Monthly Archives: July 2011

Accreditations like QCS & Lexcel ONLY set the baseline

Accreditation – a useful tool for serious business improvement, just a distinguishing feature in a market where it’s difficult to tell one firm from another offering the same service … or a costly and time-consuming commitment that isn’t worth the costs involved?

Like it or not, we have had accreditation against quality standards of some kind  in the legal industry for about 20 years now and in that time, firms large and small have faced up to this conundrum.  Now it’s a no-brainer – you have got to do it, even though I have very serious reservations about how firms set about the process; particularly when forced into it!

With new entrants from commerce outside the legal sector, where compliance with quality standards are routine beginning to provide legal services post 6th October, Lexcel will increasingly be  viewed by the expanded legal industry more as a ‘minimum standard’ that sets the bar for procedural compliance low.  It won’t continue to identify firms that offer added value and differentiation in customer experience – the qualities that really drive a firm’s brand.

The same applies to the Quality Conveyancing Scheme (QCS) which gives CML another opportunity to put pressure on conveyancers to demonstrate adherence to yet another set of rules.  Of course, if a firm has achieved Lexcel, they will be exempted from 25+ requirements of this scheme when the “application form is filled in”; and Lexcel will always go a long way to helping a firm get better organised to meet regulatory compliance – which is again a minimum standard.

Lexcel and QCS are about introducing what should be regarded as a good framework for operating the business; no more than that.

To achieve real improvements in your business, we still maintain that the standard to meet is Investors in People – which is not legal specific.  Because  it reinforces a management framework that requires people working in the business to understand and contribute to the unique ethos of the business you are beginning to talk about standards that help to develop genuine competitive advantage – if it is introduced and maintained property.  This is where the value added will come from; effective development of people as an integral part of the business, where they can help you drive improvements in use of technology, more efficient operations, better relationships with clients and new services that fit the changing needs of clients – and doing it better than your competitors.

Yet most firms have given voluntary accreditation schemes a wide berth because the standards are viewed as too demanding – overcoming partner resistance and firmwide apathy proves too high a mountain to climb, especially when firms are already struggling to make the established ways of working profitable under increasing pressure on margins.  Things have to change and accreditation to a standard is not seen as a priority to address this.  They can be part of the solution though.

Lexcel is now just a stepping stone.  When we work with firms on Lexcel or IIP, we move the focus to introduce good employee and business management rather than simply aiming for the standard. These cultural changes often contribute more to developing a firm’s unique brand and so become worth more than the accreditation standard itself. Other firms we work with comply – using the guidelines set out in schemes to improve their business – but don’t actually undertake the formal process. It works well for them and getting the certification is just a formality to seal the deal.

A potential reduction in PII drives many a firm in search of accreditation, but the only way to truly reduce PII is to actually reduce the risk – which requires buy-in from firm members in addition to good systems. The accreditation itself means very little in reality – insurers are more interested in whether actions taken action really have reduced non-compliance, in which case huge reductions in PII premiums have been achieved.  Examples include creation of “IT-automated” matter inception and management processes that identify (and make highly visible to everyone in the practice – so there is a focus on them) where there have been non-compliances in the matter management process.   What interests insurers here is not that they have a system, but the demonstrable results actually produced by using it.  The firms involved who have achieved huge savings on PII can demonstrate a significant reduction of meaningful non-compliances, maintained very visibly at an acceptable level.

The emphasis here is likely to change as a result of the ‘Big Bang’ hitting the legal industry in October this year. The Legal Services Act will highlight the need for members of the public to compare services, so the more boxes a firm can tick the better chance it stands of winning work against high street names. The changing market is putting pressure on firms – especially those with a client base consisting of members of the public rather than corporates – to stand out from the crowd and for now, accreditation serves as a differentiator.

So achieving Lexcel and QCS are now becoming essential – but they can only take your business so far.

Adopting Investors in People philosophy (with or without formal accreditation, which creates a focus) will add genuine competitive advantage, provided that you are genuinely prepared to invest time and effort in your biggest resource.

The next step for some firms aiming to develop competitive advantage in the future will be EFQM.

