pulling power. My name does give an edge when looking to attract potential clients for Knights but only reassurance. The

ML // September 2012

deliverability of high quality work and individuals comes from Knight’s existing success.

Obviously Knights found the topic of marketing and branding quite daunting – given the scale and focus the discipline needs in a law firm. Marketing - successfully used - is a key catalyst for growth but it’s not usual for law firms to invest so much time and money into it. This is unlike the private sector, where whole teams of non-fee earning specialists in sales and marketing are purely responsible for winning business.

However a message does needs to be sent out to academic and legal institutions to invest further in communication skills for new and existing lawyers. Lawyers need to be able to sell their own business and have a better relationship with clients and each other. There are a number of courses available for existing lawyers but not enough investment in them by firms. Nor is there an agenda for those coming through the system to pick these up.

Are firms investing widely enough into client services?

Law firms are having far too many one night stands with clients and failing to build deep and meaningful relationships. Law firms act as transaction houses and for clients, their experience of the firm, the brand, is that one piece of work they instruct. Clients will be unaware of other departments, services and brand values, meaning they may not come back to you for a different matter.

Key, immediate changes should be taken to communicate better with clients – so they understand what you do. We asked this of Knights: do our clients actually know what we do and that we can look after them whatever their legal concern? It works both ways – do you fully understand what your clients do?

One of the key things we’ve implemented is sending a solicitor into a client company for a month to get to know them better and be on hand to help - like a temporary in-house lawyer. As well as getting to know everyone in a different department you can market your services more proactively and apply them to situations that may crop up.

The client then has a solicitor they know understands their business and can turn to directly.

Finally, what leadership qualities attract an investor’s eye?

Somebody with clear passion, vision and charisma.

Being able to attract and manage talent is essential.

Without this you won’t be able to steer individuals to implement projects for growth or engage clients - you can only grow if you can attract talent!

Interview

13

Knights with armour Emma Waddingham speaks to David Beech, Managing Partner at Knights, about the immediate effect that James Caan’s engagement and investment in the firm has had so far.

With a background in investment and the legal sector, David Beech was already wise to the commercial success and talent building specialisms private equity investors can bring to organisations. Like Knights, he says, Hamilton Bradshaw is a ‘service-delivery, talent and results focused’ company so the two cultures were already well-aligned. It’s clear the people-first focus of Caan’s empire will pervade even further into Knights but - as Caan stresses - without at least one clear leader and visionary, Beech believes growth is unattainable.

“People are the business; talent and experience are part of everything we do but culturally we don’t want to change it overnight. Internal communications will be key to ensuring everyone is engaged with what we’re doing and why – if we’re to grow, it’s essential we have buy-in from the start.”

Initialising plans for growth has been a long time coming for Beech and the other partners, who knew their projects needed wider capital to invest. “Capital is always scarce in the partnership model as law firms tend to retain profit.

But without direct investment there was no other way. For us, the move has given us the finance and the additional expertise to action plans we’ve had for a while, make decisions quickly and be more visionary and ambitious than we ever could have been in a partnership model.”

Thanks to Caan’s profile, Beech has added notoriety to add to his bow, something that is helping Knights ‘have a better conversation with huge institutions’; attract further leading talent (an additional 12 fee earners have been employed to boost the firm to over 80 in total), and; gain ground with its ’Mexican wave’ project: on shore outsourcing solutions.

“We want to be seen as a cost solution for firms looking to outsourcing work, a firm that delivers the same technical ability, client service and standards as a city centre firm but without the cost. We know we have the vision, plans and now resources to action projects and recruit the right talent to help clients in a time where cost and added value are key.”

Legal 500 2011 St Philips Chambers is a “commercially astute set” with clerks who are “phenomenal at securing the barrister clients wish to instruct”

Chambers UK Guide 2011 St Philips Chambers is one of the largest sets in the country and receives universal praise for its “practice and forward thinking approach”.

It houses an “excellent clerking team” as well as a deep bench of highly proficient barristers.

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14

Interview

Interview with...

Des Hudson Compliance, business models and funding options, increased competition and operating in the best interest for the public are key concerns for solicitors – or should be - as Des Hudson, Chief Executive of the Law Society, tells Emma Waddingham.

What’s top of the list for member concerns?

Those in the magic circle are less fazed by new entrants to the market place, ABSs and joint ventures, etc. They have better resources and are better equipped to adapt their business plans to compete – requiring a different kind of support from the Law Society than other members. That’s not to say they don’t worry about regulation or funding reform, for example.

For the high street firm, the triple effect of recession (especially for conveyancing), new market entrants and regulation (most recently COLPs and COFAs) are prime concerns and fuel the level of information, guidance and support we offer. We are seeing a rise in member activity as firms seek help for risk and compliance matters, money laundering matters etc.

Regulation is a core concern. We’ve launched our ‘Safe Harbour’ compliance advice on the back of the SRA outcome-focused regulation.

The compliance reference group (CRG) is a direct response to the fact that the SRA refuses to be bound by the advice it gives to compliance officers.

So to help the sector help itself, the Law Society has set up two panels - one for the largest 100 firms and one for all others. Each panel features a range of anonymous COLP experts from top law firms. Queries regarding regulation matters will be sent to the Law Society for our experts’ opinions, which will be checked by the Society and sent back to the firm outlining what we believe they should do. We will be bound by our responses and will stand behind the firm if the regulator reacts.

Ideally advice from the SRA should be binding. It’s good for the Law Society as it means we can help establish and protect those high sector standards in the long-term – ultimately good for members, the public and professional clients.

Should the Law Society work closer with the media to protect the profession?

Now, more than ever, the legal profession needs a national voice to promote the high standards of members in the media and to protect and champion the profession.

However, this doesn’t always mean working out in the open.

We are very conscious of issues affecting our members and work very hard behind the scenes. Of course, for areas like claims and costs reforms, opinions from the insurance sector cover the press. I’m surprised the Prime Minister is so confident there will be a fall in car insurance in return for changes made on behalf of the insurance sector. Our significant achievements are made behind closed doors, with the regulators and politicians. This is a key, high impact role for the national Law Society, supported by regional ones.

However we do see a big media challenge ahead and intend to start another campaign train. For example, to encourage the Ministry of Justice to increase activity in claims management company regulation and prove what it’s actually doing about rogue operators. Part of the success of our approach to campaigning has always been directly with officials and decision makers – this won’t stop – but there are projects we can run to spread the message of quality and high standards of using our members to the general public.

With increasing competition and legal service providers coming in from all sides, the public need to be fully informed to make their own choices.

“Firms should make no apology for focusing on the business of law – it’s key to ensuring high standards of service.”

ML // September 2012

Interview

15

“What we’re seeing is good ideas for hard times...We expect to see a rise in enterprise activities and extending the definition of legal services provision.”

Are firms innovating or waiting to see what will happen with new entrants and / or the impact of reform?

What we’re seeing is good ideas for hard times. Those with niche practices are sticking to that principle to see them through; others are taking a new approach, as we’ve seen with ABSs - most recently Irwin Mitchell.

We expect to see a rise in enterprise activities and extending the definition of legal services provision.

This offers threats to some but also opportunities.

New entrants to the market will also, inevitably, include the rise of web-based legal services and I’m delighted to see some are innovating in that market. The consumer market has already gone through its digital revolution although this has been slowly extended into legal service providers’ offerings. Whether selling legal services or simply marketing law firms, websites will be more important than ever before. These are the windows on the high street for every day consumers and the first point of call. Firms will be on the back foot without an effective web presence to sell the brand distinctions.

Lawyers are as successful as they are smart and innovative. Now is the time to display these attributes and they need to be aware of every opportunity to them on the open market. Yes, there will be increased competition and perhaps a drive towards further commoditisation but it will force members to better define their brand differentiation. Being ethical and competent are enduringly important values for members and should be at the core of what law firms offer but a clear USP is needed to compete.

Marketing is essential for client capture – is this what concerns you about the ban on referral fees?

Some firms are hoping it’s all going to turn out OK in the end, others are actively addressing the fact they need to further imporve self-capturing methods. But what we want is a better understanding of how the MoJ is dealing

Des Hudson was born in Halifax, Yorkshire, and graduated in law from the University of Leeds in 1977. He qualified as a solicitor in 1980 and worked in private practice until 1987. During that time he became a salaried partner in a major provincial law firm in the north west of England, specialising in crime and child protection work.

In 1987 Des joined the Yorkshire Building Society as an assistant solicitor and held a number of positions during five years there. In 1992 he took up the post of head of lending at the Britannia Building Society. In 1995 he became operations director of Britannia Life, and in the following year he was made managing director.

In 1998 Des joined SMG (Scottish Media Group) to become chief executive of their publishing division and was appointed a director of SMG plc in 1999. He joined the Institute of Chartered Accountants of Scotland in September 2004 as chief executive designate, subsequently becoming chief executive.

On 4th September 2006 Des took up the position of chief executive of the Law Society of England and Wales.

with claims management companies, who serve no purpose other than to benefit financially. This is a key issue for the Society. Of course it’s down to members of the Law Society who they do business with; it’s their choice and equally, not all referral fees are wrong. But CMCs are not in the public interest and the MoJ should be more explicit and open about how they are dealing with errant firms. Are they really tackling those who flood mobile phone networks with texts asking about a neverhad accident?

ML // September 2012

16

Interview

So promoting what’s in the ‘public interest’ is key for solicitors?

Yes. And the Law Society continues to position it’s members as high quality, ethical legal professionals.

It’s essential we get this message through to the general public – this will only reinforce the position and strength of solicitors as legal service providers. This is something we’re going to increase further in the coming years.

Our Find a Solicitor Service is expanding to help the public find members and their services more effectively. This is a campaign entirely in the public interest – putting clients first is the right and fair thing to do. The Law Society can now help promote members by helping them advertise themselves – and potentially overcome the negative press fuelled by some CMCs.

We have spoken to former Dragons’ Den investor, James Caan, about his company’s investment into a law firm – what’s your advice for firms looking to attract private equity investors?

The legal sector is in choppy waters to an extent but in the long-term there are significant opportunities to be made. Private equity firms are often the ones able to spot them. The Society has the view that the model a firm chooses to adopt is a second issue. Our members are best placed to make a decision on how they should be funded and managed; there are plenty of opportunities out there, so as

long as ABSs and other ventures meet their fitness tests.

What is a firm likely to get out of private equity investment is another matter. Marketing skills are clearly the first thing. These investors will have more acute marketing skills than an average consultancy. Finance to action projects is another. Another thing to consider is the exit strategy – does the investor have one or are they in this for the longhaul? They may wish to sell the firm on, which may / may not be a bad thing but this has to be considered. The Law Society has a liberal view on what is right for firms regarding private equity – but solicitors need to have their wits about them; be wary of those who come baring gifts!

Law firms have already been able to attract non-lawyers into the management system surely this has helped benefit firms already, moving away from the traditional solicitor partner model?

We have seen an increase in a new set of craft skills. Larger firms have embraced introduction of technology as well as finance, human resources and marketing partners. These have started to percolate into the system as the business of law becomes a vital part of the practice. Firms should make no apology for focusing on the business of law – it’s key to ensuring high standards of service to the public and vital to the success of any practice.

For further information, news and compliance updates and members services, please visit www.lawsociety.org.uk

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The views

19

19-31

The Views

ML // September 2012

20

The views

SRA analyses referral fees feedback

W

ith the ban on referral fees in personal injury cases due in April 2013, as one of the regulators tasked with enforcement the SRA has been looking closely at how to do this in a way that is practical, consistent and works in the public interest.

Personal injury work is significant for the legal sector and is worth approximately £1.8billion. Given this, we need to ensure that the changes do not result in financial instability in firms reliant on the payment of referral fees for personal injury business. Disorderly closures as a result would not be in the interests of clients. Therefore, we have identified the firms most heavily reliant on personal injury business generated from paying referral fees and will be working closely with them to see what plans they have for managing when the ban comes into force.

We need to ensure that firms comply with the new statutory requirements. A number of existing referrers and law firms are considering ABS status as potentially providing a model that would succeed in the new environment.

Richard Collins, SRA Executive Director, said: “This sector will receive significant policy and supervision attention from the SRA in the lead-up to the ban and afterwards. Any entity, whether an ABS or traditionally structured law firm, undertaking personal injury cases where there is an ‘introduction’ of clients will be subject to scrutiny to ensure any new arrangements are lawful.”

We are consulting extensively with those who may be affected and are currently analysing feedback from our recent discussion paper on the forthcoming ban.

The paper outlined that the regulator does not feel rules would be consistent with outcomes-focused regulation and suggests the best way forward would be to amend the mandatory outcomes within its code, backed up by illustrative indicative behaviours. Early indications suggest that these proposals have been broadly welcomed - but all options remain on the table.

The responses will be used to inform a formal 12week consultation which will take place in the autumn.

Any changes made to the regulatory framework will come into effect in April 2013.

Richard Collins, Executive Director, Solicitors Regulation Authority (SRA), www.sra.org.uk.

Q: what will be the biggest challenge for COLPs?

A

: For many COLPs the biggest challenge will be implementing a workable risk and compliance system that does a number of things. First and foremost, the system must provide all staff within the firm an easily accessible way of being able to carry out their risk and compliance related tasks.

