BANG

BANG!

So, today is the day of the introduction of the Legal Services Act and Tesco Law. As from today, non lawyers can own law firms and provide legal services. Law firms can raise external finance and attract investment into their businesses. Is it the BIG BANG speculated by commentators on the legal industry? Well, not quite.

I have not seen any solicitors firms changing their signs permanently to “Closed” or lawyers jumping out of their windows because of the threat of new entrants to the market.

Practically, most new entrants will be delayed from entering the market until early next year due to a delay in the Solicitors Regulation Authority, the main licensing body, being ready to accommodate new business structures. One ABS has been licenced by the Council of Licenced Conveyancers but they are exclusively providing conveyancing services.

As seen on the BBC breakfast couch this morning, organisations such as CO-OP are preparing to enter the market and launch their legal services business when the SRA issue is solved.

Smaller law firms now have a great opportunity to present their expertise to the market to show the public why they would benefit from using traditional high street solicitors as opposed to retailers and insurance companies. Expertise, qualifications, experience, regulatory environment, risk management systems are all some of the selling points but they are assumed by the consumer when using a trusted professional. A far better approach would be for small law firms to focus on delivering great customer service and really getting to know their clients. Then solicitors will be able to play the retailers at their own game.

Small law firms facing "perfect storm"

No one looking at the legal profession over the last few years will have failed to notice that ‘Tesco Law’ is coming soon to a high street near you. Tesco Law will open up the provision of legal services to grocers, banks and outsourcing companies. With the full implementation of the Legal Services Act coming into effect in October, it has been said that the traditional high street practice is doomed. Whether this is reality or scaremongering is a matter of interpretation. However, there can be no doubt that times are changing for solicitors and that much heralded deregulation is only one of a handful of issues creating the perfect storm for the legal profession.

By October each of the 10,000 or so law firms in England and Wales will have to renew their mandatory professional indemnity insurance. Firms that fail to obtain cover will be chucked unceremoniously into the Assigned Risks Pool, a Law Society overhang from the days when all law firms were collectively indemnified. Climbing out of the Assigned Risks Pool is at best difficult, as firms have to convince insurers they are no longer an unwanted risk.

With little fluidity in the lawyer’s insurance market, more firms are expected to enter the pool or face a hike in their premiums as insurers pick and choose firms with the lowest risk profiles. Whilst a couple of new insurers have dipped their toes into the market this year, others have decided to limit their books of new business. In my discussions with small law firms across the country over the last few months, some firms are already paying up to 10pc of their turnover in compulsory professional insurance at a time when many are already victims of a reduction in revenues.

With the general economic downturn, and a decline in bread and butter work such as conveyancing, some firms have found that they have had to lay off support staff and fee earners recently. Various firms have moved previously salaried staff including partners to an “eat what you kill” remuneration structure. Not such a great situation if there is no killing to be done.

Clients are also becoming more savvy when negotiating fees. The impending Legal Services Act has encouraged a proliferation of comparison and auction sites for legal services. While these sites provide a great service for consumers looking for cheap legal fees, they encourage solicitors to slash prices in order to win work. Slashing prices must not mean slashing attention to detail or expertise but many firms will need to take on work at whatever level they can to meet their overheads. Avoiding another few quid in fees may be the difference between winning and losing work. Some lenders are even culling the firms they already approve to carry out mortgage work, making it almost impossible to act for a house buyer if the law firm is not on the lenders panel.

Another change coming to all law firms this October is the introduction of ‘outcomes focused’ regulations. Solicitors have until now sought comfort in the black and white style of interpretation of their regulatory rules. However, they will soon have to negotiate through a field of grey in their approach to work and how they deal with their clients. At the very least, all firms should be looking at their client care letters to make sure that they will comply with the new rules.

Although Tesco are keeping their powder dry on whether they will sell legal services alongside their groceries, other new entrants are already well developed and ready to engage with the high street consumer of legal services. The prospect of the availability of legal services in banks (Co-op), in newsagents (Quality Solicitors and WH Smiths) and shopping centres and train stations (Lawyers 2 You and others) is already a very real one.

While a small delay is expected before alternative business structures can be regulated by the Solicitors Regulation Authority, local independent law firms should consider this as no more than a bit of breathing space before the competition for clients really heats up.

Although the perfect storm is brewing for lawyers, it’s not all bad news. The changing legal landscape has forced many firms, both large and small to rethink their strategies in marketing, business development, costs base and structure, which will be beneficial in the long run. Solicitors who are prepared will be able to develop a niche in the market, whether it is for the work that they do, or the way in which they do it.
Ultimately they stand to benefit far more than those not fit enough to weather the conditions.

This article first appeared in the Business Club on telegraph.co.uk

From The Times 1 September 2011

In the City: Edward Fennell

Edward Fennell

September 1 2011 12:00AM

If professional indemnity insurance continues rising, this autumn might mark the end of an era for the tiddly firm

Season’s greetings

As we swing into the new season here is something for City lawyers to reflect upon.

With “Tesco law” looming large, things were already looking grim for their country and suburban cousins. But even more immediately grave, says the network High Street Lawyer, is the threat posed by soaring professional indemnity insurance.

