PI Insurers pose greater risk to conveyancers than new SRA proposals?

There are changes afoot with the Solicitor Regulatory Authority’s plans for conveyancing firms.  During the course of the year the SRA will be carrying out a major review of the regulation of Solicitors undertaking conveyancing and the holding of client money because of the risks posed by a small number of firms engaged in property-related fraud and money laundering.

The thrust of the proposals is to ensure conveyancing firms take seriously the risks and establish good compliance and risk management systems.  I am sure that those firms who take conveyancing seriously will already be taking these risk seriously of not by choice by reason of pressure from their PI insurers.

The Strategy is due to be published in October and will operate alongside the Enforcement Strategy published on 13^th January 2011. It will set out how the SRA will engage with firms to ensure that the procedures etc comply with the Principles, achievement of the Outcomes in the new SRA Code of conduct and compliance with the new Handbook.

So why is there a need for a strategy?  Well believe it or not but Conveyancing claims represent about 50% of the value of professional negligence claims. Payments made by the fund have more than doubled over the last few years, tying in with the downturn in the property market.

So how will the SRA will engage with the profession and other stakeholders to ensure it gets the approach to the risks posed by conveyancing correct?   We are told The SRA will draw on the information and experience available (through the Law Society), clients (including lenders) and insurers.

If issues are identified the SRA will work with firms to put matters right and it suggested enforcement action will be a last resort.  The Strategy indentifies the issues that the SRA will be looking to identify and which include:

• Conflicts of Interest

• Referral Arrangements

• Costs Information (including publicity about fees)

• Financial Stability

• Property Related Fraud and Money Laundering

• Acting for Buyer and Seller

• Acting for two Buyers in a Contract Race

• Acting for a Buyer and Lender where the Lender asks a firm to go beyond standard Instructions

• The potential Conflict between duty of disclosure and duty of confidentiality when acting for Buyer and Lender

Firms will be expected to assess these and other conflict risks, and ensure that the systems are in place to identify and mitigate the risks.

The Firm’s referral arrangements will also be under scrutiny. We will be expected to assess these and other referral risks, and ensure systems are in place to identify and mitigate the risks presented by the following:

·       Valuable referral arrangements could compromise a firm’s integrity, professional judgement or independence.

·       Reliance on one-third party for a high proportion of conveyancing work could impact upon its financial stability.

The provision of cost information is another high profile area of the Strategy. Firms will need to ensure that their fees and costs are fairly expressed and not misleading.

Concerned about how financial instability could make firms more venerable to inappropriate pressures the Strategy will be focusing on the identification of firms who only do conveyancing or a significant part of their income is as a result of doing conveyancing.  These firms will need to consider what systems and controls to put in place for monitoring their financial stability and economic viability.

The Strategy will also take the opportunity to review the risks associated with property related fraud and money laundering because a large proportion of the value of payments from the Compensation Fund represents payments related to fraud in connection with conveyancing.

Firms will need to determine what policies, procedures, systems and controls they should put in place to minimise the possibility of being targeted for criminal activity. Again this seem to be re-emphasising the risks and need for processes that we have all had to live with and act upon for some time now.  I question whether there is anything new here.

So what tools will the SRA use to indentify these risks? The SRA will use a variety of strategies and tools to test the systems and controls firms put in place to address the risks they face.

The systems and controls will differ depending on:

• The size and complexity of the firm

• The nature of the conveyancing work undertaken (e.g. e-conveyancing)

• The firm’s client base (e.g. are clients local or national)

The tools and powers will include:

• Desk-based reviews

• On-site visits, including interviews

• Use of formal investigative powers, including requests for documentation and attendance of individuals at formal interview

• Obtaining documents or information from third parties, including law enforcement agencies

• Mystery shopping

• Thematic visits

The SRA has produced a transition manual “OFR at a glance http://www.sra.org.uk/solicitors/handbook/ofr-quick-guide.page. It contains Q & As on ethical dilemmas etc. It is not intended to replace or be a substitute for firms’ own internal procedures.

Overall there is not very much new within this consultation document; much of what is proposed reflects the risk assessment that many of us are now required to undertake as part and parcel of our PI insurance application.  At the end of the day it’s the PI insurers who hold all the cards and who will clearly irrespective of the SRA’s moves  determine the fate of many conveyancing practices.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Have you heard the one about the lawyer, accountant, banker and of course the Legal Services Act?

Put a group of lawyers, accountants and bankers together mix in some good food and drink and with a bit of luck you will generate an evening of lively debate. 

This is exactly what happened when I was invited along to a dinner hosted by a high street bank and a nationally known firm of accountants.   The purpose of the informal gathering was to debate the future of the legal profession in the light of the never-ending changes and challenges that lie ahead.

Putting to one side the countless opportunity seized by many to self congratulate, and ignoring in the main the sales pitch by the hosts, I was intrigued, and indeed surprised, by the differing views around the table on the changes that will occur once the Legal Services Act is fully implemented in October.

By way of background, many of the lawyer participants were from medium sized firms leaving my firm as the only three-partner firm in attendance.  The majority of these firms have in recent times become LLPs and much of the discussion (the dull part) centred on how these firms have put in place corporate structures to provide management. One firm was smitten about its decision a couple of years ago to bring in some high flyer from London to take on the role of Chief Executive.

