Chloe McGinn, Author at The Cashroom

What are the benefits of pensions for business owners?

Pensions are not always popular with business owners. Only about a third have a pension at all, with many business owners choosing instead to rely on their businesses to fund their lives in retirement. But shunning pensions does mean missing out on some significant tax benefits that could make a big difference to the amount of money they have in the future.

Are you missing out on pension tax breaks?

Because the Government wants people to save for their retirement, pensions come with significant tax breaks. Pension contributions up to the annual allowance receive up to 46% tax relief, and there are other big tax benefits for business owners:

If you have a limited company, pension contributions can be treated as an allowable business expense, helping offset your company’s corporation tax bill
Pension contributions can be a tax-efficient way to take money from your business
If you’re planning to sell your business to fund your retirement, making the most of pension allowances is wise because it can help reduce Capital Gains Tax when the company is sold

Do you have all your eggs in one basket?

Business owners are often much more comfortable investing in their own business than trusting others to invest on their behalf. They know their company and industry inside out so on the face of it, this makes sense. But as with any investment, it is rarely sensible to put all your eggs in one basket.

You never really know what is going to happen to your business in the future. The market could go against you, or you could become ill and need to give up work earlier than expected. You may also need to sell your business for less than expected. With a pension or other forms of retirement saving, you would be less vulnerable.

Getting the best from a pension

We speak to many business owners who have been put off pensions by a bad experience – they’ve paid high charges and ended up with mediocre returns. That’s where financial advice can more than pay for itself. A good financial planner with experience of working with business owners can work with you to construct a pension that helps you make the most of the tax benefits and investment opportunities while also taking into account your individual attitude to investment risk.

A good financial planner can also work with you on your exit plan, helping you understand when you can realistically retire. We use cashflow modelling to create a visual illustration of what your future finances could look like, and we can help transfer business wealth into personal wealth, making sure your assets are structured in the most tax-efficient way.

Would you benefit from our specialist financial advice for business owners?

The easiest way to find out how we can help is to book an initial, no-obligation consultation by contacting Alison Fitzsimons on 0333 014 5429 or alison.fitzsimons@tilney.co.uk.

The value of your investment can go down as well as up and you can get back less than you originally invested.

Mike Wardlaw, Chartered Financial Planner

Tilney Group

GDPR – what does it mean for legal accountancy?

Since the introduction of the General Data Protection Regulations (GDPR) in 2018, we have seen some high-profile companies hit with multi-million pound fines by the Information Legal accountancy Commissioner’s Office (ICO).

Evidence suggests that UK businesses are struggling to fully adapt their policies and protocols to ensure they are compliant. The ICO were inundated with four times more data breaches in the year since GDPR was introduced as UK firms look to embrace their responsibilities and disclose a breach within 72 hours of its discovery.

Whilst many firms may have become compliant with storing and protecting data, policies on satisfying data access requests, were of particular concern. Two thirds (63%) of UK businesses had reported a significant rise in requests by the public for the data a firm holds on them, according to Parseq.

The report also found that 87% of organisations have failed to reply to data access requests within the allotted time limit, resulting in significant delays which will lead to fines, which then have a detrimental impact on a law firm’s accounts. This can be pertinent in the legal sector as solicitors try to balance competing priorities, however as with any job, some priorities can slip.

This is where an outsourced legal accountancy function can help to take the pressure away from solicitors who are juggling many aspects of the business.

Entrusting legal accounts into the hands of a skilled and experienced legal cashier, who can adapt your policies to comply with GDPR, will reduce the threat of possible fines and protect the firm’s valuable reputation.

Why The Cashroom?

At The Cashroom, we have tested our security measures by employing a specialist firm of “ethical hackers” to help review and improve all aspects of our data security. And, of course, we also have robust confidentiality processes in place to ensure that confidential client information is protected as per the SRA code.

But more than that, we have also developed an online portal to help minimise the risk of email fraud. Allowing internal and external stakeholders to communicate and share information in confidence, all exchanges are secure with access restricted to authorised individuals.

We supply you with high calibre, qualified people who are experts in management accounts. This means that we don’t just provide you with all the data and analysis your firm needs, we also take the time to understand your business and what you want to achieve, whilst adding value for money.

Want to have a chat about how outsourcing legal accountancy can help your firm? Speak to one of our advisors today who will point you in the right direction.

If you are regulated within the English and Welsh markets, then please contact:
Alex Holt E: alex.holt@thecashroom.co.uk T: 07817 420 466

If you are regulated by the Law Society of Scotland, please contact:
Gregor Angus E: gregor.angus@thecashroom.co.uk T: 07875 598 593

Stick to what you know, delegate what you don’t!

You probably hear the phrase all the time – “stick to what you know” – but how good are you at doing that? I think it’s fair to say that most solicitors know this is the best way to approach things. Why would you want to spend time researching an area of law you don’t know much about? Even worse, why take the risk of providing advice which, at best, may not be very beneficial to your client (because you don’t have sufficient previous experience on which to draw) or, at worst, may be professionally negligent.

Perhaps some sound advice would be to pause for breath the next time a client asks your professional view on something outside your area of expertise. Is there a colleague who may be better placed to advise? Is there another friendly firm who would look after your client for this particular matter, but not poach them for future work? Perhaps you are part of a network such as the Commercial Law Network, HM Connect, CPIN, Lawshare or Fusion Legal. By delegating the work to somebody in the know, you can rest assured the client is getting the correct advice, that you are more likely to have a happy client who will come back to you in future for other matters, that the firm you refer to are more likely to send things your way when they have a conflict/area they don’t feel comfortable advising on, and you may still be entitled to a share of the fees for the work you have referred. A win, win, win, win!

However, it’s not just legal work that this applies to. Think of everything else that goes into running a successful legal business: IT infrastructure and support, sound HR policies and procedures, compliance with a plethora of regulation (e.g. GDPR), and not least your finance/accounts function. Again, if you are minded to “dabble” in any of these areas without sufficient and up-to-date stick to what you know knowledge, it could potentially be dangerous for a number of reasons. For example, are you up to speed with the latest cyber fraud tactics? Are you fully aware of what your employees’ rights and responsibilities are from an HR perspective? Or is trying to do your own cashiering going to land you in hot water at a compliance inspection/audit. With all of these examples, you may ‘think’ you know what you are doing, or that you can get by, but do you “know’ what you are doing? If not, the additional time you’re spending on them, not to mention the stress, probably more than justifies delegating to somebody better placed to deal with them, or outsourcing those responsibilities to experienced experts or third-party providers. That way, you can sleep at night knowing things are being done properly, that you are covered from an insurance point of you, and just as importantly, that you can focus on what you do best, whether that be generating new business for your firm, or doing fee earning work for clients. I hope there is some food for thought here, and some take away points to discuss at your next Partners meeting.

Gregor Angus,

Senior Business Development Manager, The Cashroom

Work of LawCare UK

Overwhelmed? Mind racing? Can’t sleep? Life in the law can be challenging and sometimes things can get on top of you. Talk to us – we’ve been there.

Law is by nature competitive and adversarial and the heavy workload begins when studying or training to be a lawyer. There are high levels of negative emotions within law: the work is often about winning or losing requiring legal professionals to be critical, judgemental, combative and aggressive. You are required to think pessimistically, looking for potential problems and worse-case scenarios. In addition, many lawyers are perfectionists who fear failure and making mistakes. All of this can significantly affect mental health and wellbeing.

LawCare is an independent charity offering emotional support, information and training to the legal community in the UK and Ireland. We work to promote good mental health and wellbeing in legal workplaces and drive change in education, training and practice. We’ve been supporting legal professionals for over 20 years and no-one knows lawyers like we do.

Our free and confidential support service offers a safe place to talk without judgement. We’re here to help, with helpline calls, emails and webchats answered in confidence by trained staff and volunteers who have first-hand experience of working in the law. We also have a network of peer supporters, people who work in the legal profession who may have been through difficult times themselves and can offer one-to-one support, friendship and mentoring to helpline callers referred to them.

We have visited hundreds of legal workplaces over the years and we have listened to thousands of legal professionals tell us about the stress, anxiety and depression they are experiencing, which is often caused or exacerbated by a difficult working environment. Lack of support or supervision, an overly critical manager, being undermined after a career break, an unreasonably heavy workload, long hours and sleep deprivation are all very common issues.

Whether you’re a barrister feeling burnt out, a young trainee experiencing sexual harassment, a student struggling with the workload, support staff worrying about a mistake you’ve made, a senior lawyer feeling like you’re being pushed out – we’re here to listen.

We are here to help all branches of the legal profession: solicitors, barristers, barrister’s clerks, judges, legal executives, paralegals, trade mark attorneys, patent agents, costs lawyers and their staff and families.

LawCare was founded by the legal profession in 1997, primarily to support lawyers who were experiencing issues with alcohol, giving them a space to talk about their problems in confidence. We now cover a range of issues, ranging from stress to depression to anxiety to bullying at work.

lawcare We have witnessed significant growth and change in the legal profession over the last two decades, as organisations started to embrace the mental health agenda and recognised the need to look after those who need support with mental health issues. Momentum around mental health and wellbeing in the legal community has been particularly growing in the last few years, with many firms now rolling out wellbeing initiatives and providing training to staff in this area. Firms need to do their best to create a healthy and happy place to work, not just because it is the right thing to do but because there is a strong proven business case for it.