The system needs to be able to capture all decisions made and actions taken. The COLP will need high level visibility over the firms risk and compliance tasks, and should be able to easily produce audit trails as evidence that proves the firm has been doing what is necessary to ensure it meets the SRA Handbook outcomes.

Many COLPs will no doubt be readying their firm by putting together compliance plans and updating various procedures, however, for a system to be effective it needs to be more than just theoretical documents.

Firms need to ask: • what processes are in place to ensure the timely completion of file audits?

• how is a COLP to track, firm wide, the results of corrective action taken on those file audits as well as identifying any reoccurring problems?

• how is the COLP going to be able to track, monitor and manage risks on a day-to-day basis?

• how do they produce the relevant audit trails that prove compliance with the code of conduct?

To complicate matters, many COLPs will not be risk and compliance experts and will still need to earn fees and keep their clients happy!

COLPs that do implement an all encompassing, easy to manage, automated system early on will be able to reap the rewards later on in time saved, minimum exposure to risk - as well as the benefits gained from the smooth operation of compliance processes. COLPs who decide to change nothing, update nothing and try and muddle through with inadequate systems and processes will, no doubt, run into trouble later on down the line.

Brian Rogers, Director of regulation and compliance service, Riliance software. www.riliance.co.uk

ML // September 2012

The views

Q: Are investors right to be excited by the legal market - if so, why such confidence and trust?

A

: ABS Article July 2012. The true impact of the ABS regime has yet to reveal itself but there are enough firms voicing an interest to suggest that the impact will be swifter and deeper than originally anticipated. Whilst initial activity appears focused at the retail end of the market, the full impact is likely to be far-reaching as the benefits emerge in a quantifiable and measurable way.

What has been interesting is that investors have not been as ready to part with their cash as perhaps they had initially indicated. Possibly, that’s of no great surprise given that legal firms don’t carry the principle assets that appeal to external investors usually presented in the form of product, process and profit. No one would doubt the existence of profit but, for now, that output is overly dependent on the people in the business and that, in itself, is a very difficult asset to manage and comes with significant risk management challenges.

As the new world post-ABS begins to settle, we anticipate that legal firms large and small will start to adopt a more corporate feel and commercial outlook. This is likely to be a response to what other firms are doing rather than a strategic approach to attract external investment, which may be a beneficial consequence.

In March 2012, James Tsolakis, Head of Legal Services for Corporate & Institutional Banking published a report: ‘A perspective on the legal market’ and identified the following potential implications of ABS on legal firms: • The adoption of more commercial norms in the management of the related business; for example, capital structures and profit retention.

• The introduction of more, external, professional management with the new and fresh perspectives that this offers.

• Establishment of broadly offered compensation models closely aligned with the firms objectives.

• Deeper financial resources, providing capital for new investment.

• Delivery of lower cost, broader and potentially higher-quality services to clients.

• Increased competition between existing market participants and new entrants.

• Competing time horizons of interest between long and shortterm objectives of management and owners.

• The threat of conflicts of interest between rights of clients and rights of non-lawyer participants and external owners in the ABS.

21

Conveyancing – there’s room for all

J

uly’s issue of Modern Law included a survey exploring conveyancers’ attitudes to ABS (P. 49).

Overall, it made gloomy reading. Less than half of respondents were happy that ABS should provide conveyancing services, with 42% feeling it to be a ‘terrible mistake’ which may lead to the closure of firms.

At the CLC we take a more optimistic view.

True, the introduction of ABS will increase competition in an already challenging market. Firms will need to work hard to offer good value for money, or outstanding quality, or specialist expertise or excellent service (and hopefully all four). We believe there will be room for players of all shapes and sizes within the new legal services market. The CLC currently regulates firms ranging from sole practitioners to multi-million turnovers, and long may this continue.

From a regulatory perspective, two aspects of the survey gave us pause for thought. The first was that those surveyed felt that ABS might not be held to the same standards as other providers. For the CLC, nothing could be further from the truth. Our application process for ABS is just as stringent and rigorous as for other regulated entities, and our inspection approach combines desk work with on-site visits to make sure that all licensed firms abide by our outcomes-focussed regulatory principles.

As Rob Gurney of Premier Property Law (the first ABS to be licensed) said: “If you are expecting a thorough examination of your business and its staff, you will not be disappointed.”

The second was respondents’ view that there should be just one licensing body. We feel that such a one-sizefits-all approach would undermine competition and limit consumer choice and confidence. Our view is that the provision of legal services should be regulated by activity, not by a carte blanche to provide all legal services. A lawyer with 20 year’s advocacy experience, for example, may not be up to speed on probate. Maintaining a cadre of regulators specialising in different areas offers customers more choice, and a greater guarantee of expertise.

There is a need and space for different licensing authorities, just as there is room in the market for conveyancing firms of all shapes and sizes.

June Mulroy, interim Chief Executive, Council for Licensed Conveyancers.

External investors are likely to be attracted to those legal firms willing to embrace and exploit the rigour of corporate discipline.

Steve Arundale, Professional Services Director, Natwest

ML // September 2012

22

The views

Q: Solicitors have to deal with the commoditisation of legal services (the competitive price war) what do they need do to keep costs low?

A

: Until relatively recently, the law was different from other businesses: an insular world where practises and values echoed a bygone era.

The profession has even been described as ‘frumpy’ in certain circles.

No longer; with the Legal Services Act 2007 and the Government (determined to ignore its own expert advice) pushing through extensions to the small claims limit and the RTA portal in April 2013, the law is ripe to be sliced, diced and sold in neat little packages. Legal services will be the subject of pricecomparison websites where ‘he who is cheapest’ reigns.

In order to survive in this brave new world, costs will need to be kept to a minimum whilst still providing an effective service to the client. There are a number of tools which solicitors can use to do this.

Information technology is one potential driver of efficiency. Modern systems offer a high degree of automation, reducing the time which fee-earners need to spend on a matter. Furthermore, alternative ways of delivering legal services, such as over the internet, are becoming available which will allow tech-savvy firms to reduce their overheads.

However, as always in the short-sighted economic race to the bottom which pervades modern business practice, perhaps the quickest way to cut significant costs is to reduce your workforce. Back-office functions can be outsourced or even offshored. The same can be done with certain parts of the legal process. However, a word of caution; I recently attended a business development seminar where data were presented suggesting that clients may not be altogether happy at having their confidential information shipped to the Far East.

Another option is to operate a model of having few partners/solicitors supervising a larger number of unqualified and lower-paid personnel, creating a sort of McLaw. This particular approach may be more applicable to low-value, high-volume work.

One thing is certain, whatever approach you choose carries its own risks but the risk of doing nothing is equally great.

Rob Parness, Costs Lawyer, Paramount Legal Costs Ltd

ML // September 2012

We cannot deny the power brand has arrived

S

ince February 2012, solicitors have faced potential competition from those entering the legal services marketplace with the might of consumer/ retail sector experience behind them. As with all changing markets there will be those firms that cope well and those that don’t and there will be advantages for the consumer as well as disadvantages.

It is the experience for the consumer which has the greatest potential for change. This includes: how legal services are accessed; how they are charged; the level of personal interaction with the provider, and; satisfaction (or otherwise) at conclusion.

Let us not deny there are certain areas of the market - or certain levels of legal advice and service - which may well be better served by the power brands. Indeed many of these areas are already being provided by structures other than solicitors – consider conveyancing and will writing. The fact that many of these providers have proven successful is indicative of the consumer demand for a different type of product than traditionally offered by solicitors.

The question now is: what areas are next to be developed by the power brands? For those of us within the profession it may be obvious which areas of practice are becoming less viable for provision by the traditional solicitors practice. It is possible that the time has come for us to release certain aspects of our work to be better provided by the power brands.

Whilst we need to accept many of the changes that are upon us, there is also the option for traditional legal practices to adapt that manner in which the legal services are provided to meet demand where appropriate or necessary. The consumer will be the ultimate decision maker.

If we in the legal profession are able to provide what the consumer wants, ie a high level of personal service, with expert, tailored legal advice, at a fair cost and in the right environment we will survive the onslaught of the power brands. Failing in any of these areas will almost certainly result in casualties over the next few years – but that is the price of change.

By Angela Moores, Jarvis Family Law

The views

Q: Do the legal power brands hold the advantage in compliance and, ultimately, client experience and satisfaction?

A

: Let us start from the standpoint that any well-run law firm should be pretty good at compliance; it should have been compliant since it opened its doors on whatever date that was.

However, in an average firm, how many people are in the compliance department and how much emphasis and weight is attached to compliance in an average firm?

I think it’s fair to say that CLS will have a robust and well staffed compliance department as will any insurer or power brand. Whereas the compliance department of a law firm could easily be one person and he / she only does it after a day of fee earning and management.

The questions of resource, time and emphasis arise and there is no doubt in my mind that any organisation that has been FSA regulated will have more resources, more time and more emphasis on compliance than most law firms.

So, on the face of it the power brands should have an advantage in compliance or at least resource put into compliance but does that necessarily feed into client experience and satisfaction.

Again, this is a question of mentality and on how much emphasis is placed on client experience and satisfaction.

Law firms are at their heart providing a legal service. Law is a service industry. However law firms have not always seen it like that; The emphasis was on being a member of the professions rather than great client service. Better to be a brilliant lawyer with no social skills than a reasonable lawyer with superb feedback.

Hopefully that mindset is a thing of the past as the new bar is being a brilliant lawyer with superb feedback.

I think that power brands build from consumer experience upwards, which is how they become power brands.

So the trick for the lawyers is to learn from them, adopt their thinking and move on. If the power brands have an advantage in resources, well, we will always struggle to match their size and profits. But we can match them on compliance, client experience and satisfaction - it’s just a matter of emphasis.

23

Big is Best

T

hey say that ‘big is best’ and that we are all enticed by the allure of Big Brands - something I would like to explore in this month’s column.

The legal profession is a cottage industry based in thousands of offices across the UK. We have worked like this for centuries and it has served us and our communities well. There is a well tried and trusted business connectivity between the lawyer the bank manager, the estate agent and the broker, which has provided good reciprocal work for each other. It has also served the local client well – who paid a reasonable fee for a reasonable service: all is well.

Hang on – are we talking about an episode of Life on Mars? Where have I been for the last 10 years?

Well – I’ve been here and the scene above - whilst still existing - is hanging on by the threads because there is a revolution happening. Call it industrialisation, the Legal Services Big Bang or just a nightmare but you can’t ignore it because it’s going to affect each and every one of us - and it’s happening now.

Since October last year, ABSs are a reality. For the very first time there has been a recognition that you can separate ownership and management of law firms. This is really starting to make waves in what was, in reality, a cosy legal market.

Parts of the legal market are very attractive to third parties. Not just because they believe they can make a good return on their investment on the conveyancing and other future services but also because they believe they can do a better job than we do.

And the ‘big brands’ probably can: they are steeped in customer services and they have big brand reputations to protect. They are trusted by their clients, which is a huge strength, so if they are going to take us on in conveyancing be afraid be very afraid. They will do it well- not necessarily cheaper but their aim is to get that client and keep them – that is why they are ‘big brands’ and not parochial solicitors who simply won’t be able to compete.

Eddie Goldsmith, Partner, Goldsmith Williams & Chair of the Conveyancing Association.

David Bott, Immediate Past President of APIL and Managing Partner of Bott & Co.

ML // September 2012

00 24

????views The

Q: Solicitors have to deal with the commoditisation of legal services (the price war) but what do they need do to keep costs low?

A

: Coming from the legal technology side of the equation, I expect you think I’m going to recommend law firms should invest in case and matter management systems?

Wrong, those systems have been around since 1978 – that’s nearly 35 years ago. No, if a law firm doesn’t already have case management software in its offices, it is so far behind the times that it is truly a lost cause and its partners need to turn off their gas-mantles and go home – permanently. (Except they wouldn’t be reading this magazine!)

But, if you do have case management software, you may still not be running it as cost-effectively and efficiently as you could. The two big issues that divide successful case management users from the rest can be summed up as The 2 Ps: People and Place.

People Who is operating your case management software? If it is a secretary, PA, clerical assistant, claims handler, paralegal or similar non-professionally qualified fee earner or member of staff then that’s good. But if it is solicitor, what are you thinking? You do not need qualified lawyers to handle the routine stages of routine matters – the computer will do that for you. Don’t have your lawyers wasting the firm’s time typing or dictating their own special additions to template documents – clients don’t care, they just want their matters resolved quickly and cheaply.

Place Where is your case management work being processed? In an office at your high street or city-centre offices? Why? If your staff are working on computers and not seeing clients on a regular basis, they don’t need to be there. Relocate the volume case handling work to somewhere cheaper – beyond the ring-road or in another part of the country where staff salaries may also be lower.

Along with PI insurance, the two biggest expenses law firms have are accommodation and staff salaries. To survive in the current competitive environment, you need to be ruthless so be prepared to prune your expensive staff and move your main operations.

Charles Christian is a barrister who has been writing about legal technology for over 30 years.

ML // September 2012

Q: Are solicitors sleepwalking into bigger PII problems in the future?

