Today is the day when, finally, more than four years after the Legal Services Act received Royal Assent, the SRA started accepting applications for Alternative Business Structures (ABS), thus meaning we’re on the cusp of a possible “titanic battle for the hearts and minds of potential customers” as the new style legal businesses jump into the existing legal marketplace. Or, more likely, a prolonged period of trench warfare as “traditional” law firms struggle to adapt to the challenges posed by new forms of I.T, fixed fees and ever increasing insurance premiums.

The Ministry of Justice sent out a press release hailing this “milestone” and saying, rather misleadingly in my view,

From today UK consumers and businesses will find solicitors’ firms more competitive, more accessible and more efficient following reforms to legal services.

Leaving aside the issue of whether the introduction of ABS will bring all this about (and it would probably be silly to deny that it won’t have any effect at all) isn’t it going too far to claim that merely by accepting applications for ABS the whole legal landscape will change as they predict?  At least give the SRA chance to actually process a few applications first!  It may be at least a month before the lucky applicants are known – which also sounds rather optimistic.

From what I read before Christmas there were only a handful of interested parties anyway.  I wonder if that remained the case or whether the Postman delivering the SRA’s mail had an especially large mailbag today?

Time will tell.

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Last month the Law Society published the outcome of a survey it had conducted amongst small firms, which claimed that 1 in 10 small practices were planning to close down because of the cost of complying with the regulatory regime contained in the new Solicitors’ Handbook, commonly known as “Outcomes Focused Regulation” (OFR) would be prohibitive.

The report claimed that 9% of firms surveyed were planning to close or merge as a result of the increased costs of compliance. The report also suggested that 23% of firms with fewer than 10 partners did not record how much time was spent on compliance whereas those that did claimed to spend a whopping 27 days per annum on it. That, of course, must be on the old Code of Conduct, not the new, but as each firm will now have to get on top of the new rules, and will have to appoint a Compliance Officer Legal Practice (COLP) and a Compliance Officer Finance and Administration (COFA), by next March, the amount of compliance work is only going to increase, in the short term anyway. It does not help that these new roles cannot be outsourced. However, I doubt that OFR will be, on its own, the cause of many firms to pack it all in.

My initial reaction to OFR (aka Freedom in Practice) was that whilst it may be yet another issue with which to get to grips, the emphasis was on saying goodbye to box ticking and taking a more common-sense approach to regulation. Provided you adhered to the Ten Commandments (sorry, Principles) you ought to be fine and if you had complied with the 2007 Code of Conduct you would have little to fear from OFR.   The new Handbook is significantly shorter than then old and there are “Indicative Behaviours” to guide you as well.  This taken with the SRA’s stated desire to be friends with the profession, to supervise and help and only to come down hard on those  firms that refuse to change or accept help, left me feeling that maybe this was not such a bad development.  The Law Society’s survey said that 56% of respondents were in favour of OFR, so I wasn’t alone in being cautiously optimistic.

Then last Monday I went to a seminar organised by CoreLegal, the message of which shook me out of my complacency.      Granted, I was always slightly suspicious of the SRA’s desire to be warm and cuddly.  How could they give up the pedantic, hard taskmaster image cultivated so successfully over so many years?  Could they really get away from a culture of prescriptive micro-regulation? The desire to “supervise” always had an element of Doublespeak about it.  But, there is force in the SRA’s admission (stated during their “Freedom in Practice” Roadshows earlier in the year) that they can’t micro-manage every law firm and ABS and need to concentrate their resources on the law businesses that do pose a real risk to the profession, leaving those that comply (or show that they are attempting to comply) in peace.

However, the message from the CoreLegal seminar is that nothing in OFR is clear and law firms face great uncertainty in what they are being asked to implement.   Yes, there are Ten Principles that are set in stone, but instead of being clearly understandable they are a movable feast.  Thou shalt not kill is easily understood, no room for confusion there, but “ you must provide a proper standard of service to your clients”, whilst also seemingly unobjectionable and reasonable begs the question, what is a “proper standard”.  Is it a good service or merely middling?  Is it more subjective and does it depend on the type of service being provided, i.e is the level of service demanded of a firm acting for individuals (particularly vulnerable clients) going to be higher than that demanded of a big commercial firm acting for corporate clients (answer = yes).  Where is that level of service to be pitched?  There is no one prescriptive level of service and that is what makes the whole prospect of OFR so daunting for many.  In other words, what constitutes a proper standard for one client may not be sufficient for another.

