Cashroom Articles Archives and Information

The Emperor’s New Clothes

Remember the fairy tale of the Emperor’s New Clothes?

A vain emperor is conned into paying a huge sum of money for a suit of new clothes, that don’t actually exist. He parades through the streets in his non-existent clothes, and the sycophantic citizens buy into the myth that he’s wearing a wonderful new set of clothes. They are afraid to call out the truth and are complicit in the lie.

But, so the story goes, a small boy shouts out “but he’s naked”, shattering the “illusion” and the Emperor is ridiculed by the previously complicit citizens.

What’s that got to do with anything?

Well, I’m beginning to think that the COVID lockdown is a bit like the little boy – shouting out to all of us “but he’s naked”. Let me explain…..!

Up until recently many businesses have been toying with remote working, thinking about it, but not really doing much. People were worried that we will miss “something” if we don’t all work from one (expensive, centrally located) office. Along comes the COVID lockdown forcing many of us to work from home, and we suddenly realise that it’s perfectly possible.

The COVID lockdown is the little boy shouting “but everybody working in that office is stupid”.

So what else might the little boy laugh at?

“Wait what … you spend hours traveling to and from work?”

I’m lucky – for the last few years my commute has been about 10mins. But I did spend years traveling in and out of Edinburgh. Nobody enjoys that – and if we no longer need to work from one centrally located office … we can all have a 30sec commute to our “office”.

“But why do you need to work then?”

And if you work remotely, from home – why do we need to work between the hours of 9-5 (or a rough approximation of those hours!)? Are we going to see working hours becoming much more flexible?

“But why does it need to wait until the weekend?”

So if working hours become more flexible, will weekends matter? If you’re working from home, with no commute and no fixed hours … why would you split a week into 5 days on and 2 off (schools I hear you say….but I suspect the little boy will be laughing at them too!)?

“So, why is it we live in this tiny house near all these other people”

Looking further ahead, the only reason cities exist is to bring people to one place allowing them to collaborate and work together. Will the little boy’s ridicule reverse the last 100 years of urbanisation? If I don’t need to work in an office, and have no fixed hours, I can live wherever I have access to a fast broadband connection!

So, you get my (somewhat laboured) point …… the COVID lockdown is forcing us to confront long held assumptions. It’s forcing us to look hard at whether the reason we held them in the first place, remains valid now.

And one last question the little boy might ask (!)

“So, why haven’t you outsourced your cash room yet?

………!

David

Electronic Lift Off!

It has been an 8 year journey, but the wait is over, the future of Legal Bills of Costs has finally arrived!

The new electronic bill is now mandatory for all work done from 6 April 2018 (the “transition date”) and unlike the failed pilot scheme, the changes are not limited to the SCCO.

Why the change?

Essentially, the electronic bill is designed to achieve Sir Rupert Jackson’s long term aim:

“…to harmonise the procedures and systems which will be used for costs budgeting, cost management, summary assessment and detailed assessment”.

And that meant replacing the traditional Victorian Account Book style paper Bill with an electronic version, fit for present purposes.

What cases?

But it won’t apply to all cases. The electronic bill must be used for work after 6 April 2018 where the case is a Part 7 Multi-Track claim except:

Where the proceedings are subject to fixed or scale costs;
Where the receiving party is unrepresented; or
Where the court has otherwise ordered.

Format

The requirements for an Electronic Bill are brought in by the 92^ND CPR Practice Direction Amendments (PD 47.6).

Electronic bills may be in any self-calculating, self-summarising spreadsheet format which:

(a) reports and aggregates costs based on the phases, tasks, activities and expenses defined in Schedule 2 (a simplified set of costs as an alternative to J-Codes) to the Practice Direction;

(b) reports summary totals in a form comparable to Precedent S (the spreadsheet format attached to the online Rules);

(d) automatically recalculates intermediate and overall summary totals if input data is changed;

(e) contains all calculations and reference formulae in a transparent manner so as to make its full functionality available to the court and all other parties.

The court will allow any spreadsheet based Bill of Costs which produces these outcomes, but essential to the efficient preparation of the electronic bill is the need for Solicitors to accurately time record by Phase, Task and Activity.

As well as the usual detail of a case narrative, a chronology of the procedural steps and a summary of the legal team and rates, the electronic bill summarises numerous components including by Phase; by Task, Activity and expense; by Part; by communications; and compares the costs in the bill with the last approved/agreed budget.

When serving or filing at Court, you must also serve and file a hard copy of the electronic bill in “manageable” paper format. The intention is however that the electronic bill and not the paper version will be the focus on assessment, enabling live changes to reflect the Court’s assessment of costs.

However, there are already concerns about the level of IT training given to the judiciary.

Although the new rules do not apply to legal aid or Solicitor Act assessments, it is envisaged that at some point in the future they would be brought within the scope of the rules.