Commercial firms don’t face the same pressure since their well-informed clientbase is likely to see through the accreditation process, but nonetheless they will still count the boxes ticked when it comes to a tender. They have to manage their risks too.  Accreditation will continue to act as a differentiator – particularly in public sector tenders – where it is stipulated that legal suppliers have either Lexcel or ISO9001. New entrants to the legal market won’t be put off by the need to get these accreditations; they will do it as a routine part of the business.

From October, firms will need to demonstrate a degree of business agility to compete with non-legal entrants to the market. The accreditation schemes geared towards unlocking opportunities by focusing on people and culture such as IIP, or improved procedures like Lexcel and ISO 9001, will provide guidelines to achieve this. 

Look out also for another standard beginning to make its mark the legal sector – ISO27001 – which enables firms to improve operations on data security, where it is recognised by commercial clients in particular that most law firms are lax and need to improve.  This is one area where (for now) compliance with a relevant standard will differentiate firms within and outside legal for some time to come.

When debating the pros and cons of accreditation schemes in the run up to October, firms should consider the wider benefits on offer; improved client satisfaction, improved risk management, better data security and so fewer complaints, a framework to improve business management and crucially, improved profitability and the generation of a competitive advantage. These outcomes are more valuable than any piece of paper and will be a huge boost to any firm – even if they are achieved by following the guidelines without entering the formal accreditation process.

Allan Carton

Alternative view on ABS – Kerry Underwood

Baked beansBuying legal services is about to become as easy as buying baked beans. But with 5,000 organisations potentially entering the market, professional standards could slip.

On 6 October this year the Legal Services Act 2007 will come into force and alternative business structures will be born. This means that, subject to licence and having at least one qualified lawyer employed, any business will be able to offer a full range of legal services. The act followed a campaign by the consumer lobby to let non-lawyers provide legal services – culminating in a fatuous comment by Bridget Prentice, a junior justice minister in the last government, that obtaining legal advice should be as easy as buying a can of baked beans. People should be careful what they wish for.

The rising cost of professional indemnity insurance premiums and practising certificate fees, as well as legal aid cuts, have already forced hundreds of law firms out of business. The deeper cuts to legal aid expected this year will take a further toll.

Forced to compete with all comers, law firms are now considering whether to switch to being an alternative business structure, or ABS. But a significant number, including my own company, are asking the question: “Why be regulated at all?” Legal services are divided into reserved and unreserved activities. For most law firms, more than 80% of work is unreserved, which means that anyone may do it. Wills, employment tribunal and other tribunal work, pre-issue litigation and all general legal advice that does not involve appearing in court or preparing a deed for gain fall into this category.

It is simplicity itself to become entirely deregulated and instruct an ABS or counsel on the rare occasions thought necessary. No more professional indemnity insurance, practising certificate fees, inadequate professional service penalties or disciplinary tribunals. If legal advice really is a baked beans job, then why have this expensive and time-consuming regulatory regime? Why not be a minicab rather than black cab? It is true that we could all do this already: the Legal Services Act does not alter the position. What does change is the fact that a new range of unqualified entrants, perhaps as many as 5,000 organisations, will be entering the fray in the next couple of years. These could include claims management companies, universities and local authorities.

Entrepreneurs are realising that this vast sector is already largely deregulated. For a member of the public, having a former solicitor dealing with their case may be no bad thing. But what about someone with no legal background at all?

The Legal Services Consumer Panel (an independent arm of the Legal Services Board) has said that law firms and ABSs should not be allowed to dodge regulation by establishing separate businesses to handle unreserved work. So what? “Minicab law” will not be regulated by them or anyone else. The Co-operative, expected to be an ABS, called for freedom in how these organisations choose to provide unreserved work. Ironically, the more consumer groups seek to regulate ABSs the more businesses will choose to operate in the entirely unregulated sector. Few law firms have the money to compete with the marketing budgets of supermarkets, banks and insurance companies, so it is their names that consumers will see, not those of qualified, insured and disciplined lawyers. Will the big players even bother to become ABSs?

The government has learned nothing from pension and endowment mis-selling, let alone from Claims Direct and the Accident Group in the legal sector. Of course, the rich and powerful will continue instruct lawyers, as they always have. Those without lawyers will be the poor, the vulnerable, the weak and oppressed. Hardly a victory for the consumer.

Kerry Underwood is a solicitor and chairman of Law Abroad  – First posted at www.guardian.co.uk  on Wednesday 26 January 2011.