A

: As this article goes to press we are in the throes of the 2012 professional indemnity insurance (PII) renewal period for solicitors in England and Wales.

The premium is of course a major factor when renewing a PII policy. Most firms, however, know that the premium is just one of many factors needing consideration.

It is fair to say that many solicitors still feel that they are unlikely to be on the receiving end of a claim. These solicitors tend to buy on price alone. It is only when they do have a claim or a change in circumstances that they sometimes find out that their brokers and/or insurers are unable to provide the professional assistance they require.

This is why we feel it is important that solicitors try to look beyond the premium charged and assess the service provided by their brokers as well as the quality, and financial standing of the insurer providing the indemnity insurance.

Solicitors have seen significant changes to their regulation during the last few years and this trend is expected to continue. The ARP will cease in 2013 and will be replaced by an Extended Indemnity Period (EIP) allowing practices to arrange an orderly method of closure, succession or run-off coverage, whichever option is most appropriate. Some firms are looking to merge or acquire; others are looking at potential advantages a conversion to Alternative Business Structures may bring. We are now living in a world of COLPs, COFAs, MLROs and CROs - roles that, until recently, did not exist. The responsibilities of partners, management and compliance officers have been made abundantly clear by the SRA and the penalties of noncompliance can be severe. These changes will begin to affect PII cover since they introduce ‘risk-rating factors’, insurers will rely on when determining the risk presented by a firm. It has, therefore, never been a more important time to ensure you are with a broker providing good, market-based advice and an insurer that understands your requirements.

Give due consideration to all these factors before placing your PII policy and you may sleep just that little bit easier.

Martin Ellis, Managing Director, Prime Risk Solutions.

The views

Q: What can direct access to chambers really offer in terms of client service and added value that law firms can’t?

A

: An obvious clash of interest exists when barristers’ chambers work for law firms in the traditional way and the same chambers then accept instructions direct from the public. We are all after the same work.

Stories of law firms blacklisting chambers they used to instruct when they have evidence of this are on the increase.

What is in it for the client?

Can the Bar offer something law firms cannot? Is there any law firm/chambers benefit that can spring from direct access to the bar?

Client savings In certain cases a client can save money from single handling whereby whatever the matter only one lawyer is actually needed and the client gets the advice/ conference from a barrister who would ordinarily be instructed at a later stage by a solicitor.

A client who chooses to instruct the bar in this way should feel no difference from seeing a law firm. Most chambers have direct access trained clerks who deal with the money laundering/identity checks, collate the papers and act as the go between before counsel sees the client.

Added value Firstly, there may be a benefit in identifying the barrister of choice and having access to him/her directly.

Secondly the bar’s overheads are much lower than law firms so cost wise the client may well be offered a very competitive advisory rate.

Power of referral Some who attack the bar for offering public access services ignore the fact that (on many occasions) when a lay client contacts a chambers they are told the case is not suitable for direct access. The lay client is then guided to see a law firm. My clerks do this all the time.

In addition when a barrister is instructed he can always decide that a law firm should be instructed at a later stage and I have seen that happen. So the power of referral is a strong one.

Whether it be a law firm or chambers the client goes to the most important element has to be service to that client.

25

Q: Are lawyers applying their financial analysis data effectively in terms of sustainable growth and are they even assessing the data correctly?

A

: Undoubtedly current changes, such as alternative business structures, alternative fee arrangements and new regulation are presenting new challenges to a sector where is seems unrelenting change has become the only constant. To compete amid such a whirlwind of change, firms must be able to anticipate and adapt quickly.

Now that law firms profitability is being squeezed by the economic climate and larger corporations are staking a claim on what the high street firm would once have considered guaranteed income, the benefit of powerful business intelligence solutions to build key strategies and measuring success in order to ensure sustainable growth, are all the more essential.

The quality of the output is only ever going to be as good as the quality and quantity of the data that went in in the first place – if it went in at all! Data capture should involve a high level of detail to enable objective decision making. The fact is that most firms already have this data; they just don’t have it one place and don’t know what to do with it to make it mean something to them. If you don’t get the basics right with regards to data input, everything that comes after it is going to be of limited value.

I find clients tend to look to answer three main questions: • Which matters/disciplines are our most profitable/ unprofitable?

• Why are those areas more (or less) profitable than others?

• What changes should we make to improve our profitability?

To answer these you need to be able to analyse historical performance, understand what contributed to those figures and make clearly defined strategic plans for the future based on this intelligence. Putting in place KPIs and targets will allow decision makers to monitor the success of those strategies.

The good news is that once firms get to grips with the wealth of information they now have at their fingertips, they can use their BI systems to make strategic plans to ensure they deliver clear competitive advantage. This will see them successfully improve services to clients and increase profitability over the next few years.

More information on Redbrick Business Intelligence can be found at www.redbricksolutions.co.uk Jo Hodges, Redbrick Solutions

ML // September 2012

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14/06/2012 09:19

The views

Compliance: where do we go now?

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ongratulations. You are your firm’s new COLP. You must be very proud. Perish the thought that this job could use up hours of your valuable time, or that your colleagues will blame you if something goes wrong.

Anyway it is too late to go back now, so where should you start? Here are my top tips...

Let them know you are there: Send an email around the firm to ensure everyone knows you are the COLP and what that means. Remind them that if they have questions or concerns about ethical or regulatory issues they should contact you. Assure them that if they promptly and honestly report a problem you will show them love and understanding; but attempts to hide mistakes will force you to unleash horrors from the darkest chasm of hell. A reminder e-mail (about every six months) will keep these messages fresh.

Assess risk: What you do next should depend on where the risks lie in your firm. For example: • do all teams have effective supervision systems?

• do you have clear policies for high risk areas like costs estimates and updates, recording advice and diarising deadlines?

• does your firm have any rogue elephants (powerful people who think the rules do not apply to them)?

As COLP, a fundamental duty is to identify your compliance risks and take effective action to mitigate them.

Create a file in which to record regulatory failures: This is quick and easy and will give you a sense of progress.

Remember you are required to record all regulatory failures and to report material failures ASAP to the SRA. Oddly enough, SRA inspectors aren’t impressed when told: “we have no such records; everyone here is perfect”.

Create a business continuity plan: This can seem daunting but one day you may be very glad you thought about it.

A business continuity plan describes how your business will survive something like a fire (which destroys your offices and files) or the theft of your computers.

Most of the answer lies in ensuring you have good IT backup. Some firms take scary risks by not thinking about this. Socrates has been working with firms recently to develop a template business continuity plan.

Bernard George, Director, Socrates Training Limited, E: bernard@socrates-training.co.uk

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Q: Are law firms and ABSs well placed to become vehicles for service procurement and added value back-office functions for clients?

A

: With the background of over-capacity in the legal market and with pressures from new entrants, law firms are engaging in strategic thinking about their options. They can either decide to concentrate on a market niche and excel in that, or try to grow by increasing their scale of operation - benefiting from economies of scale and possible diversification into new practice areas.

However is there a third way to achieve growth by offering added value services to their clients? This has already been a successful strategy for many of the larger accountancy practices who are able to offer an extensive range of services to clients (including marketing and product strategy development, business process re-engineering, risk and compliance services).

So why don’t Law Firms and ABS’s meet fire with fire and extend their range of services including back office services?

The answer is that some will, and no doubt make a great success of it. Understanding customer needs, and filling product gaps, is a basic tenet of good business - business managers ignore this at their peril.

At least in theory there is no reason why a law firm couldn’t take over the human resources, contracts or company secretarial function for their clients. Some firms are already providing very successful legal outsourcing offerings - take Berwin Leighton’s BLP managed legal services for example which enables clients to outsource some or all of their legal requirements in an outsourced model.

However, as with any business straying too far off the path, diversification carries dangers. Proper research, careful design of products and well thought out sales and marketing strategies are essential. Identifying that clients have a need that can be profitably met and doing this successfully can be two quite different things.

What this boils down in the final analysis is excellence in implementation. This means having the right people, with the right skills, suitably motivated, following the right plan – and being given the time and resources to do it. Are law firms able to commit the time and resources to this? Or are ABS’s in a better position with their potentially greater commercial expertise and access to funding? Time will tell but my instinct is that great opportunities are definitely there – try asking your clients!

Nick Hodges, Managing Director, Oyez Professional Services

ML // September 2012

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The views

29

Risk & Compliance: the latest buzz

Focusing on the outcome

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Andrew Stenning, Managing Director, Searches UK. www.searchesuk.co.uk

Nick Ingham, Legal Manager, Anglia Research Services Ltd

hrough the years there have been a number of ‘buzz’ words and phrases which have taken turns to dominate the business industry.

‘Risk and Compliance’ is the current hot topic in the financial and legal industries.

The SRA introduced Outcomes Focused Regulation, the economy has been difficult, professional indemnity insurance costs have risen and ABSs have been introduced. These and other factors have meant that legal firms have been forced to look seriously at how their businesses are operating and in order to remain viable, many have looked to enhance their internal systems and procedures to reduce risk of exposure to claims, bad debt, SRA intervention, employment tribunals and to strengthen their position within the market.

The Conveyancing Quality Scheme, introduced in 2011 by the Law Society, has seen incredible growth since its inception, with approximately 1,600 firms already approved.

The Scheme is designed to create a trusted conveyancing community which deters fraud and firms who successfully achieve membership will establish a level of credibility with regulators, lenders, insurers and consumers alike.

Lexcel is another Law Society incentive, which again provides a similar level of credibility, and accredited firms are recognised as having enhanced risk and compliance systems and procedures in place. There are currently 1,333 firms who are accredited (including in-house practices), which accounts for approximately 10% of solicitors practices.

Both Lexcel and CQS are currently only available for firms of solicitors, although the Council of Licensed Conveyancers is also looking into a similar scheme for its members.

At Searches UK, we too are keen to embrace the changes necessary to strengthen the conveyancing industry and are working hard to optimise best practice and performance. We believe that all elements of the conveyancing process need to work together to ensure that risk of exposure to consumers, lenders, insurers and conveyancing practices alike is reduced.

Searches UK are members of CoPSO, IPSA and the Search Code and have further been assessed by a Lexcel consultant, who has confirmed that we are working in accordance with the Lexcel standard of excellence. We have set up a Risk and Compliance arm of our business and will be launching a series of newsletters and offering access to draft templates for policies to help our clients work effectively to manage their risk.

ick Ingham, Anglia Research Services puts forward the idea of probate genealogist as a risk management tool in the new regulated marketplace.

‘Winds of change’ are blowing through the world of probate practice. Following the provisional recommendations of the Legal Services Board in its consultation document: Enhancing consumer protection, reducing regulatory restrictions: will writing, probate and estate administration services (April 2012), estate administration activities, along with will writing, are likely soon to become ‘reserved legal activities’. This brings all deliverers of these services within the regulatory framework of the Legal Services Act. Moreover, implementation of other aspects of the Act, particularly those relating to Alternative Business Structures, have been underway for some time, serving only to increase the already rife competition.

With this in mind, the proactive use of outsource specialists such as probate genealogists in missing beneficiary or similar people tracing scenarios will serve as an important risk management tool for those delivering estate administration services. The risk of error or oversight will effectively be transferred to the probate genealogist - though in reality, of course, the very involvement of the specialist will eliminate (or at the very least diminish) the possibility of such error.

Naturally, however, practitioners should ensure that they restrict instructions to firms with professional indemnity insurance adequate for the assignment at hand.

Related to risk management is the probate genealogist’s ability to source and arrange missing beneficiary indemnity (MBI) insurance, which may be required as part of an administration. Practitioners are best advised to look to genealogists who are authorised by the FSA to undertake insurance mediation, and who will have long-established relationships with underwriters enabling the most appropriate cover to be incepted on the basis of the firm’s report.

In harmony with the move towards outcomes-focused regulation (OFR) which aims to give lawyers greater freedom in how they deliver their services to clients, it is suggested that practitioners should look to firms able to work with them to find the most suitable fee structure for the assignment at hand. This flexibility could become increasingly important in an environment where practitioners may be required to demonstrate cost-effective decision making in relation to any necessary work, on the basis of proportionality. This, in turn, requires the research firm to offer a flexible framework of costing options to assist practitioners in fulfilling that duty, rather than simply a ‘one size fits all’ offering.

Probate practice may be changing but help is at hand by focusing on the solutions the probate genealogist is able to offer.

ML // September 2012

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EAD Solicitors LLP is a Limited Liability Partnership registered in England (registered number OC334289) and is authorised and regulated by the Solicitors Regulation Authority (487037). A list of members of the LLP is available for inspection at our registered office Prospect House, Columbus Quay, Liverpool, L3 4DB, together with a list of those non-members who are designated as partners. Any reference to a partner in relation to the LLP means a member or employee of, or consultant to, the LLP.

The views

Q: Do the legal power brands hold the advantage in compliance and, ultimately, client experience and satisfaction?

A

: Whilst the power brands may have the money to throw at ethics training, software and internal controls, this does not necessarily translate into a happy client experience. The starting point in looking at whether power brands will flourish in terms of compliance and ultimately client experience is to focus on what makes a client’s experience a happy one.

Surely the happiest clients are those who have experienced quality legal advice from a skilled adviser, whether it comes from a power brand or from the long-established high street solicitor down the road.

