Modern Law Magazine - Issue 6 by Charlton Grant

The Business of Law

June 2013 | Issue 6 | ISSN 2050-5744 The first ever Modern Law conference: ABS: the new frontiers of law. Emma Waddingham summarises an extraordinary event Sector roundtable: MLM hosts a debate to see if the legal sector is pioneering or fearing the extensive innovations in IT. Dom talks news: Jackson: the cases you need to know!

Modern Law Magazine | June 2013 | Issue 6

“There are different points of entry for different legal needs, which will fuel (or not) commoditisation... and those that can’t compete won’t be here for long,” Helen Molyneux, NewLaw

Miles Jobling BT Law Ltd

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Welcome B

uilding, renewing and maintaining a modern legal services business can no longer be put down to chance. Strategy, strategy and more client-focused strategy was the key message from ABSs, investors and expert advisors who contributed to the Modern Law conference, ABS one year on – The New Frontiers of Law (full coverage on pages 41-46). Even Helen Grant MP, Joint Parliamentary Under-Secretary of State at the Ministry of Justice, acknowledged the difficult times ahead for law firms in light of reform and challenging regulation and commercial pressures as she claimed she’s glad she’s no longer practising law. But that doesn’t mean you have to agree with her... Based on the conversations I’ve had in order to put this issue of Modern Law together, those in the legal sector are rather excited about the challenges ahead – and proving the naysayers wrong. Take Miles Jobling, CEO of BT Law Ltd, the telecoms giant’s long-awaited ABS. He is ready to change the rules of legal service provision by bringing the in-house legal division benefits to BT’s clients and possibly those of other brands (on non-competitive issues, of course...). This could have a huge impact on commercial panel law firms and specialists offering expert support to smaller in-house legal divisions. But it could also ignite interest and investment into commercial law solutions in

general – a much-needed situation, according to the latest research by the Legal Services Board (see page 18). But behind new services, models and structures in the legal sector comes the question of business support, mainly in the guise of technology. IT innovations and solutions in the commercial and domestic markets far outstrip those in legal services and for existing firms, a lack of investment or effective use of IT pushes the competition even further ahead. So what’s holding lawyers back and what needs to be addressed as a priority? Not only have we got it covered in our exclusive sector roundtable report on IT and infrastructure but the Modern Law team has put together a unique legal technology supplement alongside this issue, filled with expert columnists, features and interviews with industry leaders. I’d like to thank them and all our other contributors for helping create another must-read issue of Modern Law, as well as all the speakers, delegates and sponsors that took part in the recent ABS conference, especially Michael Napier CBE CQC LLD for chairing the event. Modern Law, offering new experience and networks to help realise your vision.

Emma Waddingham, Chief Editor

Modern Law Magazine

Issue 6 – June 2013 | ISSN 2050-5744 Head of Events Julia Todd

Project Director Kate McKittrick

Chief Editor Emma Waddingham

Accounts Director Karl Mason

Editorial Department Events Manager Charlotte Parkinson Antony Smith Charlotte Parkinson

Advertising/Head of Sales Rachael Pearson Advertising Gemma Fort

Production Lindsey Thomson-Heley

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

ML // June 2013

Contents

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

Stop press! The courts have already levied significant decisions since the 1 April 2013 reforms – leading to an even faster pace of change for legal businesses. Professor Dominic Regan provides us with an exclusive list of cases you need to know and what their impact is likely to be.

11-16 The INTERVIEWS 11 Interview with...

Miles Jobling, BT Law Ltd

Miles Jobling, CEO of the longawaited ABS launched by the telecommunications giant, BT Plc, speaks to Emma Waddingham how ABS status has helped BT work even more closely with its customers.

15 Interview with...

Helen Molyneux, NewLaw

Emma Waddingham speaks to the Chief Executive of one of the most talked-about ABSs in the personal injury world that seemed to move effortlessly into the new legal landscape.

17-31 The views 18 Get in touch if finances are tight

Solicitors Regulation Authority

18 A call to meet the needs of

small businesses

Legal Services Board

19 ABS: now a credible capital

alternative?

Steve Arundale, RBS & Natwest

19 ABS: now a credible capital

alternative?

Jo Hodges, Redbrick Solutions

20 Bespoke architecture

Ruth A. Bamforth, PurpleFrog

20 The next generation

Noel Inge, CILEx Law School

21 ABS: now a credible capital

alternative?

Jitendra Valera, Advanced Legal

21 And so it came to pass...

Eddie Goldsmith, Goldsmith Williams

22 Pay as you go

Robert Parness, Paramount Legal Costs

22 Infectious success

Tony Brown, Pellys RJP Solicitors

24 Young guns say too much

legal IT is old hat

Charles Christian, The Orange Rag

Editorial Columnists Samantha Barrass Catherine Bailey Executive Director of Supervision Managing Director Solicitors Regulation Authority Bar Marketing

Eliza Hedegaard Account Director, Legal & Accountancy Mimecast

Nicol Garwood Founder Out There Marketing

Ruth A. Bamforth PurpleFrog

Faye Stenning Inside Conveyancing

Noel Inge Managing Director CILEx Law School

Steven Arundale Head of Professionals Sectors, Commercial Banking RBS & Natwest

Charles Metherell The Corre Partnership LLP (on behalf of Prime Professions Ltd)

Guy Hewetson Partner Hewetson Shah

Norman Denton Associate Legal Eye Ltd

Sue Nash Founder Omnia Legal Software Ltd

Allan Carton Managing Director Inpractice

David Bott Managing Partner Bott & Co

Jitendra Valera Chief Marketing Officer Advanced Legal

Rob Hailstone Bold Legal Group

Tim Harty VP of Small, Medium Law & Bar Thomson Reuters

Antony Smith Director Legal Project Management

Professor Dominic Regan Legal commentator, trainer and costs expert

Jo Hodges Managing Director Redbrick Solutions

Bernard George Director Socrates Training

Eddie Goldsmith Partner Goldsmith Williams

Matthew Williams Head of AmTrust Law AmTrust Financial Services.

Barry Talbot Managing Director Informance Limited

Eimear McCartan Solicitor Ralli Solicitors

Neil Hudgell Managing Partner Neil Hudgell Solicitors

Alan Nesbit Managing Partner Nesbit Law Group

Charles Christian Editor in chief The Orange Rag

Andrew Stenning Managing Director Searches UK

ML // July 2012

Robert Parness Costs Lawyer Paramount Legal Costs Russell Smart Chief Operating Officer Elite Insurance Company Ltd Russell Thomson Chief Business Executive Eclipse Legal Systems

Tony Brown Chief Executive Pellys RJP Solicitors Tony Klejnow Managing Director Linetime Limited

Contents

42 24 The ability to convert vision to

41 ABS one year on:

reality is the secret to success Charles Metherell, The Corre Partnership LLP

25 Bridging the gap

Barry Talbot, Informance

25 Why people hate engagement

letters

Bernard George, Socrates Training

David Bott, Bott & Co

26 Sector-ready IT

Tony Klejnow, Linetime Limited

28 Software as a service

Eliza Hedegaard, Mimecast Russell Smart, Elite Insurance Company Ltd

29 Do your homework:

investor relations

Allan Carton, Inpractice UK

29 ‘Fat cat’ barristers: don’t believe

everything you hear

Guy Hewetson, Hewetson Shah LLP

30 Going the extra mile

Andrew Stenning, Searches UK

30 Integrated investments

Tim Harty, Thomson Reuters

31 Making ATE ’work’ for

commercial cases

Matthew Williams, AmTrust Financial Services

31 Cultural redress

Sue Nash, Omnia Legal Software Ltd

33-51 The Features Legal technology

Modern Law hosted a lively roundtable of IT directors and specialists to discuss the challenges, fears and hopes of reforming legal processes through efficient IT systems, as Emma Waddingham reports.

Modern Law introduces its Charity of Choice, The Brain and Spine Foundation.

53-62 BUSiNESS MANAGEMENT 54 ABS awareness

Rob Hailstone, Bold Legal Group

54 Unbundling benefits

Faye Stenning, Inside Conveyancing

57 Allocating budgets

Catherine Bailey, Bar Marketing

57 New skills for long-term gain

Eimear McCartan, Ralli

58 The busiest of times

Paul Wilkinson, Lawclient Ltd

59 An open door

Anthony Glaister, MCIArb

60 Where are all the MDPs?

Norman Denton, Legal Eye

60 Is the legal future cloudy?

Nick Hodges, Oyez Office Team

61 A Lesson from Necker Island

35 Sector roundtable:

Charlotte Parkinson speaks to Darren Gower, Eclipse Legal Systems, about how service providers are helping law firms remain efficient and cost effective during a time when many clients are expecting the same high levels of service for less.

51 The Modern Law Charity of Choice

28 Bolt-on value

Modern Law hosted its first ever conference in May, focused on the ‘new frontiers of law’. Emma Waddingham attempts to summarise an extraordinary event.

49 The time is now

26 An investors’ market?

the new frontiers of law

Nicol Garwood suggests there are nuggets of lessons to be learned from the world’s most exclusive private island resort.

62 Lean and agile

Antony Smith, Legal Project Management

62 A record high

Russell Thomson, Eclipse Legal Services

57 ML // July 2012

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Dom talks news

Dom Talks News

Jackson: the cases you need to know! Stop press! The courts have already levied significant decisions since the 1 April 2013 reforms – leading to an even faster pace of change for legal businesses. Professor Dominic Regan provides us with an exclusive list of cases you need to know and what their impact is likely to be.

t might seem odd that reforms implemented on April 1st have generated important decisions already but they have and here they are. Some cases pre-date the reforms but are germane to them as we will see. You need to know all of them.

Case management

The essence of Jackson is to secure justice promptly and at proportionate cost. Sir Rupert himself gave the key judgment in GUNTRIP V CHENEY COACHES LTD ( 2012) EWCA Civ 392. Not for the first time an expert in a case approaching trial had a change of heart. Solicitors applied for permission to get a replacement which was granted in the court below. On appeal, a new philosophy was revealed. There is a compelling need to deal with cases briskly. Firm but fair case management directions should be vigorously upheld. Here, with trial imminent, it was too late to allow a late change. Another issue about experts has just been before the Appeal Court. In CHEELD V ALLIOTT (2013) All ER (D) 50 April, the Judge was dealing with a small claim about a porch built by a blacksmith. It had been directed that no expert evidence was to be adduced and the Judge somehow arrived at a figure for the costs of the necessary remedial works. This pragmatic and proportionate decision was affirmed by the Court of Appeal. Lord Neuberger, head honcho in the Supreme Court, said recently that the cost of expert evidence might be so out of kilter that the court might dispense with it and here we see this happening. Remember, proportionality trumps reasonableness, necessity and Mrs Bun the baker.

“In judicial training this year the bench was encouraged to get tough on default. The winner of the ‘I am harder than Rupert 2013’ prize is Edwards - Stuart J” Flexing judicial muscles

In judicial training this year the bench was encouraged to get tough on default. The winner of the ‘I am harder than Rupert 2013’ prize is Edwards - Stuart J - who on 22 May 2013 gave a judgment in VENULUM PROPERTY INVESTMENTS LTD V SPACE ARCHITECTURE LTD and loads of others; (2013) EWHC 1242 (TCC).

ML // June 2013

Dom talks news

“Budgeting is the most profound reform in those multi track cases to which it applies. It is deadly serious. No budget, no costs – save for court fees... The HENRY decision in January is dangerously deceptive. It creates the erroneous impression that a party which outspends the approved budget can still recover full costs. If only.” For the sake of completeness it should be pointed out that the claimant was still left with another eight defendants to pursue and the Judge plainly thought the case against the relevant defendant was flimsy, which would embolden him to chuck the claim out anyway. Nevertheless, be warned. A hard new approach is with us. Comply or die.

An application was made for permission to extend time for service of particulars of claim. Due to an innocent and unfortunate misunderstanding it was erroneously thought that one could serve particulars 14 days after the claim form. Not so. The long-stop deadline is four months after the issue of the claim form. See CPR 7.4 (2) and 7 .5 (1). The extension was refused! If one floats back to Woolf days, the leading decision on late service of particulars was TOTTY (2001) where the Court of Appeal was so laid back that one might imagine they it had just come out of a prolonged meditation class. “So what?” was my succinct summary. The new CPR 3.9 dealing with relief from sanctions has chopped down the previous nine point checklist. A much stricter regime now operates and in VENULUM the Judge applied it.

ML // June 2013

In FONS HF V CORPORAL LTD ( 2013 ) EWHC 1278 ( Ch .) His Honour Judge Pelling QC pounced upon the new wording of the overriding objective which requires the court to deal with cases justly (as was always the case) but now also at proportionate cost. The relevant defendant had agreed an extension to serve witness statements on 18 April 2013. It decided that it could not meet the deadline and sought an extension. The Judge allowed but 24 hours, until 4pm on 19 April 2013 and said he had ‘come very close’ to refusing outright. Things have changed - a lesson I fear some not yet have appreciated.

“Remember, proportionality trumps reasonableness, necessity and Mrs Bun the baker.” Early yet firm trends

If you want to get inside the mind of Lord Justice Jackson (a good place to be), read his sublime judgment about the mischief of default in FRED PERRY (HOLDINGS) LTD v BRANDS PLAZA

TRADING LTD ( 2012) EWCA Civ 224 and the change in the culture of litigation which has just been imposed. Budgeting is the most profound reform in those multi - track cases to which it applies. It is deadly serious. No budget, no costs – save for court fees. Even if you do file a budget and in time you must ensure that it is as accurate as can be. Further, you must monitor it constantly. The HENRY decision in January is dangerously deceptive. It creates the erroneous impression that a party which outspends the approved budget can still recover full costs. If only. It is true that the Court of Appeal directed that consideration be given as to why the winning claimant spent more than £250,000 over the approved amount. That emphatically does not mean that she will get a penny more. Bear in mind too that the decision was about the defamation pilot scheme which was more forgiving than the April 2013 reformed budget scheme (para28 of the transcript) and HENRY was governed by the old, discarded overriding objective. These are early days but a clear, firm trend is evident. Beware. By Professor Dominic Regan www.profdominicregan.blogspot.com

Interview

Interview with... Miles Jobling

CEO, BT Law Ltd

Miles Jobling, CEO of the long-awaited ABS launched by the telecommunications giant, BT Plc, believes BT Law Ltd is ahead of the game in the new corporate legal services world. He explains to Emma Waddingham how ABS status has helped BT work even more closely with its customers and suggests that collaboration with other big brand giants could spell rougher times ahead for panel law firms.

Q A

Why ABS?

