Modern Law Magazine Issue 46

Issue 46

THE BUSINESS OF LAW

ISSN 2050-5744

2020!

NEW YEAR

NEW DECADE

MODERNISE

or get left behind!

P11 Richard

Susskind Online courts and the future of justice

Supported by

P16 Mark A. Cohen

The hype and the reality of legal transformation

P23 Stephen Mayson

The review of legal services regulation – interim findings and propositions

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Pete XXXX Ward

2020: New year new decade First of all – Season’s Greetings and Happy New Year!

making huge inroads into the way the business of law operates.

factors surrounding the hype and the reality of legal transformation.

Traditionally, on the 1st of January how many of us make New Year resolutions? Promising ourselves that we’ll do new things, or resolving to do stuff we never got around to doing in the previous year – whether that’s kidding ourselves that we’ll go to the gym three times a week, or finally getting around to writing ‘the novel’ that’s been on the New Year resolution agenda since forever!

So, it’s appropriate that we’ve assembled a star-studded line up to give their thoughtprovoking observations on the issues that will shape the legal sector for the next decade.

And in his article, ‘What will lawyers do now?’, legal market analyst, author and consultant, Jordan Furlong discusses the challenging implications and extraordinary opportunities of a new legal economy.

We have Professor Richard Susskind, whose new book ‘Online Courts and the Future of Justice’ has just been launched, answering questions such as, “Will online courts displace conventional litigation within the timeframe of the next decade?”

And there’s loads more which, in my opinion, makes this first issue of 2020 a terrific read. It also saves me making resolutions that I won’t keep, as I feel I’ve achieved my New Year resolution (albeit made back in November!) of getting Modern Law off to a great start in 2020.

So, welcome to a new year and a new decade – I hope it’s happy and productive for us all!

But this year the New Year is doubly significant. Not only is it the start of another year, it’s also the start of a new decade – and that always ramps up the expectation levels as we look to make resolutions and predictions for the next ten years and not just the next 12-months.

The theme of this issue of Modern Law is all about whether legal firms and businesses in general can afford not to modernise their practices and procedures, especially with ground-breaking legal tech

Professor Stephen Mayson, who’s conducting an independent review of legal services regulation, writes exclusively for Modern Law discussing the findings and propositions of his Interim Report. (The final report is expected to be submitted to the Ministry of Justice and published in February 2020.)

International keynote speaker, legal industry consultant, and CEO of Legal Mosaic, Mark A Cohen, gives his perspective on the key

Pete Ward Editor, Modern Law Magazine.

01765 600909 pete@charltongrant.co.uk www.modernlawmagazine.com

Editorial Contributors Jane Malcom, Solicitors Regulation Authority (SRA) Fiona Morrison, TLA Medicolegal & 3D Health UK Joe Pepper, tmgroup Dave Seager, SIFA Professional Alan J Smith, High Court Enforcement Group Tim Smith, Insight Legal Software Dr Matthew Terrell, Justis Robyn Weatherley, Thirdfort Alex Williams, Tikit Grant Yuill, Denovo

Adam Bullion, InfoTrack Martin Cheek, SmartSearch Jonny Davey, Geodesys Melody Easton, DocsCorp John Espley, LEAP UK Kingsley Hayes, Hayes Connor Solicitors Alex Holt, The Cashroom Ltd Robert Kelly, Stewart Title Professor Hugh Koch, Birmingham City University Chrissie Lightfoot, Robot Lawyer

ISSUE 46 ISSN 2050-5744

Editor | Pete Ward Project Manager | Martin Smith Events Sales | Kate McKittrick

Modern Law Magazine is published by Charlton Grant Ltd ©2019

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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.

CONTENTS INSIGHT

07

What will lawyers do now?

Jordan Furlong is a legal market analyst, author, and consultant.

Here he discusses the challenging implications and extraordinary opportunities of a new legal economy.

INTERVIEWS

11

The future of justice Professor Richard Susskind OBE talks to Modern Law about legal tech and aspects of his recently launched new book book: ‘Online Courts and the Future of Justice’ – which will be reviewed in the next issue of Modern Law.

15

The practice of law vs the business of law Mark A Cohen, CEO of Legal Mosaic and an international keynote speaker, gives his views to Modern Law surrounding the hype and the reality of legal transformation.

19

At the forefront of change Joanna Swash, CEO of Moneypenny, the UK’s leading phone answering service, talks to Modern Law about the importance of a corporate philosophy that’s built around success through innovation and employee loyalty.

23

Re-thinking legal services regulation for the world of modern law Professor Stephen Mayson is conducting an independent review of legal services regulation. In this article for Modern Law, he discusses the findings and propositions of his interim report.

27

Regulators and tech innovation Dr Helen Phillips, Chair of the Legal Services Board

28

Greater flexibility and access as reforms go live Jane Malcom, Solicitors Regulation Authority (SRA)

33

Knowing your client – a roundtable discussion On the road with SmartSearch in London

IN-DEPTH KEY CONTRIBUTORS ROADSHOWS

Disclaimer: Our publications contain advertising material submitted by third parties. Each individual advertiser is solely responsible for the content of its advertising material. We accept no responsibility for the content of advertising material, including, without limitation, any error, omission or inaccuracy therein. We do not endorse, and are not responsible or liable for, any advertising or products in such advertising, nor for any any damage, loss or offence caused or alleged to be caused by, or in connection with, the use of or reliance on any such advertising or products in such advertising.

EDITORIAL BOARD & KEY CONTRIBUTORS

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EDITORIAL BOARD

FORUM 10 MINS

40

Why tech is the way forward Adam Bullion, InfoTrack

40

SRA and modernising AML systems Martin Cheek, SmartSearch

41

Same threat, different day Melody Easton, DocsCorp

41

Client onboarding: the future, the risks Robyn Weatherley, Thirdfort

43

Biggest risks of not modernising?

Dr Matthew Terrell, Justis

43

Fighting financial crime into 2020 Jonny Davey, Geodesys

45

Improving civil money claims Alan J Smith, High Court Enforcement Group

45

Tech-led ‘offer to completion’ Joe Pepper, tmgroup

47

Outdated IT roulette – not worth the gamble Tim Smith, Insight Legal Software

47

Innovators always win John Espley, LEAP UK

49

Human error – the biggest risk Kingsley Hayes, Hayes Connor Solicitors

49

The Reputational Risk of not making the referral Dave Seager, SIFA Professional

51

Change or die?

Grant Yuill, Denovo

51

Do data breaches cause stress?

Hugh Koch, Birmingham City University

53

Doing just enough to get by Alex Holt, The Cashroom Ltd

53

Modernisation and the expert witness Fiona Morrison, TLA Medicolegal & 3D Health UK

55

Can tech reduce frustrating delays?

Robert Kelly, Stewart Title

55

Resisting change inhibits growth Alex Williams, Tikit

57

The risks of not modernising in 2020 and the decade ahead!

Kingsley Hayes, Hayes Connor Solicitors Tracy Burtwell, SearchFlow James Dobson, SmartSearch

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EDITORIAL BOARD & KEY CONTRIBUTORS

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INSIGHT

“Lawyers’ future will be limited only by our imagination, ambition, and compassion”

What will lawyers do now?

Jordan Furlong is a legal market analyst, author, and consultant who forecasts the impact of changing market conditions on lawyers and law firms. He has given dozens of presentations to law firms and legal organisations throughout the United States, Canada, Europe, and Australia over the past several years. In this article for Modern Law, Jordan discusses the challenging implications and extraordinary opportunities of a new legal economy.

But now I think we’re coming up on a new issue. Throughout all of this amazing market change, one thing has remained largely constant: What lawyers do. Market evolution is changing the “how” of lawyer work, and to some degree the “who” as well — but thus far, it has had relatively little impact on the “what.”

The market for legal services has experienced a tremendous amount of change over the last decade, including: • • • •

the rise of legal process improvement and outsourcing, the emergence of competing or substitute service providers, the technology-driven commoditisation of legal work, the growing sophistication of large law firms and law departments, and • the slow but steady liberalisation of legal regulation.

Here’s what I mean. A client who retains a lawyer in 2020 to defend against a litigation claim might require that, say, the work be done on a fixed-fee basis, or that an e-discovery company be employed, or that the entire retainer be subject to project management.

Today’s legal market features increasingly knowledgeable and assertive clients choosing from a growing array of diverse service providers. In the result, sellers have more incentives to compete on price or quality (or both) and more tools with which to do it, thereby delivering greater value to buyers.

But the lawyer is still being hired to handle the litigation: To assess the claim and its likely outcomes, negotiate a settlement if appropriate, and proceed to trial if not. The essence of the relationship remains the lawyer’s agreement to defend the litigation on behalf of the client.

These are all indisputably good outcomes, and whereas most lawyers reflexively opposed these changes when they first emerged, many are now coming to accept this new landscape, and a few have even welcomed it and striven to capitalise on the opportunities it offers.

But suppose, in the example above, that there was no litigation.

Suppose that, for a variety of reasons, the client never

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INSIGHT

approached the lawyer in the first place to inquire about her litigation services. All the project management and fixed pricing in the world are irrelevant in the absence of the retainer. That’s not a matter of how lawyers do their work. That’s a matter of what lawyers are actually doing — or not being asked to do — inside the market.

Why might there have been no litigation in the foregoing example? Some possibilities: • The client improved its internal riskmonitoring mechanisms and caught a problem in its early stages before it metastasised into a statement of claim • The client implemented new workplace standards that changed the behaviour of an employee who otherwise would have done something to cause litigation • The client hired a Big 4 accounting firm to build compliance requirements directly into its contracts and business processes, reducing the risk of violations • The client consulted data showing that claims of this type succeed 89% of the time, and ordered the inhouse department to settle it quickly at the outset • The client is based in a jurisdiction that offers a robust online dispute resolution process that disposed of the litigation twice as fast for one-tenth the cost Some of these examples are still speculative, while others are already commonplace.

But what they share in common is that the traditional application by lawyers of their knowledge, skills, and time is not a factor in any of them. These examples, and more like them to come, are going to change the “what” in “what lawyers do.”

A substantial portion of the practicing bar makes its living primarily by managing, contesting, and winning (or losing) litigation.

Litigation, from these lawyers’ perspective, is a good thing, and the more of it the better.

But from the client’s perspective, litigation is an entirely negative experience, one that he or she is strongly incentivised to minimise, avoid, or eliminate.

“The development of artificial general intelligence is a very long distance away, and most AI developed in the meantime will augment human reasoning and ingenuity, not replace it. The machines still need us more than we need the machines” Twenty years ago, of course, it didn’t matter whether the client liked litigation or not; it was an unavoidable fact of life that required a lawyer to resolve. Today, however, clients have access to tools, procedures, and options that enable them to fulfil their desire that litigation either never occurs or disappears quickly and affordably.

What happens to litigators when clients find ways not to litigate?

The nature of what is being bought and sold within the legal market is changing. Clients are becoming interested in purchasing the prevention of legal problems, the quick resolution of disputes, the automatic compliance with regulations, and the built-in fulfilment of agreements.

They’re buying what amounts to: “I don’t need a lawyer.” Lawyers, perhaps needless to say, aren’t selling that.

Clients used to ask lawyers for certain types of services like document preparation, contract review, transactional due diligence, and dispute resolution, to name just a few. These services still constitute the bulk of many lawyers’ annual sales inventory. Today, however, clients are asking lawyers for these services less frequently, and in the future, they will ask for them less often still. Systems, software, and structures are emerging that will either perform these services automatically, or eliminate the need for them in the first place.

The truly disruptive impact of advanced technology in the law will be to reduce the incidence and volume of traditional legal work given by clients to lawyers. This isn’t just a market change; this is the emergence of a new legal economy.

“The truly disruptive impact of advanced technology in the law will be to reduce the incidence and volume of traditional legal work given by clients to lawyers.

This isn’t just a market change; this is the emergence of a new legal economy” 8

The old legal economy consisted of paying lawyers by the hour to do every legal task that needed to be done. The new legal economy will offer a new, if you’ll forgive the acronym, IDEA: Systems, software, and structures are going to…

• Integrate, • Delegate, • Eliminate, and • Automate …countless tasks by which lawyers once made a living.

The rise of a new legal economy will require a thorough review of all our assumptions about what legal work consists of and, ultimately, what purpose it serves. In the result, everyone in legal services, buyers and sellers alike, will need to rethink their possibilities, interests, and opportunities.

For the legal profession, one question towers above all the others and demands our attention: In the new legal economy, given the rise of “I don’t need a lawyer for this,” what will lawyers do?

Answering that question will, or should, preoccupy the leaders of the legal profession over the course of this coming decade. My small contribution to that effort would be to suggest the following four categories of responses, which can be arranged in the consultant’s favourite diagram, the four-quadrant chart.

INSIGHT

1. Retreat to higher ground. The rising waters of commoditisation and systematisation will submerge many of the low-lying sectors of lawyer activity described above. But some lawyers will be able to escape the surging tide by virtue of their specialities.

There will be fewer trial lawyers in future, but there will still be some, and they will be the most exceptional advocates practicing at the highest levels. Clients will still need empathetic advisors and well-informed counsellors, more than they do today, and some lawyers will develop these skills to their utmost. Genuine experts, possessing unparalleled knowledge and insight that cannot be adequately reflected in a database entry, will thrive.

The coming changes to our legal ecosystem will not render all species of lawyer extinct — even in the distant future, there will be lawyers performing services and helping clients in ways that will be familiar to those of us with roots in the 20th century.

2. Support the new systems. Many lawyers who find that systems and software are performing tasks for which they once billed hours will decide not to rage against the machine, but instead to support the machine, maintaining and further developing its effectiveness.

After all, someone will still have to understand how the law works, in order to translate statutory guidance and commonlaw reasoning into lines of code and algorithms. And someone will have to create the risk-monitoring mechanisms, design the workplace standards, and carry out the data analysis in the examples cited at the start of this article. These are lawyer tasks, and lawyers will be needed to perform them.

The development of artificial general intelligence is a very long distance away, and most AI developed in the meantime will augment human reasoning and ingenuity, not replace it. The machines still need us more than we need the machines.

3. Address unserved markets. It is a truth universally acknowledged, although seldom addressed to any practical degree, that only a small fraction of the legal problems and

opportunities that people and businesses face ever make their way to a lawyer. That will change in the new legal economy.

All the systems and software described above sound wonderful — but not everyone will be able to afford them and access them.

While rich people and large in-house law departments will experience a Golden Age of Law, the vast majority of individuals will be left to struggle through increasingly underfunded government programs and antiquated courts. These people will be in truly dire need of help — and some lawyers will respond, sacrificing higher incomes and more prestigious postings in order to serve the greater public good.

Providing community-based legal aid, building street-level systems to help people get the benefits they’re entitled to receive, crowdfunding the resources to fight for just causes – those are just the basic tasks lawyers will render in the early days of the new economy. As time goes on, more will emerge. And that bring us to: 4. Create new opportunities. If the only answers to the question, “What will lawyers do?” are “Retrench,” “Assimilate,” and “Help the poor,” then the future of the legal profession will be significantly less interesting than its past. But I’m willing to bet on lawyers, and on their creativity and passion, to do better than that.

In a legal economy premised on fewer problems, higher standards, faster performance, and integrated solutions, lawyers will be challenged to come up with new value propositions, new ways of helping people live better lives with fewer complications. What will they come up with? Maybe a “law school” that educates

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individuals on their legal rights and risks? An affordable online “legal utility” that replaces arcane legal paths with clickable solutions, an AI-guided digital resource to replace linear and analogue methods? A travelling dispute resolution roadshow with pop-up locations in marginalised communities?

The hidden gift for lawyers that will emerge in the new legal economy is that losing our old tasks will liberate us to find new purpose.

Lawyers’ future will be limited only by our imagination, ambition, and compassion. We can forge the legal profession we truly want, not the crumbling legacy institution that was bequeathed to us.

What will lawyers do in the new legal economy? It’s really up to us. Which means, dear reader, that it’s really up to you.

Jordan Furlong

is a legal market analyst, author, and consultant. He is the author, most recently, of Law is a Buyer’s Market: Building a Client-First Law Firm, and writes regularly about the changing legal market at his website, law21.ca.

“For the legal profession, one question towers above all the others and demands our attention: In the new legal economy, given the rise of “I don’t need a lawyer for this,” what will lawyers do?”

