Tag Archives: compliance

Apr 28

NEW PUBLICATION: Targeting Profitability: Strategies to Improve Law Firm Performance

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Targeting ProfitabilityI wrote a chapter for this book, published recently by Ark Group in association with Managing Partner.

The book comprises 110 pages of condensed content and brings together the views of 14 respected experts in law firm profitability from the the UK and US outlining specific areas within a law firm that can be targeted to introduce improvements, adapt processes and training – to generate an increase in profitability.  The other contributors are Tony Williams, Toby Brown, Robin Dicks, Susan Saltonstall Duncan, Steve Gale, Phil Gott, Brian Helweg-Larsen, Partrick McKenna, Simon Nash, Michael Roch, Joel A. Rose, Richard Tromans and Ori Weiner.

My section “Shifting the IT Focus to Developing Integrated Business Solutions” reinforces a lot of what we are doing with law firms at the minute to help firms address strategic issues where effective use of IT is part of the solution.  So there is commentary here to explain the rationale and give some tips on how to ensure the success of initiatives that are critical to most law firms now to ensure the business is sustainable and profitable.  Initiatives relate to:

  • Management of the new role of the in-house IT team
  • Management reporting, KPI’s and effective performance management
  • Client relationship management (CRM) systems and ethos
  • Proactive Performance management (again) and HR systems
  • Introduction of “lean” business processes
  • Adoption of technology on risk management and compliance; and,
  • Adoption of managed and hosted IT services

DOWNLOAD - Free Exec Summary & Sample Chapter and Buy The Book Here >>

Allan Carton

Oct 15

Use the pressures of regulation to improve service

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On 6 October 2010 the professional rules of the Solicitors Regulation Authority (SRA) were amended to oblige those regulated by the SRA to draw attention to or “signpost” the existence of a new destination for clients’ complaints about their solicitor.  It is hardly surprising that with “signposts” in terms of business, on bills and firm’s web sites clients should follow the signs and began to complain, some 35,000 in the first year alone. 

LeO eventually resolved to publish the names of those law firms which had been the subject of a decision by LeO since April 2012.  The first publication occurred on 17 September 2012 and comprises the names of 772 law firms.  There were some 992 decisions, of which 490 (53%) did not lead to a remedy being ordered.  Of the 47% which led to a decision the average award was in the band £299-£499.

Name and shame provides those running law firms with a challenge and an opportunity.  Whilst the statistics show that, for the most part, law firms provide an excellent service that hard earned reputation may be threatened by publication.  The commercial implications of publication should spur managers to create a focus throughout their firms on avoiding complaints which emphasises the importance of treating clients with respect.  Even in the best run law firms things do occasionally go wrong and in those cases fee earners need to strive for outcomes which leave no bitter taste and therefore less likely to lead to referral to LeO and the dreaded publication. 

Competing with businesses like the Co-Op with a primary focus on the customer experience ensuring their clients are not just satisfied but delighted to have been a client.  Law firms must adopt a similar approach and encourage that in all staff at all levels.  Publication of complaints should change the focus on complaints handling from reactionary catch up to embedding a pro-active consumer positive attitude in all fee earners.   If firms do not change they are likely to find the market has left them behind.

Tony Guise

TONY N GUISE is a solicitor and director of GUISE Solicitors Limited – a law firm specialising in advising solicitors about all aspects of compliance and regulatory investigation.

Oct 08

COLP and COFA Suitability Challenges

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We are now receiving instructions arising from the COLP/COFA suitability process following the dispatch of letters by the SRA to affected individuals over the last few weeks.  If anyone is struggling with this please contact us as we have plenty of experience with both the former and the present Suitability Test.  We will address the nuances of this in the COLP/COFA context in a briefing paper coming out later this month.

May 13

SRA Update on COLP & COFA Timetable

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From the SRA’s May update …

You can nominate your COLPs and COFAS from 31 May until 31 July 2012.  Expect an email before the end of May from the SRA to your firms’ authorised signatory with a link to the web-based nomination form so you need to make sure they know who that should be. As the result of another deferral by the SRA in May, the date for the SRA to give approval to nominations is now 1 January 2013 when COLPs and COFAs must start fulfilling their duties – which applies to existing law firms, including sole practitioners.

Some useful guidance and more information here

Lexcel is a great way to get your house in order to ensure compliance – so if you are thinking about going down this route, have chat with Mike Jackson who has taken many firms through the process very cost-effectively since the standard was first introduced.

Contact Mike direct on  07802 281 599 or at mjackson@inpractice.co.uk

Or complete this form and Mike will contact you.