Before ABS status, my role was Head of Litigation and Employment Law at BT Claims– wholly owned by BT Plc where I’ve been in claims handling since 1982. We handled motor claims across a fleet of 35,000 BT vehicles covering claims to repair. Seven years ago, the need for specialist onestop-shop provision to our corporate clients was highlighted by the fact that insurers asked us to provide legal services for them as outside providers were so poor. The LSA offered us the chance to extend this to the wider corporate marketplace, underpinned by the successful and well-known BT brand, trusted by our corporate customers. The key though is corporate – we’re not touching consumer legal services. The BT brand has a huge role to play in the ABS strategy. Look at the Co-op; it is absolutely right to enter the consumer market, with shops and brand frontage all over the country offering something extra to their customers. Our model – to corporates – is delivered effectively through the

ABS as BT Law Ltd, giving us scope to expand into other legal service areas such as public liability and employment law, with time. We can offer quicker, cheaper services more effectively that other outsourced providers for our customers, through the development of our aggregated claims handling model – as well as further investment in IT and infrastructure.

Q A

How will the new model benefit your clients?

This is key for me; our endto-end services - from claims inception right through to court – we are the only provider. Incorporating fleet management and claims under one roof is something clients value.

Q A

What level of growth do you expect over the next five years? Our immediate focus is on motor claims. However, there are clear opportunities to expand into third party liability claims, employers’ liability claims and employment tribunal claims for

“It’s been a relatively smooth process with no real surprises, save for the level of interest externally – and within BT Plc generally. The idea that BT Sales can take this service out to their corporate customers is a big bonus.”

Miles Jobling, CEO, BT Law Ltd Miles has been a solicitor since 1977 and joined BT Plc in corporate customers. BT Head Law Ltd is 1982 where he was the something completely newHis – we’re of Litigation for 17 years. notextensive a law firm and we have a variety knowledge of both UK of payment terms tolitigation offer customers and international and certainty in theirLaw legal costs, employment work hasenabling helped us to respond quickly of to BT what the drive the formation Law market wants. Ltd –needs whichand gained ABS status in March 2013. What have been the most aspects of He ischallenging a former member of the anLitigation ABS? Lawbecoming Society Civil

Q A

Committee and the Civil Justice The process itselfareas - not that it Council. His specialist wasinternational unfair or time-consuming. include criminal legal It was beneficial for usand to work, commercial disputes prove our processes and finance employment law. He is now CEOand youathave to step BT Law Ltd. up to become an ABS as the process is more rigorous.

ML // June 2013

Interview

“One of the key issues Jackson didn’t address was the cost burden taken up by the court systems. There is a real issue in terms of the training of court staff, duplication and the time built into the process that the Jackson reforms didn’t address or resolve...We now need to look at the things that will make the justice system cheaper and faster. It’s in our interest to have a slicker, quicker court system.” In-house, across all areas, we have made systematic improvements and enhanced some of our customer-centric elements to widen the offering to corporate clients through BT Law Ltd. It has also given the lawyers of the former BT Claims the opportunity to service customers other than BT. The challenge now is to suppress some of the enthusiasm as we have to comply with regulation! In terms of the SRA, I recently held our first meeting with the regulator. It was a great opportunity to gain insight into what the SRA wants and needs ongoing from us. It was actually quite refreshing as we got the impression it is there to work with us and the representative was genuinely very helpful and gave a good approach to understanding risk. Of course they don’t discuss other law firms but it can share general issues across the market to help identify issues quickly. I like the fact the SRA is able to come in and help ABSs improve. In terms of BT Law Ltd, we’re had to look at new issues now we handle corporate client work – such as money laundering. We are also able to share fraud information back to the SRA so it’s not just a oneway street. Personally, I think the SRA has had some bad press over ABSs which isn’t justified, especially in our case.

Q A

Have there been any big surprises since gaining the ABS licence earlier this year?

It’s been a relatively smooth process with no real surprises, save for the level of interest externally – and within BT Plc generally. The idea that BT Sales can take this service out to their corporate customers is a big bonus.

Q A

What learning curves has BT Law Ltd had to face, especially in light of motor claims handling and the Jackson reforms? The Jackson reforms have been wellsignposted for a long time. They have been immaterial to our model. As defendants, we need to deal with cases efficiently and prepare them better than before, underpinned by our fixed fee model – that won’t change. In terms of the Portal, I think it’s going well. Jackson is a natural progression from the Woolf reforms and, as I said, they have been well trailed and

ML // June 2013

discussed. Law firms just have to make sure their practices are ready for the new era and are more efficient. However, one of the key issues Jackson didn’t address was the cost burden taken up by the court systems. There is a real issue in terms of the training of court staff, duplication and the time built into the process that the Jackson reforms didn’t address or resolve. If cost is such an issue they why not? We now need to look at the things that will make the justice system cheaper and faster. It’s in our interest to have a slicker, quicker court system.

Q A

Do you have any non-lawyers in the management mix and what does this bring to BT Law Ltd? Our board is 50:50 legally qualified and non-legally qualified. This is a good mix as it adds pragmatism to our thinking as an entity. But there is an overriding corporate understanding there too thanks to BT Plc.

Q A

What is it BT Law Ltd offers its customers over and above competitors?

Our main selling point is undoubtedly the end-to-end claims and legal service supply to corporates – all delivered from one site by a trusted advisor. In terms of employment tribunals, the lawyer you see from the start is the lawyer who will represent you at the tribunal. We have cut our corporate fees, allowing for greater clarity in the market for customers too. BT Law is completely different from the wider legal sector, working in-house for our own groups as well as for corporate clients.

Q A

How closely do you work with your customers to ensure their legal needs are met? Our customers’ needs are the reason we went down this line in the first place – as a request from them to deliver more efficient, value-for-money services than their other outsourced providers. For insurers, we have looked to recover legal costs for a long time in litigation, for example, Cole v British Telecommunications plc [2000] 2 Costs LR 310, which entitled us to our legal costs. Law firms spend an inordinate amount of time getting on insurance company panels

Let’s shake on it: Samantha Barrass, Executive Director of Supervision, Authorisation, and Intelligence and Investigation at the SRA, hands Miles Jobling, CEO of BT Law Ltd, the ABS licence approval certificate earlier this year.

Interview

but that doesn’t guarantee work – it’s about what suits the corporate customer, not always the law firm.

Q A

Is the future of legal services a commoditised one?

An interesting questions as the legal market is a commodity...and yes it will become more so. My gut feeling is that law firms will have to look beyond the provision of legal services; in the future, how many legal service providers will make money from advice through HR consultancies and IT outsourcing? In terms of who provides legal services, why shouldn’t corporate brands offer outsourced legal services to one another from their own inhouse legal teams or subsidiaries?

“My gut feeling is that law firms will have to look beyond the provision of legal services; in the future, how many legal service providers will make money from advice through HR consultancies and IT outsourcing?”

Q A

And what about the corporate customer market?

There will be a dramatic change in the legal services market for corporates in the next 10 years – as well as the consumer market. In my mind there’s an opportunity to get all the General Counsel of corporate companies together and suggest that they all drive their legal needs under BT Law Ltd, say. There are (communications companies aside, for obvious reasons) some great synergies and significant savings to be made by streaming legal services this way, so who needs to outsource to a law firm when the corporate in-house legal teams are getting it right and can share other benefits too? From bodyshopping and fleet management to claims handling and employment tribunal representation, there is great potential to amalgamate staff in different areas as the likelihood is you’re not going to sue or compete with one another. Why wouldn’t we as corporate brands want to change the rules? In the consumer world (again, not one we’re entering into because the likes of the Co-op will do so well), I can see firms joining together because they have to – driven by market forces rather than by innovation for the market place. Consumers will look to the big brands and again, why wouldn’t they?

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Interview

Interview with... Helen Molyneux

NewLaw

Emma Waddingham speaks to the Chief Executive of one of the most talkedabout ABSs in the personal injury world that seemed to move effortlessly into the new legal landscape, to work with corporate giants such as Ageas.

Has the post-Jackson / LASPO reform market changed the way that NewLaw operates as a business?

The key thing about the NewLaw ABS strategy is that it wasn’t a response to LASPO. When we set up the firm in 2004, Clementi was just about to report how the Legal Services Act should look therefore NewLaw was established very much with those issues in mind. It was our goal to look opportunities to work with those in a target market which already have a direct link to consumers - such as insurers and brokers – to offer them a cost effective legal services supply through a partnership when the LSA came into force. Prior to that we worked on a referral fee basis but LASPO and the full launch of the LSA allowed us to move our evidenced success with these partners towards a joint venture ABS on an open book basis. We have an excellent reputation as good performers, for having high standards of compliance and financial management so it was a great model to take to the SRA for regulation as well as take existing and new customers on board. We tried to see the Joint Venture (JV) option prior to LASPO but the referral fee ban really incentivised customers to look to the ABS model – outsourcing legal services to NewLaw as a joint venture and profit share. This had always been our strategy but it took a while for insurers to see the benefit while they were still getting referral fees. Now this is no longer possible, it has made our strategic push easier. The advantage of course is to have a law firm with an excellent reputation and open book policy to manage legal services on behalf of the customer – a derisked opportunity for them to offer legal services to their customers.

What have been the most surprising / challenging cultural issues faced by the ABS when working with corporate clients?

We have always worked with customers on an open basis so understand their commercial pressures and needs regarding legal services. What drives their business is client retention. This is a massive issue and an effective, efficient claims service helps keep clients happy and on our customers’ books. We manage our finance and costs very carefully to stand us in good stead for JVs, to ensure they are entered into in the most cost-effective way from the start. Understanding and responding to the commercial needs of corporates such as insurers, is a cultural difference between NewLaw and the majority of law firms. One of the key defining points is that NewLaw has never had a partnership model or a classic business triangle. We don’t have to put ideas to a multitude of partners for discussion so our plans are more nimble and client-reactive.

What is the most important factor to address for legal service providers when dealing with corporate customers?

Retaining them! Before LASPO we had an alliance with customers through Referral Fees. Now we are partnered through JV ABSs. As such, our performance statistics are measured closely and ongoing to ensure we can evidence our performance and meet our promises. Everything we do in NewLaw is monitored, recorded and measured – not just for compliance but to reassure our customers and partnered companies. Plus, we have to look to the future. We are known for our personal injury work at NewLaw but it’s more than just PI. We have to be able to crosssell legal services in order to retain our clients and stop them seeking support elsewhere. So we are looking to expand other areas such as employment. However, we have a clear ethical approach to expanding service offerings

Helen Molyneux, Chief Executive, NewLaw Helen initially trained as a journalist before qualifying as a solicitor in 1990, becoming a partner with Eversheds in 1994, initially specialising in marine, insurance and personal injury work. In 2004, Helen set-up NewLaw Solicitors. As Chief Executive she is responsible for setting the strategy for the business, managing the relationships with commercial partners and ensuring the company lives up to the NewLaw promise, that states: ‘our clients are at the heart of everything we do, by making sure that every client receives the best possible service’. and wouldn’t look to pressure sell. For us, customer service is key and we want those represented to walk away with as much as they are entitled to. By putting people first and building a reputation for customer care and measuring our success on delivering that, we safeguard against a shoddy service.

ML // June 2013

Interview

How will NewLaw succeed where others may not in terms of legal services outsourcing?

The fact that you can’t simply adopt the outsourced model and offer it to customers from scratch. We had a growth plan for where we wanted to be by 2012 and formulated a business strategy and processes long in advance of LASPO and ABS regulation. Offering outsourced legal services without growth, deliverability, evidenced statistics, customer feedback and cost reports is pointless in today’s legal market as others are ahead of the game. The NewLaw model isn’t easy to replicate overnight; it has taken a great deal of time and effort to build this unique model – the first to be taken to the SRA for approval.

Q A

Are ABSs the only opportunity left for the legal claims sector?

There will always be a certain number of claims in particular areas – especially specialist claims. Our Serious Injuries Team for example, does highly complex work that attracts claimants – alongside the JV models. There is always a need for this type

of highly specialised work to be done directly by those with the niche skills, which is why we have the SIT and Clinical Negligence teams as well as others. But, as a law firm, to get high volumes of work you have to match the big brands but you can’t afford to compete to get market share. For example, the Co-op [is] a nationally trusted and ethical brand that we lawyers struggle to compete with in terms of its brand power. This is where ABSs come in – especially in the consumer legal services market.

Do you have any non-lawyer leaders in NewLaw and what do they add to the business mix?

Yes. Out of the four shareholders, one of them is a non-lawyer. On the executive board there are two non-lawyers: the Financial Director and the Operations Director, who are key members of the management team. It’s essential that we run the business as a business - in the knowledge that lawyers aren’t always the best managers. They are technicians with specific skills and we need them to excel at this to keep standards high.

Q A

What do you see as the future for legal services?

Issues around charges for legal services. How much a lawyer charges per hour isn’t considered value for money by the average consumer. However, it’s hard to deliver good quality legal services cheaply. You can commoditise as far as you can but you have to be able to meet the client’s quality needs too. In some areas, such as divorce and will-writing, why would you not use online legal document services? Probate won’t be far behind as technology gets cheaper and easier to use for the consumer. Online legal services are a way to catch the client as they use the self-service option that may need reviewing and ‘grabbing’ if the issue becomes more complicated. There are different points of entry for different legal needs, which will fuel (or not) commoditisation. There are also generational differences in terms of how and when people access legal advice, which will lead to a complete change of legal service offerings over the next 10 years. Again, big brands are key here and those that can’t compete won’t be here for long.

The views

17-31

The Views

ML // June 2013

The views

Get in touch if finances are tight.

report to the SRA Board last month highlighted a number of areas of concern involving firms and financial stability, outlining some of the issues facing firms, and how this could lead to a much higher than anticipated number of interventions because of financial failure. We are not suggesting that the majority of firms are suffering, but there are around 160 that we have serious concerns about. There are also some practices that have failed to act responsibly in their approach and could certainly be a little sharper when it comes to managing their finances. Solicitors have an obligation to run their business or carry out their role in the business effectively and in accordance with proper governance and sound financial and risk management principles, as set out in Principle 8 of the Handbook and Chapter 7 of the Code of Conduct. The regulatory requirements set out in Chapter 7 of the Handbook make it clear that solicitors must maintain systems and controls for monitoring the financial stability of their firm and risks to money and assets entrusted to them by clients and others. It is important that those firms experiencing financial difficulties report them to us as early as possible and engage openly and constructively with us in their approach to resolving these matters. Our message is that if you feel that you might have a problem, you should contact the SRA’s Supervision team who will discuss the matter with you and aim to help you to consider workable strategies. We have created a special section of our website to support good financial management. This section of the website contains useful information to support firms’ assessment of their financial situation. There are also examples of what constitutes good and bad behaviour in terms of financial management and contact details for advice and support. We want this guidance to reach those who could further improve their financial management, or those who have not yet engaged with us. The guidance, which has been added as a resource for Chapter 7 of the Handbook, can be found at www. sra.org.uk/solicitors/handbook/code/part3/rule7/ resources.page As part of our work to manage these risks, we need to build further our understanding of which firms in those markets experiencing the greatest pressure are weathering the pressures and those which are not. Consequently, we are seeking information from firms in these populations over the next few months, in order to build our knowledge. If you are contacted by us as a part of our work on this matter, this is not because we have concerns about your particular financial position. Instead, at this stage, it will be because your firm has the potential to be either high impact or in a sector where financial pressures are greater. Samantha Barrass, Executive Director, SRA

ML // June 2013

LSB: A call to meet the needs of small businesses.

ew research by the Legal Service Board suggests that small businesses are not utilising legal processes extensively, despite recognising ‘legal problems’. The LSB Small Business Legal Needs benchmarking survey analyses the findings of a survey of 9,703 small businesses in England & Wales (conducted by YouGov in December 2012). Report summary: 1 Small Businesses face lots of legal problems that impact on day to day operations and growth: • Over a 12 month period, 38% of all small businesses experienced a significant legal problem. This is higher than similar research for individual consumers • This was highest in the Transport and Communication sector (43%) and lowest in the Health sector (30%) • 45% of these problems had a negative financial impact on businesses - the average cost of each problem was £6,700. Scaled up to all small businesses this would suggest negative financial consequences as a result of experiencing legal problems in excess of £100bn p.a. 2 Existing legal services fail to meet these needs: • Only 12% of legal problems resulted in demand for advice from solicitors firms, and 2% from barristers. Small businesses took no action in response to 9% of legal problems, and handled 52% of legal problems alone • While 54% of small businesses agreed that legal processes are essential for businesses to enforce their rights, only 13% agreed that lawyers provide a cost effective means to resolve legal issues. 3 Here are opportunities for legal service providers to address these consumers needs: • 5% of small businesses had an in-house legal expert, 8% of small businesses had legal retainer contracts, and 2% have both • Having an in-house expert was linked to problems occurring more frequently and having a bigger financial impact • Having a legal retainer was strongly linked with problems occurring more frequently but having a lower financial impact - pointing to value of legal services provided in this way. What does the LSB want to do with the research? • Challenge the regulators of the legal sectors to address the issue of unmet legal needs, especially for small businesses, through the removal of unnecessary regulation that prevents innovation to meet these consumer needs. • Highlight a significant opportunity for legal services providers to deliver better service offerings for the 4.7m small businesses in the UK and promote better business. • Provide evidence for our ongoing monitoring and evaluation of the impacts of the LSA reforms. Both the report and date are available via: https://research. legalservicesboard.org.uk/news/latest-research/. 1 By Professor Pascoe Pleasence and Dr Nigel Balmer.

