As we all breath sigh of relief, and acknowledge that the world has not in fact spun off its axis, there is an uneasy consensus forming that, while we may have jumped out of the pandemic frying pan, we have landed in the fire of a global recession.

For law firms, one of the more pressing issues arising out of that recission looms in the new year.

For a number of reasons (explored in detail here https://calicolegalgroup.co.uk/way-to-recovery/) many firms are storing up a cash crunch for the first quarter of next year. Largely because most of the government support schemes will have come to an end and/or payments that were deferred (VAT and tax) will have all come home to roost.

To emphasises the point, this survey finds that 68% of firms have deferred their VAT bills until the first quarter of next year, and 31% have sought time to pay their July Tax bills, which will also fall due then (along with the “normal” January payments).

That’s a lot of cash “out the door” in the first quarter of 2021!

So, the question is – will you generate enough cash in the next 6 months to pay all the bills falling due in the first quarter of next year?

We want to help as much as we can.

First, we can help with forecasting. All firms (and I mean ALL firms) need cashflow forecasts. I was the Managing Partner of a law firm during the last recession and, in my (not an accountant’s) opinion the cashflow forecast is one of the most critical management tool a firm has. While profit and loss accounts are important, and balance sheets are interesting in a somewhat academic way (!)  …. your cashflow forecast is the thing that tells you whether you can pay the salary bill at the end of the month.

The problem is, it’s a continually moving target and, to be truly useful, needs to be constantly updated. In the survey referenced above, 54% of firms plan to review their forecasts weekly, and 28% will review them daily!

You can’t ignore your cashflow forecast!

However, the forecast only tells you when you’ll run out of cash. It doesn’t generate cash! To do that you need to fee your WIP and collect your fees. But we can help with that too.

We have recently released an update to our web Portal that automates your credit control function.

The most important part of a credit control process is consistency. Every bill needs to be chased at regular intervals, with increasing levels of “severity” until paid. Each one. Every month. No exceptions.

However, it’s a labour intensive, administrative task that often falls off the edge of a busy desks. The Cashroom’s credit control service is designed to automate you credit control process, allowing you to get back to your clients. It’s a simple, add on module to our Web Portal, that we set up to suit you, and your firm. Find out more about it here.

“We’ve been using the Cashroom’s Credit Control module for 4 months now, and it’s wonderful. As we come out of lockdown, cashflow will be critical, and the starting point is credit control. The Cashroom’s module automates the process, which makes keeping on top of chasing payments simple and efficient. It’s allowed our staff to focus on delivering our service as opposed to chasing for payments.  Fundamentally, it has automated the process of cash recovery and my company relies on it.”

Billy Smith, Complete Clarity Solicitors

If you want to find out more about the service contact

David Calder

Managing Director
E: David.Calder@thecashroom.co.uk T: 07876 236578

Alex Holt

Director of Business Development (based in England) E: Alex.Holt@thecashroom.co.uk
T: 07817 420 466

What will happen to Commercial Property?

In my last post I mentioned we were beginning to see some Green Shoots, particularly in Family Law, and Private Client law. This time I want to be a little more controversial and talk about one sector that I just don’t see coming back strong – Commercial Property.

The lockdown’s impact will affect business unevenly. We all know that hospitality and tourism/travel will be badly affected. Sadly, many businesses will go bust, and others may need to radically rethink their business model. However, if you were to make a long-term bet on those business coming back, your money would probably be pretty safe.  People will always want to “socialise with friends” (accordingly to every other CV I read it’s most people’s only interest outside work!). People will still want to go on holiday.

However, if there is one sector, I wouldn’t put money on, it would be Commercial Property. I just don’t see it getting back to any sort of normal, any time soon.

Up until relatively recently investment in commercial property has boomed. Apparently, since 2000 the global stock of investable commercial property has increased to $32trn. It was seen as a nice safe investment, for long terms steady returns – just the thing for pension funds to invest in.

But I wonder if the pandemic, and the resulting lockdown, has changed all that.

First, tenants simply stopped paying rent.

From what I’ve read, around half of all shop and business tenants in the UK simply didn’t pay their quarter’s rent at the end of March. And it wasn’t just shops and restaurants – average hotel occupancy has dropped from 70% before the lockdown, to 15% in April. Office rentals have held up, with many tenants being able to continue to work remotely (but is that really a good thing for the landlord … more on that in a moment!). Suddenly that nice secure income stream doesn’t look quite so secure!