Similarly Outcome 1.1 “You (must) treat your clients fairly”.  Who judges what is fair?  Isn’t this highly subjective and bound to be interpreted against the solicitor?  But hold on a minute.  Is this really so onerous?  Are there any solicitors who do not want to treat their clients fairly?  The difficulty for practitioners is that we simply do not know how these rules will be interpreted, but surely it is better to have guidelines for behaviour rather than pedantic rules and requirements that must be obeyed, even if they are not relevant to that particular firm’s area of practice?

The Handbook came about from an understandable desire by the SRA not to have a two tier regulatory system – one for “traditional” law firms and the other for ABS law firms.  That means that much of the new Handbook is drafted with ABS in mind, i.e. new entrants to the legal marketplace that may have many other commercial interests.  One of the examples cited at the seminar as being a difficulty for law firms was Outcome 8.4, the mandatory requirement that “clients and the public have appropriate information about you, your firm and how you are regulated”.  I disagree.  For law firms that do not convert to ABS the information to be given is simple and is set out at Outcome 8.5 – you need to inform clients via your letterheading, emails and website that you are authorised and regulated by the SRA. Job done?  For ABS that do unreserved as well as reserved legal activities, or say a firm of accountants that becomes an ABS I can see that these issues might be more problematic, but should it be concerning to the plain vanilla smaller law firms that are owned wholly by their partners/members?

The answer to all these (and other problems), at least according to the speakers at the event, is to communicate with clients to assess what they need and how they perceive the service they receive.  No longer will what is on the file be enough evidence to show that you have provided a proper level of service.  Instead, it was suggested, you will need to have a dialogue with clients throughout the case and afterwards (in the form of questionnaires) to ascertain whether they felt they had received a proper level of service.  That may involve retaining external consultants to send out questionnaires and to interview clients on the retainer relationship. I don’t have a problem with this in principle, indeed probably all successful businesses listen to their clients and work on feedback, but does it require a satellite industry to be created? Is this really a regulatory requirement or merely good commercial practice?  I suspect it is the latter.

There are troublesome aspects to the new Handbook and this is where potential difficulties lie.  If a law firm makes a mistake there is now a positive duty upon the solicitor to inform the client “if you discover any act or omission which could give rise to a claim by them against you”.  Just what should you say in this situation that will not prejudice your PI insurer’s position? There is sure to be much debate over that issue in the future.

Risk management is a main focus in the new regime.  That is not just legal risk, but financial and managerial as well and many firms may struggle to get to grips with it.  For the first time, the business of being a solicitor is a matter of professional conduct.  Consider Principle No. 8,

You must run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles

And under Outcome 7.4

you maintain systems and controls for monitoring the financial stability of your firm and risks to money and assets entrusted to you by clients and others, and you take steps to address issues identified;

In other words, if the Bank called in its overdraft to your firm suddenly, what contingency plans do you have?  For those firms that are run properly and prudently do they have much to fear? No one wants to see another Halliwells disaster and I cannot help but feel that these requirements are prudent and sensible.   If you read Chapter 7 of the Code of Conduct it reads to me as though it is written with the ABS in mind, not with law firms that already are used to supervising staff.  It must surely be in the profession’s interest that rogue firms, or firms that are shambolically run, are forced out of business and also to make sure that no such businesses are allowed to enter.

The CoreLegal seminar was very thought provoking, but there could ve usefully been much more on the role of COLP and COFA, which was somewhat glossed over toward the end. Both roles need to be undertaken by people of sufficient seniority who will act as the eyes and ears of the SRA within each firm.  In other words, COLP and COFA have the unwelcome burden of reporting any breaches to the SRA.  Failure to report a breach may have to be justified at a later stage.