The views

ABS: now a credible capital alternative?

t the end of March, the Governor of The Bank of England, Sir Mervyn King, requested Britain’s biggest banks to raise additional capital to the tune of £25bn. The financial planning committee suggests that Bank’s have underestimated the costs associated with FSA fines, compensation payments and bad debts. Is it possible that legal firms could be forced to review their own capital positions in the future? As we know, the Solicitors Regulatory Authority (SRA) will be looking to examine the financial viability of legal firms moving forward and as such it is not beyond the realms of possibility that at some stage - and for some firms - the regulator will consider capital levels to be unacceptably slim. Arguably the pressure on capital levels is likely to intensify. The economic headwinds will delay debtor payments and in the worst case increase bad debt levels. The business climate has also put fees and profits under pressure and cash flow remains challenging, especially for those firms involved in Legal Aid and Conditional Fee Agreement work. The changing legal landscape is likely to carry other significant challenges associated with cash and capital. As we have seen recently these pressures have led to the failure of some firms. ABS could provide a welcome source of capital for some firms who need to bolster their Balance Sheet position. Whilst investment through private equity remains elusive for the majority, firms could use ABS to secure capital from loyal and experienced key workers who may be willing to invest in their future and their employer. Obviously this type of approach would place moral pressures on Partners with majority holdings to keep drawings/dividends in check - possibly not a bad thing. Against an ageing population of equity partners, challenges associated with succession and ever increasing demands on capital and cash flow, the ABS is taking shape as a credible alternative funding structure. Steve Arundale, Head of Professionals for Commercial Banking, RBS and NatWest

Q: Are pay as you go legal services the way forward and how far away are we from this being ‘normal’ / business practice?

There is no doubt the current legal market is tough and competitive. Times are hard economically, civil and family legal aid has been cut, the housing market struggles to see any recovery and competition from alternative suppliers, such as online document preparation services and price comparison sites, is increasing. To survive and prosper, law firms must seek to first understand what clients need, and want, from the legal profession and then adapt their business models accordingly. Nobody wants to buy something without knowing the cost, the same is true for legal services. ‘Pay as you go’ provides a way of offering cost transparency to clients. At the outset, the client agrees with the lawyer exactly what legal services will be provided and what work the client is required to undertake themselves. A fixed hourly rate is agreed for the legal work, so the client is in full control of the costs and knows exactly what they are spending. For some people and in some cases, ‘Pay as you go’ is the way forward. It also seems entirely possible, that by offering affordable, legal advice as and when it is needed, lawyers will be able to attract more clients and make quality legal services accessible to people who may otherwise have chosen self representation as a cost effective alternative. However, ‘pay as you go’ isn’t and won’t be appropriate in all cases, so whilst Law Society President, Lucy Scott-Moncrief, has urged solicitors to be open minded about investigating this business model, I don’t think we are yet able to describe it as ‘normal’ business practice. Perhaps there is no longer such thing as ‘normal’ business practice and firms need to offer flexible arrangements, tailored to meet the needs of individual cases and clients. For the past 12 years, Redbrick Solutions has been providing legal software services and support to law firms on a pay as you go basis. Our Practice Management and Business Intelligence solutions can be customised to suit the requirements of the firm, delivering transparency on profitability (essential when using alternative fee structures) whilst ensuring efficiency and assisting with compliance everything needed by the modern law firm! Jo Hodges, Marketing Director, Redbrick Solutions

ML // June 2013

The views

Q: Are legal service providers increasingly investing in bespoke IT architecture for their business and what effect does this have on smaller firms and those with fewer resources to invest? Can they still benefit from sector-led developments?

Law firms are always on the look out for IT systems which best suit the needs of their practice. One important requirement for all law firms regardless of size is a simple but effective way to access and communicate client, other relevant information and know how at the click of a button. Enterprise knowledge management is a new technology based on industry need, where an enterprise search, collaboration system and several other relevant tools are combined in a single platform. Large law firms tend to have resources (both money and time) to invest in IT infrastructure. As such they are able to implement IT solutions, including enterprise KM products, which should be tailored to their particular requirements as well as be able to negotiate on price. Smaller law firms (including sole practitioners) tend not to have the resources or the bargaining power to achieve bespoke solutions – most IT providers offer only a “one size fits all” solution for such law firms. Small firms, therefore, often have to settle for IT products which are not cutting edge and may not be entirely suitable for their needs until such time as the relevant IT solution is scaled to their needs and budget. Of course, by the time that happens it is likely that the product will have been further developed so that small firms will always be behind the curve in purchasing the most up to date solution. At PurpleFrog we understand that all law firms regardless of size (including sole practitioners) have the need of appropriate and tailored IT products. In the field of enterprise KM, we know that a law firm which cannot access all relevant information faces spiraling costs (both monetary and time) to re-invent ‘lost’ material and that this in turn may lead to risk management issues. As a result we have ensured that our cutting edge enterprise KM solution (SynAPPsLegal) is fully financially scalable for the whole of the legal market from the largest multi-national to sole practitioners. In the enterprise KM field we consider ourselves to be a leader in this regard – a great win for the smaller law firm. Ruth A. Bamforth, PurpleFrog www.purplefrogtext.co.uk

Q: Employability: What do the next generation of legal service providers and employees need in terms of skills? How can this benefit the sector?

There has been a lot written about the skill sets required by the next generation of employees in the legal services industry. One particularly eminent legal soothsayer, Richard Susskind, has spoken of seismic changes to the way in which legal services are delivered, suggesting that while the focus until now has been on automation of processes, it should instead be on innovation. He envisages legal advice being disseminated on line as well as disputes being resolved in on-line forums. A revolution in legal service delivery means profound change in the skill sets of those in the industry. The many causal factors driving change include technology, increased competition through new forms of ownership such as ABSs, and changes to legal aid. ILEX Professional Standards’ application for independent practice rights in probate, conveyancing, litigation and immigration for Chartered Legal Executives, if successful, could usher in a new generation of legal service providers. One simple driver of change that is as old as the market itself, and more relevant than ever in an increasingly competitive market place, is the desire by ‘consumers’ to get more and pay less. Providers of legal services are already responding by using the expensive expertise of qualified lawyers only where needed, and leaving the triage function – the first point of contact with clients – to less qualified paralegals. To be effective in this role paralegals require excellent communication skills, empathy and the capability to navigate IT systems. Of crucial importance is for staff to have sufficient knowledge to recognise when to refer a matter to more qualified personnel. Specialist CILEx paralegal qualifications, which combine professional skills alongside a good grounding in law and practice, are increasingly being used by legal services organisations to meet this training requirement. While new skills which allow the application of technology to legal business and encourage new forms of service delivery will be essential in an increasingly competitive market, we shouldn’t lose sight of the overriding importance of those tasked with delivering legal services being equipped with an appropriate understanding of the law and its application in practice. IT innovation and pushing down customer contact to less trained staff are both excellent strategies to reduce overheads, as long as they are accompanied by the requisite legal training to deliver quality advice. Noel Inge, Managing Director, CILEx Law School

ML // June 2013

The views

The need for a Value based Approach for legal services delivery.

change has occurred.

oo many legal services providers focus on the internal facing elements around how to run a firm as a business or how to make it more efficient or how to make it customer-centric. All of this is good, however, legal services firms should learn from other industries where disruptive

It is about taking a different approach – a Value Based Approach to delivering legal services. Delivering a positive customer experience that is better than any alternative and doing this in an efficient & effective way that is repeatable and profitable. It is about an ‘end–to– end’ legal services delivery. DHL is a great example of this. The DHL value proposition of ‘Next Day Delivery’ did not just happen – they developed an end-to-end value delivery system which enabled them to deliver on the promise. Behind it, they figured out what was needed - people, processes, resources, technology, and how to align all of these to achieve the desired results in a consistent and profitable way. The Legal services market is no different. Providers of legal services need to first define a clear and concise differentiated value proposition and customer experience they want to deliver – and only then look at how to develop a value-based delivery model to support it. If this was a product business then it would be about creating a ‘one page picture’ of all the processes that occur in a business, from the time a customer places an order for a product, until the customer has received it. The Value Stream Maps would document all of the processes used to produce and ship a product to deliver the desired customer experience at a profit. A radical and holistic view to delivering legal services is needed more now than ever. A clear value proposition with the desired customer experience and the development of a value delivery framework that aligns the firm’s capabilities, resourcing, processes and technology to deliver the value on a consistent and profitable basis is a must if firms are to succeed.

And it came to pass… Pay As You Go Law.

ny lawyers out there shaking their heads in disbelief and surprise at the change and pace of change in the legal services market have let themselves down badly. The commoditisation of the market has been prophesised by more than one able commentator (as long ago as 1998) by Richard Susskind and revisited by him in 2010 in his must-read books. What we are seeing coming to pass is exactly as Richard set out – our cottage industry of a network of thousands of separate businesses (as good as they are) is fast becoming an anachronism and will continue to decline as we go through the industrialisation of the legal landscape. All services which can be commoditised will be leaving only the really specialist legal advice left for lawyers to charge for. What is perhaps surprising is the speed in which this is evolving. After a fairly slow start we are now seeing ultra modern offerings of legal services from a range of companies – including of course ABSs but also from switched on law firms who possibly pushed into this through the withdrawal of legal aid. These are now taking the lead and are offering their services to clients on a Pay As You Go basis. What is really more groundbreaking is that others are going further by offering free initial services supported by paid services on a menu basis, back-end. They are in the van guard of realising that this is an opportunity to embrace a new way of doing business rather than fighting to retain the status quo. What is certain is that there is and will continue to be a demand for legal services and this will continue to increase but the consumer will soon expect to be able to make a choice between ‘advised’ paid services and ‘non advised’ free services. Heady stuff indeed, so hang onto your hats - it could be a bumpy ride! Eddie Goldsmith, Partner, Goldsmith Williams

Jitendra Valera, Chief Marketing Officer, Advanced Legal

ML // June 2013

The views

Q: Are pay as you go legal services the way forward and how far away are we from this being ‘normal’ / business practice?

Current government policy seems to be to lay waste to the legal sector, whether deliberately or serendipitously, for benefit of the insurance industry which is, coincidentally, one of the largest purchasers of government debt.

In such straitened times, new pricing models must emerge to ensure that legal services remain available to the public. One such model is pay as you go legal services whereby clients do a portion of the work themselves and purchase legal advice and/or representation only as and when they need it, possibly on a fixed fee basis. Such arrangements are not ‘normal’ practice but are beginning to establish themselves in the marketplace. Co-operative Legal Services has introduced a system of fixed fees in family law matters as have Oxley & Coward Solicitors of Rotherham. Pay as you go pricing for legal services will have a part to play in the post LASPO world, however it is no panacea. What it means is that both parties to the bargain get less of what they want – clients receive less legal help and law firms receive less or lower paying work. This could cause particular iniquity where one party to the litigation can afford a lawyer on an hourly basis but the other cannot, for example a personal injury litigant bringing a case against a Defendant who is supported by an insurer or in ancillary relief where one party is disproportionately wealthy compared to the other. There are also question marks as to how much care and attention it is economically viable for a lawyer to provide in return for a basic fixed fee. Indeed, as the Co-op’s own website states, these arrangements are not appropriate for complex matters although it does state that hourly billing is the exception rather than the rule. The legal services industry finds itself politically out of favour and must adapt to the new climate in order to survive. Pay as you go offers a way forward in certain areas but is not the way forward for the whole sector and it is far from being ‘normal’ practice other than in select areas. Robert Parness, Costs Lawyer, Paramount Legal Costs

Q: Employability: What do the next generation of legal service providers and employees need in terms of skills? How can this benefit the sector?

Embracing a high performance culture is possibly the single most influential employability factor in today’s legal services market. New and traditional providers must have strong leadership and a clear strategy to recruit and develop people to take advantage of the opportunities out there or simply watch them pass by. The skill set of the business leaders will be key in the future. Are they able to set out a vision, paint a picture of what they want to achieve with clear milestones and goals? Can they deliver them and win the hearts and minds of those they aspire to lead? Are people truly accountable for what is expected of them at every level? Success should not be defined by how much a lawyer earns in fees or how many hits a website has, it’s more about wider commercial awareness and engagement across the business. Whether or not to have a motivational leader or Process Manager is a question everyone at the top of the organisation should ask themselves. True leaders make success infectious; they hold themselves, and others, accountable for it! Managers oversee a process to be followed, or even worse hide behind it. We all want to be part of something successful; no one likes to be associated with failure. Leaders and employees need a mindset that starts with the client and how can we attract more clients. Every day leaving the office with the thought,’ I delivered value today, what will I do tomorrow to add value and make a difference in our business?’ Lawyers, despite traditional views, are sales people as well as trusted advisers, who generate referrals and new business for other colleagues and practice areas. I hear a lot about how legal service providers are client focussed yet how much investment, development or sales training for client facing staff goes into really achieving this? Strong leadership, daring to be different, ditching the silo mentality and thinking about adding value to your clients and your bottom line applies from the top to the bottom of any organisation. A truly high performance culture, led with passion and with the right measures of success and accountability can only be right for the sector. So, how will you make success infectious in your business? Tony Brown, Chief Executive, Pellys RJP Solicitors

ML // June 2013

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Q: Young guns say too much legal IT is old hat.