Listening to these firms it occurred to me that many were so embroiled in trying to emanate the larger City firms they had to a large extent become oblivious to the bigger picture.  It may have been professional pride getting in the way but not one of these firms seemed in any way perturb by the inevitable challenges that will arise with the full implementation of the Legal Services Act.  One of the representatives actually popped up and announced that there was nothing to worry about! He expanded on this by saying like many of these ‘things’ it will all blow over!

I am not sure whether this reflects arrogance or a reckless disregard of the threats.  Perhaps it’s a bit of both.   The most worrying aspect was that the view expressed had the support of the majority of the legal attendees.  It was clear however that the banks and accountants are not so confident. There was much discussion around the table on how banks are beginning to tighten the screw on legal practices.   Firms with working capital deficiencies and succession issues now seem to be regarded as ‘high risk’.

The sudden change of fortune for  a certain large Manchester based practice that was forced into liquidation and the ramifications for its bankers, has clearly made banks look more closely at the balance sheets of law firms.  Add to this the uncertain future many high street firms face with increased competition and Jackson and the future does not look too good, particularly for the smaller firms.

The time to take ones head out of the sand and to give recognition to the threats posed by national brands with deep pockets to fund marketing is now. It is a sad indictment, and a very worrying one, that there are still a large number of lawyers out there who have yet to take any steps to protect those services that will inevitably become post Legal Services Act commoditised. These will include conveyancing, wills and personal injury.  We already know that SAGA, AA and the Co-Operative have plans to market services direct to the public, and more recently Quality Solicitors has agreed a deal with WH Smith to allow representatives to be in store to provide legal advice.

However wonderful we may believe we are, the fact is that those with legal problems who once would come through our doors, will without doubt be lured away with the power of national advertising and the attraction of low fees and perhaps even ‘club points’.  We live in a world where money is sparse, where people are looking to make cut backs in spending, to believe as some do that a good quality service will always ensure a client’s return, is, delusional.  Client loyalty is about to face its biggest ever test.

So you might ask what are we doing to prepare.  We are looking to establish a local co-operative to produce resources to run a campaign to keep work local and to look at ways of sharing services to reduce overheads.   The scheme has the backing of local banks and accountants have designed the financial model.  I am sure it will work and prove successful, however if it does not at least I can say that we have tried to do something.  Doing nothing cannot be an option.

Back to the dinner…. Great food and a fantastic insight into how divided our profession has become.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Time to change how we sell and buy property

It still amazes me how archaic the system is for conveyancing of residential property in this country.

The whole system is screaming out for reform and unfortunately the stakeholders that have interest in this market seem very reluctant to take any steps in an effort to improve the system and make it far more consumer friendly.

The following aspects of the process continue to frustrate me.

The old fashion and wholly unnecessary terminology used within conveyancing and documents and transfers. It is a wonder how anybody including lawyers can understand some of the clauses that I have come across. There is a need for these documents to be written in plain English and structured in such a way that they are easy to follow. Those working within the commercial contract sector should be brought into help to bring residential conveyancing documentation into the 21^st Century.


The significant difference in approach adopted by conveyancers spread around the country. Some belong to local protocols others belong to national protocols and we also have the Law Society protocol that is often cited. Why on earth can we not all operate under the same protocol and why has the Law Society allowed this crazy situation to continue for so long?


The same applies to Contracts. I come across so many variations for the standard conditions of sale and just do not understand why the terms and conditions cannot be the same for each transaction unless of course it is a leasehold or other common variation.


The endless pre contract enquiries that are sent out. Surely again questions about the title, about the search results could be cut down and the onus put on the seller to complete standard enquiries as part of the contract pack.

There must exist a simpler process and one that would make it far less expensive and a lot quicker for the consumer. It amazes me that the Law Society has never attempted as far as I am aware to put pressure on the government to look at this area of law and to put forward proposal for reform. It is difficult I know to set out rules when a lot of the practicalities rest on completion dates, mortgage offers etc but surely something can be done and done very quickly to uniform the documentation and make the process a lot simpler and easy to follow.

I just wonder whether solicitors have  a vested interest in creating the illusion that there is far more involved in the conveyancing transaction then there really is so as to justify their fees.

Having said that bearing in mind how low fees are now I doubt that this observation could be regarded as valid. If anything the fact that the fee scales have come down makes it even more important for the process to be simplified and made quicker.

I do not profess to have the answers but I am more than happy to be involved in finding a solution. The Labour government have the courage to introduce home information packs and although the legislation was flawed it did at least present an attempt to make the process quicker and indeed succeeded to a certain extent in speeding up the transaction.

I still find it incredible that the last set of real reform  made to the conveyancing process  happened  back in 1925.

The new Law Society Quality Conveyancing Scheme is designed as I understand to improve standards within the profession and although I still have reservations as to whether it will achieve its desired objective, it does anger me to think that so much time has been put in to putting the scheme when the resources might have been better diverted into reviewing and putting together proposals for the long overdue reform to our residential conveyancing process.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Can outsourcing work for small and medium sized legal firms?

The buzz word within the legal profession is “outsourcing”.