 Undoubtedly challenges lie ahead, but I cannot help thinking that many of the people prophesying regulatory doom actually have much more idea of what lies ahead than others. The force in the Corelegal seminar was to make the point that we are entering a regime of retrospective regulation, which isn’t a particularly comfortable place to be. We are all in the same boat: no one quite knows what is expected and that is indeed an unsatisfactory state of affairs. I don’t think that requires large numbers of small practices to shut up shop:  finding new work, paying ever increasing indemnity premiums and coping with pressure on fee income are probably greater threats to many practices.  However, the profession has claimed for years to be over-regulated and now the SRA has, hopefully, taken steps to remedy it.  Put the doom-mongers to one side for the time being and give it a chance. In turn the SRA has to ensure that it doesn’t lose this opportunity to build bridges with the profession.  It will only take a few well-publicised harsh regulatory decisions to alienate practitioners and throw OFR into disrepute.

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Brands won’t kill your law firm, clients will.

Solicitors need to engage with their clients and find out what they want.

The top line was the title of a webinar I took part in last night with Jon Busby of Epoq (@legal2.0) and Amanda Bancroft of 41Minds, a digital media agency who may be better known as @_millymoo.  It wasn’t a sales pitch by Jon about how any particular piece of technology (still less that produced by his business) can help lawyers, but a more high level relaxed discussion about how lawyers need to adapt their work processes in order to survive. It was good fun batting the ideas around. If you missed it, here is a summary of the main points.

Jon has also set up #flegal as the hashtag for these debates – some good comments came through from a pretty clued up internet savvy bunch of practitioners.  I did my best to be a Luddite though …

The second line is, for me, the main message that came through from the discussion. There is no one magic bullet of technology that will revolutionise legal practice. It’s not about giving up the lease on the office and becoming a virtual law firm (although for some it might be) and nor is it about dumbing down the advice given (for anyone). Law firms are human organisations and that is what gives them their edge.  It’s much simpler than that: solicitors need to understand what their clients want in terms of service delivery and quality of service – for proof of this take a read of the recent Peppermint Technology report.  And that may not be as simple as it sounds. It is commonplace to talk about their being a “disconnect” between solicitors and their clients – where is that gap and can it be bridged? First you need to find it.

#flegal Clients want solicitors to be close to them (i.e. keep in touch) but solicitors think that quality of drafting is what is important

November 8, 2011 9:32 pm via HootSuiteReplyRetweetFavorite

@TheTimeBlawg

The Time Blawg

Probably all lawyers believe they provide a “quality service” to their clients, but what does that mean? Does it have to involve a bespoke, one to one, sitting in a meeting room, (and highly expensive) type of service? That might be appropriate in some cases but by no means all.

V interesting points in #flegal webinar, user centric digital delivery, how can lawyers use this without compromising quality?

November 8, 2011 9:23 pm via Twitter for iPhoneReplyRetweetFavorite

@LAHumph

Louise Humphries

Some clients will not want to come to the office and will be content to deal remotely.  Others might want to be able to do the job themselves (i.e. wills and employment contracts) and come along for advice at certain mileposts in their case (if contentious) or if they need non-standard advice. In my view quality advice comes down to knowing the practice area well, i.e being a specialist and knowing the answers. There is no reason why that can’t be combined with being online, offline or both.

#flegal Process and intellect. Come to law firm for the intellect. Unbundle. Be brick + click NOT brick to click.

November 8, 2011 10:11 pm via HootSuiteReplyRetweetFavorite

@TheTimeBlawg

The Time Blawg

Perhaps more important is the subject of data capture, using software that allows the client to input their details, saving the law firm time and resources in gathering those basic details. Data capture and data mining are probably the biggest issue in modern commerce – look at Google for instance – but law firms aren’t generally very good at it. The relevance of date capture is to enable better processing of work, to reduce the “cost to serve” as Jon calls it. Or, to put it more simply, to reduce your costs.  This is fundamental to my mind because clients are already highly price sensitive, hourly rates are probably on borrowed time in the majority of transactions and disputes, to be replaced by fixed fees, and with major reforms of litigation costs on the horizon.

For many, the ideal approach might be to abandon a physical presence and become virtual, what the Peppermint report calls “Brick to Click”.  The survey shows that “clients of all types care very little about the physical location of law firm offices” and lawyers should look to “clicks and data” and new entrants to the market will probably do that anyway.  Jon’s view, using John Lewis PLC as an example, is that the right solution may be “bricks and clicks”, i.e don’t throw everything away and reinvent the wheel.  John Lewis now has a massive online presence, as well as many branches throughout the country.  That has been achieved on the back of excellent customer service.  Take Amazon, a wholly online business.  That has thrived from providing a great customer experience.  It isn’t perceived as being a “cheap” brand – yet it is 100% online.

