WHAT NEXT FOR THE LEGAL SECTOR AND ITS ADVISERS

By Andrew Gregory, Leonard Curtis Legal

The Natwest Legal Report has just been published – an eighth deep dive into the sector – painting a 12 month picture of struggle and challenge for practice owners, but its mood is one of cautious optimism.

Reflecting in detail on the experiences of 40 law firms,  its headline findings revealed a 50% take up of CBILs and Bounce Back loans and almost all firms taking advantage of the Government’s furlough scheme.

It touched on difficulties faced by high street firms and sectoral pressures – the explosion in the domestic property market and impact on the corporate M&A sector – but it concluded that most law firms are in reasonably good shape.

Government support, of course, can mask wider funding issues that have been exacerbated by Covid. The general trend of larger banks moving away from the sector could make life difficult for law firms in the longer term. Especially those in financial distress.

Practice owners are now looking at the secondary lending market. While there are a number of vibrant emerging funders in alternative spaces, they do tend to be more expensive and asset-based. More often than not, these require the security of a personal guarantee.

There are two other very important factors which will impact the longer-term health of the sector. One is wage inflation and the other is the cost of professional indemnity insurance.

Wage inflation is a challenge

The pandemic has certainly made people think hard about their careers in the sector. We are seeing senior professionals in firms saying no to offers of partnership,  demands coming in round flexible working and others just wanting a lot more money as the well-skilled become rarer to find.

There is a real push on getting more people into the profession, but good candidates are scarce. This is prompting surprising offers – especially from US firms – for newly-qualified lawyers of up to £150k. This is giving even the London-based Magic Circle firms a run for their money. We are seeing this trend in Manchester too, which adds pressure to delivering profit.

Serious hardening of the PI insurance market

The increasing cost of professional indemnity insurance premiums (PI)  is also keeping practice owners awake at night. Most law firms renew this annually in either March or October. Last October there was an average 30% increase in premiums, which is a serious hardening of the market that could take weak firms down.

A lot are now scratching around to get their PI in place. There must be minimum cover of £3million for the majority of firms. The PI market has also seen a significant reduction on those insurers who are offering ‘top up’ cover to cover claims in excess of £3m.

So while law firms have tackled the specific challenges of Covid, there is plenty to keep practice owners focused on in the future and they need to keep their accountant advisers close as they navigate the immediate post-Covid landscape and look further ahead.

Value of help at an early stage

 Here at Leonard Curtis Legal, we place real focus on rescue and recovery rather than insolvency, so we’d like to think that these sort of challenges won’t take beleaguered firms down.

Fortunately, more and more partners in law firms are now starting to ask their professional advisers for help and at an early stage. And if they’re not yet, we hope they soon will be.

Accountants tend to be their first port of call, but often the assistance required in these unprecedented times is specialist and non-core, requiring a wider multi-disciplinary approach that’s best able to support all areas of the business.

By approaching us, law firm partners and their accountants gain invaluable access to a much wider range of specialist solutions including; corporate restructuring, personal debt advice, equity and debt finance raising for SMEs, cashflow optimisation, property solutions and legal services. This puts all clients in the very safest of hands.

Our legal sector specialist expertise

We’re specialists in the legal services sector which, in the past 20 years, has seen significant growth. However, it’s also seen change and for some, many challenges have presented risks for the business. In some cases, these risks have also extended to the individuals behind these firms.

But we understand the fast-paced changes to the regulatory environment. As an owner-managed business ourselves – Leonard Curtis Business Solutions Group employs over 240 people across 18 regional offices. So, we have the same challenges. But we also have the expertise to navigate – and support our clients – through what can sometimes be tough times, and out the other side.

Having directors who have previously held senior management positions within large law firms is a real attraction for our clients, as it means we have a thorough understanding of how companies – whatever their scale and scope – operate and the pressures they face. As a result, our client portfolio includes law firms, solicitors, barristers, advisors to the sector, banks, specialist funders to and investors in the sector.

How we work

Upon appointment and case review, we provide Group-wide advice on the financial overview, WIP, debtors and client engagements.  Also, we undertake reviews on the structure of the firm. LLP, company, sole practitioner and ABS, for example – all require a tailored approach.

We also enjoy strong relationships with key stakeholders, banks, litigation funders and other lenders. This means we have access to the most appropriate solutions for each firm. We most certainly don’t adopt a ‘one size fits all’ approach here.

And we don’t just work with established firms experiencing any level of financial distress. We also provide consultancy advice for start-ups, through to medium to large law firms. We have strong credentials in securing investment for new entrants into the market, as well as researching – and then integrating – law firm mergers and acquisitions.

For further information, contact Andrew Gregory on Andrew.Gregory@leonardcurtislegal.co.uk or visit https://www.leonardcurtislegal.co.uk/.

Last week I attended the Scottish Open. First things first, it was absolutely wonderful to be back out at a sporting event and to be perfectly honest with the restricted numbers it meant viewing was better than it would have previously been – the sun was shining and to be out walking The Renaissance Club for a day was a delight!

With me was my husband and son – now we wouldn’t be at such an event if we were not golf fans. My five-year-old LOVES everything golf. Playing, watching, talking golf and he had the time of his life. As you may expect from a child, he has his ‘favourites’, Rory McIlroy and Tommy Fleetwood. They were both playing and so we dutifully followed the groups both of these men were playing with so my son could watch his heroes.

As I stood watching I started thinking – wasn’t it amazing that this was their job?

If you are remotely into golf you can’t help but feel a bit of awe that these men get to go around the most beautiful spots in the world (golf lover or not you cannot undermine the scenery and beauty of some courses) and play the game for a living. I am of course romanticising it here as no doubt it has its challenges but for simplicity just go with me.

I was wondering how I would feel if I had thousands of spectators watching me while I worked and although this would be extremely dull for anyone to watch I wondered how I would cope. These professionals appeared to zone into their game and have absolutely no awareness of what was going on – in-fact a fan walked right onto a tee and took a golf club out of Rory McIlroys bag and managed to take a few practice shots before anyone did anything, every team member up there was in the zone. If you missed that the story it’s here.

But I got to see cracks, a few chips in the armour if you will and these were the golden moments of the day.

Anyone with children knows they aren’t naturally quiet beings, in fact they are the opposite! Thankfully my son knows on the golf course to be quiet and behave appropriately. However, watching his heroes there were a couple of moments he couldn’t quite resist.

