The Law Society has this week published a new joint protocol with the Nationwide Building Society to assist in the winding up of estates. The protocol is the first such agreement to be reached with a building society, although similar arrangements are already in place with HSBC and Lloyds TSB. Further discussions are underway with other financial institutions. The protocols aim to assist solicitors in dealing with the different administrative procedures of banks, where they are holding assets which form part of a deceased’s estate. The agreements have been drawn up by the Law Society together with the Society of Trusts and Estates Practitioners. Law Society president Robert Heslett said: ‘These practice protocols are a significant achievement, since managing relationships with banks and building societies has long been a problematic aspect of probate practice.’ He added that ‘regular administrative delays’ when dealing with banks could cause ‘extra costs due to the difficulty in finalising inheritance tax or income tax liability’.
Sole practitioners should no longer be required to have their practising certificate endorsed every year, the Solicitors Regulation Authority has proposed, publishing a consultation on the matter this week. Instead, the SRA has proposed that sole practitioner firms will be indefinitely authorised from 31 March 2012. The move will ensure that sole practitioners are subject to the same authorisation and regulatory processes as other firms, including alternative business structures, once the SRA introduces its new outcomes-focused regulation regime. Under the plans, if regulatory action were taken against a sole practitioner firm, it would be taken against the firm’s authorisation rather than the individual’s practising certificate endorsement. SRA chief executive Antony Townsend said: ‘These proposals are designed to be cost-neutral for sole practitioners, and will simplify the system of regulation to the benefit of everyone. We welcome comments on this consultation, as part of our wider engagement with law firms as we introduce outcomes-focused, risk-based regulation.’ The consultation, Sole practice: modernising authorisation, sets out a proposed order to amend the Administration of Justice Act 1985 and the Solicitors Act 1974, so that sole practitioners will become a category of ‘recognised body’. It closes on 8 March 2011. The consultation is part of the SRA’s implementation of outcomes-focused regulation. The SRA will review the consultation responses and then discuss them with the Legal Services Board, which will decide whether to recommend the order.
Join our LinkedIn Legal Aid sub-group The Law Society this week urged the government to seek alternatives to its proposed £350m legal aid cuts, while new research concluded slashing legal aid is ‘a false economy’. In a letter to justice secretary Kenneth Clarke, Society chief executive Des Hudson also sought reassurance that no further savings will be made from the legal aid budget, after the apparent abandonment of the government’s sentencing reform proposals. Hudson said: ‘I understand a statement along these lines was made to the Junior Lawyers Division, but the Law Society has had no such direct assurance.’ The government is expected to publish its response to the consultation shortly. Meanwhile, pressure group the Commission of Inquiry into Legal Aid has claimed cutting the £2.1bn legal aid budget is ‘a false economy’ because early advice provided through legal aid saves money later. Comprising former Liberal Democrat MP Evan Harris, assistant general secretary of trade union Unite Diana Holland and former canon of Westminster Abbey Nicholas Sagovsky, the commission’s panel warned that reducing legal aid could increase costs in health, housing, education and other local authority services. Meanwhile, the Law Society’s Sound off for Justice campaign continues to gather support. Actor Michael Sheen (pictured) is backing the campaign; he has posted a link to its website on his twitter blog.
Alastair Moyes is a director at Marketlaw and co-author of Marketing Legal Services, the current marketing handbook from Law Society Publishing Having followed the QualitySolicitors debate in the Gazette you may feel we have been in a type of ‘phoney war’ for the past couple of years. Now the battle for the domestic and SME legal services sectors has started with the launch of QS’s Legal Access Points in WHSmiths around the country. The ferocity of the debate around QS on these blogs clearly highlights the two sides of the arguments (see the comments after any blog that mentions QS). However the battle analogy doesn’t help QS or non-QS firms think about their marketing and promotions. QS firms have made a strategic decision to use a third-party brand to convey the benefits of the services they offer. There are similar promotional initiatives like Blakemores’ ‘Lawyers2you’ in the Midlands or groups like highstreetlawyer.com and others. Some firms have retail outlets in city centres or choose to promote their services effectively and efficiently in other ways. However, QS’s is the biggest assault on the public’s consciousness of legal services as it will be backed by television advertising and a celebrity launch. This is the start of clear, overt competition for the attention of the public and SMEs for their choice of where they go for legal services advice. There is an old ad agency truism that fits well in this situation that can help all firms look at their future position. It comes from the USA’s advertising competition in the 1950s over soap power advertising: ‘if one business advertises their soap powder, all soap powder sales rise’. The fight is not exclusively between providers of legal services. It’s more a battle to get the public and SMEs to think about where they buy their legal services. If our current £10bn (guesstimate) legal services market grows because of QS and other businesses promotions, then all firms can benefit. But only if they promote their services effectively and