Communication, approachability and the level of expertise are pivotal in producing a happy client experience and such characteristics may be lacking in a service provided by a corporate power institution. Of course, cost is also a big issue and those firms which deliver a cost-effective service will ensure clients are satisfied with the service they receive.

The power brands may also struggle to deliver a well rounded service in those niche areas of law which require a more personal, intimate solicitor-client relationship. Using my own experiences, one area of law we have developed expertise in is business partnership law, notably partnership disputes.

Such clients are often in the midst of a very emotional and stressful dispute and require considerable attention, focus and TLC. I struggle to see that the corporate brands would deliver the level of personal, knowledgeable service required in such contentious and difficult matters.

Also, who is to say smaller firms are less compliant savvy?

There is something to be said for firms which are longestablished, with considerable experience in delivering a quality legal service. There is absolutely no reason why such firms, whether large or small, will not have built up efficient systems through experience or otherwise, to ensure successful compliance adherence.

In any event, whilst compliance is important, it is only one factor in the big legal picture. The power brands have a lot more to do than merely comply to ensure delivery of a truly quality legal service.

Eimear McCartan, Partnership Law Solicitor, Ralli. e: Eimear.McCartan@ralli.co.uk, t: 0161 615 0691 On Twitter? Follow me: @PartnershipLaw

31

Q: Will direct access barristers’ chambers and ABSs become a key target for CILEx qualified jobseekers?

A

: The move into the high street by Co-operative Legal Services and the launch of Stobart Barristers have intensified the debate about the death of the common or garden high street practice.

For Chartered Legal Executives - for whom such high street practices are a major employer - the changes to the legal services market are potentially very profound.

But CILEx qualified jobseekers have reason to be optimistic. One aspect of most ABSs is increased specialisation, and Chartered Legal Executives, as specialist lawyers, are ideally suited to employment in these organisations. Another aspect is the role of paralegal staff, who in certain practice areas are increasingly employed to progress all but the most complex files under supervision. Indeed, Stobart Barristers have set up a sister company Stobart Barrister Support Services to provide paralegal support in case preparation. As well as the full qualification to become a Chartered Legal Executive, CILEx offers recognised qualifications at paralegal level and its Affiliate Members, trained to Level 3 in selected practice areas, are well placed to target such roles.

Meanwhile, other changes are afoot. ILEX Professional Standards (CILEx’s regulator) is applying for probate and litigation rights which could see new organisations being created by Chartered Legal Executives banding together independently of solicitors or barristers.

At the recent Legal Education and Training Review Symposium the skills required of workers in the sector were discussed at some length. Notable comments included Richard Susskind’s view that we are in danger of training future generations to be ‘at the cutting edge of tradition,’ unless legal training incorporates those skills that will be required by the legal services industry of the future.

What will determine the success of Chartered Legal Executives and others in this brave new world is their ability to combine an undoubted knowledge and understanding of law and legal practice with the customer service ethic of new forms of legal service business ownership. As James Atkin of Co-operative Legal Services said, they’ll be looking for people with the appropriate behavioural skills. That should give Chartered Legal Executives as much of an opportunity as any other lawyer.

Noel Inge, Managing Director, ILEX Tutorial College

ML // September 2012

00 32

????views The

Q: What will commercial ATE insurance products look like in the future?

Lender panels, the situation is as clear as mud!

A

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: Products develop to satisfy the needs of a market and this is true for commercial ATE insurance products. The rationale for asking the question now arises from the changes taking place in the dispute resolution landscape following ‘Jackson,’ LAPSO and the introduction of ABSs. The abolition of recoverability of insurance premiums and success fees from an unsuccessful opponent is a significant catalyst for change. Once recoverability goes, the insured will pay the premium. The implications have been much debated in the context of personal injury, but there will be ramifications for commercial cases too, although these may differ in nature.

A short answer to the question is that commercial ATE insurance products are likely to: • look more like traditional insurance products; • be provided to a wider class of potential insured; • become increasingly ‘bespoke’, and; • be priced on a more competitive basis.

The risk of being ordered to pay an opponent’s costs if the claim fails or fails in part will be as real as ever and changes on ‘proportionality’ could translate into lower recoveries of ‘own costs,’ even on success. While continuing to be desirable, the viability of obtaining cover (and indeed pursuing a claim) will become a ‘bottom line’ financial decision. That decision will be based on ‘risk and reward’ and the net effect on the potential damages ‘pot’ of premiums and DBA/CFA recoveries, as well as any third party funder ‘upside’.

Contingent premiums (payable on success) will continue to be important but there is likely to be an increased emphasis on the use of ‘initial’ upfront premiums (payable on inception and non-refundable irrespective of outcome) - either alone or in conjunction with a contingent element. Despite requiring immediate outlay, the attraction of an upfront premium is that it is likely to be offered at a lower rate.

In the new environment, legal practices will be looking at ways to attract business. The emergence of ABS structures and the potential for internal funding options could lead to increasingly innovative solutions involving ATE products being obtained by lawyers and funders direct.

The impact of the changes will become clearer over time - ATE insurance products will continue to respond to the needs of those requiring cover.

Matthew Williams, Head of AmTrust Law at AmTrust Financial Services.

ML // September 2012

he situation with lender panels seems to get more and more confusing.

Just when it appears that some form of logic is beginning to be applied by one lender (HSBC) others remove firms from its panel without so much as a byyour-leave. This lack of coordination within the lending industry is causing firms a lot of concern and additional work. The additional effort completing multiple panel applications and raising appeals against panel removal is costing firms many man hours and distracting some from the very work the lender wants carried out in the first place. This scattergun approach must be causing additional and unnecessary work for lenders also.

As a result of this confusing situation conveyancing practitioners are increasingly calling for compulsory separate representation. On the face of it the ideal solution, the buyer has their lawyer and the lender has its lawyer. However, unless a quick and efficient process is developed (perhaps with costs being borne by both buyer and lender) separate representation will do nothing but increase delays and confusion for all involved in home buying and selling. In addition, unless all conveyancing practitioners are involved - solicitors and licensed conveyancers - an uneven playing field will be created.

There may be another way forward; the Law Society Conveyancing Quality Scheme (CQS) which it is hoped ‘will create a trusted community which will deter fraud’.

I have had and still have reservations about CQS but feel that those firms not yet convinced it is the panacea to cure current problems should attend one of the Law Society events planned around England for September.

Don’t yet judge what you may not fully understand. I will attend the Plymouth event and will make my mind up after that.

The Law Society has CQS, licensed conveyancers will have the SLC Quality Assurance scheme and unfortunately they do not dovetail, so the situation becomes ever complicated. Surely the CML, the BSA, the Law Society and the SLC, with the support of their members, should be sat round a table in order to thrash out one solution that fits all?

For further information about the CQS events or the Bold Legal Group please email: rh@boldlegal.co.uk.

Rob Hailstone, Bold Legal Group.

The Features

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The Features

ML // September 2012

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Features ????

00 35

Believe, succeED, grow Third party funding for law firms is the other solution for those looking to attract external funding, wider skills and management experience, especially for niche legal service providers. Unity Law – operating in industrial and work-related injury, disease and Disability Discrimination cases – is one of those making a significant impact in its specialist sectors. Chris Fry, Managing Partner at Unity Law talks to Modern Law about the self-belief, engagement and collaboration required to grow a new firm.

Q: What was the biggest challenge in the creation of Unity Law? You’d probably expect me to say “the banks” but ironically it was the SRA. In order to get authorisation you need an address, professional indemnity insurance and bank accounts but yet we couldn’t really get these until we had authorisation. It felt like a ‘chicken and egg’ scenario! The certainties that we had were that we could get the work and had the legal talent to deliver it.

Q: What leadership skills are essential in the formation of a niche new law firm?

I established Unity at the end of 2010. I had a clear vision of what I wanted the firm to look like and I trusted my intuition that it would work. There is no doubt that I’ve needed to be focussed, disciplined and confident. The unwavering support of my fellow directors has been invaluable in driving the business forward.

Q: What were you considerations in developing the Unity Law brand?

I enjoyed the whole process of having a blank sheet of paper. We spent a lot of time thinking about what to call the firm and ensuring that it reflected our core values and beliefs. We have got a brand that delivers a strong message about our approach to the law and the work we do. The strength of our brand has lead to us being approached by the Equality and Human Right Commission to assist with cases which reinforce, expand or strengthen rights for those with disabilities.

Q: There have been considerable changes in the PI market over the past five years. Has the firm been able to adapt more easily because it’s a new starter?

Entering the market in a recession and being able to see the well documented mistakes that firms have made has been advantageous. To succeed, Unity needed the expertise of non-lawyers and be held to account by shareholders who have the ability to replace under-performing directors in the future if they don’t deliver results. This tackles head-on the problems often faced by a conventional partnership structure.

Q: What will hold firms back come April 2013, beside the obvious referral fee ban?

Firms who operate a personal injury service as part of ‘general practices’ will undoubtedly struggle. These departments will have well paid lawyers who, once success fees are discounted, will find that their time is not as easily recoverable. At the same time, there will be difficulties in firms funding disbursements and non recoverable ATE

insurance premiums. We have structured ourselves in such a way that we can deal with this. I suspect however that for many firms, operating a profitable PI department will be impossible and as a result, it will become a specialist work type. Being niche and specialist in what we do means that we already receive referrals from other lawyers who don’t have the required expertise to handle this work.

Q: Will barristers’ chambers offering public access be a danger to firms in the PI market or are these more likely to impact the commercial sector?

I don’t consider them a threat in my niche sector. The barristers I instruct are experts in their field and exceptional busy doing what they do best – advocacy and defining the law. I have yet to work with a barrister who is interested in all the background work that’s involved in handling a case.

Also, barristers are unlikely to maintain their current levels of income if they do decide to work in this way.

Q: Have you had to change your business plan in light of pressures next year?

We are lucky – we don’t have the baggage that many law firms have. We can react quickly and adapt to a changing market without having to worry about retiring partners or how other departments are performing. Our business plan involves taking a very collaborative approach to how we work. We have formed close working partnerships with leading charities as well as government bodies such as the Equality and Human Rights Commission. We also actively develop working relationships with other law firms across the UK who are able to refer work to us because of our expertise in this field.

ML // September 2012

Features

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Stand & Deliver The legal regulatory bodies have made it easier for both solicitors and barristers to engage directly with members of the public to provide open and transparent services.

But can the establishment make things even easier - overcoming the inhibitions and suspicions prospective clients have about the legal profession? Ian Dodd reports.

D

espite trying and, in some cases, succeeding, to make it easier for lawyers to talk to ordinary folk there does seem to remain a reluctance from Mr and Mrs Public to take their legal problems to those best equipped to solve them.

For many, lawyers seem distant, unapproachable, stuffy, judgemental, intimidating and above all, expensive.

Some lawyers have gone a long way to ensure their websites are easily accessible, their high street offices welcoming, their staff down-to-earth and their prices reasonable; though these are in the minority, it seems.

There are also lawyers who don’t want to have ordinary folk as their clients and deliberately discriminate against them and market.

Solicitors can find it easier to appeal to and accommodate direct public access clients. Their locations, business plans, experience and general ease-of-use work in their favour. Those at the Bar have a bigger problem. Their offices (or chambers as they will continue to call them) are not, normally, found in that part of town members of the general public frequent. Their tradition and experience is dealing with professional clients. Many don’t have manned reception areas, have inadequate waiting areas and insufficient conference rooms where private discussions can take place. The Bar is also having problems coming to terms with the necessity and mechanism of the ‘up-front’ payment direct public access necessarily demands.

Naturally, the market responds to opportunities and challenges and there are a growing number of

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entrepreneurial businesses trying to ensure it’s as easy as possible for members of the public to contact with lawyers. These are mainly web-based and offer online or telephone access to solicitors or barristers, with userfriendly and transparent pricing.

Solicitors’ offices and barristers’ chambers can be hard to find and opening hours and appointmentmaking may be inconvenient. Some legal businesses are open on Saturday mornings though their - largely city centre locations can be equally inconvenient for a suburban or country dweller.

Websites make the search easier, though some degree of knowledge about what to enter into the search engine is needed and, unless the site owner has worked on web siteoptimisation, it could be a long and fruitless search.

The easiest way to encourage and allow members of the public to access and use legal services must, surely, be to take those services to them - in places they visit regularly or can get to easily.

There are some firms that have a presence in public places such as shopping centres and there are others who have dedicated, high street locations looking more like a shop than a law firm.

Taking this a logical step further; Instant Law are installing private, secure booths or working areas in public libraries up and down the country so that members of the public can, at their convenience and without an appointment, talk to a lawyer and get advice.

Using unique, state-of-the-art video conferencing software and an easy to

use, on-screen start page a member of the public can see and speak to a lawyer and (at the end of a 20 -30 minute, free, initial consultation) will know if they have a case which can be progressed.

What the next moves might be and, more importantly, how much it is all liable to cost is also communicated.

This service is becoming increasingly popular with libraries and a growing number are incorporating it in the wide range of public services they offer to their users.