Mar 30

Our Top Five Fixes for shaping up to OFR

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Lost in acronyms?  Struggling to know where to start?  If so check out our Top Five Fixes to get closer to compliance.

Prepare a business plan

Principle 8 of the SRA Principles states that you must “run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles”. There are also relevant provisions in Chapter 7 of the 2011 Code:  Outcome (7.4) states that “You maintain systems and controls for monitoring the financial stability of your firm and risks to money and assets entrusted you by clients and others, and you take steps to address issues identified.  The SRA will therefore expect you to plan well in advance if you are considering any change to the structure of your firm and to have a business plan in place which shows that you have considered and regularly review the financial viability of the firm.  The new approach enables the SRA to concentrate its resources on business models that rely too heavily on, for example, introducers of large volumes of work, or on models that have a slim profit margin, potentially endangering the business viability of the regulated entity. It will also be necessary to review your business plan periodically to assess its effectiveness and consider possible changes.

Prepare a whistle blowing policy

Outcome (10.4) states that: “you report to the SRA promptly, serious misconduct by any person or firm authorised by the SRA, or any employee, manager or owner of any such firm (taking into account, where necessary, your duty of confidentiality to your client).”   This is supplemented by Indicative Behavior (10.10) which states that “having a “whistle-blowing” policy” may tend to show that you have complied with the principles. You should therefore develop such a policy which explains the process which a person within the firm should go through if they encounter misconduct either within or outside of the firm. In both situations this should includes clear reporting lines and the people responsible within the firm for reporting to the SRA.

Prepare an interest rate policy

Rule 22.3 of the SRA Accounts Rules 2011 states that: “You must have a written policy on the payment of interest, which seeks to provide a fair outcome. The terms of the policy must be drawn to the attention of the client at the outset of a retainer, unless it is inappropriate to do so in the circumstances.” Rule 22.1 states that: “When you hold money in a client account for a client, or for a person funding all or part of your fees, or for a trust, you must account to the client or that person or trust for interest when it is fair and reasonable to do so in all the circumstances.” There is a large degree of flexibility given to firms when deciding on what interest will be payable to client’s on money held client account.  It is also possible to contract out of the obligation contained in Rule 22.1, under Rule 25.1. When contracting out the client must give informed consent and therefore all relevant information must be made available to them at the outset to enable them to do so. The policy should therefore be included in your firm’s terms of business and any existing clients will require a letter explaining the policy and requesting their agreement. The policy should also be included in your firm’s Office Manual.

Comply with provisions relating to outsourcing

Outsourcing can provide for lower costs associated with accounts, disclosure, ICT support and consultancy and digital dictation services. However when using such services you must now ensure that clients are informed in your firm’s terms of business that you do not provide such services. You must also ensure that you make adequate arrangements with the entity you are outsourcing to so that the SRA will have the same access to the information which they store regarding your firm as they would if the service was being provided by you. This will mean altering your contract with them to reflect this necessity.

Select a COLP and COFA

The new SRA handbook requires both ABSs and solicitors firms to appoint a COLP and COFA in order to become or remain authorised.  The SRA Authorisation Rules for Legal Services Bodies and Licensable Bodies make minimum requirements as to who may take on the role of COLP: “8.5 (B) An authorised body must at all times have an individual:  (i) who is a manager or an employee of the authorised body; (ii) who is designated as its COLP; (iii) who is of sufficient seniority and in a position of sufficient responsibility to fulfil the role; (iv) whose designation is approved by the SRA.”  Similar provisions exist in relation to the COFA. However Rule 8.5 (g) states that the COLP must be a lawyer in order to be designated; no equivalent provision exists for the COFA.

The selection of the COLP and COFA must be approved by the SRA. The SRA will apply the Suitability Test when deciding whether to approve a non-authorised person candidates.  Whilst it was previously understood solicitors would be passported the SRA web site has a case study indicating that full screening will be applied to solicitors. The possibility of full screening of solicitors has been confirmed to us by the SRA (29.03.12) and that entails enhanced CRB checks. This process may present issues for those solicitors who have not previously undergone the Suitability Test or its predecessors. This may pose particular issues for the smaller firm with more limited choice of candidates for the COLP and COFA roles. Sabina Rinker has acted for those experiencing issues arising from the Suitability Test and she is very familiar with the jurisprudence which is developing at a pace.

We hope our Top 5 give you a starting point.

As always, if in doubt — take advice!