I recently had the pleasure of chairing a legal IT round table for Modern Law in London (see pages 35-39). It was a particularly interesting and valuable exercise for me as the panel of IT directors, finance directors and chief executives were not ‘the usual suspects’ you encounter but instead were representatives of niche practices, ambitious start-ups, ABSs and traditional law firms that were reinventing themselves to meets the challenges of the new legal era. It was also instructive that all the panelists had started their careers outside of the legal market (or, in one case, just returned to it after a couple of decades of working in the real world) and were able to view it with a fresh perspective. Unfortunately they were not impressed by what they saw. Only two vendors received any praise while many of the others came in for scathing criticism. As the panellist who had just returned to the sector commented, ‘most of the IT systems have barely changed in 23 years’. From the others, the general consensus was ‘why is the market dominated by point solutions?’ and ‘why is there no legal sector equivalent of an ERP platform?’ (ERP = enterprise resource planning – effectively one system that does everything from accounts and case management through to CRM and HR). The almost unanimous view was the failure of lawyers to embrace and engage with IT meant most firms made little strategic use of technology and instead spent their money on short term tactical projects, in other words those point solutions again. Dismay was also expressed at the relatively low IT budgets being spent by law firms, with one panelist citing an average of 2% of turnover (this 2% includes not just software and support but also IT department salaries) among practices within his firm’s peer group, compared with between 6% and 7% in banking and pharma. Once again this was attributed to the fact most firms don’t think about IT in a strategic context but merely as a back office overhead that needs to minimised. That’s the bad news. The good news is all the panelists felt that because their firms had a more ambitious agenda, they would be able to exploit this technology gap to their own advantage. What else? Three technologies were identified as being potentially disruptive and worth watching, namely Microsoft Sharepoint, Yammer and Windows 8 Pro tablets. All in all, a very useful exercise. Charles Christian, Editor-in-Chief, The Orange Rag

ML // June 2013

The ability to convert vision to reality is the secret to success.

n some firms, partners often attempt to formulate strategy for the forthcoming year or more at a retreat or away day. Part of this process will inevitably involve a review of the previous year’s performance against objectives set at department and firm level. Because of the difficult trading conditions there is often dismay felt and expressed at their combined failure to have achieved these objectives that they had spent many hours formulating and an array of excuses often emerge. The problem arises when there is a realisation that despite the rhetoric, financial performance in particular has been affected by the firm’s failure to address issues such as underperformance and profitability of individuals or teams. The underlying reason for this failure in simple terms is lack of effective implementation. Unless and until the management of the firm move from planning and objective / process setting to implementing and managing change in behaviour (with its resultant impact on culture), nothing will in fact change. If the management of the firm cannot effect this behavioural change themselves it is often effective to enlist external support. Financial hygiene is the classic example in which change has to be enforced from top to bottom by those who understand the business of law and who ideally have practised in that environment. It is important that your advisers have empathy and pragmatism to ensure that any change is realistic and that you prevent adherence to process driven formulae which fails to take into account the impact of the many issues facing law firms at this current time. Through effective implementation behaviours can change, performance can improve and a more positive attitude can emerge. In many cases the outcome may lead to a positive and recognisable change of culture. In the majority of cases, however, the win is a change of behaviour bought into by all, effectively managed and implemented and yet which does not detract from what many firms believe is their unique culture. Unless we have the ability to convert vision to reality it is likely the next partners’ away day will be just like the last. Charles Metherell, The Corre Partnership LLP The Corre Partnership is the sister company of leading professional indemnity insurance broker Prime Professions Ltd and provides compliance risk and regulatory consultancy to professional service firms.

The views

Q: As a data specialist, what do you feel would help bridge the gap between lawyers and IT departments within firms to help them understand, engage and embrace the possibilities data has to offer?

In our modern world, data is starting to take on an ever increasing level of importance. Gone are the days where a static report that answered a single question would be good enough to satisfy the management board of any business, let alone a law firm. It is no longer good enough to accept that the reason a gross margin is below expectation is because of logic like, ‘that is what we agreed with the client when we agreed to do the work at the given price although we didn’t know what the matter profitability was going to be at the time we provided the quote’. An answer like this is symptomatic of a lack of collaboration between an IT department and the rest of the firm, typically where the IT department is not in a position to be able to advise the firm on the ‘power’ that resides within the firm’s data. If this kind of data was available to decision makers on a daily basis then the answer to the question would invoke an entirely different answer. In my experience, the simpler it is for staff members to be able to access data and make sense of what it is providing, then the quicker the firm will get buy-in from everyone. In today’s technological environment where it is easier to work on your PC or smart phone at home than it is at work, IT departments are under pressure to provide a similar experience at the office. This means that besides everything else they’re expected to do, they must continuously be alert to new technologies for making the management of data easier. At Informance, we work with the most leading-edge business discovery platform on the market which is enabling our legal customers to increase efficiency and improve profitability by enabling their IT department to deliver a simple, intuitive solution that allows everyone within the firm to access and analyse data. Barry Talbot, Managing Director, Informance – a QlikView Elite Solution Provider which helps law firms improve operational performance with QlikView.

Why people hate engagement letters.

lients hate engagement letters. They see them as bureaucratic waffle, which lawyers insist on to protect themselves. Lawyers hate engagement letters. They see them as bureaucratic waffle, which the SRA insists on to protect clients.

In any case, people rarely read them with care, unless something goes wrong. Then you may discover that the letter was ill-thought out, or has been overtaken by events and has created more problems than it solved. The trouble is that a typical engagement letter is trying to do three inconsistent things: • Helping the client understand the most important things. (For example are we advising the company or the directors? What will it cost? How long should it take?) Those things should be discussed with the client, and then confirmed in writing in big, bold print. • Setting ground rules on minor things like deposit interest, and capping the firm’s liability. Such rules are necessary, but should not distract from the big messages. • Keeping the SRA happy. For example the SRA insists you give the client written information about the complaints process at the start of every engagement. That is best tucked away in your standard terms, to be referred to if the need ever arises. How to ensure your engagement letters work smoothly • Keep it brief. Over the years, many firms have accumulated more and more text in their standard documents. Nobody is sure if it might serve some purpose, so they leave it in, and the documents become mind-numbing and time consuming. • Put as much as possible in your terms of business. Then the actual engagement letter can be pithy and easy to write and read. • Keep it up to date. Have you reviewed your firm’s standard engagement letter and terms of business in the light of recent regulatory changes? • Train and supervise. Even after an engagement letter is sent, your fee earners need to update the client, for example about changes in the costs profile or timescale. You need to train your people to do that. You also need to supervise and review files. This can all be a burden. That is why we include in the Socrates COLP & COFA service template engagement letters and terms of business, plus updating, plus online training. Bernard George, Socrates Training Limited

ML // June 2013

The Views

Q: Is there really an abundance of investors keen to work with the legal sector or, have they simply failed to see enough ABS enterprise worth investing in?

What is clear to me is that in early 2012 there was a lot of appetite for an ABS style future between law firms and other parts of the supply chain. The logic was, that with a referral fee ban looming, that an ABS structure would ring fence revenue streams for the supplier and equally the lawyer would ring fence their supply of work.

So, good reasons for both parties to join up. The fly in the ointment was a general wariness by a VC or PE to be regulated by the SRA or to have the SRA scrutinise the ownership of the fund. As the owners normally have a negligible input, save for asking ‘where is my double digit return?’ and don’t take well to being asked questions.

It is true that some law firms who may or may not be ABSs have invested heavily in IT hardware and software to process volume work. This is certainly more noticeable in new entrants to the legal sector enabled by the new ABS structure. Remember though that ABS is a form of ownership and not a new way of doing business, although the conversion to or the formation of an ABS may be the catalyst to re-think the business and to invest.

But the VC and PE were prepared to structure matters to the SRA’s happiness and jump through the SRA hoops as there was a view that there would be great returns by adding technology and synergy to the law firms.

The popular perception is that the new breed of law firms a.k.a. ABSs seem to be targeting the volume, process driven type of work that can be ably assisted by IT investment. Where does this leave the traditional law firm?

However in March 2013 the new figures for personal injury work up to £25,000 came out and to everyone’s surprise and horror (except possibly the insurance lobby) the figures were low, depressingly low.

We believe that while there are legal service providers investing in bespoke and targeted segments, smaller firms can still compete by not going head to head but by combining investment with their strength ‘Personal Service’.

The landscape once you take out the great returns and move into ok or lesser returns is one where investors are left with their general wariness of scrutiny and regulation but not the same urge to jump through the hoops.

Selective investment in a modern, flexible case management system allows the firm the ability to handle all types of work and not just the specific. Additional benefits flow from this approach to cross sell to other areas of the firm. By using on-line case tracking, often called client portals, and CRM systems even the smaller firm can punch above their weight.

So, no, I do not think that there is an abundance of investors keen to work in the legal sector. High profile liquidations such as Halliwells and Cobbetts, the ongoing recession, the wariness of regulation and the new cost regime all have led to there being less interest than there was in 2012.

Add the face to face time with the client to the personal service, leads to client satisfaction and further incremental business. Not just the repeat business the next time the client moves house.

The other facet of ABS is be careful what you wish for, VC or PE input will not make your life easier, far from it. You merely change one set of problems for another. So as ever, it is up to us to carve out a future as external investment is increasingly unlikely and in any event it brings as many problems as it solves.

Where do the firms who want to invest heavily go to spend their investment? With a huge amount of money they can write their own systems and create something very specific for their needs. But more likely they go to the same suppliers as the smaller firms - it’s all a matter of scale.

David Bott, Managing Partner, Bott & Co

Tony Klejnow, Managing Director, Linetime Limited

ML // June 2013

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The Views

Another financial year closed and, while we wait for results to be audited, initial feedback would suggest another bumper year of growth for Mimecast. Why? Because more and more firms are appreciating the benefits of email delivered as a service. So no, at Mimecast, we don’t believe that legal service providers are increasingly investing in bespoke IT architecture for their businesses at all! In fact, it’s quite the reverse. We have seen a movement ‘away’ from bespoke IT architecture and heavy customisation, which can be expensive, difficult to support and highly time consuming, in favour of software being delivered as a service, or a ‘SaaS’ approach. Outsourcing IT services to third party vendors who then deliver those services over the internet, results in lean, mean IT departments that can focus their resources on areas of high value for the business, while offloading commoditised but management-intensive or high risk applications – such as email – to cloud vendors like Mimecast. Email, in particular, is absolutely mission critical to law firms, so legal CIOs need the peace of mind that comes with a 100% availability SLA – in layman’s terms, an email system that keeps email flowing even if the mail server goes down, as well as, critically, the granular legal hold and eDiscovery capabilities that a cloud archiving service can offer. To the question about smaller firms having fewer resources to invest, this is just another reason why many are choosing to go down the SaaS route, as it becomes an inexpensive way of getting all the functionality to compete with the large firms, at a fraction of the cost. But it’s not just small firms that have fewer resources to invest, the majority of IT departments today are under intense pressure to do more with less. Cloud computing has already shown it has the potential to deliver on that promise, whether that be for firms of five, 50 or 5,000. Many firms have products containing features based on feedback from customers in the legal sector, providing an even more valuable service without having to invest in any bespoke software. Eliza Hedegaard, Account Director, Legal & Accountancy, Mimecast

ML // June 2013

Q: Will the use of bolt-on or ‘white-labelled’ services increase in use amongst law firms that aren’t looking to become an ABS; can they sell and benefit from bolt-on service provision as well as an ABS in the long-term?

There is no doubt law firms will need to look to add value to their customers and differentiate themselves, especially against companies such as ABSs which threaten to take a large volume of non-complex work out of the sector as they ‘commoditise’ certain types of claims. From speaking to some law firms they appear to me to be in danger of being squeezed, as highly efficient firms and ABSs seek to ‘filter’ the bulk of easy claims out of the system, leaving clients with slightly more difficult cases having to find solicitors prepared to take the financial risks associated with such cases despite QOWCS Appearing to protect the client. No longer will the pre-April profits mean that law firms can comfortably afford the bells and whistles which were happily given to clients without much thought, e.g. funded disbursements, early rehabilitation and other services developed to get clients mobile long before settlement and in some cases admission of liability. Those firms I’ve talked to said that due to the reduced costs it is becoming increasingly less likely they will take on riskier cases, in some cases even with ATE cover. On early indications, this is leaving a hole in access to justice for those clients who are genuinely injured but are finding it hard to prove their case and almost impossible for anyone to 100% help-fund their case – unlike the situation pre-April 2013. Against all such challenges, a law firm could offer bolton and white-labelled services, providing the client is fully protected by a comprehensive ATE insurance policy, bespoke to the firm’s additional services it provides and funds up front. The client would therefore benefit from the help they need at a point when it is most required – only paying for the premium on success and deferred until the end. Such policies may only be available from a selected few ATE insurers who really understand the new market and fewer still who could help you maximise the use of such policies as a method of attracting business over and above your competitors. Russell Smart, Chief Operating Officer, Elite Insurance Company Ltd

The views

Q: Is there really an abundance of investors keen to work with the legal sector, or have they simply failed to see enough ABS enterprise worth investing in?

Maybe not an abundance, but there are a good number of potential investors out there looking for the right relationship. We’re working with some of them now, where integration of legal services into their current business proposition would open up new opportunities; also investors aiming to consolidate complementary law firms, with a sound rationale behind their strategy and money to invest … but wisely. They also have to participate in the business to balance their risk and return pro-actively. However, the same familiar obstacles that many firms have already faced on true mergers (as opposed to simpler acquisitions, where what the lead management team just take control) over the past few years arise in both these situations. They are even more of a challenge where investors make assumptions based on their experience elsewhere before going into preliminary discussions with a law firm; particularly when the external investors are not already engaged in the legal sector. Quite different perceptions on both sides about how the business has to be run robustly and by whom roles and interests going forwards - can drag out any discussions for a very long time. Interestingly, investors talking at the recent Modern Law conference talked of gestation periods for deals of up to six years in the legal sector, when they might expect it to be one year in other sectors. External investors want a role and lawyers often want to retain more control than the investors are prepared to countenance – but this can often be addressed through rational evaluation of the business strategy. The more partners there are in the legal practice, the more difficult it can be of course to achieve commitment to the right balance; and then be sure it can be implemented effectively. Reaching that stage takes time but it can be accelerated. Investors are looking for the right law firms with the right leadership now to recognise the value of the investor’s management input to improve the business… not just their cash. There is a strong case for deeper preparation at the outset and for objective facilitation of early discussions to determine quickly if any relationship has potential to be successful, or not.