This democratisation of direct public access is, through public libraries, reaching a wide audience. Birmingham Central Library, for example, has a foot-fall of about 4 million/year and the Paradise Shopping Centre, to which it is attached has a foot-fall of 3 million/week.

Large conurbations, such as Manchester, Liverpool and Newcastle, have around a million people a year using them. There are about 3500 public libraries in the country and they, like every other business, are looking for innovative ways to encourage people to use them and their growing list of services.

Maybe initiatives like Instant Law teaming up with public libraries is one way that the legal profession can widen their appeal and offer members of the public services at their convenience and on their terms?

By Ian Dodd, Instant Law

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ML // September 2012

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Features

39

Carving an ABs niche Two experienced business women and non-lawyers have set the tone for those looking into obtaining ABS status for specialist practices. Elizabeth Eagles, Director of NAS Legal Ltd outlines the reasons behind their move and how their model best suits their niche client base.

N

AS Legal Limited is on face value a normal high street Stockton on Tees based law firm but underneath the façade on the high street is a well established, flourishing, niche business. For a number of years, we have been a key player in the business of County Court advocacy or as we were historically known, Court agents.

We were well aware the legal world was bracing itself for ‘Tesco Law’ but decided to jump the gun on many corporate giants to become one of the early companies to lead the way in the UK’s legal revolution.

As the UK’s eighth Alternative Business Structure, we are hoping that the niche area of instructing experienced, expert advocates can grow and be developed under its new regulatory status.

With an already existing portfolio of leading law firm clients, we intend, as an Alternative Business Structure with two non-lawyer, business-women owners, to push forward and expand our client base – flinging our doors open for new and potential clients to experience the first class service on offer.

With approximately 200 employed and self employed advocates throughout England and Wales, NAS Legal Limited is able to offer coverage in any County Court.

With long-term, experienced career advocates we aim to guarantee the satisfaction of knowing that solicitors’ matters are being dealt with by advocates who are pro-active in their arguments and reactive to unexpected situations.

Testimonials from our existing clients remind us that we’re more than capable of delivering on our promises and be a vital partner to some of the country’s largest providers of legal services. With our background as business managers we will not only make the most of client feedback but also ensure our services are tailored to individual client needs, while letting the lawyers get on with their work.

We have invested in sophisticated systems to reach the needs of all clients however large or small. Instructions can be provided by telephone and e-mail as well as the more traditional methods. As far as funding goes, we haven’t looked to external sources – but that doesn’t mean the door isn’t open. There may well be interest in ABSs by external funders, such as private equity investors but as yet we haven’t approached any. That’s not to say we’re not averse to the idea but for now, we already have the business development and directional skills to make NAS Legal deliver on our vision.

As well as being open to funding ideas, the door is widely propped open for non-corporate clients who require assistance in the ever increasing market place of Landlord and Tenant, Employment and Personal Injury law. As an ABS, we offer a complete one-stop-shop, offering competitive fees and the guarantee that matters will be conducted by

“Becoming an ABS in such an exciting time of change for the UK’s legal system will hopefully help secure our place as the forward thinking, positive and pro-active law firm it has become.” experienced and qualified professionals and not outsourced at any stage of the procedure. The one-stop-shop development in our specialised areas will ensure easy access to justice for the public negating high brow traditionalism and offering a relaxed and approachable ethos.

Next year’s funding litigation issues are of course a sector concern but we don’t envisage this causing us a problem. We have always worked on a fixed fee basis, agreed from the outset with clients. This helps individuals and commercial clients get the right services at the right cost – as low as possible to deliver the high standards we’re committed to. Helen, our co-Director at NAS Legal, and I are able to market services to a level that clients see as more approachable and engaging than some traditional high street firms. We have already gained new clients because of our approach – being more accessible and in touch with clients than those hiding behind their shop windows on the high street.

This ABS model - meeting all needs under one roof - does appear to be something the corporate giants are pushing.

However, as an existing regulated entity we have a history of satisfied clients and a proven track record that the one-stopshop theory really does work!

One of the key drivers to apply for an ABS licence by the Solicitors Regulation Authority was to allow us to be owned and managed by professionals with a background in business development, client liaison and legal sector service standards and requirements. Becoming an ABS in such an exciting time of change for the UK’s legal system will hopefully help secure our place as the forward thinking, positive and pro-active law firm it has become.

The licence itself will in, the long-term, offer us broader options with exciting career opportunities for existing and new staff, whilst still demonstrating the most admirable qualities and standards of the existing practice.

ML // September 2012

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Features

41

Change of guard Change shapes business; change should be for the good of the people. Are the current changes to the civil justice system for the good of the people and how do they affect the businesses that service client needs? Dr Victoria Handley reports.

I

n 1998, the Queen’s speech had amongst it’s proposals the modernisation of justice. This entailed the introduction of the Civil Procedure Rules (1999) designed to modernise civil justice and eliminate some of the barriers to access to justice.

Lord Woolf had been appointed to reduce the unnecessary delay, excessive cost and remove undue complexity. He introduced a pre-litigation procedure for civil claims (the Protocols) and a new procedural code.

Solicitors and insurers had to change the way they worked. Front loading of claims was seen as the way forward to provide a cards-on-the-table approach.

The protocol required the circumstances, legal basis and quantum issues to be set out in a Letter of Claim to the insurers.

The burden then shifted to the insurers to investigate and provide a decision on liability with evidence in support within three months. This reduced Claimant costs as no liability investigation was needed after the Letter of Claim, until the insurers’ decision was forthcoming.

The Protocols worked so well that they were rolled out in other areas of law. Predictive costs in RTA and Employers liability cases placed further incentive to work efficiently, swiftly and make economic and realistic decisions about claims.

Solicitors needed to gear up their practices to work smarter, harder, and faster from inception of the claim whilst utilising the right level of fee earner to handle the claim whilst balancing the legal understanding of the issues against predictive costs. Insurers needed to reassign their teams to respond to claims quickly, carry out precise investigations and made reasoned decisions.

Move forward 10 years and costs remain in contention. Confident that insurers

could improve even further upon their practice to respond to a claim within three months, the RTA Portal required a decision in 15 working days. Yet again, costs were reduced. Businesses had to invest in technology, implement diary systems, educate fee earners, employ administrative and IT teams to upload the information previously provided in a Letter of Claim to the new portal. New technology saw some firms unable to compete and close. Whilst their understanding and application of the law was good, their desire and financial ability to move into new technology meant that they could no longer service client’s access to justice needs.

Despite the investment in technology, few improvements have been made to complexity having now four methods of dealing with road traffic accident claims alone (Portal, Portal litigation, Protocol and litigation).

Faced with the new challenges of a ban on referral fees (thereby reducing rights awareness among claimants), reducing portal costs and extending the portal to non-RTA matters, solicitors and insurers have to once again address their structure and procedures.

Portal amendments mean additional costs to the users to implement the upgrades. Some firms will close as the reliance on technology to ‘process’ claims becomes too onerous. Each change impacts on business by balancing the fee earning staff ratio between experience and profit; increasing the need for administrators and IT consultants to service the portals (could the insurers not have responded to the Letter of Claim within 15 working days and save the overall costs of the portal?); failing to improve access to justice as litigants in person are somewhat precluded from

the Portal process.

As fraud is alleged more frequently and is a growth area of complex law, firms must retain experienced staff to protect client’s interests.

Cost awards must reflect this.

So, are the changes for the good of the people? Constant change and reform does not reduce cost, delay and complexity as the basis for these problems is not rooted in one aspect of the civil justice system.

Change sees only the reduction in the number of firms operating PI departments, the dumbing down of tort and multi-tiered processes. There is a need for firms to recognise that this is a specialised area, that tort law cannot be dumbed down to the lowest possible fee earner and that cost is linked to complexity of the substantive or procedural law and not to quantum.

The Government’s desire to change guard and improve access to justice is being subverted by the desire to simply reduce costs - without a proper assessment of how and why costs are generated and whether they are indeed already at the correct level. Every change shapes our businesses but as it stands, such changes actually reduce access to justice.

By Dr Victoria Handley, Director, Handley Law Limited.

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ABSolutely fabulous?

A flurry of news and activity occurs each time a new ABS is named by the regulator, but are they as compelling as the hype indicates? According to Anthony Smith, it depends on your point of view.

A

noticeable development of the new legal services environment is the growth of market based research and industry events exploring various aspects of legal service delivery. There’s probably more publicly available information about lawyers and legal services than ever before, providing much food for thought.

In June I attended a round-table debate hosted by the law firm FoxWilliams. The purpose of this event was to discuss results of a survey the firm commissioned about Alternative Business Structures (ABSs). The survey report was titled ‘ABSolutely fabulous?’ and an executive summary can be downloaded from Jures (www.jures.co.uk), the independent marketing organisation which conducted the survey.

According to the survey - formed of responses from 100 commercial law firms to detailed questionnaires with some follow-up interviews - it seems that most respondents don’t see a single overwhelming compelling reason to convert to an ABS structure. The most popular (46.9%) reason cited for potential conversion was being able to ‘partner with other providers of legal services’. Frankly, this hardly sounds compelling, much less the legal service revolution that some were predicting as a result of full implementation of the Legal Services Act. One of the people on the discussion panel at the event was Adam Shutkever, CEO of Riverview Law - a new market entrant. He made the point that organisational structure – whether ABS’s or anything else – is merely a vehicle for serving the market. Much of the publicity surrounding the launch of Riverview Law earlier this year was about how, with the proverbial blank piece of paper, Riverview Law has devised an approach to legal service delivery based on its understanding of market requirements.

After the panel session ended I asked Adam why he thought he knew what his market needed. He explained Riverview Law has spent a lot of time, money and effort conducting extensive market research before deciding upon what legal services to offer, who to offer them to and how they should be delivered. Although our conversation was relatively brief, I was left in little doubt that market need rather than internal capability is the driving force behind everything Riverview Law tries to do.

Since the ABSsolutely fabulous event, Riverview Law have demonstrated willingness to innovate with the launch of its ‘Myview’ service. Once registered, users have free access to a legal document library (over 450 documents)

and other resources such as a portal ‘containing all the support tools used by Riverview Law’.

A recent conference - LawTechCamp 2012 - saw Ajaz Ahmed, co-founder of Legal365 address delegates as a keynote speaker. He was one of many who spoke persuasively about why, and how, the legal profession must change.

Interestingly, he said: “I don’t think that people from within the [existing legal] industry are going to be able to make the changes needed to win in the long term. They simply don’t have the vision or the courage to make the required changes…So is innovation and disruption ever going to come? You better believe it. It will eventually come because this market is too big and too valuable for entrepreneurs to ignore, but the innovators are going to come from outside of the industry, it’s not the lawyers that are going to do the innovating.”

The Legal Education and Training Review (LETR) initiated and promoted by the professional compliance bodies (Solicitors Regulation Authority, Bar Standards Board and ILEX Professional Standards) is perhaps seen by some as an overly academic exercise. As the review progresses such a view looks increasingly misguided. In July 2012 LETR held a symposium in Manchester and by all accounts the event was far from dull. James Atkin, head of Risk and Compliance at the Co-Operative Legal Services was there to say: “The Legal Landscape has changed and, with the advent of alternative business structures, new project management and consumer-focused skills are required.”

Other attendees from Riverview Law and Parabis spoke of building a multi-disciplinary service culture, where non-legally qualified personnel work alongside lawyers as part of (and perhaps form the majority of) client service teams. Indeed Karl Chapman, Chief Executive of Riverview Law, reportedly said that he would not employ many lawyers currently available because they do not have the right skills - ‘they cannot do what’s required in a customer service environment.’

If public pronouncements such as these are anything to go by, the newer market entrants seem to be validating the point made by Ajaz. So how is the competition going to respond?

By Antony Smith, Director of Legal Project Management Limited www.legalprojectmanagement.co.uk

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Features

45

SINK OR SWIM Litigation funding in the real, post Jackson reforms world, is going to be tough.

Solicitors are in self-preservation mode (those with leak lifeboats need not apply after April 2013...) and ATE insurers are paddling to bigger ponds, As Emma Waddingham reports.

D

ebates on the future of litigation funding have moved past speculation on the legal world post Jackson and towards a more realistic assessment of what to do next. Consultations over Damage Based Agreement (DBA) rates and closer collaborations with insurers and funders are gathering speed on a daily basis. For ATE (after the event) insurers, the wheels have long been put in motion to diversify into new markets or expand into more profitable areas of their business.

This will have an undeniable effect on the profitability of some firms, says Alan Strange, Underwriter Director at Lamp Services: “There will surely be a reduction in the number of bulk PI firms and PI departments post April 2013. If not, then they will be at least streamlined to make things work more profitably – such as RTA claims. We’re writing policies for post April 2013 but we don’t know how attractive they’ll be to the market.”

The idea that more complex work will go to specialist solicitors and those with a highly regarded track record in multi-track cases is shared by some ATE insurers. Those operating in a niche PI market could do well to continue this, according to Strange.

While ‘risky lower value’ cases will ‘disappear’ - perhaps the intention of the bill anyway, suggests Strange - there will a rise in the number of ‘have a go’ cases. “To an extent, we’ve seen this with the RTA portal anyway but this will increase across all areas,” explains Alan.