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INTERVIEWS

Richard Susskind: the future of justice Professor Richard Susskind OBE is President of the Society for Computers and Law, Technology Adviser to the Lord Chief Justice of England and Wales, and Chair of the Advisory Board of the Oxford Internet Institute. He is the author of ten books, his work has been translated into more than 15 languages, and he has been invited to speak in over 60 countries. He is the world’s most cited author on the future of legal services and advises international professional firms and national governments.

In this interview, Modern Law’s Editor, Pete Ward, asks the questions.

MLM: As someone who came into law from an IT background, do you think the traditional legal services marketplace has wasted numerous opportunities to adopt better processes and improve efficiency?

RS: In fact, I did not come into law from the world of technology, although many people assume this. I first became interested in technology in 1981, when I was a third-year law student at Glasgow University, and wrote a final year dissertation on computers and the judicial process. Although I have spent much of my career in technology, I regard myself first and foremost as a lawyer of sorts. As to your question, it is a great one, because the story of the last decade, in my view, has been that of missed opportunity. If lawyers and legal businesses had embraced technology, they could have gained great competitive advantage over those who resisted. And by this, I mean they could have delivered a quicker service, better service, cheaper service, and a much-improved service experience for clients, all of which can differentiate a business.

“In my estimation, most of the short-term predictions about AI greatly overstate its impact but, crucially, most of the long-term claims hugely underestimate its effect”

considerable common comfort. With no law firms making the break and forging ahead, few firms have been impelled to pioneer. They have been more concerned about avoiding competitive disadvantage (“as long as we’re not behind the curve”) than seizing competitive advantage (“here is how we can steal a march on our rivals”). Not investing in performance-enhancing technology has not been a problem so far because the legal market has been pervasively conservative in its use of technology.

In the 20s, however, this will change. With significant and technologically proficient new competitors in the marketplace (I am thinking here especially of the Big 4) and a burgeoning legaltech start-up community beginning to bear fruit, deploying technology will shift from being an optional and potential source of advantage to being a mandatory commitment if legal businesses want to stay afloat.

MLM: As we start a new decade, will online courts displace conventional litigation within that timeframe?

RS: I am always hesitant about timing, largely because it is not within my gift to direct the

In truth, though, because most law firms have been slow to invest, this has afforded some

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INTERVIEWS

change. Whether change comes swiftly or slowly will depend on how aggressive this new competition turns out to be, and how much more demanding the increasingly knowledgeable inhouse community becomes. As a generality, I like the view of Bill Gates, that less happens in two years than we expect with technology but more happens in ten. Will litigation be transformed by online courts within the next couple of years?

Not a chance. Will it be transformed by 2030? No doubt (in my mind at least).

That said, it is wrong to think of there being a simple binary choice between physical and online courts. In fact, there are three options and it is worth being clear what they are. The first are traditional physical courtrooms. The second are virtual hearings, where some or all participants communicate at a hearing via video-conferencing of some sort. The third are online courts, which for current purposes we can take to involve human judges (not AI) making decisions on the basis of evidence and arguments submitted to them electronically rather than in oral hearings.

For any given case, it is likely, for many years yet, that we will find a blend of these three techniques being relied upon. Parts of a case will be handled traditionally, parts by video, and parts by online techniques. And, over time, I expect, the balance will shift towards more and more work being handled online.

We should be careful not to speak of litigation as one monolithic category of legal service. As I stress in my new book, online courts are likely, in their early years, to be used largely for the resolution of low value disputes. For many years yet, complex, high value actions are likely be fought out – adversarially and gladiatorially – in traditional courts.

“When I submit the manuscript, invariably I will say ‘never again’ but about a fortnight later I am wondering what I should write about next”

So, by 2030, I expect many if not most low and modest sized claims will be handled largely online but high-end disputes will be broken down and, while some aspects might be handled virtually or online, I expect the oral traditional will be maintained, certainly for key parts of the final hearings.

pressure on costs – legal providers will have to find a way of delivering ‘more for less’. Next, there is the new competition – law firms now have formidable company, as I mentioned earlier.

Finally, there is technology – our systems are becoming increasingly capable, so that more and more of the work undertaken by lawyers and law firms will, over time, be taken on by machines.

The ‘legal sector’ itself will be redefined by these drivers of change. Some providers (innovative and flexible law firms, alongside some of the new players) will grasp the opportunities and shape the market. Lawyers and law firms that prefer to hang on to their old ways of working will struggle to survive in the long term – they will be unable to meet the cost demands of the market, unable to compete with the new competition, and unable to match the efficiencies and service improvements that technology will bring.

MLM: Since writing The End of Lawyers?, in 2008, which aspects of technology have impacted most on the legal sector and your thinking over that period – and has anything unpredictable happened?

RS: Some context might help here. I distinguish between two ways technology can be used: to automate and to transform. The first involves, essentially, grafting technology onto old working practices – streamlining, systematising, and optimising traditional legal service. The second is very different and involves using technology to allow you to do things that previously were not possible or even conceivable. Take court technology.

The first 40 years of court technology were devoted to trying to make the old system more efficient. Online courts are a whole different proposition. These were not possible before the early 90s when the Web was invented. This is a development that brings about a fundamentally new way of delivering the service.

Back to your question, the dominant approach to legaltech until now has been automation. In contrast, I believe the 20s will be the decade during which we begin to transform, disrupt, and replace our old ways of working. So, since 2008, I am saying that we have largely witnessed automation – of the back offices of firms (better practice management systems), of their research (the web has become the first port of call), of their communications (email, internally and externally), and of their handling of documents (notably, document management systems and technology assisted review in litigation). Some of these sound pretty dull, like email. But they have dominated.

The big swing, though, by 2030, will be away from the presumption that all disputes should be heard in physical courtrooms to an assumption that cases should be conducted online unless strong arguments can be made for the need for physical hearings.

MLM: Is the legal sector in control of its own future, or are feature-led tech systems being forced on it by disrupters?

I have been pleasantly surprised by the huge upsurge of interest in AI. I wrote my PhD on AI and law in the 1980s at Oxford and so have been

RS: There are three main drivers of change in the legal sector, as I see it. The first is relentless

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INTERVIEWS

waiting my whole working life for lawyers to see its potential. That said, there is still much more marketing noise than fully operational systems.

MLM: ‘The End of Lawyers? (2010)’ and ‘Tomorrow’s Lawyer (2017)’ were seen as an inspiration by some and bordering on heresy by others – how do you see the new book ‘Online Courts and the Future of Justice’ going down with the legal profession?

RS: My new book has already had a warmer and more sympathetic reception than my previous ones. On one view, it is about increasing access to justice around the world and most lawyers support this as a worthy aim. Lawyers somehow seem less threatened by the new book. Admittedly, it has a more benign and less provocative title than, say, ‘The End of Lawyers?’ (but, please, always remember there is a question mark there), but the fact remains that its central thesis is a direct challenge to much of the work of litigators. I suspect because it focuses quite a bit on low-value disputes and self-represented litigants, many commercial litigators think it is not relevant for them. This a classic failure to recognise the early signs of a disruptive technology, MLM: As a pioneer of online courts, understanding the benefits and drawbacks, can you put a timeline on how AI and machine learning will come to replace conventional litigation procedures RS: There is currently a lot of hype about AI. In my estimation, most of the short-term predictions about AI greatly overstate its impact but, crucially, most of the long-term claims hugely underestimate its effect. In the next few years, the most likely AI to have direct impact will be traditional rule-based systems (expert systems) which will help selfrepresented litigants understand their rights and duties and the options available to them. We are already seeing this in British Columbia with their Solution Explorer. But this will not be to replace

“As I stress in my new book, online courts are likely, in their early years, to be used largely for the resolution of low value disputes”

In the next issue of Modern Law Magazine, read our regular tech columnist Charles Christian’s review of Richard Susskind’s new book ‘Online Courts and the Future of Justice’.

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judges; it will be to extend the help that courts can offer parties. What most people have in mind when they ask about AI and courts, however, is if machines can replace judges. My answer to that is that there is no prospect in the next decade, for example, of developing systems that can think like judges and deliver decisions with coherent reasons. But we are seeing systems that are able to predict the outcomes of court decisions as accurately as good lawyers. In my book, I envisage, as a thought experiment, the idea of ‘predictions as determinations’ – binding court determinations that are generation by predictive AI.

MLM: What’s on the Richard Susskind agenda following the new book launch – a rest or another project?

RS: I always say that a book launch is not an event but a process. I usually spend about six months, actively promoting my books (speaking and writing around the world). Law firms, conference organisers, and others often host book talks. The sponsors are happy to call these “official” launches of the book in the country in question. In parallel, however, this time, Daniel (my economist son) and I will be finishing off an updated edition of our book, The Future of the Professions, which was first published in 2015. So, I will be writing and promoting. That said, I do take holidays, usually a week at a time, when I try to rest – lie in the sun and read thrillers.

PW: And finally, a self-indulgent question from one writer to another: are you resolute in your writing routine, or do you procrastinate until the hovering spectre of the deadline activates you?

RS: Most people assume, because I have written 10 books, that I must be organised and disciplined.

They imagine perhaps that I spend three months each year secluded in a cottage in Scotland, in easy sight of a loch that is my muse, and there I churn out, say, three thousand words of purple prose each day. In reality, I am chaotic and if a global ranking of procrastinators were compiled, I would well up there. In truth, I squeeze in my writing around my day job (primarily, advising and speaking), and so I can be seen hunched over my keyboard on trains and planes, in coffee shops between meetings, and wherever I can plonk down my laptop and put my two middle fingers to the keyboard. I am hugely deadline-driven and so the final furlong is always stressful. When I submit the manuscript, invariably I will say ‘never again’ but about a fortnight later I am wondering what I should write about next.

Professor Richard Susskind OBE

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INTERVIEWS

“The practice of law is shrinking, and the business of law is expanding”

The practice of law vs the business of law Mark A Cohen is the CEO of Legal Mosaic, a Forbes regular contributor, international keynote speaker, teacher, and legal industry consultant. His perspective on the legal sector is drawn from in-depth, diverse experience during a forty year career in the field. His first twenty-five years were spent as a practicing “bet the company” civil trial lawyer, and the past fifteen have focused on the business of law and improving access to and delivery of legal services. He talks here to Pete Ward.

competitive sports. When I was 12 years old, I was in an all-star baseball game and the youngest player by about two years, which was a big deal and wonderful for my ego. At my first ‘at bat’ I took a called third strike. The Coach took me out of the game and asked me if I knew why he was benching me. I said it was because I struck out. “No,” he replied, “you could swing and miss and strike out all day long and I would keep you in the game –but you struck out because you didn’t swing once. And at that moment, at age 12, I thought there’s a lesson here, which is if you try something and fail, that’s ok, you can learn from that. But if you don’t take a chance, then you’ve really failed.

MLM: What were your early influences – that set you on the path to your current role?

MAC: My biggest influence would have to be my father. He wasn’t a lawyer but was a widely known and well-respected orthopaedic surgeon, who thought about a half century ahead.

He believed that the greatest gift a parent could give a child was exposure. And he defined that as the combination of a formal education and a worldly education, comprising EQ, experience, travel, experimentation, and calculated risk taking. He was a tremendous influence on me. I also learned a great deal from

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INTERVIEWS

MLM: In this age of digital transformation in the legal sector, what are the risks of not modernising?

MAC: Further marginalisation! And by that I mean lawyers and legal service professionals providing a service, and lawyers in particular, must represent their customers/clients confidently, zealously and within the boundaries of the law and legal ethics. I question how a lawyer in the age of digital transformation can competently represent a business client if that lawyer is not using contemporary tools and, more importantly, does not understand some of the challenges of business.

I think it becomes a competency question. Clients want solutions to complex business problems, not legal briefs. Counsel should be based on data, not anatomical parts – gut, nose, etc. It must consider multiple risk factors, not simply legal ones. And it must be delivered quickly and efficiently because business moves at warp-speed.

“There is no silver bullet to technology.

Technology is like evidence.

Some of it is highly relevant; some should never even see the light of day”

MLM: Can you examine your statement that ‘the practice of law is shrinking yet the business of law is expanding’?

MAC: Clients are prepared to pay a premium for differentiated legal judgement, skills, experience, and a history of results. Those are core elements that only a small percentage of lawyers can deliver.

With the rapidly accelerating use and efficacy of technological tools and capitalized, tech and process-enabled providers that have different and more customer-centric and multidisciplinary problem solving capabilities, clients are increasingly open to alternatives to the traditional partnership model law firm. This is not simply about costcutting, though that is certainly an issue in all but high-risk matters. It’s also about competency, applying the right resource, efficiency, holistic risk assessment, and other considerations. This is why we’re seeing an escalating migration of work away from traditional law firms to other types of providers often referred to as “alternative legal service providers.” Actually, they’re not alternative at all, but simply offering different skill sets with different models. We are seeing a paradigm shift in what it means to be a lawyer, when they are required, from what delivery model they are deployed, with whom they collaborate in the legal supply chain, and at what cost their services (or products) are delivered.

Law is no longer solely about lawyers or law firms.

The profession is now part of an industry. And the practice of law is distinct from the business of delivering legal services.

I was recently in Singapore where I gave a keynote speech to GC’s in the region, then moderated a panel. Lam Chee Kim, the GC of DBS Bank, painted a stunning picture of his legal department—its use of technology, the importance of multidisciplinary

“Technology is only as important as the problem it seeks to solve, its ability to solve it, the willingness of people to adapt it, and its positive impact for the legal consumer” 16

collaboration and a “joyful” workplace focused on customer alignment. Only 50 of the 500 DBS Legal Department team are licensed attorneys—the rest are technologists, project managers, data analysts, forensic accountants, other allied legal professionals and paraprofessionals. This is what I mean when I say the practice of law is shrinking and the business of delivering legal services is expanding.

And this is a global phenomenon, although some jurisdictions are further along than others.

The practice nuances might be slightly different from jurisdiction to jurisdiction, but the delivery components – technology, data, allied professionals with competencies that extend well beyond solely legal expertise-- are remarkably similar.

MLM: What key factors surround the hype and the reality of legal transformation?

MAC: A lot of the hype is generated by legal writers’ clickbait, sensationalist headlines, easy answers to complex solutions, and parroting the latest catchphrase. “Legal tech” is a generic term applied to many things. There is a widespread misconception that technology alone will disrupt the legal industry. Tech enables new models that are aligned with customers and that deliver efficient, holistic, cost-effective, impactful results to customers at scale. Tech is a part of change, not the sole agent of it. There is no silver bullet to technology. Technology is like evidence. Some of it is highly relevant, some of it should never even see the light of day. Technology is only as important as the problem it seeks to solve, its ability to solve it, and the willingness of people to adapt it. Legal tech is not synonymous with legal transformation. Change starts with people; a cultural change. Technology is a tool that, properly utilized, can expand and accelerate cultural change.

Transformation is tough yards. It involves a myriad of change elements--culture, buy/ sell dynamics,, and a range of other things. Transformation does not come overnight. Look at Amazon. For almost two decades, Amazon bled hundreds of millions of dollars of red ink investment before it turned a dime. We all know the end result. Many people think Amazon disrupted retail with its magic technology platform and then threw the switch and presto! But it didn’t happen that way. Likewise, legal transformation isn’t going to happen in a day, a week, or a year. It’s slow going—I know from personal experience. How do we know law really is changing? There is ample evidence: law firm compression, companies like UnitedLex and Axiom achieving scale, an infusion of investment into the legal sector, the Big Four’s re-entry into law, and a changing legal buyer sentiment. The totality of these and other systemic changes has brought the legal industry to a tipping point. The intersection of legal industry change has turned from a red light to an amber one, and now it’s starting to turn green.

INTERVIEWS

MLM: Has the legal profession’s inward focus – on lawyers, not clients and society – contributed to consumer restlessness and reconsideration of the legal function?

MAC: Absolutely! I read a recent study on consumer satisfaction and confidence conducted across 30 industries, and law was at the bottom.

That’s in part because the profession has elevated profit-per-partner (PPP) above net promoter score (NPS). Business lives and dies by NPS; it’s time the legal industry focused on it, too. Lawyers have had a stranglehold over the industry for a long time.

Legal practice was the business of law for decades.