efficiently in their areas, as a viable alternative for potential clients. This competition between providers becomes a well-known commercial task of gaining (or losing) market share (think of the newspaper and magazine market’s competitiveness). Marketing management offers many ways to analyse and plan a response to the new market conditions. You could compete head-on or use other promotional techniques to gain market share that suits your budget. One of the most important aspects of deciding which way to go is something we have been working on with both a QS firm and many non-QS firms. Our experience shows that changing the internal organisation of a firm to focus on clients’ needs is the essential element of future competitiveness. A firm that evolves its services to quickly and satisfactorily deliver the benefits of legal services to their clients will remain a profitable business. To achieve that firms need an accurate database of past clients and promotional materials that focus on the benefits of their services for identified target client groups. Capturing client inquiries and retaining them as future clients means ensuring your internal organisation allows easy client access into your firm and follows-up closed matters with relevant communications about further services. QS is using a loyalty card scheme which is not a unique idea of solicitors but how would your firm match or compete with that in your local area? All of this is about competition between solicitors firms with or without a brand. We’ve not mentioned the other competitors like the Co-op, Halifax, other banks, insurance companies and new entrants. These businesses are after your current and past clients and are ‘battle hardened’ marketing machines. The raw commercial realities of winning and maintaining a competitive market share are here. Without a clear marketing management approach, firms are likely to be trampled underfoot in the charge towards the future profitable clients.
The debate on the European Unions’s proposed directive on the right to a lawyer at all stages of criminal proceedings is hotting up. The Gazette covered the recent parliamentary motion tabled by the government where the justice secretary recommended that the UK opt out of the draft directive. The motion was supported by the House of Commons by 303 to 192. Now the UK has put its name to a note supported by four other countries (Belgium, France, Ireland and the Netherlands) launching a variety of criticisms of the proposal. So the UK not only wants to opt out, it also wants to ensure that UK citizens arrested in other member states do not benefit from improved rights. Would not opting out have been enough, if all they wanted was to ensure that UK law was not affected? Why would a government wish to ensure that its citizens do not benefit from maximum protection when arrested abroad? Is such protection not one of its core duties? As the shadow spokesman pointed out at the time of the Commons debate, the UK’s current law is in any case broadly in line with the directive’s requirements. It seems churlish both to opt out and to try to block the measure applying elsewhere. As to the note itself, the five countries – rather like a QC repeating ‘with respect’ before every argument insulting counsel on the other side – begin with an account of their total and slavish devotion to fundamental rights in general, and the right to a lawyer in particular. ‘For these reasons,’ they say, ‘it is essential to get this directive right.’ They then give four reasons why they disagree with the current draft. The CCBE is looking into the arguments so as to issue a properly argued rebuttal. However, the first three arguments do not strike me as sufficient justification for the group’s paper, meaning they are exactly the kind of traditional matters to be raised in negotiations (which is not to say I agree with them). For instance, the paper argues that the right to a lawyer should not necessarily exist at all stages of the proceedings (say, when fingerprints are taken, which is an example used by the government in the House of Commons) or regardless of the gravity of the charge. Again, the five countries argue that the right to a lawyer is not the only factor to be taken into account when measuring access to justice, since issues such as maximum police detention and speed of being brought to trial should also be considered. Finally, the note requests that the Commission explain exactly where the new rights depart from the case-law of the European Court of Human Rights, and what the impact of such departure would be. No, the main part of the paper – the wrecking proposal – comes at the end when the following appears: ‘The relationship between rules on access to a lawyer and rules on legal aid needs thorough political discussion. Any directive on the right of access to a lawyer should take into account the consequential costs and implications for member states’ legal aid systems.’ Legal aid was deliberately separated from the proposal on the right to a lawyer because of its complexity and politically controversial nature. Anything which is attached to the right to legal aid is likely to have a very difficult time passing, particularly in the current economic climate. The desire to attach legal aid to the right to a lawyer shows a wish to see the proposal sink out of sight. Of course, there are cost implications for the current draft, but that has been true of all the measures which have been passed so far. (And, as the Commission points out, the draft directive would in any case reduce costs incurred by appeals to the European Court of Human Rights in Strasbourg by an estimated €11m for all member states over 10 years.) It may be that the UK, far from wishing to opt out, is seeking to amend the draft directive to make it acceptable. Then it would be good to know its minimum terms. But to opt out and seek also to block – when its own citizens can only gain from the directive being passed by the remaining member states – is inexplicable.