‘Fat cat’ Legal Aid barristers – don’t believe everything you hear.

t is an absolute disgrace and, bluntly, shameful what the Government is trying to do to our judiciary system. Whatever your views on the late Margaret Thatcher, on one thing she was resolute, as she stated: “The legal system we have and the rule of law are far more responsible for our traditional liberties than any system of one man one vote. Any country or government which wants to proceed towards tyranny starts to undermine legal rights and undermine the law.” There have been many spurious stories in certain tabloids recently about Chris Grayling, Lord Chancellor and the Government wanting to do away with ‘Fat Cat’ legal aid barristers – but the truth, the whole truth and nothing but the truth is that they simply do not exist. Barristers who practice in crime or family matters, do so, because they have an in-built desire to fight social injustice. On a daily basis, often seven days a week, they are subject to the full spectrum of what one individual is capable of doing to another and invariably these are horrific matters. On average, senior barristers doing primarily legal aid work earn c.£60-70k a year, at the junior end it is c.£25k. In terms of the legal sector, £6070k is what a newly-qualified solicitor can earn. Crime doesn’t pay (pun intended). The examples of highly paid legal aid barristers in the press are not only a) extreme and therefore disproportionate but also b) inaccurate, as a number of their cases have run for years. So the sums mentioned are skewed because they include VAT due to be repaid and don’t take account of chambers expenses, travel to court, insurance, pension etc. To date the UK has been revered for having the finest criminal justice system in the world. If the Government gets its way, we are heading towards a two-tier system. Be under no illusion, those working publicly funded cases do so to fight injustice at any cost. However if that cost becomes the inability to make their vocation a sustainable living, then the cost will come to bear on the public who will not have access to the best legal representation, that should be their given right in a democratic, first-world society. Guy Hewetson, Partner, Hewetson Shah LLP

Allan Carton, Managing Director, Inpractice UK

ML // June 2013

The Views

Q: Do search companies do enough?

At a time when firms are really feeling the pinch, solicitors and conveyancers are increasingly scrutinizing their outgoings and looking to save money where they can. Not only are they looking to reduce costs in order to keep their own quotes competitive, they are also starting to ask ‘what more could this provider do for me?’ With risk and compliance within the conveyancing sector being such a hot topic, would you be happier knowing that your chosen search provider has considered their own responsibilities in this area? For example, while a conveyancing practice would be expected to carry out random file reviews to make sure that all of their fee-earners have the required skills and expertise to carry out their role to a high standard, are you confident that your search provider carries out similar random checks to address the same issues? You may want to consider whether your search provider is a member of CoPSO and whether they subscribe to the Search Code. By doing so, you will be safe in the knowledge that they carry adequate insurance cover, should this ever be required. Next, you may want to know whether your search provider can offer your feeearners quality information to keep them up to date with all of the latest guidance in this area, as well as providing this information with valuable CPD points. Another area to consider is how quickly and easily searches can be ordered and returned by your chosen supplier. Do they have an easy to use on-line ordering system? Do they provide any training or are they available for support? Searches UK offers all of the above and was the first search provider to have its systems and procedures assessed and approved by Legal Eye Limited, a leading risk and compliance company. Obviously, I am going to be biased, being the MD of one of the top search companies in the country. I can’t, and wouldn’t, tell anyone who they should use but I would advise firms to carry out due diligence on their chosen search provider to ensure that they know they are acting in their clients’ best interests every time they order a search. Andrew Stenning, Managing Director, Searches UK Limited

As with any rapidly developing market the scope for utilising IT to effectively manage and undertake business is huge. This applies just as much to the legal industry in its current state as it does to any other sector. However, it does not follow that the best IT is always bespoke and that only those with the deepest pockets will be able to fully realise their potential. By ‘bespoke’ I am referring to fully tailor-made systems and packages that are designed and built from scratch for each individual client. This does not mean to say that non-bespoke systems are not adaptable or customisable to fit in with the precise way that each business operates. Any good system will be designed to be capable of being developed to work with a business, not against it. What is important is to make sure that the systems that you have –bespoke or otherwise – are integrated with each other. The new ABS providers entering the market and those strategic partners that are responding positively to their arrival are focussing on the four key areas of system infrastructure, which will make sure that their business is being efficiently managed and that their chosen marketing channels are being exploited. These four areas are Customer Relationship Management (CRM), Matter or Case Management, Business or Practice Management and Knowledge Management. It is vital that these four areas of IT are integrated and feed off each other. It is this integration that we at Thomson Reuters are increasingly seeing as being the area of investment. A big trend we see is law firms and new legal service providers looking to move to one system provider who can deliver a joined up solution that is based on the latest legal-sector requirements. And none of this has to be bespoke or is necessarily beyond the reach of smaller firms. Whatever the size of your business the needs from your system will be exactly the same – accurate business management information, efficient operational processes and insightful customer information to help you realise their lifetime value. With this in place you can then focus on the quality of the service you provide. Tim Harty, VP of Small, Medium Law & Bar, Thomson Reuters

ML // June 2013

The views

Q: How will after the event legal expenses insurance (ATE) ’work’ for commercial cases from 1 April 2013?

Much as before, although the abolition of recoverability will inevitably change case ‘economics’. For commercial cases, the risk of an adverse cost award is as real as ever, (the new Qualified One Way Cost Shifting regime does not apply). Those wishing to offset adverse and other costs risks are still able to seek ATE. The significant difference is that on a ‘win’, for policies commencing on or after 1 April 2013, it is no longer possible to recover the cost of the premium from an unsuccessful opponent (save for some limited claim types, e.g. insolvency where exemptions apply). There will be inevitable consequences on case economics. However, ATE remains a viable option for suitable cases including those where the potential upside is ‘worth’ the irrecoverable costs of pursuit (now including the premium), and/or where the consequence of potential failure would stifle an otherwise proportionate and economic claim. One way of looking at the effects of the change is to consider the relatively common situation where a claim settles for an ‘all in’ global sum with no differentiation between damages and costs. In this instance the premium consequences may in fact be similar for both pre and post 1 April 2013 policies. It remains to be seen how the market evolves, but the change is likely to give rise to a wider range of premium options. Contingent premiums (payable only on success) became the ‘norm’ when recoverability was available. An insured may now prefer to pay an ‘upfront’ premium for cover at a lower rate or to have a hybrid part ‘upfront’ part contingent solution with the rating reflecting the insurer’s exposure. Procedurally, for non-exempted cases it will no longer be a requirement to give notice of funding (N251), as an opponent will not be at risk of paying the premium. The insured can now take a view on whether it is advantageous to disclose the existence of a policy. There is also scope to seek cover limited to some heads of claim and not others, without that decision being an effective ‘heads up’ to the opposition. A period of adjustment is inevitable, but the rule change may have the effect of simplifying the process and facilitating tailored products.

Q: Is culture change an issue in law firms (and even newly licensed ABS’) and what cultural element is in most need of readdress and how?

In my quarter century as a costs draftsman (now Costs Lawyer) what strikes me most about law firms is how little they have changed over that period. Yes, most have implemented some technological advances – mostly by way of case and practice management systems, digital dictation and use of e-mail as a main vehicle for correspondence – but in most fundamental respects the majority appear to still operate as they did in the 1980s. The partnership model still prevails in private practice, legal education and training has changed little (the Legal Education and Training Review report is still awaited). Lawyers’ career paths are still fairly predictable and the delivery of legal services to businesses and individuals remains, mostly, only available during ‘normal office hours’ i.e. 9.00 am to 5.00 pm Monday to Friday. New entrants to the legal services market – some (but not all) ABSs, are going to fundamentally change the way that law is practised. The most fundamental change will be in the delivery of legal services both to business and individuals. Firms will be forced to realise that they are first and foremost service businesses and they are going to need to deliver those services in a way – and at times – that suit their clients. Whilst it is not necessary (at least at first) to offer a 24/7 service, firms will need to have to make their services available in the evenings and for at least part of the weekend. After all, most of us would be extremely annoyed if we were not able to contact our bank, insurer and even government departments (such as the tax office) outside normal office hours. As well as personal advice – even if only by telephone – this is going to also entail the online delivery of legal services and advice. This, in my opinion, is probably the single biggest ‘culture change’ that law firms need to adopt – and soon. The second has been described as ‘value billing’ and will turn the current pricing model for legal services on its head – but that is a subject for another day! Sue Nash, Founder, Omnia Legal Software Ltd

Matthew Williams, Head of AmTrust Law, AmTrust Financial Services

ML // June 2013

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The Features

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The Features

ML // June 2013

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Sector roundtable: Legal technology Modern Law hosted a lively roundtable of IT directors, innovators and experts in the field of legal technology, to discuss the challenges, fears and hopes of reforming legal processes through efficient IT systems, as Emma Waddingham reports. MLM: Have law firms dug themselves in a rut; with smaller firms with limited budgets having to make do with the relatively limited functionality of integrated systems from smaller suppliers, while larger firms are having to spend a disproportionate part of their IT budgets maintaining the integration of an ever increasing portfolio of ‘best of breed’ point solutions? Salzano: We’re always looking for business management software that we can use in an extremely intelligent way, with knowledge management and documentation and financial processes but the high cost of development means these are usually bolt-ons. We need a fully-fledged business management system that will reduce total IT ownership cost and, importantly, maintenance. Scott: Overall, law firm IT strategies haven’t moved on in the last few years. Strategies are often tactical and not part of an over-arching framework. There are numerous case management systems but they cost a fortune to own and maintain - the ratio of IT spend to business turnover is not sustainable in the long run. Snyman: Lawyers themselves are very high maintenance... Scott: Maybe they need to learn not to be and look where they can use IT to reduce that cost! Snyman: There is a need for IT Directors to understand supply and demand – to look at what lawyers require and how they perceive and use IT. This is where change starts. Only when law firms use and work with process and systems designers /vendors will we have relevant solution development for the sector. There is also a failure by lawyers generally to engage with IT – to rank it highly in the strategic vision within the firm. Makepeace: We are in the middle of a perfect storm as we’re all looking to build our knowledge systems at the same time as a wide range of commercial pressures. The cost of developing these systems, maintaining them, increased regulation and reform and competition makes for a dangerous time for law firms. Craddock: There is also a problem when looking to purchase new systems, where strong partners get their own way; there are plenty of tricky politics to overcome within a firm. Stott: There have been issues in terms of silo mentality in

“Overall, law firm IT strategies haven’t moved on in the last few years. Strategies are often tactical and not part of an overarching framework.”

Roundtable Guests

Chair: Charles Christian, Editor-in-Chief, Legal IT Insider Tony Brown, Consulant Chief Executive, Pellys RJP Solicitors ltd Mark Craddock, Director, Global Sales & Alliances, Thomson Reuters Jon Else, Financial Director, Forster Dean Adam Makepeace, Practice Director, Tuckers Solicitors Rob Martin, Director, Federated Search Strategy - Legal UK & Ireland, Thomson Reuters Matthew Preston, ICT Development Manager, Goldsmith Williams Luigi Salzano, Business Services Director – Systems Development, Pannone LLP Shane Scott, IS Director, Shoosmiths LLP Thereza Snyman, Head of IT, Kinglsey Napley LLP Nigel Stott, IT Director, Clarion Solicitors our firm, where lawyers want to protect their clients within departments. We’ve reworked our partnership model and now have a different approach – including leaders from outside the sector – to curb this. It’s helping to share knowledge across the systems within the firm. MLM: In terms of software product categories, what are the least satisfactory software systems out there? Preston: Accountancy systems, as they fail to provide the flexibility to manage everything we need. I’m currently in the process of unpicking ours. The ones on the market assume lawyers work in a purely transactional way; they always need to be customised. Makepeace: I agree, the systems out there don’t offer a holistic business management solution – they are all built from the bottom up and in silos (e.g. HR, finance, CRM, case management, etc.) when it should be looked at from a business of law perspective. Stott: Our greatest asset, human capital, isn’t IT managed. There are no systems at present that can deal with our best

ML // June 2013

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resources, in terms of skills and how best to use those skills within the firm – outside of CPD and payroll. MLM: What are your biggest IT issues at the moment? Salzano: The BYOD (Bring your Own Device) issue is a big one. Our policy is, don’t. Information security around BYOD is a nightmare as consumer mobile devices are not often in line with legal applications. So why give yourself that headache? We have companyissued devices so they are able to access information on the move. Snyman: There are limited systems that work – we’ve introduced Android choices such as iPhones and I’m looking forward to seeing how Windows Surface fares. Preston: We are less dependent now on PCs so once legal software shapes up, BYOD will be much more common and less of a risk. Makepeace: Yes, but until the price of mobile devices come down, it’s far too expensive to buy them into the law firm. Perhaps that’s where BYOD could help... Stott: But we’re about using technological hardware innovations as a solution when it’s normally the applications and software that cause the problems. We need the vendors to recognise the overall strategic need for solutions to run offices over a wide network – either virtually or in-house. Unless the vendors get their act together, firms will need to piece together their own environments or use applications from other sectors. MLM: What about business development? Are CRM elements of IT packages effectively shelved? Stott: We developed our own CRM system, which isn’t unique but we wanted it to do specific things. It’s worked really well. Brown: You can have whatever CRM system you like but if the people using it are not sales and marketing

“We are in the middle of a perfect storm as we’re all looking to build our knowledge systems at the same time as a wide range of commercial pressures. The cost of developing these systems, maintaining them, increased regulation and reform and competition makes for a dangerous time for law firms.” professionals then it’s a waste of money. Lawyers need to change the culture of their approach to marketing. Snyman: Absolutely and lawyers should be looking at other ways to monitor customer relationships, such as SEO / social marketing enterprises [such as linked in] rather than resorting to a dusty CRM system. They are simply not doing anything with the information. With CRM, what you don’t get is information on the business you lose and why. Perhaps more mystery shoppers should be sent to law firms – a scary but interesting prospect. Scott: We employ sales professionals at Shoosmiths, have mystery shoppers and listen in to 1 in 10 customer calls to get a 360 degree view of the client. A mistake can last forever in the mind of the client, so CRM has to be 360 degrees. Martin: ABS brands have the capacity to own clients from cradle to grave, well beyond the original matter – which might not have been a legal one. New entrants will be much more efficient at retaining the client for other matters and storing and using CRM knowledge. Scott: Although I’m not sure you could have a cradle to grave retention in a dispersed purchase, such as conveyancing – where the client might never even speak to the law firm or get a choice in who they deal with. Brown: Lawyers don’t exploit the relationship enough with clients – especially across silos. It requires crossselling and lawyers don’t like to do it. Christian: It comes down to culture again – acting as if all, say, 12 departments within one law firms are separate law firms...

