Modern Law Magazine - Issue 5 by Charlton Grant

The Business of Law

March 2013 | Issue 5 | ISSN 2050-5744 Emma Waddingham reports exclusively from Westminster on the recent All Party Parliamentary Group roundtable on the future of legal services. Rob Terry, Group CEO of Quindell Portfolio PLC speaks to Modern Law about how he manages standards and clients across one of the largest legal services portfolios in the country. The People’s lawyer: Greg Shields asks if law firms are actually any good at putting people first.

Modern Law Magazine | March 2013 | Issue 5

“Barristers contribute to the reform of law, assisting government and doing so for free – you can’t label, regulate and commoditise this, which the LSB is sometimes keen to do” Maura McGowan QC, Chairman of the Bar Council

Professor Stephen Mayson “The suggestion that ABSs are in some way unethical is a line their opponents have taken from the start... The illogical attack is nonsense and fundamentally flawed” Charlton Grant

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Introduction

Welcome T

he legal services ‘Big Bang’, it’s happened but not quite as dramatically as we expected. Don’t get me wrong, there are plenty of new and large-scale ABSs and portfolios established across all lines of service sectors but the extent to which they have affected the marketplace is yet to be seen. The truly exciting times lie ahead. So for now it’s business as usual, with the added need to sharpen strategies, deploy unique selling points and shout about your success and ability to meet clients’ needs. This is particularly true for those at the Bar, according to Maura McGowan QC, Chairman of the Bar Council and one of our headline interviews (pages 11-12). McGowan QC speaks of defending the integrity of legal services and the rule of law amid ambitions to innovate the sector. Professor Stephen Mayson, our second interview (pages 15-17) adds, however, that it’s important not to assume ABSs and new legal entities are ‘unethical’ as they create dynamic and commerciallyminded business plans with the investment of external funders. The regulators are not

indiscriminate in their licensing approval and will be watching new entrants, even more closely than some law firms. ABS: Who, why and winners We’re only a few steps into 2012, but almost a year on from the wide-scale launch of some of the most exciting businesses to enter the legal market and re-energise already successful legal brands. Enter the first of our ABS supplements, created to cover the stories of those who have gone through the process, funded licensed entities and support them. If you’d like to share your experiences, why not drop me a line at emma. waddingham@charltongrant.co.uk or come and find me at the Modern Law: The New Frontiers Conference (1 May 2013, The Royal College of Surgeons, London) if you’ve been quick enough to get a ticket! Full coverage of the conference, chaired by Michael Napier CBE CQC LLD, will be in a forthcoming issue of the magazine. Modern Law, the source for all that’s new in the business of law... Emma Waddingham, Chief Editor

Modern Law Magazine

Issue 5 – March 2013 | ISSN 2050-5744 Events Manager Julia Todd

Project Director Kate McKittrick

Chief Editor Emma Waddingham

Accounts Director Karl Mason

Editorial Department Events Co-ordinator Charlotte Parkinson Antony Smith Charlotte Parkinson

Advertising Rachael Pearson Production Lindsey Thomson-Heley

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

ML // March 2013

Contents

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

Emma Waddingham, Chief Editor, reports exclusively from Westminster on the latest All Party Parliamentary Group roundtable made up of regulators, ABSs and guests, to discuss the future of legal services.

11-17 The INTERVIEWS 11 Interview with... Maura

McGowan QC

The Chairman of the Bar Council speaks to Emma Waddingham about innovations at the Bar in the modern legal market and, while she admits they need to promote their achievements more widely, why she believes barristers are as capable of change as solicitors, so long as it’s not ‘change for change’s sake’.

13 Is the Bar slow to innovate?

Neil Douglas, Parklane Plowden

15 Interview with...Professor

Stephen Mayson

The independent thought leader and Director of the Legal Services Institute talks to Modern Law about key issues and misconceptions regarding ABSs and regulation – especially those that fudge the idea of access to justice.

19-37 The views 20 Cutting red tape

Agnieszka Scott, Solicitors Regulation Authority

20 Funding people

Noel Inge, ILEX Tutorial College

21 Reward matching

Steven Arundale, RBS & Natwest

21 Hold the upgrade?

Jo Hodges, Redbrick Solutions

22 Full attention please

Robert Parness, Paramount Legal Costs

22 Leadership

Greg Shields, Forster Dean

23 Serving you well

David Bott, Bott & Co.

23 Is there anybody out there?

Eddie Goldsmith, Goldsmith Williams

24 Making the most of it

Charles Christian, The Orange Rag

24 Judging a book by its cover

Colin Taylor, Prime Risk Solutions

25 Business intelligence

Barry Talbot, Informance

Editorial Columnists Agnieszka Scott Director of Policy Solicitors Regulation Authority

Barry Talbot Managing Director Informance Limited

Eddie Goldsmith Partner Goldsmith Williams

Matthew Williams Head of AmTrust Law AmTrust Financial Services.

Alan Nesbit Managing Partner Nesbit Law Group

Catherine Bailey Managing Director Bar Marketing

Eimear McCartan Solicitor Ralli Solicitors

Neil Douglas Chief Executive Parklane Plowden

Alex von der Heyde Managing Director Esterase Ltd

Charles Christian Editor in chief The Orange Rag

Faye Stenning Inside Conveyancing

Neil Hudgell Managing Partner Neil Hudgell Solicitors

Andrew Stenning Managing Director Searches UK

Chris Kenny Chief Executive Legal Services Board

Allan Carton Managing Director Inpractice

Colin Taylor Director and Head of Risk Management Services Prime Risk Solutions

Antony Smith Director Legal Project Management Bernard George Director Socrates Training

ML // March 2013

David Bott Managing Partner Bott & Co

Greg Shields CEO Forster Dean Guy Hewetson Partner Hewetson Shah Jitendra Valera IRIS Legal Jo Hodges Marketing Director Redbrick Solutions

Noel Inge Managing Director ILEX Tutorial College Orlando Scott-Cowley Enterprise Consultant Mimecast Priya Anand Patel Senior Associate Legal Eye Ltd Rob Hailstone Bold Legal Group

Rob Martin Director, Federated Search & Knowledge Management Thomson Reuters Robert Parness Costs Lawyer Paramount Legal Costs Russell Smart Chief Operating Officer Elite Insurance Company Ltd Steven Arundale Head of Professionals Sectors, Commercial Banking RBS & Natwest Sue Nash Founder Omnia Legal Software Ltd

Contents

25 Leadership academy

Bernard George, Socrates Training

42 The people’s lawyer

27 A good night’s rest

Andrew Stenning, Searches UK

27 Access to knowledge

Rob Martin, Thomson Reuters

Allan Carton, Inpractice UK

29 Engaging for change

Alex von der Heyde, Esterase Ltd

31 Commercial underwriting

Matthew Williams, AmTrust Financial Services

Sue Nash, Omnia Legal Software Ltd

33 IT blindspot

Orlando Scott-Cowley, Mimecast

33 Issues of proportionality

Russell Smart, Elite Insurance Company Ltd

33-49 The Features 33 Success = understanding

Adequate funding is vital for any sustainable business. While current economic uncertainties throw this into sharp focus, firms need to better understand the interplay between structure and finance for success. George Bull writes.

35 Interview with...David Jabbari

David Jabbari, CEO of Connect2Law, radiates optimism and enthusiasm for the legal profession generally and Connect2Law in particular. Antony Smith finds out what his plans are after being recruited by the firm last year, with a brief to sharpen the organisation’s effectiveness in the post-ABS world.

39 The great unknown

When some parts of civil litigation are so uncertain, how are legal entities supposed to make concise and achievable business plans (even with the most market-aware leaders) when there is a lack of clarity, procedural uncertainty and a whiff of ‘Yes Minister’ with regards to LASPO and the Jackson reforms, asks Anthony Hughes.

The modern view of the regulators, statute, case law and public policy is that litigation funding uses the full range of litigation funding & finance options. Sir Roger Carrick sheds light on these key tools.

47 Interview with…Rob Terry

31 Budget preparations

Greg Shields asks if law firms are actually any good at putting people first, especially in light of increasing commoditisation.

45 Funding justice

29 Spread the word

Emma Waddingham speaks to Group CEO of Quindell Portfolio PLC and its ABS, Quindell Legal Services, about how the company manages services, standards, clients and employees across one of the largest legal services portfolios in the country.

51-62 BUSiNESS MANAGEMENT 53 Lunch is over

Priya Anand Patel, Legal Eye Ltd

53 Brand value

Ian Hunter, Jellyfish

54 Selling consistency

Rob Hailstone, Bold Legal Group

54 Brand power

Faye Stenning, Inside Conveyancing

57 Marketing discipline

Catherine Bailey, Bar Marketing

57 Brand innovation

Eimear McCartan, Ralli

58 Delivering quality post-LASPO

Paul Wilkinson, Lawclient Ltd

59 A case of Festina Lente

Anthony Glaister, MCIArb

60 Marketing moves on

Mark Witter, Anglia Research Services

60 Measuring the benefits

Nick Hodges, Oyez Office Team

62 Approaching costs

limitation budgets

Antony Smith, Legal Project Management

62 ABS: the low down on a start-up

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Emma talks news

Emma Talks News Emma Waddingham, Chief Editor of Modern Law was given access to the latest All Party Parliamentary Group (APPG) roundtable meeting held in Westminster recently. Christina Blacklaws, Director of Policy, The Co-operative Legal Services; Lucy Scott-Moncrieff, President of The Law Society; Maura McGowan QC, Chairman of the Bar Council and Chris Kenny, Chief Executive of the Legal Services Board, formed the panel to discuss ‘the future of legal services’, chaired by Lord Hunt of Wirral.

he impressive venue of Westminster attracted practitioners far and wide to the latest APPG meeting on the future of legal services in February, including Jonathan Djanogly MP (former Minister of Justice), and an all-star panel line up. The event, chaired by Lord Hunt of Wirral, gave panel members the opportunity to offer their thoughts on what the future legal system and offerings might look like.

The current landscape

The advent of Alternative Business Structures (ABSs), technological innovations and increased competition, as well as reform, will have a significant impact going forward in the legal sector. The Law Society / MOJ / LSB Baseline Survey of Solicitor Firms report in 2012, explored the extent to which different factors have been a problem for firms in 2010/2011. This report indicated that the majority of solicitors firms were most concerned with ‘complying with regulations on legal services provision’ – the introduction of COLPs, COFAs and reform such as LASPO. However, secondly highest on their ‘worry list’ was the issue of competition for business – both from peers and from forthcoming new legal entities. Interestingly, the Law Society/MOJ/LSB High Street Firms

survey 2012 reported that only 25% of respondents concerned about competition highlighted ABSs as a problem (this could be because the number of registered ABSs was, at the time, relatively low). How things have changed!

Fast forward

Chris Kenny, Chief Executive of the Legal Services Board, went first. His view (in contradiction with the theme of this event) is to ‘never make predictions about the future, especially in the field of legal services’. He believes ‘there is so much change ahead’ that’s it’s hard to outline the shape of the sector and the nature of suppliers further down the road. There will be, he added, ‘a much more diverse market than in the past’. Fairly obvious but who can blame him for being cautious? The nature of suppliers is changing by the minute (take a look at the first of our ABS special editions enclosed in this issue of Modern Law for examples of how ABSs are leading this change) and the rumour mills have it that Direct Line, the AA and BT are also entering the legal market. Back to Westminster and Kenny’s view is that the use of white-labelled services and back-office supplied services will be used more prominently in the future. A vision of more law firms offering

back office support to other law firms – particularly in areas outside of London. Branded networks such as Quality Solicitors, he suggests, have already responded to the increasing fragmentation of the market and concerns from high street lawyers by providing a scheme and marketing it to the public. These are ‘examples of more fluidity; providing better legal advice and professional services’ – a move that makes Kenny more ‘optimistic about the future’. He fought back claims that the legal sector is the ‘least innovative’ part of the economy, arguing that it has moved to seek opportunities, rather than be responsive to markets. Export opportunities and being quick to create new services for corporate clients are two key examples of this, outlined he said, in the success of Riverview Law.

“Technology should be used more extensively to help ‘sell’ legal services, especially through social media. This, she added, is how junior lawyers will be delivering services to the next generation of ‘time poor’ clients” Lucy Scott-Moncrieff, Law Society ML // March 2013

Emma talks news

“Despite the jokes, lawyers are sharks; they have to keep moving to survive - so long as they do so safely and sensibly” Maura McGowan QC Lucy Scott-Moncrieff, President of the Law Society, took her place at the pulpit to talk about the effect of liberalisation in the legal sector, allowing for varied, extensive and ‘great’ innovations by traditional law firms. She believes that as long as an ABS satisfies the Regulator ‘protects the interests of clients and those working within the organisation’ and continues to be monitored in line with those ethics, then high standards of service will continue. One of her most crucial points alluded to the rise in technology and its impact on the changing role of lawyers in the future. Solicitors are no longer there to ‘tell people what the law is’ but ‘how to manage the law and interpret it in line with the bigger picture’. Technology, she said, has helped people access the law on an unprecedented scale, so lawyers are now best placed to help interpret the law and advise on where it should be applied. Technology should be used more extensively to help ‘sell’ legal services, especially through social media. This, she added, is how junior lawyers will be delivering services to the next generation of ‘time poor’ clients. In terms of driving change, the new Chairman of the Bar Council, Maura McGowan QC, stressed similar points to those offered in our recent interview on the Bar (see pages 11-12) - namely that the sector ‘has to be sure innovation is the right thing to do, not just because we are capable of it’. McGowan QC went on to point to the ‘already innovative’ work conducted by the Bar which will set the scene for the future; although admitted that ‘because we’re lawyers, we are good at hiding the fact we’re good at being adaptable’. Her main concern however, is the demise of legal aid work and access to justice for ‘vulnerable people who often only see legal services as an emergency service, rather than a luxury service’. Another concern from McGowan is the possible ‘over inflation’ of the market caused by ABSs and external funders, who must ‘not allow for the principles of the rule of law’ to be diluted or undermined’ in the drive to innovate legal services. A point well-received from the floor, underlined by her closing remark: “Despite the jokes, lawyers are sharks; they have to keep moving to survive - so long as they do so safely and sensibly.” Personally, I can’t imagine many sharks moving so responsibly in the battle to beat off competitors but you can’t blame the Bar for being cautious.

The branded view

Christina Blacklaws, Director of Policy, The Co-operative Legal Services, outlined the future plans of the branded ABS, which stands out from most ABSs in that it’s historically a consumer co-operative, ‘known for serving the community and being an ethical leader’. Christina said she has been ‘pleased to see the sheer energy, enthusiasm and creativity come to fruition in the marketplace in terms of ABS uptake’ – especially in terms of the approach to accessing new funding. She claimed ‘there will be no big bang; change won’t happen overnight,’ despite the significant entrance of ABSs over the past 12 months. For the Co-op, the ability to harness technology and fund the development of bespoke, in-house systems means they can mix free initial advice with DIY online legal tools and a legal aid telephone service to help ‘fill the gap’ left by the elimination of Legal Aid. ‘We are a force for good in business and for the profession; we aim to be an excellent consumer champion to provide high quality, accessible and affordable legal services’. Not an altogether surprising statement from the Co-op but certainly a firm retort to those who argue ABSs aren’t as ethical as traditional law firms...