That’s ended. Law is now a profession within an industry. The profession, like the industry, has customers. Lawyers refer to customers as “clients” because the relationship has certain unique characteristics; - privilege, expectation of confidentiality, etc. But clients are also customers that expect service, results, accountability, predictability, and value. That’s where lawyers have lagged; their monopoly caused them to take customers for granted. That’s why new providers have entered the legal space and why alignment with customers is critical.

“I don’t think you can be a good lawyer unless you can be viewed by clients and consumers as delivering value”

MLM: Millennials have coincided with, and grown up with, rapid tech advances – does that give them a disproportionate influence in moving the sector forward?

MAC: I don’t think it gives them a disproportionate influence but the perspective they bring as native linguists in tech is something that the profession would be wise to embrace.

And it’s not an either or. I don’t think people with grey hair and lots of experience are necessarily the only ones who should matter. At the same

MLM: Will the future of legal tech, and AI particularly, be a case of assisting – or replacing?

MAC: Will certain jobs be eliminated? Absolutely.

A Deloitte study of the impact of automation projects that approximately 30% of legal jobs will be automated within 10 years. However, there will also be many new jobs created as a result of automation. The caveat is that they will require new skillsets that are often difficult to map. The most important aspect, from my perspective, is what legal professionals - both licensed attorneys and allied legal professionals - do to prepare themselves for these changes, and how can they make themselves more marketable from a consumer perspective as well as an employer perspective? Short answer: augment their skills.

This starts with seeing things through the lens of the legal consumer—what does the consumer need and from whom do they buy those services or products? It is no longer about simply earning a law degree and becoming licensed to practice.

And when I refer to augmented skills, these would include understanding business basics, project management, how to deal with clients, and the customer service aspect of the legal industry. After all it’s a service business.

MLM: Is gender diversity in the legal sector a question only for women – and do men really care?

MAC: Again, there’s more than a little irony here, because every major law firm will have a labour and employment department that handles discrimination cases. The profession has its own glasshouse problem. It has been, and it remains, a blight on the profession that women, even today, do not have equal opportunities, equal pay, and the same advancement opportunities as their male colleagues. As a profession charged with upholding the law, we must be egalitarian and commit to diversity in the broadest sense. Diversity not only has demonstrably positive results but it is also good business. The legal industry – especially law firms – would benefit from more gender, geographic, competency-based, and generational diversity. Legal providers should reflect the values of their customers and society.

time, just because someone happened to come of age in the digital age doesn’t necessarily mean that person is going to understand tech’s optimal use in the marketplace. I think it really does take a village approach. I advocate that companies have at least one person under 30 given a meaningful voice at the management table. So too are those with a great deal of business (and life) experience important contributors.

“It has been and remains - a blight on the profession that women, even today, do not have equal pay, leadership representation, voice, and opportunity to advance” 17

What it means to be a lawyer as well as how legal services are best delivered—and by whom—are questions that legal buyers are now asking.

Lawyers and allied legal professionals should be aware of that and be mindful of the marketplace.

It is not “business as usual” – or as it has always been – in the legal industry. All lawyers do not need to be data programmers; however, they must understand how technology is being utilised to more efficiently deliver legal services.

The fundamentals of being a great lawyer haven’t changed but the tools and resources available to great lawyers have changed a great deal. It is critical that all lawyers and allied legal professionals and paraprofessionals understand how those tools and resources can be deployed to advance the interests of legal buyers.

Mark A Cohen

is the CEO of Legal Mosaic

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Practice Performance Matters

INTERVIEWS

“It’s crucial for any business for its employees to buy into the culture, but it has to worth buying into”

AT THE FOREFRONT OF CHANGE

Joanna Swash was recruited as Moneypenny’s first salesperson 14 years ago – today she is CEO of a business that has grown to handle more than 15 million calls and live chats across two continents for over 13,000 businesses each year. Joanna has been a key part of the leadership team Moneypenny and a driving force behind the company’s success. Most recently she headed up the Moneypenny’s commercial entry into the US market. She talks to Modern Law about the importance of a corporate philosophy that’s built around success through innovation and employee loyalty.

piece of business. It made him realise he could do much better, starting with taking the impersonality out of answering services and that’s how Moneypenny was born.

MLM: What were the individual personal drivers when setting up Moneypenny?

JS: When Moneypenny founders, brother and sister Ed Reeves and Rachel Clacher, took the decision to start the company they were determined to create a company they would want to work for themselves.

Later it was about tapping particular markets and ‘talking their language’, instead of a broad brush approach. As an example, for over a decade, we have had a dedicated team of Moneypenny Receptionists who solely handle our law firm clients. It was a strategic decision to concentrate a team on one particular area, and the right one.

For Ed, one of the most significant drivers came from a bad experience with an answering service that cost him a lucrative

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INTERVIEWS

This focus has enabled key members of our team to really know the market. Bernadette Bennett has been a part of our legal new business team for over a decade, and Claire Smith, our Head of Business Development, is a qualified solicitor and well-known in the industry. This has allowed us to become established and trusted in the sector.

MLM: When it started in 2000 where did you think you’d be in 2020?

JS: No one can predict the future. As Bill Gates said: “We overestimate change in the next two years and underestimate change in the next 10.” There’s so much truth in this. Early on, we knew we had a service perfect for the legal industry – professional and reliable. But we couldn’t have foretold the success we’ve had supporting law firms.

We felt this again recently with the launch of our Live Chat service. The legal sector is our largest area of growth for the product. No one could have predicted that. It will be very interesting to see what this looks like in 10 years’ time. Having said that though, the business has a history of planning for success. While lots of businesses feign a certain amount of surprise at what they’ve achieved, we always set out to make Moneypenny a market leader and had a clear vision from the outset. As an example, whenever we have moved into a new office space, we have always taken significantly greater space than we needed in preparation for growth. The upshot is we always grow to fit the space. The same goes for our current headquarters – we built it with enough room to grow by another 300 employees, which we are planning to do.

One of the building blocks to this growth has been our company culture. It’s crucial for any business for its employees to buy into the culture, but it has to worth buying into. From the beginning we were determined to be a company that people would be happy and proud to work for. A big part of our culture is enabling employees to have a voice. It’s popular advice, but we’d say go further and listen and actually action what they said. We did this on a large-scale as we were gearing up to build our new headquarters. The senior management team had lunch with every single employee in small groups over a few months and asked them what they wanted from their workplace.

Their suggestions form the design of the building today – fresh air and access to light, social spaces, and a gym to name a few. It’s more than simply bricks and mortar. Staff are valued and empowered. We’d advise every business to adopt this attitude – empower employees and they’ll move mountains with you.

MLM: And what key challenges does the business face heading towards 2030?

“Our workplace culture has meant we acquire most employees through word-ofmouth. We receive in excess of 3,000 CVs and can cherry pick the best employees for the job”

JS: As with any business, it’s about keeping ahead of the competition. We know how many legal practices must feel; there’s an abundance of firms just as there’s no shortage of telephone answering services. Law firms, as with any business, should take stock of what they offer the market and compare to what they offered 10 years previously. It helps to get perspective.

We offer more products than we did 20 years ago, but our commitment to quality and service to our clients remains the same as it did on day one. But that doesn’t mean we rest on our laurels. We’ve always checked our rear view mirror and have always been one step ahead. If we continue to do this, we’ll still be the market leader in 2030.

There are wider changes on the horizon too owing to the way people communicate. As more businesses adopt digital forms of communication, for instance voice recognition, they won’t need a dedicated receptionist to handle every call.

These voice calls could well be reserved for the most important conversations. This is a direct challenge for us, but we’re already developing and delivering our own digital solutions.

Office desk phones will probably become obsolete and instead business phones will simply be mobile apps, which will handle business text as freely as voice. By 2030, our first impressions of companies will be defined by the quality of their digital switchboard and how easy it is to speak to the desired person. This will be AI-enabled and fuelled by a combination of generic sector and bespoke company data – and their ability to handle the edge cases; the moments where a call really does require human input.

MLM: What are the biggest risks to a business of not modernising/adapting to change?

“Consumer behaviour is changing all the time and so too is technological capability – it’s the job of any business to marry the two together” 20

JS: Quite simply, a company that doesn’t adapt to changing customer demands and employee needs stands to lose. That’s true for all businesses but it’s a challenge that we share with many of our clients in the legal sector in particular. Clients expect us to be experts in our fields. That means keeping a constant finger on the pulse of both client and employee needs. From a client standpoint, it’s about being at the forefront of change and offering the best products, service and experiences. Consumer behaviour is changing all the time and so too is technological capability – it’s the job of any business to marry the two together.

For employees, it’s listen and react. The younger generations are much more forthright about what they expect from their employers. Increasingly this includes flexibility of working hours, career potential and the latest tools. Also, greater control

INTERVIEWS

of company benefits to best suit individual stages of life. At Moneypenny we launched our Pick ‘n’ Mix benefits system which allows employees to do just that; to pick the right package for them. It wouldn’t surprise me to see many more businesses adopting this strategy in the next few years.

In the face of change, our core belief is still happy staff = happy clients. And a company that doesn’t believe this on some level puts itself at risk. Our business is all about its people and we work hard to empower them and involve them in everything we do. It’s only through continual evolution and constantly listening to their needs that we will maintain the happy, healthy and productive workforce we’ve become so well known for.

Failure to stay current and a reluctance to change are two of the factors that undermine most businesses. That’s why we’re investing so heavily in AI and our development team.

MLM: How important is product differentiation/development so customers buy from you and not the competition?

JS: For us, evaluation is a constant process and we apply this to everything. It doesn’t necessarily mean introducing something brand new either. It can take the form of a much improved and repositioned product that’s been given an overhaul.

L to R: Joanna Swash, Rachel Clacher, Ed Reeves.

“Failure to stay current and a reluctance to change are two of the factors that undermine most businesses”

MLM: How important is tech adoption to business efficiency and growth – and how will tech advances, particularly AI, help Moneypenny grow?

JS: After quality of people, technology is the next big driver for growth. And it touches all aspects of a business. A new CRM, CMS, live chat or document management system could transform the way a business operates. Of course, this won’t mean much if it isn’t utilised fully. Be brave. Try new things. If it doesn’t work, move on.

Quality can be a surprising differentiator as well.

This applies to all businesses. Unexpectedly catching people off guard by exceeding expectations can win you market share when people have become accustomed to expecting mediocre goods and services.

How do you do that? It’s really understanding the client and what they need. Early on we realised that if we took the impersonality out of all answering services we could stand out from our competitors and crucially, give our clients what they needed – real people, they get to know and trust, working for them. This has been our key differentiator since 2000. Our clients enjoy building a relationship with their Moneypenny receptionist and team. In turn they feel supported in providing their own clients with greater service.

Our people are an important part of how we grow as a business too. Our workplace culture has meant we acquire most employees through wordof-mouth. We receive in excess of 3,000 CVs and can cherry pick the best employees for the job.

Also, we have learnt that if someone doesn’t fit the bill, let them go. It doesn’t make sense to keep a relationship going any longer than it needs to if it’s not working. Most of our mistakes when we were starting out were based on recruitment and not parting ways soon enough.

And of course, we keep ahead of our competitors by continually investing in new technology and new products. Almost without exception our competition copies where we go, which means they’ll stay behind us – as long as we keep striving for the same excellence and developing new ideas, innovations and routes to market.

“From a client standpoint, it’s about being at the forefront of change and offering the best products, service and experiences” 21

There’s such a buzz around AI and machine learning and there’s a lot of companies that can do a lot of clever things. Our job at Moneypenny is to harness this technology and make it accessible for businesses. We know how powerful the right communication infrastructure can be for a business.

We’ve spent the past few years tapping into the right areas with AI and developing the best products using this technology. We’ve worked with the best of the best too – Amazon, Twilio, Microsoft, ABI Watson to name a few. And we’ll continue to do so.

There’s always room for improvement.

In future years, our digital products will form a large part of our business. We know our legal clients in particular want to adopt more technology and automate parts of their communications, and we want to provide them with new versions of the quality products we’re known for.

Joanna Swash

is CEO at Moneypenny

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IN-DEPTH

Re-thinking legal services regulation for the world of modern law Professor Stephen Mayson is a strategist, independent legal thought leader and advocate for social and organisational fairness. He is conducting an independent review of legal services regulation. In this article for Modern Law, he discusses the findings and propositions of his interim report. The final report is expected to be submitted to the Ministry of Justice and published in February 2020.

M

point to some significant shortcomings and challenges arising from the present structure for the regulation of legal services and those who provide them.

y interim report for the Independent Review of Legal Services Regulation in England & Wales was published in September 2019.

While the reforms of the Legal Services Act 2007 have been mainly beneficial overall, that legislation might best be characterised as an incomplete step towards restructuring legal services regulation.

For reasons that are understandable, it did not fully follow through on some key elements of the regulatory structure. These include: review and reform of the reserved legal activities (those few activities that must be provided by lawyers); the known regulatory gap (as a consequence of which the non-reserved activities of lawyers are regulated, but those of non-lawyers can legally be provided but cannot be regulated – to the potential detriment of consumers); and the separation of regulation from professional representative interests.

This lack of follow-through has led to increasing challenges to the integrity of the regulatory framework as the legal sector has evolved and developed since 2007.

“What the findings of the interim report confirm is the nature and range of issues that will need to be addressed in any future reform of the legal services regulatory framework”

The shortcomings and challenges

What the findings of the interim report confirm is the nature and range of issues that will need to be addressed in any future reform of the legal services regulatory framework. They

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In summary, they are: • inflexibility arising from too much statutory prescription; • competing and possibly inappropriate regulatory objectives; • a pivotal set of reserved legal activities that are anachronistic and do not necessarily include all activities that ought to be regulated; • title-based authorisation that leads to additional burden and cost in relation to some activities being regulated that do not need to be (resulting in higher prices to consumers); • the unsatisfactory nature of the separation of regulation and representation; • the existence of unregulated providers who cannot be brought within the current regulatory framework (with an expectation that their numbers will increase); • the prospect of LawTech that will be capable of offering legal advice and services independently of any human or legally qualified interface or interaction, and so beyond the reach of current regulation; • a regulatory gap that exposes consumers to potential harm when some activities are not regulated when they ought to be, and puts qualified practitioners at a competitive disadvantage;

IN-DEPTH

tools is engaged, resulting in everything that the holder of a legal professional title does being subject to sector regulation.

On the other hand, an individual or business wishing to offer only non-reserved activities, and not otherwise subject to legal services regulation, cannot gain admission to legal sector regulation.

However much they might otherwise wish to subject themselves to regulatory obligations, or offer the benefit of regulatory protection to their consumers, they cannot because they do not hold a professional title or a licence for an alternative business structure (ABS). They lie outside regulatory reach, legally able to carry on non-reserved legal activities, but not able to enter (or to be brought within it) – that is, they are both unregulated and unregulatable.

In sum, the current regulatory structure provides an incomplete and limited framework for legal services regulation that will struggle in the near-term and beyond to meet the demands and expectations placed on it.

However, this does not lead me to the conclusion that, in some way, the next step should be to ‘finish the job’ of the Clementi Review and whatever the 2007 Act might have left incomplete or problematic. Instead, I envisage an opportunity to revisit and reform rather than to ‘make good’.

An alternative approach?

• seemingly ever-increasing prices of private practice lawyers, reducing further the availability and affordability of legal services for many; this encourages either greater selflawyering and litigants-in-person, or nudges increasing numbers of citizens into the world of unregulated providers and LawTech; • consumer confusion, caused by the existence of both regulated and unregulated providers for the same legal services, and a profusion of differently regulated professional titles; • inadequate or incomplete consumer protection, that is not consistent with a widespread consumer expectation that all legal services and those who provide them are subject to some form of regulation and protection; and • as a result of all of these issues, the risk of low public confidence in legal services and their regulation.

“The current regulatory structure presents a narrow ‘entry gate’ to regulation”

The hypothesis of the alternative approach to regulation explored in the interim report is that, in the future, authorisation to practise and the application of regulatory requirements would not be imposed only on those who hold one or other of the existing professional titles.

Instead, all providers of legal services should be capable of entering the regulated domain for at least after-the-event regulation (such as access to the Legal Ombudsman). Beyond this entry level, a risk-based approach could determine whether additional during- and before-the-event requirements should be applied.

Accordingly, the working assumption of the interim report is that all legal services (to be redefined) would be regarded as low risk unless they are separately defined and identified as carrying a higher risk requiring more targeted regulation.