“Hundreds of Britain’s 10,000 solicitors’ firms may be uninsurable and will be forced to cease trading or make other arrangements in the next 12 months,” the network says.

At the heart of the problem are the micro firms with five partners or fewer. If they have a claim against them on their record they will typically be facing insurance premiums of about £50,000. The danger, High Street Lawyer says, is that at this level the costs could prove to be prohibitively expensive.

Some solicitors may just give up. For those who want to soldier on, the answer could be to look for a merger partner. But, either way, this autumn might mark the end of an era for the tiddly firm. Small may still be beautiful but, sadly, it has become unaffordable.

This article first appeared in The Times on 1 September. Whilst there are massive difficulties for small law firms, and PI insurance is just one of them, HighStreetLawyer.com has solutions. If you are a small, local, entreprenerial law firm then get in contact to see how we can help.

Five questions when choosing a lawyer

The legal sector has always been a worry to many people because of the opaque prices, and it's going to become more complicated with the impending Legal Services Act.  

There will be more choice, new regulators and many new firms launching. While this has many benefits, it also has the problem that many businesses appear to be manned by qualified and properly-regulated lawyers, when in fact they are using inexperienced people or less-stringent regulation.
The most important steps you should take to make sure you get a good solicitor are:

Is your lawyer a qualified and properly regulated solicitor? To make sure the firm is using solicitors (after all, if you are paying for legal advice you want it from a highly-qualified professional) it is important to make sure they are regulated by the Solicitors Regulation Authority. This can be done by asking to see their practicing certificate or by checking online. 

Is your lawyer properly insured? Solicitor firms should have professional indemnity insurance of at least £2m to protect clients in case they make a mistake and cause you to suffer a loss. This is important as currently the insurance market for solicitors is very difficult and some are not able to get insurance. To make sure they are properly insured, ask to see their certificate. (Lawyers that cannot get insurance use insurance from the Assigned Risks Pool. This scheme is a last resort but it does give the customer protection in case of a negligence claim. However, it's a bad sign about the firm that they’ve had to use it.)

Do you have a detailed list of rates and charges? Make sure you take control and get all fees quoted and documented up front, as you don’t want to be hit with a large bill or unexpected charges. Ask for a breakdown of what is involved for the cost. Also, enquire what happens if the lawyer has under-quoted for the amount of time they will need to complete your case. Many solicitors will now carry out work at fixed prices.

Do you know who will actually carry out the work? At a solicitor’s office you will meet the partner, but is it him or his secretary that will actually do the work? Also ask what arrangements are in place if he/she is away and something comes up. Find out if the firm is part of a larger network that can provide support and assistance in case there is a gap in experience, knowledge or workload.

Does the firm have good risk management procedures? You should make sure a firm has stringent procedures in place to make sure it doesn’t make a mistake or miss something. Ask if they have an up-to-date membership of The Law Society’s Lexcel Scheme or the Conveyancing Quality Scheme in place, or alternatively if they have other processes in place to ensure the quality of service.

Gary Yantin is managing director of legal network High Street Lawyer

This article first appeared on Real Business http://realbusiness.co.uk/advice_and_guides/five-questions-when-choosing-a-lawyer

Latest newsletter

Legal Services Act update

We are now only about 10 weeks away from the 6^th October and the key date when non lawyers should be able to provide legal services as Alternative Business Structures. The Solicitors Regulation Authority, who are expected to be a key regulator of ABS under the Act have recently announced that due to parliamentary delays they will not be ready to regulate bodies by the 6 October.

The Council of Licenced Conveyancers are expected to be ready to act as a regulator and are already receiving applications from bodies wishing to be ABS’.

It will be interesting to see if the CLC’s gain may be the SRA’s loss or whether there will be differing levels of regulation once the SRA declare themselves ready.

A report published recently by accountants H W Fisher found that 36% of SME firms that they surveyed did not think that they would be affected by the Legal Services Act. Only 11% of firms have considered trying to raise external capital. The full report can be found here: http://www.hwfisher.co.uk/uploadedfiles/newsitems/SMELegalPracticesSurvey2011.pdf

See if you are ready for the Legal Services Act and how you compare to other firms by taking our own survey.

http://debate.highstreetlawyer.com/ 

HighStreetLawyer.com as a consumer brand

Since January we have been referring work to the firms who have piloted our scheme with us. As the number of firms we talk to increases and as we settle into the second half of this year, our consumer campaign is set to intensify. We are currently working on a number of collaboration agreements with introducers of legal work including legal comparison sites and non lawyer retailers and referrers.

The referral debate

The outgoing Law Society president announced just before the end of her term of office that the Ministry of Justice should consider banning referral fees. Referral fees are an ongoing bone of contention amongst solicitors who would prefer not to pay a third party for introducing work. However, there is a huge difference between paying a third or more of your fee simply for the introduction of work that may or may not complete and outsourcing your marketing, customer care and some due diligence to another organisation. Such fees are now an accepted part of the legal industry and as shown since our launch in January are not of concern to solicitors or to clients provided the value that they add to a matter is transparently explained and provided that all parties comply with the relevant codes.