Work carried out both before and after 6 April 2018?

It is still possible to commence Detailed Assessment proceedings with a paper Bill for work undertaken to 6 April 2018 but there must be an electronic bill for work from 6 April 2018. It remains to be seen how much of a take up there will be in line with Senior Costs Judge Master Gordon-Saker’s preferred approach when he said that:

“Frankly we’re working possibly on the false assumption that if you’ve got to prepare an electronic bill you’re probably going to do it for the whole case rather just a bit of it.”

Specialist Costs Lawyers would be able to translate old work into the new codes so that the entire bill is electronic.

So, will the added transparency afforded by the electronic bill assist with quicker resolution of costs assessments? And in turn, will Solicitors get paid quicker?

Quite possibly, especially in conjunction with the supposed certainty afforded by costs budgeting.

Indeed, done well, time recording and the electronic bill itself will bring about many benefits:

It is designed to dovetail in with the Precedent H Costs Budget and will help with monitoring spend under Phases to stay under Budget.
Those who are not time recording accurately under Precedent H Phases risk losing budgetary control in costs managed cases, without any early warnings.
If overspending, the level of detail will help management see where the overspend is occurring.
There is more detail in the Bill and the data is manoeuvrable by the parties and the Court.

But as always, the electronic bill will only be as accurate as the information inputted, especially as the once simple task of time recording by fee earners is now more complex and time consuming. Costs Lawyers will ensure the final electronic bill can be signed off as accurate and some Solicitors may even take a pragmatic approach to retrospective coding by their Costs Lawyers at the end of the case.

In future, Courts will deal with all matters electronically, although there are many practical and IT hurdles to overcome for the Courts to manage cases on a purely paperless basis, including the secure and usable format in which Solicitors’ electronic files of papers can be lodged at Court.

But for now, the focus is on the electronic bill and plenty of teething problems can be expected!

Lee Evans is a Director at NWL Costs Lawyers, a firm which has specialised in Legal Costs claims for over 35 years.

E: lee.evans@nwlcosts.com

W: nwlcosts.com

What Every Good Law Firm Should Know About Translation

Dan Peachey is the commercial director at city legal translations – certified as the UK’s fastest growing translation company in 2016 by the Association Of Translation Companies.

Here, Dan explains what every good law firm should know about translation . . .

Q: How important is translation to the legal sector?

DAN: Legal translation accounts for five per cent of all translations and the legal translation sector is worth 2.3 billion US Dollars annually. Despite this, so many within the profession are unfamiliar with how to handle the foreign language elements of legal matters or treat them as an afterthought. The legal world relies on legal experts and for translation and interpreting, it should be no different.

Q: What are the consequences of not using a professional legal translator?

DAN: Inaccurate translations can cause a whole world of problems leading to wrongful convictions, damaged reputations, finances, transmitting liability or ownership to another party, businesses made or lost. There have been cases of properties being sold at the wrong price, or to the wrong person. These are not sensational examples; they are possible if legal documents are not translated correctly and professionally.

Q: What’s the best approach to commissioning language services?

DAN: When it comes to commissioning language services, it pays to know about the different types available and where to source them. For example, do you know the difference between translation (dealing with the written word) and interpreting (dealing with the spoken word)?

Expert translation and interpreting should be provided by a Language Service Provider (LSP) affiliated to a professional trade body, such as the Association of Translation Companies or the Institute of Translation & Interpreting.

An LSP with specific experience of your sector will not only ensure accuracy and precision but also speed up the process. They will be familiar with terminology and styles of writing and will also have a wider knowledge of specific legal systems and areas of expertise.

Check the LSP uses experienced, mother tongue, legal expert translators.

You should also ensure the LSP can certify documents to the right level for legal use. There are a number of different levels, such as certified translation, notarised translation or sworn translation. It can be a bit of a minefield! We have a handy explanation on our website at www.citylegal.co.uk.

By working with an accredited translation company and you’ll get the best results. City Legal works with more than 2000 legal translation experts and supports over 600 language combinations.

Q: What type of documents will need to be translated?

DAN: Anything and everything! We translate court judgments, witness statements, evidence, certificates such as marriage, birth, death as well as police checks, expert testimony and company formation documents such as Articles of Association and memoranda.

Q: What’s involved with legal interpreting?

DAN: Legal interpreting needs to be carried out in a completely accurate and non-biased manner. We provide interpreters for a variety of reasons – in the court room or to take a witness statement, for example.

There are different types of interpreting including simultaneous or conference, consecutive and telephone interpreting, but a good LSP can guide you through this.

Q: How are translations costed?

The cost of the translation will depend on the length of the document, the content and the language combination required.