Tommy Fleetwood had just hit a drive and was charging down the fairway completely focused on his next shot and a little shout came out of the quiet ‘Come on Tommy, you can do it’ from my son. Tommy looked up, smiled and gave him a thumbs up – recognition for my boy and his day was made. It was a fleeting moment in Tommy’s ‘working day’ but he took that moment to appreciate and acknowledge the remark. He was busy and playing for the winner’s share of $1,333,330 however he took that moment to say thank you.

Throughout the day my son was thrown balls from many of the professionals and given a smile or a wave. Just a moment for these men at the end of their working day. A quick thank you for his support and for being there. This was the end of the golf course and some of these men now knew they had zero chance of even getting a cut of the prize money. They were probably tired and frustrated at the end of their day however they still said thank you to fans.

So why did this strike me as something to write about?

It was that feelings provoked by the gratitude from my son. He proudly announced it was the best day ever. You couldn’t remove the smile from his face if you tried. Players acknowledging him and saying thank you meant he loved the game a little bit more. He was even more passionate about golf. He came home and wanted to go straight out on the course to practice.

As adults we no longer receive reminders from our parents or adults to watch our P’s and Q’s. But is it something we forget along the way? Do we just expect colleagues and clients to deliver stuff to us without even muttering a simple thank-you? Or if someone has really gone above and beyond, do you take the moment to appreciate it more than just a quick thank you in an email?

Last month we processed over 1.6 billion pounds of client payments – the stamp duty deadline resulted in an extremely busy time for the market.

Our teams did their job and processed these securely and accurately and numerous clients came back, unprompted, with some really nice thank you messages. We have shared these EVERYWHERE. Internally on our Portal homepage for all staff to see and publicly for the market to see. Again, I am harping on about it here because hearing and seeing someone say thank you is so important.

We all say thank you in day-to-day life but once in a while – take that moment. Lift your hat and throw someone a golf ball if you will. You might end up motivating someone so much they go away and practice their putting.

Emma O’Day

*And just incase you think a 5 year old is too young to golf, here he is in action

This month we opened our offices up to staff, but with no compulsion that they return. Essentially our policy is “work where you want to”. Even with reduced capacity due to social distancing, we have only seen around 20% occupancy, with most staff choosing to stay at home.

It’s too soon to tell but I suspect that, while we may see a slight uplift in this number, we will never go back to full occupancy.

As a business, we are reasonably relaxed about that. One of our office leases expired last August, and we didn’t renew it. We are not “over officed”. But that’s just us.

But what’s the wider impact of this “new working normal”? Well, over the last year or so I’ve written a few posts about how this will impact commercial property, and I just can’t get past how fundamental the change might be.

Short term, it seems “OK” – our clients are reporting that commercial property work remains “buoyant”. Rents are being paid, and investments are made. But I wonder if that hides longer term issues.

Businesses are paying rent because many tenants are in long term leases that they can’t break. Government aid has been generous. A moratorium on evictions has been extended, and a lot of the investment is in upgrading old offices to make them more attractive… to encourage staff back. Nobody knows yet if that will be successful.

What is the longer-term outlook?

In May this year only one third of Europe’s offices had occupancy rates over 10%! The ratings agency Moddy’s reckon that in the US, one fifth of the country’s offices will be empty by 2022. The IMF links that directly to valuations, with a 5% drop in occupancy resulting in a 15% drop in valuation. They are projecting rent to fall by 7.5% in the US this year.

That doesn’t sound like a great investment to me.

I wonder if the problem is that the effects of the “new working normal” are being hidden? Property lease are long term, government support has been generous, and debt is cheap and widely available.

So, while we’re not seeing the effects of the “new working normal” yet, is it just a matter of time?

Looking further ahead, the value of investment trusts that invest in office space are apparently still 13% below their level in 2020. Are we beginning to see the end of Commercial Property as an investment class?

But what do I know, I was a litigation lawyer! Any commercial property lawyers care to chip in?

You will by now be used to Blogs from me on topics as wide-ranging as wellbeing, to financial compliance, to leadership styles, to risk management.

But, this is the first one you will have read on this particular topic… my departure from Cashroom!

After eight years (that have flown by) at the business, the time has come for me to progress my career elsewhere. I will shortly be joining Amiqus to head up the Business Development team there. However, I depart on really good terms, with very fond memories and many close friends. So, I anticipate that I will have a close working relationship with Cashroom going forward. I therefore thought that I would take this opportunity to reflect on my time at the business, and just how far we have come.

I joined The Cashroom in August 2013, as the first person in a Business Development or Sales role. The business had 28 law firms as clients, all located within Scotland. Catherine O’Day and David Calder (Chairwoman and Managing Director respectively at the time), took a chance on me. I had been a solicitor in private practice for the best part of 10 years. I have had lots of contacts, but very little by way of marketing or sales experience. For that opportunity, I will be forever grateful to them both. I was looking to step out of legal practice, and David and Catherine gave me that chance, and I jumped at it! My time at The Cashroom has been all I hoped, and a whole lot more. It has allowed me to develop many skills, meet new people, and provided a role that I genuinely enjoyed.

Going back to the start though…

I was tasked at the outset with growing the business in Scotland, and trying to break into the English and Welsh market too. I’d like to think that I have been successful in delivering on those, as over the first couple of years we took on many new Scottish clients, and the first dozen or so English clients, to the point that it made sense to employ another member in the team to focus on English and Welsh growth. Growth has continued apace over the last few years, north and south of the border. As at the time of writing this, we now have around 220 clients, across the length of the country. It has been quite a journey.

Thinking back, we also provided just three services when I started – Legal Cashiering, Payroll, and Management Accounts. Today, we still offer these core services, but in addition have a large client base that use additional services we have developed, such as Statutory Accounts and

Tax compliance, Credit Control, and various project/consultancy services. The team delivering the services has also grown substantially in my time from around 15 people when I joined. Today’s head count is over 100 across two offices!

It’s true that you don’t notice the incremental day to day changes and progress. When you look back, you notice that rather a lot has happened!

Some of the above, I think, shows just how far we have come in the last eight years. I’m sure the work, ideas and initiatives that are currently underway will ensure that the business will continue to go on and achieve even greater things in the future.