If you need emotional support call our helpline on 0800 279 6888 or access webchat, email support, peer support, information, resources and factsheets at www.lawcare.org.uk.

The Impact of Outsourcing Law Firm Accounting Services to Third Party Experts

When the time comes to consider outsourcing the accounting services of your business, naturally you’ll have some concerns about what this can mean for you, both in the short and long term.

Outsourcing Law Firm Accounting Services After all, change can bring risk, so you need to be confident that the strategy you implement will be worth it. Speaking to third party experts about outsourcing your account services should reassure you that the impact will be beneficial on your business moving forward.

Some law firms worry that outsourcing their accounting services to a third party could have a detrimental impact on the business. But in reality, the truth makes for a much more pleasant read.

Outsourcing doesn’t mean you’ll lose control of your cashiering services, in fact it’s the opposite. Firms are able to gain a greater understanding of what is going on with regards to their management accounts. This in turn brings even more insights as third party experts are able to help the firm identify:

What area(s) of the business generate the most revenue
What area(s) of the business bring in the most money quickly
What area(s) of the business aren’t profitable
Where money is being spent and the return on investment
Area(s) of growth

Outsourcing Law Firm Accounting Services These insights help your business to run efficiently and continue to grow, while some of your competitors lay still in the water.

Outsourcing doesn’t have to be costly and can often save you money and more importantly fee earner time. Companies offering outsourcing accounting services are experts and have streamlined processes to ensure maximum efficiency. Furthermore, they understand best practices which can be passed on as additional savings to you. So, as you can see, the impact of outsourcing a law firm’s accounting services to third party experts has a positive effect on the way the business can grow and thrive.

With the introduction of more stringent Data Protection Laws and the General Data Protection Regulation (GDPR), ensuring data security is paramount these days. Throw into the mix that thousands of criminals are attempting to hack into law firm IT infrastructure, then your concern regarding the impact outsourcing would have would seem justified.

However, third party experts have this area covered too. They have the policies, procedures and technology all in place to ensure that any data they handle is safe and secure, away from the prying eyes of those who wish to exploit it.

Won’t outsourcing make managing cashiers harder? You may think this is the case, but it couldn’t be further from the truth. The right outsourced legal accounts third party will remove that burden.

So, we originally wondered what the impact of outsourcing law firms accounting services to third party experts would have. Hopefully we have shown that it needn’t be doom and gloom. In fact it can have a positive impact on your business, helping it to grow and adapt in a changing legal sector, by enabling solicitors to run their businesses better and to earn fees. The experts will identify areas of focus and working together you can help expand your business whilst working efficiently and effectively.

Here at The Cashroom, our experienced team can be on hand to unburden busy law firms by-

Helping firms to prepare and then monitor performance against annual budgets
Producing cashflow projections
Conducting fee and performance analysis
Providing commentary and advice on monthly performance
Preparing for year-end accounts
And more…

If you are considering outsourcing your law firm accounting and would like some more information about how The Cashroom can help, please get in touch.

If you are regulated within the English and Welsh market then please contact:
Alex Holt E: alex.holt@thecashroom.co.uk t: 07817 420 466

If you are regulated by the Law Society of Scotland, please contact:
Gregor Angus E: gregor.angus@thecashroom.co.uk t: 07875 598 593

Invest (at least your time) in wellbeing initiatives – it’s a win,win!

It’s well proven that a happier, healthier and more engaged workforce is good not just for those employees wellbeing, but for your business too – a true win,win scenario. You will lose far less days to sick leave, and spend much less on recruitment, training and the management of a constantly changing workforce. In addition, your employees will become your best brand ambassadors, thereby improving the top line, as well as the bottom.

There are various reports and surveys which attempt to quantify the return on investment in workplace wellbeing but, even without investing heavily in financial terms, there are many simple and practical steps you can take within your business to implement some initiatives that will make a difference over time. This is a topic I could write a whole book on (maybe one day!), but here are just a few ideas to think about…

wellbeing investment 1. Starting a new job can be very stressful, so have a look at how you bring new staff into the business at the outset. Only 12% of employees think that their employers do a good job of onboarding them (Gallup State of the Workplace Study 2017). Could you invite new starts to a social get together in the weeks leading up to their start date? Even a chat over lunch will make them less anxious about starting with you. Could you provide them with some sort of ‘welcome pack’ to make them feel part of the team as quickly as possible? Could you ask someone to be their ‘buddy’, that they can ask for simple help and assistance when they start, e.g how on earth does that coffee machine work?!

2. A survey in the US (State of the American Workplace) found that close work friendships boosted employee satisfaction by 50% and people that have a ‘best friend’ at work are seven times more likely to be fully engaged in their jobs. That sounds good on all fronts, doesn’t it? Think about whether you could offer more by way of social interactions for your employees, from lunches, drinks after work, barbecues, teambuilding days, to Corporate Social Responsibility volunteering opportunities, encouraging friendship amongst your employees.

wellbeing investment 3. Some employers are fortunate to have deep pockets, or access to investment cash for wellbeing, allowing them to invest in a gym in the office, subsidise gym memberships, or have personal trainers or dieticians come in to the office regularly. However, you really don’t need to go to that extent to encourage your employees to spend a bit more time moving and exercising regularly during their working day, thereby improving their wellness. How about encouraging walking meetings: a brisk 10 – 15 minutes round the block to chat through something you would normally do while sitting slumped in a meeting room to do. You will likely arrive back in the office refreshed, or at least a little more awake, and ready for the next task. Top tip – an initiative like this requires a top-down adoption, i.e. the leaders and managers of the business need to embrace it and start doing it regularly, to help instil into more junior staff that it is acceptable, and in fact is to be encouraged!

4. Could you invest a small sum in having a specialist come in to talk to staff about mental health wellbeing, such as how to spot when things ‘aren’t quite right’, where to turn for support or advice, and some practical hints and tips or coping strategies. You could go one step further and train a mental health first aider within your organisation, which will help to make this an ongoing initiative, benefitting all within your organisation, and helping to reduce time lost to sick leave.

5. Finally, make seasonal events (e.g Easter, Halloween, Christmas) fun! Think about giving out Advent Calendars or Easter Eggs to all staff – not a huge investment, but definitely a morale booster – or having a dress down/up(!) day for Halloween. This can encourage interaction amongst employees, lift spirits in the office, and at the same time be used to generate some money for a charity of your choice.

I hope there are some ideas here that you might be able to implement in your organisation, even with minimal investment. I think you will see an improvement in morale, health and wellbeing in the longer term, and a reduction in sick leave and staff turnover. With proper commitment to employee wellbeing, and a strategic approach to it, you will also see financial improvement to the top and bottom lines too. As I say, a win,win.

Gregor Angus, Senior Business Development Manager

The Cashroom Ltd

The Ultimate Guide to Cyber Risk, Security & Compliance in the Conveyancing Sector

Data breaches and cyberattacks are big news. And, the threat from hacks and fraud have become a stark reality for law firms around the world.

Given the level of trust between solicitors and their clients, it is not surprising that criminals target these relationships for financial benefit. However, offenders are not just looking for financial gain. They are also after the confidential data at the heart of solicitor-client relationships.

Today, law firms are at greater risk than ever before, with around 1,400 criminal organisations actively targeting the legal sector at this very moment[1]. Moreover, conveyancers are a specific focus due to the vast sums of money involved in property transactions.

There has been a 112% rise in legal sector data breaches in just two years.[2]

Despite the risk, conveyancers are ill-prepared for dealing with and preventing cyberattacks. As such, a security-first approach is now urgently required.

Common security threats facing conveyancers

There are catastrophic implications of not defending against data breaches and cybercrime. But, before you can put stringent security processes in place, you have to understand the risks.

Push Payment Fraud

Authorised push payment fraud (APP) fraud occurs when cybercriminals deceive individuals into sending them money. Because the victim believes the fraudulent transaction to be genuine, the client authorises the handover of cash. This is then quickly transferred to different accounts, often abroad, which makes getting it back almost impossible.

£11 million of client money has been stolen due to cybercrime over one year[3]

APP fraud is on the rise. And conveyancers may find themselves liable if they don’t do enough to protect their clients from scammers and are found to be negligent.

Phishing and Spoofing

Phishing sees criminals use emails, texts, websites, phone calls, etc., to pose as a legitimate person or institution. They aim to lure the people in your firm into handing over sensitive data.

90% of data intrusions start with a phishing email[4].

80% of law firms report at least one attack in the past 12 months[5]

With spoofing (or email hijacking) hackers attempt to obtain financial or other confidential information by impersonating your firm. For example, by sending emails or hosting a fake website.

The conveyancing (and wider legal) sector, is at huge risk of financial and reputational losses because of phishing and spoofing. So much so that the SRA is issuing new threat warnings most days.

With fraudulent emails and websites spoofed to a high standard, firms must improve their cyber defences. For example, email security systems can provide robust first-line protection for most attacks.

Property hijackings

security Property hijackings (where criminals pose as owners) are escalating. In many cases, criminals will rent a property and steal the landlord’s post. They then use this to pose as the real owner and sell the house to cash buyers.

In one particularly high-profile case, property development company Dreamvar purchased a London property for £1.1 million from a seemingly legitimate seller. It was only after the firm began refurbishment work that the scam came to light.

Initially, despite the buyer’s solicitor acting honestly and innocently, it was still found 100% liable for compensation. However, following a long-awaited appeal[6], the court ruled that both sets of solicitors must ensure that a property transaction is genuine or face the consequences. This decision should put conveyancers on both sides of property transactions on high alert.

