An Unnecessary Upheaval?
There’s an old curse- “May you live in interesting times”.
It has to be said that even ignoring the present geo-political issues, the threats presented by climate change, and the approaching asteroid, the legal sector in England and Wales is dealing with times that are far from dull.
You’d have to have lived in a cave for the last year or two to have missed the huge amount of discussion around law firms handling client money. As the SRA’s consultation period neared its conclusion Cashroom was invited to attend a round table discussion hosted by Lockton in their London offices.
The attendees were mainly law firms, many of which handled client money and had done so very securely and efficiently for many years.
It would be perhaps a more interesting blog if I was able to describe the heated debates. The vociferous disagreements and hotly contested arguments.
However, the room was unanimous on each issue.
There were of course nuances- some law firms are more focused on property transactions for example. They had a particular interest in the discussion around TPMAs and Digital Payment solutions. The consensus there was very much that firstly the number of issues was miniscule in comparison with the transaction numbers, and that the efficiency and client service levels would be massively detrimentally impacted by the changes being considered by the SRA.
Aside from the lack of availability of these solutions, the chaos which would be caused by even a significantly delayed imposition of such measures was felt to be unnecessary and potentially cataclysmic.
The insurers and brokers confirmed that they simply did not believe that the risk profile would fundamentally change, and the lawyers felt that the regulatory responsibility would have to stay with them. Neither element would appear to be likely to be improved, or the burden reduced, by the SRA’s considered options.
The room felt that TPMAs, with their ‘subscription charges’ and then charges per transaction, would create additional expense and would be passed onto the end consumer (the very person the changed measures purport to be assisting).
A fascinating meeting really came to a unanimous conclusion that with the use of appropriate processes and service providers (whether inhouse or outsourced) the existing model is not broken. Bad apples need to be rooted out of course, and it was felt that closer attention should be paid during SAR audits to potential red flags. Law firms have proven for many years that they are well capable of handling client money and should be allowed to continue to do so.
Click here for a response from The Law Society to the SRA’s client money consultation.
Chief Revenue Officer
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About Cashroom
Cashroom provides expert outsourced accounting services for Law Firms including Legal Cashiering, Management Accounts and Payroll services. Our mission is to free lawyers from the complexities of legal accounting by supporting the industry with accurate management information and allowing lawyers to do what they do best – practice law.
‘The Cashroom have been an integral part of MBM from their inception. They has supported the growth of MBM from a small firm of 15 people all the way to the 70+ partners and staff now working in the firm. I have first hand experience of the wealth of skill employed within the business and the cashiering knowledge is unrivalled. The fluid ability of Cashroom to adapt to the changing requirements of a firm on a daily basis, as well as the ability to cover holiday periods seamlessly would be a benefit to any law firm. The Cashroom portal provides a first class workflow system for all cashiering requests and, more importantly, provides the level of security that email instructions do not. Cashroom provide both a cost effective fully outsourced service that can deliver almost everything that an internal finance team would be charged with, as well as a wraparound service to support an internal finance team.’