It has been a pleasure to be a small cog in the wheels that have made things happen over the years. I sincerely wish everyone at Cashroom, their clients and contacts, all the very best for the future. I will certainly follow developments at the business with interest. As I said at the outset, I’m sure there will be many opportunities to collaborate. So, hopefully this is not a goodbye, but rather a “speak soon“.

Gregor

The last few weeks have been a blur. That’s not just because of my ageing, failing eyesight, but more due to a month or two of hectic webinar and judging activity.

The judging was for the Today’s Conveyancer inaugural awards.

Firstly, the webinars were numerous. This included Law South’s discovery days, Atlas Cloud’s webinar on managing remote working, Legal Eye’s ‘Securing the financial future of your firm’, and Menzies ‘Management Information and Strategic Planning.’

The reason for mentioning all of them is that something struck me as a theme which ran through all of these discussions, and the review of the submissions for the awards.

That theme related to the power of integration of technology.

To give an example, Coadjute won the Today’s Conveyancer award for Innovation. Their model connects the property software platforms used by estate agents, conveyancers, mortgage brokers and lenders. Their submission was the epitome of the them- they have looked at the end to end process, and realised that there is a flow of information that can be harnessed and guided through different platforms, hugely improving efficiency and creating a vastly improved experience for the firms using it.

In the same category were other submissions along similar lines. Both law firms and tech providers who were knitting tech solutions together to a greater or lesser extent…

…but all the time realising that there was a core principle at play – SIMPLICITY.

It may sound counter intuitive to think that utilising several tech products within one process is a simplification. However, like a duck swimming on the water, a system which provides a straightforward interface for the user but has leading edge, complex technology behind it is an extremely attractive proposition.

The webinars confirmed this. There was much discussion around the flow of accurate data. The importance of that data for making business decisions. The power of communication with clients, as far as customer service is concerned. Also, the benefits that can bring for online reviews.

At The Cashroom, our in-house tech development team have been working on creating system integrations with a number of Practice Management Systems. We will be launching four such integrations in the next month, with more to follow.

The principle behind our endeavours in that direction are the same as I mentioned earlier – SIMPLICITY.

We support any firm on any Practice Management System, using our secure portal to communicate with our clients. By integrating with systems we can improve the flow of data and reduce any need for re-keying. As a result, this will greatly reduce the risk profile of the process. We are also integrated with banking platforms, making our payment process slicker and more secure than ever.

I’m pleased to say that our tech development path is very much in line with the theme I saw in my hectic few weeks. We want to create simple ways for our clients to work with us and their technology. This will give them access to the very best Legal Accounting as a Service.

The legal sector is evolving. Technology is evolving with it. Are you embracing evolution? Remember Darwin’s theory- it’s always the survival of the fittest!

We were delighted to sponsor the Law Society of Scotland Annual Conference again in 2021. This year, for obvious reasons, the event was held virtually, and appears to have been a great success. The sessions we attended were very well attended by solicitors from far and wide. Perhaps many of those same people wouldn’t have been able to justify the time away from their office and travel expense to attend a “live“ event, but that’s a topic for another day!

One of the sessions I found particularly interesting was the Risk Management session chaired by Matthew Thomson of Lockton.

I found it interesting to hear that in the last five years the number of intimations against the Master Policy (the Professional Indemnity Insurance policy for the Scottish profession collectively) has fallen from around 900 claims to about half of that. There have also been far less high value claims (classed as those valued at over £1 million). It is also worth noting, in contrast, that claims against property professionals, accountants and other professional services providers are currently rising. Solicitors are (positively) bucking the trend!

It is hoped that one of the reasons for this drop in claims against solicitors is a greater emphasis from law firms on risk management. I also think that the use of technology and improved systems and processes, will also have contributed.

The question was raised during the session as to whether fraud has increased during the pandemic?

The answer from the panel was that it has undoubtedly been on the rise, with the use of email posing the greatest risk. This struck a particular chord with me in that one of the biggest developments at Cashroom in recent years has been building our Cashroom Portal technology. At its core it is the means of communication between us and our clients, specifically to get away from the insecurities of email. The portal is a secure and encrypted means of communication. With two factor authentication built in, it ensures the greatest level of practical security is applied, thereby minimising fraud risk.

As we now provide services to just shy of 10% of Scottish law firms, we would like to believe that we contribute in some way to the reduced risk overall.

The other risk that was highlighted by the panel was that cross-checking and verifying things like bank details being more difficult to do when staff are working remotely. Again, this is something that our Cashroom Portal and its’ integrated open banking technology helps to minimise significantly. In fact, in our experience, many in-house Cashiers and finance staff do not even follow a process of checking or verifying bank details, often they are simply authorised to set up and make payments themselves. This process, and its’ inherent single point of failure, compromises security.

Again, use of Cashroom services ensures that there is no such single point of failure, and all details are cross-checked and verified, minimising the possibility of human error.

The closing remark from the panel was that often errors made, and claims arising from them, lag behind the event by quite some time. It may be that there are in fact an increased number of claims against the master policy through the pandemic, but we will have to wait and see. We, as a business working in this space, are confident that the profession is constantly gaining awareness on fraud and risk issues, but as ever, cyber criminals and fraudsters are always looking to the next opportunity, and they thrive on change. So, if you are planning to bring your staff back into the office in the near future, beware that any change such as this provides uncertainty, changes of process, change of log in details etc etc.

So please be alert to any unusual activities, telephone calls or emails sent to you or your staff, and re-deliver your cyber, fraud and anti-money laundering training to all staff as a priority.

By doing so, and working together as a profession, solicitors have an opportunity to learn from each other, share information, and create tighter security that discourages fraudsters and criminals.

Take a minute and think, what do you want to get out of the next month? Year? 10 years?

Is it to progress your career?  start a family? Go on luxurious holidays? build a home?

Regardless of the answer, if you ask yourself ‘why’ a few times you will probably come to the answer ‘to be Happy’.

Fame, money, respect, status are secondary in some ways to the reason we want them… Happiness.

Happiness has been described as the ultimate currency. Every pursuit in life, however grand or conservative always comes back to the slightly naive and simple, playground goal of wanting to be happy.  Happiness is an emotion, and, like all emotions, can change on a whim depending on what’s going on in our lives. The Cambridge dictionary defines ‘Happy’ as ‘feelings, showing or causing pleasure or satisfaction’ but what does being happy mean to you?  We so commonly buy into assumptions of what emotions are, we so rarely stop and unpick these labels for ourselves.