Jason Smart, CEO at Elite Insurance, warns many firms - who have tough decisions to make about DBAs, the loss of commission from ATE policies and dealing with the referral fee ban – are putting themselves first firms, unmoved by issues like the recoverability of fees for legal experts, such as barristers. “It’s every man for themselves – it will be interesting to see how fee arrangements with chambers will work out,” he says.

Whether this is a) a good thing for

clients and b) the profile of the legal sector is a debate in itself but as claimants cover the cost of insurance premiums from damages, ‘in some instances outside of injury work this burden will be too much and prevent some actions being brought,’ believes Jamie Molloy, Underwriter at 1st Class Legal, adding: “This is not good for access to justice”.

The ripple effect For ATE insurance providers specialising or mainly operating in PI ATE, the effect of LASPO is clear. “The MoJ has taken up LJ Jackson’s recommendation that recovery of ATE premiums be abolished. For PI/clinical negligence matters the MoJ is introducing QOWCS to eliminate the need for ATE. This in turn will mean a number of ATE insurers are likely to leave the market as their core work will be gone,” suggests Molloy.

“Some will move into/focus on general commercial litigation [although we’ll see later that this isn’t a risk-free, easy move] and others will look into writing BTE LEI products or different classes of insurance altogether. Elite, for example, (who are predominantly a Legal Expenses Insurer) are now writing different classes of insurance such as Professional Indemnity Insurance,” he adds.

Smart admits this is the case but that it’s nothing new: “We’ve always had niche products for commercial clients and although these are harder to write, it will be an area we expand into post Jackson.

“Insurers face tougher constraints on capital to underwrite business, so it’s clear we have to expand policy streams that are going to me more profitable. Ultimately, insurers and solicitors shouldn’t be embarrassed to make money out of what we do. Do you see GPs - who make a fortune out of private work getting embarrassed?”

Jamie Molloy, 1st Class Legal

Matthew Williams, AmTrust

Value in experience Alan Strange, Lamp Services Change does bring opportunities – if you have the experience. For those in the PI sector, it will be firms with a history of dealing successfully with complex claims who will be open to discussions on the best policies. For insurers (and solicitors) having experience in the field of commercial litigation will be an open door to more work.

Matthew Williams, Head Of AmTrust Law at AmTrust Financial Services, explains that for ATE providers, commercial litigation explains this is ‘mainly due to recoverability’ in commercial cases. “Post April 2013, commercial litigation claimants will have more realistic discussions with their insurers as fees will come out of damages. This will lead to more ‘grown up’ products created through sensible discussions with clients.”

ML // September 2012

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For commercial ATE insurers with a track record, next year will ‘bring a great divergence of products’, according to Williams: “At the moment, products are all a bit samey but as soon as recoverability goes – and it’s clients, not judges who field private talks on insurance policies – the opportunity for private, bespoke arrangements will be advantageous for all.”

However, adds Smart, commercial ATE insurance comes with a myriad of risks for those venturing into the unknown, ‘so don’t expect this market to boom’. “As well as needing the contacts and skill to forge bespoke agreements, commercial cases themselves are a far greater financial risk for insurers,” he says.

The move from injury ATE into commercial ATE is not easy. Molloy stresses the differences between PI work (block-rated/scheme based meaning an insurer will have a large book of small policies) and Commercial ATE policies (usually bespoke and applied for on a one-off basis) pose ‘far more concentrated risks’ as the cases are more complex.

“Lose one case and you’re not losing £25,000.00 but quite possibly hundreds of thousands of pounds.

Couple the lack of requirement for ATE in injury work with the lack of premium recovery in other areas and suddenly you have a much smaller market,” he says.

Wiliams agrees, adding that the benefit for those experienced in specialist commercial ATE policies will be able to spot where premiums can be lowered without damaging the sector. “Rates will go down, again, due to those sensible conversations with clients,” he adds.

His predictions for the small claims market are less positive however. ”Smaller claims may disappear – the squeeze will be on smaller cases with a lower level of quantum. Damages in these cases may not be enough to

cover the premium and will therefore be less appealing to the claimant. Of course, commercial BTE products would be an ideal way to overcome this challenge but convincing SMEs to take out that insurance, in a recession, is unlikely.”

Sharing the load Alternative billing arrangements, like Conditional Fee Arrangements (CFAs) are also predicted to be more widespread amongst solicitors and barristers in commercial cases. “There is a more gradual acceptance of taking on a CFA as they know they’ll lose business to another – especially barristers’ chambers.”

Another concern is what might happen in the future- as policies agreed now will be scrutinised under the new regime. Williams warns: “The old recoverability scheme will apply but judges may not be so sympathetic two years from now – this is something we all have to take into account now.”

Fast forward According to Williams, those involved in litigation funding are going to have to collaborate even further to offer the best, most secure policies for clients.

“Litigation funding is a rapidly growing sector, with more funders joining the market than ever. “There are a number of different approaches but funders are looking to work with ATE providers – and vice versa – to complement their funding products. The more innovative ATE providers and solicitors are, the closer funders will want to work with them, creating a ‘partnership’ approach involving not just the ATE provider, solicitor and client but also funder and experts, such as counsel.”

Contrary to the ‘plight of ATE insurers in the PI field’, the third party / litigation funding market is only just emerging and growing rapidly, adds Molloy, who notes: “First Assist has been brought out by Burford (US

One of Northern Ireland’s leading Personal Injury Solicitors including a Catastrophic Injury Specialist Unit Members of Headway – The Brain Injury Association Personal Injury Solicitors List

47

funder) and a number of other insurers already work with funders”.

“1st Class Legal has taken a slightly different approach in that we act in a dual capacity as a cover holder to insurers and also provide legal underwriting to litigation funders. In addition, we have funds that we have invested directly ourselves into cases.

Our focus post April 2013 will be to offer a variety of packages to those involved in commercial litigation,” he says.

So what about those in the PI ATE sphere – will the likes of Lamp Services vanish? “Not at all; oneway costs shifting has come as no surprise to the ATE industry. At Lamp, international healthcare is something we’ve been growing for a while in light of the changes. Although we’re fully investigating packages for PI, it’s clear the premiums need to be realistic as well as attractive to clients.

There will definitely be significantly less ATE providers as of next year and we already know one is completely shutting up shop.”

Profitability and brands aside, there is one factor Smart feels is marginalised in post Jackson conversations – that of risk assessments and fraud. He explains: “The MoJ placed the burden to lower fraudulent claims into the hands of the insurance industry. Risk assessments currently performed by ATE providers will no longer be there to prevent cases getting into the system. So what happens to those 63/100 fraudulent cases once insurers are out of the loop? Jackson batted this issue away when it was put to him in 2009 but Hill Dickinson has already seen a rise in the number of ‘have a go’ cases and with less scrutiny over fraud, the number will only rise. The MoJ needs to address this and take responsibility for a problem it will cause with these reforms.”

For more information, contact: T 028 9023 5554 E info@prhannasolicitors.com

ML // September 2012

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Features

49

Out with the old A growing number of progressive lawyers are shrinking their costs, reducing risk and building powerful competitive advantage by utilising outsourced electronic site mapping tools - helping streamline and increase profits for commercial lawyers, writes Richard Hinton.

A

nalysing title information on large and often complex sites is a task that traditionally takes commercial lawyers an inordinate time to compile and assemble.

The customary way of pulling together the legal titles and carrying out all the searches on a large development site which involves a lot of different titles is a labour intensive process. Researching and sourcing all the relevant information, only to resize and print it before cutting it out and sticking plans onto maps, is not a practical use of time and resources.

This approach is old-fashioned, out of date and not in keeping with the way the legal profession delivers other services to its clients. Almost all other aspects of the legal profession have been revolutionised by technology, with any required data usually available at the click of a mouse.

But this essential part of the property development process has hardly changed in decades.

So how does electronic site assembly compare to traditional methods?

Historically the process starts with a basic Ordnance Survey (OS) map, and from here it is straightforward enough to highlight the area of interest, but then it must be overlaid with cut outs from Land Registry title data. When information about utilities is added in, and the findings from the environmental searches are overlaid, it quickly bulks up into a sizeable and unwieldy piece of work.

Slimming down From a logistical point of view this makes transportation challenging and often taking up an inconvenient amount of space. An obvious advantage of electronic site assembly is that it removes the need to carry around boxes of papers and plans. A laptop and a projector or even a handheld tablet can allows the lawyer to carry out the review electronically and interactively.

Using electronic site assembly, clients who are appraising a site benefit from the commercial insight it provides.

Environmental searches are a costly part of the process sometimes a client won’t want to do a full report on the whole site when assessing its suitability for purchase.

Electronic site assembly can provide a contaminated land screening ‘layer’ which takes Landmark data and screens the area, providing a simple colour coded key for identification purposes. The darker the colour, the worse the contamination. Flood screening works in much the same way. This allows the client to easily see where they can place offices, houses, and car parks, and pinpoints where they might want to do more environmental work in case they need to dismiss the site on environmental reasons.

Another advantage of electronic site assembly is its versatility. Beginning with a paper plan of the area, from there, electronic site assembly will source the SIM, order the OC1s and Registers and provide them in GIS format overlaid onto the Ordnance Survey map. Users can then digitally

overlay and place existing hard-copy plans ‘geospatially’ onto the latest OS plans accurately.

The polygonised Land Registry data can be used to plot the various freehold and leasehold titles onto an electronic OS. It is then a straightforward task to colour-code the different titles as required in order to quickly and easily see if there is any discrepancy between titles. Also, to see if there are any ransom strips or other areas of concern such as unregistered land. In terms of risk management, this lessens the chances of human error.

A major challenge for most development sites has been identifying where the utilities are in terms of fibre optics and pipelines etc but electronic site assembly can show this in a single composite plan. It takes all the various utility plans from all the different providers and maps them electronically so users can view all of them together or separately in the component separate layers.

It is not always convenient or possible to view the actual site itself. This can make it hard to visualise or to spot things ‘on the ground’ which need to be addressed. The use of aerial photography therefore provides another dimension to electronic site assembly. It allows users to view the site ‘as it is’ remotely without the expensive of a site visit.

The efficiencies created by electronic site assembly mean the process can drastically reduce man hours, freeing up staff to work on fee earning business, while enhancing the client experience and installing a level of risk management that does not exist with a manual site assembly process.

For further details contact marketing@searchflow.co.uk

By Richard Hinton, Business Development Director, Decision Insight Information Group (Europe).

ML // September 2012

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Business Section

Click and go The UK online legal services market is in its infancy but as consumer demand calls for more choice and increased access to services, companies with huge success in the US are starting to stream their fibre optic services here. Mark Edwards reports.

T

he idea of online legal products in the UK has been a slow burner.

The rise of law-savvy consumers with a history of Amazon, eBay and Ocado e-receipts from online shopping is an exciting prospect for legal service providers. Yet this portion of the UK legal market is quite immature; the number of services purchased online is insignificant compared to the overall market size and market need is not being met. Given that the UK is one of the leading online purchasers of other products and services in the world, there’s no cultural reason why UK consumers wouldn’t buy their legal services online.

So the problem isn’t consumer shyness, neither is it legislation. The Legal Services Act is becoming a large driver (although not fundamentally necessary) of the change required for the legal industry to modernise further and make a significant shift to online, yet it hasn’t. Here lies the problem. The lack of desirable online legal products and services for UK consumers is to blame for the slow uptake.

However, there are a few exceptions.

Sectors such as personal injury have created massive opportunities for online providers. This will only increase to catch up with the consumption of online legal services in the US,

as uptake gains parity with other comparable services (e.g. financial services) over the coming years.

Lessons from America In the US, individuals and business are generally more law-savvy than in the UK. The assurance of the blossoming online legal services market in the States highlights the potential for similar new revenue streams here, from both legally unprotected private clients and small businesses.

What are they buying?

Customers in the US, through my experience at Rocket Lawyer, typically

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14/08/2012 12:51

Business Section want lower cost solutions from online providers, and often begin by looking for self help options to avoid the higher prices of a lawyer (perceived or real). They are therefore willing to engage with the legalities of the matter quite deeply.

Why should this be any different in the UK? What do they get?

At Rocket Lawyer, we guide customers through the purchase with online interviews that ask questions a lawyer would ask. The interview is paired with guidance to help people with their answers in order to make the experience as easy as possible. As long as the customer has the right information to hand about themselves and their circumstances, they will be able to create their own legal document online.

Do it yourself online legal services aren’t a complete solution for all. For those whose needs aren’t fully met, we have a ‘do it with me’ solution where we engage our law firm partners into the process. They are able to deal with more complicated elements and provide the legal advice which rocket Lawyer cannot. This provides a flexible, accessible and cost-effective service to help every customer get the solution that’s best for them.

Big brand effect Once well-known, trustworthy and easy-to-use brands establish good value online services in the UK, then a significant number of customers will opt-in to make savings compared to traditional legal service providers. Additionally, the added convenience and accessibility of online services will considerably benefit untapped potential customers: families, working professionals and small business that don’t

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approach law firms for help, for whatever reason.