What is needed is careful analysis of what your clients want and how they want it and to then respond.  Law firms need to consider a blend of services – online and real and need to promote the services they offer. It is no point having a web facility that allows clients 24/7 access to their files if they don’t tell clients it is there.  Ultimately it is about being responsive to what clients want.  That is the challenge ahead.

There will be more webinars where Jon develops some of these (and other) themes.

Additional Reading;

http://www.solicitorsmarketingsystem.com/blog/blog/brands-wont-kill-law-firms-clients-will/

http://thenewplayingfieldforlegalservices.blogspot.com/

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In addition to wanting to reform employment law, the government also wants to improve the public’s understanding of the legal process by allowing filming inside courts. It is bound to be controversial – do you remember the furore over televising parliament when that was first proposed?  In general I tend to be in favour of modernising proposals but I think this one is wrong, both in principle and in terms of what is actually proposed. ITN recently ran a debate on the subject and you can see the brief introduction above and the full discussion below.

What’s it got to do with the issues currently facing the profession?  Well s.1 (1)(f) of the Legal Services Act 2007  states that it is a regulatory objective  under the Act  to “increase public understanding of the citizen’s legal rights and duties”, which at least hints at joined up government. At the moment only the Supreme Court allows its proceedings to be filmed. However, I doubt that these proposals will do very much to promote that particular objective.

Ken Clarke’s initial plans are for filming and broadcasting only the Judgments in the Court of Appeal and the Crown Courts.  In other words you won’t see the whole trial being televised, so if a big murder trial is covered you won’t see the witnesses giving evidence, nor barristers with their best suits and polished shoes playing to the Jury, and nor will you see the Jury at all, let alone the Foreman standing to announce the verdict: it will simply be the Judge giving his/her verdict or sentence.  To his credit, Clarke says he intends to proceed “cautiously” and he also intends to publish court-by-court statistics on various measures, such as the length of time cases take from offence to conviction, how many trials were ineffective and the sentences handed down. The latter seems like a good plan, but I think the former  is wrong.  It seems like the main thrust of the initiative is focused on the criminal court process and not civil.  That is understandable because criminal cases will usually make the most compelling television, but does nothing to educate the public on the areas of law that are probably more likely to affect them.

And that is the problem, the televising of trials will risk trivializing proceedings. The Chief Executive of Victim Support is reported to have warned about “Judge Judy” style programmes and Roger Gale MP is also worried about “eccentric” lawyers playing to the cameras.   Do we really want to see something like the OJ Simpson trial repeated over here?  The cameras would only be interested in either trials involving celebrities or the most high profile murder trials.  Gale is right to warn of the whole process being turned into an entertainment, a 21^st century version of the pillory, which would neither explain the legal processes involved or shed light on why the particular defendant acted as he/she did.  Just wait for some self-appointed vigilante to opine that the sentence handed down wasn’t severe enough and try to mete out his own “justice”.

Televising parliament was different because that involved covering the proceedings of the body that makes our laws, which are clearly matters of public interest.  Many criminal trials may interest the public, but that is a different matter.

You can see why the TV companies have been lobbying hard to be allowed in. The possibilities for television coverage are endless. Just think, if a case was televised on ITV, during commercial breaks you’d have Ray Winstone giving the latest on screen odds, “”2-1 the Defendant’s mum says “he’s a good boy really”. 50-1 the Defendant’s wife storms out of court looking for a divorce lawyer. You wanna bet on sentence? The odds are on-screen: 11/8 nine years, 10-1 life … Bet in Play … Nah”.

Alternatively on the BBC you could also have legal experts sitting on a sofa in the studio discussing the case;

Alan -  “it looks bad for the Defendant, he left the pub, went home got the carving knife and then he found the victim in an alley and stabbed him.. that’s GBH with intent…shockin’ “

Lee – “But Alan, don’t forget he was provoked, he’d been taunted all night and he’d just split up from his girlfriend”

Alan “Aye, but this Judge has form.  You know what they say about him?  He gives a fair trial and a very unfair sentence.  This laddie is going down for a looong time. His Defence was very p0or, all over the place, he stands no chance on appeal. I hope he’s got his toothbrush”

Cut to Gary

“And we’re hearing that the Judge has come back from lunch and is going to sit now, so back to Mottie in the court room for the sentence…”

But, what if, instead, the Judge is too lenient?