A lot of the larger legal practices are already beginning to save vast expense through outsourcing backend and administrative tasks. They are handing this work to legal support services either from an outside law firm or a legal support company. If the work is outsourced to an entity based in another country this practice is sometimes called “offshoring”. The outsourcing industry is increasing each year and as of April 2010 there were around 5,200 professionals working within that sector. These were mainly based in India and the Philippines.

The question is whether a small sized legal practice should particularly in an age of austerity be looking at some form of outsourcing. The area in which there seems to be some growth is in the area of typing support.

Many of the providers of transcription outsourcing are based in the UK and work not only with legal firms but also other sectors such as the NHS.

The majority of these services operate on a “pay as you go” basis with no joining or monthly subscription fees. The dictation is digitally recorded and is transcribed by a nationwide panel of secretaries normally secretaries with legal experience.

There are a number of advantages to be gained by outsourcing transcription apart from the obvious one which is cost.

These include:

1.     The ability to get work out on the same day or within 24 hours of the work coming into the office which intern helps to speed up transactions and advance cases meaning that costs come in much quicker with the resulting benefit for cash flow.

2.      There is no sickness or holiday issues to worry about.

3.      The service can be provided 24 hours and is not limited to 9-5pm.

The downside is that those working on the typing of letters and memoranda etc are not aware as a secretary would of the background to the case and this lack of case knowledge can sometimes be found to be inhibiting.

There are also the SRA requirements to be addressed.

The Solicitors Regulation Authority issued its first public statement on the ethics of outsourcing back in July 2010. In general the SRA considers legal outsourcing to be perfectly acceptable as long as contingent ethical obligations are satisfied that include client disclosure.

In the statement issued the SRA notes “in accepting work from a client, the firm must always consider whether the work should be outsourced at all as they should have the necessary resources and competency to undertake the task. In summary a firm must act in the best interests of their client.."  

In November of 2010 the SRA announced that it is set to launch what is refers to as a “thematic review” of outsourcing. This is likely to take place sometime this year. The review is to identify whether there are any particular issues or risks that require changes to the current regulatory requirements or whether certain outsourcing arrangements need particular attention in a supervision process.

So coming back to where we started and the question of whether outsourcing can be an option for small to medium sized legal firms the answer must be yes although one must not underestimate the cost and management that will need to be invested in overseeing the outsourcing and making sure that the conduct rule requirements is met.

How much money would the outsourcing of transcription service save is really down to the individual firm to assess. The cost of a good legal secretary can range between £18,000 - £26,000 depending on the region. In comparison the cost of outsourcing is around £1 per minute of dictation and on the basis a fee earner will probably do around 60 minutes of dictation each day the annual cost is likely to be around £14,400.

Outsourcing will not be every firm's cup of tea but in an age where there is more and more pressure on resources this should be an option  to be considered sooner rather than later.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Housing Summit - No room for lawyers?

Interesting that the one absent party from the summit meeting on what should be done to help first time buyers, held and chaired by Housing Minister Grant Shapps on 15^th  of this month, was  a representative of the legal profession.   

The meeting was attended by ‘leading industry figures’ representing home builders lenders, councils and consumers.   Perhaps the Housing Minister, who of late has been preoccupied with television and radio appearances in his capacity as Local Government Minister, does not regard housing lawyers as having thoughts and ideas on what can be done to help our first time buyers. Perhaps it was a case of a simple oversight.

Yes, I know it may be more to do with availability of lower cost housing, and more affordable lending schemes, but there is clearly room for improvement in the conveyancing process that could be introduced to simplify and make less expensive the cost of purchasing.  

Lawyers working in the residential sales and purchase market day in day out know that the process of buying a property is broken and full of unnecessary form filling and other bureaucracy.   If as Mr Shapps claims there is need for all of the players in the industry to pull more closely together then clearly it is important to ensure that he has present representatives from all relevant sectors.   

Housing Minister Grant Shapps said:

"I called on key figures from across industry to come together today, because we must do more to help aspiring first time buyers - the average age of the first time buyer with no support from their family is now 37, and there are 1.4 million households who aspire to own a home but are simply unable to do so because of house prices and mortgage availability.

"I wanted to hear a first-hand account of the problems the sector faces, but I also wanted to knock heads together so the needs of young people who want to buy a home are put first. The Government is working with industry to improve the availability of mortgages - but there also needs to be a much more unified effort from across the board to work together, so we can ensure that young people are not locked out of the housing market."

Good rhetoric, and good intentions, but how long does it take a Government to conclude discussions with lenders on increasing the availability of lending, and although I agree there needs to be improved communication between the various ‘players’, the time for action is now and  perhaps less talking and more positive action is the key to this problem.

Conveyancing and Litigation - The differences

I have had the fortune to work in various different areas of the law during my career.  I started like most young lawyers of my time treading the boards of the local Magistrates Court trying my best to represent people who in the main had little appreciation for my efforts.  I then progressed into family law, running from court to court seeking injunctions only to be running back a week later asking for the injunctions to be withdrawn.  

For the majority of my career however I have been involved in the litigation process mainly undertaking personal injury work.  I have also undertaken sport related work acting for professional footballers and boxers.  A mixed bag which has become even more extensive in recent times with my introduction to residential conveyancing.   I have always had an interest in and enjoyed contract based work and therefore found the move into this area not so daunting.