ML // March 2013

Ready for the floor

Many of the questions pitched to the panel from the floor were largely focused on the diminishing legal aid market, asking Blacklaws ‘will even the Co-op run these cases if it’s not profitable to do so?’. Debate on the collapse of work for criminal practitioners, along with access to justice in this field, soon followed - an APPG meeting in itself. Blacklaws defended the ethical behaviour of ABSs (mirrored by Professor Stephen Mayson in our interview, pages 15-17), to naysayers which distracted from an all too brief discussion on what clients expect from legal services suppliers. One solicitor from Keystone Law identified the key changes to the sector in that ‘technology has removed the need for face-to-face interaction. But this is often what clients want – access to self-service documents. Modern clients don’t especially want a dayto-day relationship with a lawyer, preferring a here and now service at any time of day’. This delegate also raised the point of what lawyers increasingly want from their business, a ‘work-life blend’, where flexiworking supports 24-hour services for clients and more diverse working options for lawyers. However it was Jonathan Djanogly MP who won quote of the night with his comments on how the sector had reacted to the Legal Services Act. For first time, he publicly declared that the Law Society and CiLEX, had ‘adapted very well’ to the introductions of ABS and the liberalisation of the market, however ‘the Bar has some work to do to apply itself in terms of ABS’. He said: “It needs faster adaptation or face being left behind.” This is a view echoed by the LSB and something the Bar has to address collaboratively to redress. Sitting on the sidelines, Baroness Ruth Deech, Chair of the Bar Standards Board, remained silent on this point but apparently her conversations with the LSB and others lasted long after I left to get my train home. Emma Waddingham Chief Editor of Modern Law

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Interview

Interview with... Maura McGowan QC Chairwoman of The General Council of the Bar

Q A

What will barristers face during life at the modern Bar?

Most commercial and civil practitioners face a good, prosperous and secure future at the Bar. Recruitment will have to meet market needs but those who succeed in commercial law face a confident future. Publicly funded work may be less secure. There will be a reduction when work comes out of scope via the forthcoming LASPO Act, as well as a reduction in criminal work. There is a problem in that the work is decreasing generally, the number of solicitors doing advocacy work is going up and fees have been cut across the board. However, the Bar is still and has always been a tiny profession and has only ever recruited on a small level. If we’re lucky, the profession will stay the same; we will not expand – particularly in family and criminal law.

Q A

Will barristers have problems expanding into other areas of work if they have to leave the Bar?

Most will choose not to leave the Bar and it’s not as if the CPS or solicitors are recruiting. Yet barristers will find they have skills that they didn’t know they had if they do look to other professional roles. They are bright, articulate and persuasive. Some may find roles in companies that they would never have expected, perhaps on a board or another role. While we can’t find more jobs for lawyers, the brand of lawyer is a

passport to other things, especially overseas where they view our legal profession as the best in the world.

Q A

Is there a change in attitude at the Bar towards business development – strategic and commercial?

There is a change in attitude towards business development, certainly. Knowing how to market and expand is very important. However, sets and individuals need to spend more time learning how to advertise themselves and their skills. Information technology has taken off in chambers – probably slower than other parts of the legal sector – and now barristers are IT savvy and able to maximise technology to develop their practice. The Bar has always been reticent about communicating its successes. We’re getting better now but it still needs to learn how to say strongly: ‘if you want top rate advocacy, we are the best, come to us’. In terms of the Bar Council, we’ve worked hard to show how much we’re changing and adapting to the modern legal landscape. BARCO – the Bar’s new Escrow account service – has been created proactively to provide a sound and sustainable financial infrastructure which will make it easier than ever before to have access to

Maura McGowan QC Maura McGowan QC was called to the Bar in 1980 and took silk in 2001. She is a criminal practitioner at 2 Bedford Row in London and Lincoln House Chambers in Manchester. She has extensive experience in all areas of crime most notably murder, drugs, violent and sexual assault and child abuse. A Deputy High Court Judge since 2010 and a Recorder since 1996, she is an elected member of the Bar Council (serving on the Law Reform Committee and as a Vice-Chairman of the Professional Practice Committee). She is the Director of Education and Training for the South Eastern Circuit and a serving committee member of the Criminal Bar Association. She is also Called to the Irish Bar.

“Yes we are traditional and old fashioned but it’s always worked so that’s not a bad thing” ML // March 2013

Interview

“Barristers contribute to the reform of law, assisting government and doing so for free – you can’t label, regulate and commoditise this, which the LSB is keen to do” the Bar’s services. The system is safe for clients, returns a competitive interest rate to clients and it will make life so much easier for clerks and sets. [Further information about BARCO and Phase 1 of the scheme can be found at http://www. barcouncil.org.uk/for-the-bar/barco/] Ultimately, chambers are as good as the people they take on. We have to keep re-energising ourselves from the bottom up to attract the best and be competitive.

Q A

What impact has the launch of ABSs had on the business psyche of the Bar?

The reaction and impact varies enormously between areas of practice. The expertise of barristers is a remarkably valuable asset. ABSs will be another way of providing that expertise to the public. Certainly there are areas of work within the tradition model (client to solicitor, solicitor to barrister) that work as they have for decades without the need to change. This isn’t about the Bar being conservative but recognising that in the majority of cases, the traditional model still provides the best service to the full range of clients. In the area of criminal law, the Rule of Law is supported and strengthened by the traditions of an independent Bar and the Cab Rank Rule, for example.

Q A

What about Direct Access?

Direct Access provides opportunities to tender for contracts and work without giving up the independence of the Bar. As of January 2013, just fewer than 50% of the Bar were qualified to do Direct Access. When the rule changes to allow family and criminal practitioners to do direct access work in cases eligible for legal aid we expect this figure to rise. Direct Access is not there to compete with solicitors but to provide more choice – as we’re obliged to by the regulator – to clients. However, there will always be cases that still need a solicitor and we’ll refer it back. Criminal work especially. The system provides the Bar with enormous flexibility – it it’s the right case – to help the client access high quality legal advice and often cheaper advice.

Q A

What is holding the Bar back in terms of Direct Access and innovation?

The Bar Council would desperately like to see the rule changed on Direct Access to give criminal and family lawyers greater access to more work as the current rules don’t allow them to take on cases eligible for Legal Aid. In crime

ML // March 2013

especially, there are some clients who simply need an advocate and that’s where the Bar can help – perhaps bolting on solicitors’ services to draft pleadings etc. It isn’t suitable for every case but it allows for greater client choice and opportunity for the Bar to innovate. We do however need to get spread the message more widely about Direct Access to the public and to businesses. There is increasing international interest but more can be done.

Q A

Are barristers open to change and what does the Bar and the Bar Council regard as change for the better? As a profession the Bar is properly cautious about change – it needs to be managed properly. Sets are increasingly employing CEOs and Practice Managers and that’s changing the nature of chambers as a business – moving away from the rigid clerks-client model to attract and nurture relationships with solicitors and other sources of work. The Bar is now able to work with solicitors and directly with clients – but not one at the expense of the other. We’re more adaptable than people give us credit for.

Q A

The Legal Services Board, for example?

Yes. Like other professionals we accept we have to be regulated, working to fair, sensible and effective regulatory provisions. But we get concerned when regulation is there for the sake of it. When it becomes too expensive and too burdensome then it’s not effective. We do need something to unite solicitors and the Bar but not necessarily as big and as expensive as the LSB. When regulatory fees come directly out of the pockets of barristers, it makes it harder to meet the call

for change as regulation costs creep up. Having said that, we have a very good relationship with the Bar Standards Board (BSB) perhaps better than those in some other regulated professions.

Q A

So do barristers have the capacity to change?

We respond to what the clients want and innovate around their needs. Yes we still have traditional values but it’s always worked well, so that’s not a bad thing. You cannot simply turn what barristers do into a commodity. Fundamental to the running of a democratic society is the ability to contribute to and uphold the rule of law. You can’t package that and put it on a shelf. Barristers contribute to the reform of law, assisting government and doing so for free. We do it to bring changes to the law for the benefit of the public – you can’t label, regulate and commoditise this, which the LSB is sometimes keen to do. Ultimately we have to adapt to meet the needs of the market – our clients - but it would be a devastating loss to society to lose our status as an independent profession. Maura McGowan QC interview, Chairwoman of the General Council of the Bar

Feature

Modern Law asked Neil Douglas...

Q: Is the Bar slow to innovate and what, in reality is happening to assist clients?

There have probably been more changes to the Bar in the last 10 years than in the previous 300 years. The pace of change is picking up so it is clearly a challenging time for the Bar as a whole. For the Bar to survive, we need to innovate to meet the clientâ&#x20AC;&#x2122;s changing needs. For example, the majority of chambers have sophisticated case management systems but only make use of some of the functionality. A number of the tasks carried out by clerks lead themselves to workflows - booking cases in, chasing briefs and papers, billing and fees collections as well as dealing with specific client needs. It is vital that the barristers themselves have sufficient knowledge of how key elements of the process work and how they can help by using the system. Training for both staff and barristers is therefore key. We also need to work with the software suppliers to ensure they produce the functionality that chambersâ&#x20AC;&#x2122; needs. Clients are looking for links between their case management systems and ours to avoid multiple handling of case data and files. This is not straightforward as there are a multitude of systems. However, use of APIs by the software supplier should be able to assist in this process. In addition we need to look to reduce the high volumes ARS_185x125 15/3/06 7:01 pm Page 1

of physical papers received by chambers, possibly taken into court and shipped back to clients. This involves working with clients and barristers (and as appropriate the courts) to determine what medium and format is best for particular cases. Additionally, it involves looking at appropriate hardware and software to allow barristers to review and annotate soft copies of documents. Another key area is that of management information for our larger clients who want confidence that we are meeting our agreed service level standards, with regard to turn round of papers etc. Neil Douglas, Chief Executive, Parklane Plowden

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Interview

Interview with...

Professor Stephen Mayson Emma Waddingham, Chief Editor, speaks to Professor Stephen Mayson - independent thought leader and Director of the Legal Services Institute - about key issues and misconceptions regarding ABSs and regulation – especially those that fudge the idea of access to justice. Regulation

At a recent All Party Parliamentary Group meeting which discussed the future of legal services (see pages 7-8), the idea that ABSs are in some way ‘unethical’ compared to traditional law firms was mooted more than once – especially those which looked to commoditise legal services and / or have to perform in line with the business interests of external finders. Is this an antiquated point or one which has some mileage?

The suggestion that ABSs are in some way unethical is a line their opponents have taken from the start – including foreign counsel in the US who say they don’t want anything to do with these ‘English ABSs’. I strongly believe this is rubbish. Just look at the regulatory framework the Legal Services Board and the regulators have put together to control which firms get an ABS licence, especially regarding ethical behaviour and service delivery. Once an entity has its ABS licence it has to continually meet the statutory requirements to which it has subscribed, or risk losing not only their practice but significant financial resources and even the ability to run a legal entity in the future. ABSs are overseen by a Head of Legal Practice who is authorised and appropriately appointed to the role, working within a pretty strong framework of ethics. There’s simply no incentive to behave unethically, regardless of the fact that the reputational, commercial and financial damage would be profound. The illogical attack is nonsense and fundamentally flawed.

Q A Q

This doesn’t mean that ABSs won’t stray from the ethical path, as some solicitors have been found to do... No, it doesn’t but that’s why you have clear regulation and fines.

From a marketing perspective, do ABSs have a harder task to market their brand as ethical compared to that of ‘brand solicitor’ in a traditional model (something that has generally always carried weight with the general public)?

Branding and marketing ethics is extensive in consumer marketing. The Co-op, for example, starts from a good place due to its background as a members’ organisation and cooperative. However, the strength of any ABS brand – if well-placed, marketed and received, will overcome minor ebbs and flows of attack on their ability to provide ethical services.

The competition

Q A

Will ABSs quickly sweep work away from the high street practitioner?

Not at first; the problem will be the battle to keep clients over time. The feedback from clients who use law firms is universally positive and they have said they would go back to them if they needed help again. But that’s the opinion of those who have already invested in legal services. For first-time users and the next generation of customer, ABSs present a better chance of getting

their work – especially if it’s a brand already aligned with their lifestyle / attitudes and capacity to access legal services (i.e. online, over the phone or outside regular working hours). People are increasingly tech-savvy and time poor, making more use of social media – which cannot be underestimated. Perhaps they are more likely to use a ‘high street’ branded legal service and this is where we are likely to see a drift over time.

Q A

ABSs are often associated with cheaper, commoditised legal services and therefore lower quality services. Is this accurate?

No. If you look at the Co-op and Riverview Law for example, you couldn’t say that either of their services are low quality and even cheaper. Brands that package services upfront, such Riverview Law,

ML // March 2013

Interview

provide consistency and certainty on price as it’s upfront (or pay as you go). Ultimately it might not work out any cheaper than a bill-by-the-hour law firm but at least clients know what they’re letting themselves in for financially. This is where the strength of the marketing comes in – the ABS has got to be seen as a more attractive option and upfront / fixed fees are increasingly a unique selling point (USP) for many legal service consumers. General Counsel and corporate buyers of legal services will tell you they need certainty in spend to ensure their budgets. This is a ‘get real’ moment for the profession, which needs to look at price more carefully.

External Investment

Q A

Has there been as much interest / involvement by external investors as you expected?

Yes, in part because the law has finally become an interesting market (with the advent of ABSs). Outside funders think there is a lot of money to be made in law. There is a lot of external funding that needs a home and in today’s economic climate, law is a relatively exciting option for that funding than it might otherwise be. For me, the more interesting element is whether firms are fit to be invested in; is there more money to be invested than really good investment opportunities? At the moment, there are too many small law firms which are not usually disciplined enough to get investors excited. This is why funding is only going to those firms which have already grasped the nettle to address scale, efficiency and discipline within the entity. Newer models, like ABSs are more obvious choices still because the immediate efficiency issues an investor would need to address (scale and process) could be created / amended easily due to the lack of idiosyncratic leaders. New structures are less dependent on personalities

– especially compared to the equity partner model. Investors can also be used as vehicles to consolidate the increasingly fragmented market and while there is scope for this, it hasn’t happened yet.

There has been some consolidation in terms of brand however, in the guise of Quality Solicitors? A: Of course and despite what people think of Quality Solicitors, it has made significant steps into marketing and getting the message out there. This is the real challenge to the market; lawyers need to look at how Quality Solicitors and the Co-op have shifted consumers’ expectations of legal services through their marketing – as seen in Quality Solicitors’ extensive advertising.

The Bar

At the APPG meeting discussed earlier, Jonathan Djanogly MP (former Minister of Justice) said he believes the Bar needs ‘faster adaptation’ to ABSs and the new legal market, ‘or face being left behind’. Is this true of the Bar profession as a whole or for individual elements, such as the Bar Standards Board?