Money laundering

The National Crime Agency (NCA) believes that the extent of money laundering impacting the UK could be costing hundreds of billions of pounds each year. Moreover, conveyancing firms are a significant target for money launderers. And, when you consider the amount of money that can change hands in just one transaction, it’s easy to see why.

According to NCA figures, residential property transactions made up 32% of all suspected money-laundering activity in the last three years. What’s more, the SRA revealed that there was a 43% increase in money laundering reports in the opening nine months of 2018[7].

Solicitors can incur hefty fines and even go to prison if they don’t report suspicious activity. So, conveyancing firms must do more to protect against this threat.

Malware & ransomware

security Malware attacks – where malicious software is installed on a user’s machine – can be extremely damaging; to your day-to-day operations, your reputation, and your bottom line. Ransomware attacks – an aggressive form of malware which prevents access to systems unless a payment is made – can be even worse.

More than 55% of British law firms suffered at least one cyber-attack in the past 12 months[8]

For conveyancers, being locked out of your IT systems, even for a short time, could make it impossible to meet essential client deadlines. For example, completing a property transaction. And the implications of this could be catastrophic.

Password spraying

Password spraying happens when hackers use common passwords to try to access a large number of accounts (e.g. password123). If one password doesn’t work, they wait long enough so that the account is not locked down before trying a different one.

Once a hacker has gained access to one email account, they use their skills to work through the rest of a firm’s systems. So, having one person using a weak password could put your entire firm at risk.

75% of organisations have accounts with passwords that feature in the top 1,000 passwords, and 87% have accounts with passwords that feature in the top 10,000[9].

Denial of Service (DDoS) attacks

Distributed Denial of Service (DDoS) attack happen when an email or website server becomes overwhelmed. Once besieged, hackers can exploit the weakness of the system to access other content on that server. Cybercriminals might carry out a DDoS attack by sending millions of emails to a single email address in an attempt to collapse a server.

DDoS attacks have been around for years. In 2014, ACSe:Law was forced offline by hacker group 4chan. While the firm’s website was restored, an error led to an archive of internal emails and financial information to be published on the home page. As you can imagine, this caused the firm serious reputational damage.

DDoS attacks have increased considerably over the years. And, as more and more connected devices come online, the risk becomes even greater.

It is estimated that 33% of all downtime is related to DDoS attacks[10].

Human threats

Insider threats happen when malicious users (e.g. disgruntled employees), get their hands on confidential and commercially sensitive data. But, when it comes to human risk factors, it is simple mistakes that are the biggest threat to your conveyancing firm. This is because conveyancers often fail to undertake adequate checks, or don’t know, or don’t follow, the necessary security processes.

Common security issues caused by human error include:

Not undertaking the necessary client checks
Not following established processes (e.g. how to take payments from clients)
Losing mobile devices or leaving them open when working remotely
Sending emails or post containing sensitive data to the wrong person
Not using the BCC function when sending emails to a mailing list
Installing unauthorised software onto work devices
Clicking on dangerous links, downloading viruses or falling victim to phishing scams.

Law firms are still not taking cybersecurity seriously

If your firm is the victim of a cyberattack or data breach, and your security processes are found lacking, you could be liable for a hefty fine.

In July 2019, The Information Commissioner’s Office (ICO) announced plans to fine Marriott International £99.2 million following a data hack. It also plans to fine British Airways £183 million for security failures exploited by cyber-attackers. These fines don’t include any victim compensation payments.

Payment from the compensation fund relation to conveyancing fraud is up from £700k in 2015/2016 to a staggering £3.7m in 2017/2018.[11]

While professional indemnity insurance might cover any losses you incur as a result of a cyber-attack, it is unlikely to include regulatory fines due to negligent security processes. It is also unlikely to cover the potentially significant reputational damage.

How to combat data breaches and cybercrime

Put robust processes in place

Only 55% of law firms have documented policies and procedures for cybersecurity[12]

When it comes to protection from cyber risk, preparation should always be your first line of defence. While not a full and final list, this should include:

Establishing compliant policies and processes

Create (and regularly review) your data protection and financial security policies and processes to ensure compliance with the latest regulations and industry guidance.

You should also have a cyber incident response plan ready. Also, print out a hard copy of this, including necessary reference numbers and phone numbers. If you get shut out of your systems, you may not be able to access this.

Putting the basics in place

Put stringent security controls in place (and make sure that you document these). For example:

Preventing staff from sharing passwords and ensuring suitably complex passwords
Making sure passwords are changed if a firm suspects a system has been compromised
Making sure devices are encrypted and require a password when switched on
Establishing steps to remove outdated info
Using encryption and two-factor authentication.

All your printers, copiers, even iKettles linked to your network need the same rigour of security and password regimes as the rest of your tech equipment. Without this, they could provide a route into your system.

Regular testing and monitoring

Set up regular penetration testing (ethical hacking) to test your systems and proactively identify any vulnerabilities that an attacker could exploit. Penetration testing can be performed manually or done automatically via security software. Also, increase monitoring across websites and apps to defend against attacks.

Keeping everything updated

In addition to ongoing maintenance, make sure that updates and patches are carried out. This should cover things like browsers, servers, operating systems, antivirus software, malware protection and firewalls.

Managing third-party relationships

Cyber-attacks are often possible due to third-party weaknesses. As such, security controls must be a crucial part of any vendor agreement. Also, analyse any data integrations for vulnerabilities.

What’s more, if you’re merging with another firm, check their cyber risk levels. If they have malware on their system, it will infect your firm when you consolidate.

Investing in security accreditation

Information security certification (e.g. ISO 27001 or Cyber Essentials) helps to protect client and employee data. This won’t just keep sensitive data secure, it will also demonstrate to clients (and the ICO) that you take your responsibilities seriously.

Meeting the requirements of the GDPR

Establish a lawful basis for data processing Personably Identifiable Information (and document this). Also, develop GDPR-friendly policies and templates such as Terms & Conditions and Privacy Notices.

Should a data security incident occur, under the GDPR, you must report this to the ICO without undue delay. So, establish compliant processes for responding to data breaches and other security threats.

Protect against human error

All too often, mistakes happen because people do not understand their data protection responsibilities.

“Challenges such as keeping information safe, cybercrime and compliance with anti-money-laundering regulations need constant attention. The threats of criminals using IT to steal client’s funds is an increasing problem. It is important that law firms develop a culture where cyber security is treated as a serious priority, and take sensible steps to warn their clients about the risks”.

SRA Chief Executive, Paul Philip

Security awareness training

Law firms are failing to train staff on data security, leaving the door open to avoidable data breaches and cybercrime. To combat this, conveyancing firms must establish an acceptable use policy (AUP) that spells out the rules of using digital technology.

In addition, training is vital to ensure everyone understands the policy, the risks, and the potential consequences of breaching data protection laws.

Client and financial checks

Law firms have more stringent security requirements than most other professions. As such, safety measures and checks are vital.

Law Society’s Conveyancing Quality Scheme (CQS)

Changes to the Law Society’s Conveyancing Quality Scheme (CQS) came into effect on 1st May 2019. These changes included a strengthening of requirements to mitigate the risk of property and mortgage fraud, money laundering and terrorist financing. Crucially, the new Core Practice Management Standards (CPMS) reinforced solicitor obligations towards client identity checks and checks against the conveyancer acting for the other party.

Find out more about these changes here.

Dreamvar v Mishcon de Reya

Following Dreamvar v Mishcon de Reya, both sets of solicitors are now obligated to ensure that a property transaction is genuine or face the consequences. According to the Law Society[13], the steps that must be followed are:

Reviewing your policy for risk assessing transactions, identifying the facts that make a matter high risk and making efforts to ensure that you have procedures in place to deal with those risks
Reviewing or establishing policies about when you might ask seller’s solicitors or conveyancers questions, for example, about whether they have carried out their AML investigations. Considering raising questions where there are indicators of potential fraud of the type highlighted in the HM Land Registry/Law Society joint note on Property and Title Fraud (if you raise questions but fail to pursue the responses properly, you may be exposed to additional risk)
Reviewing or establishing policies in relation to how you will answer questions from the buyer’s solicitors when acting for a seller
Reviewing or developing policies to establish when you should decline to act if you are not confident that the ‘seller’ is the registered proprietor.

Conveyancers must also be aware of, and put into practice, the following information:

Law Commission Proposals

Conveyancers could be held liable for fraud under new proposals from the Law Commission to reform the Land Registration Act. These proposals would place a new statutory duty to check the identity of clients. Where conveyancers fail to take reasonable care, they could be forced to make indemnity payments to the Land Registry.

Find out about the red-flag indicators that mean a transaction may be suspicious here.

Use technology to combat cybercrime

Training staff to recognise common scams and risks is vital. However, as cybercriminals become increasingly savvy, education alone isn’t enough.

“No training package (of any type) can teach users to spot every phish. Spotting phishing emails is hard. Spotting spear phishing emails is even harder. Even our experts struggle. The advice given in many training packages is based on spotting standard signs like checking for poor spelling and grammar, and while these can be a good place to start, they can’t be used to spot all phishing emails. Bad guys can spell (and some nice genuine people can’t).”

Sociotechnical Security Researcher, NCSC

It’s essential that you bolster your defences. Not least because, when it comes to digital threats, it’s better if these are stopped in their tracks as soon as possible, without relying on human involvement.