We can often see it in binary terms as either, we are happy or unhappy. However, a far more empowering and helpful way of looking at it is seeing happiness along a continuum. Every choice we make being able to move ourselves up or down the ‘Farral Williams’ Chart from weeping in our pillows to dancing in the street.

Are you happy?

It’s a hard question to answer. So many of us strive for this golden chalice but we don’t even know if we have a taste of it or not.

So I want to share a few tips on how we can start to own this elusive, slippery concept called happiness and ensure we are having a piece of the pie every day.

• Think details and rituals: Rather than pinning all your happiness on the yachts, penthouses, and Caribbean islands. Focus on the details, the specifics of the day-to-day that could make you a little happier. Once you know the little things that would add to your happiness then start to ritualise them! This may not sound too spontaneous or fun but, routinely building in activities every day that make you happy, are key to your overall well-being. Ten minutes of reading before work. A cup of tea in your garden. Do an art class once a week. It might not set the world alight, but adding 1% more happiness a day soon has an accumulative effect, more specifically 365 % within a year.
• Pleasure and meaning: For ultimate happiness, we need to think about juggling short-term fun with a long-term focus. Instant gratification is great but too much and it can feel a bit hedonistic and off-putting, a bit like too much ice cream. Having a meaning for the future is also important to spur you on. However, if the focus becomes solely on 10 years down the line, whilst living a life like Scrooge, then that sounds pretty dull too. We need to balance these two components, the present pleasure, and meaningful future, check in with your goals and time use, are you getting a balance?
• Be present: ‘Life is what happens when you are busy making plans’ as John Lennon famously said. How true is that? Life isn’t lived tomorrow, or only on the weekends, it doesn’t switch on at 5 pm Friday then disappear Monday morning to hibernate… It’s right now. In the words of the wise Kung Fu Panda “, Yesterday was history, tomorrow is a mystery, all we have is this present”. The only time we have the potential to be present is in this exact moment as you read these words. So it makes sense the more we tune into this ‘now’ the more available happiness is to us. We can do this regularly with something called Mindfulness training, which conditions our brain to be more present in each moment, rather than caught up in thoughts about the past or the future. So if you are serious about putting happiness firmly on your agenda then prioritising mindfulness may be a wise move.
• Appreciate we are not designed to be happy: News flash, human beings are not designed to be happy we are designed to survive. Think about it, it didn’t matter when we were cavemen and women if we had a big grin on our faces. It mattered that we were paranoid, hypervigilant, and scared because these qualities would keep us constantly on the lookout for dangers and ultimately alive. Unfortunately, these habits have resulted in the current culture of ruminating, anxious and depressed folk. Another way of putting it is that our brains are wired Velcro for negative, Teflon for positive. We simply don’t need to cling on to positive thoughts for our survival, so we let them go!

This doesn’t mean we can’t be happy, it just means we have to work a little harder to achieve it.

So we can be a little kinder to ourselves when we aren’t skipping down the street dancing like Fred Astaire.

• Cultivating an attitude of gratitude: And for those of you that think this all sounds like too much work it may be reassuring to know that a feeling of happiness can be cultivated by simply shifting our awareness and becoming more grateful. More thankful for the little things in a day that we may not notice as we rush around being a great ‘human being’ as opposed to ‘human doing’. Taking regular breaks to be thankful and ‘sweat the small stuff’ has pretty impressive results, taking pauses for gratitude in our day not only improves our wellbeing and happiness but adds an astounding 7 years to our life.

So ultimately, as lucrative as our happiness may sound, it could only be one choice, two rejigs of our thinking, or three moments of gratitude away. Recognising that we are responsible for our happiness and that it is accessible right now puts us in the driving seat to own and ultimately change it.

What change can you make in the next 24 hours to shift you 1% forward?

This article is based on the work by Tal Ben-Sharar, Sonja lyubomirsky, Jon Kabat-Zinn, and my own life experience. It accompanies the workshop as part of the Manchester Law Society, Wellbeing series. You can watch my on demand webinar “ Let go of happy, it’s all about happIER” at www.itsmental.co.uk

Anna is a wellbeing coach, bringing 20 years of experience and a background in Occupational Therapy to support individuals learn the skills to tools to support psychological wellbeing, mental health and long-term happiness. We are proud at It’s Mental to have her on our Panel of Experts. You can find out more about Anna go to https://www.itsmental.co.uk/Anna-croucher

Automating the conveyancing process – a couple of years ago this thought would have made many lawyers drop their jaw and possibly even angered them. How can you automate what has taken years of expensive and difficult training to learn? What an insult to their expert skills and knowledge! Oh no – not anymore.

I attended The Law Society of Scotland’s conference last week and the work being done within the industry and from Registers of Scotland is not only refreshing but is being welcomed. It is exciting and is being seen as a positive change. Instead of coming out of lockdown and reverting back to old ways, the industry is accelerating and pushing further ahead with innovation than ever before.

Why the change in mindset?

Maybe we aren’t scared of technology anymore? We all use it in our everyday life with little problem. Instead of looking at technology development like it is taking our jobs from us and demeaning our skills, our attitude has changed and we can now see that in fact what it does is enable us to do more of what we love and do it better.

Registers of Scotland are working on providing a digital submission solution for advance notices. In fact they were actively encouraging and calling out for firms to test this with them at the conference and said they really are accelerating this process now with a dedicated development team – how refreshing is that! Lawyers for some reason get a bad reputation about being behind in technology and not embracing it but this is definitely not what I saw at the conference and I don’t see it in my day to day job. Yes, there were lots of questions especially around e-signatures but change brings pain and we have all worked through pain in business – it is almost always worth it!

I predict in another couple of years the conveyancing process as we know it will be completely transformed and lawyers and clients will both be delighted with the progress made and how the conveyancing process looks – it will be quicker, there will be less risk of human error and lawyers will have time to offer expert advice without being bogged down with admin work.

Back to my point on lawyers being seen to fear technology. I mentioned Registers of Scotland but I see every day, UK wide, that lawyers are embracing tech. Cashroom has over 200 law firms in the UK using outsourced legal accounting services – these are not firms that fear technology.

Our experts log in and use many practice management systems depending on what the client uses – these systems and the firms that use them do not fear technology.