Tony Guise

Nov 18

Linkedin Users – default setting you may want to change

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This is worth checking out on your Linkedin profile, although Linkedin has changed their policy as a result of user feedback since the piece below was published by Steve Woodruff back in August.  When I checked today I found that my account allowed Linkedin to use my name and photos to be used in third party advertising … which I doubt many of you want.  So you should follow the instructions below to check and amend your profile.

“Apparently, LinkedIn has recently done us the “favor” of having a default setting whereby our names and photos can be used for third-party advertising. A friend forwarded me this alert (from a friend, from a friend…) this morning.

And I expect that you, like me, don’t want to participate.

This graphic shows you how to Uncheck The Box.  (Click on the image to make it bigger):

1. Click on your name on your LinkedIn homepage (upper right corner). On the drop-down menu, select “Settings”.

2. From the “Settings” page, select “Account*”.

3. In the column next to “Account”, click “Manage Social Advertising” .

4. De-select the box next to “LinkedIn may use my name, photo in social advertising” .

*UPDATE: After you finish with Account, check the new default settings under E-mail Preferences (such as Partner InMails); and Groups, Companies & Applications (such as Data Sharing with 3rd-party applications). It’s a Facebook deja vu!”

Worth checking your profile out to see how it’s set today?

Allan Carton

Jul 14

Alternative view on ABS – Kerry Underwood

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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.

May 27

LSB conclusion on referral fees; leave it to the SRA!

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The Legal Services Board has dropped plans to force law firms to publish their referral fee arrangements on their websites, in its final decision on the regulation of referral fees published today.  The LSB said it would no longer seek to prescribe the precise measures that law firms and others must take to achieve greater transparency over referral arrangements.

Instead, it has set out what frontline regulators such as the Solicitors Regulation Authority must achieve by 2013, but it will give the regulators freedom to decide themselves what measures they want to impose on firms to reach this position.  It will still be open to the SRA to oblige firms to publish referral arrangements if it chooses to do so.

For more go here >>

Jan 05

Tackle e-data security; differentiate where it matters

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Another way to reduce costs, manage risks and make your practice a more attractive proposition when you are competing for business.  Just picking up on an increasingly important  issue raised by Rupert White in his LSN blog on solicitors becoming too casual about how they handle confidential electronic data.  He quotes the recently reported example of A4e, a law firm in the Midlands, that was fined £60,000 for allowing a laptop with 24,000 clients’ details on it to leave the premises unencrypted.  It was later stolen in a burglary.

Should more legal practices be working towards certification in the global ISO 27001 information security standard following the lead of Irwin Mitchell and a small number of other law firms that are taking this initiative, which should be of particular interest to the larger firms and others regularly tendering for business to clients becoming increasibly nervous about data security.   Irwin Mitchell reduced the number of security incidents from 25 a year ago to seven in the same period this year, after becoming certified.

Go here for a summary of the ISO 27001 standard, which makes good business sense  for the right law firms.  For more information on how to tackle certification to the 27001 security standard at your legal practice, contact Allan Carton on 0161 929 8355 or at acarton@inpractice.co.uk

Dec 11

Update from the SRA on the move to OFR and ABS

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Any lawyers and managers involved in any aspect of developing a legal practice should find this extensive overview of where we stand on OFR and ABS helpful; an informative and enlightening review from Charles Plant, Chair of the SRA, given in November 2010 which covers key issues and actions being taken on introducing these new initiatives.  There is a lot here about the rationale for some of the important measures and next steps to work through remaining issues. 

Read the article online here or you can also download a pdf here, which will let you read and digest over the Christmas period if you can find the time.

Key areas covered:

  • Useful summary of where we are up to; the 3 generic ABS modules; particular issues in the MDP model and steps to address
  • SRA’s objective to be sole regulator of ABSs – level playing field
  • Retaining elements of established compliance procedures; transition to and from ABS; attack on poor, unregulated providers of non-reserved legal services
  • SRA regulation of providers of non-reserved legal services within an ABS - NOT exclusion of non-regulated services from SRA role. Section 69 order to amend legislation – how being progressed with LSB
  • Compensation fund – apply to all as an interim measure; charge investigations to defaulting businesses
  • Roles of COLP and COPA (formerly HOLP and HOFA) maybe one person - all regulated organisations, not just ABS
  • Impact of external ownership and potential conflicts; ABS requirement – systems to identify potential conflicts
  • Criteria for refusal of applications for authorisation as an ABS; conditions, suspension and revocation of ABS authorisation
  • Guarding against pre-emptive ABSs – conditional contracts; timescales – on target?

Allan Carton