For example, countries with low levels of population such as Iceland or where the cost of living is high such as Scandinavia are generally more expensive. Before you compare LSPs, you should see what is included in the price, as some charge urgency fees, whilst some offer proofreading as part of a job automatically, whilst others charge this separately. Also, some companies offer Legal Aid rates in the relevant circumstances so make sure you tell the LSP upfront before they quote!

Q: Can’t we just use Google Translate?

The world of automated or machine translation has been talked about so much lately, with Google Translate as the one everyone knows best! Such tools can be useful for translating large documents where there is a lot of repetition. However, translations for the legal sector need to be precise, accurate and exact, with confidentiality at the heart of the process. Therefore, legal documents do not naturally fit the profile for technology-based translations and often ‘legalese’ may not have precise equivalents in another language while a simple rephrasing of sentences may cause confusion and transmit liability or ownership to another party. Steer clear!

Dan Peachey is Commercial Director at City Legal Translations, the UK’s Fastest Growing Language Services Provider in 2016. Dan is a Council Member of the Association of Translation Companies and the Vice Chairman of Eulogia, the European Alliance of Translation Agencies. He has been working in the translation sector for the last 16 years. www.citylegal.co.uk

Top applications to help you run your business

The world has gone technology crazy. Technology means we can all work more flexibly and more efficiently than ever before but with so many top applications and gadgets to choose from how do you know what really would benefit you and running your business? This week we ask a Managing Director, a Business Developing Director, a Business Development and a Marketing Manager what their top applications are and how could they help others in running a law firm.

David Calder, Managing Director, The Cashroom Ltd

Top Applications – OmniFocus

I’ve always thought of myself as a pretty productive person, but I’ve always hated “ToDo” applications or reminders. They’ve never really worked for me. For years I kept a very simple clip board on my desk, with a pad of paper, wrote down my tasks for the day and scored them out as I completed them. It worked reasonably well for the 20 years I was a practicing lawyer.

And then I discovered OmniFocus.

applications OmniFocus is a Task Manager for OSX and IOS, which implements the “GTD” (Get Things Done) productivity methodology espoused in the book of the same name by David Allen. I had never come across this until I read about OmniFocus, but it’s a pretty comprehensive process for time management and (surprise surprise) getting things done.

In essence OmniFocus is a big data base where you log everything you need to do. You can store personal and business tasks, and organise them into mini projects. You can then aggregate the tasks together to create a daily ToDo list. However, the clever thing is that, not only are your tasks organised by project, they are also organised by “context”. A context is a brief description of the circumstances that must exist before you can complete a task. They can be pretty much anything, but a typical example is time – so you categorise tasks according to how long they’ll take.

The beauty of this is that, if you have an hour to spare, you can set up OmniFocus to only tell you about tasks you can fit into that hour, and ignore anything that’s longer. In this way, you know exactly what you can do in the time you have available. So your custom To Do list, only contains those task you can complete in the time you have. That’s only an example – contexts can be pretty much anything.

It’s this ability to create custom to do lists, for specific circumstances, drawing tasks from all your projects, that makes OmniFocus so powerful, and has persuaded me to give up my trusty clip board!

Emma O’Day, Marketing Manager, The Cashroom Ltd

Top Applications: Hubspot

Before you skip passed the marketing part and think this doesn’t affect you, please stop and skim your eyes over what I have to say. Marketing is effectively just a name for promoting your business to allow it to grow and be a success– now doesn’t everyone want a successful business? I myself started working in marketing whilst I was completing my diploma in legal practice so believe me when I say lawyers can be marketing gurus too – yes that is what I am now calling myself!

Hubspot is my app of choice, David and Alex can testify to me bleeting on like a sheep for months about getting it and oh how I love my hubspot! One application contains every single one of our contacts and their full history – how we know them, what emails they have ever been sent, have they read those emails, have they attended events, what business they have referred our way etc. I can send emails from it or add a task for one of my colleagues to send an email to someone. We can automate emails so if someone does open a specific campaign then they get sent a follow up campaign without me actually doing anything – very cool! applications

You can spend half an hour scheduling all your social media posts for the week/months/year ahead and then never have to go on social media again if you don’t want to! This is brilliant to ensure you have constant content going up, although I would advise you take a look on social media at least a couple of times a week to see what is current and what your followers are talking about too.

You can create a blog post on it which then automatically goes onto your website, and automatically is then pinged out on your social media accounts. You can also create a mass email campaign to go out to hundreds or thousands of contacts if you have them with the click of one button.

applications The Business Development Managers also log onto hubspot and all our new business comes in through it. David can log in and see on a dashboard very quickly how many new enquiries we have, where they came from and at what stage they are in our sales process, for example he can quickly see if Alex has sent out a contract and can then click into that if he wants to see more details.

Hubspot also has a fantastic reports feature to see how successful your email campaigns have been, how many new leads you have converted that month and you can set a monthly target so it can report on how close or far away you are to reaching your target. Perhaps you want your fee earners out generating some of their own business every month, you would be able to track this here.