HighStreetLawyer.com as an umbrella group

We now have a number of preferred supplier arrangements in place for various services and are working on many more.

We have partnered with leading Genealogy company Finders. Finders provide a number of services to solicitors and to the public including a missing wills and missing beneficiary service as well as specialist probate insurance and advice on potential bona vacantia cases where the State stands to inherit unclaimed estates. Finders offer significant discounts to HSL members for all of their services. HSL members are eligible to become panel firms for the referral of legal cases.

Jennings Costs lawyers provide a bespoke service to solicitors in debt collection matters both where firms are chasing their own clients for fees and where firms wish to outsource debt recovery work to a specialist firm. Jennings also provide costs drafting services, which are discounted to HSL members.

Follow us

You can follow us on twitter @highstlawyer and linkedin. Over the next few weeks, our MD Gary Yantin will be in Bournemouth, Southampton, Croydon, all over London, Manchester, Nottingham, Sheffield, Liverpool and  Birmingham. Any firm interested in finding out more about HighStreetLawyer.com should email gary@highstreetlawyer.com for an appointment.

Top Tips for reducing legal spend for SME’s

As appeared on http://www.freshbusinessthinking.com/business_advice.php?CID=8&AID=9416&PGID=2

1. Agree fixed fees
Be aware there are over 10,000 law firms out there — you can afford to shop around, and don’t have to go to the one down the road. In particular, small businesses should avoid lawyers charging hourly rates. Most firms are happy to agree a fixed fee for routine work. Even the most experienced specialist lawyers will now accept fees based on value as opposed to time billing.

2. Stay on top of changes in the law
The Law changes all the time. Even lawyers like me struggle to keep up with everything. It’s hard to make sure that your business is compliant, especially if different areas impact on you (for example, almost every business has to deal with employment law and property law at some point) and getting caught out by a sudden change in the law can be horribly expensive. I’d recommend businesses consider an annual review of your key contracts to make sure it never happens to you.

3. Use the law to solve problems before they happen — lawyers are always cheaper than lawsuits.

By using contract terms properly, you can do a tremendous amount to limit your liability. For example, if you run an e-commerce website getting your Terms and Conditions (T&Cs) right can be absolutely crucial to your business. The difference between a T&C guaranteeing delivery in 14 days and one guaranteeing delivery in 28 days can be enormous! The same applies almost everywhere — employment contracts, leases, shareholder agreements — if they’re written properly.

4. Have a lawyer on retainer, rather than going to one in a crisis

For plenty of businesses (for example, property developers), ongoing legal costs are unavoidable. If you’re in one of these businesses, setting up a monthly bill means that you are not going to be hit with a massive legal fee payable in one go. Lawyers want to control cash flow too so offering to pay by direct debit monthly will help negotiate better rates with your lawyer.

5. Get rid of the notion that law is complex & expensive

Too many small businesses have the perception that lawyers are expensive, and that law is always hugely complex (I blame the television). In fact, most legal issues are relatively simple and routine. Employment contracts, Commercial leases, shareholders agreements, and terms and conditions can and should all be purchased on a fixed price basis.

About The Author

Gary Yantin is the founder of http://www.highstreetlawyer.com/ - A solicitor of eleven years experience, he started his career in a small high street firm in St.Albans and he understands the pressures of working in a small firm. He founded High Street lawyer to enable top quality small independent firms fight off “Tesco law” by developing nationwide competition on fixed price products, primarily benefiting consumers and small businesses that currently rely on undifferentiated local firms

I want to be loved by you!

What does a client want from their lawyer? Perhaps love is too much but how often do solicitors consider what clients look for when choosing their legal adviser. More importantly, what is it about your competitors that may be attracting your existing or potential client to them. The need to understand your client is more important now than ever as new entrants to the market emerge. Organisations such as Co-op will not be able to create significant amounts of new work. Rather they will be looking to take market share from the current incumbents. Member organisations such as Saga and AA know their members and their habits. They know about their insurance needs, what cars they drive, the number of dependants they have, their health profiles  and the number of holidays that they take. Supermarkets, with their loyalty schemes, even know your favourite brand of cereal or toothpaste as well as the guilty pleasures you treat yourselves to now and again. With this sort of information, marketing additional services such as wills and powers of attorneys should be a doddle.

What these new entrants need to do is demonstrate that they have the relevant legal expertise to carry out the work. They will need to recruit good staff and invest in sophisticated IT. How can existing law firms and legal brands such as HighStreetLawyer.com compete?

They can do so by showing that a strong personal service that puts the client at the heart of everything that the lawyer does is still available. Whilst price is an extremely important factor in selecting your solicitor, making the client feel appreciated is essential. Clients want to feel like they are appreciated by their lawyer and not just for the fee. Easily achievable objectives such as availability and accessibility will level the playing field between traditional law firms and new providers but understanding how to appreciate clients will tip the advantage in the solicitors favour. Add to that sophisticated marketing, risk management procedures, clearly defined branding and buying club benefits and the advantage starts to become greater still.

Find out more about HighStreetLawyer.com and how it can help you whether you are a law firm, a consumer of legal services or a service provider by contacting me.

All the best

Gary