Part of the challenge for the Bar is to preserve their core activity – high quality advocacy in the court room – which should be delivered by the Bar. In reality, the playing out of the rule of law and access to justice happens in a court room. To ensure this, we need to have utterly independent and high quality advocates who are globally recognised as being able to deliver. It is evident that there’s not enough activity to sustain the Bar at its current size, there are just too many barristers for demand. So it can’t defend the entire profession. However, there is an alternative mission for the Bar, that of direct access. Having to compete in the modern legal landscape, which

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

ML // March 2013

includes ABSs isn’t for the whole Bar but for some, it’s going to be useful to help survive in a diverse market.

Access to justice

Q A

You feel strongly about access to justice and the way it’s used in defence or to criticise ABSs – why? The regulatory objective in the Legal Services Act (LSA) focused strongly on access to justice. The creation of ABSs in the Act inspired people to use access to justice arguments to criticise or provide support for ABSs, without thinking about what it should really mean. For those opposing ABSs, the argument is that new legal entities will destroy high street practitioners, limiting access to justice. However, this argument equates access to a law firm as access to justice, rather than whether market innovation can help bring access to justice closer to the public. The meaning of access to justice is a narrow view but one built on in the rule of law. The view is that justice and therefore access to justice only flows if you have a connection to legal rights and obligations. Dispute avoidance – such as mediation, for example, shouldn’t be defined as access to justice as justice is only required when there is a dispute over legal rights. Mediation is not necessarily in accordance with a party’s legal rights. I don’t want to see access to justice being misused in discussions around ABSs it isn’t in the public interest or that of practitioners. Professor Stephen Mayson is speaking at Modern Law’s The New Frontiers Conference, on whether the legal market is moving fast enough. Modern Law’s first annual conference will be held at the Royal College of Surgeons on 1 May 2013. Highlights of the soldout event will feature in the next issue of Modern Law.

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

Interview

Professor Stephen Mayson Professor Stephen Mayson is a self-titled ‘independent legal mind,’ a strategist, thought leader and advocate for social and organisational fairness. He helps organisations make difficult decisions in times of structural or industry change. Famed for his unique perspective and sense of justice, Stephen’s objective is ‘to bring independence, insight, challenge and objectivity to the various contributions he makes to organisations and the broader world of legal services’. These include: Advisory: Stephen is both a retained and ad hoc strategic advisor for organisations in or connected to the legal sector. Clients include law firms, barristers’ chambers, patent and trademark attorneys, other providers of legal services (including licensed ABSs), corporate and government legal departments, regulators, and professional bodies. In this role, he offers facilitation and process for identifying and thinking through the relevant issues and options; challenge; market analysis and information. Policy: He is the Director of the Legal Services Institute, an independent public interest think-tank. Stephen’s core role is to monitor developments in the legal services market and engage with government, regulators, professional bodies, practitioners and others. He is especially focused on taking a public interest perspective on the regulation, development and education of an effective legal services sector. For more on this, go to www.legalservicesinstitute.org.uk Coach: Stephen also undertakes a limited amount of business coaching for those in strategic leadership positions (in the law, the commercial world, the armed forces and public sector), working particularly with individuals who have reached, or are making a transition to, a very senior governance or leadership position within their organisations and who are facing business or personal issues that are strategic to their organisations. Follow his thoughts via Twitter @StephenMayson or on his blog: stephenmayson.com

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The views

19-35

The Views

ML // March 2013

The views

Cutting red tape

he Solicitors Regulation Authority (SRA) is gearing up to implement the first changes as part of its Red Tape Initiative.

The SRA’s Red Tape Initiative (RTI) is aimed at removing unnecessary processes and regulations that do not benefit the public and cause unnecessary burdens for those it regulates. The first RTI consultation closed on Friday 8th February. The consultation outlined 10 proposals which had been identified could be removed or curtailed. It also opened up the challenge to everyone it regulates, to let the SRA know where else their regulations and processes might be unnecessary or could be streamlined. Following a full analysis of responses to the consultation, recommendations on each proposal will go to the SRA Board for approval. Any changes to the Handbook will be introduced in the April edition of the Handbook, following approval from the Legal Services Board. The SRA received a wide range of further suggestions. This includes suggested improvements to the online PC renewals exercise, changes to education and training regulations and suggestions on how the SRA can further improve its day-to-day operational transactions. Agnieszka Scott, SRA Director of Policy, said: “We have been really encouraged by the level and nature of responses we have received. We will publish a full response to each of the suggestions that we received.” “Where we cannot make the proposed changes we will explain why, and where we can, we will outline the steps we are taking to implement the change. It is envisaged that further changes to the regulations will be introduced in the October update of the Handbook.” This consultation is part of an ongoing initiative and the SRA will accept and consider further suggestions as it receives them. These can be emailed to redtapeinitiative@sra.org.uk. Agnieszka Scott is the Director of Policy at the SRA. www.sra.org.uk/sra/consultations/red-tape-initiative.page

Q: As practitioners and support staff in legal entities are expected to undertake more diverse roles particularly in volume practices - are firms making the most of government funding to help train practitioners / employees and what’s available?

One of the difficulties often experienced by firms is understanding and accessing government funding to help develop staff. Indeed, there are many employers who would rather avoid the perceived bureaucracy and inflexibility associated with government funding, preferring instead to elect for the training of their choosing. However, for those prepared to persist, there is tangible financial assistance available for workforce development. This opportunity is particularly relevant for the legal sector at the moment, due to the introduction of a number of new legal services apprenticeship schemes. The Level 2 Intermediate Apprenticeship in Legal Administration was introduced in 2012, and many firms are starting to embrace this initiative by taking on school leavers in apprenticeship roles. The knowledge element of this apprenticeship includes units in working in a business environment, providing administrative services, managing information and producing documents, and an introduction to the legal environment. Level 3 Advanced and Level 4 Higher Apprenticeships in Legal Services are being finalised during 2013. The Level 3 scheme will be suitable for direct entry by those holding good A levels, or as a progression from Level 2. There will a choice of practice areas to select from, which are likely to include civil litigation, property, family and private client. The Level 4 scheme is intended for those already working in the legal sector or as a progression from Level 3 and will include options in personal injury, debt recovery and commercial litigation. Training costs of the apprenticeship schemes are met in full for young people aged 16 to 18 at the time their apprenticeship starts, and 50% for those aged 19 to 24. Additionally, recruitment costs can be covered by the £1,500 Apprenticeship Grant for Employers (AGE) which can be claimed by small businesses taking on apprentices aged 16-24 years. Businesses will be eligible for the grant, which is available per apprentice, if they have never employed an apprentice before or have not recruited one in the last 12 months. It is clear that employing school leaver apprentices offers a genuine cash incentive for employers to train competent support staff to fulfil specific file management roles. Noel Inge, Managing Director, ILEX Tutorial College.

ML // March 2013

The views

Q: Does the reward match the risk?

The economy of law firms in the UK is static and more change is on the way through a number of regulatory and operational changes. But with profits of SME legal firms struggling to match risk to reward – particularly outside of London - will firms struggle to find the next generation of equity partner? The NatWest and RBS 2013 Legal Benchmarking survey released last month showed that pre-tax profits made by firms outside the UK’s top 100 were relatively low. The report is the largest and only free report of its kind, looking at firms operating within the small and medium enterprise space reporting revenue of up to £25m. According to findings, the median profit per equity partner (PEP) for the majority of firms is around £90,000 – leaving little for the firm after partner remuneration (measure at around £80,000 on average). Figures showed an average firm makes profits of around 25% of its income, while some firms that are struggling badly have reported no profit or even a loss. More important than the profit percentage is the actual level of profit earned, a figure which varies quite dramatically around the country and between the different sized SME firms. Given that there is little difference in the profit margins in larger and smaller SME firms, the difference is due to the significantly different annual fee figures per equity partner. It is not really surprising that a new small firm has lower billings per equity partner than a longer established and more mature larger firm, but it highlights the need for smaller firms to think about how they can increase billings per equity partner without diluting the margins. This data raises further questions around succession given that talent is unlikely to see earnings capacity supportive of the additional risk that partnership brings. According to results, fees per fee earner hit £132,000 per annum on average but were shown to differ greatly in firms outside of London. While those in London achieved an average £217,000, firms in the North fell behind at £155,000 with the combined tally of Wales, Midlands & East of England the lowest at £112,000. So with profit level struggling, why would a salaried partner or potential partner make the jump to equity partnership if the reward doesn’t match the risk? The report showed that among 337 firms, less than half of the current headcount will generate revenue. Going forwards, new rules introduced by ABS and Ltd status may give firms the opportunity to raise capital from all employees and not just the selected few. But the true impact of the diversification of the legal sector will likely take a while to filter through the firms. Although those smaller firms and those in the regions are on the front line when it comes to the impact of the ever-changing landscape and have a great opportunity to maximise impact and profit. Steve Arundale, Head of Professionals and Financial Institutions at RBS and NatWest. For a free copy of the benchmarking report, go to http://www.nw-businesssense.com Or for more information on RBS and NatWest’s professionals team, go to http://www.natwest.com/ business/services/market-expertise/legal.ashx

Q: Many legal entities have the technology to hand but don’t use it to full capacity / properly before shopping around for a newer model. How do you know the difference between when it’s time to simply upgrade what you have and when it’s time for a complete overhaul?

When you consider how much technology generally has changed over the last 10 years, it’s incredible. New innovations seem to be announced with mind boggling frequency and (despite being somewhat late to the party) the list of technologies available to law firms now seems to grow by the day. Lawyers are no longer deskbound, they can work remotely with tablets and smartphones and technology will only continue to get smarter and more cost effective. As a result we are becoming more fickle and demanding in our technology choices. One of the issues we come across is that firms don’t always have a clear idea of what they want to achieve with new technology. A clear objective is essential as is a good implementation plan and we find many firms now employing consultants or project managers to navigate this minefield for them. Once you have a clear idea of what you want to achieve, it is easier to decide if your existing technology can be customized or further developed to meet your requirements, or whether you need to go back to market. Issues that firms with outdated technology come to us looking to address include: • Disparate systems in place resulting in costly and inefficient working practices • Poor matter information causing risk management concerns • Being unable to accurately measure progress across files • Inconsistent working standards across the firm • Lengthy document production times We have found historically that many technology providers sell in a product and then leave the law firm the ongoing task of maintenance and customisation. These providers would often charge huge sums for support, training and maintenance which firms are reluctant to buy and so they are left with a solution that doesn’t work for them and they quickly decide they need to buy in something else. Often there is nothing fundamentally wrong with the technology itself, just in the service of the provider. This is why we decided to approach the market differently and do not charge large upfront fees, nor any fees for support, training, maintenance or upgrades. Our pay per matter business model means that we have to be a service led organisation, working hard to ensure all of our products deliver exactly what our clients are looking for – and continue to do so - otherwise they will simply stop using them. More information can be found at www. redbricksolutions.co.uk Jo Hodges, Marketing Director, Redbrick Solutions.

ML // March 2013

The views

Q: Law in practice: Costs budgeting – will Court of Appeal rulings such as the recent one in Henry mean that areas of the Jackson reform like proportionality won’t be given the full attention of lawyers in light of the raft of reforms set for 1st April 2013 in civil litigation?

Costs management, or budgeting, is the posterchild of the forthcoming civil justice reforms. There has been more discussion of this aspect of the changes than any other and it has recently been thrust to the fore once again by the decision of the Court of appeal in Henry. However, costs management is only one facet of the reforms and others are equally, if not more, radical and pervasive. The doubling of the small claims limit will make claims between £5,000 and £10,000 uneconomic and firms who do a significant amount of work in this bracket will need to consider where their next pay cheque is coming from. The abolition of the recoverability of success fees will doubtless affect many firms’ business models. Provisional assessment of Bills under a certain amount (rumoured to be £75,000 but, at the time of writing, the relevant Practice Direction has not been published) is to be introduced. The costs of provisional assessment are capped, therefore it is likely that costs disputes will not settle because defendant insurers will ‘chance their arms’ before a judge knowing that they will never pay more than £1,500 in the costs of assessment. This will undoubtedly have an impact on cash flow for claimant solicitors. Perhaps the most damaging reform in terms of profitability for solicitors is the proposed imposition of fixed costs in fast track employers’ liability and public liability claims. No rules have yet been published but the fee levels mooted represent, it is said, approximately a 50% drop in income for firms doing this sort of work. Since these areas probably cover the majority of non RTA personal injury work lawyers need to think carefully about their exposure. Comparatively little press seems to have been given to these and other aspects of the reforms and anecdotal evidence suggests that many firms are adopting the ‘ostrich position.’ That is a risky strategy at the best of times but one encouraged to an extent by the delay in publishing the legislation, since one cannot design a business model to operate in an unknown framework of rules. Robert Parness, Costs Lawyer, Paramount Legal Costs.

ML // March 2013

Q: Leadership: Is it harder to find the right talent to lead and grow a legal services organisation and once you have found them, how do you keep them?

There is more talent available now than ever in legal services organisations. The current young legal professionals are brighter and more trained than ever before. The key to future leadership in organisations is to understand that you can grow amazing leaders if you foster the right culture and provide the right training. We have introduced the concept of Independent Command in Forster Dean. There is no middle management instead each of our 27 offices is led by the manager. They have access to regional mentors who can provide advise however they cannot give direction-it is the local leaders decision. As a firm we have a clear and defined vision and our managers are then actively encouraged to develop their own vision for their office and local community. Leaders think and speak in a different way to manager’s .Our leaders are taught the 7 decision process that make a leader and they are taught the physical and sub conscious aspects of acting as and being recognised as a leader. They are trained to understand the underlying thinking processes of the people they meet to develop a deep understanding of how to influence and lead. In the culture of the firm we really focus on the client and the local community. Our leaders are encouraged to give back to their communities with pro bono work and advice. We promote work life balance and offer a reward structure which provides income based on one quarter of what you bill over a threshold. Once you engage with professionals and give them the tools to influence and lead in their communities (providing them with a dynamic firm whose aim is to grow) you can create a unique culture in the profession leaders want to be part of. Greg Shields, CEO, Forster Dean

The views

Q: Are you getting enough advice from your consultants / expert witnesses and service providers about what they can do to assist / support you in the forthcoming Jackson reforms? (E.g. from counsel re CFA agreements prior to April 2013 etc). If you are working more closely with service providers / consultants / expert witnesses / counsel, why and how will this help your business going forward?

I am, like most I would hazard, trying my best to be ready for whatever happens in April 2013 and the coming months. I view myself as pretty well informed (APIL EC, Portal Co Board, Law Society’s Law Management Section EC), however it is near impossible to plan (with or without consultants) if you are given very little time to plan or indeed no time at all. At time of writing (February 2013), I have CFA and DBA regulations, draft (but not final) Protocols for Low Value RTA, EL and PL matters, draft (but not final) SI for QWOCS, Part 36 etc. What I do not have is the minor matter of the figures on costs under the new Protocols. When the Protocol first came into force on 30th April 2010 it applied to all accidents occurring on or after that date and this logic is applied to the Employers’ Liability and Public Liability matters i.e. it is date of accident that is the trigger point. However the new RTA Protocol states that it will apply to all claims where the CNF was submitted on or after 1st April 2013. This means that all historical accidents that are submitted after the new Protocol comes into force will be dealt with under the new Protocol with a new cost regime. If the Protocol had of been drafted using date of accident as the trigger there would have been an overhang of up to 3 years of personal injury claims in which the current cost regime would have applied. This ‘overhang’ would have helped aid the transition between the old and new cost regimes as the old regime ran off, the new regime would have bled in. But as a result of the wording there is no ‘overhang’, more like a portcullis coming down. It is now less than 6 weeks to the 1st April 2013 (the proposed implementation date) and how on earth do we plan? What is clear is that whatever the costs come back as, that you are going to have to be good at change management or you are going to need the benefit of superb consultants, as due to the drafting, the costs that a claimant representative can charge changes overnight.