Having your full sales process in one place from marketing right through to your client becoming a client is brilliant and I can’t recommend using a CRM like hubspot enough! Go on, become a marketing guru too!

Alex Holt, Business Development Director, The Cashroom Ltd

Top Applications: Good Notes

The life of a BD person is hard. No…really…stop laughing.

We develop a caffeine addiction. Our cars take a pummelling. We are forced to eat nice lunches with people and attend drinks events.

It’s hell, I tells ya.

But on a more serious note, our remote, wandering lifestyle is a wonderful testing ground for apps which enable easier and more efficient working methods.

applications One of the biggest issues for anyone who deals with numerous client meetings whether on the road or in the office is the whole issue of fitting in the time to type up the notes and perform the activities you’ve agreed, before the next meeting starts.

Good Notes is an iPad app which, when using the rather clever stylus, allows you to write out your notes straight into the ipad. Because it effectively replicates a pad of paper, you are able to make notes just as quickly and ‘haphazardly’ as you would do normally within a meeting. You can even doodle! Once the meeting has finished, you can export that note and then save it within your CRM (I’m guessing Emma will have sung the praises of Hubspot in that regard!), and flag it up to relevant people within your team. It is a searchable app, so once you’ve made your notes you can name the note and then it becomes searchable subsequently within GoodNotes either by name of note or by date- a definite improvement on the physical day book, especially after you’ve moved onto a fresh one.

We toyed initially with using an app which converts handwriting to text, however we found that for meetings, it distracts you a little to be keeping an eye on the ‘translation’ of your handwritten gems into text. With GoodNotes, it is of course sensible to try to write so that others can read it, but that’s really the only limitation. And did I mention you can doodle!?

Gregor Angus, Business Development Manager, The Cashroom Ltd

Top Applications: RD Client

For me, since moving forward to working exclusively from an iPad, the best App has been RD Client. This App allows you to have a remote desktop connection to your workplace computer, using just the IP address. Once you open the App, it is exactly the same as sitting in from of a PC or laptop if you were in the office. I find this an absolute lifesaver, and my ‘go-to’ App every day (along with our CRM). It means I can still send my emails from Outlook, access documents from our Cloud, check my calendar, access anything on my desktop, use Word etc, with exactly the same look and function as if I was on a PC. The other ‘plus’ is that it’s all in the same place, which saves going in and out of various Apps. It is certainly a long way from when I first got an iPad, and you couldn’t use Microsoft programmes at all, or at least it certainly wasn’t easy to do so! I can’t imagine ever going back to a laptop now, let alone a PC!!

So those are out Top Picks, could they help you? Please let us know if you use any applications that is instrumental in your day to day working and could benefit others.

Top 5 Tech Products For a Successful and Efficient Law Firm

I work in marketing and so part of my day involves checking social media and reading up on tech legal news. Today I was really struck by how Tech focussed the profession is becoming – gone is the image of the lawyer surrounded by paper and difficult to get in touch with.

Now everything is electronically stored and you can even read an email on your watch. It is really beneficial for lawyers to be aware of potential opportunities through the use of technology and at the minute there is more of it available than ever to help your firm function better and more efficiently.

In our everyday life we are surrounded by advancing technology, smart TVs, apps to control your central heating and our cars aren’t far away from driving themselves! We need to embrace technology (many already are!) in the workplace too. As well as technology, the workforce is focusing more on work-life balance and flexible working than ever before. I believe the two go hand in hand.

Below are 5 techie products that I believe would make running your law firm easier and help you get more out of your working hours.

My top 5 tech finds

The Link App

Nobody understands working in a law firm better than a lawyer and this product is designed by a Lawyer for lawyers. This app puts client communication at the core of your business. At the touch of a button you can keep clients up to date with their case. Client cases can be accessed at any time of day, at your desktop or on the go. A happy client comes back again and again; and are your best referrers!

Amiqus ID

Anti-money laundering, identity and compliance checks online. Ok, so I know that not many people get excited about this process, but the checks are there to protect the profession and Amiqus ID is a fantastic product which makes the process and checks much quicker and is cost effective too. When you just want to focus on managing incoming client care, Amiqus can securely handle the money laundering checks and on boarding.

Breathe HR

As a growing business, we have discovered that HR is really important. But you don’t need to pay for someone in-house. We took our own advice and outsourced but in the form of an App called Breathe HR. There are a lot of these products out there but this one works great for us. Staff holidays and sickness can be logged easily and teams can view when other members have holidays booked. Staff contracts and documentation can all be stored in one secure place and it is easy to claim expenses and have them go direct to your accounts department. A great all around company tool.

The Cashroom Portal

Of course our Cashroom portal! We are an outsourced accounts department for legal firms and we also provide management accounts and payroll services.