As a consequence, entry into regulation would be set with broader scope. In relation to low-risk legal services, after-the-event redress would become available (principally through a reformed Legal Ombudsman). This level would set the minimum conditions of regulatory intervention to which all regulated providers of legal services would be subject.

From narrow to broad

The current regulatory structure presents a narrow ‘entry gate’ to regulation. A combination of a reserved legal activity, and an authorisation to carry on such an activity (usually arising from a professional title), is required. However, once through that gate, the whole array of regulatory

There would then be additional powers to determine that certain legal activities carried higher risk (to the public good or to consumers). These

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IN-DEPTH

scope of sector regulation. The position now is that in fact all legal services are within the scope of regulation if they are provided by someone who is already legally qualified and authorised to practise.

activities would be subject to practice conditions (usually applied on a during-the-event basis), as well as the lower-risk entry-level requirements.

Practice conditions might include: accreditation requirements to assure competence; continuing professional development (CPD) obligations and re-accreditation to assure continuing competence; obligations relating to the handling of clients’ money; contributions to a compensation fund; undertakings; and appropriate management systems.

There could also be further additional powers to determine that certain legal activities carried a high innate degree of risk (again to the public good or to consumers). These highest-risk activities could then be subject to before-the-event regulation, as well as to during- and after-the-event requirements.

Before-the-event conditions would ensure that providers have prior authorisation to carry on the highest-risk activities before they were allowed to offer their services to clients. This would probably be in much the same way as is presently required for the reserved activities – although the report also proposes that these activities should be reviewed, and that the notion of ‘reservation’ would not be necessary in the future.

This approach could be supported by a public register of those individuals and entities who are subject to regulation. Consumers would then be able to consult the register as they contemplate using any particular source of advice and representation to help with their problem.

The register would establish for them whether or not their prospective provider is regulated, and for what. If the prospective provider is registered, there will be specific regulatory protection; if not, the consumer is on notice that protection and redress will not be available.

Unfortunately, the current structure will not admit those who are not legally qualified. This is now an unnecessary restriction that inhibits further access to legal advice and representation as well as to regulated innovation, competition and technological substitution.

The case for change

The potential benefits of the alternative approach explored in the interim report are:

“While the reforms of the Legal Services Act 2007 have been mainly beneficial overall, that legislation might best be characterised as an incomplete step towards restructuring legal services regulation”

This alternative approach would not assume the disappearance of professional titles or of any need to regulate them, but would instead offer an additional route into regulation. In principle, the same regulatory requirements should be applied to those who hold a professional title as to those who do not. To do otherwise would be to create an unlevel regulatory playing field.

The report accepts that there might once have been (and in many cases continues to be) a compelling need for lawyer advice and its regulation, justifying the traditional reservation of certain activities to those who are legally qualified. However, it also allows an alternative in relation to those activities or situations where such a monopoly has become inappropriate in the twenty-first century.

a. It would be easier for consumers to check whether their provider or prospective provider is registered or not (including for higher-risk activities that attract additional regulatory requirements and protection). This is a simpler starting point for consumers than the current complex mix of factors. b. A differentiated, or layered, approach to regulation would allow before, during, and after-the-event interventions to be applied to providers based on the risks of the services that they actually offer. c. Adopting such a risk-based approach would mean that more of the cost and burden of regulation could be self-selected and cumulative, depending on the commercial or operational choices that providers elect to make. As such, it would offer a more targeted and proportionate response to the public and consumer risks within the legal sector. d. This approach would enable those who are currently unable to enter the regulatory structure to choose to do so, for the benefit of their consumers. This should lead to an increase in regulated access, competition and innovation in legal services. e. This approach could also apply to those providers who are moved (or move themselves) outside the current regulatory framework, for instance by having been struck off, disbarred, or even simply retired.

It would constrain their current option to set themselves up as an unregulated paid adviser in respect of non-reserved activities. f. A framework that is constructed around ‘providers’ of ‘legal services’ could apply to the providers of LawTech that substitutes for lawyers in ways that the current framework cannot.

An important question for the interim stage of the Review is whether such a longer-term alternative approach would sufficiently address the identified shortcomings of the current framework, and whether these projected benefits would be worthwhile.

Such an alternative approach need not be seen necessarily only in terms of an increase in the

Copyright © 2019, Stephen Mayson

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Adults and children are seen within four to six weeks of instruction at any of our 158 clinics across the UK and the report provided within two weeks.

The ‘Find an Expert’ facility on our website allows three experts to be located immediately.

GROUND FLOOR, FESTIVAL HOUSE, JESSOP AVENUE, CHELTENHAM GL50 3SH Phone: 01242 263715 email: enquiries @hughkochassociates.co.uk Web: www.hughkochassociates.co.uk

KEY CONTRIBUTORS

REGULATORS AND TECH INNOVATION

T

What role do regulators have in the fast-moving world of technological innovation?

he Government’s Fourth Industrial Revolution white paper identifies the need for “a more agile approach to regulation, that supports innovation while protecting citizens and the environment”. This statement holds true for our legal services market. Indeed, since effective legal services underpin all parts of the economy and a well-functioning society, it is vitally important that regulation in this sector keeps pace with the greater role that technology is playing in the delivery of legal services to consumers.

Research we carried out last year found that fewer lawyers view legal services regulation as a barrier to innovation than three years ago. While taking pride in this result, we also found innovation in the sector as a whole has not increased and that there has been limited adoption of new technology.

Legal professionals told us the main barriers they face to adopting LawTech are lack of expertise, the risks involved in using unproven technology, and the potential for greater ethical problems.

This tells me that innovation and ethics go hand in hand and underlines the importance of a well-designed regulatory framework that both encourages technology and addresses the risks it creates. With this in mind, we have set ourselves a five-year policy objective that access to legal services is increased through the promotion of responsible technological innovation that carries public trust.

To kick this work off, we have commissioned a series of expert papers and recorded podcasts on various aspects of technology and regulation. The first paper, by Alison Hook, considers the different approaches taken by regulators internationally. In her analysis, regulators are taking one of four strategies: wait and see, resist,

“Research we carried out last year found that fewer lawyers view legal services regulation as a barrier to innovation than three years ago” accommodate, facilitate. England and Wales fall into category four: facilitate. I think we can all be encouraged by this.

Compared to many other jurisdictions we have a liberalised regulatory framework that encourages external investment. The regulatory framework also means that regulation operates more independently of the profession than in other countries.

Codes of conduct are built around highlevel outcomes. Together, these foundations leave us well positioned to respond in an agile way to the opportunities and challenges that technology presents.

In his paper, Professor Roger Brownsword of Kings College London emphasises the importance of social acceptability: that the regulation of new technologies should be broadly acceptable to legal professionals and consumers, as well as being compatible with general societal interests. In his view, regulation will not be acceptable if a technology is permitted to cross any ‘red lines’, if there is either overregulation or under-regulation, or if there are unanticipated negative consequences.

Interestingly, data from the Legal Services Consumer Panel’s most recent annual tracker survey shows that more services are being delivered online than ever before, but nearly half of consumers view lack of

27

trust as a barrier to using services provided through AI-type technologies.

A third paper, by Noel Semple, Associate Professor at the University of Windsor, Ontario, assesses the impact of technological innovation on the sustainability of the Legal Services Act regime itself. He too identifies risks of both regulating too little or too much. In the first instance, consumers or other interested parties could be exposed to risks and detriments brought about by innovation. Alternatively, over-regulation could choke the flame of technological innovation and thereby deprive the public of innovation’s benefits. His overall conclusion is that the risks posed by technology are real, but the existing regime remains capable, for the time being, of responding to them.

It’s too easy to portray regulation as stifling innovation and call for regulators to get out of the way. While badly designed regulation can block progress, it is equally true that well-designed regulation can unlock progress.

Technology is not a panacea that will fix all ills, but it can make a really positive contribution to improving access to justice and the administration of justice, and to making markets more competitive in the consumer interest. Effective regulatory leadership, by government, the Legal Services Board and the regulatory bodies we oversee, will support the sector to maximise the benefits of LawTech while successfully managing its risks.

The research papers can be found on our website – legalservicesboard.org.uk, and our Talking Tech podcast is available on Apple Podcasts and most podcast apps.

Dr Helen Phillips

is Chair of the Legal Services Board

KEY CONTRIBUTORS

GREATER FLEXIBILITY AND ACCESS AS REFORMS GO LIVE At the end of November, we launched our new Standards and Regulations, which replaced the SRA Handbook 2011. The Standards and Regulations are the culmination of four years, of development work, which has seen us consult widely with the profession and public alike, with more then 35,000 of you providing direct input.

T

he feedback proved invaluable in helping us to deliver the new regulations, which are not only simpler and far shorter than the previous SRA Handbook, but now focus a lot more clearly on what really matters – high professional standards and protecting the public and its money.

The reforms put more trust in your professional judgment, getting rid of lots of outdated prescriptive rules and giving you more flexibility over how you work.

“The aim is to help more people get the opportunity to access the expert legal help a solicitor brings – currently only one in ten people use a solicitor or barrister when they have a legal problem”

The aim is to help more people get the opportunity to access the expert legal help a solicitor brings – currently only one in ten people use a solicitor or barrister when they have a legal problem.

28

Allowing solicitors to practise and offer public services from beyond traditional law firms, for example from within non-regulated organisations such as accountants or estate agents, or as SRAregulated freelance solicitors can only help to increase access. Not only giving the public choice and better service, but freeing solicitors up to compete with non-regulated legal service suppliers in new ways. There has been real interest from the profession in the new practice options that are now available, offering a wider range of career choices. Within a few weeks of the launch of the Standards and Regulations, we already have freelancers on our Solicitors Register.

KEY CONTRIBUTORS

Key elements of the reforms include: • Separate codes for firms and solicitors: This gives greater clarity on the differing roles and obligations of individuals and their employer. With more than a fifth of solicitors working outside law firms, for example in-house, it also provides a code which is more directly relevant to such solicitors.

• New enforcement strategy: The strategy provides clarity on how we decide whether to act in a given case, and what factors we consider in deciding the seriousness of any misconduct and the action to take.

The strategy is supported by the ‘enforcement in practice’ suite of publications, which shows everyone the approach we take to particular issues, for example concerns about social media.

• Reporting Concerns: We consulted on and have now published new guidance explaining the duties of every solicitor to report any concerns they may have about potential misconduct. This includes both what type of issues need reporting and when.

• The Solicitors Register: TThe Register provides the public with key information on all SRA regulated solicitors and firms, including their name, where they work and links to any disciplinary outcomes. We know that solicitors and law firms are already regular users of our current services, including Law Firm Search and Check a Solicitor. In time, our new Register will replace our existing listings, making it easier for you and the public to find the information you need.

• The SRA clickable logo: All regulated law firms who have a website are now required to display the SRA’s clickable logo.

The logo helps the public to see what consumer protections are in place when using a regulated firm.

Previously, while it was a voluntary requirement, more than half of firms were already using the logo.

“The reforms put more trust in your professional judgment, getting rid of lots of outdated prescriptive rules and giving you more flexibility over how you work”

“To help you to comply with the new rules and understand the opportunities they bring, we have published a range support materials, including webinars, guidance and videos at www.sra.org.uk.newregs”

To help you both comply with the new rules and understand the opportunities they bring, we have published a range support materials, including webinars, guidance and videos at www.sra.org. uk.newregs. Since it was launched in September this site has already had more than 50,000 visitors.

Now the new regulations are live, we are looking at understanding the difference they make.

The impact of these changes, both in terms of opening up public access and creating opportunity within the profession will need long term monitoring.

That is why we have commissioned economic consultancy Economic Insight to develop a framework for evaluating the reforms. This will include assessing the effect of the new Standards and Regulations, and Transparency Rules, on the public, profession and wider legal sector.

Reports on progress will be conducted after one, three and five years, so watch this space for future updates on what we find.

Jane Malcolm

is SRA Executive Director, External and Corporate Affairs

29

Congratulations

to this year’s shortlist!

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ROADSHOWS

Knowing your client a roundtable discussion This initial discussion took place in London, with further SmartSearch round tables planned in early 2020 to be held in Edinburgh, Leeds and Birmingham.

The agenda for the discussion addressed the following points: 1. Are you ready for the 5th Money Laundering Directive, and how will the amendments and new provisions strengthen transparency and the existing preventative framework?

2. With firms’ different attitudes to risk, what are the key issues around Risk-based Approach?

3. As part of 5MLD what AML Training priorities should firms focus on from legal, regulatory, and employee responsibility aspects?

4. Why is the legal profession one of the lowest sectors for SARs Reporting?

5. After OPBAS expressed concern over the Law Society and SRA possibly offering conflicting advice, are solicitors now getting consistent information?

6. Is Identity Fraud on the increase – and what type is most common?

7. How is the shift from Third Party identity theft to an increase in First Party fraud impacting on law firms 8. Source of Funds/Source of Wealth – how many businesses are checking for the same thing?

9. Cybercrime – cyber essentials vs cyber essentials plus?

10. Implications of Dreamvar vs Mishcon de Reya – discuss?

It’s impossible to do full justice to the wide-ranging discussion that resulted, and the following pages can only give a flavour of some of the key points raised during the session.

About SmartSearch SmartSearch is a leading UK provider of anti-moneylaundering (AML) software. Its AML verification platform conducts individual and business searches, with automatic worldwide Sanction and PEP screening and ongoing monitoring. SmartSearch’s technology delivers an unrivalled user experience to over 4,000 client firms and 40,000 users, enabling them to keep up to date with the latest AML regulations and fulfil their AML, Customer Due Diligence (CDD), and Know Your Customer (KYC) compliance obligations. SmartSearch’s automated verification approach is convenient for both users and their end customers, with individual AML checks taking less than 30 seconds from start to finish, while business checks take less than three minutes.

Martin Cheek (Chair) Managing Director SmartSearch

Martin Cheek is managing director of SmartSearch, which he founded along with long-term business partner John Dobson in 2011. The two previously worked together at Callcredit where Martin headed up Callcredit Direct. He holds an MBA and a law degree from the Open University.

33

ROADSHOWS

LONDON

Martin Cheek, Managing Director of SmartSearch, took the chair for a round table discussion around the topic of ‘Knowing Your Client’. He kicked off the session referencing the 5th Money Laundering Directive and the Government’s consultation paper that went out earlier this year.

Are you ready for the 5th Money Laundering Directive, and how will the amendments and new provisions strengthen transparency and the existing preventative framework?

Cheek began, “For me 5MLD is not a revolution in the way that the money laundering regulations of 2004 and 2007 were, but it’s more of an evolution. And as we have people from practice and consulting here today, who may see things from different perspectives, regarding whether the additional provisions in 5MLD will actually be implemented by the ‘drop dead’ date of 20 January 2020?”

Brian Rogers said the majority of his core client base fits within the 5-20 partner UK firms and they see this very much as business as usual. “But a key issue for me is rather than getting people to focus too much on 5MLD is to get them to focus on becoming fully compliant with 4MLD!” Cheek suggested that this is about risk assessment policies and procedures? Rogers agreed, adding, “But not only to have them but to put

Tuesday 5th November 2019 Pullman St. Pancras Hotel, London

them into play. When we do compliance reviews we see all these nice forms but they’re not always completed.”

Colin Blears agreed that educating people on the existing regulations, rather than the new ones coming through was paramount, saying, “Conveyancing is seen as one of the high-risk target transactions and AML in that sector is seen as more of a tick-box exercise. I agree the challenges are not around 5MLD. Other jurisdictions are bringing in regulation where we already have it, though it’s not always being adhered to by the people who are regulated. So the focus does need to be around seeing some high-profile cases causing people to wake up to the idea that it’s a serious issue. They need to understand it’s not just buying a piece of technology and saying we’ve got it, it’s actually using it and monitoring it and ensuring that the firm sees it as an number one priority and not just an ‘I’ll do it at the end of the day task’.”

“With the smaller firms, the onus is on fee earners to deal with the issues, because they can’t farm it out to a larger department” 34

Cheek said there was a seismic shift when the 2007 regulations came in, as previously it was very much a tick box exercise but then moved to a risk-based approach, adding, “For me, the massive issue is that when you meet Money Laundering Reporting Officers, they vary in their levels of risk, from people who are highly risk averse and spend a lot of time and effort, through to those who don’t do enough, However, probably most firms get it there or thereabouts right.”

Blears echoed that, saying there is a distinct lack of knowledge in certain providers between KYC and AML and while they go in parallel as a customer onboarding journey, they are distinctly different functions, saying, “I don’t think people always understand what functions they’re meant to be serving.”