Gary – “we shouldn’t criticize Judges of course, they have a difficult job sitting up there all alone, but the Defendnat got away lightly there didn’t he?

Alan – “Aye, it’s shockin’.  We need consistency from the Judiciary, the UK courts are the best in the world but this result is just a disgrace.  The Lord Chief Justice needs to get him in for extra training on Monday.”

Clarke’s proposals don’t go that far of course.  He only wants Judgments to be filmed.  But this risks pleasing no one (perhaps apart from practitioners who will be able to get up to the decisions right from the horse’s mouth).  As one of the speakers on the ITN film above states, most Judgments will be ”turgidly boring” and do little to enlighten the viewer as to the workings of the legal system or the rationale for the verdict. So neither entertaining nor educational.

As with most innovations it will be a salami slicing process.  First the Judgments then, when everyone has got used or bored with that, Counsels’ closing speeches.  Then the witnesses, until the whole proceedings are filmed from beginning to end.  Then you can imagine the public’s reaction: “criminal trials?  They’re like Grand Prixes; you want to watch the beginning to see how he pleads, the stuff in the middle is boring and then you want to see the finish, that’s the fun bit when the Jury comes back.  It’s a murdah so it’s got to be a mandatory life sentence, none of these Pre-sentence reports to spoil the fun.  Could be a minimum 25 years for this you know”

(voices off) Now time for a quick break before the Jury Foreman returns the verdict;

“The latest live odds are on screen: Gwillty: evens favourite, Not Gwillty: 100-1. Whole Life Tariff? 500 -1.  Bet in play … Nah!”

Let’s hope the Jury aren’t following this on their iPhones.

What are the odds on a three week constructive unfair dismissal and sex discrimination case being filmed? Now that would be interesting … *

*100,000 – 1

Many thanks to ITN for sending me the links to their programmes on what is a serious issue.  The full debate is below;

What do you think?  Please take a moment to answer then poll below

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So, today is the day: 6^th October 2011, ABS day.  The day when the last element of the Legal Services Act comes into force, except that it hasn’t unless you happen to be licensed by the Council for Licensed Conveyancers (CLC), who had the pleasure of making history by licensing the very first ABS.

Premier Property Lawyers, the conveyancing arm of MyHomeMove has been granted a licence to operate by the CLC.  Click here for the story in Legal Futures.  This will be a good pub quiz question in later years.

Aside from this Big Bang appears not to have occurred, not yet anyway. Not today.

Of course, this isn’t surprising because the CLC isn’t the main show in town: the SRA is and no doubt many commercial organisations will seek to be licensed through the SRA to give themselves maximum flexibility in respect of the reserved legal activities they can offer. They will have to wait until January or February before they can reveal their hand. The SRA missed the boat for today’s launch because of legislative delays and concerns over non-disclosure of previous convictions among ABS applicants.  With the SRA being the only regulator able to license ABS wanting to do the full range of reserved legal activities (save for Notarial functions) and the CLC only able to licence conveyancing and probate as areas of work, the commencement of ABS today will be something of a damp squib.

However, that didn’t stop the Today programme having a debate on the subject this morning between Jonathan Gulliford of the Co-OP Legal Services and Clive Sutton of the Sole Practitioners’ Group (SPG) or from putting up a summary of the Legal Services Act on its website (see here).

Clive Sutton’s main point was that ABS threatened the independence of legal advice given to consumers, because the commercial interest behind an ABS will taint that advice in the interests of making a profit.  I don’t think that is the main point at all – the main issue is competition and being able to respond appropriately to the challenges posed by the new entrants to the market.

The SPG was the organisation that briefly threatened a few months back to force a futile and costly ballot of all solicitors on the issue of whether the Law Society should allow the SRA to be able to licence ABS, before seeing sense. Gulliford made fairly short work of him.