Rocket Lawyer already helps millions of customers in the US each year with their legal needs. We do this by offering an affordable and valuable set of products and services directly to consumers. A high standard of customer service is important (as for any legal service provider), but it’s absolutely essential to create the right blend of online products and help people use them. An easy-to-use website and great telephone support are key, as is collaboration with progressive lawyers (who can work online) for more complex issues – ensuring those quality customer service levels remain.

Back to the UK Given the size of the UK legal market, its potential and the currently limited choice of online legal services, it’s clear to see why established brands from the US market will be opening up their e-shops here. Rocket Lawyer, for example, will launch to UK customers towards the end of 2012, bringing our marketing experience, web platform and client-focused products here. It’s only a matter of months before affordability and accessibility finally starts to meet UK expectations. www.rocketlawyer.com.

Rocket Lawyer will launch in the UK at the 2012, www. rocketlawyer.com.

By Mark Edwards, Vice President & General Manager UK, Rocket Lawyer.

SOS Q: How can case management help deliver lower operational costs?

T

he price-squeeze for law firms will take a strangle-hold when it comes to mass volume work - the work new entrants to the market are most coveting. New players are set to deliver legal services (such as remortgage, conveyancing and personal injury) in highly automated, online environments at nail-bitingly competitive, fixed-fees to the customer.

Fully utilising case management technology is a critical way solicitors may achieve any kind of profit in this type of work by lowering the cost burden.

Speeding up repetitive actions is the simple premise of case management systems, yet the cost-benefit to law firms addressing the price squeeze of commoditised work will vary depending on their size.

For larger firms costs can be reduced by de-skilling recurring elements of high volume work with scripted workflows so minimising the salary bill. Already commonplace in what can be considered ‘law factories’ - teams of less qualified, less expensive staff use highly prescriptive workflows to increase the output of work. To help mitigate risk, team leaders are qualified lawyers and team members are unable to deviate from the scripted templates.

For smaller firms, costs can be reduced with case management by making solicitors more self-sufficient thus reducing their reliance on support staff and challenging the outdated 1:1 ratio of fee earner to secretary. By

automating repetitive activity, lawyers can also increase their productivity and enjoy more rewarding and profitable work.

For many years, mass volume work had been the life blood of many law firms - the cash flow provider. However, without taking measures to reduce the cost of delivering volume work with case management technology, it may be impossible for some areas of work to be delivered at a realistic cost to the customer, whilst also bringing in a meaningful profit to the firm. Indeed, we might remind ourselves of the old adage that ‘turnover is vanity, profit is sanity’.

Checklist of cost benefits of case management: • Larger firms: de-skilling laborious processes to reduce salary overheads and manage risk • Smaller firms: reducing administrative costs and 1:1 ratio of support staff • All firms: more profitable delivery of high volume work to enable more competitive pricing David McNamara, Managing Director, SOS, www.soslegal.co.uk

ML // September 2012

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Business Section

Informance Q: Are lawyers applying their business analysis data effectively in terms of sustainable growth and are they even assessing the data correctly?

W

ith the current changes happening in the legal services sector and the emergence of a new future, it has never been more important for law firms to do better. Firms need greater transparency of their performance and be in the position to analyse their data on a daily basis.

Some of the key areas firms should be looking at are: who their top 10, top 50 and top 100 clients are, how much more additional work they could obtain from existing clients and how profitable their client base is.

For firms to sustain growth they must have a strategy in place to ensure continued development and increased profitability with the right data analysis in place to execute and measure performance. Without the right tools to do this, firms may find that they are at a loss as to what the numbers really mean.

The burden placed their finance and IT departments to deliver relevant reporting is often misplaced and when questions are asked, without the right tools in place, the answers will more often than not, be too late.

There are a host of measures that should be frequently reviewed such as time, billing, workin-progress and outstanding debt. In addition, having a transparent view on profitability at the client and matter level is becoming increasingly important. Whilst the arrival of Alternative Business Structures may not have an immediate impact, those firms who are not taking steps to review their strategy for the future, may find themselves playing catch-up.

Having the ability to monitor their financial performance on a regular basis, by giving all staff the capabilities to make a difference in their areas, will make a huge impact on how the firm rides the wave of change that is currently flowing through the legal sector.

Barry Talbot, Managing Director, Informance. Informance is QlikView Elite Solution Provider and the UK’s leading provider of QlikView to law firms.

Nesbit Law Q: Do the big ticket brands have the advantage in the Modern Legal Arena?

A

: There are three choices going forward in the Modern Legal Arena: get big, get niche or get out!

So the big ticket brands, firstly who are they? Coop Legal Services, RJW – Slater & Gordon and Claims Direct, certainly. Should any household legal brand name successfully obtain an ABS then I am sure they would also be included, but other than that it is hard to see that there are any standout big ticket brands in the arena.

There are certain advantages these much larger firms will have by way of marketing experience, customer service journey and the ability to deal with the regulatory regime on a major level. Their ability to harmonise process with IT driven platforms leads to a significant advantage in speed and compliance. However, whereas that will work successfully on a suite of both straightforward and commoditised cases, when the cases become more difficult and bordering on niche, the lower grade staff at these big ticket companies are more often than not unable to cope.

Therefore the ability to cope with niche work remains as much a viable option as ever. The niche firm will have lower overheads and will be able to provide a more tailored and potentially dedicated individual service to their clients. They will also be easier to manage on both

ML // September 2012

a supervisory and regulatory level due to the fewer number of people involved.

The success of big ticket brands is going to squeeze the markets considerably for the smaller and medium sized practices, whose only chance is to corner their own locality. However, the tendency for the public to want 24hour availability and online solutions means the local law firm will hold only limited attraction for them. It remains to be seen whether this is simply another storm that small and medium firms will be able to ride, but it’s easy to identify the obvious advantages that big ticket or niche firms will have in order to make life difficult.

Alan Nesbit, Nesbit Law

Business Section

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Neil Hudgell Q: Are the ‘power brands’ a risk to the well-being and longevity of my business?

I

face this question in one form or another on a daily basis. My answer is a consistent one, yes, but only if I let it be. It is the same answer I give when asked about the Jackson reforms and their inevitable implementation in 2013.

For my business the strategy is a simple one. Don’t compete where you can’t. I don’t have the multi million pound marketing budgets, national brand profile or back office support that the Co-ops of this world have. Nor do I have a client data base of literally 100s of thousands. I couldn’t and wouldn’t want to compete on that level.

Where I can compete is in the regional market places where I have long standing profile and reputation. I have a highly skilled work force of qualified and support staff committed to excellence in delivery of client care and a truly holistic approach in how we deal with compensation claims from initial instruction to post settlement. Growth has to be controlled and measured to retain that culture. Through our recent acquisitions that has been a very valuable lesson learnt for us.

This doesn’t mean that we give up on securing work nationally, far from it in fact. We have a very good on line presence, which generates work country wide. But our bread and butter is within a 50 mile radius around our established bases in Leeds, Hull and Birmingham.

There is no more powerful voice in securing work than the experience of the people you have already done work for and

here I believe we excel. The biggest single source of business for us is recommendation. Some of that is down to doing a good job, but it’s also about listening to what people want from the experience and acting on that. This is why we routinely carry out satisfaction surveys with our clients at any time from the start of the claim to its conclusion. We know that no two clients are the same.

Some still want a face to face interaction, whilst others prefer everything by email. We approach all our instructions on that bespoke basis.

We retain a personal touch, which some of the big players are often accused of lacking. Who enjoys going into their bank, for example? We are of a size where we aren’t reliable on huge chunks of work to survive, and can mobilize and adapt accordingly. We deal with increasing volumes of high value work, that isn’t necessarily suited to a power brand operation, and we make our profit by maximizing the costs on each job, not in the small margins on the volume.

Regardless of all the changes I still very much see a thriving role for a well positioned, mid size, regionally based, niche practice with forward thinking, bold and dynamic management.

Neil Hudgell, Managing Director, Neil Hudgell Solicitors.

A Great British Service

T

he summer of 2012 will be remembered as a time when it felt spectacularly accurate that we should have the word ‘Great’ in front of Britain. The Diamond Jubilee and Olympics have brought a much needed morale boost to the UK. Despite the Prince’s repeated bladder infections - I suspect that the Queen is rather chuffed by how it’s all turned out!

For someone who has dedicated the past 60 years to serving her country, the Queen has much to teach us about the principals of good service. The results of a YouGov survey, commissioned by the Legal Services Consumer panel revealed that only 70% of recent users of legal services felt ‘they were treated as an individual rather than as just another file’. This figure had been 75% in 2011.

Why is it important?

In times of austerity spending, companies have to get their service right if they are to have a share of the market.

Research carried out by the Institute of Customer Service demonstrates that there is a direct correlation between market share growth and customer satisfaction.

With clients having more choice about where (and how) they buy their legal services, marketing a law firm is more about ‘relationship marketing’ rather than ‘transactional marketing’. Relationship marketing focuses on getting the clients and keeping them longer term using a combination of marketing, quality and customer service.

Excellent customer service is at the crux of relationship marketing. Getting it right means: • Clients will be less inclined to go to your competitors.

• Satisfied clients will recommend you to others. It costs up to 10 times more to win a new client than it does to keep one.

• You avoid the risk of having a dissatisfied client who could damage your reputation and brand. Someone who experiences poor service is likely to tell up to 20 people about their experience.

• You have a good chance of cross-selling your firms other services.

• Fee earners and staff will get the ‘feel good’ factor from working in an environment where clients are satisfied.

Overall, think long term - not short term. A royal service equals a loyal client!

Natalie Rodgers, Managing Director, Scala Business Development

ML // September 2012

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Business Section

Legal Marketing Experts Q: What are law firms missing when it comes to brand identity consistency?

B

rand identity is a key component to the marketing of any business and law firms are no exception. By having a strong brand identity you are affording your clients and customers the opportunity of instantly recognising who you are and what your business has to offer. Maintaining consistency is vital in order to ensure that your brand identity remains strong; yet many firms still fall foul of the basics by changing colours, sizes and shapes. Others even omit their logo entirely in some advertising and marketing literature. Others believe that a re-brand every couple of years will benefit their marketing campaign. However, unless this has been handled expertly, there is a real danger of this course of action having the opposite effect, with customers becoming confused.

The brand identity should be prominently displayed in all marketing, advertising or promotional material, including letterheads, emails, websites, etc. It must appear in a consistent format at all times to avoid dilution - which will ultimately weaken it. That said; some firms do use different colours of the same logo to denote different areas of their business, which is fine as long there is consistency throughout.

If you are thinking of updating your brand identity, it’s important to fully consider what you want to achieve: whether you are looking for an entirely new re-brand or looking to refresh what you already have. For a complete re-brand, you will not want a brand identity similar to one of your competitors - you will want to look for something unique. If you are looking to freshen up your existing brand, it’s advisable to keep some similarities between the old brand and the new, so that when the re-launch takes place, clients and customers still recognise it’s the same business.

There are rules and regulations which need to be kept in mind and solicitors are additionally required to adhere to the SRA rules. Chapter 8 of The SRA Code of Conduct 2011 sets out the requirements in relation to publicity and can be viewed by going to: http://www.sra.org.uk/solicitors/handbook/code/content.page.

Faye Soden, Director, Legal Marketing Experts UK

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Antony Smith Implementing Legal Project Management

A

s the name suggests Legal Project Management (LPM) refers to the application of project management techniques to assist with the delivery of legal services. This can translate into practical help with things like: • Improved realisation rates • Better management of Fixed Fees • Helping transition to other forms of Alternative Fee Arrangements (AFA’s), particularly value based pricing • Improved client communications and overall client satisfaction (those who have implemented LPM processes say that the ‘client collaboration’ aspect is probably the most important single benefit realised).

Arguably, many solicitors already use some form of project management in their daily work. Successful solicitors have to manage their files and individual matters and this requires project management skills, even though the administration work may not be recognised as such. So what is Legal Project Management? One answer is to say that LPM is a more formal encapsulation of practices which are the hallmark of every good lawyer. Because these practices are captured and formalised, they can then become part of standard practice by every lawyer in the firm thus driving up overall quality of service.

Space does not permit a detailed explanation about how to implement LPM so:

• Ideally it should be implemented as part of your firm’s

overall strategy. After identifying suitable markets and services to be delivered, consider how best to deliver those services.

• Identify a specific delivery objective, which can then be measured and reviewed.

• Create LPM processes which best support that objective.

Core LPM processes could include things such as: o The creation of a Project Initiation Document (PID) for matters, which clearly records client needs and what success looks like from the client’s perspective. o A cost estimation and client communications protocol. o Periodic matter reviews where fee earners check progress against the PID and the cost estimation and communications protocol.

• Design and run a pilot project, applying LPM techniques to a relatively small number of matters.

• Assess whether the original objective has been achieved and the extent to which LPM techniques have helped to achieve it.

If you are happy with the results of the pilot, then plan to roll-out LPM delivery techniques more widely. If you are not happy with the results investigate why and remember: there is no such thing as failure - only feedback!

Antony Smith, Director, Legal Project Management Limited, www.legalprojectmanagement.co.uk

PI claims specialist quadruples in size using Proclaim Case Management In 1997, Neil Hudgell set up his own specialist personal injury and medical negligence practice which has since grown to be four times its original size and now employs a team of over 70 staff. He speaks to Modern Law about his success.