Cheek agreed, “For me KYC sits in the middle. There’s a whole load of stuff you need to do beforehand upstream and downstream.”

Emma Oettinger has been following the implementation of 5MLD across all the jurisdictions her firm operates in, not just the UK, and the equivalent 5MLD changes coming out of other countries driven by FATF, the Financial Action Task Force. She explained, “For a number of years we’ve had a specialist risk/AML team, separate to our conflicts team, to assess not only

ROADSHOWS

“Everybody is looking to win new business yet preserve their own position and do the right thing, acting with integrity in line with the core principles of the SRA’s code of conduct” With firms’ different attitudes to risk, what are the key differences around a risk-based approach?

clients for risk but also all matters across the firm globally.

We’ve already incorporated the high-risk sectors, such as oil, gas and precious metals into the risk assessment training and tools for that team. There are a number of nuances coming through from 5MLD which potentially, for some of the larger firms, might be more of an issue.” She concluded, “We see our risk team not in the role of business prevention but as a business enabler – but of the right business!”

Cheek opened up this topic asking that in addition to risk assessment and policies and procedures, there’s now a requirement under 5MLD to audit all that, and if auditing internally can it be seen as a true audit? Payne said that many lawyers have different attitudes towards risk, and not just in terms of personality, but in the context of how they assess that risk, adding, “Instead of a risk-averse culture we should be looking at a risk-aware culture. Ultimately those who are going to liaise with the client are best placed to assess the risk, and it’s important that we as the supervising compliance function don’t take that assessment at face value, not only because people sometimes have blind spots and the audit effectively acts as a second set of eyes, but also because we’re not all identikit lawyers, people have different assessments of risk and awareness of what is actually pertinent.” Cheek asked if fee earners stick to the policies and procedures, as he often found that if something didn’t quite fit, they would do it anyway. Payne responded that there may have been a time when some would just go through the motions but didn’t think that was a fair assessment now.

Matthew Tasker felt it was easier for large firms with dedicated teams dealing with risk and compliance, whereas it’s more of a problem for smaller to medium sized firms without dedicated teams. Millie Balkan said, “Having moved from working at a 6,000 strong company to a 38 person firm, I found that in the smaller firm the fee earners are far more engaged, far more knowledgeable and far more switched on to risk.” Joe Payne agreed, adding that a corporate lawyer at a very large city practice might be working on one deal for over a year and never actually liaise with clients or go out and get business. Balkan added, “With the smaller firms, the onus is on fee earners to deal with the issues, because they can’t farm it out to a larger department. It’s both time-consuming and non-chargeable for the fee earner but important to get right, because at the end of the day no one embarks on a 6 year-long journey to become a lawyer only to be struck off for doing something silly! Everybody is looking to win new business yet preserve their own position and do the right thing, acting with integrity in line with the core principles of the SRA’s code of conduct. So there is a conflict, but I do think that people at smaller firms are far more switched on, as it falls on them to get it right with no one else to blame!”

Mason thought that if you asked ten MLROs about a riskbased approach you could get ten different answers and approaches. He questioned how often ‘red flags’ are being overlooked and suggested that one solution is to focus more on face-to-face and online training to create more awareness of the importance of not ignoring the red flags. Balkan said, “Policies shouldn’t be taken as gospel and should exist to stop us occasionally sleepwalking into mistakes.” Oettinger said, “The important point is when diverting from your policies and procedures that there is a record and that senior people take responsibility for doing this.” Balkan added, “And ensure that you have a paper trail and feel comfortable, because if it doesn’t smell right, it probably isn’t right!” Rogers agreed, saying,” It should never be too much bother to make a quick file note of a minute to say why a decision was taken.”

Collette Best wondered if there was some case for a leaflet that explains to the client, “Why my solicitor is asking me to prove my identity?” It was pointed out that this had been attempted in 2002 and 2007 but wasn’t actually that useful and hadn’t been updated. Best continued, “But it’s something that the SRA, or the legal sector as a whole, could produce and it’s on my wish list, once the new regulations come into force.” Best then picked up on the point of centralised due diligence, saying, “The SRA sees both centralised and decentralised models when visiting firms and I don’t think there’s a right or wrong answer, as it depends on the structure of the firm. But one of the things we do find challenging is where that CDD is centralised, we then do file reviews and ask the fee earner what due diligence happened on this file, and if they can’t tell us, or don’t know what the risks are or how the client was risk rated, then that becomes a concern. So it’s striking a balance between making sure the fee earners have enough information and knowledge to spot when something is suspicious without it being burdensome.

Best said, “At the SRA, we’ve had a number of self-reports on the back of unexplained wealth orders, where firms have been able to justify their decision making on the back of file notes they made at the time. So, documenting decision making is a really important part of a firm’s armoury if it needs to defend itself if we decide to investigate a transaction.” She added that in terms of the risk-based approach, one of the biggest areas of non-compliance with the current regulations is the failure to have a firm-wide risk assessment, or having a firm-wide risk assessment that doesn’t touch on the five required areas in the regulations.

“We put out a lot of information about this, in late October 2019, and out of a sample of 400 we found that 1 in 5 weren’t complying with their obligations, so this is clearly an area where firms are struggling. There are firms that are doing things really well and have a good risk-based approach but it isn’t documented or set out so they can’t justify it to us, which comes back to my previous point about it being written down, because if it’s not it simply doesn’t exist!”

“It’s a good indicator that if you’re not also training your receptionists, perhaps you don’t have a very good attitude throughout the firm” 35

ROADSHOWS

Attendees:

As part of 5MLD what AML Training priorities should firms focus on from legal, regulatory, and employee responsibility aspects?

Martin Cheek (Chair) Managing Director SmartSearch

Cheek stressed that training is a mandatory part of the ML regulations, and has been since 2004, saying, “But I’ve seen situations where a new recruit is plonked in front of a pretty shoddy PowerPoint presentation and has to sign that they’ve received training! Then there are other firms whose ongoing training has levels of sophistication based on the seniority of the person within the firm.”

Millie Balkan Compliance Manager GSC Solicitors LLP Colette Best Director of Money Laundering SRA Colin Blears Director Risq Ventures Limited

Mason thought best practice was to have a combination of different methods of training, PowerPoint and online fine as a foundation, but face-to-face being the most effective way of bringing people up to speed and keeping them up to date.

Payne agreed, adding, “One of the best benefits of face-to-face sessions is you get a perception of how the training is being received.” Oettinger said from her company’s global perspective, “We’ve built our own bespoke AML training and general risk training at various levels. And our MLROs undertake regionalspecific training to help our lawyers worldwide to understand what the risks are in their jurisdictions.”

Ian Mason Partner and Head of UK Financial Services Regulatory Team Gowling WLG Emma Oettinger Head of Financial Crime & Risk Ashurst

Balkan said, “When working in a large firm, AML training was part of the induction process by webinar, and then the risk team would make regular presentations and send out bulletins to fee earners to update on particular issues. The risk team itself would constantly be updated by the Director of Risk or Head of Financial Crime. Now, being at a smaller firm, Jonathan Fisher, a leading figure on the AML scene, comes in twice a year to update us on prominent issues.”

Tasker said that it’s also vital to involve all sectors of staff in AML training. Best agreed, adding, “One of the first questions the SRA asks when doing visits is ‘who gets training in your firm?’. It’s a good indicator that if you’re not also training your receptionists, perhaps you don’t have a very good attitude throughout the firm.” She continued, “We looked at training as part of our thematic review last year and found a really close correlation between firms with poor training and firms that passed into our enforcement process. And while training on the regs is important, training on a firm’s own policies and procedures is also essential.”

Joe Payne Partner/Compliance Office Katten Muchin Rosenman UK LLP Emma Oettinger Head of Financial Crime & Risk Ashurst Joe Payne Partner/Compliance Office Katten Muchin Rosenman UK LLP Brian Rogers Regulatory Director and Head of Content & Thought Leadership Reliance Group/Access Group Matthew Tasker Owner Taskers Law Management Consulting

caught. But by offering advice to their clients to look out for potential problems, clients appreciate you’re not just looking at them for revenue, you’re looking at them as a relationship by acting as a trusted advisor!” Oettinger said, “When a firm’s team goes out to help clients develop their own risk and compliance framework, they realise that their in-house team can also be a resource within the client relationship.”

Why is the legal profession one of the lowest sectors for SARs Reporting?

With the Government looking to revamp the Suspicious Activity Reports (SARs) regime, Cheek said his understanding was that, “When it was first introduced, back in the ‘Dark Ages’, they were gearing up for around 3,000 reports a year – but now the system is getting closer to 420,000!

And the legal sector seems to be a tiny proportion of those.”

Blears had researched the figures and said, “The official figures showed that lawyers filed around 12% fewer reports over 2018, contributing just 2,660, or 0.57% of the total.

Accountants were more diligent, and filed 5,140 reports, or 1.11% of the total, in 2018, an increase of 13.2% compared with the previous year. Banks still accounted for the vast majority of SARs, contributing 80% to the total volume received by the NCA.”

Rogers stated how important it is for fee earners to engage with clients, pass on what they have learned from AML training to their clients, and thereby add value to the relationship, adding, “It shows that they’re not only looking at it as a compliance issue for them as a firm to ensure they don’t get

36

ROADSHOWS

“Some firms are extremely diligent in asking for proof of where the funds are from and follow the trail through, while others just take a gift from ‘Granny’ at face value!”

Cybercrime

Tasker said it was ‘interesting’ that an increased number of reports appeared to relate to greater diligence. Blears said it had become clearer because of GDPR and the ICO making it apparent that they don’t believe there are more data breaches, they just believe there’s more transparency in the previous breaches.

Balkan said, “I believe that cybercrime is currently by far the biggest threat to law firms, not least because everyone in every practice is probably receiving emails from somebody purporting to be somebody else and it’s a huge, huge issue! And although things look legit and websites are there when you check, you’re nervous to respond in case you get virus attachments.”

Best confirmed Blears’ figures of a 12% drop last year, but also that the previous year saw a 10% drop, saying, “The NCA has repeatedly raised queries about the quality of SARs, and the antiquated nature of the online reporting system doesn’t drive good quality SARs. So the SRA does advise firms to use the right glossary codes and make sure they’re reporting the reasons why they’re suspicious.” She said the SRA had an agreement with the NCA to share information but that they are quite limited as to what they can share.

Blears added that cybercrime is such a broad statement and consumers are affected directly by it, stating, “There are stats that say people over the age of 60 are at higher risk because more of their information is online now than ever before.

And people under the age of 21 are at high risk because they have a new online presence and account status, and with less history and fewer checks being required that makes them more vulnerable to identity theft.”

Source of Funds/Source of Wealth – how many businesses are checking for the same thing?

Cheek concluded this section questioning if the group thought the SARs system is fit for purpose and does it provide a tangible benefit, asking, “The latest report resulted in about £500,000 worth of criminal assets being seized from an estimated money laundering total between £60-120 million. So, is it worth all the time and effort?” Mason said, “One criticism often made is that people get very little back from SARs, even allowing for the confidentiality aspect, in terms of knowing was it of value.” Oettinger said, “If that’s the system, and law enforcement says to the Home Office, ‘we want to keep it’, then Government surely has to resource it, particularly if they’re saying, ‘report more’!” Balkan adding, “Yes, help us to help you!”

The session concluded with a discussion around what Cheek considers one of the most complex aspects, the three distinct areas of Know Your Client (KYC) and SOF/SOW, and how firms go about it, how consultants advise about it, and how regulators looks at it? Rogers questioned whether they were seen as different, suggesting that some firms see them all as the same thing. Cheek said that particularly in conveyancing transactions when individuals are gifted funds, there is a massive variance in the way law firms handle that cash. “Some firms are extremely diligent in asking for proof of where the funds are from and follow the trail through, while others just take a gift from ‘Granny’ at face value!” Tasker said, “It’s much more common with the bank of Mum & Dad too.” He added, “It’s all about joined up thinking and good governance and GDPR talks about that. After all, it’s fairly basic to have an accounts department liaise with fee earners to get more triangulation on what’s going on.”

Best pointed out that a programme is underway to revamp the system, as mentioned in the Economic Crime Plan, looking at new system for SARs online within the next couple of years, adding, “In terms of the value of the system, you can’t just measure it on assets recovered, it’s also about the preventative aspect. And there are case studies about human trafficking interrupted because of information shared through the SARs regime.”

Rogers said, “There are the very large firms who have the necessary processes and procedures in place but what we’re not addressing are those smaller firms who don’t have the resources and/or the training.” Oettinger said in her experience the smallest practitioners, working out of their one-room office, were very careful about exactly which client they took on, continuing. “It’s when you get into the larger mid-size firms that it becomes more of a problem.” Rogers added, “We find that a lot of the larger conveyancing ‘factories’ are very much at risk because they have different parts of the transaction dealt with by different people, with little connection between any of the parties and tick boxes being arbitrarily ticked.” Tasker added, “It’s coupled to those firms also having huge turnovers of staff, so continuing training becomes a serious problem.”

After OPBAS expressed concern over the Law Society and SRA possibly offering conflicting advice, are solicitors now getting consistent information?

Best said that historically there had been massive discrepancies in the way that professional body supervisors went about AML supervisions. She thought OPBAS has gone a long way towards achieving cohesion, and ultimately they have been a force for good in professional body supervision in terms of raising standards.

Best then addressed the point of conflicting advice, explaining that a recommendation was made to the SRA and The Law Society about phone advice, adding, “The solution we put in place at the SRA was that people phoning our Ethics Helpline should get a disclaimer about the purpose of the information given, as were those phoning The Law Society Practice Advice Service Helpline. So in theory, people should know that advice provided through our Ethics Helpline is for regulatory purposes and be absolutely clear as to the purpose of that advice.”

Best concluded the session, saying that when the SRA did its recent exercise on risk assessment that small firms came out of it really well. “Because they didn’t have the resources to throw at third parties and consultants, they were doing it themselves from scratch, without standardised templates, and were really thinking it through, and as a smaller firm, everyone was more involved and we didn’t tend to see poor practice at the smaller end.”

37

CASE STUDY

Digital Era:

Prepare your Firm for the New Challenges We live in a digital world where technology has improved and streamlined our day-to-day activities and mobile apps have fundamentally transformed nearly every aspect of our lives.

The power of mobile is rising rapidly; by 2020 the number of smartphone users is projected to reach 2.87 billion and mobile searches have already surpassed desktop searches by 27.8 billion in 2019. A business with a poorly designed mobile website is not likely to be recommended and according to Google “not having a mobile-optimised website is like closing your store one day each week.”

As technology evolves, so are customers’ needs: they are eager for information. They want it now, they want it personalised and they are searching it every step of their decision-making journey. In short, the power lies in their hands - literally in the devices they hold.

According to the 2019 Legal Trends Report, the law firms that have achieved growth over a sustained period have been able to do so due to two critical factors: a focus on client experience and firm efficiency.

Expectations are evolving and the Legal Industry is not exempted from these new demands; law firms must focus on providing a consistent customer experience across all devices, in order to stay competitive.

It is fair to say that the legal industry is only just starting to understand the need to operate as a business rather than relying on reputation alone.

Put yourself in the shoes of your clients, how does your firm treat them throughout their journey? Every interaction with your brand drives their perception of it, impacts their engagement, feeds their memories, and builds trust and loyalty. Customer experience is a powerful tool that can have a great impact on your business strategy, customer satisfaction, and conversion rates.

As such, the profession has been slower than other industries to take advantage of technology that aids growth. More recently, law firms have seen a wave in disruptive legal technology and are starting to invest heavily to increase efficiency, reduce costs and mitigate risk.

Those firms who are seeing success are utilising innovative products that speed up the overall transaction by using automation in workflows, all to benefit the firm and their clients. This is a prime opportunity for firms to evaluate their business and implement strategies that will help them remain relevant and grow in the evolutionary technology forward era.

We are overexposed with advertising in our daily lives, which means it’s getting harder to draw customers attention. A good strategy requires reliability and consistency within your brand image, messages and customer service. It’s also important to create a unique selling proposition to stand out from the crowd.

38

CASE STUDY

Perfect Portal is a New Business Management System that helps firms:

How Perfect Portal helps law firms grow in the Digital Era: Perfect Portal offers an innovative digital solution for law firms to increase business growth by maximising on every opportunity and increase efficiency throughout the conveyancing transaction.