In addition to things like encryption, antivirus software and two-factor authentication (which all firms should use as standard), there are some ingenious ways technology can help conveyancing firms improve their security.

Online portals

As phishing attacks and technological vulnerabilities are costing law firms millions each year, emails are coming under intense scrutiny.

Could online portals like The Cashroom’s provide the answer?

In a word, yes. With a portal, all exchanges are safeguarded, with access restricted to authorised members of the firm carrying the relevant security information.

Indeed, firms not using a secure portal service could pose severe security and GDPR risks. For example, financial and personal information sent through word processing documents and email could be intercepted and used by unscrupulous cybercriminals.

OnDMARC

Many conveyancing firms have invested in standard IT security solutions. But these won’t protect them against phishing and spoofing attacks.

DMARC technology combats email fraud by actively blocking phishing attacks and preventing rogue third parties from impersonating an email domain. For example, Lawyer Checker – which provides technology and products to help protect lawyers and consumers – has service designed specifically for the legal profession. By using OnDMARC, conveyancing firms currently vulnerable to email fraud can protect themselves from reputational or financial damage.

Blockchain technology

Blockchain is a digital ledger of every transaction ever made using cryptocurrency. These transactions are recorded forever, and duplicated thousands of times across a network of computers (so they can’t be tampered with).

Crucially, blockchain technology can be used to monitor more than just financial transactions. And, because it is impossible to corrupt, it could play a key role when it comes to preventing fraud and embezzlement.

Outsourcing reduces the security and compliance risk

Outsourced cashiering and management accounts

Your firm is professionally obliged to keep an accurate set of books, and a failure to dedicate the time necessary to accounts-related work increases the chance of human error. Especially when you don’t have access to certified experts. But, should an error occur, the impact on your bottom line and your reputation could be devastating.

The good news is that, when you use outsourced services, the risk disappears.

An outsourced legal cashier will keep your accounts in order. And prepare tax and VAT returns to ensure you meet all regulatory requirement deadlines. They will also enable compliance with the Solicitors Accounts Rules and Money Laundering Regulations. Crucially, an outsourced cashier will also ensure that there’s a clear audit trail as required by your accountant or inspector.

Also, if you have one cashier looking after payments, a fraudster need only get their hands on one set of bank login details. Even if you have multiple cashiers, they will all likely to be on the same network, so it’s easy for hackers to get all the information and access rights they need.

But an outsourced partner will have invested heavily in security measures (e.g. encryption, anti-intrusion systems, back-up procedures, etc.) It is almost impossible for conveyancing firms to ensure the same level of protection.

An outsourced legal cashier and management accounts partner should also offer:

Robust confidentiality processes to ensure that confidential client information will be protected as per the SRA code
A secure online portal to protect those all-important communications
Cyber Essentials Plus certification
A robust GDPR policy
Regular staff training on cyber risk.

At The Cashroom, we provide all this and more. Ultimately, when you outsource to us, you get the peace of mind that comes with knowing the processes and people looking after your firm operate securely.

Outsourced risk and compliance

The burden of risk and compliance has become increasingly complex. Today, a proactive approach is essential to mitigate the risk of a regulatory issue or destructive reputational incident.

But rather than lying awake at night, many conveyancing firms are opting to outsource this aspect of their business. And, in doing so, are gaining access to appropriate experts with all the skills and expertise they need.

Often, outsourcing means taking someone on to help with more specialist work, while in-house compliance teams get on with day-to-day work. For smaller firms that don’t have the budget to employ full-time in-house risk and compliance professionals, the ability to pass everything over to a trusted partner is especially valuable.

Outsourced security technology

The progression of technology has enabled criminals to become even savvier. So, fighting fire with fire is essential when it comes to reducing the cyber-risk in today’s digital age.

This includes using:

Technology that filters out viruses before they hit your inboxes
Business-class antivirus/malware that offers active protection against attacks
Regular and automatic back-ups
Online database checks to highlight any red flags
A digital bank account checker that validates the source or destination of funds
DMARC technology that actively blocks phishing attacks and prevents third parties impersonating your email domain to any recipient such as clients, suppliers or employees.

Conclusion

Digital information and client funds must be safeguarded to protect firms, conveyancers, and clients. And this requires a combination of education, technology and robust processes. What’s more, cyber risk, security and compliance are not one-time activities. The challenges are evolving and require constant vigilance.

Where a failure in security occurs, solicitors could be liable for losing client funds, be forced to pay the money back to lenders, be subjected to raised insurance premiums, and face severe and long-lasting brand damage.

Outsourcing not only reduces the pressure upon conveyancers – who already have to be vigilant when undertaking daily tasks – it also frees up fee earner time. And, just as important, it leaves due diligence to specialists who can keep up with the rapidly evolving issues of a digital world.

[1] HM Government

[2] Xyone Cybersecurity roundtable

[3] Xyone Cybersecurity roundtable

[4] Xyone Cybersecurity roundtable

[5] Hiscox Cyber Readiness’ Report

[6] Dreamvar v Mishcon de Reya

[7] Upholding Professional Standards 2017/18 report

[8] ‘Hiscox Cyber Readiness’ Report

[9] The National Cyber Security Centre (NCSC)

[10] Verisign/Merril

[11] https://www.sra.org.uk/sra/how-we-work/reports/annual-review/annual-review-2017-18.page

[12] https://www.logicforce.com/2018/11/02/cyber-security-scorecard-q4-2018/

[13] https://www.lawsociety.org.uk/support-services/advice/articles/dreamvar-informative-and-case-summary/

The Ultimate Guide To Outsourced Legal Cashiering

An increasingly strict regulatory regime has changed the legal sector forever. At the same time, the financial pressure on many firms has grown substantially as challenger firms and online providers have made their presence known.

What’s more, with many law firms registering as Alternative Business Structures (ABSs), there has been a rise in non-lawyer experts taking on management roles. And these non-lawyers are applying tried and tested business techniques to improve standards, deliver consistency and reduce costs. In response, more and more traditional firms are having to adopt a similar business-like management approach to keep up.

But it’s not just about surviving. By modernising the way they operate, law firms can also thrive in today’s challenging legal landscape.

One way that savvy firms are choosing to innovate and respond to change is by outsourcing essential business tasks. In particular, legal cashiering is one back-office function that has become increasingly popular to offload.

“Outsourcing to The Cashroom has been painless. So easy to deal with accommodating everything that we need to do, when we need to do it, whilst keeping us on the right side of the vast array of regulations.

We have complete trust in them to ensure our compliance, and have a Law Society Inspection Report which proves what a great job they are doing for us.

We will never have a cashier in our office again.”

Kate Anderson, Director at Masson Cairns

Why outsource your law firm’s cashiering?

Rather than wasting time on routine, non-legal tasks, many law firms have chosen to contract things out, while they focus on the more lucrative aspects of winning new business and keeping clients happy. And, with lawyers increasingly expected to do more with less, the appeal of outsourcing is only getting stronger.

Here are just some of the ways that outsourcing your legal cashiering can help your law firm.

Reduce the cost and burden of managing employees

Legal accounting is a complex administrative task, so it’s vital that your firm has access to experienced staff. This is especially important in such a highly regulated industry. But, with a shortage of quality legal cashiers, finding qualified bookkeepers can be tricky. And, interviewing and assessing candidates’ integrity and skills is not straightforward for a law firm.

At the same time, the total cost of employing in-house cashiering personnel is expensive. Because, in addition to wages, you also have to take the costs of recruitment, induction, training, mentoring, sick pay, maternity cover, holiday cover, pension contributions, and National Insurance into consideration.

Also, law firms face the challenge of having to fund sufficient senior cashiering resource to deal with complex, high risk elements, while using that same resource to carry out the more mundane, junior tasks. And that’s not cost-effective.

Employing a full-time legal cashier may not even be financially viable for smaller firms. And, if you are one of the 523 new law firms planning to open in the next year^[1], you will need affordable, quality cashiering support to challenge the larger players.

Using an experienced outsourcing supplier lets your law firm tap into recognised, certified expertise, without the burden and cost of employing and managing your own staff; making it a much more affordable option. In addition, a resourcing approach provides you with 9-5 support and real time cashiering, but at a cost based on the actual activity and skill level your firm requires.

Respond quickly to a changing marketplace

Today’s legal market is in a state of flux. Because outsourced services are scalable, your firm can adapt quickly to rising or slowing demand for services, without the worry about hiring or laying off staff. And you only ever pay for what you use.

So, by partnering with a trusted outsourcing expert, smaller law firms benefit from a more agile approach. As such, embracing an outsourcing ethos could help you to adapt and thrive. And secure your long-term survival.

“The Cashroom offer an invaluable service for any solicitor’s firm. Their approach is efficient, professional and responsive. They have allowed us to deal with rapid growth by taking on all accounts functionality.”

Alexis Brassey, Managing Partner and Notary Public at Cavendish Legal Group

Save valuable office space and costs

We have already looked at how outsourced legal cashiering can help your law firm to cut down on employment costs. But the savings don’t stop there.

With outsourced cashiering, you will also save on infrastructure and associated office costs (e.g. energy, floor space, hardware, software, etc.). Indeed, when you consider the total cost, you can save thousands of pounds year-on-year by outsourcing.

Reduce the compliance burden

Compliance is now a pressing concern for most businesses. Not least because the rules and regulations are continually changing. But for law firms, the need for demonstrable security and integrity is vital.