Q: Is there anybody out there? The diversity of ABSs...?

There is a strong suspicion circulating that many personal injury (PI) related ABSs are being constructed as a way around the impending referral fee ban. This may well be true but it’s hardly surprising. The PI / Road Traffic Accident (RTA) world is going through a tempestuous period at the moment. The sector is barely getting used to the RTA portal and its ramifications when along comes the Government and proposes reducing the fixed fees in the MOJ portal from £1200 down to £500. Now even I can work out that there is absolutely no money in this to pay any referrers fees (which, in any event, is going to be outlawed at the same time) - so where does this leave the RTA claims industry post April? There is potential life after April. There are various marketing schemes such as injurylawyers4U - a very well seasoned and established player in the market and you can be sure they will have plans post April. There is also an option (some say necessity) to take advantage of the new rules allowing a deduction of the clients damages. There is also a recognition that within a legitimate (i.e. not sham) ABS then the question of referral fees being paid becomes something of an academic exercise. No doubt the SRA will be scrutinising any such applications but provided everything else stacks up an ABS is a legitimate vehicle post April for RTA/ PI. Whilst the attention may be on PI / RTA at the moment, it should not stop (and is not stopping) other forms of ABS from being created. It is not front page news anymore but there are a number of innovative ABSs being authorised - from city type work through to barristers in the shape of haulage carriers. Within the substantial number of pending applications at the SRA (and CLC) there will continue to be a more and more diverse mix of schemes. What is interesting is that no-one (including the SRA) could have foreseen the variety of applications and in my view ‘we ain’t seen nothing yet’. Eddie Goldsmith, Partner, Goldsmith Williams

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

ML // March 2013

00 24

????views The

Many legal entities have the technology to hand but don’t use it to full capacity/properly before shopping around for a newer model

Talk to any legal IT vendor and they all have tales of law firm customers saying they are going to swapout their software in favour of another product because the original system lacks functionality X, Y or Z. To which the vendors reply ‘but the system has had functionality X, Y or Z for the past five years, you just forgot it was there’. This is a multifaceted issue in which neither side comes out of it too well. On the one-hand we have law firms who are NOTORIOUS for their tight-fisted, penny-pinching, scrimping on software training, with the result most staff are lucky if they can use a software application’s basic functionality. Seriously people, the Sitting Next to Nelly approach to training has no place in a modern law firm – software training may be expensive but it is an essential part of the new joiner induction process. And, firms should also consider top-up or remedial training to ensure everyone gets the best out of a firm’s investment in IT and that skill levels do not drop off as people forget their original training. On the other hand, most legal software training is archaic in its methods and has failed to keep pace with the times – so it is hardly surprising users are unfamiliar with the full functionality of the systems they are working with or else forget some of the options at their disposal. For example, the most widely used software application on the planet today is Facebook – but nobody needs to go on a training course to use it. By contrast, Microsoft Office is the most widely used law office application yet law firms are traumatized by the prospect of upgrading to newer versions because of the training issues! Over the last couple of years we’ve seen a lot of interest in the consumerisation of legal IT – BYOD and all that – but the emphasis has tended to be on hardware and devices. The next big challenge is going to be the consumerisation of software, particularly in terms of improved training and ease of user adoption and rollout. Expect to hear more about gamification and similar initiatives in the months to come. Charles Christian is a barrister who has been writing about legal technology for over 30 years.

ML // March 2013

Do you judge a book by its cover?

fter nearly 30 years arranging professional indemnity insurance (PII) for law firms, there is very little I haven’t seen relating to the placement and structure of a firm’s PII policy. Although the policy wording is on the ‘Minimum Terms and Conditions’ laid down by the SRA, we are able to tell a lot about a firm by reference to its premium, the level of excess, the quality of an insurer on the programme and the firm’s insurance track record. The continuing economic stagnation is leading many firms to look at a merger or acquisition in order to leverage off their infrastructure costs and increase (or maintain) profitability. In addition, the increasing conversion to ABS increases the threat of competition in the face of what, for many firms, are already difficult trading conditions. The market is, therefore, one in transition. At times like these, it is, of course, important to ensure costs are kept to a minimum and ensure you are fit for merger should the situation arise. Likewise, if you are looking to bolt on a firm to your own, it is vital that the PII arrangements and the risk profile of that firm are fully understood; these are important factors needing consideration when deciding if any particular opportunity is right for your firm. It is, therefore, prudent to look at your current PII arrangements and ensure that they are providing you with not only the cover you require at a price you can afford, but that the arrangements present your firm’s insurability in a good light. It is also important to ensure your broker provides help and advice so you minimise risk; a clean or relatively clean claims record is, after all, a valuable asset. The PII renewal in October 2013 will soon be upon us and it promises to be an interesting one. The Assigned Risks Pool is finally closing, there will be freedom to change your renewal date and the increased risks associated with unrated insurers will no doubt be clearer. It would seem, therefore, that now is a good time to review your firm’s cover - it may not be just your insurers who judge you by it. Colin Taylor CIRM, Director and Head of Risk Management Services, Prime Risk Solutions

The views

Q: Many legal entities have the technology to hand but don’t use it to full capacity/properly before shopping around for a newer model. How do you know the difference between when it’s time to simply upgrade what you have and when it’s time for a complete overhaul?

It’s no secret that the technology used within law firms is in an almost constant state of flux as new versions containing new features and functions are constantly made available by software vendors. New technologies also impact upon this trend which can add to the IT problems currently faced by most law firms. I believe the advent of these new technologies can cause a lot of soul-searching within a firm and can ultimately lead to poor IT decisions being made. One of the key issues is how does your firm justify additional spending on new technology, when it has already spent several hundred thousand pounds on a system that was supposed to provide you with everything you need? In my ‘business discovery world’ I come across this issue all the time and I believe the answer is quite simple. Completely changing what system is in place with a new one isn’t necessarily the only option. The real issue is whether your incumbent system works from a transaction processing point of view or not and if your business processes can be modified without having to consider an upgrade or a complete change of system. Also, if you do upgrade to the latest software version, will you then get the functionality that you need? If we consider these questions in respect to practice management systems, they mostly do a very good job at transaction processing. However, what they don’t do very well is reporting or being able to provide you with the capability you need to analyse your data. But you don’t necessarily need to change your entire system to get better reporting across your firm as there is business intelligence technology out there on the market that can solve these issues much quicker and in a more enriching process. We have considerable experience of implementing business discovery technology over existing practice management systems and can provide you with a complete mind- shift in what can be attained at a fraction of the cost of a new system. So if your firm is considering a new system, the big question to ask is whether your partners are prepared to spend money on something ‘new’ that in essence they thought they already had, or whether you can get the information you need out of your existing system easily and without the need for a total overhaul. And put into context, the decision is easy.

How to be a leader

friend of mine likes to say that practising law would be fine if it were not for the clients. Likewise you may feel that running a law firm would be fine, were it not for your colleagues. Few people really enjoy managing lawyers. Fewer still are truly good at it. There are

two classic mistakes. Mistake One: David Brent Are you too keen to be liked by your colleagues? Can you not see a committee without wanting to be on it? Do you rarely decline an invitation to an event to ‘represent the firm’? Is much of your time spent on issues nobody cares about, and which will make little long-term difference? One can easily spend lots of time on management, neglect your practice, but still find you are having little impact. Mistake 2: Richard I Richard may have had a lion’s heart, but he was a rotten king. He took no interest in running his kingdom, and spent almost his whole reign off fighting wars. Likewise some so-called law-firm leaders neglect their management role in favour of fee earning. Meetings are cancelled, news goes uncirculated, budgets are set late and not monitored, all because the boss is too busy with clients. Here are three key principles which the most effective leaders follow: 1.

Prioritise - The main thing is to make the main thing the main thing. You need a clear sense of the issues that will really make a difference to the future of your firm, and then focus on them. Very often they will involve unpleasant conversations and decisions. Do not bottle out. 2. Delegate - You cannot run the whole firm yourself. Allocate tasks, set deadlines, monitor progress, and motivate people to achieve. You have to make the change from being a worker, to being someone who manages the work of others. 3. Avoid reinventing the wheel - Having spent years billing by the hour, one can see spending time on a problem as worthwhile, even when you make little progress. Time is a cost. Be ruthless with it. When you can contract tasks out, at a reasonable cost, do so. That applies to most training and know-how. Bernard George, Director of Socrates Training Ltd.

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ML // March 2013

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The views

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Making the most of external knowledge

aving a good case management system is essential for any law firm these days, yet there are many firms still working without one. I believe that part of the reason for this is down to the fact that there is simply too much choice and lawyers traditionally do not have the necessary expertise to understand which system will deliver what it promises and which system will fail and leave them worse off than before. So how does one go about selecting the right system for their firm? With so many changes to the legal landscape and such an abundance of compliance obligations to fulfil, should the overriding consideration be based on cost alone? Or would something that helps generate higher business carry more weight? Or what about a system which will help your COLP sleep easier at night and keep your insurers happy? When it comes to risk and compliance, there are a number of things that a firm has to consider in order to ‘get it right’. Conveyancing is seen as a high risk to professional indemnity insurance providers and as a way of reducing risk, firms may want to consider COMPLETIONmonitor, which is a low cost and easy to use online conveyancing check-list system that brings risk management and order to every transaction. The technology is supported by LENDERmonitor, giving instant access to all the latest lender requirements and is promoted by the CML and insurers alike. With firms doing all they can to win valuable work, Springboard’s system which offers a quick and effective way to generate professional conveyancing quotes in seconds may be something which is deemed more important. In addition, it allows estate agents, mortgage brokers and IFAs to quote on their behalf, giving the power to offer clients an even better service. We believe we have shortlisted some of the very best providers around today to work with and are proud to promote their respective systems, all of which we whole-heartedly endorse. Andrew Stenning, Managing Director, Searches UK.

he very term ‘outsourcing’ can conjure up some negative images for information and knowledge management teams. Outsourcing, however, can take many forms and it is not always a simple case of reducing costs by outsourcing experienced teams or support functions. Take, for instance, legal research. It is now common practice for most firms to rely heavily on outsourced services, but before online legal research was widely available it was more difficult, more time consuming and more costly for a firm to provide the same level of service that is now available to all. In more recent years, the rapid take up of external ‘know-how’ services has resulted in the outsourcing of both the production and management of precedents, practice notes and checklists – and in some cases with the application of a firm’s own styling to these documents. This change in working practice can be seen in a positive light, as it drives competition among external providers to make improvements in consistency, speed of delivery and quality. In both of these examples, the need to retain experienced knowledge management professionals with an understanding of a firm and the services being delivered has still remained vital. The real challenge has been about how to manage the change in working practices and adapting in order to focus on higher value work. When it comes to making decisions on outsourcing, something akin to the 80/20 rule is likely to apply in most cases; identify and look to outsource the day-today, non-unique work (80%), but retain and focus key staff on higher value activities that help drive a firm’s competitive advantage (20%). When contemplating the outsourcing of core information and knowledge services the following five points should be carefully considered: • are you already maximizing the value of your existing investments, such as: people, systems and knowledge? • why are you considering outsourcing? Cost reduction, quality improvement, speed of delivery, or expansion into new markets. • who will benefit? The firm as a whole, equity partners, clients. • will you lose out in the short term or long term? • what are the alternatives, and is a hybrid approach being considered? There is always a balance to be struck when it comes to outsourcing, and the role of experienced information and knowledge management professionals remains important in maintaining a competitive edge, and in supporting the higher value services that law firms seek offer their clients. Rob Martin, Director, Federated Search and Knowledge Management, Thomson Reuters’.

ML // March 2013

The views

Q: Marketing has moved on from the days of all-day lunches with wine but what is it your clients feel is being lost in the world of direct / online marketing and what do you recommend companies ensure in their bid to get more work?

If you check the tracking analytics for your online newsletter, you will find that fewer than 35% of the people you sent it to have actually opened it. Even less will have clicked through to read any of the articles. This is great information and tells you how best to work with them, but what about the other 65%? Online communications and social media are essential, but not enough. Many simple things that worked in 2007 – before lawyers retrenched due to the recession – are still good, although what works best for you will depend on your clients, geography and the characteristics of your people. There is a long list of potentially good marketing activities, but these are top of my list: 1. Know and play to strengths, but dig deep to find them. 2. Aim to create opportunities to meet face-to-face early on with people aged over 40 to establish a strong, trusting relationship. Subsequent exchanges online will make more impact (at any age) if you’ve agreed that’s how to keep in touch; always check at that stage what is the best way to stay in touch and make sure this is recorded and shared with your colleagues. 3. When you talk to clients, business partners / introducers and prospects, explore their world – their business and their family - not just today’s legal problem. 4. Discover their passion, share that with colleagues and make sure the client knows you know about it. Lunch, breakfast, coffee, dinner with other business advisors and their clients all work – but so does a walk in the country. 5. Make it relaxed and try to talk their language. 6. Adopt JFDI – too often, lawyers spend a lot of time considering all the options and don’t quite get around to doing it. So if there is an idea to be explored or actioned: ‘just do it!’ 7. Be willing to pick up the phone to renew contact, to arrange to meet or to follow up on meeting at an event or even online through Linkedin. 8. Invest in some hard copy newsletters and bulletins to get them on desks as well as e-communications, but actively manage the database to focus on the right people to keep production and distribution costs down. 9. Ask clients how they want you to stay in touch when you make first contact. New client inception forms should always include the question. Then do what they ask; not what is easiest or cheapest. Allan Carton MBA, Director, Inpractice UK Limited.

Q: Engagement: how are firms engaging lawyers / employees in the changes ahead, particularly for those looking to become ABSs? What advice would you give to others when looking to gain full support and collaboration from colleagues in pushing your organisation forward?