Brown: You need them to understand how the different departments work. There’s no easy answer but you can start by sharing information and experiences across the firm as well as partners / leaders initiating discussions around this. MLM: Are there any disruptive technologies out there that could potentially transform the way law firms operate? What of the Facebook-style portals (HighQ, Yammer etc) portals for dealing with clients and other parties? Salzano: The social features of Yammer are interesting, especially when combining with other products. Yammer provides a really good opportunity for lateral communication and to facilitate bottom-up communication in a law firm, to reach Board level. We’ve run a trial across a few business services and it’s pretty cheap for what it is. Brown: We use Yammer internally to extend communication outside of the traditional environment. For example, people are able to access internal news feeds on the train, therefore extending the boundaries of the firm. Preston: How do you promote its use though? We launched it and after one month everyone returned to email. Brown: That’s a good point. It’s about familiarity and making a push to help tie it into reducing internal email traffic. Scott: Sometimes, these applications are tools of self-discovery rather than having to push them from the IT / infrastructure department. For instance, a partner wanting to make more of social media or tools such as Yammer. Christian: Could email and portal log-ins

ML // June 2013

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Features be taken over by social media applications as client communication methods? Else: Facebook might not be the place to talk about a legal matter... Snyman: We already use Anywhere Access which is secure, not complex and registered clients love it. We’re looking to roll it out to other teams – such as immigration, so that the clients can see live movement in their case as they go through the process. That’s essential in fast-moving cases. Martin: Facebook and Twitter passwords, for example, could be used to log in to these client applications – without risking sharing information with the platform. People value that kind of tool. Craddock: Social media platforms are business development opportunities. Those seen as a leader in a segment of law could drive the business forward in this area. MLM: Are there other areas of technology that lawyers don’t and should use? Snyman: We’re at the start of the mobility revolution. The ability to access corporate information on the move will change the way people work and think about working. Scott: To be honest, my office was my laptop and Blackberry eight years ago, same for my colleagues. But I wasn’t in the legal sector then... Makepeace: Law firms still need to make the journey, especially in terms of tablet computers. Across the board, technology is still a learnt behaviour and it’s the younger generation that is bringing technology in to the business. Martin: iPads are a completely normal thing for young people to be using and they don’t come with an instruction manual. You have to find a way to use it – maybe that’s what legal technology needs to be like, more intuitive? MLM: What about training and buyin by lawyers - is legal IT being held back by the fact firms are buying loads of efficiency and productivity tools that lawyers never learn to use properly? Can anything be done to change the training bottleneck?

“I think there’s a need to ensure that training focuses on the process, rather than the application. To sit someone down and say ‘this is Word, here’s how to use it,’ is pointless. It has to be put into context for the training to be valuable” Martin: Training budgets are completely out of the window but the technology is here, now and even current systems need to be taken advantage of. People think technology is difficult so even if the training is there, there’s a low take up. People avoid it. Snyman: I don’t think so. Two of my biggest technological ‘hopes’ are the most experienced partners. They went out and bought iPads for their domestic use and are now extending their IT engagement within the firm. I can already see that the barrier ‘fear’ in using IT has been brought down. I think the iPad / mobile device revolution will help overcome any concerns or fears of IT being too complex. Also, I think there’s a need to ensure that training focuses on the process, rather than the application. To sit someone down and say ‘this is Word, here’s how to use it,’ is pointless. It has to be put into context for the training to be valuable. MLM: Are we looking at law firms from the wrong direction - is the key not the IT tools lawyers either do or don’t use but the environment in which they work? Should we reinvent the law office first and then will the tools and processes will follow? Snyman: Until lawyers start thinking outside the legal box then we’ll not move on from the issues of today. Scott: In every industry, businesses are constantly looking for process improvement – but lawyers aren’t. It’s not necessarily the environment. Makepeace: It’s the culture – there’s a cultural shift yet to happen within firms. Preston: It will come, especially in light of reforms such as LASPO. It’s a

case of necessity. Brown: It highlights the ever increasing need for non-lawyers to come into law firms – having someone in-house to cut out the jargon. Snyman: I agree. Business Analysts (BAs) are essential, now more than ever to use the data gleaned from IT processes more effectively too, but there are no budgets in to employ them. However, I’ve found some practitioners with a process-driven approach who I can up-skill, internally and organically. It’s worth a try. Salzano: But alongside the skills, the BA needs authority – to be able to convey information and listened to, to offer criticism. MLM: Finally, some blue-sky thinking, in an ideal world with no practical constraints in terms of time, budgets and resources, what legal IT systems would most like see developed? Preston: They need to be scalable, simpler and cheaper systems that work across a variety of devices. Scott: We have to move with the times. IT has to be simple and easy to use, as well as being value for money as technology changes all the time so it’s expensive to keep pace. Systems are being constantly updated and there are the pressures of meeting new client access needs, which is why Cloud-based systems are so interesting. Stott: We also need systems that take into account the diverse services offered by law firms and ABSs, that aren’t just legal services. Modern Law would like to thank all for attending.

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ML // June 2013

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ABS one year on: the new frontiers of law On 1st May 2013, the Royal College of Surgeons, London, opened its doors to those with a stake, role and responsibility to the legal sector and consumers of law in the first ever Modern Law conference focused on the ‘new frontiers of law’. Emma Waddingham summarises an extraordinary event

odern Law’s first ever conference sold out in record time, suggesting that not only are people interested in the impact and future of ABSs and the legal services sector but that they are looking for answers and the experience of those defining the path of change. Professionally chaired by Michael Napier CBE QC LLB, the ‘Question Time’ format of the event was a huge success and allowed, not only Michael’s understanding of the sector to shine through in his challenges to panellists but the ability for the floor to get far more involved than a straight speaker session. The scale of the programme themes (from legislation of the Legal Services Act to regulation; attracting investment and then working with ‘non-lawyer’ investors and partners; the experience and impact it has had on the first round of ABSs; and, importantly the effect the LSA has had on the marketplace and for consumers) was enough to whet the appetites of existing ABSs, let alone those looking to gain approval or invest / joint venture into the sector. All elegantly and sometimes defiantly examined by the VIP panel guests (listed in due course) and kick started by the Parliamentary Undersecretary of State for the Ministry of Justice, Helen Grant MP. A rare coalition The first panel of the day, ‘Putting the customer first’, saw two former Ministers talk about their perception of whether the legislative changes that have created the current legal landscape have enabled further access to justice, competition, innovation and, importantly, put the customer at the heart of everything lawyers do. Bridget Prentice and Jonathan Djanogly MP, both the former Minister of Justice, were joined by Professor Richard Susskind OBE (author, presenter and independent advisor) for the first session. But first a word from keynote speaker, Helen Grant MP, who acknowledged that ‘the last few years have certainly been a time of tremendous and fundamental change for the profession in general and the last few months quite a time in terms of that change’. The former civil litigation and family lawyer witnessed firsthand the ‘huge increase’ in the number of claims and costs of dealing with personal injury claims, the growth of risk-free litigation and the ‘worrying

“Ultimately, it will be the consumer who wins through the creation of more transparent services, greater opportunity and importantly, better value for money.”

The ABS Panellists

growth of the compensation culture’ - challenges that the civil justice reforms were set to deal with. “At heart of Lord Justice Jackson’s report was the principle that access to justice for all requires that costs are proportionate and unnecessary cases kept away from the court room,” she stressed, adding: “The changes are very much for the better”. “If I were still practicing as a lawyer I’d be sat at this conference thinking what can we do and how can we make the most of this [ABSs]?” she enthused. However, Grant accepted there will be ‘pain and uncertainty for a while’ while lawyers figure out what to do and find new ways of working amidst the flurry of reform, new competition and the need to do more for less. “Ultimately,” Grant concluded, “it will be the consumer who wins through the creation of more transparent services, greater opportunity and importantly, better value for money.” Change for the better? So what of the former Ministers, do they feel the changing landscape has proved to be for the better and was the interest by lawyers and investors a welcome surprise? Bridget Prentice, who initially piloted legal services reform, said: “I’m excited by level of interest. These great organisations have seen the importance of legal service in this country and abroad; and I think it will be seen as a model around the world. The Act is far broader than anything we’ve done before in the sector and it has attracted expertise in entrepreneurial spirit as well as the expertise of the lawyer into legal services”. Jonathan Djanogly MP, who continued the reform process from 2010, said he never expected the ‘big bang’ as such for

ML // June 2013

Features

the legal sector, mainly because lawyers are ‘generally more cautious’ and the initial slowness of the licensing process. “The challenge from a ministerial point of view was to get the SRA to start licensing ABSs as soon as possible. The fact that there were some problems initially did not go unnoticed by the department, by the way; but on the other hand, the new regulatory system had to get it right, therefore SRA had to take the time. It’s important now for the Government to ensure the SRA is moving forwards and that they have the staff levels in place to cope,” he said. Professor Richard Susskind reminded delegates of his predictions on the ‘cottage industry’ of legal services – the 30-40% of the sector made up of sole practitioners who often, ‘handcraft inefficiently, and run their firm in a way no one would recognise as modern business practice. His belief is that the cottage industry practitioners will ‘fade away in light of consolidation and doing more for less’. “ABSs bring in external cash and people who know how to run a business. How will providers who are inefficient – therefore with high costs – over next decade – manage to survive? I’m not on a mission to diminish conventional lawyers; it’s more important for me that consumers have choice and understand how to enforce their entitlements. All those offering the innovations that we’re seeing now, to create affordable legal services to protect entitlements, really are leading the world in ABSs,” he suggested. Susskind explained there are three main factors pushing law firms to think about ABS and not necessarily because they want to drive market growth – one aim of the LSA. “Firstly, there’s the burning platform – law firms have no choice but to jump. Secondly, the hunger of competitive advantage means firms will have to change or face fading away and thirdly, lawyers change because of the fear of being left behind. But lawyers are bright people and when under the cosh, can indeed adapt,” he said. But what of the impact of ABSs on the consumer; have they met the criteria in the LSA and are they already starting to show signs of innovative services and delivery mechanisms for customers of legal services? Not quite, agreed the panel. Djanogly admitted that ‘from the consumer interest, one great challenge in the profession is the demystification of the product’ and that ‘ABS gives the potential to

ML // June 2013

“Protests against Stobart Barristers from the established professions come about because they can’t react. We come in with a clean sheet and they just can’t compete.”

The Investment Panellists standardise and explain legal services to the public. However the idea that ABS as a label is a ‘sexy’ selling point to the consumer market is potentially a hard pill to swallow. What is waiting in the wings, claimed Susskind, is the rise of DIY law, online document drafting and support – the idea of virtual communities established to support one another through legal issues. Whether these virtual hubs – as exist in other sectors on line and via social media – are run by volunteers or commercial enterprises is yet to be seen but, according to Susskind, ‘a social media community and a dominant way to access legal services is coming. And it’s coming soon’. The second panel, ‘ABSs: how is it for you?’ also failed to highlight a significant shift in service innovation – but highlighted this is yet to come. The ABSs sharing their experiences were: Andrew Darke, Irwin Mitchell; Andrew Twambley, Amelans/ InjuryLawyers4U; Anthony Hughes, Horwich Farrelly; David Beech, Knight’s Solicitors; Christina Blacklaws, Cooperative Legal Services, Mark Savill, Lyons Davidson; Neil Kinsella, Slater & Gordon Lawyers UK, Tim Oliver, Parabis Group – all individuals known to Modern Law and ready to open up the thought processes and cultural lessons learned from the ABS process.

Conference Chair, Michael Napier CBE, QC, LLD

ABS: What does it mean to you? Neil Kinsella kicked off the panel echoing a point from Djanogly that ABS isn’t about the status, it’s about capital and what it can do. “Yes, the customer needs to be at the heart but capital can transform an entity’s ability to deliver a strategy. Capital is not just an opportunity to cash out...you have to be able to create a superior competitive advantage and superior return on investment for those who put capital into your ABS,” he said.

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Features

The Regulator Panellists

A comment that proved poignant when speaking to the investors later in the day. Having said that, for some (including Amelans and Horwich Farrelly), the LDP passport to ABS was a driving factor towards their recent move to the new status. As Twambley said: “ABS puts me on a platform for change in the future; then we’ll decide which way we’ll go.” So, has ABS made a difference to firms? It has not made a tremendous difference at the outset if you were formerly an LDP perhaps, although it certainly has given the firms a position to move quickly into offering new nonlegal services or entering new services areas if they see an opportunity, or need external finance. Andrew Darke voiced a different view, that ABS is ‘purely a vehicle to attract external investment’. “Consumers will see better systems and people once that capital comes in and there is also the real chance for more lawyers and non-lawyers to get up to board level - a welcome tool to have when competing with other businesses for industry talent,” he suggested. David Beech added that the biggest driver for Knights was the realisation that partnerships are no longer fit for purpose: “Under ABS you can change management structures; proper accountable management happens immediately, rather than a peer group appointing one of its own.” The common theme of introducing non-lawyers (a term that Professor Stephen Mayson debates later) through ABS was raised and tweaked by Mark Savill, who said that while management skills are essential, so too are individuals with technology skills. “The benefits to clients? Being able to invest in the right people and technology drives into efficiencies and business approach, to deliver for clients with the right quality and also at the right price,” he said. Darke agreed: “Does ABS structure help that? Yes in so far of capital injection. Drive

ML // June 2013

down costs and fixed fees”. Moving on, Tim Oliver noted ABSs haven’t yet given rise to the MultiDisciplinary Practice (MDP) – another element of the LSA, to help drive variety and customer choice. An organisation not far off an MDP – certainly on a consumer level - is the Co-op which is owned and governed by its 7.5 million members. Christina Blacklaws admitted it’s a ‘liberating’ experience to be employed after years in private practice, with a membership throughout the structure of the co-operative to account to in terms of ethics and community, as well as being commercially successful. Investment: How is it for you? Why invest in the legal sector? Some of the key funders and consultants on capital investment led the third panel, offering their view on why ABSs are an investment opportunity and, importantly, how to attract their attention. The panel hosted: Iain Kennedy, Duke Street; John Llewellyn-Lloyd, Espirito Santo; Jordan Mayo, Smedvig Capital; Steve Arundale, Natwest, and; Trevor Howarth, Stobart Barristers. John Llewellyn-Lloyd summed investors’ needs up brilliantly: “What they are looking for is quality management but one of the biggest challenges to firms in working with investors is in the presentation of financials by law firms which are often dreadful, to be honest. The whole point is to demonstrate profits and how you will build value in an organisation. This might require firms to bring in a different skill set.” Do your homework Understanding where market opportunities are, what they are and obtaining facts and figures is also key, as is understanding the M&A market. “How are you going to do deals and put them together? Do as much background reading as you can on deals and the capital investment

market before coming to the table. A lot of firms look to bank debt to fund growth activities, which will be much less plentiful in the future. If your partners won’t invest then you’ll have to go to outside sources,” he stressed. Jordan Mayo agreed strong management is an essential pitch ingredient, as is ‘a vision for capital investment to execute’. One of those visions is to consolidate and upscale firms, added Ian Kennedy from Duke Street, which invested in Parabis. “It’s a massively fragmented industry – even the magic circle firms are in the overall context of the market. Being efficient and offering consistently high quality services could and should be done in larger scaled firms. Those that can’t will be competed away,” Kennedy said, adding: “The attraction is to lead that consolidation and get return on investment for all.” An attraction that has turned the heads of specialists, believes Steve Arundale: “An interesting development and potentially a threat to firms now is the attraction of Business Angels to the legal sector to finance ABSs”. Barristers by the lorry-load The concept of long-distance lorry driving coming into the legal market place stunned everybody, not least because the legal experts at Stobart Barristers are barristers. Trevor Howorth, who has been on both sides of the legal supply and demand fence, reminded delegates that brand is just as important as capital for ABSs. “A well-recognised consumer facing brand is comforting. If the brand has structure then it’s a vehicle,” he said. A brand entering into the marketplace with a ‘clean sheet’ financially and reputation-wise is even more valuable. “Protests against Stobart Barristers from the established professions come about because they can’t react. We come in with a clean sheet and they just can’t compete.” ABSs: a new frontier? So, has the advent of ABSs really invoked a new frontier of legal services? One of the benefits of the post-LSA landscape has been the push for traditional law firms to look at new ways of improving services, as well as potentially becoming an ABS, so believes Chris Kenny, Chief Executive of the Legal Services Board, the regulators’ regulator. “Despite the very difficult economic environment, it’s been a success story in terms of encouraging competition. But the most exiting thing is the way other firms are beginning to behave

Features

“When people say legal services is a dead market, I ask them how the Co-op can create growth. Clearly, it’s not dead if there’s £33,000 worth of business gained by the Co-op. Whether that’s pinched work or meeting the ‘unmet legal need’...it’s because they’re not doing it like lawyers do it.” without thinking about ABS status. The new landscape is about disruptive innovation and people [lawyers] are responding because of that,” he said. But are the regulators happy with the new environment? Kenny was joined by other well-known names from the regulatory field: Antony Townsend, Chief Executive, Solicitors Regulation Authority and Ewen Macleod, Head of Professional Practice, Bar Standards Board. Adam Sampson, the Legal Ombudsman and Patricia Greer, Chief of Corporate Affairs at The Law Society added to the mix with a practitioner / consumer view. “The good news,” said Kenny “is that ABS has caused a revolution in regulation. The way it lets us think about regulating against risk as an ongoing engagement and focusing on systems control and supervision has already been a great success. But none of that has anything to do with the legislation, which is hopelessly complex, so much so that it gets in the way of achieving goals. The sooner we can get away from that, the better we will be,” he remarked. Patricia Greer agreed with many of the comments and sees ABS ‘not as a driver but an enabler’ – a vehicle to change in the face of market pressures and demand. However, she stressed that regulation is ‘still hideously complex’ and the legislative context hasn’t even stopped yet.