For example, when it comes to legal cashiering, your firm is professionally obliged to keep an accurate set of books. But for lawyers, preparing accounts can be stressful and worrying, especially when they don’t have access to certified experts. However, not taking the time to dedicate the focus necessary to accounts-related work is not an option. Because unintentional accounting errors can prove costly, and, if a mistake happens, the risk to your reputation and your bottom line could be devastating.

However, if you employ an outsourced legal cashier, they won’t just keep your accounts in order. They will also enable compliance with the Solicitors Accounts Rules and Money Laundering Regulations. And, crucially, an outsourced cashier will also ensure that there’s a clear audit trail as required by your accountant or inspector.

With the Solicitors Regulation Authority (SRA) accounts rules set to undergo their first major overhaul in years this November, with significant changes that all firms will need to prepare for, firms should look to get their cashiering processes in order now to stay ahead of the game.

“The Cashroom has definitely been a good business move, not only because of efficiency but also in relation to compliance which can be daunting at times.”

Susan Ayre, Partner at Simon A Holt & Co

Plan for business as usual

Law firms that don’t want to suffer any downtime due to unexpected events have to be prepared. For example, how would you cope if unforeseen and long-term absenteeism hit your business?

By offering support that never stops or takes a break, with outsourced legal cashiering you are free from the burden of sick days, jury duty and family emergencies. So, as well as saving you money, it can also boost your productivity.

Also, as alarmist as it might sound, extreme weather conditions are on the rise. And, with global warming set to lead to more and more changing weather patterns, you have to think about how you can continue to operate if you can’t access the office. Outsourcing business services such as legal cashiering can help to support your disaster recovery planning. With remote support available when you need it.

Free your solicitors up, to get on with what they do best

Law firms depend upon a steady cash flow to survive, so keeping on top of your bookkeeping is essential.

But, for many practices, this can be both challenging and time-consuming. Correcting errors is a costly waste of your valuable time; especially where many other responsibilities need looking after. For example, if you don’t nurture and grow your client base, your business will suffer, you’ll spend less time earning fees, and the less profitable you’ll be.

With time one thing none of us has in excess, it pays to acknowledge that you can’t be an expert in all areas of your business. Instead, you should focus on your strengths.

Removing the hassle from your shoulders, expert outsourced legal cashiering will take care of everything for you. Leaving you free to spend more time with clients and other tasks that make your firm money.

By outsourcing your legal cashiering you’ll also have peace of mind that you are working with people who have experience in dealing with day-to-day bookkeeping, as well as the escalation of matters where necessary.

“We operate a business which requires efficiency and certainty of service. The Cashroom has augmented our own internal accounts team, taking control of key elements and working closely to provide a seamless service to us.

We have found them to be extremely professional and helpful, at a cost which has achieved significant savings as against an in-house approach.”

Andrew Kwan, Solicitor-Advocate at Clear Law Solicitors

Help your law firm to grow

An outsourced cashier will ensure an up-to-date log of case-related fees and expenses for regular claim back purposes – resulting in a healthier cash flow. And that’s crucial to business growth. But more than this, with the right support, you will also get access to better forecasting data. So, using an outsourced cashier can provide valuable business insights that can be used to identify trends and inform your overall business strategy.

For example, forecasting data can be used to assess the profitability of certain matters, to intelligently determine opportunities for growth, and to identify legal service areas that are becoming problematic.

What type of firm needs outsourced legal cashiering?

We help many types of law firms with their outsourced legal cashiering needs. Including:

Sole practitioners up to mid-sized firms.
Firms where the cashier has retired (as it can be difficult to recruit cashiers)
Firms where the cashier is going on maternity leave
Firms that are restructuring and dealing with TUPE options
Firms that need help to improve following a Law Society Inspection
Firms where the lawyers have been trying to do it themselves and have no real knowledge of compliance
Forward thinking firms with a desire to do things differently.

The challenges of outsourced legal cashiering (and how to overcome these)

When it comes to introducing outsourced legal cashiering into your law firm, the benefits are clear. But what are the challenges you will face?

Data security

Law firms are a particular target for cyber criminals, not least because of the huge sums of money transacted each day. But criminals are not just looking for financial gains; they are also after the confidential data which is at the crux of the solicitor-client relationship.

When it comes to protecting client money, it’s only natural that you’d be worried about putting your valuable data and finances in the hands of a third-party. But, in most cases, an outsourced partner will have invested heavily in security measures such as encryption, firewalls, password protection, physical data centre anti-intrusion systems, software updates and back-up procedures. They should also have a robust confidentiality process in place to ensure confidential client information is protected as per the SRA code. It can be hard for smaller law firms to provide the same level of protection.

Let’s face it, if you have one single cashier who sets up and authorises payments, a fraudster need only obtain a single set of bank login details. Even if you have multiple cashiers to check payment details, they are all likely to be on one single network, so it’s easy for a hacker to get all the information and access rights they need.

Modern law firms are like mini banks, but without the resources required to protect the money they hold securely. That is precisely where the added value of outsourced provider comes in to play.

The burden of managing a third-party supplier

Some law firms are concerned that managing a third-party could be just as complicated as looking after in-house staff. But this shouldn’t be the case.

Yes, it’s true that, if your requirements are complicated, you may rely on multiple outsourcing partners. And this can become tricky, not least because, in an age of interconnected systems, getting a supplier to take responsibility if something goes wrong can be a challenge. But the right outsourced legal cashier will be used to a multi-party model and will do everything possible to streamline and simplify things for you.

Of course, there are also benefits of simplifying supplier management. For example, using one partner for multiple tasks such as cashiering and management accounts.

Fear of change

Change is both risky and exciting. But it can also foster self-doubt. Will all your effort be worth it?

As we established earlier in this guide, the law is not just a profession; it is also a business. So it’s vital to keep moving forward. And, with a wealth of benefits to be had, not taking the leap could mean that your competitors get ahead while you stagnate.

Cost

When investing in outsourcing, price is always going to be a concern. So, when making your business case, it’s crucial to understand the total cost of ownership (TCO).

What’s more, price doesn’t always mean value. In many cases, spending money and saving yourself time is more cost-effective.

Being stuck with the provider

When looking to outsource, one of the biggest concerns faced by law firms is that they will be stuck with the service provider in some unholy death grip.

Many outsourcers combat this fear with exit clauses in their contracts. However, even with an agreement which allows for termination, you could face difficulties replacing the service, either by taking it back in-house or by finding another, better outsourcer.

There is also a concern about ‘professional behaviour’ on separation. With numerous horror stories where the outsourcer makes life extremely difficult – either by ‘working to rule’ or by being generally obstructive as the service is taken off them.

To ensure this doesn’t happen to you, due diligence is needed before signing any agreement. This should include obtaining a reference from a firm which no longer uses the service and putting a plan in place for end of contract.

Integration with other processes

The last thing you want to do when appointing an outsourced legal cashier is to have to switch all your existing systems. But modern partners should be able to work with your current setup.

To make this work they will look at things such as:

How your systems are hosted and how they access them (e.g. server-based or cloud)
How the system works (e.g. how are documents stored and how will financial information requests be forwarded)
Who will manage the process your end (e.g. will there be a specific contact, or will they liaise directly with fee-earners).

The Cashroom has a totally system agnostic approach. This means that firms need not change their systems before benefiting from the service.

Things to consider before you appoint an outsourced legal cashier

Outsourcing your legal cashiering will have many rewards. But as with any investment, there are some things to consider before making the leap.

What questions should you ask your preferred provider?

Who will manage your account?

For example, will it be a dedicated individual, and, if so, who will cover for sickness or absences?

You should also make sure that you will be supported by specialist legal cashiers. It is vital that any partner you appoint doesn’t just have a firm grasp of accounts, but also possesses an ILFM qualification and has an in-depth understanding of the SRA Handbook, SRA Accounts Rules, and other relevant guidelines.

Can you get a reference from other customers?

A few positive words from a happy customer can put your mind at rest and give you confidence in your decision. As such, ask the outsourced legal cashier for references.

What are the terms of your agreement?

It’s vital that you understand the terms of any contract and Service Level Agreement (SLA) you are entering. Things to look out for include:

Data protection processes and guarantees
If they have an established business continuity and disaster recovery plan
How they would handle a security incident and rectify any data or financial losses
Whether they hold professional indemnity insurance
Who owns your data
What happens if you want to end the contract
If they will support you during a compliance visit.

Do they offer an online portal?

In an age of intense regulatory compliance, demanding client needs and increasing levels of cyber crime, it is imperative that any online portal is able to protect client information, improve the customer journey and provide increased efficiency.

Remain Cyber Secure and GDPR Compliant

Traditional forms of online communication, like emails, are coming under intense scrutiny as phishing attacks and technological vulnerabilities are costing law firms millions each year.

An effective portal can minimise this risk as both internal and external stakeholders are able to communicate and share information through the secure portal. All communication exchanges are secure with access restricted to authorised members of the firm carrying the relevant security information.

Using an outsourced legal cashier without such a secure portal service poses serious security and GDPR risks. Financial and personal information sent to the legal cashier through word processing documents and email could be intercepted and used by unscrupulous cyber criminals causing financial and reputational damage to your firm.

Improving Efficiency

Working outside of a portal creates a myriad of opportunities for communication to be lost or seriously delayed. It is extremely easy to mislay or overlook an email. Busy practitioners working on legal services are bombarded with email requests meaning the legal cashiers could be delayed. Similarly, sending a request to the outsourced cashier means that your firm’s request is buried within the work of their other clients. This could delay important transactions and reduce efficiency.