Whether moving to an ABS structure, a merger, or another change in strategy, the practical implementation of your plans is the real challenge. You need to consider timings, the scope of change, what should be preserved, available resources, the abilities and, crucially, the capacity of staff to deliver. Failure to plan properly can lead to cynicism and a loss of engagement. Too often we see new initiatives that fail because the implementation is poorly thought through and staff have lost belief in the process. One aspect of any implementation must happen above all… communication! It is critical to the successful engagement of staff. Referring to retail sector examples is not necessarily popular, but the turnaround of ASDA in the 1990s is a superb story to learn from. In 1991 it teetered on the verge on bankruptcy. By 1999 shareholder value had multiplied eightfold. A recognised reason for its success was the focus on communication. You may vaguely remember the phrase ‘Ask Archie’. The process went a lot deeper than this. ASDA CEO Archie Norman, was regularly on the shop floor making himself accessible to staff and managers. He enforced the culture of communication across the management team with store managers monitored as strictly on the communication measures as on the financial ones. If this was achievable in a large, diffuse PLC there is no reason why principles of good communication should not be applied to your firm. Whatever the practice size these principles are critical for staff engagement. So if you are struggling to motivate staff to deliver the changes you need to make, perhaps you should measure yourself against the following: Since the announcement, the memorandum and the press release, have I and my senior team: • been present at office meetings to talk to and hear from staff? • visited the other offices in the firm on a regular basis? • provided updates on developments to staff, both what’s gone right and what’s gone less well? • explained where strategies are changing in the light of new factors? • been truly receptive to feedback? If not, there may be a reason why things aren’t progressing as well as you would like. Alex von der Heyde, Managing Director, Esterase Ltd

ML // March 2013

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The views

Q: My corporate client has a good commercial claim, and would like to obtain after the event legal expenses insurance (ATE) for it. The directors are keen to take advantage of the current provisions on premium recoverability. As such the idea is to get a policy in place prior to the forthcoming implementations of The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) which abolishes that recoverability. As the implementations are scheduled for 1st April 2013, time is now very tight. Is there anything we can do to help expedite an ATE application?

Yes. Input from the legal team is of significant assistance in the underwriting process. A concise and comprehensive application which provides all the information an underwriter requires, will accelerate the decision making process. Some points to have in mind.

Proposal and budget/estimates When completing a proposal, take care to respond to all the questions and to provide the information, including the budgetary information sought. Ensuring the declaration is signed prior to submission could avoid an unnecessary subsequent delay. Case summary A brief case summary can be invaluable for ‘reading in’. An outline explanation of the following points can be particularly helpful. • The claim and any defence points raised. • The remedy sought. Where this includes damages, the amount claimed and the basis of the calculation/estimate. • Identification of the legal issues and of what the applicant needs to prove to succeed on both liability and quantum. • The stage reached and ‘next steps’. • Positive points and perceived areas of risk. • Perceived prospects for settlement. • Prospects for enforcement assuming the claim succeeds. Supporting documentation Provide copies of key documents. Subject to the stage reached this may include • Counsel’s opinion • letters of claim/response • statements of case • witness evidence including any expert report or initial input • any information on enforcement prospects • However, avoid providing too much documentation. If a claim is document/correspondence intensive, a short synopsis of relevant points from it could prove a far quicker way to supply the underwriter with information the applicant needs to get across. Once in possession of the necessary information an underwriter will often be able to conclude a review and make a decision on an application within a relatively short period. The clock is ticking, but there is still some time…

Q: What can firms do to prepare for costs budgeting?

Practitioners already know (or should do) most of what they need to about Costs Management/Budgeting. The 16th lecture in the Jackson implementation series is essential reading: http://www.judiciary.gov. uk/Resources/JCO/Documents/ Speeches/costs-managementsixteenth-implementation-lecture-300512.pdf . Costs budgeting will apply to all cases allocated to the multitrack after 1st April 2013 except those in the Commercial Court or Admiralty division. Note however that there is to be a further amendment to Rule 3.12 and PD 3E which will remove compulsory budgeting from cases in the Chancery Division, Technology and Construction Court and the Mercantile Courts where the value of the dispute (exceeding interest and costs) exceed £2M (to avoid forum shopping). So what can firms do to prepare for it? 1. Where possible, analyse historic cases across those areas of work where you do most work, subdividing those areas as much as possible. Clinical negligence for example might be broken down into cerebral palsy/birth issues, failure to diagnose matters and surgical error cases. The more extensive the crosssection the more accurate the information (data) you will get out of it. 2. Produce a matrix (a spreadsheet will do) of average costs for each phase of each type/sub-type of matter to establish median costs (together with the assumptions on which those median costs are based). You will then have a ‘template’ for futures such budgets which can be backed up/justified by real data. Don’t forget to then tailor the template budget(s) to your specific matter(s). 3. Start recording all work done by phase (there are 10 at the moment) to get into the habit of doing this – not forgetting that you will already be working on some cases that will be subject to budgeting! Your IT department should be able to help you ‘code’ your case management system in some way to enable you to record and filter the work done by phase. 4. Set up a system to monitor actual work done against the budgeted costs for each phase. If you look like you are going to exceed your budget try to agree a variation with the other side and if not then make an application to the Court. 5. Use your costs specialists to help you to prepare your own costs budgets and to analyse your opponent’s. Get used to seeing and using them as part of your litigation team throughout the life of a case. Sue Nash, Founder of Omnia Legal Software Ltd.

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

ML // March 2013

00 32

????views The

t’s a story you hear every day in consumer life: purchaser gets blinded by the possibilities of a piece of kit, brings it home full of good intentions, but only every uses 10% of the functionality because they never really have the time to devote to figuring out how to unearth the wonderful opportunities hiding in the remaining 90%. Cameras, home computers, I’m sure we’ve all done it. And in the end the shiny piece of new kit that had so much promise just collects dust until the next version comes out….and so the pattern continues. It can often be the same with technology in the corporate world, too. Many law firms buy software which, often, could significantly improve productivity, but is either never fully utilized or, worse, never even deployed and quickly gets relegated to the realms of shelfware. This generally happens because deployment cycles are long and badly planned and, with a lot of on-premise infrastructure to manage, IT staff are overstretched and training is often neglected. In all sectors, including legal, the IT team is never an expert in all the solutions they deploy, but they are generalist and, as a result, there is a huge amount of untapped functionality left behind in legal server rooms. New solutions are then added as the business tries to solve new problems….and so the cycle continues. When is it better to upgrade, or when is it time for a complete overhaul? It doesn’t really matter if you’re stuck in this cycle, but an upgrade will at least protect you against bugs and security volatilities in the short term. Longer term, however, being caught in this cycle is the perfect time to think about moving to the cloud. A cloud-based computing approach will remove the complexity of the constant LAN based upgrade cycle and allow the cloud vendor to deliver innovation and new functionality without you having to even think about it. The cloud offers a continuous delivery cycle of new features and functionality and helps you stay on top of important technology in your business. In addition, removing all of that on-premise infrastructure frees up the IT team to deal with the meaning of the data - providing real insight from the collection of unstructured data that the firm has amassed over the years. Orlando Scott-Cowley, Enterprise Consultant, Mimecast

ML // March 2013

Q: Costs budgeting – will Court of Appeal rulings such as the recent one in Henry mean that areas of the Jackson reform like proportionality won’t be given the full attention of lawyers in light of the raft of reforms set for 1 April 2013 in civil litigation?

In Henry v News Group Newspapers, the Court of Appeal ruled in the claimants favour, overturning a previous decision by the High Court which said there was no good reason to depart from the budget set. This was not necessarily a ‘good news story’ for claimants post April 2013. Proportionality will be something a lawyer must take into account when looking to adequately fund and insure a specific action against costs and cannot ignore this fact even with the comfort of this decision by the Court of Appeal. While decisions - like that in the case of Henry - are made, it is reasonable to assume that the threat of incurring recoverable costs (higher than the original budget set) could become a real challenge for claimants. Especially true where they are seeking to fund their case and where damages are not particularly proportionate to the cost of running. Where cost uncertainty remains due to these decisions, adequately setting a level of insurance before the point the claimant can no longer purchase and/or afford insurance will be a key challenge - no matter how likely or unlikely this will occur. It may be possible to purchase top up where costs remain proportionate. However in the event of other types of civil litigation (e.g. land disputes) where redress is not a monetary amount or are of low value, this will become extremely difficult. For example; a defendant with deep pockets may simply ‘dig in’ knowing the cost risk for the claimant will become unsustainable and the case is under-settled or worse still, dropped. This could lead to claims on policy, even on legitimate cases, increasing premiums for everyone else. This could lead to some huge perversions in events which a lay person may find extremely unpalatable and therefore damaging the reputation of English and Welsh law; a situation Lord Leveson related to in his recent report published into press culture, practice and ethics. Behaviour of lawyers interpreting these decisions will be increasingly important to determining premium and the availability of funding and insurance to support civil litigation in the future. Russell Smart, Chief Operations Officer, Elite Insurance Company Ltd.

Features

Success = understanding Adequate funding is vital for any sustainable business and absolutely crucial for those intending to expand by developing new service lines or increasing their geographical reach. While current economic uncertainties throw these issues into sharp focus, firms need to better understand the interplay between structure and finance for success, as George Bull writes.

he key questions for management teams are very simple. How much money do we need? How much have we got? Where can we get the extra we need? On what terms? While aspects of the business planning and fund-raising process may be complex, it is important to keep these basic concepts clear in mind. Any consideration of structure and financing can only take place within the context of the overall business. Internal factors to be addressed will include strategy, the firm’s direction and business plan. Any inconsistencies or misalignments must be ironed out. Different in nature but also fundamentally important are the disciplines of budget-setting, monitoring, financial control and accountability. Without these, funding requirements cannot be quantified; nor will funders be happy to provide access to capital in their absence. Last, but by no means least, the impact of culture and process must be carefully weighed. Most legal business have now come to grips with changes in the wider economic environment which have an impact on them. Key among these are expectations of fee growth or decline in different segments of the legal services market, the unmissable fact that we have entered a new era of relationships between banks and professional firms and the truth that commoditisation reduces the need for skilled lawyers. Innovation, of course, boosts the demand for skilled lawyers but that is another story. The key pressures affecting the profession are: • New entrants • Evolving client (customer) expectations

• Price competition • New methods of service delivery • The power of brands and advertising • Consolidation, driven from within the profession and externally Many legal services providers will use new structures and innovative financing arrangements to develop their business. To take advantage of these, clear commercial models are required to set firms apart from their competitors. When matching models to business strategy, firms must take the key steps in the right order. First, agree your firm’s strategy. Second, decide on the business model. Third, create the right structure. The right structure can help your firm deliver its strategy. By contrast, changing your firm’s structure is not a strategy in itself; at best it may be a step along the path. Once the business model is clear, financial modelling must be undertaken in the course of preparing a detailed business plan. Financial forecasts have to be constructed and their reliability assessed. The credibility of budgets must be subject to robust testing in the course of identifying the level of finance required. Setting aside debtors and creditors, the principal sources of finance are generally the partners/proprietors, banks and other sources of debt finance and external equity. Each of these may have a role to play; all bring their own advantages and disadvantages which should be reviewed carefully in constructing an overall funding model. Funding and structuring considerations are inextricably intertwined. For example, a simple partnership or LLP may be at the best structure for funding through partner capital (borrowed or not) and bank debt. However, if a firm wishes

to reduce its reliance on banks, then increased self-funding through the retention of profits may be extremely attractive. As the SRA recognises, this is often best achieved by an LLP with a corporate member. Exactly how that structure should be implemented requires careful consideration. Once external equity is in prospect, then a shareholding structure is almost inevitable, not least because it is concept well-understood by equity providers while also offering considerable flexibility and the prospect of tax-preferred share incentives. One other key consideration should be borne in mind. As the pace of change in the provision of legal and non-legal services to clients continues to increase, different parts of an organisation may make profits in different ways and have different funding requirements. In diverse businesses such as these, a ‘one size fits all’ approach does not work either in the management of the business or the assessment of financing requirements. The way in which client needs are met may therefore have a direct impact on the structure of the business and the way in which it is financed. For businesses which understand the interplay between structure and finance, there is everything to play for. For businesses which have not yet reached that point in their own journey, there is still time to catch up. George Bull is National Chair of Professional Practices Group at Baker Tilly. www.bakertilly.co.uk

ML // March 2013

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Features

Interview with... David Jabbari, CEO, Connect2Law. Meeting the CEO of a well-known legal brand on a cold day in Manchester immediately after the collapse of Manchester based law firm Cobbetts may not appear too inviting. However, David Jabbari, CEO of Connect2Law, radiates optimism and enthusiasm for the legal profession generally and Connect2Law in particular. As with practically every organisation in the legal services industry at the moment, Connect2Law is faced with challenges and opportunities. David was recruited in 2012 by the firm with a brief to meet these challenges and sharpen the organisation’s effectiveness in the post-ABS world. Antony Smith interviews for Modern Law.

Could you summarise what Connect2Law is and outline its current status?

Connect2Law began in 2001 as a referral network. Connect2Law was designed originally to be, and still is, a professional service referral network for law firms. It was recognised that many firms, especially smaller firms, found themselves in the position of having to turn potential clients away because they could not service particular types of work. Connect2Law offers its members the ability to retain their client by referring some work to other firms in the network who are better placed to do particular kinds of work. Clients cannot be poached by network members and, in keeping with the solicitors code of conduct, they are always advised that a particular matter is being referred to an associate firm in the network. Currently there are over 2,600 member firms including 18 regional hub firms – which play a key role in Connect2Law. These firms

are strong regional firms in their own right and they will do most of the work referred to them by firms within their regional hub. Referrals between Connect2Law members has resulted in approximately £40 million work of legal work being done by its members.

Will LASPO and the proposed ban on referral fees in connection with PI cases affect Connect2Law?

Yes it will. We will have to make some immediate, and lasting, changes to the way we handle personal injury (PI) cases but longer term it will have less of an impact due to our change in strategy. I was brought in help guide Connect2Law through the post-LSA legal landscape but recently I have been spending a lot of my time considering LASPO and the ban on PI referral fees. As from 1st April 2013 if a Connect2Law member firm feels that for whatever reason it cannot service a PI matter brought to it by an existing or prospective client then it will advise the person concerned that they may wish to consider instructing a

“When prospective clients approach Connect2Law members we want those prospects to feel confident the firm they are approaching is backed-up by a national brand which can call upon significant resources”

David Jabbari, CEO, Connect2Law David is a qualified solicitor with degrees in law from Warwick and Oxford Universities. He joined Pannone in 2012 as a partner and the first CEO of Connect2Law. David was formerly an equity partner and the CEO of Barlow Lyde & Gilbert, during which time he handled both the acquisition of Halliwells’ insurance practice and the merger with Clyde & Co which was the biggest ever merger of two UK law firms. Following the merger of BLG and Clyde & Co in 2011, he became a partner and the Chief Operating Officer of Clyde & Co. Prior to that, David was a director at Allen & Overy and in 2004 became the firm’s Global Head of Knowledge Management, having originally joined the firm in 2002 as the Global Head of Knowledge Management for the firm’s International Capital Markets practice.

ML // March 2013

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Features

“Being small and trying to do everything is a problem for many firms. I think small firms can be successful if they concentrate on doing what they do best, i.e. provide good quality legal advice in their areas of expertise, and then get others to help them run their practice as a business” recommended firm within the network. It will be for the client to contact the recommended firm if s/he chooses to do so and the original firm will have nothing further to do with any referral mechanism or the PI matter. This is not a referral under LASPO and therefore leaves Connect2Law free to pay a commission in these circumstances. Member firms are obviously already comfortable making recommendations to other firm members and this is something we are planning to build on and make prospective clients more aware of.

So you plan for Connect2Law to become more of a consumer brand?