Fresh from that skirmish, Gulliford then popped up again, this time on the sofa of BBC Breakfast in debate this time with Craig Holt, of Quality Solicitors.  Holt conceded that the threat of competition had led to QS introducing new innovations – Saturday opening and fixed fees.  Holt’s main point was that local firms could be driven out of business thus reducing the provision of good, face to face advice.

Gulliford set out the Co-Op’s vision which is to have high street “law offices” staffed with solicitors, legal executives, barristers and paralegals.  Their key aim is to change the way people perceive the cost of legal services and they will commit to upfront fixed fee pricing so people will know what they’ll be paying for their work.  Craig Holt made some good points in return and highlighted the issue of concern for many practitioners: namely that providing legal advice by telephone isn’t the best way to provide a service, especially in sensitive cases.

It will be interesting to see whether the Co-OP’s commitment to fixed fees extends to the litigation services they offer.    Fixed fees is the coming key battleground and unless the Co-Op  use economies of scale to make their service cheaper, I can’t see how they can commit to fixed fees in litigation on the basis of High Street law firms staffed by qualified lawyers whilst remaining commercial, unless they use the law offices as a “front” for a centralised telephone and email service.  That, however, was not what Mr Gulliford was suggesting they intended to do.   It will be very interesting to watch the Co-op over the next few months.

The perception of lawyers isn’t helped though by making Luddite calls for the LSA to be repealed, or for lawyers to be given special treatment. What we need now is for law firms to start demonstrating how good they are, what a good service they provide and to show how they can (and do) help clients.  It’s time to blow thoise trumpets, not cry over spilt milk.

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Now that the clock is ticking ever nearer to ABS Hour (for Licensed Conveyancers if not Solicitors for the time being) more and more businesses are launching their products, or announcing plans to launch.  The current plan de nos jours seems to be online.

Back in May, In-Deed, the online conveyancing portal fronted by Harry Hill of Rightmove fame, entered the market.  More recently Rocket Lawyer, LawPivot, LexisSmart and Legal365, the latter created by Yorkshire law firm Last Cawthra Feather, have declared their intent to the online fray in this country. LegalZoom, US based, will no doubt get involved over here at some point.

They are all based on the same idea, offering online legal documents which you can download for free, or for a price.  Rocket Lawyer, based in the US and part funded by Google’s venture capital arm (“Google Ventures”) offers monthly subscription packages allowing the individual or business user to download a wide range of documents.

All these platforms offer the same sort of package: standardised documents with one-to-one expert legal advice available as an add-on, not as the fundamental.  This is an example of the “one-to-many” legal service that has been spoken about by Richard Susskind for one and put into practice by Tessa Shepperson at Landlord Law, for example, for some years now.

One to one advice is available via their panel of lawyers and for those who sign up to the “pro” package they can get a discounted hourly rate or a discounted contingency fee agreement.  The key point about their marketing, which I must admit I like, is the concept of “legal health”: You can click on a button to take a “Free Legal Check Up” and use their “legal health tools to better understand, manage and control your legal life.”

Juxtaposing legal and health together is clever, especially in the US where health insurance is a necessity.  You would want to protect your health, why not your legal position?  These types of model enable service delivery at relatively low cost as well as being a powerful referral source for lawyers.  As Jon Bloor wrote in LegalWeek last month, it’s not Tesco Law that should be worrying you, it’s Google Law.

Law Pivot is slightly different in being an online resource that allows the user to pose either a confidential or open question to their panel of lawyers. It’s an example of crowd-sourcing, with the user choosing to instruct the lawyer who gives them the best answer to their question.

Legal 365 is a British contender in this market (LawPivot is also US based) and has grand plans to open a number of city centre “law shops” (we used to call them offices) to help clients fill in the documents they have just created and offer additional services.  This latter element strikes me as being rather odd. What is a “law shop”?  Is it a “legal access point” such as Quality Solicitors is running with WH Smiths or something more? Are they actually planning to open more offices in new locations?  If the latter, where are the savings to be made?  I can fully understand taking a firm off the high street and going online, but not doing both.