The Jackson reforms of civil litigation will cost the taxpayer more than £70m a year in employers’ liability cases, according to a report prepared by economists. The report, published by consultancy firm London Economics, states that much-vaunted savings in damages pay-outs and insurance premiums will be offset if the number of claims falls significantly. The proposals by Lord Justice Jackson for civil litigation reform have been largely adopted by the government’s Legal Aid, Sentencing and Punishment of Offenders (LASPO) bill, now before the Lords. They include a 25% cap on success fees and the removal of recoverability of success and after-the-event (ATE) insurance from the losing party. The report’s authors, Moritz Godel and Gavan Conlon, state that local authorities and the NHS will still have to pay for the effects of personal injury accidents even when the victims are not able to claim. This will in turn mean they cannot claim back costs either through the NHS injury cost recovery scheme or the Compensation Recovery Unit. In total, Jackson reforms are expected to save £34m in damages pay-outs and £11m in saved ATE premium payments. But those savings are outweighed by the £60m cost to the NHS and local authorities from employers liability cases that are not taken on. The report estimates there will be a further hole of £43m in lost tax revenue from lawyers’ and ATE insurers’ income. The cost savings are a key facet of the government’s argument that claims numbers and associated costs to the public are out of hand. Lord Collins, a Labour peer, said the taxpayer was the ‘loser’ when he spoke at the second reading of the LASPO bill on Monday. ‘While the direct savings attributable to the Jackson proposals are substantial, estimates based on public data suggest that they will be outweighed by direct and indirect costs resulting in a sizeable net loss to the Exchequer of £70.2 million per year. The main sources of loss are tax and the recovery of payments from public bodies resulting from PI claims. ‘So, on the behalf of the real people behind Britain’s dreadful industrial disease and accident statistics, I plead for the government to think again and put fairness and justice first.’ The report was paid for by personal injury firm Thompsons, although there was no editorial influence.
The Solicitors Regulation Authority will begin accepting licence applications for alternative business structures from 3 January, it has announced. The order designating the SRA as licensing authority was laid before parliament today and will come into force on 23 December. The authority will therefore start accepting applications on the first working day after the new year. It expects the first successful applicants to be announced in the second half of February. Chief executive Antony Townsend said: ‘We welcome the news that we will become an ABS licensing authority from 23 December. This is a milestone that we have been working towards for nearly two years. ‘It means the public can have confidence that ABSs providing reserved legal activities will be regulated according to the same rigorous professional standards as traditional law firms.’ The SRA will become the second ABS licensing authority, after the Council for Licensed Conveyancers was granted the status on 6 October.
I work in a provincial practice with three town centre-based offices in Cheshire, and it is with interest that I read about HSBC’s new ’shortlisted’ panel of 43 law firms and licensed conveyancers. This follows talk of some of the other mainstream lenders such as the Lloyds Banking Group also making moves to reduce the number of solicitors on their panels. Lately, I find myself pondering the question of whose interests this will ultimately best serve? HSBC has said that its customers will now ‘have the advantage of competitive fixed fees, as well as benefiting from the speed, efficiency and consistent quality of service provide by firms on the panel’. Surely this is every good firm’s aim, and is not unique to the 43-strong panel on HSBC’s list. If lenders continue to limit the number of solicitors on their panels, will this not inevitably mean less choice for the consumer (the lender will dictate which firms of solicitors can be instructed, and the consumer’s freedom of choice will be restricted)? Such action may also result in fewer firms with local knowledge in smaller towns and rural locations. I fear it may encourage ‘conveyancing factories’ in central, key towns and cities, which will operate a high-volume/low-cost service on behalf of the lenders. Local specialist knowledge may be lost, with complicated or unusual issues more likely to be overlooked. Not only this, but being included on a panel is valuable to any firm. If only very limited numbers are being selected, then these chosen few might potentially feel under pressure to represent the lender’s best interests first – possibly at the expense of impartial, independent advice for the consumer. There is also the prospect that limiting the number of solicitors on lenders panels will add to the demise of the traditional local high street. The smaller independent firms are effectively being pushed out. HSBC has also been quoted as saying that its panel will ‘spare customers the time and hassle of searching for a firm to do the important conveyancing works’. I wonder what has happened to consumer freedom of choice? Is it right that their lender should choose their solicitor for them? My firm has been established for over a century and is proud of its client base and local reputation. It will be hard for us and for all similar firms to watch this become diminished by lenders who warn consumers that if they appoint their own lawyer they will effectively have to pay twice by paying the lender’s legal fees as well. I fear the banks are being shortsighted. Their actions will ultimately restrict choice and opportunity. They will restrict business, and have the potential to create cartels generating a juggernaut of future difficulties for consumers and solicitors alike. Jeannette Kemp, Northwich, Cheshire
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