We would like the Connect2Law brand to become more visible to consumers as a means of augmenting the strong local brand and presence of member firms. We do not envisage the Connect2Law brand replacing the member firms name. We are planning for our member firms to retain their name and local status but for easier recognition of member firms being ‘powered by Connect2Law’ if you like. We already do a lot of work with member firms in areas such as sharing best practices, developing operating efficiencies and helping to negotiate more favourable PII premiums. Clearly individual firms are assessed by prospective clients and PII brokers alike on their own reputation and performance, but we think we can help our members improve their reputation and performance even further. When prospective clients approach Connect2Law members we want those prospects to feel confident the firm they are approaching is backed-up by a national brand which can call upon significant resources. This helps ensure their matters are going to be

handled efficiently and effectively. We will not seek to impose top-down Connect2Law standards, but we will work with our members so that they can concentrate on being what they are best at – being lawyers – while we can help them run their practice as a modern business.

The ‘branded’ legal market place is becoming quite crowded – what makes you believe the new-vision Connect2Law will succeed?

Looking at the consumer law market, I think over the next 10 years or so we will see the emergence of between four to six dominant brands. Each brand will have a slightly different operating model, but members of the public will recognise them as being a legal service provider. We already have a large network of law firms, so we are not starting from scratch. All of our hub member firms have a dedicated Connect2Law business manager and I have a Connect2Law team of 15 full-time staff based here in Manchester. Our hub members are particularly important to us, and we plan to work even more closely with them. As mentioned earlier, the hub firms are already significant regional law firms in their own right. So we already have the network and key people in place. We are already very comfortable working alongside each other, so we just need to build on this rather than have to start from scratch. That’s quite a platform from which to advance.

In the previous edition of Modern Law I interviewed Richard Susskind and among the points Richard made there are two in particular to highlight. The first is that, in his view ‘for much of the legal market the (business) model is not simply unsustainable, it is already broken’. Would you agree?

As a general statement, I agree with that. Of course firms in different sectors will need to operate differently. A big city law firm will need to operate differently to a small country practice but I think that, generally, the monopoly lawyers had on legal service delivery and ownership has insulated them from the need to change. The liberalised market has forced lawyers to consider how to meet competitive challenge of the new market entrants and, in so doing, how to change.

Richard also said ‘I do not see much of a future (beyond 2020) for most small firms in liberalised regimes’. Is that fair?

I think that being small is not a problem. Being small and trying to do everything is a problem for many firms. I think small firms can be successful if they concentrate on doing what they do best, i.e. provide good quality legal advice in their areas of expertise, and then get others to help them run their practice as a business. This is where I think the Connect2Law network can help its members even more in the future: helping to run a modern business and providing a recognised brand-name as a pathway to an increased market share. David Jabbari, CEO, Connect2Law MLM would like to thank Antony Smith, Director of Legal Project Management, for conducting this interview.

ML // March 2013

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The great unknown When some parts of civil litigation are so uncertain, how are legal entities supposed to make concise and achievable business plans (even with the most market-aware leaders) when there is a lack of clarity, procedural uncertainty and a whiff of ‘Yes Minister’ with regards to LASPO and the Jackson reforms, asks Anthony Hughes. Combine this with the fact that history appears to be repeating itself and lawyers are left facing a hike into the great unknown...

henever an organisation decides that significant change may be required, it would ordinarily do that in a strategic manner. Initially the team would be put together to carry out an overview or review of current practices, procedures in the market etc. That team would be expected to make recommendations and then a decision would be taken as to the objectives or ideal outcomes that the organisation wanted to achieve. Assuming that organisation is of significant size and scale, a project team will be put in place together with a project plan showing precisely what was deliverable and when. What they wouldn’t do is set a deadline and work backwards. I had the good fortune of working with the MOJ and other stakeholders on the initial portal protocol. I’m afraid that in my opinion they went about this the wrong way and we all saw the consequences in terms of setting an unachievable deadline. On one occasion I had a conversation with the senior civil servant (funnily enough, outside the Houses of Parliament) urging him to delay implementation so that it could be done correctly rather than just quickly. He made it clear that this wasn’t possible and ‘Yes Minister’ prevailed.

You would have thought that we would learn from these mistakes but it seems that sadly history is just repeating itself. With only a matter of weeks to go uncertainty reigns. Statutory instruments are being drafted, rules are still being considered, costs regimes remain out for consultation. The consequences of this are significant but frankly government and the civil service don’t seem to care. Insurers ordinarily write policies of insurance for a 12-month period. This means that actuaries have to try to price their products in the face of significant uncertainty, for at least the last six months if not longer because those policies will cross over the April deadline. Why is that satisfactory? Business modelling in the face of reform Other stakeholders - such as lawyers, investigators, claims management companies and medical agencies have to consider how their business models will be impacted and whether they can be sustainable beyond the implementation of LASPO. How can we do that without knowing what the actual outcome will be? To add insult to injury the Government then issued another consultation which will directly impact

“To say there is no joined-up thinking is an understatement. Frankly, when you read some of the content of the consultation documents, it beggars belief in terms of the lack of understanding of the marketplace and something as basic as the civil procedure rules themselves”

Anthony Hughes Chief Executive Horwich Farrelly Solicitors Anthony has worked with a number of leading Manchester law firms and has specialised in high value insurance matters arising from road traffic accidents, accidents at work and health and safety issues. He also has expertise in fatal accidents including a criminal element in terms of dangerous driving and death by dangerous driving. He joined Horwich Farrelly as Chief Executive in May 2009 and is also a member of the Executive Committee of leading lobby organisation the Forum of Insurance Lawyers (FOIL).

ML // March 2013

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22/02/2013 10:25

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upon the reforms, in terms of whether or not to raise a small claims limit and to rethink the entire philosophy around whiplash. To say there is no joined-up thinking is an understatement. Frankly, when you read some of the content of the consultation documents, it beggars belief in terms of the lack of understanding of the marketplace and something as basic as the civil procedure rules themselves. What I’m alluding to is a suggestion that the small claims track is in some way the answer to insurers’ prayers in terms of fighting fraud. You only need to take a cursory glance at rules 26 and 28 of the CPR to see that as they’re currently written the concept is just unworkable. Lord Justice Jackson was given a very clear brief and whilst he and I did not always see eye to eye (primarily because he simply was not prepared to even acknowledge the existence never mind the operational value of the MOJ portal), one thing that we did agree on was that any package of reforms needed to be a set of interlocking measures. He very deliberately designed his recommendations on that basis. Nowhere in those recommendations was there a suggestion that the MOJ portal (primarily because he denied its existence) should be extended either horizontally or vertically. Furthermore, he specifically said that he thought any ban on referral fees was unworkable. The irony is that until Jack Straw saw an opportunity to raise his profile this was never really on the agenda. Also let’s not forget Jackson dismissed the option to raise the small claims limit as so many before him had. What we’re left to work with Why are these so important you may ask yourself? As I said above, Jackson wanted an interlocking set of reforms and his view was that if you diluted them in any way they would be less effective. Of course if you overburden them they could equally struggle to have the same impact. The relevance of extending the portal is that it requires significant technology development which quite clearly has failed to materialise. In my opinion this is

“What must Lord Justice Jackson think? I suspect he will be disappointed. After all, why get an expert involved and take soundings from stakeholders with great in-depth knowledge, only to ignore their views and drive-through politically motivated decisions?” quite simply because outside of the motor sector the designers don’t really know what is required because the final rules are not available. Oh I have a sense of déjà vu because this is exactly what happened back in 2010. All of the time and effort spent on this could have been dedicated to getting the rules and regulations and most particularly the fixed fees ready in good time for the April 2013 deadline. The referral fee ban, it is widely accepted, is of no relevance if the fixed fees are set at the correct level. All it has done is made insurers, lawyers and claims management companies scurry around considering what clever business models can be created to make sure that they do not fall foul of the ban. Also, how income generated from personal injury claims can continue to be split between the various stakeholders. The other significant issue is of course the work this has placed upon the regulators. A right dog’s dinner Jackson provided a very comprehensive set of fixed fees across personal injury generally and this was based upon empirical evidence compiled for him by Professor Fenn. Furthermore, he squarely recommended the creation of a review body to consider the level of fees on a regular basis. Let’s not forget this has been rejected!

Whilst I’m not expecting the Armageddon that some predict on 1st April 2013, I do think that from the point of view of delivering sensible workable reforms this is nothing short of a dog’s breakfast yet again. I’m not surprised that there is a challenge by way of judicial review and I will be fascinated to see the outcome especially now the MT via the CJC response does not support the current FRC proposals. Finally, what must Lord Justice Jackson think? He did his best and prepared an incredibly comprehensive report and set of recommendations. This was supported by the compensator lobby and the ABI and they urged implementation in the recommended format. Many claimant lobbies opposed it but on reflection I know that most would have preferred the reforms to be implemented as he wanted rather than the mishmash that we could get. Just like Lord Woolf before him (who of course recommended fixed fees back in 1999) I suspect he will be disappointed. After all, why get an expert involved and take soundings from stakeholders with great indepth knowledge, only to ignore their views and drive-through politically motivated decisions? Anthony Hughes is Chief Executive at Horwich Farrelly Solicitors.

ML // March 2013

Features

The people’s lawyer Greg Shields asks if law firms are actually any good at putting people first, especially in light of increasing commoditisation.

f you want to put clients at the forefront of your business then I believe being geographically close to them is important. As lawyers we need to be active and relevant in the local community where our customers are based and provide a ‘human touch’. Over Christmas in our firm, Forster Dean, we used the offices as a drop off point for ‘Mission Christmas - Cash for Kids’ (a charity that collects toys for disadvantaged children) - a perfect example of lawyers using their initiative to give back to the community. To be honest, my focus is always on our people, first. You’ve got to believe that if you have a positive culture which encourages responsibility, learning, recognition and joy then your team will be amazing with your customers/ clients. I like a challenging culture where we are fast-paced and constantly questioning each other. Responsibility, learning, recognition and joy should not originate solely from the top of an organisation; they must rebound from everyone, in every part of the company! Allowing personalities to flourish One of the really big challenges that we all face in the law is getting everyone in the business to just be themselves, chill out a bit and respect each other as part of the same team. All with a singular dream of doing the best for our clients. In the current climate the government’s challenge to reduce legal fees in all sectors means that even in the most client-focused firms, time made available to look after clients has to be reduced otherwise the firms will cease to exist. Will the commoditisation of the legal market really give clients a better service? When looking at the commoditiaation of legal services, it is easy to lose sight and touch with what we are really talking about. In the legal market we only deal with serious matters that vitally affect the lives of our clients and their businesses. The establishment of processes for certain aspect of the law is sensible if carried out by lawyers. The issue with commoditisation is that non-lawyers who are not trained in many of the interactions required by the simplest legal transaction - are giving advice without understanding of all the consequences. This leads to delay for the client and ultimately increased cost to society, generated from sorting out the problems. I believe in face to face contact with clients, caring deeply and genuinely about their problem and using the business of law as a force for good in the world. When technology works There is a need for lawyers to have the correct IT infrastructure to allow engagement through a variety of different e-vehicles (e.g. email, social media, online case tracking) and to ensure that what can be reduced to a process, is. This allows lawyers to have more time with the

ML // March 2013

“The commoditisation of legal services - as it appears to be evolving – (I think) stops the client from coming first. It denies the client and their communities from interacting with highly trained professionals, whose core ethic is doing the right thing for the client” client to give advice and to think creatively on the clients behalf. It ensures pricing is kept at a sensible level for clients however this is a self-adjusting issue within the market. The public want to trust the legal profession, listen to our advice and know that we will deal with their worries or problems for them in a professional manner. The commoditisation of legal services - as it appears to be evolving – (I think) stops the client from coming first. It denies the client and their communities from interacting with highly trained professionals, whose core ethic is doing the right thing for the client. I dislike call centres and the bulk trade in legal services. I also deeply resent the race to the bottom that is going on in the UK legal world. Margin and profit, costs per case, have nothing to do with what’s best for the customer. Let’s return to remembering what being a professional lawyer in our communities stands for - isn’t that why we became lawyers. Greg Shields is Managing Partner at Forster Dean Solicitors.

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Funding justice The modern view of the regulators, statute, case law and public policy is that litigation funding and finance provide access to justice. A modern lawyer should knowledgeably be able to discuss the full range of litigation funding & finance options. Sir Roger Carrick sheds light on these key tools.

ommercial pressures, reducing state aid, LASPO changes and the imperative of cash flow to client and lawyer alike can only increase the need for funding options. Against that background, I will attempt to summarise the main options, excluding Conditional Fee Arrangements (CFAs) and After the Event Insurance (ATE), which are generally already well understood. Litigation Funding Litigation funding involves paying the legal bills of a claimant in exchange for a share of the proceeds of success. If there is no success in the litigation there is no repayment because litigation funding is not a loan, it is champerty. This has important implications: for example, funding litigation in this way means becoming responsible for the defendant’s costs if they are awarded against the claimant. In addition, by law, litigation funders engaged in champerty in the UK are not permitted to exercise control over the litigation. They simply pay the bills and stand ready to pay the other side’s costs, in return for a share of the settlement. This share is negotiable but normally around 30%. One of the largest litigation funding firms, Harbour Litigation, has a £200M fund and will consider cases only with a minimum claim of £3M. However, there are many other funders who will cover smaller cases. Many clients who could afford to fund their litigation still chose a funder because they want to use their own cash for other purposes and they value the pragmatic commercial logic that funders bring to the case. Litigation Finance Litigation finance is a loan made to the client in order to allow the client to pay

legal fees and disbursements. The loan is repayable whatever the outcome of the case and takes no share in the settlement proceeds and therefore is not champerty. The loan is designed to be bridging finance until the client receives their settlement. Unlike litigation funding, it is not appropriate as risk finance where the outcome of the case is uncertain. Litigation finance loans tend to cover matrimonial, probate, clinical negligence, personal injury and smaller commercial litigations. At Lime Finance, we offer solicitors a firm wide facility limit that they can apportion among their clients at their discretion. We rely on the case and settlement assessment provided by the solicitor to arrive at a lending decision for each client loan. We take no direct security from the client but we do take a solicitor’s guarantee in support of the solicitor’s case assessment. We also ask that the client agrees to their settlement proceeds being managed by their solicitor with the authority to deduct money from the settlement to repay the loan. In this way all respective interests are aligned and we offer the maximum discretion and flexibility to solicitors where clients cannot offer security because their assets are part of the litigation. Prior to the financial crisis there were many litigation finance providers, including Barclays Bank. However, most have now left the market. Funding & Finance Criteria Funders such as Harbour Litigation and finance providers such as Lime Finance look for similar criteria:1. Good Legal Merits and Precedent– Funders will take a risk and the price of their funding is related to the perceived risk of losing

“Commercial pressures, reducing state aid, LASPO changes and the imperative of cash flow to client and lawyer alike can only increase the need for funding options”

Sir Roger Carrick KCMG LVO Sir Roger is a former British diplomat, with prominent appointments including Ambassador to Indonesia and High Commissioner to Australia; a published author, lecturer and business adviser. He has held business directorships and chaired the board at several companies with international interests. The Chairman of Lime Finance is also Vice Chairman of the Royal Over-Seas League, a Freeman of the City of London and a former Trustee of the Chevening Estate and Visiting Fellow, University of California, Berkeley. the case. Loan providers such as Lime Finance are looking for a repayment mechanism under any reasonable expectation of the litigation outcome. For example, in matrimonial cases it is usually a question of whether the client receives 40% to 60% of the assets and not a question of receiving nothing at all. For clinical negligence cases, ATE or BTE may already be in place to cover the loan, if the case is unsuccessful. 2. Credit-worthy Defendant – Does the other side have the means to pay the award and are the assets in a jurisdiction where judgement can be enforced? 3. Experienced Solicitors – One of our key criteria is the track record of the firms to whom we extend facilities. Over time we build trust and understanding and can thus support them more effectively. 4. Costs in relation to Settlement – The funding level must be commensurate with the expected settlement size. It serves no-one when these elements are misaligned. Sir Roger Carrick is the Chairman of Lime Finance.