Find out more about the technology at www.perfectportal.co.uk

• Send out accurate online, private and referred quotes within seconds • Increase conversions with automatic quote chase up features, including SMS • Measure business growth with a Smart Dashboard and reports and • Proactively communicate with their clients on the case progress with a fully branded Mobile App These tools are built to ensure that a professional customer experience is delivered throughout the whole client journey. Being client-centric is the turnkey every law firms should focus on in today’s era of digital communication. It will undeniably result in a better perception of your brand and allow you to increase your revenue.

39

EDITORIAL BOARD

Adam Bullion

Martin Cheek

is General Manager of Marketing at InfoTrack

is Managing Director at SmartSearch

Why tech is the way forward

SRA and modernising AML systems

One of the biggest trends in law is the rise in legal technology. Firms are beginning to implement new technologies to improve efficiency and increase profitability, however the move is still a slow transition.

Unlike other sectors that evolve at a rapid pace incorporating tech into their practise in leaps and bounds, the legal industry has been more hesitant to adopt many of these technologies.

Money laundering finances a wide range of criminal activities, including drug-trafficking, modern slavery and terrorism. The legal market is highly attractive to the criminals – an irony, but one that does nothing to mask the seriousness of the issue.

In part, this is because of the profession’s respectable image, but there are also practical reasons. Law firms frequently handle large sums on behalf of clients. The creation of trusts and companies presents a high risk of criminal abuse, helping to obscure ultimate beneficial ownership. Conveyancing – the bread-and-butter of many law firms – is particularly vulnerable because of the highvalue transactions involved.

Though a recent study from Aderant suggests that innovation is moving to the forefront of business focus for firms, finding 30% of firms have a role dedicated to the responsibility of law firm innovation. The most important aspect of innovation for firms lies in the ability to identify which areas will best benefit from legal tech and new skills for staff that will promote increased efficiency, a reduction in costs and improve client interactions and relationships.

The SRA’s thematic review in May found that, “although most firms were able to show adequate (AML) systems, processes and procedures, we had concerns about a significant minority.” The SRA followed this up in October, announcing that it would check the AML compliance of all 7,000 firms impacted by the regulations, and carry out a programme of targeted, in-depth visits.

There is no one size fits all model for employing legal technology into your firm. Although pain points which firms identified as most having an impact relate to document and case management (90%), billing and cost recovery (88%) and mobility and customer apps (70%). Recognising these as business areas to be addressed, legal technology and training can be introduced to alleviate much of the burden of these tasks.

The penalties for non-compliance are severe – rightly so, given the criminal activities that benefit. And for a legal firm caught on the wrong side of the law – or worse, unwittingly aiding criminals – the reputational repercussions could be grave.

With a plethora of solutions available in the market, firms can choose suitable options for their size, business model and area of practise that will provide maximum impact. Integrated case management systems can dramatically reduce error rates and increase efficiency by removing the need to save and upload files to multiple locations. Effective financial software can improve cost recovery and reduce or eliminate lost disbursements, and smart technology can improve your client relationships by delivering on home mover expectations in a technological era.

It is clear the legal industry urgently needs to modernise its approach to this threat. A manual, approach to AML leaves firms wide open to abuse, as criminals become ever more adept at producing false or altered documents that even experts find difficult to spot.

Leading firms are increasingly turning to smarter, electronic solutions to meeting their AML obligations. At SmartSearch we count over a quarter of the top 200 law firms among our clients – including three of the top five.

Adding new skills and technology to your firm’s repertoire will enhance both the experience of your staff and your clients, generating greater efficiency and reducing administrative-heavy processes to empower you to grow your business.

But electronic AML can be tailored to any level of needs, and as well as being more reliable, it is also quicker and more cost-effective. A full individual AML check takes seconds, with ongoing daily Sanction and Politically Exposed Person screening, and optional full AML reverification of all clients on an annual, two-yearly or three-yearly basis. Business searches – including ultimate beneficial ownership – take just a couple of minutes. All our clients’ initial search data are securely stored, and can be evidenced to a regulator.

“With a plethora of solutions available in the market, firms can choose suitable options for their size, business model and area of practise that will provide maximum impact”

By adopting a smart approach, firms can save themselves time, money and unnecessary worry. Most importantly, they can be confident they are doing everything they can to avoid helping dangerous criminals to do their dirty work.

“A manual, approach to AML leaves firms wide open to abuse, as criminals become ever more adept at producing false or altered documents that even experts find difficult to spot” 40

EDITORIAL BOARD

Robyn Weatherley

Melody Easton

is Head of Marketing at Thirdfort

is VP EMEA at DocsCorp

Same threat, different day

Client onboarding: the future, the risks

When using technology to protect your firm from decadesold security risks, it can feel like the cybersecurity landscape is forever changing and evolving, and staying on top of it akin to rolling a large stone up a very long hill.

The reality is that the biggest threats aren’t new. They’ve just taken on new forms.

We are living in an increasingly digital world with smartphones being the means to most ends. The rise of challenger banks such as Monzo and Starling which allow you to open an account via your mobile phone reflect this.

Despite technology modernising parts of conveyancing (including the first ever blockchain transaction last year), clients are still required to provide original or copy identity documents and bank statements for client due diligence. This outdated process is slow and manual, but why should conveyancers care?

Average transaction length will hit 20 weeks: as predicted

by Matt Prior, MHCLG. Longer transactions mean less business for conveyancers and unhappy, frustrated clients. Digital onboarding tools enable clients to carry out identity checks, PEPS and sanctions screening and source of funds checks via their smartphone. This removes the need for clients to provide any documents to their conveyancer, cutting onboarding time from weeks to days and progressing the transaction to completion sooner.

Property fraud is 71% of all fraud: and conveyancing has been flagged by the SRA as a high-risk area for money laundering. Fraudulent bank statements can be purchased for under £40 and identity documents are faked beyond human detection. Instead of relying on physical IDs and bank statements, technology can verify the authenticity of an ID and use facial biometrics to match a selfie to that document.

The technology is better at spotting fake documents than human review, meaning a more robust compliance process. As of next year, facial recognition technology will be written into Anti-Money Laundering Directives, further embedding it as a recognised business practice.

Fixed fees vs profit: conveyancing has increasingly moved to fixed fees, putting more pressure than ever on conveyancers to complete work efficiently. Digital onboarding puts the ball in the client’s court, empowering them to quickly and easily carry out due diligence checks via their smartphone. The requirement to collect physical documents is removed, as is the chasing and manual review. This allows conveyancers to create efficiencies, enabling them to process more matters, quicker and free up their time to win new business.

To keep up with advances in other industries, digital onboarding seems a logical way to improve part of the conveyancing process, progressing transactions in the most efficient and compliant way. That said, the key to its uptake will be conveyancers’ willingness to trust and embrace this technology and the recognition of the risks if they do not.

Take phishing, for example. It’s been part of the landscape since the early 1990s when the first group of ‘phishers’ targeted AOL users. It remains popular with cybercriminals today – 32% of confirmed data breaches were attributed to phishing in Verizon’s 2019 Data Breach Investigations Report.

Today, phishing isn’t just email attacks but also ‘smishing’ (SMS texting attacks) and ‘vishing’ (phone calls with a real person).

Human error – like emailing the wrong person or attaching a wrong file – is another persistent threat. We’ve been making mistakes since the dawn of time, and in an era of GDPR-like data regulations, these mistakes can be incredibly costly. Worryingly, The IBM 2019 Cost of a Data Breach Report found nearly a quarter of breaches involved human error.

Fortunately, firms can use proven technology to protect against threats like human error and phishing. Email recipient checking technology has been around for years. It protects employees by asking them to confirm their recipients are correct, as well as highlighting risks in the domain types (Gmail, Hotmail, etc).

It’s the simplest way to ensure the right information goes to the right person.

Ethical wall solutions are being used more and more to secure and protect sensitive client and matter data. Nearly 60% of firms that responded to the ILTA Tech Survey 2019 have an ethical wall solution as part of their security strategy. Ethical wall technology locks down access to information on a specific case or client using a pessimistic, ‘need-to-know’ security model.

So, if an employee unknowingly divulges their credentials after clicking on a phishing link, the attacker will only gain access to that information which the employee has access to – rather than the entire database.

Phishing and human error may not be particularly sexy, but recent data breach reporting says that they are a law firm’s biggest data protection threat. Ensure your firm has the right protections in place today to reduce the risk of a breach.

“Today, phishing isn’t just email attacks but also ‘smishing’ (SMS texting attacks) and ‘vishing’ (phone calls with a real person)”

“The technology is better at spotting fake documents than human review, meaning a more robust compliance process” 41

EDITORIAL BOARD

Dr Matthew Terrell

Jonny Davey

is Head of Marketing at Justis

is Product Manager at Geodesys

Biggest risks of not modernising?

Fighting financial crime into 2020 Trusted by their clients to handle both their most sensitive information and their money, it is also this very credibility that makes law firms vulnerable to a variety of financial crimes, including money laundering and phishing attacks.

Between 1980 and 2014 the number of cases heard in UK superior courts each year more than tripled. From approximately 4,000 cases being heard in 1980, to an average of 12,000 a year by 2014. Over the same time period, despite the huge rise in cases, the Weekly Law Reports continue to only publish around 400 cases each year.

Reported to cost the UK over £100 bn every year,1 money laundering in particular presents a significant risk for the conveyancing industry, with criminals attracted by the large sums typically involved.

Posing as it does a very real threat to both conveyancing departments and their clients, what exactly is the industry doing to combat financial crime? And – crucially – could it be doing more?

One example of a non-modernisation view is the practitioners who are yet to embrace technology to support their legal research, and continue to use physical copies of law reports which can often leave them with limited information. Given the disparity between the number of cases heard in the superior UK courts and how many are actually published, practitioners who traditionally look towards law reports for their work are missing out on a lot of information regarding other important cases, potentially leaving both themselves and their clients at risk.

In this area of legal research, modernisation is the use of technology to support better access for practitioners and the public. It is about making each judgment searchable; allowing us to understand the value of a judgment to the brief given by our clients; it is about using technology to tell us when a case has been overruled, or heard in a higher court. However, what are the risks of not modernising?

Without modernisation and the use of tools such as JustisOne and vLex, firms would be required to search for documents manually to support clients. This would make their services more expensive and render them unable to offer competitive pricing.

More importantly, there is a risk of missing important cases; with millions of cases available online finding those regarding the specific point of law in question will be very quick in comparison to the equivalent offline search.

Modernisation does not need to concern firms within the legal sectors, or those with internal legal teams. Most suppliers of technology which can offer a form of modernisation are willing to let you try the services before you buy, giving you and your team the space to understand how modernisation will reduce risk.

It is certainly true that plenty of guidance has already been issued by various bodies, including the Law Society and the Solicitors Regulation Authority (SRA).

The SRA in particular has been under pressure from the Government to ensure that firms are complying with EU Money Laundering Regulations 2017 (MLR 2017). It has responded to the challenge with concerted action, producing guidance and a risk assessment to make it easier for law firms to comply. It has also stepped up efforts to ensure compliance through regular monitoring, writing to 400 firms in March this year asking them to supply their mandatory Anti Money Laundering risk assessments.

In spite of their efforts, however, a recent report by the SRA revealed that one in five UK law firms are still failing to comply with the regulations, pinpointing a lack of reporting and a failure to maintain adequate prevention systems as key issues2.

So, while it is fair to say that the regulators are directing considerable effort to combatting financial crime in the form of money laundering, it is clear that there are still a variety of barriers preventing more firms from conforming to regulations.

Yet, in many cases, solutions to these barriers already exist.

For example, the burden of both checking and monitoring can be eased by using an automated AML search rather than manual processes. Now, it is imperative that the industry works together to ensure that all such solutions are implemented, and to further encourage all parties to remain compliant – to better combat financial crime.

“One example of a non-modernisation view is the practitioners who are yet to embrace technology to support their legal research, and continue to use physical copies of law reports which can often leave them with limited information”

1. Financial Times, “One in five UK law firms fails to comply with money laundering rules”, 28th October 2019 2. ibid

“In spite of their efforts, however, a recent report by the SRA revealed that one in five UK law firms are still failing to comply with the regulations, pinpointing a lack of reporting and a failure to maintain adequate prevention systems as key issues” 43

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EDITORIAL BOARD

Alan J Smith FCIM

and authorised HCEO at High Court Enforcement Group Limited

Joe Pepper

is CEO at tmgroup

Tech-led ‘offer to completion’

Improving civil money claims HMCTS and the Ministry of Justice are in the throes of a £1.2bn court modernisation project and have already made significant progress.

Technology is often held up as the panacea to all the challenges facing our industry, and that clearly cannot be the case. What technology has done in other sectors however, and what it is starting to do more of in the world of conveyancing, is to make life easier for all parties and most importantly - improve the flow of communication between all involved.

One of the key reforms that has been instrumental for those wishing to obtain a County Court Judgment is the Money Claim Online system, for applications to be made for claims of up to £10,0000. The service means that claims issues can be issued, responded to and settled without the need for third-party involvement.

The Property Ombudsman consistently lists poor communication as the number one reason that home-buyers express dissatisfaction with the process. Where firms have engaged with technology providers in the past, it has predominantly been about improving internal processes, and often this has created unintended blockers to communication with other parties’ systems. The disaggregated nature of the market has meant that the silos have proved difficult to break down.

Chris Philp MP, justice minister, said: “Submitting a civil money claim online is allowing thousands of people up and down the country to claim the money they are owed quicker and more easily.

“This is just one way this Government is using technology to ensure our world-renowned justice system remains fit for the 21st century and increases access to justice for all that use it.”

Yet it is starting to change now, as we at tmgroup have seen with the development of our new API in 2019 which allows any hosted Case Management System (CMS) to be easily integrated with our platforms within a matter of days. But more than that, Open Banking has forced all the lenders to look to provide API solutions for third parties which makes the longer-term potential for development of virtual property deal rooms more practical.

The Money Claim Online website has received over 100,000 applications and this has led to an 82% increase in the number of warrants of control issued in the past three years (190,028 in 2016 to 345,471 in 2018).

Once a creditor receives a warrant of control then they have limited options. If the debt relates to a Consumer Credit Act agreement, or if the debt is under £600 then the only options in these two circumstances is enforcement with a county court bailiff.

The growth in the sharing of data that we’ve already witnessed in 2019 is only likely to increase in 2020. In South Wales, where over half the property transactions in 2019 have been through the new mio platform for Estate Agents, we have witnessed huge improvements in transparency and joined up thinking through the deployment of ‘a single view of the truth’ to all parties, despite the multiple systems still being used. Law firms’ CMS can be integrated with tmconnect, which in turn is integrated with mio, which is not only integrated with the Estate Agents’ CMS but also provides the consumer with a view of the process and status of the chain via an App for their smartphone or other device. The outcome is that property transactions using mio in South Wales take on average 85 days to complete, versus the national average of nearer 120 days.

If the debt is over £600 then High Court enforcement is available, High Court enforcement is also the only option if the total judgment value is over £5,000. The High Court option is not available for any debt relating to judgments arising out of consumer credit act agreements.

With the significant rise in warrants of control being tied intrinsically to the success of the Money Claim Online portal, the consensus from the clients is that obtaining judgments is a simple and streamlined process. The feedback we have received at High Court Enforcement Group is that they would like to be given a High Court enforcement option for judgments relating to the Consumer Credit Act and for judgments that are under £600.

This level of integration is opening the door to a greater use of data, such as the introduction of the Property Information Questionnaire and the potential for firms to receive and interpret search data rather than reports. 2020 promises to be another fascinating year as we move towards a far smoother property transaction for all.

This would mean that creditors are being given choice and that options for both High Court enforcement and country court bailiffs are available to anyone with a judgment.

This is the modernisation and reform that would enable the success of the money claim online system to filter down to the creditors pocket and hopefully mean that they have a better chance of receiving the money owed to them.

“Where firms have engaged with technology providers in the past, it has predominantly been about improving internal processes, and often this has created unintended blockers to communication with other parties’ systems”

“If the debt is over £600 then High Court enforcement is available, High Court enforcement is also the only option if the total judgment value is over £5,000” 45

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EDITORIAL BOARD

Tim Smith

John Espley

is Technical Director at Insight Legal Software

is CEO at LEAP UK

Innovators always win

Outdated IT roulette – not worth the gamble If a letter from the name of a firm fell from signage outside the office, I’m confident it would be fixed quickly.