Professor Stephen Mayson

A voice from further down the regulatory-evolved track, Ewen Macleod admitted the BSB is in a slightly different position than SRA in terms of ABS. “We want to walk before we can run. There is a programme of regulatory improvement stages to go through with the LSB which will allow us to pass into a new regulatory environment, starting off with a new regulatory handbook for the Bar and followed in Jan 2014 by the authorisation of non-ABS entities and ABS entities after that,” he announced. Whether the Bar will have extensively performed some regulatory shopping before then or not, is another matter. As for the Legal Ombudsman (not a regulator, we know), reminded delegates that: “Regulation adds an unnecessary burden which I don’t think works for

Sponsors

consumers very well and ABSs are an example of that. For consumers, the idea of an MDP with layers of regulatory bodies is problematic. With multidisciplinary functions, say, for example, in the Co-op, if you are getting family law advice in the Co-op bank and funded by its financial services, how will you know who to send redress enquiries to? Should we be moving towards a single legal service regulator or single professional services regulator in the distance?” Greer wasn’t so sure: “I disagree. The overseas legal profession seem to really value the principle of self-regulation in the UK. It’s something to be admired and shouldn’t be thrown away.” And finally... The truly magnificent Professor Stephen Mayson made the still packed auditorium wake up and smell the coffee as he flipped his session, ‘Is the market moving fast enough?’ around. How fast is fast enough and from what point? It might now be, he said, ‘the end of the beginning’ for the initial impact of ABSs, as there is definitely more to come and is adamant there is potential for growth: “When people say legal services is a dead market, I ask them how the Co-op can create growth. Clearly, it’s not dead if there’s £33,000 worth of business gained by the Co-op. Whether that’s pinched work or meeting the ‘unmet legal need’... it’s because they’re not doing it like lawyers do it. I’m also still convinced that the locally defined one-stop-shop, based in the city suburb will appear. It will be one business that says, ‘we’ll look at your problem, work out what it is and provide that one-stop solution’. Hasn’t happened yet but I think it will.” I’m never going to do his talk justice (sorry, you should have been there!) but suffice to say he rounded off by reconfirming the need for lawyers to ‘focus on strategy, discipline and the culture of internal investment’. Final thought of the day? As Mayson said: “The legal sector: its big, it’s exciting and it’s profitable for people who do it the right way.” Modern Law would like to thank all our Speakers, Sponsors, and delegates who attended this year’s Modern Law conference.

ML // June 2013

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Features

The time is now Charlotte Parkinson, Modern Law Magazine, spoke to Darren Gower, Eclipse Legal Systems, about how service providers are helping law firms remain efficient and cost effective during a time when many clients are expecting the same high levels of service for lower costs.

t a time when many law firms are being forced to adapt and look for fresh and innovative ways of running their firms, many are looking to their service providers for guidance. Of course, one of the largest and arguably the least utilised and understood of these is the IT service provider.

While it is impossible not to have noticed the - to use the word of the moment - change, some people are still uncertain about exactly how and why utilising technology could benefit them and enable them to start running their law firms as businesses. It has certainly become clear that, in light of the ABS era and other developments in the field, firms need to move away from the thinking and towards the doing in order to achieve this. In the past, many have viewed IT as an unknown quantity, preferring to stay in line with the traditional way of running their firms. Many have felt unsure of how they should be using technology to assist in the transition from the old to the new era of legal services. Change for growth There is no doubt that the time is definitely now for the legal sector to embrace technology, as other sectors have done already and it is clear that here are definitely lessons that can be learned by looking at these. The Insurance division, for example, now utilise aggregator websites to

“It is therefore key to look at where the future of technology is heading as it is fast becoming a primary driver of market differentiation, business growth and profitability.”

“All firms wishing to embrace the change are looking to their service providers to supply them with secure, efficient, value for money and innovative solutions.” streamline the process of claims handling for all parties involved. There are certainly some law firms that either have already, or are in the process of, acting and reacting to changes. They have realised the responsibility their decision makers have to understand and embrace technology so they can use it to deliver tangible business results. There are, however, still those whose understanding of technology leaves something to be desired. It is therefore key to look at where the future of technology is heading as it is fast becoming a primary driver of market differentiation, business growth and profitability. Of course, while the needs and demands of each firm will differ depending on such factors as specialisms and size, all firms wishing to embrace the change are looking to their service providers to supply them with secure, efficient, value for money and innovative solutions. So, in an ever evolving era where client expectation is rising, what is out there? While there is no doubt that the challenges that face the legal sector have never been greater, therein also lays opportunity to truly differentiate and generate competitive advantage. Darren Gower comments: “For example, one technology recently revealed is Eclipse’s own ‘TouchPoint’ client self-service portal. TouchPoint provides a secure, online, device-independent way for clients and customers to manage their own cases. Administrative costs are saved, and the opportunity to provide a transparent and instantaneous service is presented. As the market changes, and clients demand a different ‘type’ of service, firms should look to technology such as self-service portals as a key way to stand out from the crowd and deliver a truly different standard of client experience.”

ML // June 2013

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Modern Law’s Charity of Choice The Brain and Spine Foundation

We are delighted to announce Modern Law has partnered with our Charity of Choice, The Brain and Spine Foundation.

he Brain and Spine Foundation is a registered charity which is funded almost entirely by voluntary donations. They are committed to providing reliable information and support to people living with neurological conditions across the UK. Neurological conditions and associated treatments are often complex, raising many questions for the people affected and their families. The Brain and Spine Foundation provides support and quality information to people affected by brain and spine conditions, in order to reduce anxiety and to help inform their choices. The Modern Law team has organised the following activities in support of the Brain and Spine Foundation, with 100% of the proceeds raised going directly to the charity: • A sponsored leap of faith • Blind folded driving – with each team member donating £1 per obstacle hit

• Cake Sale & Chilli Lunch

To find out the total we have raised for the Brain and Spine Foundation, and to take a look at more photo’s keep an eye on our website: www.modernlawmagazine.com For more information about getting involved with our Charity of Choice features please contact info@charltongrant.co.uk

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Business Section

Q: Are legal practitioners as engaged and aware of how new legal entities work as their entrepreneurial leaders, especially within ABSs and new legal entities?

It is likely that the majority of practitioners still have their heads firmly in the sand as far as new legal entities are concerned. Many believe that the ABS route is only for existing brands or the large legal firms. However, firms of all sizes should look at the benefits of becoming and ABS.

The excellent ABS supplement that accompanied the last edition of Modern Law should have been compulsory reading for all legal practitioners. It sets out clearly why many firms have chosen the ABS route. Some of the reasons given were: ‘we are free to work with outside collaborators and investors by offering them shares or loan stock to raise investment’; ‘the ABS has allowed us to formally acknowledge the role that non lawyers can have within the management of the business’; ‘flexibility is the key word here’; ‘becoming an ABS has reinvigorated our own employees and created a lot of local publicity’. The key benefits are flexibility, access to outside investment, the ability to work with colleagues with other

areas of expertise, additional motivation and increased publicity. What is not to like? Possibly one thing, the current rules may soon be relaxed so that law firms no longer have to report non-material breaches to the SRA. However, this would not apply to ABSs because their requirement is contained in the Legal Services Act 2007. It is not only juniors and newly qualified lawyers who need a greater understanding of the changing landscape, many experienced practitioners do also. Within the next five to ten years the number of law firms on the high street will have reduced substantially. Existing brands (Co-op, SAGA, AA etc) will be delivering more and more legal services as will new brands, possibly Quality Solicitors, HighStLawyer and Bold Legal (or brands that have yet to emerge) etc. The legal profession/industry is entering an era of change the like of which has never been seen before. The threats are real but the opportunities, for those who understand and embrace those changes, are huge. It is time for all firms to take a good long hard look at themselves and what the emerging market has to offer. Rob Hailstone, Bold Legal Group

Q: Are pay as you go legal services the way forward and how far are we from this being ‘normal’ business practice?

With more and more clients no longer being eligible for legal aid since 1 April - and no economic improvements apparent on the horizon - it is becoming increasingly unaffordable for many to pay for their entire legal casework.

In order to assist their clients, many firms are looking to ‘unbundle’ work (particularly in their family departments) and are now offering clients a ‘pay as you go’ service, allowing clients to gain much needed advice on certain aspects of their case, whilst not committing to the traditional retainer. This leaves the client with far greater flexibility and enables them to have as much or as little support as they can afford or want to commit to. Lucy Scott Moncrieff, President of the Law Society, spoke recently at the Law Society’s Legal Aid Conference about this new pay as you go service, which more and more firms are looking to adopt. She confirmed that whilst a number of regulatory and insurance challenges are posed

ML // June 2013

by this system, they are not insurmountable. It seems that whilst the legal profession has been slower than some to look to new ways of promoting its services, with so much at stake many firms are now moving full steam ahead, leaving the more traditional firms in their wake. There is no doubt that the legal landscape is changing, whichever way you look at it: outcomes-focussed regulation, ABSs, civil justice reforms, ‘clients’ now being referred to as ‘customers’, etc. In order for firms to survive and prosper in these changing times, it is vital that they look at their current business models, with a view to adopting a different approach to service, to match today’s client expectations and have the commercial edge on their competitors. It seems that the pay as you go service is just one model that appears to be working. Not necessarily for every client, but certainly for many, and whilst today it appears to be mainly the family cases that are focussing on this new way of working, who knows what other areas could benefit from unbundling their work and offering their services to clients in this way. Faye Stenning, Inside Conveyancing

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Business Section

Q: Are marketing budgets properly planned by chambers and what marketing activities are often miscalculated on budget allocations?

Properly constructed marketing budgets ensure that chambers’ marketing plans and campaigns are realistically costed and deliver the desired benefits in terms of retention or new lead generation. In order to achieve this, there needs to be significant research into the industry, various market segments, competitors and chambers’ own historical marketing metrics. However, a lack of information tying previous campaigns to revenue can make this a very difficult exercise. Hence, many chambers still allocate their marketing budgets based on the amount of money members contributed the previous year as opposed to strategically planned activities. Instead of reverting to the old practices it might be more sensible to take a snap-shot of the various business streams and evaluate the number and value of instructions generated in a 12 month period. This at least will give you something to measure future campaigns against. It will also provide a good indication of where the business is currently focused. Comparing this information with the market trends

information and an analysis of chambers’ strengths and weaknesses will allow you to focus your marketing plans and budgets accordingly. One of the most miscalculated marketing spends is buying one-off sponsorship or advertising. Ad hoc or standalone activities do little to generate income or instructions. Instead it would be wiser for chambers to focus its spend on integrated campaign plans which encompass all elements of the marketing mix, thus ensuring that the target market receives consistent communications from chambers which are both timely and relevant. In short, properly planning campaigns per market sector allows for a greater accuracy in marketing budgeting and makes sure that campaigns are closely targeted for greater success rates, giving you a better return on investment from your marketing spend. Costing in all integrated campaign elements and setting those costs against the desired benefits (revenue based or otherwise) is essential if chambers is to understand exactly what they are currently spending and how that spend is contributing to business and brand growth. Catherine Bailey, Managing Director, Bar Marketing www.barmarketing.co.uk

Q: What do the next generation of legal service providers and employers need in terms of skills? How can this benefit the sector?

Since finishing university, the shape of the legal sector has changed considerably. Within the last few years, the momentum for change has noticeably grown. As the legal sector continues to be attacked on all fronts by recession, government cuts and more a consumer-driven approach, legal service providers must now have an ever-growing plethora of skills to succeed in such a market. It may once have been sufficient for lawyers to be attentive to detail, client-focused and knowledgeable in their chosen area but those days are no more. Today’s legal market has recently tuned into the information technology revolution, with social media, software systems and online platforms playing an ever-increasing role. The legal world is now a more consumer-driven environment, with clients or ‘consumers’ playing an ever more important and demanding role. Legal service providers need to adapt to these changes and develop the necessary skills to harness technology in a fruitful way. The profession requires a hybrid of skills to adapt and

move with these changes. Such skills include the ability to be technologically savvy and forward-thinking, be commercially aware, have marketing knowledge and show vision and creativity. This is not to mention the skills normally expected of those in the legal profession - namely excellent communication and interpersonal skills and intellectual ability. These rapid changes in the legal profession are intimidating and immensely challenging. Undoubtedly, there will continue to be many casualties along the way. However, I am going to take a positive stance on how such everchanging demands on the profession are likely to affect its future. Lawyers have often been criticised for failing to be good ‘business people’ but lawyers of the future will not be subjected to such criticism. They will be well-rounded and business canny. The legal profession is going through a watershed moment. Once we have weathered this storm and adapted to the new legal environment, I hope we will see a strengthened legal sector, able to cope with whatever challenges the future may hold. Eimear McCartan, Solicitor (Corporate), Ralli Solicitors LLP.