My initial experience of this field of work has proved insightful. I have always looked upon conveyancing as uninspiring and dull.   A view I know shared by many other litigators.  I must say however that this is not a fair representation of what I have found to be a very demanding and often enlightening area of practice.  The danger, I suppose, of viewing and drawing conclusions from outside observations.

So how does conveyancing and litigation differ?

To begin with and the most noticeable difference is the pace at which conveyancing proceeds.  Unlike litigation where one is working within quite generous protocol and court timetables, the average conveyancing transaction time is around 6 to 8 weeks, during which the pressure to cross the finishing line is immense.  The fear of a transaction collapsing and the general stress of moving has made the process even more pressurized and demanding.  Letters coming into the office need to be answered on the same day otherwise the danger is that by the following day they will have been overtaken by events.

I equate the constant pressure to the buzz and work that goes into preparing for a large trial, making sure all of the witnesses turn up, collating and sorting trial bundles and generally ensuring all of the hard work undertaken during the previous 2 to 3 years is not put to waste.

The other major difference is the involvement of a large number of contacts and the obligation to keep everybody updated.  In litigation there is of course the client, the ‘other side’ and perhaps an insurer at the beginning. In conveyancing you can have two firms of solicitors to communicate with along with the two sets of estate agents and the client.    This has the effect of tripling the number of calls you would normally receive when working within litigation.

The third and major difference is the inconsistency in approach and application of the conveyancing process.  Each practitioner has his or her way of drafting contracts, some firms follow the Law Society protocol, other s follow local protocols.   It is clear that this is a process that is in need of reform.  It is too focused on form filling and administrative tasks and far more cluttered with pointless obligations and requirements than the court process that has benefited in recent years from constructive reform.

The time has come for conveyancers to step out of the ‘smoke and mirrors’ and join together to demand reform and to make the process simpler and far more consumer friendly.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Divorce: the importance of choosing the right solicitor

Considering divorce can be a daunting experience at the best of times but when we are still coming out of a recession and may in fact be entering a second recession the thought of having to enter into ‘battle’ over the family assets is for some a major nightmare.

In some cases the only asset is the home and though there will be considerations to be taken into account if children are involved the resolution of the finances between the parties can be relatively straightforward.

However there are more complex cases involving businesses, investments, trust funds and even inheritances.  To find a solution that will meet the needs and financial goal of each party is not easy and often proves problematic as well as expensive.

The need for a good solicitor and one who can work with you to find a working solution without having to run up a large legal bill is essential.  The aim is to ensure there is full and early assessment of the value of the assets, usually with the help of specialist financial planners and other experts, and that the line of communication is opened early, and remains open, with all concerned.

You need to choose a solicitor who can handle you case in such a way so as to minimize the hostility and bitterness that often hampers progress.   A solicitor than can allow you and your partner to preserve your dignity and to work together in doing all that you can you to ensure that those assets which have been accumulated within the marriage are not lost in unnecessary legal and court fees.

A good solicitor will not be one who embarks on sending out inflammatory letters and whose actions only serves to fuel additional bitterness as well as taking money out of your pocket when it is not necessary.

The need to open up early and constructive dialogue with the solicitor acting for the other spouse is essential.   Early and open discussion on issues that you and your spouse believe to be addressed will help to ensure issues are constructively discussed and resolved and the need for Court intervention is reduced.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Senior Judge calls for change in law to benefit cohabitees

Sir Nicholas Wall, the president of the Family Division, has today said that Unmarried couples who split up after living together should have legal rights to a possible share of property and money. He added courts would be more sympathetic to a claim where the couple had been living together for a significant amount of time.

Currently apart from when children are involved a judge has no discretion to make financial provision or adjustment in the same way as is possible when dealing with married couples.  A sixth of couples in Britain live together with the number expected to rise.

Sir Nicholas told the Times: "I am in favour of cohabitees having rights because of the injustice of the present situation. Women cohabitees, in particular, are severely disadvantaged by being unable to claim maintenance and having their property rights determined by the conventional laws of trusts."

He added: "If cohabitation has been short and the contribution minimal, judges would not be sympathetic to a claim."

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Conveyancing Quality Scheme - another Law Society 'White Elephant'?

The Law Society is now actively promoting  its new residential conveyancing quality scheme.

The Conveyancing Quality Scheme, which is supported by the Council of Mortgage Lenders, will provide a recognised quality standard for residential conveyancing practices.

No details of the benefits of the scheme are known, though the Law Society is planning to publish these at the beginning in April to coincide with the Easter house-hunting surge.

It is reported that Law Society president Linda Lee is claiming that over the past three years, the society had led consumer PR campaigns encouraging the public to use a solicitor rather than other legal providers – all of which had been successful.

This campaign it seems was rather low key as reports from some solicitors claim that the Law Society has not done enough to promote the profession and that a large section of the public has now resigned itself to be led by cost rather than quality.  

Linda Lee is reported to have said: “We now plan to do the same with CQS, a scheme which will be of genuine benefit to anyone buying a home.

“The aim is to generate publicity for legal practices which have secured the CQS mark of excellence and enable them to market their CQS status to the public effectively.

Until the benefits to the consumer are known a large number of solicitors are asking whether this scheme is likely to become another ‘white elephant’ similar to the Law Society’s Personal Injury and Clinical Negligence panels.   Those schemes that have been up and running for a number of years have had little impact on the consumer’s choice of solicitor.