Why? Because left unattended, it’s evidence of not caring and is a risk to a firm’s reputation. The same logic can be applied to outdated technology.

Every business wants profit growth but it is very unlikely that can be achieved without changing something. If you have been working the same way for many years, it is possible that you and your staff have an ‘if it ain’t broke, don’t fix it’ attitude?

The temptation to eke out another year from a firm’s current IT system is great. Partners in planning meetings can coalesce around facts like:

Change is hard, it’s disruptive and often it is easier just to do nothing. However, to grow your business to be more profitable as the leader of your business you need to lead the charge.

• • • •

Technology has been the biggest driver of innovation in all spheres of life for the past 40 years. In fact, most law firms operate completely differently to how they operated even 10 years ago.

Driven by increased competition and market pressure on price, SME law firms are being forced to change to maintain profitability.

The current system delivers what we want Our staff all know how to use it It costs us very little to run We’ll seriously consider replacing it in 12 months’ time

The reality is that with each passing year of not modernising, a firm is putting itself at greater risk of a partial or complete system failure. In short, the cost of modernising IT is likely to be less than the cost to a firm’s reputation in the long run.

Think of it from a client perspective, if your firm is using a 10-year-old practice management system, the question to be answered is this – if your favourite airline had not upgraded its computer systems for 10 years would you fly on its aeroplanes?

Vendors and developers will all end support for their oldest hardware and software eventually; that’s a fact of life. Withdrawal of support doesn’t mean systems will stop working overnight, just that the risks in keeping them become greater over time.

If you are one of these firms, you will have suffered a slow but steady decline in efficiency for the past 10 years. It is imperceptible and immeasurable but I have visited hundreds of firms over the years and, almost without exception, these firms tell me times are tough. They say that they cannot find good lawyers or that external pressures are to blame. These are the firms that are using old and inefficient systems. Of course, what has happened is that purchasers of legal services have moved to firms that are more efficient and probably more economical because they will be providing better service. The innovative firms embracing modernisation are booming.

When a software provider stops issuing security updates, a firm is at greater risk of being hacked by cyber criminals. Firms that have fallen prey to such vulnerabilities may experience significant disruption to their ability to service clients and/or financial loss.

Putting cyber-attacks aside, other disadvantages to not modernising IT systems include: • Higher maintenance costs compared to newer technology • Poor overall system performance • Inability. The reality is that with each passing year of not modernising, a firm is putting itself at greater risk of a partial or complete system failure, to update to newer software versions • Possible non-compliance with insurance policies • Adverse impact of staff’s perception on a firm unwilling to invest

So what has modernisation bought to these innovators that is making them so effective? Well to name but three: Mobility – You can truly work from anywhere now, managing your matters as if you are still in the office from your smartphone, tablet or laptop.

Flexible working – The ability for staff to manage matters remotely has changed the whole structure of how a law firm can be run, helping to retain and attract skilled staff.

Perhaps the most serious implication of not modernising is it shows a complete disregard for the importance of data security in the 21st Century. Examples abound of well-known brands that have been bashed by the media when hacks or data breaches have been reported.

A change to the ‘revenue-earning support staff’ ratio – Through the automation of non-billable tasks such as producing documents and generating bills, law firms are recruiting fewer support staff and more fee earners.

As we head into 2020, now is the time to address the issue of modernisation. Microsoft ends support for its Windows 7 operating system and Windows Server 2008 on 14 January. It’s safe to assume those with unscrupulous or criminal motives will target businesses with these end of life systems after this date.

Law firms mustn’t be afraid to think outside the box. You must take dramatic steps and change the way in which your firm works if you want to grow your profits. It takes courage to embrace new ideas but, if history is anything to go by – the innovators always win.

Successful firms harness modern technology to help create growth, rather than under invest in the hope of keeping costs down.

“The ability for staff to manage matters remotely has changed the whole structure of how a law firm can be run, helping to retain and attract skilled staff”

“The reality is that with each passing year of not modernising, a firm is putting itself at greater risk of a partial or complete system failure” 47

Case law from the UK, Republic of Ireland, Northern Ireland and complete EU Law. All in one location.

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STL_Modern Law_Nov 2019_v7_final.indd 1

11/27/19 12:10 PM

EDITORIAL BOARD

Kingsley Hayes

Dave Seager

is Managing Director at Hayes Connor Solicitors

is Managing Director at SIFA Professional

Human error – the biggest risk

The reputational risk of not making the referral It is often said that solicitors, as individuals and as businesses are risk averse. Understandable perhaps from a profession dealing with the very precise matters of law and used to paying huge attention to detail. After all, the job is often to find solutions to problems or indeed ensure that there are no unforeseen landmines in the future. The role is frequently about taking risk out of the picture for the client so of course the solicitor should be risk averse.

Data protection is everyone’s business and arguably, law firms are at greater risk than businesses in other sectors given the volume of both personal information and client monies held.

This makes the legal sector an attractive target for those seeking to carry out fraudulent activity, utilising ever more sophisticated methods such as malware, phishing or gaining unauthorised access to sensitive data.

However, in a market where solicitor firms are competing with new entrepreneurial entrants to legal services, whilst the individual practitioners should not be encouraged to individually take risky decisions, the business might have to. The new SRA Standards and Regulations expect firms to adopt processes to assist individual solicitors to attain the highest professional standards. To do this, the firm management/COLP should be making decisions on firmwide processes which all employees will have to adhere to.

However, despite the media headlines and cyber security reports focusing on the threat of cyber-attacks, law firms should look closer to home when considering their data protection obligations.

The biggest fraud risk to any business is human error The latest ICO Data Security Incident Figures Q1 2019/20 report shows that 573 data security incidents recorded during this period related to cyber events such phishing (accounting for 51% of data breaches), unauthorised access (27%) or malware (6%).

Third-party referral has traditionally been an area where the risk averse nature of solicitors has been evident. Whilst undertaking legal work, it will often be obvious that the client will benefit from complimentary financial advice. However, the decision to proactively make a positive recommendation where the client should obtain that advice has been considered a risk. The solicitor might weigh up whether the referral will reflect positively on them or is there any real benefit to them in making a firm recommendation. Is it easier to just tell the client that they should seek financial advice but not suggest where from, or proffer perhaps the ever popular ‘3 business cards’ of local financial planners and let the client make the decision themselves?

The figures revealed that a staggering 2,518 (81.5%) of all reported data breach incidents were non-cyber related with the top three reasons being: • private data being posted or faxed to the wrong recipient (20% of all non-cyber related data breaches) • private data being emailed to the wrong recipient (14%) • the loss or theft of paperwork or data in an insecure location (9.5%) The legal sector is in the top five for data security incidents with firms responsible for 214 non-cyber related data breaches and 17 as a result of a cyber-attack.

The regulator suggested to me that if a solicitor identifies that a client needs related financial planning advice, they should always make a referral. To not do so might be considered fundamentally at odds with two of the seven principles underpinning the rules, acting with integrity and in the client’s best interests. They want the firm to establish a process to govern this, which removes the unwanted personal risk from the individual.

Lack of employee awareness and accountability a weak point The Insider Data Breach Survey 2019, published by Egress, found that 95% of IT leaders acknowledged that insider threats were a serious concern within their business while 55% of employees said that their company did not provide the tools to enable the secure sharing of personal information.

The survey exposed that lack of awareness and accountability were a potential internal threat with more than a quarter (29%) of employees stating that they believed they had personal ownership of the data they worked with. Nearly a third (32%) also said that they would consider taking company information with them to a new job.

Now is the time therefore to conduct the due diligence on the financial planning firms you have worked with or are considering and bring those successfully vetted, into an established firm-wide process. The SRA anticipates that you might have more than one firm in the mix to ensure you are acting with independence.

Therefore, having a preferred, approved list based on qualifications and expertise in different areas of financial planning that will arise from legal work, seems best business practice.

Human error, whether intentional or otherwise, is a significantly bigger risk to data security than malicious external attacks.

Developing a recognised process now, lessens risk across the board. There is less risk of individuals within your firm making referrals to the wrong financial planner, who might reflect poorly on your business. Also, individuals within your business can make the referral for complimentary financial planning with confidence, knowing that it is not an individual risk because the referees have been researched and approved by the firm.

Any regular reviews to ensure that robust data protection measures are in place should include regular staff training and clear data breach reporting lines and accountability to mitigate the risks.

“Human error, whether intentional or otherwise, is a significantly bigger risk to data security than malicious external attacks”

Reputational risk is real and understandable, but I would argue that not making a referral when the client obviously needs financial planning alongside your legal advice is the bigger reputational risk.

49

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EDITORIAL BOARD

Professor Hugh Koch

is Visiting Professor in Law and Psychology at Birmingham City University and Director of HK Associates

Grant Yuill

is Head of Marketing & Customer Engagement at Denovo

Change or die?

Do data breaches cause stress?

Nature tells us that those who do not evolve face extinction. We know we need to change; we know we need to keep up, and yet… Change can be tough and that sometimes puts people off.

Data breaches concerning individuals and organisations are increasingly common, highlighted by the growing emphasis on GDPR, organisational security measures and associated complaints and litigation.

We live in a time when the rate of change is accelerating incredibly, driven by rapid advancements in technology. Keeping up with the changes nowadays can be so overwhelming that many choose to become laggards, adopting and adapting to change only when there is no other option. The problem with that is that they are in danger of missing out on the opportunities changes inevitably reveal, leaving the field wide open for their competitors and exposing themselves to the real possibility of becoming, if not extinct, certainly irrelevant.

When data breaches occur, despite the best interests and quality data control of organisations, not only can an organisational reputation be adversely affected and its customer trust be damaged, but any other individual persons or ‘customer’ may be significantly affected psychologically and socially. Typical psychological effects include invasion of privacy, feeling victimised, upset and depressed, insomnia, eating and sleeping difficulties and social anxiety. The stress of experiencing a data breach may also result in other well-known adverse life events such as needing to move house, area, losing a job, relationship stress and separation and dislocation from friends and family.

The question you must ask yourself is; am I the driver of change, the thought leader, boundary pusher and disrupter who is responding to the changes in our marketplace and eschewing the idea of the “traditional” law firm? Are you excited to use technology to help drive change?

Recent unpublished records identified that a significant number of cases, where psychological disputes post data breach was found, a level of disturbance and disruption consistent with a recognised psychological disorder such as an adjustment disorder, depressive disorder, generalised anxiety disorder and in extremis, PTSD. The finding of an appropriate diagnosis helps all parties understand logically how severe a problem has been and whether it requires treatment to rectify.

Love it or loathe it, legal technology is here to stay. The early adopters are already looking for next generation solutions and the laggards coming to terms with their options.

As with all industries there’s a lot of hype in the legal technology sector. Some seem to be positioning it as the panacea, the saviour for legal firms, saving time, saving money, make your team more productive. These claims can seem exaggerated and confusing leading to distrust and leading to yet more procrastination, more missed opportunities.

With regards to whether a data breach would meet the criteria of a life threatening event (with implications for PTSD), this is less likely. However the ‘knock on’ effect of a serious data breach could conceivably result in high levels of stress and subsequent adverse life events with serious implications.

It’s not all hype. The truth is that most of those claims could be true. Could be. The challenge is using the technology to its fullest. If you have legal software in place, ask yourself this question. ‘Do I use it to its full potential, or have I just learned the bits that I need to get me through my busy day?’

Given that a claimant involved in a data breach claim is likely to be anxious and distressed, it is important that the claim is pursued and resolved as speedily as possible, ensuring the claimant finds the process convenient and accessible. Needless to say, the culture of this medico-legal process should, itself, be aligned with optimal information security and unbiased, fair and impartial witness reporting.

We see it time after time. Law firms who buy legal technology and then use it to about 20% of its capability. They don’t engage with it fully to reap the multitude of benefits the technology can bring.

When they do decide to try some other aspect of the software, they often find the support from their provider somewhat lacking.

Of course, not all technology providers are the same.

Helping the claimant obtain the best legal and medico-legal advice requires trust in the legal firm involved. Making a compensation claim for a data breach can be stressful. Recent rulings have paved the way for those affected by data breaches to claim damages for distress with or without actual financial loss being involved. The immediate future for these types of claim should allow greater recognition and support for individuals who have been placed in such invidious positions by data breaches.

At Denovo we love technology. We embrace the advancements in technology; not just for its own sake but because we know how it can help our clients. You see, our team works in a collaborative partnership with our clients, using the latest technology to develop ideas for their busy practices and supporting them in using the technology, so they can get maximum benefit. If you are prepared to change, if you are prepared to embrace the technology and learn how to use it fully, it really could be a game changer.

“Helping the claimant obtain the best legal and medico-legal advice requires trust in the legal firm involved”

“We see it time after time. Law firms who buy legal technology and then use it to about 20% of its capability” 51

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EDITORIAL BOARD

Fiona Morrison

Alex Holt

is Director at TLA Medicolegal & 3D Health UK

is Business Development Director at The Cashroom Ltd

Doing just enough to get by

Modernisation and the expert witness

One of the biggest risks facing the legal sector for 2020, as far as fraud and cyber threat are concerned, is complacency.

Following the GDPR transition law, firms have galloped to digitise the Medicolegal Reporting process – but what about the Medical Experts?

The SRA, as part of their drive to provide new regulations, and guidance on what they’ll expect to see when they consider a firm’s security measures, have recommended steps such as obtaining Cyber Essentials accreditation to combat cyber threats. However, ask yourself this – is your firm going for that accreditation as a tick box exercise to simply be able to say “We comply”? Or are you genuinely serious about combating the very real threats presented by cybercrime?

Modernisation is a concept whereby processes take place within society or industry, creating changes that transform lives.

Modernisation is a continuous and open-ended process.

We provide Expert Medical Reports predominantly in cases of Serious Injury and Clinical Negligence. We have long anticipated the provision of all medical records and associated legal documentation in a digital format. For years we have accepted, sorted and stored mammoth quantities of hard copy medical records every day at our headquarters, from our instructing law firms.

It’s worth knowing a few facts to put this in context: • £11 Million of client money stolen due to cybercrime over 1 year • 60% of law firms reported to have suffered information security incidents last year • 14,000 Criminal organisations actively targeting the legal sector at this very moment according to HM Gov figures

In 2017/18 we invested heavily in new digital platforms and technology for medical records and radiology. In the last eight months we have reached a position whereby 80% of medical records, reports and legal documents are now received in a digital format. Twelve months ago it was 20%. It is an effortless way to store and administer the records. It also achieves a straightforward assessment of each case by our team and Inhouse Experts for screening reports.

The threat is real, growing and potentially disastrous for a firm in terms of finances and reputation.

So in relation to cyber risk, don’t just do enough to tick the box.

At The Cashroom we operate the finance function for nearly 200 law firms throughout the UK. Doing just enough was not an option. We decided that Cyber Essentials Plus was the necessary level which is a far more stringent accreditation – more difficult to attain, and certainly more testing, but crucial to our credibility. We invested in the development of a secure communication portal to do away with vulnerable email traffic. Again, expensive short term investment that we felt was important to our offering to clients.

Do Experts like digital records?

Irrespective of whether Experts like to use digital records or hard copies, it is essential for us to retain a copy for further work on any case, such as CWC’s or additional expertise.

Digital records are highly convenient for straightforward personal injury reporting, or even complex claimant reporting, providing the notes are in a comprehensive order on the viewing platform for the Expert. Our Experts are provided with the full documentation in good order and this is part of our service whether digital or hard copy. Even digital medical records sent to Experts directly in a disordered fashion are practically useless and often require the Expert to print and organise all the records so as to prepare their report – significantly increasing time costs.

For both fraud and for cyber threat, complacency can also extend to the culture you engender within your firm. Some firms, astonishingly, will undertake no training at all to combat these threats. Some will carry out some training and again ‘tick the box’. However, these are evolving threats. The fraudsters are ever more sophisticated in their approach, so training must be an ongoing process.