ML // June 2013

Business Section

April 1st was a very busy time for COLPs and COFAs LASPO Changes to SRA Handbook The LASPO changes to ‘prohibited referral fee’, see sections 6 and 9 in Edition 7 of the SRA Handbook and the Glossary definition for ‘prohibited referral fee’: 1. a payment prohibited by section 56 of LASPO; or 2. a payment made to or by you which appears to the SRA to be a referral fee for the purposes of section 57(7) of LASPO, unless you show that the payment was made as consideration for the provision of services or for another reason and not as a referral fee. The phrase ‘which appears to the SRA’ leaves the onus on the firm’s COLP and COFA to ‘show’ that payment was not a referral fee. Have you updated your Client Care letters from LSC to LAA and from FSA to FCA and PRA from April 1st 2013? Regarding LSC to LAA, Matthew Coats, Chief Executive of the Legal Aid Agency in his message, said: ‘On 1 April 2013 the transition of the Legal Services Commission

(LSC) to the Legal Aid Agency (LAA) was completed. The purpose of the LAA is to ‘Deliver legal aid efficiently and effectively as part of the justice system.’ Regarding FSA to FCA and PRA, the Financial Services Authority (FSA) has now become two authorities the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). How is your Risk Index looking? All COLPs and COFAs are invited by the SRA to take part in an online ten-minute survey to discover your views on the severity and impact of the risks your firm may face using the SRA Risk Index for the following categories of risk: firm viability and structure; fraud and dishonesty; firm operational risks; competence, fitness and propriety; market risks, and; external risks. At the Law Society’s recent Risk and Compliance annual conference in London, reference was made to the SRA Risk Index and if you are struggling to complete your own firm’s risk analysis you will find this link useful. www.sra.org.uk/ sra/strategy/risk-framework/risk-index.page Paul Wilkinson, Managing Director, LawClient Ltd

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Business Section

Q: Jackson’s Rule Changes Encourage Private Dispute Resolution

We have all been inundated with the debate about the pros and cons of Lord Justice Jackson’s reforms. Most criticism has been aimed at the removal of public funding and the restriction of costs recovery in the smaller claims. No-one suggests that these cases can easily be resolved outside the court unless the equivalent is extremely efficient. In the absence of direct negotiation that would have to be the sort of fixed cost time limited mediations that are currently available. Broadly they achieve satisfactory outcomes and the interest of justice is seen to be well served even if that is with a very wide brush. But contrary to popular belief mediators can see new challenges emerging. Cost restraints will make for more litigants in person who may have little idea what mediation is and even then once in a while they might well take time to adapt to the non confrontational style. Generally mediators prefer parties to have someone advising the parties, and where that’s not possible, mediators should be prepared to have preparatory meetings perhaps by phone.

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Who inherits

That is not all, as the reforms kill off CFA agreements and introduce the damage based fee agreements. It’s a case of ‘Ceasar is dead, long live Ceasar’. Don’t let’s underestimate the difficulties that we have in mediations where CFA agreements created secondary conflicts between clients offered an otherwise acceptable inclusive offer and solicitors trying to agree their slice of the cake. This makes for an outcome where either you have to adjust your costs to well below what is otherwise recoverable, or make for a very unhappy payee/insurer or an even more unhappy client. Having DBAs in place or the ATE premiums payable from gross damages paid, will make it easier working out who is paid what. But it won’t remove the difficulties. The introduction of costs budgeting and costs capping will put mediation and indeed other ADRs such as expert determination on the agenda earlier and in so doing those of you representing parties may well do so more collaboratively in trying to achieve satisfactory outcomes earlier. But that doesn’t mean that the challenges to mediators will get any easier as the conflicts twixt you and your clients are still there.

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Business Section

Q: Why haven’t we seen more multi-disciplinary ABS models coming to market in the past 12 months – especially in terms of professional services such as accountants?

I recall comments in the early days of the Legal Services Act including references to a rush towards amalgamation of high street professional service firms – accountants, IFAs, estate agents and insurance brokers, to name a few. So why then, has the first accountancy firm to be granted an alternative business structure (ABS) licence only just been announced? Perhaps a clue is in the comment that it won’t ‘shoot itself in the foot’ by entering the legal market - just yet. There are the usual thoughts of: • Conflicting regulatory regimes, and; • Perceived work and cost in setting up an ABS. However, fear of the unknown, during one of our deepest financial downturns probably shoulders a significant part of the blame. So perhaps potential partners are waiting and courting favour to see how it works out for others, before deciding? The ABS probably suits breaking into new markets, or perhaps better handling regulatory change, such as in the PI market. But, it’ll take a strong nerve to countenance marrying

one of the other professions, whether locally or further afield, and put referral work from those shunned at graver risk! Accountants traditionally have strong links with law firms working to mutual advantage. Synergies exist between them, not least cross selling to respective client lists. However, as one accountant mused recently: “We have a clear advantage over the law firm in our annual fee retainer for financial statements. The lawyer may not see a client for several years and is more transactional, than relationship driven!” Adding into the mix that a multi-disciplinary ABS may alienate mutual business opportunities with other partners brings a strong resistance factor into play. Lawyers and other professionals are perhaps cautious by nature, so going into effective ‘partnership’ involving another discipline you know nothing about, requires a great deal of trust. The fact that there are frequent mergers of law firms (and ABS applicants have largely come from the profession) is because all parties know the terrain. A backdrop of predictions that numbers will fall sharply over the next few years as a result of market over-supply (including the development of other external players) hardly makes for easy or encouraging navigation! Norman Denton, Associate, Legal Eye

Q: Is the legal future cloudy?

Industry statistics predict exponential growth for Softwareas-a-Service and Infrastructureas-a-Service, while most business publications are proclaiming the advantages of Cloud IT services. Despite all of this, the actual growth of cloud services within the legal sector so far has been relatively slow. Larger firms are certainly looking to invest in innovative solutions. In an attempt to identify the technologies that will allow them to increase efficiency and drive costs down, they are investigating everything from web portals to on-line document assembly and CRM systems. Over the next few years, change will be driven by the supplier investment in ‘best of breed’ web cloud applications. As consumers, we easily use Facebook or Skype to communicate with friends. We use Google to search for information and Amazon to purchase a birthday gift. These technologies have gained our trust that they will deliver what we need every time. Commercial technologies that deliver dependable benefits, quickly and easily, will become equally successful.

ML // June 2013

In the legal sector, legacy systems can be clunky and the attempt to incorporate flexibility can make them seem overly complicated. I actually know of employees who’ve had to resort to using personal credit cards in order to access software services that actually work! The smaller law firm has the potential to turn this situation to their advantage. Without a team of specialist IT staff and layers of technical infrastructure to work through, the deployment of cloud technologies becomes a straight forward proposition. Security issues can be addressed by outsourcing to a trusted supplier who will offer guidance while providing exactly what is required. Digital dictation, one of the cloud services offered by my own firm, is an example of this. We provide a service which was previously inaccessible to many firms due to the cost and complexity of deployment. Now dictation can be completed while authors are ‘on the go’ and dictations are instantly accessible from either home or office. The challenge is to join client’s needs and expectations with the actual service provided. Fantastic local, or concentrated niche services, if coupled with judicious delivery of the right IT solutions will make a ‘cloudy’ future seem bright. Nick Hodges, Managing Director, Oyez Office team

Buisness Section

A Lesson from Necker Island Nicol Garwood suggests there are nuggets of lessons to be learned from the world’s most exclusive private island resort.

magical afternoon at a private island tucked away in the idyllic British Virgin Islands can’t help but leave a lasting impression - but how would your key clients describe working with you? In early 2009, I got an email from my then CEO. Necker wanted to schedule a meeting between us and a UK based procurement agency; a company brought in to streamline their purchasing systems. From the moment we entered the meeting room you could feel the tension. I wasn’t too sure if it was because they were unsuitably dressed in black tailored suits, stiff leather shoes and ties (someone should have told them to pack for the Caribbean). Still, you could cut the atmosphere with a knife. Up until that point we had been supplying a small quantity of Necker’s provisioning needs, but a catalogue of challenges over the years prior to my tenure meant we most definitely were not their best yachting buddies. And by the look on their impassive expressions that wasn’t about to change over one meeting. Or was it? Trouble in the club “We’re not entirely confident in awarding you preferred supplier status given your higher prices,” commented one of the middle aged senior execs. Just as he finished and I began to defend our position on price something interesting happened.

Someone’s cell phone began to ring which is in itself is a sackable offence in my opinion. Or at least it would not have been, save for the thundering lyrics of Hip-Hop rapper 50 Cents which proceeded to belt out of the phone. “You can find me in the club, bottle full of bub. Look mami I got the X.... ” In any case, I glared disapprovingly at my reportee. Quick to inform him that he needed to raise his standards. Suddenly from across the table one of the grey haired agency execs sheepishly whispered, “Oh, I must apologise. I thought it was switched off.” Can you imagine the look on everyone’s stunned faces? Suddenly, people around the table erupted in laughter; which thankfully, then proceeded to set the tone for a wonderfully relaxed and productive meeting. But aside from its obvious hilarity, the moment was significant for two reasons. Not only did it break the ice but it broke down walls: it offered an extraordinary insight into the true personality of someone we were set to do business with. This by extension gave ‘permission’ for each party involved, to build a more authentic relationship without the noise and ego, often witnessed in the business and marketing worlds. A relationship catalyst Translated into financial outcomes, this incident was the catalyst behind our sudden 400% increase in year to date revenues. And although it came about unintentionally, the deepening of our relationship with

“One can suppose that to win more profitable clients - thereby winning more profitable fee income - building and deepening relationships is a key skill in the whole business development process”

Necker was a great demonstration of the power of emotional connection during the business development process. In fact a study by Silvia Hodges and LexisNexis MartindaleHubbell, found that personal ‘chemistry’ was an important evaluation criterion amongst midsized firms when selecting and reviewing legal service providers. And in the words of one of the panellists at last month’s Modern Law Conference, ‘I violently agree!’. In fact, this story packs a interesting lesson for lawyers who in order to thrive in today’s competitive world must bring their whole self to the business table. That includes their personality, their authenticity and most importantly their sense of humour. To be crystal clear, being an outstanding lawyer, offering tangible results and delivering real value in the eyes of your client is paramount. However in an ever accelerating rate of change brought on by the game changing trends arising throughout the profession, leading with identity, influence and power without it being underpinned by true authenticity and a ‘wanting to offer real value’ is only a recipe for a prescription cocktail of anti-depressants. It’s the same reason why record numbers of lawyers; especially women appear to be leaving the profession. To position yourself to adapt and thrive, it calls for a shift in the way we conduct business. As my dear friend Sir Richard would say ‘people before profits’. For when you break it down to its basic level, business is about doing business with people. People do business with people with whom they know, like and trust (yes that old marketing adage!). One can suppose that to win more profitable clients - thereby winning more profitable fee income - building and deepening relationships is a key skill in the whole business development process. The only way to achieve this is by being uniquely you. Nicol Garwood is the Founder of Out There Marketing

ML // June 2013

Business Section

Improve productivity - borrow ideas from Lean and Agile methodologies

‘T

he best teams routinely obtain productivity increases of 200 to 400%, changes that are potentially industrydisruptive improvements,’ so says Stephen Denning in his book, The Leader’s Guide to Radical Management: Reinventing the Workplace for the 21st Century. The management techniques he describes are well known and well established in many industries, particularly the software development industry. Denning advocates an ‘Agile’ working environment which is underpinned by ‘Lean’ processes. But what does Agile and Lean mean for law firms? The tool most people associate with Lean product and service delivery is the value stream map (VSM). A number of law firms have announced recently the completion of value stream mapping exercises covering particular practice areas. A value stream (according to the Lean for Dummies cheat sheet) ‘includes all of the activities, materials, people and information that must flow and come together to provide clients with the value they want, when they want it and how they want it’. A VSM is a diagrammatic representation of a value stream and it is used to highlight areas of inefficiency. Any activity which clients would not pay for if they knew of its existence is non-value added, or waste, and is therefore ripe for elimination from the value stream or a candidate for significant amendment if it is to be retained. Examples of the

latter in legal services might be too much time being spent on non-critical case tasks or poor organisation of matter files. Agile is essentially about empowering delivery teams to self-organise and take responsibility for product and service delivery. Agile teams are said to be guided by a set of principles set-out in the Agile manifesto, enunciated by a group of software developers in 2001. Arguably, this manifesto translates into legal services as follows, where delivery teams should: 1. Continually collaborate with clients; 2. Commit to flexibility and rapidity; 3. Consistently focus on client goals; 4. Realistically weigh up risk; and 5. Demonstrate a strong bias toward simplicity rather than complexity (especially in connection with solution delivery and communications with clients). I have seen software development teams increase productivity enormously after moving to an Agile way of working but I have yet to hear of a law firm which really does practice Agile legal service delivery. If you believe your firm is one, please let me know. Antony Smith, Director, Legal Project Management Ltd www.legalprojectmanagement.co.uk

A record new business high for Eclipse Boom times for Eclipse as firm announces 23 new contract wins in 2-month period, reports Russell Thomson.

he UK’s largest independently owned legal IT provider, Eclipse, has announced a record ‘new business’ month for the March-April period. A total of 23 organisations invested in Eclipse’s Proclaim Case and Practice Management solutions, ranging from established high-street practices through to boutique new startups and commercial operations. Among the wins were: • A leading north-west law firm (currently under an NDA) investing a six-figure sum in a full Proclaim Practice Management solution in multi-disciplinary work areas

• Global aviation specialist, TES Aviation - the company manages an aircraft portfolio valued in excess of $3billion and will be utilising a Proclaim In-House Legal solution • A household-name ABS (currently under an NDA) taking the full Proclaim Practice Management solution firm-wide,

ML // June 2013

for consumer service delivery • CBT Clinics, a cognitive behavioural therapy provider, offering niche rehabilitation services for solicitors and insurers. CBT will be using a Proclaim Medico / Rehab system • Young conveyancing practice, Garnett Wilson, implementing Proclaim Conveyancing to manage an increasing property transaction caseload • Costs negotiator, County Costs, implementing a Proclaim Costs Drafting solution in readiness for an upswing in business following legislative changes to personal injury law Dolores Evelyn, Eclipse’s Sales Director (pictured), said: “We’re seeing huge levels of activity right across the market and from firms of all shapes and sizes. There is a real demand at present from firms that need robust and customer-centric solutions to manage both competitive pressures and legislative hurdles.” For further information, visit www.eclipselegal.co.uk Russell Thomson is the Chief Business Executive at Eclipse Legal Systems.

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Don’t get left behinD

Create a superb experience to maximise recommendations Gain the competitive edge with the only solution of its kind Spend less time on admin and more time maximising profits

The ultimate self-service solution has arrived With NEW TouchPoint from Eclipse Legal Systems, you can give your clients, customers and partners true self-service control. TouchPoint enables a device-independent, interactive experience – securely and in real-time. Providing access to a huge range of information, TouchPoint is an ‘always on, always visible’ solution. From contact management and targeted cross-selling, through to visual KPI presentation and dynamic report commissioning, TouchPoint sets you apart from the competition.

You’ve just been handed the competitive edge

Call 01274 704 100 Visit eclipselegal.co.uk or email info@eclipselegal.co.uk