Our online portal ensures efficient and risk reduced processes whilst reducing compliance worries from the law firm, enabling our legal cashiers and accountants to focus on the expert detail that they know best. The advanced technology Cashroom has enables our experts to do their best job as well as maximising the efficiency in our services – that is exactly what Registers will achieve with their work. If you ask me lawyers aren’t scared of technology – they are embracing it and will reap the benefits!

Emma O’Day

January 2021 was my 10 year anniversary as a Director of Cashroom. I became a non-exec director in 2011, and Managing Director in 2012.

But my involvement with Cashroom goes back further than that. In 2005 I set up a law firm, MBM Commercial, with 3 others, and was Managing Partner for 7 years. Catherine O’Day acted as MBM’s outsourced Finance Director and supervised our cash room. We often discussed Catherine creating a business that would outsource MBM’s entire finance function. In 2008 Catherine took the plunge and Cashroom was “born” with MBM as its very first client.

So, although technically not the founder, I was “in with the bricks”.

It’s been a “wild ride”! When I joined in 2011 we had 3 employees, 6 Scottish clients, and turned over around £100,000! We now employ over 90 people and deliver services to over 200 clients across the UK. In 2021, we should turn over almost £3.5m.

Behind those numbers, the business has changed dramatically. We’ve moved from being an outsourced cashiering service, to a technology driven business process outsourcer. We’ve developed our own technology platform that runs the business. It deals with secure client communication, task management, and increasingly integrates directly with other systems, dramatically increasing efficiency. We are far more “data driven”. Management by “intuition”, is no longer viable (if it every was!), and we need more detailed specialist skill in different areas of the business. Over the next 10 years I’m sure the business will change even more.

When I was at MBM, I acted for a client who was MD of a large utility business. Something he said always stuck in my mind. When hiring, he always hired people better and cleverer than he was. It came back to me at my first Cashroom board meeting (there were 2 of us!). I realised that, if I was to build the company I wanted to build, I needed to do just that. I couldn’t do it by myself.

So, over the last 10 years, I’ve strived to hire people better than me at doing the various things I did as MD in the early days. Recently I’ve felt I was pretty much there, and the way our senior team stepped up to deal with 2020, convinced me of it.

So, in February 2021, I stepped down as MD, and became Chairman. I’m still involved in the day-to-day management of the business (focusing on clients and client relationships), but our “new” CEO, Chris O’Day will take the business forward into its next growth phase.

Chris joined us in 2014 after qualifying as a CA at Deloitte. He started as an accountant in our accounts team, moved to Head of Accounts, then Head of Client Services, before becoming our FD. He knows our business inside out and has a clear vision of where he wants to take the business over the next 10 years.

I’m incredibly proud of what we’ve achieved at Cashroom, and at the risk of sounding “fatherly”, incredibly proud of Chris and the team. I know that the next 10 years will be even more exciting.

I can’t wait to see how things go!

David Calder, Chairman

Who enjoyed the Masters this month? I always think the Masters signals the start of spring, a turn in the weather (for the better), and gives a general sense of optimism about what lies ahead. And goodness, we can all do with that this year can’t we?!

For any golf fan, there’s just something different about the Masters and Augusta National Golf Club. It’s a place of great tradition, always immaculately presented, with a deep history, and conjures up many iconic images of great golfing moments from years gone by. Who can forget the dramatic collapse of Greg Norman in 1996? Not me  – Norman was my favourite player growing up, pre-Tiger, and I was a devastated 14 year old that night! And what about Tiger’s amazing win the following year by a record margin (12 shots), which almost overnight shifted golf from the sports pages onto the front pages, and literally changed the sport and earning capacity of professional players forever. His ‘comeback’ win in 2019 wasn’t too bad either!

I think we all enjoyed the tournament this year, back in its usual slot in April, with some exciting golf over the four days, and Hideki Matsuyama a deserving winner on Sunday evening. His performance over the course of the tournament got me thinking about how important it is in sport, business and life in general, to play to your strengths, and be true to yourself. In other words, as somebody once said ‘be you, everyone else is already taken’.

What I mean by this in the context of Matsuyama, is that he is not the longest hitter (which some would say is a pre-requisite to win at Augusta), he wasn’t top of the stats for greens hit in regulation, or putting (which again, many would think is a requirement to win at Augusta), but nonetheless he’s the one heading home to Japan with the green jacket, and a lifetime exemption to play at the Masters. Oh, and he will also make a few quid from it (with the $2,070,000 winners cheque for starters).

Matsuyama didn’t get overawed by others hitting it further, frustrated at those who seemed to hole every putt they looked at, or by those who maybe came across much more confidently in media interviews. He played his game, stuck to it, went about things his way and held off all comers to take home the ultimate prize – a Major championship. If he had tried to change any of that, or be something he’s not, I suspect he wouldn’t have done so well.

Playing to your strengths or playing your own version of the game doesn’t however mean you can’t look to improve or innovate ‘you’. As I say, Matsuyama is clearly not ‘long’ off the tee, but he constantly looks at ways of improving his accuracy and confidence on the course allowing him to get round his way. I’m told by a friend who plays professionally on the European Tour that Matsuyama is the only player he has seen try 5 or 6 different sets of irons and drivers on the practice range before a round, with a dedicated ‘runner’ between him and the equipment manufacturers’ truck to swap and change clubs for him, until he feels comfortable he has the right equipment for the particular circumstances of the round ahead. Interestingly, although not so unusual, I read that Matsuyama changed to a different putter just two weeks ago.

In the context of running a business, I wonder how many people spend too much time trying to be somebody or something they’re not. Or trying to be all things to all people. I’m not for one second saying don’t try new things, but do that in a controlled way, or for a trial period to see if it is something worth sticking with in your individual circumstances, rather than doing so because ‘everyone else is’. One lesson we can learn from Matsuyama’s Masters win is perhaps that sticking to what you know, what works best for you, what you’ve had success with, and improving and innovating on that, may bring about the best results.

Gregor Angus

Government Funded Support

Many law firms have now having taken advantage of either CBILS (Coronavirus Business Interruption Loan Scheme) or the smaller Bounce Back Loan Scheme. However, the real question remains as to what the funding landscape will look like in the months after these Government Backed Schemes come to an end on March 31st.