A portal can solve this. Each request that is made both internally and externally is unique to the business. Here at The Cashroom, all tasks also have an automated workflow, ensuring that deadlines are adhered to and communication is clear for all concerned.

Portal functions also enable the legal cashier to eliminate internal and external email. All requests are clearly tracked and progress is monitored via the technology. This means that each task has a clear and easily accessed audit trail; something that becomes extremely time consuming when using emails alone.

How quickly can you get up and running?

As with any investment, it’s essential to get up and running quickly. Ask your outsourcer how long this will take, whether there will be any downtime or disruption, and if there is a migration plan to ensure a smooth transition.

Do they offer any other outsourced services?

As previously discussed, it’s not unusual for law firms to be put off by the idea of managing multiple third-party suppliers. To keep things streamlined, find out if they offer any other outsourced services to help you consolidate your supplier management. Could they be a ‘one-stop-shop’.

Why work with The Cashroom?

Pioneers in the evolving legal landscape, at The Cashroom, we supply you with high calibre, qualified and experienced legal cashiers – at a fraction of the cost of employing your own staff. We also help you to unlock a huge range of additional outsourcing benefits.

For example, when you work with us, we will:

Save you money
Offer a fixed monthly fee, so you stay in control of your cash flow
Work with your existing practice management system (or provide recommendations where wanted)
Remove the burden while making sure you stay in control
Help to keep you compliant with industry rules and wider regulations
Facilitate and support your business growth
And more!

More than outsourced cashiering, we also offer management accounts and payroll support to law firms across the UK.

With trained lawyers on our team, and board members who were previously managing partners of their own firms (along with a chartered accountant), we also understand what it takes to run a successful legal business. And we share all this knowledge and expertise with you.

But we don’t expect you to take our word for it. As well as having won multiple industry awards, we are also happy to supply references of current and former customers to give you all the peace of mind you need.

“We have been using The Cashroom’s services for three years now. We brought them in to provide a secure, efficient, compliant cashiering function to support our growing business with their flexible resource model.

They have delivered exceptional service with a real personal touch, saving us money but delivering a quality finance function which suits our forward thinking approach to the provision of legal services to our clients. Their processes work especially well for our very busy conveyancing team.”

Gareth Jones, Practice Manager at Easthams Solicitors Limited

What type of tasks can we help you with?

The Cashroom provides all the legal cashier services typically provided to a firm of solicitors; the difference is we employ “your” cashiers, and they work remotely from our offices. Among many other things, we:

Maintain up-to-date books and records
Process all day to day transactions
Make bank payments
Reconcile firm and client bank accounts daily
Pay suppliers
Perform day and month end routines
Prepare and submit VAT returns
Assist with VAT inspections
Prepare Law Society Certificates and assist with inspections (Scotland only)
Provide information for Accountants’ Reports
Ensure full compliance with Law Society Accounting Rules /SRA.

In conclusion

Today, outsourced legal cashiering is not only helping law firms to make significant cost and time savings, but it is also leading to improvements in productivity and growth. Crucially, outsourced legal cashiering is helping to relieve the massive compliance worry. But when it comes down to it, the most significant benefit of outsourced legal cashiering is that it frees up lawyers to focus on client work.

To find out more about how outsourced legal cashiering can help your firm to flourish, contact Alex Holt alex.holt@thecashroom.co.uk or take a look at our services page on our website.

^[1] Hazlewoods, Chartered Accountants and Business Advisers

The Growing Impact Of Cyber Crime In The UK

Cyber crime is a significant threat to the legal sector and is on the increase. Unless we develop a culture to up our cyber knowledge, it’ll be a threat that’ll only continue to grow.

In the Cyber Security Breaches Survey 2019, conducted by the Department for Digital, Culture, Media and Sports (DCMS), 32% of UK businesses had reported a cyber security breach in the last 12 months. Over a third admitting this breach led to a loss of data or assets.

Poor cyber hygiene is to blame, of which staff training is a contributing factor. It seems silly that something that could cause such catastrophic damage both reputationally and financially, has so little resource attributed to it.

Cyber criminals use sophisticated social engineering techniques to conduct their cyber crime; however, these do have red flags which people can be trained to spot. Some of which have been highlighted by the Solicitors Regulation Authority’s (SRA) scam alerts.

The SRA issued 217 alerts in 2018, informing people about criminals replicating reputable and genuine law firm websites and spoofing emails in a bid to steal client/firm money. The DCMS report found that 80% of UK businesses had experienced sustained phishing attacks last year.

In the past 3 months, Linklaters have reported several attempts on their domain name. Each time, a subtle change was made to look like the original e.g. @linklaters.co or @linkiakers.com. Impersonation fraud, the act of using fake domain websites and email addresses extremely close to the originals, cost the UK £92.7milion in 2018.

‘Fraud the Facts 2019’ report highlighted that email (malicious redirection) fraud has become a lucrative business. Fraudsters use emails to convince a home seller or law firm to change their bank details before a payment is made resulting in £123million lost in 2018.

According to the Financial Commissioner’s Office, the UK has amassed a total of 10,600 notified breaches since 24th May 2018. This equates to over 1,000 notified breaches per month and over 42 per day.

When breaches are so frequent and attempted attacks are even more persistent, how can law firms ensure they are able to defend themselves?

Lexcel and CQS urge members to adopt Cyber Essentials, a Government backed accreditation which encourages business owners to consider the ways they protect their businesses from cyber crime. It adds extra kudos if you’re dealing with a firm that has cyber essentials as you can be confident, they’re doing all they can to combat the cyber criminals.

Changes to the SRA standards and regulations come into force on 25^th November, look at expanding the role of the Compliance Officer for Legal Practice (COLP) focusing on staff training and breaches, covering the base of employees receiving regular training and as a result increased accountability in the future.

Similarly, firms should have protocols, procedures and responses securely in place, so staff are aware of the next steps if and when a serious breach occurs. Ensuring that your law firm is cyber aware is not only a definitive way of protecting the firm’s reputation and data, it is also a regulatory imperative.

As the threat of email impersonation and spoofing increases, using email encryption to ensure the message you send is received by the intended recipient, or DMARC email services that ensure the law firm’s domain is spoof proof can also offer increased protections.

The Cashroom Ltd

Cyber Risk – scary and real

I was a huge Doctor Who fan as a child. I’m ancient, so my favourite doctors were Jon Pertwee and Tom Baker. I loved the monsters most of all though. There were so many great villains, and while I thought the daleks were OK, they never really felt scary. Giant pepper pots who would struggle to deal with uneven terrain or stairs.

The ones that really used to freak me out and have me cowering behind the sofa were the Cybermen. They were dead eyed, relentless, ruthless and had seemingly infinite resources.

By this point you will be sighing and rolling your eyes at another of Holt’s shoehorning in of cultural references, and to be honest you’re right.

It’s just that we are back in the throes of terrifying cyber threat.

Three or four years ago, any conference you went to featured doom and gloom and scary stories about cyber threat. It became almost an industry joke- the method used by purveyors of solutions for all your cyber risks. The numbers quoted were horrifying- often hypothetical and often using statistics from other sectors, as information specific to legal was scarce.

But we listened, and took steps. At The Cashroom we realised the use of email made us vulnerable so we invested in the development of our secure client communication portal. We, and others, sought certificated reassurance- we are Cyber Essentials Plus accredited. We, and others, implemented detailed training programmes to ensure our people were empowered and vigilant, and working to sensible secure processes. cyber threat

And for a couple of years, the tone of the messaging around cyber threat calmed a little. Of course there were high profile examples of issues, which kept the threat visible, but the hysteria of the messaging at conferences and in articles cooled off.

However, anyone who thought that the threat had receded is in for a shock. Because the pause in threat level was illusory….it was more a gathering of data, and now the statistics are there to show exactly the seriousness of the cyber threat faced by the legal sector.

I took part in a round table discussion, hosted by our friends at Xyone Cybersecurity, and attended by representatives from the police, insurance, tech and legal sectors. A fascinating discussion took place over coffee and bacon butties, but some of the statistics put us off our breakfast.

59% of UK and US companies suffered data breach caused by a third party.
Two thirds of SMEs who suffer a breach will not survive.
90% of data intrusions start with a phishing email.
Nearly 0.5% of all emails sent globally were phishing emails.

And some stats were specific to the Legal Sector

112% Rise in Legal Sector Data Breaches in 2 years
£11 Million of client money stolen due to cybercrime over 1 year
60% of law firms reported to have suffered information security incidents last year

There were some great tips, some of which were pretty obvious, but some (iKettle risk!) were a surprise-

All your printers, copiers, even iKettles which are linked to your network need the same rigour of security and password regimes as the rest of your tech equipment or else they can be used as a route into your network.
All your suppliers may provide a route into your systems if they don’t have rigorous procedures and protections in place. Carry out DD on them to check this out.
If you’re merging with another firm, check their cyber risk levels. If they have malware already on their system it’ll infect your firm when you merge.
Have a hard copy of your Cyber Incident Response plan, including necessary reference numbers and phone numbers- if you get shut out of your system, you may not be able to access that info!

So the analogy with the Cybermen isn’t too tenuous- they have huge resources. They are relentless and ruthless. They are…scary. It’s time to come out from behind the sofa and face the threat, because it’s real and the mattel plastic replica of a sonic screwdriver just won’t cut it, I’m afraid.