We have been developing our very own portal, it is a secure method for clients to send their instructions to us and both organisations benefit from a full audit trail, it is extremely user friendly.

You will always have your own dedicated cashier however with the ability to add attachments and comments to the portal the need for phone calls and emails is minimal. An efficient and compliant accounts department should be a top priority for every law firm. Download our client portal presentation here.

E-CPD

CLT Scotland are now offering e-learning CPD -you can now gain the necessary CPD hours by fitting it into your own schedule, you could even do it from home wearing your pyjamas (if you wished!) Topics include the Criminal Justice (Scotland) Act 2016, powers of attorney and social media law. I really think that CPD without having to leave your desk is a great idea.

If you know of any other products then please let me know, we are always looking for tools that can benefit our clients.

Emma O’Day

Marketing and Communications Manager

6 barriers for professional services getting into LinkedIn (and why it’s important to overcome them)

In professional services, there is historic reticence regarding technology, yet technology is here to stay and evolving at a rapid pace. Broadly speaking, six barriers exist that prevent professionals from creating their LinkedIn presence and getting results.

Fear of change

First, there is the issue of change. Change is risky and exciting, but it can also foster self-doubt: is this effort worth it? But LinkedIn is now no longer optional for professionals. It is the digital business card, but offers a whole lot more in terms of creating new business, strengthening existing relationships and moving yourself and your practice up the Google search rankings. LinkedIn is the first place that other professionals look when they have problems to solve, so not having a presence—lacking even a foot in the door—could mean that your competitor gets the brief, not you.

Desire to leave it to someone else

“I don’t have the people skills” or “I didn’t train to be in business development” you may say. However, you must upskill because direct relationships are what people now want, not through a middleman. You must not only excel at your profession but grow your business, tapping into nascent skills or developing new ones. Once you and your business understand this basic reality, you are ahead of the game.

Misconceptions linkedin

On the face of it, LinkedIn can appear like a glorified Facebook. The reality is, like Facebook, many people use it — 22 million in the UK alone. It is tailor-made for professionals and the services you provide and is the number one B2B database in the world. For the most part it is free and represents an efficient way to foster new professional relationships.

Lack of time

Time. You don’t have enough of it, and creating an effective LinkedIn profile demands some of your most precious resource. But there are shortcuts available and content can be repurposed. Just small bursts of time each day—think of it like going to the gym—help keep your profile lean and focused, so your activities are effective and pay dividends.

Fear of going public

Another barrier is the fear of putting yourself out there in public, to many millions of people. You have full control over what people see, but this control requires skill and it is not simply a case of plug and play with LinkedIn. You need to bring online what you do offline.

Lack of skills

Finally, you don’t need digital skills to make your profile accurately mirror your professional life. This can be done with baby steps to build confidence and—most likely—outside help from other professionals that can help you get that boost that a LinkedIn profile provides.

Many professionals fear using LinkedIn or do not think it is worth their time. But it cannot be ignored anymore because building your LinkedIn presence effectively can put you and your business out in front.

Miles Duncan is CEO and Founder of LinkedIn Success Systems

LinkedIn Success Systems is a specialist training company that provides LinkedIn training for Corporates and SME’s.

miles@linkedinsuccesssystems.co.uk

LinkedIn Success Systems is in no way associated with LinkedIn Corp. We are a third-party organisation helping companies and individuals to improve their performance of using LinkedIn

Most Common Accounts Rules Breaches

It is important to remind yourself frequently about common breaches in the accounts rules. At The Cashroom we put policies in procedures in place for our clients to safe-guard them from breaching the rules, in this short piece we demonstrate the most commonly breached rules and advise on ways you and others in your firm can avoid these.

FUNDS TRANSFERRED WITH NO WRITTEN AUTHORITY

To avoid breaches-

If funds are transferred between clients without the client’s written authority this is a breach, i.e. I am selling my flat and buying a house with a partner. As an individual I am selling a property, I am a singular client and must give written authority for the proceeds of my sale to be used in another matter, such as the purchase of a property jointly for my partner and me. For the purchase transaction my partner and I are dealt with as a joint client and matter. Therefore, my written authority is required to transfer the proceeds from the sale of my flat for the purchase of our house.

Put a procedure in place to ensure confirmation that the mandate giving the client’s written authority for a transfer to another client is on file and obtain a partner/directors approval in the instruction to Cashroom to transfer the funds

Put a procedure in place to ensure confirmation that all bills have been issued to the clients on creation

2. WITHDRAWAL OF FUNDS HIGHER THAN BALANCE HELD

To avoid breaches-

A breach can take place when there is a withdrawal of client funds from a ledger where the current balance held for that client is lower than the actioned withdrawal. A client account must not be overdrawn.