What we do know, is that the high street banks that have muted the underwriting of bank debt are likely to become more stringent than pre the government schemes. Bank underwriters will be scrutinising affordability assessments more closely, due to most firms having taken on additional longer-term debt via the available schemes throughout the pandemic. They will also be concerned about the level of capital they have almost been forced to provide by the government. I’m fairly convinced that there is concern over exactly how straightforward the government guarantee will be to call on, when businesses invariably start to fail.

Further Challenges

As the repayment holiday periods on these loans tick by, the start of repayments will come into sharp focus for firms who haven’t forecast effectively. We believe that there will be many who struggle with the increased fixed costs, namely PII renewals, which many, including our fellow Calico member Lockton, are predicting due to the shortage of Insurers in the market and the lack of new entrants. We expect default rates on these government-backed loans to increase, leading to high street lending subsequently tighten post CBILS.

We are seeing debtors book values rising and, as gloomy as it sounds, bad debt levels are expected to rise further in line with this trend. Firms are facing fairly sizeable Tax and VAT liabilities due to deferments made throughout 2020, however, not all firms feel confident entering into official repayment plans with HMRC, and rightly so. The reality is that these liabilities need to get paid off over a fairly short term through a ‘time to pay’ plan, an alternative to which is to consider perhaps a longer-term government support loan.

With both the Furlough scheme and the Stamp duty freeze also coming to an end, it’s expected that there will be a short term drop off in the amount of conveyancing work that solicitors have been processing over the last 12 months.

It is, however positive to see that there is already quite a bit of activity on the M&A front. The circa £1m T/O + firms & mid-tier firms are taking advantage of the government-backed funding available to acquire smaller firms and bring in the quality staff & ongoing books of businesses that often come with those deals.

Clearly, this was always going to ignite a jump in new members joining virtual law firms as well as new virtual firms entering the market.

Reviewing Finances & Understanding the Options

Above, I touched on the potential difficulties of direct bank lending post-CBILS. It’s also important to note that two of the largest alternative funding providers to the Legal sector (Aldermore & Investec) have both sadly pulled back from the market with no expected return planned. There are also a couple of smaller mid-tier lenders who have retracted from the sector, drawing some similarities with the PII market.

So, where does this leave us, and what can you do to de-risk your firm to protect against any future downturns in income, increased costs and increased debtors?

It’s clear that there will be a smaller pool of finance providers moving forward, so my first recommendation is to maximise the benefits of CBILS while being mindful of not over-borrowing. You can in fact apply for as many CBILS facilities as you wish up to a maximum of £5m total exposure.

Some providers are offering the ability to settle early without incurring the overall interest cost, and many firms are opting to use CBILS in place of future non CBILS borrowing to reduce interest costs and the need to provide security. However, this is not the case with all providers, so you’ll need to check the terms of the settlement.

Others are refinancing a CBIL (which they have transacted early on with their bank) partly to restart repayment in the interest-free period again, but primarily to switch from a loan that their  primary bank may have held a debenture over, to a loan with a 3rd party provider which is totally unsecured.  Do you mean to restart the interest and payment free term again??

Spreading Liabilities to Reduce Risk

On the point of debentures, I would consider trying to spread liabilities from your primary bank to reduce risk as much as you can. We have seen banks take control of a firm’s finances when they have previously provided the lion’s share of the debt, leaving members with little control and creating high levels of stress and anxiety for partners.

Whilst it might sound a bit clichéd but when it comes to debt, my experience has taught me to never have all your eggs in one basket. With the opportunity to apply for a significant amount of debt via the CBILS scheme, also consider reducing the existing debt levels held under debenture. By doing so, you instantly put your firm in a stronger position. You’ll also have the benefit of having 12 months from now where you don’t have to make any repayments; this will take the pressure off while you may be looking to restructure your operation.

Working with a trusted finance broker who has access to multiple providers and knows the CBILS market could be a useful asset to help you spread liabilities and provide insight into the best possible providers, as each has their own nuances and idiosyncrasies. This allows you to get on with your day to day business and not have to worry about organising the best possible finance for the firm.

There will be a requirement to provide a higher degree of supporting information for future funding, so getting into the good habit of forecasting and having an up to date business plan will really help you when it comes to future funding, in addition to up to date management accounts.

Securing your Firms Future

Moving forward, there will be a growing requirement for equity directors or equity partners to guarantee finance deals if the firm is trading as an LLP or Ltd entity, and no debenture exists.

Shoring up cash flow and having tight controls over what is coming in and going out will be crucial. See Cashroom Services for a robust and efficient system.  Outsourcing your debt recovery work could also be a brilliant move to ensure that you are getting these debts paid more quickly and not letting them run for months on end. Like it or not, more and more clients will be putting off paying bills until they absolutely have to.

Reducing fixed costs where possible is a balancing act(,) but with many now working from home, considering downsizing or getting rid of the office entirely(,) is something that many firms (dependent on the work they are transacting) are either looking at or have already done. Virtual offices & zoom calls, while not ideal, are clear cost and time savers.

Being clear on the potential growth sectors outlined in any business plan is crucial to ensure that everyone knows what they are doing, and therefore, having regular progress reviews to monitor KPIs is also extremely important in any diversification plans.

We ourselves at Acorn are bringing in an Operation Outsourcing company to assist with our growth plans to map out our journey for the next 3 years and clearly define what needs to be done along the way to achieve our objectives.

New Technology

The use of technology has proven itself and will continue to be a critical factor for many law firms in reducing costs and increasing efficiencies. There is innovative tech being developed in all areas, so keeping up to speed with what developments are happening and implementing the relevant technology into different areas of your firm at the right time and in the right way, all needs planning. Therefore, it is crucial to have a key member of the team responsible for ensuring that you stay ahead of the curve on this as, when done correctly, provides a much slicker process.

From a support staff perspective, there are efficiencies in secretarial and document preparation. Our partners, Document Direct, have been extremely successful in this over the last few years, providing ongoing support to a wide range of well established and well-respected law firms up and down the country. It is definitely worth speaking to them if you are restructuring or looking at your costs as this can be an instant cost saving.

Final thoughts

Acorn Business Finance decided early on that we would shift our focus to providing CBILS to as many firms as we possibly could during the pandemic. The knowledge that we have gained over the last 12 months, around both the scheme and the different funders that we have been working closely with, has been invaluable.

If you have a question about any aspect of CBILS, we’d be happy to share our knowledge and hopefully get to learn more about your plans for the future.