Alex Holt,

Director of Business Development, The Cashroom

5 Common Questions about Outsourced Cashiering

When we are out meeting solicitors, explaining what it is that we do, and how we do it, they are often surprised at just how simple it really is to outsource your cashiering. We thought it would be worthwhile explaining some of our standard responses!

Do we need new ‘IT’, or learn how to use a new ‘system’?
We do not have a ‘system’ or software that we use, we simply access the accounts part of your existing Practice Management System remotely. So, all you need is a legal practice management system of some sort, and a means of us accessing it remotely. We also have a secure client portal which all of our clients are on, creating a secure environment for both The Cashroom and client to communicate without the cyber risks of email. This also avoids having to protect sensitive data via email. Training can also be given to ensure you are comfortable when using the portal.
Will we get a different person each time we contact you?
We allocate each client to a cashiering team, headed up by a very experienced senior cashier, essentially your ‘Head Cashier’. They will have a small team of people who will work with your firm, in order that holidays, sickness cover etc, are not a problem for you. You will get to know the two or three people working with your firm very quickly, and build a relationship with them. You can pick up the phone or send a query via our secure client portal to these selected people at any point and be ensured that someone will always be about to help.
Is it impossible to bring the service back in-house in the future?
We do not require you to use any new software/system, we are accessing your existing system remotely. Therefore, if at any point you wanted to bring the service back in-house, it would be as simple as recruiting a cashier, changing the username/password for our login to your system and online banking, and then our access would be terminated.
Is there a loss of control involved?
Some feel that by having ‘their cashiers’ offsite, they will somehow lose some of the control over what is going on. Clients tell us time and time again that they actually have a better understanding of what is going on by dealing with our cashiers. Before outsourcing, the cashier at their firm often controlled things, choosing what they wanted to disclose to the Partners. By outsourcing, it puts control back in the hands of the Partners of the firm, rather than the cashier, allowing the Partners to make the decisions and be more involved in what is going on in the firm!
Does it really save us money?
We can offer a saving of around 20-30% on the salary costs of inhouse cashiering staff. This will vary from firm to firm, depending to a large extent on how well they pay their staff, but in some cases the saving can be as much as 50%. There are additional savings, such as National Insurance and Pension contributions, the cost of additional office space which can be used by fee earning staff instead, the savings on recruitment / training of new staff, the management time of a Partner in dealing with appraisals, performance issues etc, as well as the cover for holidays/sickness.

If you are thinking about outsourcing your cashiering / accounts department, but have any questions, please feel free to get in touch.

Scotland – gregor.angus@thecashroom.co.uk / 07875 598 593

England & Wales – alex.holt@thecashroom.co.uk / 07817 420 466

How outsourcing your Legal Cashiering can save time and money

The Legal Institute of Forward Thinking says; “Law firms don’t fail for lack of profits; they fail for sufficient cash to operate.” Change is inevitable in the business world, but how you adapt to this change makes the difference between whether you sink or swim. One way that savvy firms are choosing to adapt is by outsourcing essential business tasks, like legal cashiering.

An outsourced legal cashier provides a variety of functions, including but not limited to: processing the day to day transactions, set up bank payments, assist with VAT inspections as well as preparing and submitting VAT returns. The list is endless.

Having the right person delivering your legal cashiering service is vitally important. If you were looking at having an in-house cashier, you’d have to take time recruiting, vetting, training, providing cover for any absences. Add in the costs for computers, software, pensions and wages, the cost of having an in-house cashier continues to increase. Combine that with the time put into recruiting and managing the cashier, it goes to show that someone’s time will be heavily constrained, preventing them from conducting their daily business.

By outsourcing the legal cashiering service, you are introduced to a talent and knowledge pool of people who can provide cashiering support every day, their training and management needs are taken away from you. They also ensure that you remain compliant with the SRA, CLC and the Law Society of Scotland.

What is the cost benefit of outsourcing?

Maximise your resource: Benefit from a cost based on the actual activity and skill level your firm requires, rather than having to fund sufficient senior cashiering resource to deal with complex, high-risk elements, while using that same resource to carry out the more mundane, junior tasks.
Access expertise and insights: Get access to better forecasting data which provides valuable business insights that can be used to identify trends and inform your overall business strategy.
Improve your cashflow: Ensure an up-to-date log of case-related fees and expenses for regular claim back purposes – resulting in a healthier cash flow.
Reduce your exposure to risk: An outsourced partner will have invested heavily in security measures and will assume compliance responsibility.
Improve efficiency and productivity: Free your employees to get on with what they do best and benefit from more streamlined processes.
Become more agile: Scale resource up and down as you need it, without the hassle of hiring and firing employees.

Outsourcing this part of the business, frees up lawyers to do what they do best, win business and earn fees. This enables your business to grow.

About The Cashroom

When the property market is causing enough headaches for legal service professionals, The Cashroom is ready to help ease the pressure on your law firm by ensuring compliance with the solicitor’s accounts rules, saving firms money and providing accurate and timely management accounts and management information.

Let The Cashroom worry about your firm’s legal cashier and payroll services so that your firm can focus its resources and time on providing expert legal advice to the consumer. Additionally, our management accounts and management information on budgets, cash flow projections and monthly management allow you to reflect on the work that has been completed and accurately predict where your firm is going in the future.

The health and well-being of people working in the legal services sector

Mental illness is the leading cause of sickness and absence from work and like many other sectors, the health and well-being of people working in the legal sector is something that needs addressing. According to research 66% of solicitors feel high levels of stress in their jobs, and each year in the UK, 70 million workdays are lost to mental illness.

According to the recent ‘Stress in the Legal Profession: Problematic or Inevitable’ report by LexisNexis, legal professionals feel as though a level of stress comes with the territory. 75% of respondents were concerned that stress and mental well-being is a major issue that needs addressing in the legal sector. Over a quarter of respondents feel that more needs to be done to help and support colleagues struggling to cope with the rigours of the job. These startling statistics show that people feel more confident talking about well-being in the legal sector but feel more needs to be done to address the issue.

The health and well-being of legal service professionals has started deteriorating in recent years. Lawcare, a charity promoting and supporting good mental health for all in the legal community witnessed a surge of calls being made to their helpline in 2018.

The helpline received 932 calls in 2018. Of these calls, the majority were concerned about their mental health. 26% felt stressed by their jobs and 19% were starting to feel depressed. 11% of callers were anxious about their jobs and the service they are providing.

Almost half of all the calls received (48%) were made by legal professionals with less than five years’ qualified experience. The Junior Lawyers Division’s resilience and well-being survey also found a huge number of younger legal professionals struggling with work related mental health issues. This research clearly shows that the well-being of people in the legal sector spans all knowledge ranges and doesn’t discriminate between the newly qualified and the more experienced lawyer.

93% of respondents reported feeling stressed in their role the month before they completed the survey. Over a quarter of qualified members surveyed felt severely or extremely stressed.

The survey classed stress as being under too much emotional or mental pressure. When almost all of young legal professionals feel this way, it is clear that more should be done to improve the working conditions in the sector.

77% of respondents believe that their firm could do more to support those with stress at work with 87% looking for their employer to provide more guidance and support when it comes to mental ill health.

Whilst the call from those within the profession is looking to employers to do more, the reports also found that the majority of legal service providers are happy in their jobs, finding stress to be an unavoidable consequence of carrying out such an important service.

About The Cashroom

Brexit’s Impact on the Property Market

Since the referendum of 2016, there has been uncertainty about how the property market would fare. Prices have continued to grow in most areas in the UK, but they have been slowing with buyers and sellers reluctant to make a move. Which leads us to the question what will Brexit’s impact on the property market be?

The headline figure that everyone is throwing around is the inactivity of buyers and sellers entering the market. In February, the RICS UK residential survey found that respondents recorded a 40% reduction in new buyer enquiries. Although the net balance figures for March, April and May were slightly more buoyant with only a -26% net balance of new buyer enquiries. It’s clear that buyers are reluctant to declare an interest in property until October 31st when they know what the country is doing next.

Alongside that, the number of registered house hunters per branch fell from 296 in March to 265 in April; it also marks a reduction of 21% in the past year when there were 337 registered house buyers per branch.

The average of 237 house hunters per branch was the lowest recorded number since the financial crisis of 2008. This reluctance from buyers is one of the effects of Brexit’s impact on the property market.

It’s not just buyers and sellers who have been put off by Brexit. The number of properties available on the market has decreased. The NAEA Propertymark’s Housing Report states that the number of properties available per branch fell from 37 in March to 35 in April.

Construction output in May saw its most severe decline since the unseasonably poor weather of March 2018. Thanks to the political uncertainty construction companies haven’t wanted to commit, resulting in their employment levels plummeting to their lowest levels in 6 years. With all of this in mind, less houses, less market activity, less new builds happening resulting in fewer construction jobs, Brexit’s impact on the property market looks to be catastrophic.

There is light at the end of the Brexit tunnel, and we’re not talking about deal or no deal. Reports have suggested that transactions are slowly starting to pick up. The number of approved sales per branch were eight in April, an increase on the seven per branch the previous month.

Research conducted by Reallymoving.com shows that house prices could be set to bounce out of the Brexit blip and could potentially increase beyond the dizzying heights of summer 2018.

The data found that UK house prices are set to soar by 9% between May and August, with the North East of England set to increase by 20.2%.