ML // March 2013

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Interview with... Rob Terry Emma Waddingham, Chief Editor, speaks to Group CEO of Quindell Portfolio PLC and its ABS, Quindell Legal Services, about how the company manages services, standards, clients and employees across one of the largest legal services portfolios in the country - making it a prime contender for the FTSE 100.

Was activity at the end of 2012 as furious as expected in terms of new contracts?

Yes, we saw a lot of activity towards the end of 2012 and are still heavily engaged with a range of existing, new and potential customers who have been using our services or are planning a move to us in the lead up to the changes expected in April 2013.

Q A

How has the start of 2013 been across the portfolio?

The pace of engagement with new prospect clients has continued. Those who moved into pilot with us in 2012 are now all in full roll out. We are enjoying a highly successful period, to the extent that our run rate volumes for the rest of 2013 are now visible from existing client relationships.

Is the sector holding its breath preLASPO (01.04.13) commencement or is there wide-scaled activity behind the scenes in preparation?

Leading up to the end of last year, there was a high degree of concern and uncertainty in the market generally surrounding the possible interpretation and practical application of LASPO, which we have been able to use to our advantage. The SRA have more recently been engaging in a number of nationwide Strap Ad.pdf 1 04/07/2012how 09:38:30 forums toP.Manners help firms understand

CMY

LASPO will be interpreted and the regulatory implications, so there is now a higher degree of behind the scenes preparation assisted by the additional clarity being provided by the regulator.

Are you expecting a post-April rush as clients look to work out the lay of the land (after LASPO) or are the successful industry players well-placed to do business as usual?

As with any significant market changes, there is a broad spectrum of clients; from those who are early adopters and are therefore better prepared, to those who have only recently began to fully understand the implications for their business model and are therefore now needing to address the changes. We are actively engaged and assisting with prospective clients and existing clients across the whole spectrum, so we do expect to see new customers being added beyond April.

The path for insurance companies appears to be formalised contracts / relationships with ABSs rather than acquiring law firms â&#x20AC;&#x201C; is this the way you expect things to continue over the coming year? When the concept of LASPO was first introduced, coming so soon after the introduction of ABSs, many advisors and commentators in the industry felt that the most effective route in managing clientsâ&#x20AC;&#x2122; needs and

preserving revenue streams was to consider: establishing their own ABS; entering into various joint ventures with an ABS, or; acquiring a law firm. What has now become clear to insurers is that the process for establishing an ABS is rather more complicated and entails significant complications for a large multi-disciplinary and complex insurance and / or broker group. In order for an insurer to acquire a law firm they would need to obtain and maintain an ABS licence. Given the aforementioned complications, this has become a

Features

highly unattractive proposition. This leaves the final option of partnering through contract with an ABS which can be achieved in a compliant fashion. However, this requires there to be an appropriate structure to be put in place with the right partner who can provide a proven, ethical and reliable service offering - and with the right financial benefits for all parties.

Q A

Are mergers between medium / large sized PI firms in themselves a solution to Jackson / LASPO?

One of the key drivers to success in the future PI market is to achieve critical mass, therefore mergers or acquisitions to create the efficiencies required would seem logical. However, this will not provide the solution to Jackson / LASPO as the challenge for any firm postApril is to ensure that they have access to prospective clients in a fully compliant model. So mergers and acquisitions in themselves will not address the potential issues created by Jackson / LASPO.

What does real consolidation require? How much further does the Quindell Group portfolio plan to extend to in the bid to reach its place in the FTSE 100?

Our main corporate objectives in 2013 are to deliver significant organic growth and go on the full list, both of which we believe will in turn move us towards FTSE 100 status. At the same time, we are continuing to be approached by prospective acquisition targets. Quindell has operationally successful businesses led by strong management teams and are earnings enhancing, whose strength is then harnessed by leading edge, integrated technology. Each of the businesses acquired are totally synergistic resulting in a model whereby the potential issues of integration are minimised. Whilst completing acquisitions in the hire and repair, legal services, medical examination, rehabilitation services, medical services, and technology we will continue to build from this strong platform into related business areas.

Managing investments

“Each of the businesses acquired Q are totally synergistic resulting in a model whereby the potential issues of A integration are minimised”

Quindell’s extensive portfolio and investments must require significant management, maintenance and assessment pre and post formalising the relationships (with, say, Mobile Doctors or Silverbeck Rymer). With that in mind, what do you look for in a company before investment and taking it into the portfolio? The businesses we have acquired have included two other public companies with successful track records going back many years. Silverbeck Rymer for example, has been a successful law firm for more than 50 years. Because

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“Given our unique structure and access to the right working capital, we believe significant organic growth is not only achievable as a desired result. We can now show is actually being achieved” of these proven track records, we have been able to provide customers with the confidence that we can deal with their customers in the manner that they expect.

Does it help to have worked closely alongside the companies beforehand?

We often work closely with the target company before we acquire it, which reduces the risk of culture clashes but also ensures that when we do acquire them that integration is a lot easier.

What kind of leadership qualities are needed / desired by the Quindell Group in order to invest / work with?

It important that the management of the target companies support and understand the vision of the Group that we are building, as we expect customers to be taking services from multiple points within our service capabilities. Key to ensuring and maintaining quality customer services at the right margin is our ability to apply technology to the services we provide and this is a key part of ensuring consistency in the customer journey.

What kind of work ethic / employee culture pervades the portfolio?

The customer must be at the heart of everything in an organisation such as Quindell does. At the same

time, we are in the people business and our staff are our key asset. We work hard to motivate our staff both financially but also through training, education and an exciting and challenging working environment. Our growth plans over the coming years will mean that we will have a number of new roles and positions becoming available and want to identify the talent in our organisation so that we can fill these positions from within.

The perception of commoditisation in legal services is often accompanied by the assumption that volume and profit come at the cost of customer service. The Quindell Group prides itself on its ethical approach to business and its high standards of client service. How do you ensure this is the case throughout the process and have you needed to make any changes to ensure consistency?

As part of our selection criteria, we seek to acquire businesses with a strong track record in excellent customer services that we can use as a corner stone for any potential acquisitions with that sector, thus mitigating any of the potential concerns around the loss of customer service. Silverbeck Rymer was the cornerstone acquisition in the legal services area. Its strong management team, ethical approach towards costs and strong IT services capability is now the management team heading up Quindell Legal Services QLS. Additional acquisitions made in this sector have been led by the QLS team with targets being acquired that will be wholly complementary with additional skills set to the cornerstone business. We have invested and introduced Quindell Technology into QLS to ensure that key performance indicators and real time management information along with a number of other ancillary factors can be managed on a rapid scale basis thus ensuring consistency of approach.

Is it possible to provide high standards of client care in a volume practice and in the PI sector from 1st April 2013, whilst making a profit? How does the Group ensure this?

It is imperative to provide high standards and client care in the PI sector post 2013 and if we do so, the Group will make a profit. We will do this by employing the right people, providing the right training, listening to our customer’s feedback and acting on this. We refer to the answers previously provided relating to the underpinning of the highest standards of customer care. The Quindell strategy is completely aligned with the predicted challenges of LASPO, Jackson and related additional changes. This enables us to comfortably work profitably within the new environment.

What has been your opinion of the PI / claims focused ABSs to date? If ABSs are viewed in themselves as the ‘solution’, what impact will this have on the provision of legal services in the claims sector and will these ABSs last?

The introduction of ABS has created a new marked differentiation within the industry. Using an ABS for that which it was originally conceived - to allow commercial enterprise and investment to be introduced to a more traditional market - but within a regulatory and governance framework will (for those who have access to capital), enable them to clearly grow rapidly and successfully. Those who have merely switched from an LLP status to an ABS but have not sought to introduce new sources of capital, will struggle to attract and retain clients in this highly evolving and rapidly developing commercial market. Therefore given our unique structure and access to the right working capital, we believe significant organic growth is not only achievable as a desired result, but that we can now show this is actually being achieved. Rob Terry, Quindell Group PLC

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Business Management

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Business Management

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Business Section

Q: Marketing has moved on from the days of all-day lunches with wine but what do you feel is being lost in the world of direct / online marketing and what do you recommend companies ensure in their bid to get more of your work?

As a Solicitor-Partner, in practice I received daily emails from companies promoting their business. Quite often these emails were sent straight to the deleted folder because I felt that the emails were impersonal or irrelevant. Having made the decision to leave private practice and join Legal Eye to assist firms with compliance and Lexcel it gave me the opportunity to reflect and evaluate what worked well when I was on the receiving end of various marketing strategies. I decided that the key to successful marketing was rapport. Lawyers are expected to know the law and advise clients but there are thousands of lawyers in the industry providing the same services. So being unique in a fierce market and conveying this to potential clients is a task that many firms can find challenging. To stand out in the market, firms should be deciding on whether face to face contact, online marketing or a combination of the two works best for them. Where online marketing is most suitable, marketing strategies should convey a personal, approachable and relevant message, With this in mind, firms must have a business and

marketing plan in place, identifying measurable objectives and a process to evaluate the firm’s achievements against those objectives. Once a firm has decided to engage in marketing they will need to decide who they want to target, what they want to offer and how the are going to do it, considering budgets and resources available. E.g. for high street firms, they may wish to develop their presence in the local area by sponsorship or pro bono work, hosting local seminars to raise awareness, or by concentrating on cross referrals within the firm. These approaches can give a firm instant credibility with potential clients. Where firms wish to attract the wider market, development of the firm’s website plays a critical role, as does the firm’s online presence especially where more and more clients are turning to the web to find legal advisors. Firms must ensure that the material online is relevant and regularly updated. When considering email and online marketing, firm’s should also be mindful of their obligations and responsibilities under the E U Commerce Directive and Publicity requirements under the Code of Conduct, as marketing materials are not only seen by potential clients and so firms should ensure that they are compliant. Priya Anand Patel, Senior Associate, Legal Eye Ltd

Brand value T

he true value of a brand lies within the collective minds of the consumers and is a perception of what we have heard, seen and experienced. Even though this interpretation will vary from person to person, it’s fair to say that with the internet and the speed that consumers can compare one brand against another, they now challenge brand offerings and in the legal services sector, the once unquestioned proposition of the brand ‘solicitor’ and what it stands for. Consumers of legal services no longer have their heads turned by statements such as ‘experience’, ‘expertise’ and ‘heritage’ as these are no longer sufficient in a market saturated by the same “me too” offer. Consumers want more from the brand ‘solicitor’. They want to feel an emotional attachment with a firm created using the attributes that lead to brand belief such as making the consumer feel that their needs are really understood and catered for. Another problem with the brand ‘solicitor’ is that it can mirror a fading brand in today’s ever changing market. Differentiation and relevance together create

strength and these are always the first things to go when a brand rests on its laurels or fails to adapt to the needs of its customers. The problem then is that the attributes that helped build the brand in the first place - esteem, knowledge and reputation - continue to influence the consumer and remain high even as the other attributes fade. So often we see how difficult it is to change the perception of a brand in the minds of the consumer when new players are coming into the legal market with propositions born out of a deep understanding of their customers’ needs. This then falls within the remit of the management and marketing specialists to find new ways of building on their brand such as finding new gaps in the market, introducing new services and improving delivery then finding the right channels to communicate these affectively in order to change opinion and generate interest. Solicitor firms do have an opportunity to continue the brand ‘solicitor’ but on the other hand, so do new competitors under the ABS structure. But in the end it will be up to the consumers as to who they trust and only time will tell who has done the best job of influencing their decision through effective marketing. Ian Hunter, Managing Director, Jellyfish Creative

ML // March 2013

Business Section

Q: Brand Solicitor: will the brand of solicitor come to an end with the rise of ABSs and wider acceptance of direct access from the Bar and / or brands such as the Co-op?

I would argue that the brand of solicitor will not come to an end with the rise of the ABS because ‘solicitor’ is not a brand, not in the true sense of the word. Yes, it may conjure up an image of a professional trustworthy person providing help and assistance to people, often in times of distress. However, it may also conjure up images of, authority, intelligence, expense, a daunting presence and complexity. It conjures up too many confusing and disparate images to be a brand. Brand is about meaning. Your brand should be the sum total of all the meanings that all your possible audience’s carry around about you in their heads and in their hearts. There should be some uniformity relating to a well known brand. If you walk into a John Lewis store or a Premier Inn anywhere in the country you know pretty much exactly what kind of service and products you will be getting. A well known and liked brand should offer comfort, reliability and continuity. The term solicitor does not guarantee any specific level of service because there

are too many firms all working in different ways. Some are good, some are bad and some are indifferent. That is why new entrants are trying to offer legal services under their existing, recognised and trusted brand names; Co-op, AA and SAGA etc and that is why new legal brands are being formed, Quality Solicitors, Lawyers2you and HighStLawyer to name only three. Whether any of these trailblazing businesses will survive remains to be seen. If they don’t though, others will. Being part of a strong, well known brand should bring a number of benefits to individual firms, including; national recognition, protection against new market entrants, strength, a loud voice, buying power, national marketing and PR and training facilities, etc. If you are thinking of joining a legal brand (and you prefer an Interflora style emblem, rather than a complete makeover) you could become part of the Bold Legal Group spin off, Legal Eagle. It is in its infancy, but that may well be the best time to join (You can contact me at rh@boldlegal.co.uk). Rob Hailstone, Bold Legal Group

Q: Brand Solicitor: will the brand of solicitor come to an end with the rise of ABSs and wider acceptance of direct access from the Bar and / or brands such as the Co-op?

The way in which we ‘buy’ has been changing and evolving for many years and we have all witnessed the dramatic impact this has had on our High Streets. Our ‘buying’ of legal services is no exception, with quotes often being obtained, considered and dismissed online without even having shaken hands with the person with whom we will entrust our affairs. Indeed, long gone are the days when we would wear our Sunday best for an appointment with our trusted solicitor. However, the last couple of years have seen the most significant changes yet, with the introduction of ABSs being the catalyst. Competition is fierce and marketing techniques are proving difficult to keep up with, let alone budget for. The traditional law firm, headed up by a team of partners with expert knowledge in specialist areas, and based on a solid foundation of reputation and local respect, needs to consider other methods of marketing if it is to compete successfully with some of the newer entrants, who have seemingly uncapped marketing budgets, and dedicated marketing teams to promote their shiny new legal businesses to the masses.