Ensure that before a payment is made/requested against the client account there are enough funds currently showing on the client side of the financial ledger to cover the withdrawal. If there are not sufficient funds on the client ledger you must not make the withdrawal.

3. RECORDING INTERMISSIONS OF PAYMENT

To avoid breaches-

There is a rule where a solicitor is not required to pay sums into the client a/c but must record such intermissions in the client ledger.

Ensure procedures are in place to log all incoming client cheques and log the outgoing details; of either by banking the cheque or endorsing the third party cheque direct to the client

4. CLIENT BALANCES AFTER CONCLUSION OF A MATTER

To avoid breaches-

Client balances held after the conclusion of a matter should be dealt with promptly. Any balance held after conclusion of the matter is a breach.

Review all balances currently held when receiving your month end balance listings from your Cashroom; and ensure all finalised matters are checked for balances before archiving

Obtaining the client’s bank details upon opening a new client will avoid the need to search for clients’ in the future

5. CLIENT ACCOUNT DISBURSEMENTS

To avoid breaches-

Transfer of costs or disbursements from client account within 14 days of rendering the bill of costs or incurring the disbursement; or within 28 days of completion. Any funds still held in client account after 14/28 days is considered to be in breach.

Your Cashroom can produce reports to highlight all matters with outstanding office balances and where funds are held in client account to identify any potential transfers

Ensure procedures are put in place for all transfers to be instructed to your Cashroom on payment of the bill or disbursement

6. PROFESSIONAL DISBURSEMENTS

To avoid breaches-

The payment of billed professional disbursements should be made within 48 hours of receiving the funds in payment of your bill. If the professional disbursement has not been paid within this timeframe the funds are considered client monies and as such should be immediately transferred to the client account.

Ensure procedures are in place to identify that when a bill has been paid by your client; instructions to make payment of all unpaid disbursements included on the bill are sent to your Cashroom.

If you would like any advice on compliance, a health check inspection carried out on your accounts or are thinking about outsourcing your cashiering function, management accounts function or payroll then please do not hesitate to contact alex.holt@thecashroom.co.uk (for England/Wales) or gregor.angus@thecashoom.co.uk (for Scotland/Ireland) or visit www.thecashroom.co.uk for more information.

FUNDS TRANSFERRED WITH NO WRITTEN AUTHORITYTo avoid breaches-

Put a procedure in place to ensure confirmation that all bills have been issued to the clients on creation

2. WITHDRAWAL OF FUNDS HIGHER THAN BALANCE HELD

To avoid breaches-

A breach can take place when there is a withdrawal of client funds from a ledger where the current balance held for that client is lower than the actioned withdrawal. (SRA Accounts Rule 20.6 & CLC Rule 12). A client account must not be overdrawn.

3. RECORDING INTERMISSIONS OF PAYMENT

To avoid breaches-

There is a rule where a solicitor is not required to pay sums into the client a/c but must record such intermissions in the client ledger (SRA Account Rule 16 and CLC Rule 11).

Ensure procedures are in place to log all incoming client cheques and log the outgoing details; of either by banking the cheque or endorsing the third party cheque direct to the client

4. CLIENT BALANCES AFTER CONCLUSION OF A MATTER

To avoid breaches-

Client balances held after the conclusion of a matter should be dealt with promptly. (SRA Account Rule 20 & CLC Rule 12.2.6) Any balance held after conclusion of the matter is a breach.

Review all balances currently held when receiving your month end balance listings from your Cashroom; and ensure all finalised matters are checked for balances before archiving

Obtaining the client’s bank details upon opening a new client will avoid the need to search for clients’ in the future

5. CLIENT ACCOUNT DISBURSEMENTS

To avoid breaches-

Transfer of costs or disbursements from client account within 14 days of rendering the bill of costs or incurring the disbursement (SRA Account Rule 17); or within 28 days of completion (CLC Rule 12.1.4). Any funds still held in client account after 14/28 days is considered to be in breach.

Your Cashroom can produce reports to highlight all matters with outstanding office balances and where funds are held in client account to identify any potential transfers

Ensure procedures are put in place for all transfers to be instructed to your Cashroom on payment of the bill or disbursement

6. PROFESSIONAL DISBURSEMENTS

To avoid breaches-

Ensure procedures are in place to identify that when a bill has been paid by your client; instructions to make payment of all unpaid disbursements included on the bill are sent to your Cashroom.

The Increasing Risk to the Legal Sector in 2017

The progression of technology has enabled criminals to become more savvy when looking to exploit businesses. The legal sector in general has become a huge target for cybercriminals when they appreciate the large sums of money transacted each day. Given the level of trust between a solicitor and their clients, it is not surprising that these particular relationships are targeted for their own financial benefit. Criminals are not just looking for financial gains, but also for the confidential data which is at the crux of a solicitor-client relationship, causing a risk to the legal sector.