The Financial Conduct Authority’s ‘Mortgage lending statistics – June 2019’ data also reveals that mortgage lending in 2019 is healthier than in previous years.

The start to 2019, saw the negative impact Brexit had on the property market, but as the year progresses there seems to be a more positive outlook for those looking to take part in the property market in the summer.

About The Cashroom

Why everyone should run a marathon!

I recently ran Manchester marathon. I wasn’t fast, and I wasn’t last – 3hr 31 min to be precise – but sometimes the time is irrelevant . I ran a marathon in 2014 (Edinburgh) and have run the distance a few more times at the end of Ironman triathlons (pre-– children!), but this time around was a little different. I haven’t slept much in the last few months (see earlier reference to children!), and had a busy few months at work and at home, so training was ‘minimalistic’ to say the least. However, aside from a ‘moment’ a few weeks before race day, I knew that I could get round alright. It wouldn’t be a PB, but I would complete the distance. And that’s when I realised that something had changed in the last few years – my perspective. Being able to run a marathon on minimal training was now my ‘new normal’, and I think there is a lesson in that: what you perceive as your ‘normal’ can vastly change over time, and your limits are almost certainly not where you think they are.

Perhaps you have thought about entering a 10k/half marathon/marathon, taking up a new hobby, writing a book, or doing some voluntary work. In your professional life, you might always have wanted to set up your own business, to expand your business into a new city, offer a new service, or change career completely, but convinced yourself that it’s beyond your capabilities, that you don’t have the necessary knowledge, or that you are too busy. If that sounds familiar, I would really encourage you to challenge yourself on this – it’s all too easy to find reasons not to do things! You are just as capable as that other person who has done it, or is in the process of doing it; the only difference is their mindset.

You don’t need to go in all guns blazing, signing up to climb Mount Everest next week, but decide what it is you want to achieve, and start taking small, incremental but consistent steps towards it, building momentum as you go. Those daily, weekly or monthly steps towards the goal, over time, are what make the difference. Once you have that consistent practice, what once seemed like a pie in the sky idea will come clearly into view, and be more than achievable. And once achieved, your perspective will have changed, in a positive way, forever. Even if your goal was to start a new business, and it wasn’t ultimately successful, going through the process, and making that your ‘new normal’, will change your outlook, and help you believe that it is not beyond your capabilities should a better opportunity arise in the future.

So, while I would encourage you all to run a marathon – I truly believe anyone can do it with the right preparation and dedication to training – your goal may be something quite different to that. The same principles apply though: identify what it is you want to achieve, commit to it, then train for it in a deliberate and consistent way. Very philosophical I know, but life is short, so set about doing the things you have always wanted to do. And remember, nothing changes if nothing changes.

Gregor Angus,

Senior Business Development Manager

New SRA Accounting Rules 2019

The Solicitors Regulation Authority has recently confirmed, that the changes of the SRA Accounting Rules will be effective from 25^th November 2019. These new reforms were approved by the Legal Services Board (LSB) last year and are part of the Looking to the Future programme, allowing solicitors greater flexibility in how they work.

The new SRA Accounting Rules are designed to be far more outcome-focused, and are shorter and more targeted than the existing rules. They continue to focus on the protection of client money but with the freedom for solicitors to use professional judgement in considering how the standards are met, by applying simpler accounting rules that focus on the principles of safeguarding client money, rather than lots of specific technical rules.

November will also see the SRA Digital badge becoming a mandatory requirement for all regulated firms who run a website. Further information is available on the Solicitors Regulation Authority website.

Under the current rules, period controls are specifically described, for example the transferring of costs within 14 days and the banking of client monies by next working day. However, under the new rules, these period controls have been replaced with the word “promptly”, leaving it open for you as a firm to decide what “promptly” means to you.

This also means that you could make the decision to continue using the old rules period controls for handling client money, as long as all areas of the new rules have been considered and changes made where necessary.

The SRA has promised some form of guidance in addition to the new rules. However, we have not yet received any confirmation when this will be nor what form, this will take.

Significant Changes to the SRA Accounting Rules

Under the current rules, firms can transfer money from client account to reimburse the firm for incurred or paid disbursements. However, under the new rules (4.3) firms must provide a bill of costs or other notification of costs incurred to the client or paying party first, before the transfer of funds can be completed. The definition of costs includes disbursements.
The current rules include a section on the dealing of residual client balances. However, these are now silent under the new rules with only rule 2.5 referring to the prompt return of client money as soon as there is no longer any proper reason to hold those funds.

Other Key Changes to the Rules

The number of rules has been reduced to 13, compared to the current 52.
Changes in what is classed as client money under certain circumstances means some firms may not be required to hold client bank accounts. This includes money received in advance for fees and disbursements (where they are the only client monies held and clients are informed in advance) and money received from the Legal Aid Agency.
Professional disbursements are currently considered separately to disbursements. However, it appears all disbursements will be treated in the same way under the new rules.
Agreed fees are no longer considered as separate to costs. Under the new rules, agreed fees are classed as client money until the bill is raised (unless the firm follows the changes in point 2).
The new rules now formally require the COFA or manager of the firm to review and sign off the client account reconciliations. Any differences on the reconciliation should be investigated and resolved promptly.
Firms running client’s own accounts will now be subject to reconciliations every five weeks. Considerations will need to be made on how this is completed as it is unusual for these accounts to be recorded on the client ledgers.
New rule 11 specifically refers to the use of TPMA’s (Third Party Managed Accounts). You are permitted to enter an arrangement with your clients to the use of a TPMA. You however must still ensure to obtain regular statements from the TPMA provider and ensure these accurately reflect all transactions on the account.

Considerations in Advance of the Rules

We recommend that all firms review the new rules which are available on the Solicitors Regulation Authority’s web page, to ensure you are comfortable with the changes due to commence from the 25^th November 2019. Below are some considerations to be made for the more common process changes required under the current rules:

Firms that current rely on the transferring of incurred and paid disbursements for cashflow purposes or as part of their usual cashiering procedures, need to consider the new rule 4.3 on billing or notifying clients in advance of transferring these costs. Changes to the current process will be need to be considered to either;
1. first supply disbursement only bills, or
2. only transfer costs on the creation of a final bill
Under the new rules the concept of unpaid or incurred disbursements has been removed, meaning disbursements are only to be considered as disbursements when paid.
Defining the meaning of “promptly” for your firm. Under the new rules, “promptly” is referred to on the banking of client monies received, and on the transferring of office monies from client account for costs (this includes disbursements). As a firm you will need to consider if you are required to adopt changes to adhere to this rule. It is recommended that documented systems and controls are in place to ensure the definition of “promptly” is familiar to all.

The Cashroom Clients

The Cashroom offers recommendations for adherence to these new rules and provide advice on the creation of a suitable policy to ensure compliance for our clients. If you are interested in what The Cashroom can offer, please get in touch…

Katie Wilson,

Head of Cashiering England and Wales

The Law Society of Scotland launches mental health survey!

Mental health issues are being recognised more, especially in the workplace however there is always more we can do. The Law Society have now implemented a survey for Scotland’s legal sector urging solicitors, accredited paralegals, paralegals, legal technicians, and all support staff working at law firms and in-house legal teams to get involved and complete the survey. For us working in the legal sector, we are often helping others and finding ways for them to solve and deal with their problems, sometimes forgetting about our-self in order to help someone else. Along with our extremely busy and sometime stressful work we all have commitments and strains to deal with in our personal life too. It is vital for all of us to take a step back when needed and deal with our own health. And even if we do not have any existing mental health problems, ensure that we are all looking after our mental health as we do our physical health.

Alison Atack, the president of the Law Society of Scotland has said: “At the Law Society, we want to understand more about mental health issues within the whole of the legal sector, which supports around 20,000 jobs in Scotland, and examine what we may need to do to tackle any stigma that exists around mental health in the workplace and ensure people can access support when they need it most. I’m proud that we are the first professional body in Scotland to initiate a sector-wide survey of this kind.”

At The Cashroom Ltd we think this is a fantastic initiative from the Law Society and would like to encourage everyone to participate in this survey – CLICK HERE TO PARTICIPATE.

Mental health is becoming extremely common within the workplace now and is now one of the main causes of sickness in staff members. A massive 70 million working days are lost every year in the UK due to mental health issues which is costings businesses around £2.4 billion per year.

It is common for people not to talk about their feelings especially in the work place due to the fear of being discriminated, feeling ashamed and embarrassed or the not knowing how people will react. We should now be creating workplace environments for people to feel safe enough to be themselves and speak out about how they are feeling.

At The Cashroom we have a confidential phone line available to staff which goes to trained mental health professionals that they can call 24 hours a day (you wouldn’t let yourself or even a colleague treat your cancer would you?).The Mindful Employer creates a safe place for staff to call and also has a lot of useful information on its website for staff. We also encourage all staff to look after their mental wellbeing by allowing time during the working day for staff to complete a daily mile outside in the fresh air and we have fresh fruit delivered weekly. We also have our mental health charter displayed in the office for staff to see.

It is also Mental Health Awareness week so what better time to complete this survey and take some time to think about you and others mental health.

TOP TIP: Ask yourself, would you know if you or someone else was being affected by mental health, could you recognise it? There can be a lot of different signs and symptoms related to mental health but no one should be afraid to get help if they are having difficult feelings. Things to look out for in work are, feeling more tired than usual, finding it extremely difficult to motivate yourself, short tempered, isolating yourself and avoiding colleagues.

Chloe McGinn

Marketing Assistant

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