The only justification I can see for it is that they perceive there is a reputational advantage in being in (probably) very expensive city centre locations, in order to validate their online position.  After all, if you are just one of a number of online document providers, without any established online brand offering the same sort of service for roughly the same sort of fees, how do you differentiate yourself from the pack?   Does having a real world presence validate an online facility?  Would I be more tempted to use Legal365 than RocketLawyer just because the latter had a shop I could go into (probably to complain when something went wrong?)

I’m not sure I would.  One of the good things about shopping on Amazon is that you can read other people’s reviews of the products and not just the advertising hype.  I don’t need to go and view the product itself.  Indeed, often it is the other way around – see the product in a shop and then go online to buy it for less. It doesn’t matter that Amazon sells products, with services people are even keener to get independent third party validation.   That can and will come from online sources and will be increasingly critical.  For an example of a newly developing ratings site take a look at solicitor.info– which allows clients to rate their solicitors.  These sorts of sites will gain momentum as time goes by, until one establishes a brand presence like TripAdvisor or MoneySupermarket.com.  Change is afoot and it is the web that will fundamentally alter the way we practise law, not the Legal Services Act.

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One of the main reasons behind the creation of the Legal Services Act was the then government’s perception that the framework for the provision of  legal services in the UK was “out-dated, inflexible, over-complex and insufficiently accountable or transparent”(*). The then existing regulatory structure was then replaced with a new edifice that supposedly addressed these issues.  Hence we now have the Legal Services Board overseeing a profusion of “frontline” regulators.

One of the other bodies created by the LSA, the Legal Ombudsman (LeO), has today published his first annual report in which he criticizes the new regulatory system and draws attention to the possibility that consumers may become confused by what legal services are regulated under the act and which not.

The LSA only applies to those law firms and Alternative Business Structures (ABS) carrying out Reserved Legal Activities.  They are; conduct of litigation, advocacy in court, conveyancing, probate activities, notarial activities and administration of oaths. Businesses that don’t do any of these types of work need not be regulated under the LSA.  However, what about ABS that undertake both regulated and unregulated work?  If a problem arises in such a hybrid business will it be clear to the consumer where to pursue a complaint? LeO gives as an example the situation where legal services are bundled together with financial services and other products.  Who will the consumer complain to then if they need to make a complaint?

Adam Sampson - Chief Ombudsman

This is an issue that has still to be properly dealt with by the LSB and the other interested regulators. In his report, Adam Sampson says;

The Act sought to free up the legal services market. But the market is powerful. We are
seeing new forms of legal service being offered to meet consumer demands for ease of
access, fixed or lower prices, and innovative uses of technology. New players are coming
into the legal market, including large corporate businesses looking to offer bundled
professional services. The nature of the legal profession looks set to change and change
quickly.

This poses a real challenge for regulation and, with it, our jurisdiction. In the face of this
diversity of provision, the traditional distinction between what is regulated and what is
unregulated is becoming difficult to negotiate. Newer providers are, as one might expect,
interested primarily in finding structures and business models that work in market terms
rather than ones which easily fit the existing regulatory structures.

While these developments may offer a wider range of legal products to customers, there
is a danger of both consumer confusion and regulatory inefficiency. Take these examples,
demonstrating the new range of legal products available to consumers. They may, or may
not provide good quality legal services which may satisfy consumer demands. But, if they
do not, how confident can we be that consumers – or indeed we ourselves – know who
would be the proper avenue for appropriate redress? Is it the Legal Ombudsman, another
Ombudsman scheme, Trading Standards? Or is it no–one?

And later on in the same report

These cases reveal a mismatch between consumer expectations of what constitutes a ‘legal
service’ - which consumers clearly assume implies access to a proper system of regulation
and redress - and the reality of the diverse market providing such services. This confusion
is not helped by the habit many unregulated companies have of presenting themselves as
though they were traditional law firms, with websites and advertising material branded
with the panoply of wigs, gowns and quill pens.

The Ombudsman is particularly concerned about will writers and claims management companies, which he thinks are fertile areas for complaint and confusion. The LSB’s Consumer Panel has recommended that will writing become a Reserved Legal Activity, perhaps leading to another regulator, the Institute of Will Writers being added to the alphabet spaghetti of regulatory acronyms (SRA. BSB, ILEX, etc) already in existence. Last  Thursday the LSB set up a statutory investigation into the question of whether to include will-writing as a reserved legal activity. If it does will-writing will not be reserved only to solicitors, judging by comments made in the LSB’s press release announcing their investigation;

Importantly, solutions will need to be targeted at the actual problems – it is clear from the results of the mystery shopping exercise – and the Consumer Panel’s analysis – that the challenges are common to all providers and that a monopoly for solicitors is not the answer.  We are asking the existing regulators and trade bodies to explore the steps that can be immediately taken to raise standards across the marketplace.