The Law Society is hoping that this scheme will help solicitors compete with outside suppliers when they begin to come into the market after the full implementation of the Legal Services Act in October of this year.   The general view however is this move is represents  ‘too little, too late’  and is likely to have little impact.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

How can I help my solicitor make my home move less stressful and quicker?

 Solicitors despite the image some may give through poor client relations do understand that moving home is stressful and for the client is one of the most important lifetime experiences.   We know that you are worried about the transaction falling through before contracts are exchanged; we also know that making arrangements to move in to a home are fraught with complexity and expense.      We recogonise that you expect given this anxiety to be regularly informed about what is happening. This is understandable.

So what can you do to help?

To begin with you should at the outset receive a ‘pack’ of information from your solicitor containing documents of various description for you to read and in some instances complete.      I bet some of you think that we do this on purpose, that we send what may seem to be hundreds of documents in the hope that this will impress you and justify our modest fee!     The true answer however is that we are obliged to send some of these documents because of obligations placed upon us by the organization that regulates our profession.  Other documents are necessary as part of the home moving process.   Most forward thinking solicitors like us believe that the system for moving home is antiquated and requires reform. Unfortunately until a progressive looking Government changes the system we have to work within the constraints of a system that was designed when far fewer land transactions were taking place.  So this brings me to the first tip – please read the papers we send and do your best to complete the forms etc fully and ensure they are returned promptly.   Time is often lost having to chase for information and documents that are requested at the outset.  The more you can supply the quicker the process will be.

The other advantage of reading the ‘pack’ in full is that it will contain an explanation of the process and should answer a number of the questions you have about timings and the stages of the procedure.

The second tip relates to trust and understanding.  Although your move is the most important thing to you, it must be kept in mind that for a solicitor to be able to quote a competitive price for the job, he is obliged to take on and process a number of other transactions.  It is not uncommon for a busy practitioner to handle at any one time around 80 live transactions.  Though an equal amount of time is devoted to all of the cases, as far as that can be achieved, it is inevitable that there will be times when you case does not receive daily attention.  If a practitioner were only to handle say 5 to 20 cases at any one time, he would probably have to charge around £800 to £1000 for each transaction to make it pay. Many of you would not sadly be prepared to pay a premium of that level for personal attention of this type.   So an understanding of the practicalities of a modern day conveyancing firm does I am sure help.  As does the fact that where there is a ‘chain’ of transaction taking place it is more often the case that the process of you case is hampered by the slowness of someone else within the chain.   This is frustrating as it often gives the impression that your solicitor is slow.  So as for my second tip please can you show some understanding by trusting your solicitor to do the best he can for you and to allow him to get on with the work he is undertaking for you.   I know from personal experience that having to take phone calls during the day can prove very disruptive and cause delay.  I am not advocating that you should never call your solicitor; all I am saying is that before picking up the phone just ask yourself whether the call is necessary.   Many solicitors prefer and find e-mail communication less disruptive.

This brings me to my final tip and one that I consider would help tremendously if followed.  One of the largest groups of callers into conveyancing departments is that of estate agents.  I recogonise that they are keen to see a transaction completed quickly for obvious reason, but I simply do not understand why some persist in calling every day to find out about progress.  I can perhaps understand an agent calling on behalf of a client of that agent but when we get as we do calls from the agent of the other party it is, at least in my view, unacceptable and very disruptive.  So if you could speak to you agent and make sure they do not call without your approval this would be very helpful.

At the end of the day the client comes first and the need to keep the client updated is paramount.  We have to work in a system that is inherently slow and which is akin to an age when telegrams and manual type writers were prevalent.  Clients expect a professional and quick service but at an affordable price.  The question whether the high street lawyer can continue to meet this demand is a question for debate on another day.

David Pett who is a partner with Morgan Jones and Pett wrote this Blog Entry.  His role involves the supervision of the firm’s Residential Conveyancing Team.  He also runs the Business Development and IT Team. He can be contacted at davidpett@m-j-p.co.uk

Your feedback would be appreciated – davidpett@m-j-p.co.uk

Why the Law Society’s Conveyancing Quality Scheme is the final nail in the coffin for the high street conveyancing solicitor

 Buying a home can be stressful and often leads to anxiety.    Those like myself who work in the industry understand this and though we work hard to take steps to ensure the stress is kept to its minimum, we are often left feeling equally frustrated. 

Most solicitors working in this sector are working 70 hour weeks plus if not longer trying to make some money out of what has fast become a very competitive and in the main profit losing area of legal work.

Those who understand conveyancing will know that given the antiquated system for conveying property in which we are forced to operate the only way to stand any chance of making some money is to commoditize the product, keep the price low and have in place good technology.    At the same time quality and client relations must be maintained.

The constant battle between competiveness and quality often makes it difficult for the solicitor to deliver the type of service that one would expect from a supplier of professional services. Whether the client is paying £600 or £200 the level of expectation is the same as are the demands of the client. 

Given the client is expecting high standards of service but at a low price the future for the solicitor as a provider of this service looks grim unless something is done to make the process more slim line and less cumbersome. The Law Society that purports to be an organization that exists to promote solicitors interests seems more preoccupied in bringing in more stringent quality standards for conveyancers than putting pressure on the Government to modify the home moving system.