Secondly, and more critically, the lockdown has accelerated existing trends. Bricks and mortar retail was struggling before the lockdown, with more and more people shopping on line. Judging by the steady stream of packages being delivered to my door during lockdown (!), that trend has continued. This will continue, putting more and more pressure on traditional business models. Debenhams went into administration in April, and Intu, which owns a number of shopping centres in the UK, appointed administrators on June 23^rd. Now, it appears Debenhams will continue in some shape, but only by because it “did a deal” with its landlords (although interestingly not Intu!) ….. I suspect that means they were pressured into taking a haircut on their rent! https://www.bbc.co.uk/news/business-52979759

Second, do we really think the office market will come back? There has to be a risk that businesses continue to work remotely, or at the very least more flexibly. Some commentators see a sharp downturn in high density urban office space. (https://www.moodysanalytics.com/videos-on-demand/2020/major-disruptions-ahead-office-sector). Indeed, at the Cashroom we have decided not to renew a lease on around 40% of our office space.

But how will it all pan out.

Bluntly, I’ve no idea. However, the problem that drove investment in Commercial Property in the first place has not gone away. Pension funds and insurers need a way to generate long term, secure income streams to meet their liabilities to pensioners. In fact, as we all get older, it will become more and more pressing. Government debt is not the answer. Interest rates at historic lows, with nobody (at least nobody I’ve read) predicting that will change any time soon. And the last attempt at solving the problem (collateralised mortgage debt) didn’t end well…!

So – how are we all going to convert out pension pots into secure income streams if Commercial Property isn’t the answer?

If anybody knows …. whisper it ….. we’ll make a fortune!

David Calder, Managing Director 

The Cashroom Ltd

It’s a rather tired metaphor I’m afraid, but I’m beginning to wonder …..!

Read More

I’m considering moving house.

It’s an arduous process, and the last few months’ restrictions have (to my secret delight) put the brakes on our plans. There were always factors I could use to slow things down sneakily- packing up the house would be a nightmare, we’re too busy to go house hunting etc. But my trump card was always Stamp Duty.

“What a waste of money!” I would say.

And it was a pretty unarguable point. Yesterday’s announcement by Rishi Sunak that there will be a Stamp Duty ‘holiday’ for properties purchased up to £500,000 was a hammer blow to my delaying tactics. Scotland followed with an announcement today that the starting point for land and buildings transaction tax (LBTT) is to rise from £145,000 to £250,000.

Last evening was spent glued to Rightmove.

We were back house hunting with a vengeance. Many of the house details contain virtual tours, and with the added tools of google maps and satellite view. It’s far easier to house hunt from the sofa than it used to be. Dagnabbit!!

This morning we have had responses from a number of the estate agents with details and proposed viewing times. I do get the impression that estate agents are struggling to balance their furloughing of staff with the upturn in interest.

So I may be in my own private hell as a result of Mr Sunak’s ‘generosity’. However it seems clear that the housing market will see a boost from this announcement. Our friends in the legal sector with property sector departments will no doubt be delighted.

From The Cashroom’s point of view, we stand ready with our huge flexible resources to support our existing clients with our cashiering service. We know that our processes are particularly popular for conveyancing firms. We move money quickly and securely, and fit into a slick process of payment authorisation which our clients love. Any firms who aren’t yet clients (why aren’t you?!) we would be delighted to chat with.

So what?

What I’m secretly hoping is that we will be inundated with new enquiries and as a result I’ll be able to recycle the “too busy to move house” excuse.

So come on law firms….help a fella out!

Alex Holt, Director of Business Development

In this last part of the series, I’m going to talk a little about the Cashroom. What are we doing to change things up and innovate in the post COVID environment.

First, a quick recap on where we are, and how the lockdown affected us.

We decided to “lockdown” about a week before the official announcement. We initiated our business continuity plan and went from having 85 people fully operational in the office, to having 85 people fully operational at home, in just over a week. I’m not going to pretend it was easy (it wasn’t), nor that it went entirely smoothly (it didn’t), but we did it and I think (hope!) most of our clients didn’t noticed any service disruption as a result of the transition.