Stuart Gibson, Managing Director at Acorn Business Finance

Lawshare, the referrals and support network, run by Full Service, Top 100 Law Firm JMW, has recently turned ten! Having worked with The Cashroom for a number of years, as one of their preferred partners, we thought we’d catch up with one of the Lawshare team, namely – Partner, Peter Finkill-Coombs.

CR:     So Peter, ten years of Lawshare, what an achievement. Can you tell us about the background to how it all started and your involvement?

PFC:   Certainly, I’ve only been part of the Lawshare team for a little over a year now but have long been aware of the scheme and it has been great to work in such a tightknit and committed team, albeit it has been something of a strange year!

I’ve always admired the Lawshare concept which was already on my radar before joining JMW. Like all good ideas, a very straightforward premise. Our members, who cover a broad spectrum, can ensure they assist their clients by referring work to JMW from those enquiries they generate but that fall outside the specialist areas of work their firm undertake. For every matter we take on, at its conclusion, we profit share with the referrer. Whether we open a file or not, we speak to every client and feedback on each enquiry. A point of difference that our members often tell us sets us apart from previous referral relationships they’ve had experience of.

I personally hail from a Chambers background and got to know Stuart (Stuart Cartwright -Head of Lawshare) during my time as national head of BD for Doughty Street Chambers. I was able to supply speakers, including leading Silks, as part of the free CPD seminar programme that Lawshare run throughout the year for its members.

Stuart has been the head of Lawshare since its inception a decade ago but has been at JMW for over 25 years, he won’t thank me for saying that ha ha! Formerly a partner in JMW’s well regarded Business Crime team, Stuart was approached by, our then new, Senior Partner Joy Kingsley to head up her brainchild – Lawshare. After some initial persuading, because I think he loved the cut and thrust of criminal work, particularly the advocacy, he picked up the idea and ran with it. He fondly regales us with stories of the early days, which he describes as running around Manchester with a Blackberry and Joy’s book of contacts! The tech reference rather dates that doesn’t it! I’m sure anyone who knows Stuart will know it will have been a slick approach.

But from small beginnings he has grown Lawshare into the very successful department it is today, dealing with thousands of enquires per annum from members all over the country. When the opportunity arose and Stuart approached me about joining his team…I was already sold.

CR:     Despite the Pandemic I understand Lawshare have reached something of a milestone in last year?

PFC:   Yes! That’s right. We were delighted to announce our 500^th member. We work with so many different firms and individuals it was a pleasure to welcome new start up Capa Law into the fold. As personal injury litigation specialists they wanted, right from the off, to ensure they had a system in place so they could assist their clients in areas of law they don’t undertake. Membership offers that wraparound service in a streamlined way.

CR:     As a Full Service Firm, what’s preventing you from acting for the client in other areas of law though?

PFC:   Very good point! Our guarantee to only act for the client on the referred piece of work underpins what Lawshare is all about. Our members value this guarantee and knowing their client will be so well looked after, almost as much, if not more than the financial rewards of profit sharing. We’ve sophisticated software in place which ring-fences every enquiry and should a client return on a future occasion we signpost them back to the referrer.

CR:     With a department so driven by ‘traditional’ business development how did you adapt during the pandemic?

PFC:   Like a lot of Law Firms and the wider business community for that matter, we were very concerned, not only regarding the financial landscape for JMW and our Lawshare members, but more importantly for everyone’s health.

We’ve developed engrained relationships over the years and look to support our members in any way we can. In the early stages, Stuart ran a regular blog that went out to members. Stuart sits on the board so was able to give insight and share tips from ‘the top’ here at JMW. Despite the broad-church that is our membership, we were unified by common problems, perhaps only differentiated by scale. We were able to provide solutions for office practicalities and make introductions where firms needed to quickly mobilise a workforce to work remotely.

Members were able to tap into our specially selected buying group Lawsave, of which they get free access. Amongst the offerings under the Lawsave umbrella are a number of products and services that all help to drive down the cost and improve the efficiency of running a practice. Members were looking introspectively like they perhaps never have before and outsourcing and online solutions to problems they never thought they’d have. Being able to call on Lawsave and the preferential rates and discounts it offers came at time when the bottom line has never been to important.

We transposed our free CPD seminar programme online and like the rest of the world embraced Zoom and other such platforms like never before!

As the year wore on we realised engagement was up and I think as the public perception regarding a geographical emphasis about where legal services are carried out has helped broaden our reach. Amongst our membership we now have member firms in my home town city of Newcastle, the South Coast, Kent, Essex, Wales and even Spain! We’re very proud of our Manchester roots and needless to say still enjoy a great stronghold in the North West. The advent of our London office (which opened 2 years ago and has over 100 staff) and recruitment of partner Abby Winkworth has only helped galvanise our now national presence.

CR:     So with regards to growing the network, how do people get involved with Lawshare?

PFC:   Very straightforward. Lawshare membership is free of charge with no ongoing cost, nor minimum commitment. We have members who utilise the scheme on a more than daily basis and others we perhaps only hear from now and again. The similarity being is we’re always on hand to service those enquiries in exactly the same way, no matter who they come from and with what frequency. The reason for Lawshare’s year on year growth is down to a few key factors, simplicity, transparency and red hot service levels. Members and prospective members can contact us anytime using lawshare@jmw.co.uk. Where the team will process enquires and be more than happy to discuss with those wishing to join or learn more about Lawshare.

Peter’s direct contact details can also be found below –

Peter Finkill-Coombs, Partner – Lawshare

Peter.fc@jmw.co.uk D: 0161 828 1957       M: 07595 277 843

We spend a lot of time talking to our current clients, new prospects, and strategic partners to ensure that we keep an ‘ear to the ground’ with what is happening in the sector. One theme that we are hearing a lot at the moment, is that mergers are very much back on the radar again. One solicitor we spoke to described it as a time when the stronger players will ‘eat up the weak’! A bit extreme, perhaps! However with continued uncertainty, fundamental changes to the way people work, more changes to PI work in England and Wales, inevitable tax increases in the near future, and a whole host of other reasons, it is understandable that consolidation may well appeal to some firms.

Benefits

By merging with the right firm, you can gain expertise in other areas of practice. Perhaps a geographical reach you don’t currently have, put a succession plan in place for those nearing retirement, and share costs of suppliers, premises, PI Insurance etc etc. So, what are the things you need to consider when choosing a potential merger partner, or when responding to an approach made to you?