The Labour Government introduced Home Information Packs, and although they were not well received, they did go someway towards speeding up the process and making it less stressful.  The Law Society was presented with a golden opportunity to build on this initiative but failed to respond positively. Unfortunately our current government lacks the insight (and indeed the motivation) to bring in measures to improve the system and the signs are that we will not be emerging from the dark ages for sometime.

David Pett who is a partner with Morgan Jones and Pett wrote this Blog Entry.  His role involves the supervision of the firm’s Residential Conveyancing Team.  He also runs the Business Development and IT Team. He can be contacted at davidpett@m-j-p.co.uk

Your feedback would be appreciated – davidpett@m-j-p.co.uk

Does the Andy Gray's dismissal mark an end to office 'banter'

Andy Gray made inappropriate remarks in the work place and has been punished for his conduct. Some may say the punishment was too harsh and disproportionate.  Others including myself are asking the question – has this incident marked the end of what has become a common characteristic of the work place that is, ‘office banter’.  Is this PC gone too far, particular at a time when we have a Government that is looking to reduce the level of red tape? 

I accept there is a fine line between respect for fellow workers and what some would call innocent banter. However in all of these cases each situation must be considered on its own facts and more importantly on how the banter is received. 

I am sure there will a lot of workers out there racking their brains to think whether they may find themselves in a similar position on the basis of remarks made in office conversations over the past month or so.  Re- living conversations at last year’s Christmas party must be happening in a number of offices throughout the country.

There is no excuse for offensive remarks but should we all be asking ourselves whether Mr. Gray’s dismissal has now sent out a signal that any form of office banter should now be restricted. The question of whether this is good or not is one that should be viewed against a background of low office moral due to risk of redundancy and wages that are being eroded by inflation.

Surely it must be best to leave it to the adult to decide what is appropriate banter given the audience and circumstances prevailing.  We should all know how remarks will be received and whether they may be unwelcome.

Time will tell as to whether Mr. Gray is deterred from challenging the decision through an offer of a secret severance payment or whether the appropriateness of the sanction will be aired in an Employment Tribunal.  One thing is for certain these circumstances have placed a big question mark over the future of unguarded office banter.  

More than 1,000 solicitors support Will Aid charity scheme

Monday 24 January 2011 by Jonathan Rayner

'More than 1,100 solicitors have participated in a will-writing scheme that is set to raise at least £1.5m for nine UK charities.

Solicitors all over the country took part in November 2010’s Will Aid campaign, forgoing their usual fee for preparing a will, and instead asking clients to make a donation to the British Red Cross, Christian Aid, Age UK, NSPCC, Save the Children UK and other major charities'.

Read more on the Law Society Gazette Article  on Will Aid Charity Scheme : http://bit.ly/hAJlB5

Why we should all embrace the Legal Services Act changes

Introduction

The beginning of every year is clearly the ideal time to make resolutions and to do one’s best to stick with them.  For me there can only be one resolution, apart from the obvious of eating and drinking less, and that is to do as much as I can as a partner within a high street practice to make sure that our business makes the most of the opportunity the Legal Services Act will offer when it is fully implemented in October.

There will be no hiding from it.   There was some doubt over whether the remainder of the Act would see daylight.  The Coalition Government as part of its general review of Labour Party introduced legislation was questioning whether the regulation was necessary. It seems however that unlike the infamous HIP regulations, the regulation passed this scrutiny and is now firmly back on course and is to be implemented in full and without revision.   

The question we should all be asking ourselves is whether we should be fearful of this change or whether we should be viewing it as a positive change and one which we should all be embracing.

There are some it must be said grim predictions of carnage in the profession. 

Professor Stephen Mason suggested that one third of the profession might disappear.  This was in an article published in the Times in May 2009.  He said “There are currently too many law firms duplicating too many costs...the Legal Services Act will sort this out”.

The opening up of competition will certainly present a challenge to legal practices and no more so than from national corporates.

Tesco has shown little interest so far in providing legal services, unlike the Co-op whose business model appears to be working and indeed growing each year.   I have also read that the CPP Group are in talks with Irwin Mitchell about being able to offer legal services for the price of a pair of shoes! In addition the AA and SAGA have said they will offer legal services to not only their members but also to non-members.

For many firms relying upon conveyancing, Wills, Probate, low value Personal Injury and other types of work that can be commoditised and where there is no emotional involvement or great complexity, there clearly exists a threat from new market entrants offering a cheaper service.  It would be foolish for any of us to ignore this risk.

On the other hand there are many who have already began preparing for the change and who are excited about the opportunities these will introduce in terms of addressing succession concern as well as opening the door to investment offers and cost saving re-structuring options.

This article wishes to review those provisions of the Legal Services Act designed to increase competition in the supply of legal services and to examine and debate both concerns and opportunities.

Background

The origins of the Legal Services Act lie in competition law and the Office of Fair Trading’s Report 2001 entitled “Competition in the Profession”.   In the report, it states:

 “The professions are entrusted with the delivery of services of considerable public importance.  They work within a framework of law, but within that framework, their governing bodies have important degrees of freedom to control rights to enter and practise the relevant professions.  The exercise of these powers can have a significant impact on the economy, on the interests of the consumers, and on society generally, especially where the professions concerned have exclusive rights to provide certain services.  Restrictions on supply in the case of professional services, just as with other goods and services, will tend to drive up costs and prices, limit access of choice and cause customers to receive poorer value for money than they would under properly competitive conditions.  Such restrictions will tend also to inhibit innovation in the supply of services, again to the ultimate detriment to the public.”