The risk to the legal sector is posed by the interception of emails, cloned websites and fake headed letters are amongst just some of the techniques these criminals are using, meaning it is becoming more and more important for law firms to ensure that their due diligence and compliance policies are constantly up to date. When considering the protection of client money, it’s paramount to understand the significant risk which cybercrime presents.

Protection by way of prevention

To protect law firms, solicitors, and clients, firms must ensure that they safeguard digital information from both internal and external sources. Firms must meet all of the legal and regulatory requirements to lower the risks posed and conserve their reputation. The SRA’s Risk Outlook 2016/17 gives a helpful overview of various cybercrimes and suggests perhaps moving away from complex rules to free up firms to innovate and grow, whilst ensuring a high level of protection. The challenges around cybercrime, whilst not new, are evolving and require constant vigilance.

The SRA are entrusting solicitors with the responsibility to manage their own risks and offers the Risk Outlook as a tool to aid them with this mammoth task. It provides an overview of the risks to the protection of people who use legal services; the operation of the rule of law; and the proper administration of justice. The risk posed to these three areas is something which needs to be taken seriously.

What should we do about it?

In cases where law firms have not been vigilant enough in checking simple things such as email addresses for a slight change, solicitors could be liable for losing client funds; be forced to pay money back to lenders; be subjected to raised insurance premiums; and suffer brand damage. It is therefore crucial that, as merely one example: no notifications of changes to bank details are sent by letter or by email.

The opportunities for criminals are vast, but equally so are the opportunities for mitigating risk by outsourcing due diligence and compliance solutions. Outsourcing will not only reduce the pressure upon a solicitor who already has to be vigilant when undertaking various daily tasks, but it will free up fee earner time and leave due diligence to specialists who can keep up with the rapidly evolving issues we face today.

It is therefore of utmost importance that there is a general awareness of the risk of cybercrime and fraud in the legal sector. Not only should risk management be carefully considered by law firms to meet legal and regulatory requirements, but solicitors themselves should be acknowledging risk when undertaking their daily tasks to ensure that the relevant precautions are undertaken each and every time.

Jennifer Davies – Lawyer Checker
https://www.lawyerchecker.co.uk

Risk management and Professional Indemnity Insurance – what is round the corner?

The SRA will announce another wide-reaching consultation around the provision of financial protection for law firms this spring. I would encourage all firms to have a read of the consultation when it is released and to at least form an opinion of the potential impact that any proposed changes may have.

There is speculation that the consultation will include some recommendations that will represent the most radical changes to Professional Indemnity Insurance (PII) for the legal profession since the Solicitors Indemnity Fund (SIF) was disbanded back in the year 2000. It has been suggested that some of the proposed changes could be as follows:

- - Lowering the compulsory limit of indemnity to £500,000;
  - Allowing the potential for an aggregate limit of indemnity rather than an each and every claim
  - Removing cover for cyber related thefts from client account;
  - Removing cover for claims made by more sophisticated clients such as financial
  - Removing cover for conveyancing work completely;

So what will this mean for your firm? In my opinion, the profession has been very lucky to have the protection of the minimum terms and conditions (MTC) since 2000 and in some respects the MTC has ended up providing cover for law firms (and their clients) that was never really intended. The advent of client account cyber frauds is the most recent and relevant example. There is a clear agenda among the participating insurers and to some extent the SRA to ‘water-down’ the MTC and to allow law firms to pick and choose their cover. The SRA clearly feels that there needs to be a more flexible approach to PII in order to ensure that they can compete with other regulators that are increasingly threatening their place in the legal services industry.

While it is hoped that these changes may have a positive impact of premium levels, particularly for smaller firms, are they really a good thing for the profession as a whole, or not? It may well be for the firms that have their houses in order, but for others, this will create new challenges. In reality, my view is that this will lead to insurers scrutinising law firm’s policies, procedures, systems and processes more so than ever before. Your approach to risk management will be looked at in more detail than in previous years. If any of these changes are approved then they will be implemented in 2018, so no-one can afford to be complacent.

I have highlighted a couple of the bullet points above as I suspect that these are particularly key issues for readers of this article. If insurers are given the opportunity to offer limited cover with regard to cyber claims and conveyancing work, they will do so! However, if you can demonstrate that your firm has a robust approach to dealing with cyber related issues, then you will be fine and your firm will still be able to secure competitive PII cover. Continuing risk awareness and education of your staff has to be demonstrated and I would encourage you to engage with your insurer and respond to any communications they send you in this regard. You will also need to demonstrate the controls around your client account and prove that you have a sophisticated approach to the management of cash within your firm. When it comes to conveyancing, you will again need to demonstrate that you have a process and the right people in place that will protect your clients and ultimately your insurers.