ML // March 2013

So is a strong brand the key to success? Whilst there is no doubt that consumers will start to recognise some of the stronger brands, does this necessarily mean they will be persuaded by them? Many believe this is the route to go down and to this end there is no doubt that the Quality Solicitor brand is now both well recognised and respected, offering its members a huge arsenal of marketing expertise and support. Others believe that in order to remain successful in today’s market, fundamentally partners need to focus more on structuring and running their firms as a business first and foremost, with a firm eye focussed on the ability to evolve and gain ever dwindling market shares. The new ABS legislation now makes if permissible for firms to employ BDM, finance and marketing partners, who will be able to take up the challenges facing today’s professionals, allowing them to navigate their firms successfully, leaving the other partners free to focus on delivering high quality, professional services to their clients. There seems to be little doubt that if a firm has not yet embraced the changes and adapted their business accordingly, either through branding or restructuring, then they really do need to consider acting now to ensure that this new era does not leave them behind. Faye Stenning, Inside Conveyancing.

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Business Section

Marketing has moved on from all day lunches, but then in reality all day lunches aren’t proper marketing – they are client relationship building. Marketing is the identification of unfulfilled needs, it defines and measures those needs, determines which target markets organisations can best serve, recommends appropriate services to fulfil those needs and calls upon the entire organisation to think about and serve the customer. Marketing is not simply online versus offline, events versus brochures. True marketing is a discipline that takes years of learning and experience. Implemented correctly it brings great benefits to organisations, implemented poorly is becomes an expensive overhead that generates little. Many chambers struggle with marketing and do not appreciate the integrated nature of the discipline. In a bid to become more modern many chambers race to produce their website and join an array of online promotion sites and directories. Communications with prospective clients become impersonal and rather sporadic as the amount of time and resources allocated to all marketing activities remains the same as in previous years, despite the fact that the workloads have more

than tripled in recent years. The result is poor marketing communications and unloved clients. Chambers needs to dedicate the correct amount of resource to this important discipline. Each of the marketing mix elements needs to be appropriate to the market and carry very clear messaging and calls to action. Campaigns need to be targeted and personalised. The more you can do to tailor the messaging the more successful you will be. In effect you need to make sure that the personal element of the “face to face” lunch era isn’t lost in your integrated campaigns. The campaign plans and messages also need to be communicated internally through chambers. Every member should know exactly what’s going on and have the correct messaging to hand ready for the inbound calls and emails which should result from your campaign. It is everyone’s responsibility to market chambers, not just the clerks’ room. A free guide on promoting chambers is available at www. barmarketing.co.uk Catherine Bailey, Managing Director, Bar Marketing

Q: Will the brand of solicitor come to an end with the rise of the ABS and more acceptance of legal services direct from the Bar/brands such as the Co-op? If not, why?

The brand or image of ‘solicitor’ in today’s legal market is changing. The traditional view of the brand of solicitor is that of the professional, respectable and distinguished. Indeed, closely associated with this brand is the traditional partnership model and the perception of the ‘partner’ at the top

of that hierarchy. Alternative Business Structures have undoubtedly opened up the possibilities that exist in relation to the way law firms are structured, managed and marketed - and of course have introduced the bigger corporate players into the legal arena. With the introduction of the ABS, we are seeing a move into a more ‘commercial’ legal world, with increasing introduction of non-lawyer influence and a more consumer-driven way legal services are administered. With this new, influential element comes the risk that we will see the dilution of the solicitor brand in its traditional sense. The Co-ops of this world have the budget, influence and know-how which come with their strength as a large corporate body, to make their mark. With the introduction

of such players into the legal market, along with increased direct access to the Bar, clients as consumers of legal services now have more choice than ever before. Such brands already have the trust and confidence of consumers looking for legal services and advice in the future and are able to provide it at a competitive price. In my own experience, we have seen an increasing number of clients come to us in the legal sector looking to move into a more versatile, commercially friendly business vehicle for running their firm. It seems we may be moving away from the traditional partnership model and its associated image, into a more flexible way of running law firms. This could be indicative that we are moving away from the traditional brand of solicitor as we know it. Like the introduction of ABSs themselves, this dilution will not be overnight. Those long established in the market need to look to become more innovative in the way they are managed and marketed, whilst balancing this with quality, yet cost-effective legal services to clients. This might not halt the dilution but it could help to temper it. Eimear McCartan, Solicitor (Corporate) Ralli Solicitors LLP.

ML // March 2013

Business Section

Delivering quality post-LASPO

ASPO (Legal Aid, Sentencing and Punishment of Offenders Bill) will be introduced in April 2013 and the Law Society assessing CQS firms from February. With over 75 ABS’s now accredited by the SRA, it will be a challenging time ahead for all law firms; key to survival is delivering quality.

1. Criminal and Civil Legal Aid will no longer be managed by the LSC One of the aims of LASPO is to abolish the LSC and transfer powers and functions to the Lord Chancellor. It is the intention that a new Executive Agency will be established (within the MoJ) and will work alongside and in partnership with a family of agencies and other bodies responsible for the administration and delivery of criminal and civil legal aid. Audits are taking place across the country by the LSC to check that claims made and payments received correlate with Zero tolerance allowed! 2. Firms that signed up for CQS are also now being assessed Approximately 500 of the 2000+ CQS firms have now been assessed and from February 2013 the remaining CQS firms will be visited. I suspect may firms when applying for accreditation answered ‘no’ or ‘working towards’ when applying for their accreditation.

3. SQM or Lexcel: How long will the Specialist Quality Mark survive? We are keen to minimise and recoup from the provider costs incurred in instructing peer reviewers to undertake Peer Review work in relation to a provider who clearly does not meet the Contract’s Quality Standard. The costs that are to be reimbursed to us are those standard costs that are charged to us by those we instruct to carry out Peer Reviews. These costs are normally around £1,400 per Peer Review. With the 2013 Standard Civil Contract and the option to elect for Lexcel or SQM, many firms are looking to migrate from SQM to Lexcel and to develop their private client business. 4. Compliance with SRA Code of Conduct, COLP and COFA reporting The increasing cost and burden of Compliance is yet another reason why firms should rethink their approach to maintaining quality. Lawclient has developed the first Outcome Focussed SRA compliant online Office Procedures Manual always kept up to date and a new Compliance Manager to help COLP’s and COFA’s manage compliance with over 600 pre-defined Lexcel , CQS, and SQM compliance tasks (visit Lawclient’s www.officemanual.co.uk). Paul Wilkinson, Managing Director, Lawclient Ltd.

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Business Section

A case of Festina Lente

was brought up to believe that what we used to call ‘litigation departments’ were there as a service department. I bought a Volvo car two years ago, and my expectation is that when it goes wrong – which is pretty infrequently – Volvo will sort it out pretty quickly. If I am satisfied I am more likely to return to purchase a new car whenever that is in the future. ‘After sales service’ is key to achieving long term success. No matter how passionate we are about enforcing rights and obligations in the formal sense, most clients I am sure would prefer certainty of outcome matched with speed of delivery at as reasonable cost as is practicable. Perhaps that sacrifices perfection and exactitude to achieve a quick fix. But isn’t it time we left our CPR comfort zone and thought outside the box? Last week I mediated a moderate building claim where the builder Bloggs claimed money for the works and house owner Mavis counterclaimed something up to the County Court limit for overpayments and faults. Mavis had BTE insurance, and thus far had notched up £30,000 in costs. That, I am afraid is pretty typical of the sort of dispute which gets to mediation rather later

than one would like to see. My point is that doing a deal that satisfies Bloggs, Mavis and the insurer is all the more difficult with the consequential delay, angst, and cost. If a deal is done it is not going to be pretty. There had been little observance of the required pre action protocol and still less effective judicial case management seeing it trundle on to a PTR and effectively they were ready for trial at the mediation. There are lots of things that help an earlier understanding of each side’s arguments from prompt information exchanges to proactive communication between representatives. There is a happy medium that can and should be reached. Proactive dispute management means getting on with it early and applying a thorough risk assessment so that clients and funders can make informed decisions. Then open your tool box of available options – expert determination for technical polarised disputes; adjudication for quick binding solutions that keep the final determination option open, or time limited cost capped arbitrations for finality; mediation where direct negotiations fail, and litigation is genuinely then there as a last resort. Then, with DBA’s and a new costs regime out there, such alternatives make sense. Anthony Glaister, mediator and arbitrator, In Place of Strife www.mediate.com

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Business Section

Marketing and business development has moved on... C

lient engagement and differentiation are key components to ensuring continued bottom line growth, as maintaining client loyalty and attracting new clients becomes more critical to firms of all sizes.

Firms must work on differentiating themselves by providing their existing and prospective clients with an exceptional experience and engaging with them in ways they may never have considered before. Elevating your customer experience should be a major strategic goal if a firm is to succeed and grow in today’s environment. Building a great customer experience builds long term customer loyalty. Firms need to be ahead of the curve and use many of the new technologies and marketing mediums to engage existing and potential clients, fend off their rivals and grow their business.

Younger generations are forgoing established methods of communication and are adopting new, socially oriented and multiple communication channels such as Instant Messaging (IM), Skype, Facebook, Twitter, Linkedin, etc. Some of the younger generation may be your clients now, but they will all be your clients in the future. To engage with a younger generation, who will inevitably be your future clients; it is increasingly important to consider using social media and online forums where you can drive pro-active conversations rather than reactive ones. This give the firm a chance to proactively engage with existing and potential clients, position itself positively and address client concerns, rather than sitting back and waiting for clients to come to you. This can drive and cultivate profitable relationships as well as providing valuable feedback and goodwill not available in more traditional marketing channels. Firms should consider moving beyond their current marketing or business development strategies and embrace client engagement strategies as a vital part of their marketing and business development mix. Mark Witter MBA is Chief Operation Officer at Anglia Research Services. www.angliaresearchservices.com

According to some analysts, changing software systems can be likened to life saving surgery (painful but worth it) and this causes many companies to wait until their systems are failing before taking action. For many law firms simply the thought of changing their software systems sends shivers down their spines. One of the main barriers to getting the best from software tools is the users themselves. Many people don’t want to change the way they work on a computer because it took so long to learn in the first place and they are comfortable with maintaining the status quo. In any case the job of a lawyer is to ‘practice law’ and understandably, anything that is seen to detract from that falls low down the list. The cost of changing an existing system can actually be less than putting up with the inefficiencies, missing features and frustrations of using an out of date system or one that doesn’t align with the firm’s objectives. Just as major surgery can enable the patient to make a complete recovery, introducing a

ML // March 2013

new system can actually be less painful and inexpensive than implementing fixes to an existing broken one. So how do you decide whether to change systems, or to stick with what you have? The first thing to do is to audit what you already have against your actual requirements, and to make sure that your current model is being used properly. The best time to consider change is when disruptive technologies or major macro environmental changes throw up new challenges. Examples of these changing circumstances include the growth in mobile devices and social media. Another is the new regulatory framework bringing new challenges of risk and compliance. Every law practice will eventually need to react positively to these factors. However what if you need it but can’t afford it? The answer then is to measure the long term financial benefits. Even projects that involve a major change in software will pay for themselves within 2 to 3 years, smaller projects much sooner. And if capital funds are a limitation consider a Software- as-aService version (S-a-S), as these usually have lower up-front costs. S-a-S can also help with quicker deployment and ensure you are able to access future technologies as they arrive. Nick Hodges, Managing Director, Oyez Office Team

Our expertise is your solution Baker Tilly’s Professional Practice Group is a multidisciplinary team whose flair and sector expertise have helped us to achieve our position as one of the UK’s top providers of business services to the professions. Like most businesses in the current economic climate, professional firms, both large and small, corporate or partnership, are facing numerous challenges.

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Business Section

Estimating litigation case budgets: a project manager’s approach F rom 1st April 2013, in the vast majority of multi-track cases, litigators will need to prepare detailed cost budgets. What approach would professional project managers take and what might litigation lawyers learn from them? Ultimately those responsible for providing estimates should be those who have experience of doing the work, but project managers will seek to add value by getting the project team to: 1. Understand the project size. Estimates relating to resources, effort and costs will reflect project size. Until all project tasks have been listed and understood, it is extremely difficult to appreciate the total size of the project ahead. So estimators should first concentrate on listing all tasks first before they try to start estimating. Form HB lists the main tasks and phases which make up civil litigation procedure such as ‘Disclosure’ and ‘Experts Reports’. Clearly these broad stages can be broken down still further. Professional project managers will encourage estimators to break tasks down to a reasonable level of granularity, as it is easier to appreciate the effort required to complete a smaller task than it is for a much larger one. 2. Whenever possible, base estimates on previous data. Law firm practice and case management systems hold a wealth of data about previous cases. Hence an obvious starting point is to begin by looking at previous data

covering similar cases. At a stroke, this should take away a lot of uncertainty surrounding budget estimates. 3. When examining previous data: A) Match the data to the task lists created B) Look for data relating to standard components, such as numbers of documents reviewed as part of disclosure etc C) You will sometimes need to fill-in gaps, but do so with care. For example, if you have completed projects of a similar size to the one at hand (i.e. within a factor of three) you may safely use ratiobased estimation approach but otherwise be wary of lazy extrapolation. 4. Use group reviews to improve estimation accuracy In the present context it may be best to have at least two estimators. The first, a litigation lawyer, estimates the task size and effort required; the second, a costs practitioner, then estimates the cost. 5. Review previous estimates against actual outcomes to improve future estimations. Estimation accuracy improves with practice, especially when previous estimates are reviewed against actual outcomes, with lessons learned and applied. Antony Smith, Director, Legal Project Management Ltd www.legalprojectmanagement.co.uk

The low-down: From start-up to ABS Nigel Beck highlights the story of Pudsey Legal in its move from Kayes Solicitors into an ABS, looking at the core challenges, solutions and outcomes to date for the new organisation.

riginally formed as Kayes Solicitors some 10 years ago, the ABS Pudsey Legal was launched following the grant of its licence in November 2012. The organisation now numbers over 20 staff, having earned an enviable reputation for excellent customer service and a strong local focus.

The Challenge With changes in legal legislation Nigel Beck, Pudsey Legal the firm saw an opportunity to expand into a broader range of consumer legal services, as well as enabling non-solicitor managers to take an ownership stake. Traditionally a personal injury practice, Pudsey Legal has launched conveyancing, wills, probate, family law, and consumer dispute products in order to provide a truly one-stop solution for the local community.

So how could the firm retain its core customer promise of superior service and transparent pricing, while taking on a greater range and volume of work?

ML // March 2013

The Solution Having used a Proclaim Practice Management system from the outset, the extension of this solution was a natural step. Proclaim is unique in its suitability for multi-disciplinary ABS organisations, with ready-to-go casetypes across the full range of consumer service areas. Proclaim provides a fullyintegrated legal services solution for all Pudsey Legal staff. The Results Proclaim’s dedicated workflows ensure that administrative chores - such as document production and scheduling activity reminders - are automated. A core centralised database across all work areas ensures consistency of approach and rapid searching facilities. The upshot is that the Pudsey Legal promise of excellent service is enabled more time can be spent on customer care and less time on non-value adding administration.

Pudsey Legal’s service objectives are to provide clear, quality, approachable legal advice. Proclaim empowers the practice to focus on these vital areas, ensuring that the cornerstones of excellence are built in to every legal process. For further information, visit www.eclipselegal.co.uk

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