This was followed in 2003 when the Department for Constitutional Affairs published a document entitled “Competition and Regulation in the Legal Services Market”.

The Government then appointed Sir David Clementi to conduct an independent review of the regulation of legal services. His report was called “Review of the Regulatory Framework for Legal Services in England and Wales” and his foreword set out clearly the three main areas of concerns raised during the consultation process leading up to his report, namely: 

• current regulatory framework
• current complaints systems
• the restrictive nature of the current business structures.

In his report, Clementi states:

“I have learnt that certain lawyers dislike being described as part of an industry.  They see a conflict between lawyers as professionals and lawyers as business people.  The idea that there is a major conflict is in my view misplaced.  Access to justice requires not only that the legal advice given is sound, but also the presence of the business skills necessary to provide a cost-effective service in a consumer-friendly way.”

The central thrust of this early material is the emphasis on reducing cost and putting the consumer’s interests at the heart of change.  This is a theme which will be quite familiar to those who have had time to read and digest the recent report from Jackson.  The message that seems to come across loud and clear when one looks at reform in the legal process is the need on the one hand for greater consumer protection, and on the other a drive for further cost reduction. Unfortunately little is said about the difficulty many lawyers have and will continue to face in providing a sound, reliable and consumer friendly service, whilst at the same time making sure that there is enough money in the bank to remain solvent.

I sometimes think the Government would only be completely satisfied if all types of legal advice and services were to be dispensed by bodies like the Consumer Advice Bureau. The reality is that the only reform we seem to be seeing is reform designed with this type of aim very much in mind.

Indeed, Clementi was then followed by the publication of a White Paper entitled “Putting the Consumer First” with proposed introduced reforms along the lines which Clementi had recognised.  In this Paper it states:

 “We will create a Legal Services Board, an Office for Legal Complaints, and will take steps to enable firms to provide services under alternative business structures to those presently available’. 

This then led on to the draft Legal Services Bill in May 2006 with the Bill receiving publication on 24 November 2006.  It passed through Parliament and was received Royal Assent on 13 October 2007. 

Alternative Business Structures

From about October 2011, “alternative business structures” (ABSs) will be permitted under Part 5 of the Legal Services Act, allowing participation by a larger proportion of individual non-lawyers in a firm, as well as external ownership or part ownership of law firms, and the possibility of firms providing new and novel combinations of legal and non-legal services. The SRA aims to have rules in place to govern the conditions under which ABSs will be permitted as and when the legislation allows.

There is nothing to prevent legal firms from preparing to set up an ABS;  indeed the SRA encourages the preparation of the setting up of ABSs and these can include for example, a discussion with potential business partners, a non-binding arrangement with a potential business partners for the setting up of an ABS (that is “subject to contract”), registration of company names, acquisition of domain names, an agreement to enter into exclusive negotiations with a potential business partner, or certain conditional contractual arrangements to be activated once the regulatory requirements have been relaxed and all the necessary approvals granted- e.g., an agreement to accept non-lawyers, or an outside investor into the partnership.

ABSs cannot be authorised until the Legal Services Board has finalised the detail of the new licensing scheme so that regulators, such as the Solicitors Regulatory Authority can prepare their own licensing regulations and apply to the LSB to become licensing authorities for the purposes of regulating ABSs.

The SRA has already begun work on the project.  The process will involve consultation and formation of new policies, rules and procedures.  Assuming the LSB approves the SRA’s application, secondary legislation will be needed to give the SRA the necessary powers.

Further information can be found at www.sra.org.uk

What options will the introduction of ABSs present?

The options these changes present to solicitors practices gives rise to many issues and ones which should already without doubt be occupying the minds of practitioners.  I suspect there are not that many firms however, who have begun such considerations. 

The impact of the LSA depends very much on where the legal practice is positioned in the market.  It goes without saying the challenges for a large London based legal firm is going to be completely different to that of a High Street sole practitioner.

            As mentioned above the big question to be answered is whether the ‘High Street’ firms will disappear overnight or whether they will they be able to reinvent themselves and move more effectively within the market than larger firms? 

Furthermore does the LSB spell the end of generalists?  Is the way forward with specialists or will generalists merge with say, accountants to offer a one-stop shop? What about seeking outside investment opportunities?

So what should a Practitioner be doing now in preparation for these changes?

As the above questions suggest, it very much depends on the circumstances in which your practice operates.

I foresee that the larger legal practices based mainly in main financial centres will begin, as they are already doing, to merge with each other and could very well become PLCs.

For those smaller practices like my own where we undertake different types of ‘High Street’ work, but are quite niche in the areas of the law in which we practice, there could very well be a number of favourable opportunities.