The obstacle to digital review of records for the Medical Expert lies in two places; Complex defending cases, clinical negligence and with the Experts themselves. Complex defending personal injury reporting and Breach of Duty requires a forensic approach, especially where fraud or dishonesty is suspected by the instructing party. A hard copy of the medical records in a detailed order is essential in these cases. This enables the expert to skim back and forth to record and measure inconsistencies with statements, medical records and medical evidence. To date there is no digital package we are aware of that can offer a comparative to hard copy review of records. However any such software is only as efficient as the end user. We are one of the few companies with an in-house IT team that are able to support and educate our Experts through digital modernisation. However, an Expert without the technical know-how to navigate such software will always remain the biggest obstacle to full modernisation. In 10 years, as new medical experts dip their toe in to the medicolegal field, this obstacle will no longer exist.

We use an internet based training tool which allows us to test our staff on a regular basis, updating their records each time, and giving them up to date training on issues such as fraud, cyber threat, GDPR, data security etc.

Once you have these trained staff, empower them. How many firms will have partners who will react badly to being told that there may be a problem with, for example, a conveyancing payment that they want making? Far too many I’d suggest. Yet surely a fee earner or cashier who raises a concern should be praised for spotting potentially ruinous issues, rather than be made to feel bad for daring to mention the matter. Taking a few more minutes to consider the issue isn’t asking a lot.

It might be argued that some of these steps cost more than simply ticking the box… or do they? Loss of reputation, or a huge embezzled amount of completion monies, or a problem with ransomware… they’re pretty costly too aren’t they?

53

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EDITORIAL BOARD

Robert Kelly

Alex Williams

is Commercial Business Development Manager at Stewart Title

is P4W Product Manager at Tikit

Can tech reduce frustrating delays?

Resisting change inhibits growth

Busy residential property lawyers need no reminding that moving homes is regularly featured in lists like the “Top 5 Most Stressful Things People Will Deal with in Their Lifetime”. This stress is passed on from purchasers to their lawyers who subsequently seek that both the risks and delays involved in conveyancing are reduced.

As we move into a new year and, in fact, a new decade, there is more pressure than ever for businesses to modernise their processes. And as much as law firms may like to think the opposite; they are not immune to this trend. The legal environment is evolving and lawyers will be expected to keep up.

Recent research from ViewMyChain.com indicates that a typical home sale takes an average of 120 days to move from the acceptance of the offer to completion day. Many of the most frustrating delays occur at the start of the transaction. The need to ensure that all appropriate client ID checks are carried out has traditionally slowed down the onboarding of clients resulting in delays to the initial searches and title investigation.

It’s important that firms are aware of the risks they could face if they do not embrace modernising the way they operate. Perhaps the most key to note is the risk of losing competitiveness. If other legal practices are able to provide a more efficient, cost effective and less time consuming service, customers will flock to them. This is especially true as the technology savvy generation grow older and look for businesses that can offer them a simple, convenient way to do legal services.

Technology is now helping to overcome this hurdle with innovative providers offering app-based digital ID checks that enable clients to use facial recognition software to comply with ID requirements speedily, without the need to visit their lawyer.

This segment of the emerging market, who will very soon be a large proportion of potential clients, is at risk of being lost if law firms don’t modernise because they expect technology.

These expectations are only going to keep progressing, with a higher demand to see more innovative services that are not only transparent, but also instantaneous. Traditional pen and paper methods won’t cut it for much longer. Through listening to needs such as these, a firm is more likely to satisfy and retain consumers.

Unfortunately, once a lawyer starts to progress on the initial searches to assemble the information required to report to their client, they typically face further delays from local authorities.

The average time lawyers and their clients wait for the results of a local authority search is estimated to be at 10 days. Stewart Title has also been informed of delays up to 50 days and in the case of one particular Council, up to 90 days.

Resisting the need to change will only inhibit a firm’s ability to grow and expand. They should look at optimising services to create business differentiation through the use of, for example, integration and automation. Ten years from now, the profession is set to look radically different, with lawyers perhaps expected to have a mix of different skills, not just those traditionally known.

This can be pre-empted and acted upon now.

This can lead to an added three months to the average transaction time of four months. It is no surprise then that both buyers and sellers are feeling the frustrations and that the amount of property sales that have fallen through owing to delays has risen from 21.6% in 2016 to 34.9% in 2018.

Technology in law can be disruptive but it is a huge opportunity that should not be overlooked. Firms need to adapt and develop their strategy for the future to maintain prominence. This could include reviewing the technology they use and ensuring that their provider has a solid roadmap for the upcoming innovation of their products.

Here again, technology such as Stewart Title’s online ordering platform (www.stewartsolution.com) can provide a quick and cost effective solution to this delay. Stewart’s No Search Policies offer protection for buyers and lenders against adverse matters which would be revealed by a local search. The Search Delay Policies provide similar cover where a search result is awaited. Both policies can provide peace of mind straightaway.

“Ten years from now, the profession is set to look radically different, with lawyers perhaps expected to have a mix of different skills, not just those traditionally known”

Home buying will never be entirely stress free, however, these are two ways in which technology can reduce delays for buyers and their lawyers.

“Unfortunately, once a lawyer starts to progress on the initial searches to assemble the information required to report to their client, they typically face further delays from local authorities” 55

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FORUM

There’s nothing more stimulating than a discussion forum – and although Modern Law runs a series of ‘in the flesh’ Roundtable Roadshow events up and down the country (see Pages 33-37 for the latest) – we also host regular Forum discussions within the pages of the magazine. These give readers access to different expert opinions, experiences and insights into the topic being discussed.

Kingsley Hayes is Managing Director at Hayes Connor Solicitors Hayes Connor represents clients following data breaches and other cyber offences. The firm is appointed as data protection advisor to the Communication Workers Union (CWU) which has nearly 200,000 members. It currently represents thousands of claimants against Ticketmaster, Equifax, Marriott, British Airways, Amazon, Dixons, TeamSport and Yahoo. Hayes Connor was the first to serve a representative data breach claim in the High Court following the Court of Appeal’s ground-breaking ruling on 2nd October. The action against Equifax has a total estimated value of £100 million.

In this Forum, three expert voices give their opinions on two questions on financial crime, AML and fraud/cyber risk, and based around this issue’s theme: The risks of not modernising in 2020 and the decade ahead.

Tracy Burtwell is Sales Director at SearchFlow Tracy joined SearchFlow in October 2018 as Sales Director. She came to the business with more than twenty years senior sales experience, including boardlevel responsibilities with Linde Materials Handling, Briggs Equipment and Viridor. She was also Head of Sales at BT and VP of Retail in Europe for Tyco Fire & Security (now Johnson Controls). At SearchFlow, Tracy utilises her extensive experience in supporting the company’s account management, portfolio and awardwinning customer services teams, to successfully put in to action the strategic sales plans.

We may not always agree with what we read, but if it enables us to explore and engage in onward discussion with our colleagues and clients then mission accomplished.

John Dobson is founder and CEO of SmartSearch John’s early career was in IT and sales before starting his first company in the early 1980s. He has since established and run a series of highly successful businesses, twice winning the prestigious Queen’s Award for Enterprise, including with SmartSearch in 2018.

So, meet our Forum experts and join the discussion over the following two pages.

57

FORUM

Q WHAT ARE THE KEY FINANCIAL CRIME AND FRAUD/CYBER RISK PRIORITIES FOR 2020 AND THE DECADE BEYOND? TRACY BURTWELL Sadly, no business is immune to cyber risks, frauds or financial crimes and so the key is to ensure security systems are kept as up to date as possible, risk assessments are regularly undertaken, and industry regulations are adhered to.

The levels of sophistication displayed by cybercriminals are varied and firms need to look both internally and externally for potential risks. Research by AXELOS revealed that 73 of the UK’s top 100 law firms were targeted by cyber-attacks last year. Of the 73 firms, 84% of these also admitted that they had been victims of phishing attacks.

The potential outcomes for such risks can include financial loss, data breaches, infiltration of systems, regulatory penalties, and reputational, brand damage – all of which shouldn’t be underestimated.

A risk priority that continues to be a threat is email modification fraud. This is deception via impersonation and is said to account for over half of all cybercrimes. Even when all areas of an organisation are protected, they continue to be vulnerable to impersonation and cyberattacks via email.

Money laundering risks also remain high on solicitors’ agendas. The UK’s National Crime Agency reported a record number of money laundering allegations last year, at over 460,000 reports of suspicious activities. An AML risk assessment is an important - and obligatory - part of the SRA’s rulings. Failure to have one places firms at greater risk of being used to launder money.

With the fifth Anti Money Laundering directive coming into force from 10th January 2020, additional layers of transparency will come into play that will help improve safeguards relating to financial transactions and regulate virtual currencies. Firms will however need to get on top of compliance responsibilities and ensure strong policies and procedures are in place across the entire firm; an inconsistent approach is no longer good enough.

JOHN DOBSON Governments across the developed world have identified tackling money laundering as a key area for 2020. In Europe, the Fifth Money Laundering Directive (5MLD) is due to be implemented by all EU Member States – including the UK – by 10 January.

While many other EU countries have already done so, the UK Government has yet to finalise the regulations transposing 5MLD into UK law. A consultation in March has been followed by months of political turmoil and uncertainty as to the UK’s future relationship with the EU. This leaves firms affected by the regulations in a potentially difficult position, as they will have a very brief window between the regulations being laid before Parliament, and their coming into effect. The Directive contains a number of new provisions that will need to be reflected in UK regulation, and firms will need to ensure these are embedded into their compliance processes.

For the legal sector, new provisions around ultimate business ownership (UBO), politically-exposed persons (PEPs), clients from ‘high-risk’ third countries, and transactions involving high-value goods could all have significant implications.

KINGSLEY HAYES The UK is one of the most digitally advanced countries in the world and is a major global financial centre. As more businesses become increasingly digitised, more systems are integrated both within the UK and internationally, and more data is shared domestically and globally, the risks of financial crime and cyber threats also grow.

The Financial Conduct Authority (FCA) estimates the value of serious and organised crime in the UK is £24 billion.

Money laundering is recognised as a high-risk priority by the National Crime Agency (NCA) which also estimates that cyber-enabled incidents are responsible for 84% of fraud reported nationally.

As the way we conduct both business and our private lives increasingly relies on tech, fraudsters have more opportunities to access sensitive data from anywhere in the world.

There is evidence that Organised Crime Groups are working more closely together according to the National Crime Agency making combatting the relentless risks a complex business priority.

58

FORUM

Q WHICH AREAS OF FINANCIAL CRIME ARE BEST TACKLED BY WORKING WITH THIRD PARTY SPECIALISTS? JOHN DOBSON Dealing with the compliance challenge of anti-money-laundering (AML) can be daunting enough at the best of times, even without the additional burden of quickly implementing new regulations.

This is one area where third-party specialists can really help.

An AML platform can meet all a firm’s Know Your Customer (KYC) needs, with electronic ID verification, Sanction & PEP screening and ongoing monitoring to alert firms to any change in a client’s status. Electronic checks are by their nature much more secure than manual document checks, and are also quicker and more cost-effective: a full individual ID check and screening takes seconds, while a business check can be performed in minutes.

With a batch upload service, firms can easily verify existing and past client databases and ensure all information needed for audits and reviews is immediately accessible.

Importantly, the system will be constantly updated to take into account new regulations, at no additional cost – so firms can have confidence that they will remain compliant at all times.

KINGSLEY HAYES The methods of committing financial crime are often sophisticated, complex and will commonly have interwoven issues with cybersecurity.

Working with a third-party specialist, or in some cases several, is critical to understanding the intricacies of fraudulent attempts and malicious attacks in order to both minimise the risks and adequately react when an incident occurs.

While a growing number of organisations have heightened awareness of, and improved measures in place, cyber threats remain a priority business concern.

Nearly a third (30%) of global CEOs place cyber threats in their top five business concerns according to PWCs 22nd Annual Global CEO Survey.

As the world becomes increasingly digitised, greater connectivity and information sharing pose both great business opportunities and simultaneously a heightened risk.

A growing reliance on tech, and ever-increasing tech-enabled devices, deliver greater opportunities for fraud and cyber criminals requiring a holistic approach to ensure appropriate defences are in place.

TRACY BURTWELL Engaging with a third-party that specialises in providing market leading solutions to combat cybercrime and online fraud will help to ensure you mitigate risk to practices like email modification fraud, social and engineering hacking. It enables law firms to concentrate on the legal business, while a third party can specialise in maintaining the security to safeguard the firm.

According to Microsoft’s Security Intelligence Report (volume 24), it said that malicious phishing attacks are on the rise, and not by a small margin but by a significant 250 percent.

Protecting you and your clients can be relatively inexpensive however and, in addition to ensuring you have the right encryptions and protocols installed, new standards and regulations have come into force with the SRA looking to increase the role of practices’ Compliance Officers. This will encompass the prevention of breaches through regular training of employees, which should also help towards tackling future crimes.

59

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10 MINS WITH

CHRISSIE LIGHTFOOT Q A

Has the industry changed drastically since you started working in it?

As a businesswoman I’ve been a buyer of legal services for over thirty years. I’ve worked in the legal profession and industry as a trainee solicitor, lawyer, legal futurist, speaker, writer, consultant and LawTech investor throughout the world these past fourteen years so it is inevitable that I have seen changes. But I wouldn’t say the industry has changed drastically.

There has been incremental change over a long period rather than drastic change in the short term. In the past decade or so, here in the UK (courtesy of the LSA 2007), we have experienced change and improvement in relation to regulation, policy and law which has helped foster entrepreneurism and innovation within the legal ecosystem, one of the most striking being the rise of Alternative Legal Service Providers (ALSPs) and new ‘businesses of law’.

Q

What has been the key positive, or negative, impact of change in your area of the market?

A

LegalAI/LegalTech, once considered a nice-to-have, is now a must-have. The LegalTech market is rather vibrant at present in the UK and rapidly evolving in other nations too.

The benefits of LegalTech are many, including increased automation, lower cost, and higher productivity. However, where adoption has occurred in the legal profession and industry it has been focused internally; designed to maximise profits and benefit the law firm, but not so much the client. Lawyers have been, and continue to be, reluctant to implement clientfacing LegalAI. A survey by Lexis Nexis reported recently that here in the UK only 3% of law firms are aiming to focus on client-facing LegalTech.

Although this may be negative, I view this as an opportunity for ALSPs to step in.

Q A

Who inspires/inspired you and why?

“The benefits of LegalTech are many, including increased automation, lower cost, and higher productivity”

“XXXX”

The following individuals and teams have had, and are having, a profoundly positive input and impact into how we live, socialise, communicate, love, travel and work, now and in the future. They are visionaries who don’t just see the future, they create it, shape it and drive it.

I admire and am continually inspired by the likes of Elon Musk, Richard Branson, the awesome people and teams at Hanson Robotics and NASA; in particular Katharine Johnson, ‘a hidden figure’, who was a NASA mathematician and has just celebrated her 101st birthday. She calculated and plotted the path to enable John Glenn to become the first American to successfully orbit earth in 1962. Also Tim Berners Lee and Vint Cerf (the fathers of the Internet), the Google team - Sergi Brin, Demis Hassibis (of DeepMind) and Ray Kurzweil - the IBM Watson team (in particular Dr. Peter Waggett who is the head of emerging technology), Andrew McAfee of MIT (whom I had the pleasure of interviewing and speaking with at the Nordic Business Forum in 2018). And, Ada Lovelace, the English mathematician, predominantly known for her leading work on Charles Babbage’s proposed mechanical general-purpose computer, the Analytical Engine. Finally, Steve Jobs (Apple), Bill Gates (Microsoft), Jack Ma (Alibaba), Jeff Bizos (Amazon), Mark Zuckerburg (Facebook), Reid Hoffman (LinkedIn). The list goes on…

Q A

What has been the most valuable piece of advice given to you?

Q A

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

There have been a number of people throughout my life who have been kind enough to share their advice but if I had to choose what was the most valuable it was this: “For a happy life you must follow your heart, your gut and your dreams, for they will bring you joy, love and purpose. But listen to that small voice in your head because it may help you decide which path to take. If they conflict, ignore the voice.”

I’m a huge fan of John Grisham and J.K. Rowling. I’ve always dreamed of being an author whilst travelling the world in my RV and cycling. So, if I wasn’t doing what I do now I’d love to be doing exactly that; conjuring up a fiction “crime erotica” novel working up a tantalising plot including stuff I’m interested in such as law, crime, technology, the future, space-travel and cycling.

Chrissie Lightfoot

is CEO at Robot Lawyer Lisa Ltd and CEO EntrepreneurLawyer Ltd. Author of best-seller The Naked Lawyer and Tomorrow’s Naked Lawyer.

62

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