As is usual with any proposed change, if implemented these changes to Professional Indemnity Insurance for the legal sector will represent an opportunity for forward-thinking firms with the right approach but will provide a challenge for those firms not willing to adapt. Plenty of food for thought for the New Year!

Jake Fox is Managing Director at JM Glendinning (Insurance Brokers) Professional Risks Limited, a specialist insurance broker dedicated to the legal profession.

https://www.jmginsurance.co.uk/solicitors-professional-indemnity-insurance

New work types & mitigating the risk involved

The legal profession has had so many challenges in the last few years that many firms haven’t survived, and many have only survived because they have made effective changes.

We are seeing a trend of firms wanting to review the types of legal work that the firm undertakes. If you are looking to take on new work types, there are some key areas where good planning, due diligence and robust risk assessment will pay dividends and avoid catastrophe.

The work type
What are the factors that are driving the decision to expand your range of legal services? The usual driving force is to look at which areas are currently busy and lucrative A trend is emerging where personal injury firms are looking to start up or acquire a conveyancing department.
Whilst PI and conveyancing are both process driven work types the challenges and the risks involved are very different

Dealing with client money
A conveyancing department will usually mean that your accounts department becomes very busy and you need to ensure that you have the right support in place to cope with the number of transactions taking place. Complying with the SRA Accounts Rules and ensuring that you handle client money correctly is imperative.

Once a matter has completed residual client balances must be dealt with. Fee earners must take responsibility to keep on top of this to ensure that you do not hold client money longer than is necessary.

The Team
When recruiting prepare role profiles that you can use when advertising the job and carrying out interviews. You will need to set out your expectations to new people, and if you are recruiting a Head of Department they will need to be able to support you by supervising the legal work and be an effective manager.

Support staff – do you need more secretarial support or will your fee earners be able to be self-sufficient?

Alternative options – consider being able to outsource the cashiering or typing or buying in interim practice management.

Templates, documents and workflow

Prepare & develop a compliant suite of templates that are approved and ready to use for your new and unfamiliar work type.
Incorporate them into your case management system
Provide training for the team so that they are familiar with them and can process them efficiently.
Technology
Ensure your accounts package, document/case management system is appropriate for your new work type. There are additional modules or packages for specific work types.
Buy enough licences in time for your team to function properly.
Ensure that the broadband will cope with your planned systems.
Quality Standards, Lender Panels & Portals
Applying for a quality standard such as CQS membership, apply to be on lender panels, or set up the firm on a portal for a specific work type – allow at least 6 months.
Your cash flow may be affected if there is a gap in being able to take on new work.

Denise Butler is Director at Peacock Risk Management
www.peacockriskmanagement.com

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The Top 5 Challenges Facing the Legal Profession

In recent years, the legal profession has had to face many challenges and make constant changes to keep ahead of the game.

1.Winning work at the right price

Depending on your work types you will usually quote an hourly rate or a fixed fee. You may also have a fee structure which includes a success fee. Whichever way you price up the work you are calculating the time that is likely to be spent on the matter, the challenges involved in delivering the work and the risk to your business. Knowing your market is crucial as is delivering the work efficiently. The LASPO, the referral fee ban and the cuts in legal aid have meant that many firms have had to change the way that they work and look at taking on other work types.

2. Ensuring that the work is processed efficiently & profitably

Once you have won the work your team need to deliver the service in an efficient and profitable way. Utilising a case management system along with other available technologies is often the key here. Keeping on top of your housekeeping and monitoring the work capacity of each fee earner is also an essential part of the supervisory procedures.

3.Cashflow

Billing and collecting in the fees in a timely fashion is the lifeblood of the firm. Monitoring WIP as part of the supervisory procedures, and incentivising fee earners to take money on account and keep a check on their clients’ payment record, should form part of the regular activities in the firm. Residual client balances can build up and this needs to be managed carefully to avoid breaching SRA Accounts Rules

4. Profession Indemnity Insurance premiums

Keeping your PII premium down is a challenge and a source of stress every year. Robust risk management, dealing with any complaints quickly so that they don’t turn into claims, and achieving a quality standard such as Lexcel are all positives. Develop a good relationship with your broker/insurer so that they understand your business and can help you as much as possible.

5. Compliance, regulation & changes in legislation

If there is a change in legislation or regulation it can have a huge impact on your business if you are not prepared and cannot make changes quickly enough. You need to review your Business Plan & risk assessment every 6 months to keep on top of what is happening in the profession and how to deal with it.

You need to be compliant so that you meet your regulatory obligations. The key to compliance is good organisation, the right policies and procedures and regular monitoring. If you build these into your business processes you will develop a robust and realistic way of working and stave off damaging behavioural challenges and a poor risk profile.

Denise Butler is Director at Peacock Risk Management
dbutler@peacockriskmanagement.com
www.peacockriskmanagement.com

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