The first thing you will need to consider is whether you get a good ‘feel’ for the other firm. A bit vague, I know, but it really is important that there is a good ‘gut instinct’ that the two firms could come together well, that there is a logical reason for it, and that the cultures align.

If you can tick that box, you can move on to some due diligence and valuation work. This is where the Accountants come in, and there will be extensive number crunching to try and ascertain the ‘worth’ of the entities. Regardless of which side you are on, you need to agree amongst the Partners/Directors what your ‘yes, lets do the deal’ or ‘no, thanks ’ numbers are. When it comes to negotiation with the other firm, it doesn’t have to be, and indeed shouldn’t be, an acrimonious process. There needs to be a collective will of both firms to make it work if it is going to be a success.  You will obviously also need to consider how you are going to fund the acquisition if you are doing the acquiring, but that’s a whole different article!

Once a deal is reached, that’s when the hard work begins!

There is a huge piece of work in making the merger a success, and ensuring that the two firms don’t just continue to work in silos, albeit under the same firm name. You shouldn’t underestimate the time and work involved in this. The time and work should be factored into any merger budgeting, if the two firms collectively are going to be better than the sum of their parts.

Work hard at the post-merger integrations of people. Involve specialist business coaches or consultants where possible,. Facilitate specific sessions for the people from both firms to get to know (and trust) each other. For the firm to operate as one business going forward, I can’t emphasise how important it is that the people feel that they are on the same team. It might also be a good opportunity to re-structure the decision-making process, depending on the size of the new merged firm. For example, you might look to move away from collective committee decision making of ‘the partnership’ towards a Managing Partner, or Executive Board, that are empowered to make decisions more quickly.

Systems Technology and Process

When it comes to systems, technology, and processes, again bring in experts if possible. Review what each firm has or does, and how to either knit those together seamlessly, or possibly even bring a new way of working for the new expanded firm as a whole. This ensures that the merged entity does in fact bring the efficiencies and cost savings planned.  Without a specific and well-defined plan on this, both firms will simply default to their old ways of working, and some of the benefits of the merger disappear quickly.

Manage the messaging around brand and culture for the new firm, internally and externally, carefully and constantly. Again, invest in the right experts to help you with this. This means who and what you now are is known by everyone in the firm, and as many people as possible outside the firm. The merger is fundamentally about being a ‘better’ firm going forward, so let everyone know that.

So, there is a lot to think about, and even more to do, if you are going to successfully merge two firms together. However, with significant efficiencies and cost savings to be made, and the possibility of creating a more robust and future-fit firm, it may just make sense for you.

Gregor Angus, Head of Business Development at Cashroom

Common outsourcing worries and how at Cashroom we address them

No longer is outsourcing an alien concept like it was when Cashroom began over ten years ago. However, we are still met with concerns over outsourcing such a pivotal part of your business – your finance function. So, once you’ve decided to outsource, how do you choose from the wealth of providers?

When your client is looking for a lawyer, they want the best service and when you are considering outsourcing you should come to the most experienced and best provider – that’s Cashroom!

We asked some of our clients what worries they had pre-Cashroom.

I don’t like change

Ah that old chestnut! Change can be difficult for everyone, but the benefits gained will outweigh this small period of feeling uncomfortable.

Managing expectations and clear communication are the most important things here. You will receive a direct contact at Cashroom (in-fact we have a dedicated transition team) who can hold your hand during the Transition process.

Keeping everyone in your firm informed along the way really helps with their reservations and fears.

We have onboarded over 200 clients at Cashroom and have a wealth of experience in ensuring the process goes smoothly and is pain free!

Is it better for employees to all be under one roof?

One thing the pandemic has shown us is that we don’t all need to be in an office for a business to succeed and you do not need to employ everyone that makes your business thrive.

By adding a supportive remote component to your current all-star team, it creates a better quality of working life for the stars you hired to do the work you hired them for.

Cashroom help you make the most out of the skilled talent you already have, by providing them with expert support.

Will I still need an accountant? I don’t like the idea of having to liaise with lots of external providers.

Absolutely not, Cashroom can provide as little or as much of your finance function as you need!

We have our own chartered and management accountants to prepare monthly management accounts and Cashroom can seamlessly provide the year end accounts and tax returns too.

Also don’t forget we also do credit control and payroll – in-fact when you think about it doesn’t it make sense to just have on expert provider doing all of this?

I just have greater trust with an in-house team

Cashroom are committed to hiring and training talent that invest in your business and are as enthusiastic as any in-house team. With less plates to spin you have better control of your business.

Trust is one of our most important values. We have monthly awards to nominate staff who display these values beyond the expected level.

We are not a large call centre where you get passed off to any available person. You have a dedicated team that you get to know well. You’ll develop a working relationship with them, just like your in-house team along the corridor.

I will have faster reaction times inhouse

Unlike most in-house teams or some smaller outsourced providers we are a flexible resource. During a sudden spike of activity your cashier may normally get swamped and reactions times may decrease. At Cashroom we can flex our team and provide the extra support needed to ensure everything always runs smoothly.

Think of us as a business partner allowing you to focus on the core competencies of your firm.

At Cashroom communication is seamless, accessible, regular and secure. We use a dedicated Web-Portal, that provides secure communication and a clear audit trail of all communications and transactions so you can see exactly what’s happening and when.

Using Cashroom might just be better than your existing team!

You won’t know our system like an in-house team would

Cashroom has a dedicated team of over 90 experts in accounting, technology and the legal sector and support over 200 UK law firms using the full range of practice management systems. Our teams bring a specific skill set that comes from significant professional experience, which is always developing. We are constantly refining our systems and process knowledge and work closely with many system providers to ensure the best possible software. We can also help recommend the best system for you if you are thinking of changing or are in the process of setting up a firm.

Now what?

Yes, we are biased but you truly are getting the best outsourced legal provider when you choose Cashroom. And if you don’t want to take my word for it then please get in touch and we can let you chat to one of our clients about their experience. Alternatively we have some testimonials on our website. 

There are lots of bolt on cashiering options out there, but don’t you want the best for your firm? 

With over 200 firms of all sizes and doing all types of legal work, we are prepared and ready now to take on your firm’s legal accounting.

Emma O’Day