The mystery shopping exercise showed that some solicitors made a mess of will writing, thus rather handing useful ammunition to those who argue that the existing marketplace needs reform. However, whatever the rights and wrongs of that particular debate, it is clear that the future regulation of the legal services marketplace is anything but clear.  The overriding aim of the LSA was to make the consumer king: what is becoming clear is that the consumer could end confused and isolated. It is theoretically possible for what otherwise looks  like a “firm of solicitors” to be regulated by the Council for Licensed Conveyancers, if they only do conveyancing and wills, for instance.

Or what about a business that looks like a law firm that isn’t?  The consumer will think they have been dealing with a regulated body, with all the safeguards and protections (such as insurance) that that might provide, but actually find none of it is in place because it is outside the scope of the LSA.   Consider employment law as an example. An advocate before an ET does not need to be authorized under the LSA because it doesn’t count as advocacy for the purposes of the LSA.

There are two issues which are becoming increasingly clear to me.  One  is that the only way that that confusion will be reigned in is if the number of reserved legal activities is increased (that has never been thought very likely given the need to “deregulate” legal services) or the number of regulators decreases. Or both.  Perhaps we might eventually end up with a “Lawyers Regulation Authority”, a frontline regulator of all sectors of the profession, not that that would fill many people with confidence given the Financial Services Authority’s record.

The second point is that the LSA should be viewed as the biggest and most ruthless quality control exercise ever mounted in the legal profession: if you’re not good enough you won’t survive. For this reason expect to see more specialisation of services, especially amongst smaller firms.

* = Department for Constitutional Affairs July 2003, “Competition and Regulation in the Legal Services Market – A report following the Consultation “In the Public Interest” paras 71-73

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The Troubleahead Podcast with Gary Yantin of HighStreetLawyer.com - http://t.co/AWGTSqZ Now on #iTunes

June 29, 2011 10:39 pm via Tweet ButtonReplyRetweetFavorite

@michaelscutt

Michael Scutt

This is the first Troubleahead podcast.  A little while ago I met up with Gary Yantin, solicitor and Managing Director of High Street Lawyer.com, to discuss how HighStreetLawyer.com works and to chew over the challenges posed to practitioners by the Legal Services Act.

Gary is well worth listening to for not only his explanation of why there is a role for marketing umbrellas like HighStreetLawyer.com but also why Partners need to think about succession planning, consumers and taking a strategic view. We discuss the importance of branding, whether the high street lawyer is doomed and the importance for law firms of having  a low costs base.

There is also a further plug for the webinar I’m doing with Michelle Drapeau on 6th July – how to raise your profile in then post-LSA marketplace.  It’s free and please click here to book. https://www3.gotomeeting.com/register/239922718

Finally, there’s also a mention for my Countdown competition – there’s a bottle of wine at stake for the best winning entry – click here for more details.

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The Legal Services Act has inspired much debate, created many column inches of writing, destroyed many trees and caused much angst. It has also created (or given rise to) so many acronyms that you could have a game of Scrabble or Countdown with them all. So with Carol Vorderman back in the news following her victory earlier this week as “Rear of the Year 2011” I thought a further competition was in order.

So, let’s do that. By my reckoning there are 17 acronyms that I regularly come across when reading or writing about the LSA – hold on, make that 18 – most are regulators, of course.

I will give one decent bottle of wine to the person (based in the UK only I’m afraid) whom I judge comes up with the most amusing or notable phrase out of the following alphabet spaghetti using all available letters. Vowels are at a premium unfortunately.

Unlike on Countdown you have 30 days not 30 seconds to reply. Please leave your answer and contact details as a comment to this post.

LSA
LSB
LeO
ABS
RLA
LDP
SRA
CLC
CIPA
ILEX
FO
BSB
ALCD
HOLP/COLP
HOFA/COFA
OFR

Good luck!

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