Q: Why did you choose Proclaim?

W

e needed a robust system with the flexibility to adapt and develop in line with the growth of our firm. Eclipse was widely known to be the market leading Case Management Software provider and Proclaim came highly recommended.

Proclaim allows us to manage our entire caseload within a single centralised system, containing a principal store of approved letters and customised workflows. Many facets of case progression can be automated and routines can be created that ensure we stick to our service promises. The automatic generation of set tasks provides fee earners with a daily action list and allows overdue tasks to be monitored by supervisors.

A major benefit is how Proclaim provides a ‘virtual contact’ with our business partners, increasing speed and security. All our medical reports are obtained from UKIM, with instructions being sent via automated email from Proclaim. We instruct Premex in the same way to provide triage services for appropriate claims.

Q: Do you use Proclaim for management reporting facilities and statistics?

R

eports are essential for providing transparency throughout the business. All managers can easily monitor the quality and mix of work to ensure it is carried out by the most appropriate fee earner. Daily reports are distributed to team managers to provide comprehensive updates on all incoming enquiries and a weekly list of all closed files is circulated, detailing the settlement achieved on each one. Without Proclaim this would all have to be carried out manually, which would have huge time and cost implications.

Eclipse Legal Systems, www.eclipselegal.co.uk.

For information, email: info@eclipselegal.co.uk or call: 01274 704100.

ML // September 2012

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Business Section

‘Preaching to the converted on the importance of professional standards’ The MoJ has appointed an agency to provide interpreters to the legal sector, but as Ted Sangster warns, professionals may not necessarily be qualified and accountable public service interpreters – offering high levels of risk for lawyers.

T

he legal profession understands the vital importance of professional standards. Lawyers spend years obtaining the qualifications and level of experience necessary in order to practice and must abide by a strict code - being held accountable for their professional conduct.

Such standards are integral to the judicial system. For people to be fairly represented they must have access to expert legal counsel – i.e. advice that is of a recognised standard and regulated.

Just as legal professionals adhere to and uphold professional standards; I believe it should also be the case for the public service interpreters who are employed by the justice system.

Particularly as they provide the access to your expert advice.

ML // September 2012

Maintaining standards The National Register of Public Service Interpreters (NRPSI) was founded in 1994 to maintain a register of professional, qualified and accountable public service interpreters to safeguard the public and profession. One of the ways it helps to protect the public is by playing a key role in fulfilling the requirements of Articles 5 and 6 of the European Convention on Human Rights (ECHR) concerning ‘the right to be informed in a language one understands of the reasons for arrest’ and ‘the right to a fair trial, including the right to have the free assistance of an interpreter’.

There are currently more than 2,200 UK-based professional interpreters on the Register covering 101 languages. To be accepted onto the Register they have

each satisfied rigorous entry criteria in terms of qualifications and experience, and demonstrated their commitment to professional standards by signing NRPSI’s Code of Professional Conduct. All registered interpreters are issued with a photo ID card to prove their registration and identity.

While NRPSI is a voluntary regulator, our powers allow us to discipline and, ultimately, exclude someone who breaks the code. In this way we can ensure interpreters on the Register are appropriately qualified, have

Business Section

the level of competence claimed and employ best practice.

At the same time, public service organisations and others who use the Register can be confident that they are employing a qualified interpreter who can be held accountable should their conduct or competence fall below the high standards expected of a registered professional interpreter. Essentially, using a registered interpreter provides you with the peace of mind that you are working with someone who is professionally competent and able to do their job. Using the online register to search for an interpreter is not only free but extremely easy. Something evidenced by the fact that it receives over 30,000 searches each month to: • Check if an interpreter is registered – by searching for a specific interpreter by name or the registration number that appears on their ID Card.

• Find an interpreter to employ – by searching for the required language and then narrowing down the results by selecting a location or type of security clearance.

Playing with fire The risks of using an unregistered interpreter are many and the costs high. You risk using someone unqualified at best and incompetent at worst to be the direct line of communication between you and your client. The consequences of being misunderstood and serious inaccuracies in court interpreting can lead to wrongful conviction and a potential risk to public safety.

And, when things do go wrong, you have no access to a formal complaints procedure.

The use of unregistered and unaccountable interpreters is a continual threat to the quality and reputation of interpreting.

Nowhere is this more clearly demonstrated than in the case of unregistered and unaccountable interpreters failing to show for

59

court hearings at a considerable expense to the legal system and taxpayer. There have been a number of such cases reported in the news over recent months. This situation has arisen since the Ministry of Justice appointed a single agency, Applied Language Solutions (ALS), to provide interpreters for court hearings.

ALS is not required to use interpreters on the Register and has successfully deterred a number of registered interpreters from working for them by cutting their pay.

A shared vision As well as collaborating with the interpreter membership bodies to tackle this specific issue, NRPSI is working on a number of other fronts to ensure the National Register is the first choice for anyone who needs a qualified professional interpreter. To start with we have embarked on a communications programme to raise awareness of the register and convey the importance of using qualified and accountable interpreters. We are working to expand the register and enhance its usability. We are also developing guidelines to help both interpreters and the users of their services get the most from working together. These improvements will enable us to better serve the public, users of the Register and professional interpreters.

Our greatest asset is the professional interpreters who share our vision and the users of their services, like lawyers, who value professional standards.

By Chairman of the National Register of Public Service Interpreters (NRPSI).

We work with law firms to ensure compliance and optimise best practice and risk management. Our extensive and thorough knowledge of the Code of Conduct and other regulations will ensure your law firm is compliant and your processes sound. The advice we offer is clear and practical, and we pride ourselves on our exceptional customer service and unbeatable work quality.

Legal-Eye Specialises in • Best Practice • Risk Management • Compliance of the Code of Conduct, Equality Act 2010, EU Commerce Directive • Lexcel Accreditation • CQS Applications • Completion of tender responses to win new work • TCF (Treating Customers Fairly) programmes / training • Training: AML, Equality and Diversity, Data Protection, Conflict of Interests, Lexcel, The Bribery Act

Tel: +44 79 2177 4548

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ML // September 2012

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Business Section

Survival of the fittest ABSs have arrived and are here to stay. With them comes the emergence of new business models, as both existing firms and new entrants seek to find that something unique that will differentiate them from the competition. As Jitendra Valera asks, who will succeed and which business models will survive?

T

he variety of business models emerging suggests that the winning formula is yet to be determined. However, it’s clear that whether it is to be: the market leader in a targeted high volume practice area (e.g. conveyancing); to create a direct legal service offering (e.g.

Riverview Law) or; build an ‘Online Legal Service’ providing a variety of automated legal services and documents, the business model - the structure and funding will be driven by what made the firm decide to become an ABS in the first instance. In nearly all cases, the overriding driver is to create a business that will be market leading and generate strong revenues, ultimately delivering high returns on investment.

Recurring themes in emerging models Although the winning formula is yet to be determined, there are a number of recurring ‘themes’ in the new business models which most ABSs have, or should have, as central to their business ethos.

Client Centricity: There is a clear recognition that this is critical to success. This ranges from providing transparency on fees to building the service delivery capability seen in other industries - such as finance and retail. This includes the ability for a client to track cases online and communicate with the provider via various means such as text, email and online Alternative Fee Arrangements: A move away from the traditional ‘billing hour’ to offering clients a price for legal work based on value of service, rather than the time a lawyer spends. This brings direct financial advantages to clients and can be flexible, transparent, competitive and in some cases, aligned to clients’ success. Although the ‘fixed-fee’ model gets the most air time, the most interesting and sustainable are ‘subscription models’ - where a monthly fee covers all the services a client receives from a firm. Such arrangements not only deliver value to clients but also create a sustainable value for the firm Leveraging Technology to gain competitive advantage; ranging from driving efficiency gains in high volume or repetitive, processdriven work to creating a new paradigm with lawyers operating virtually without an office Online Presence: This is not only about finding work, engaging with clients and keeping them informed on case progress 24/7 online but extends to provision of automated legal services, without any lawyer intervention,. This pushes the U.K. consumer towards following the doit-yourself U.S. model.

Non-lawyers with specialist skills to run, grow and manage the firm: Aligned with this is use of management information as a key tool, not limited to financial KPIs but also operational KPIs covering all areas, from process efficiencies to people and marketing effectiveness Marketing and branding are central to ABS’s seeking to generate demand, be competitive, create brand value and position themselves attractively to clients and investors

ML // September 2012

Achieving return on investment Given that return on investment and therefore achieving a high valuation is a key driver for many of the new business models, there is a need to move away from the levels experienced by traditional practices. This would not be uncommon at around three to five times the profit. This compares miserably with commercially run businesses which can achieve valuation multiples of 10 to 15 times profit. Such high valuations are typically linked to businesses that have a high degree of ‘recurring revenues’ and ‘valuable long-term contracts’ - with high potential for further growth. It is therefore logical that in seeking to achieve a higher return on investment, ABSs move away from the traditional WIP and adopt business approaches where either recurring revenues or a move to life-time value client relationships play a key part of their make-up Conclusion – the jury’s out!

The high likelihood is that many of the emerging business models will not survive as they are today. We are already seeing some new entrants who saw a move to online services as a panacea and fail to generate the high demand expected as consumers are not yet ready (or willing) to buy legal services online. The most successful firms in the long run will be those that adapt and change swiftly whilst still providing quality legal services profitably and generating high returns for shareholders and investors.

By Jitendra Valera, Chief Marketing Officer, IRIS Legal.

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Business Section

COLPs & COFAs: Legal Eye what next?

By now, firms will have nominated their COLP and COFA, responsible for compliance within law firms. So is this a time to sit back and wait until the SRA confirm appointments or are there key steps firms should be taking now?

Emma Waddingham reports.

I

t’s possible those nominated as a COLP and COFA are a bit fidgety at the moment, to say the least. “It is fair to say that these are daunting roles,” says Steve Cornforth, Senior Partner at EAD Solicitors and President Liverpool Law Society.

“It is easy to feel that you will not be at the top of your firm’s Christmas card list after a couple of months in the job. It is the duty to report to the SRA which is scary to most of us,” he adds.

But will it be this bad? “So long as you start to prepare the ground now then you should be able to cope or COLP without too many fears,” Steve suggests. Rob Price at Bolder Solutions agrees there has been ‘huge panic’ in the run up to nomination, ‘but the focus should now be on internal communications and leadership engagement.

“It won’t be that bad at the coal face – there is plenty of support but its widespread understanding in the firm of the role and processes for the COLP and COFA roles. It’s fine if the COLP / COFA knows what they’re doing but firms need to ensure fee earners know why they are deluged with new systems and procedures,” he says.

“Fee earners need to know which hops to jump through and refer issues up to department heads, in the same way as money laundering compliance. There are reasons behind the regulation changes and everyone in the firm needs to be on-board for things to run properly,” stresses Rob. It’s clear you need a strategy to action now – not simply to give COLPs and COFAs peace of mind but to ensure a smooth, accessible and honest compliance procedure within the firm. Some top tips from Steve are: • Make sure you have full buy in from your partners. I would get it in writing from each partner that they understand your role and will give you their full support even if you have to have to report a breach.

• Don’t be afraid! You have been nominated because you are the best person for the job. If you don’t do it somebody else will have to!!

• Be realistic about what is a material breach; there is no clear definition.

I would advise to have your own definition and use that. So long as you have seriously considered what is material and remain consistent, then you are unlikely to be criticised.

Rob adds: • Be cautious while things are bedding down - it’s like driving 20mph in a 30 mph zone. Don’t rush or potentially face retrospective discipline.

• Internal communications are key to distilling important information • Use face-to-face training and workshops to explain the new systems and address questions and resistance from the start.

• Don’t report everything that moves, however in the same vein, the SRA won’t believe a clean bill of health from the COLP / COFA. There’s always bound to be something that slips through the net. Again, specialist training can help fee earners identify what they should be reporting and how.

These are just a couple of ideas for starters. So good luck and be prepared!

ML // September 2012

Q: So the deadline has passed now to assign your COLP & COFA – what are the next steps?

I

f you are one of the 93% of firms who did nominate your COLP and COFA, one of the next steps is to wait to hear from the SRA regarding your nomination(s).

It’s equally important that firms need to acknowledge the COLP and COFA will be taking up their roles from January 2013 and they need to ensure they are proactive about compliance.

Key questions The SRA will be reverting back with the following types of questions. So, for example, the COFA will have to provide evidence of: • experience of working with the SRA Accounts Rules • the accounting system used?

• who will undertake the day-to-day accounting activities?

• experience in signing off reconciliation statements and confirmation that you will be reviewing and signing them off • knowledge of managing office and client accounts The COLP will be asked the following types of questions: • do you intend to share premises or use serviced offices? If so, can you advise how you intend to ensure that all client information is kept confidential?

• will you be outsourcing any operations, and if so, how do you intend to ensure that all client information is kept secure?

• Do you have any active fee sharing or referral agreements? Will you be paying for any introductions and if so, please provide the amount/s per agreement. Also provide the percentage of the company’s total fee income expected to arise from the arrangement/s.

Firms need to ensure they are ready to answer these questions and provide the evidence required.

By Jaunita Gobby, Director, Legal Eye Ltd

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