There will be a new regulatory structure with the Legal Services Board sitting at the top and with other existing regulatory bodies sitting underneath it.  These include the SRA, the BSB, ILEX, CLC, CIPA and the Faculty Office.  Running alongside all these regulatory bodies it was the plan at one time for there to be a ‘Consumer Panel’ to deal with complaints.  It seems however that this idea has fallen foul of of the Government’s Quango cleansing operation.  The present talk is about merging the consumer panel concept with the CAB.  I am not quite sure whether this would be a perfect marriage given the CAB exists to represent the interests of its clients and is not necessarily the best body to deal with complaints.

This new regulatory structure will present certain opportunities.  In my practice, we undertake both litigation and non contentious work.  We are already giving thought to separating these two disciplines of work and setting up limited companies to act as vehicles for their future operation.  This will then give us the opportunity once the 2007 Act is fully implemented to ‘shop’ and select for each different company which of the regulators we wish to be governed by. There may be some advantage for example for choosing as our conveyancing regulator, the Council of Licensed Conveyancers.  They operate less stringent rules on referrals. We may also witness a ‘costs war’ between each of the regulators in an effort to try and attract new members. 

The choice of regulator and the separation of litigation from non contentious work may also have some beneficial impact upon future legal indemnity premiums.  It may be an ideal opportunity to shop for insurance without the baggage of the whole practice’s claim record.

By restructuring a legal practice and separating the entities of work within it may also make separate parts of the business more attractive to outside investors or at the very least to those new entrants who may be looking to “buy up” existing legal practices. 

One of the main players in the market is the insurer DAS which underwrites over 300,000 legal policies each year and who have already declared an intention to come into the market and offer legal services.  It could very well be looking to expand through the acquisition of existing litigation practices.  By making sure your firm is structured in such a way that perhaps separates litigation from other areas in the practice, and is then able to demonstrate that the separate entity generates a profit, may very well make that entity easier and more attractive to ‘sell’ or merge. 

In my own practice we have a succession problem and one which I am certain is common to many other partnerships.  The ability to separate entities within the practice, to set up corporate vehicles for future delivery of services, and the ability to sell these separately presents a fantastic exit plan and one that ought to be explored by those firms that are facing a succession problem.

It will be possible to sell 100% of the legal practice to a non legal lawyer owner when ABSs are permitted.  As mentioned, there is nothing to prevent legal firms to exploring possible commercial arrangements at this stage.  Firms should be aware of jumping the gun however and should consult the guidance on alternative business structures which can be found on the SRA website. 

Cost Reduction Options

Other options open to legal practices that may be looking to become more competitive so as to be more attractive to outside investment, are the business models that already exist, such as the Keystone Virtual Legal Practice.  Keystones operate from a base in Mayfair in London which is used as a meeting point and a hub for administration.  All of the fee earners working within the firm are known as ‘partners’  and are engaged as consultants.  They all operate from home using the support provided by the administrative hub.  They retain 75% of the profit costs they generate with the other 25% going into a pot.  They are described as the fastest growing legal practice in England and Wales.

The other option is outsourcing.  Kerry Underwood’s firm, Underwoods, presently outsources its RTA portal work to a company in South Africa.  Other legal practices also have invested as we have in digital dictation software which again lays the foundation for outsourcing of typing and support staff.  We should be asking ourselves is it really necessary to operate out of expensive High Street offices, when as some of us already do, work from home. 

There is also the initiative taken by Quality Solicitors who are looking to offer firms  the benefit of adopting their national branding, in the hope that this brand will then be able to compete with the likes of the Co-Op and other new ‘brand recognised’ entrants.  One problem I foresee with the Quality Solicitor model, however, is that what happens if one of these Quality Solicitor firms finds itself on the front page of a national newspaper because of a major failing.  Such publicity is clearly going to have an adverse impact upon the brand as a whole and could lead to the whole thing falling over.  There is also a funding concern when comparing the probable size of their marketing budget with that of the likes of Tesco and the Co-Op. I may be wrong but I do not see how they can sustain a national marketing campaign without having to call upon members firms to contribute large sums of money each year.

So to recap, the options open to small and mid-size legal practices, are to either ‘take the bull by the horns’ and embrace these changes, to take steps to restructure with a view to selling businesses on or to merge, or to look at cost saving structures, such as loose associations between firms whereby a service company is established to provide services to four or five firms so the cost of those services can be shared and reduced.  This is very similar to what is already happening in London where we have seen certain of the Borough Councils joining forces in an effort to reduce overheads.

Our firm has already looked at the idea of forming arrangements with other firms to share referrals, and has recently launched an online referral and tracking  scheme for fee sharing on clinical negligence, RTA portal cases and other areas of law.  We see this as a building block for the creation of a network of smaller and mid-sized firms and to then explore cost sharing initiatives

The other option is to promote and emphasise when publicising business the fact that cheap is not always best.

This can be demonstrated by the fact that not all people, for example, are interested in purchasing the basic product line that Tesco and other supermarkets offer.  These products may appeal to a certain part of the community but are not everybody’s cup of tea.  There will always remain a place for a legal practice that can offer a competitively priced service but one that is based on good and sound principles of service and reliability. The only reservation I have about this is that even though you may be provide very reliable and quality service to clients, unless you have the marketing clout of Tescos or other similar companies, it may be difficult to get your message out to the public as a whole. 

Do something, because simply sitting back and doing nothing would clearly be the wrong thing to do and could very well be the final nail in the coffin.  Do what we have done and take advice from your accountants.  See what they have to say about restructuring.