When the government announced their financial support, we knew we had to take advantage of it. Volumes were dropping across out client base, and some clients were finding it tough. So, while it broke my heart to do so, we made the difficult decision to furlough 31 members of staff. I spoke to them all personally, explained the situation, assured them we would do our best to make sure they all came back, and spent the rest of the evening drinking heavily!

Also like many of our clients, we (successfully) applied for a COVID Business Interruption Loan, took advantage of the VAT deferral, and negotiated with our creditors.

Long story short, we are emerging from lockdown, blinking in the sunlight, and preparing for the new normal.

So what are we doing?

Return from Furlough

As of the beginning of July, we’re bringing all staff back from furlough, at least part time.

We’re not doing it because we think work volumes will have returned by then. We’re doing it to free up “idle” capacity in the business to be able to work on all the initiatives and projects we have underway that never seem to get the attention they need.

You all know what I’m talking about, the change initiative that never seems to quite get over the line, because those involved have “day jobs” delivering client services that always take priority. Well, by bring everybody back from furlough before we “need” them, we hope to create the capacity we need to drive through that change.

And talking about change…!

Premises

The lease on one of our offices is up at the end of August. We have decided not to renew or replace it. We will lose around 40% of our office space. The enforced home working has shown that we do not need everybody in one place – home working … works!

In the short to medium term, we will need to make changes around booking desks, social distancing, “Hot-desking” and deep cleaning, but in the longer time we plan to have only around 50% of our workforce in the “office” at any one time.

Technology

We have recently completed a deal to acquire a small technology business, bringing in house, the expertise we have to date outsourced.

An odd move for an outsourcing business, you might think. However, outsourcing works when you’re outsourcing a non-core function (e.g. your accounts team!). Over the last year or so it’s become clear that technology is in fact a core function at the Cashroom, and crucial to our future growth and development.

And talking about technology…!

Automation

Over the next few weeks we’re trialling a new development to our client Portal. It takes advantage of the new Open Banking regulations to automatically set up payments based on instructions received from clients into the Portal. That means there is no need for our cashiers to log onto the client’s bank account, to set up the payment, increasing accuracy and security.

That’s only one example of how future developments of our technology platform will drive efficiency and accuracy.

It seems we’re a “Fintech” business now!

So, we’re being bold, and are trying to innovative and creative. We know not everything we try will succeeded, and that’s OK, because we’ve given ourselves permission to “fail” as long as we do it fast, in a safe environment, and learn.

“Gulp…!”

David Calder, Managing Director at The Cashroom Ltd

Find out more about out services.

At the Cashroom our goal is to revolutionise legal accounting world-wide, and we have recently taken a big step towards achieving that goal.

Kanbaro Limited is the company behind developing and maintaining our Portal. For those that don’t know, the Portal is the IT platform on which we run the majority of our business. It securely and efficiently deals with client communication, task management and increasingly the automation of many of our processes.

The Portal is critical to what we do and was one of the main reasons we were able to quickly and easily, transition to remote working when the lockdown was announced.

However, it is clear that the pace of technological change in our market will accelerate – driven in part by the opportunities presented by Open Banking and the automation of tasks and processes. Over the next few years the Portal will revolutionise the way we work, and we need to increase the scope and pace of our technology development

So, with that in mind, a few months ago we reached agreement with the shareholders of Kanbaro to acquire their business along with all its IP. I’m happy to say that the deal has now completed, and Kanbaro Limited is a wholly owned subsidiary of the Cashroom. One of the Directors, Paul O’Day will join the Cashroom as Head of Product Development.

This is a significant step forward for the Cashroom. Having an in-house development capacity will allow us to move forward more quickly with a number of exciting technology projects, taking full advantage of the opportunities presented by Open Banking, process automation, and creating our own published API allowing the integration of our Portal with other systems.

In turn this will increase efficiency, accuracy and security for all our clients… The Cashroom is about to become even faster, even more accurate and even more secure!

In addition, consolidating all the IP under one ownership will allow us to exploit that technology world-wide.

Our goal is to revolutionise legal accounting world-wide after all!

Exciting times.

David Calder, Managing Director at The Cashroom Ltd

So, to recap – business are facing unprecedented change forced on us by the COVID pandemic, and the lockdown. We’re being forced to make big changes, fast …. and we really don’t like it!

We’re being challenged to break things and make them better.

So what might a law firm think about?

Sales Process

Do you have a sales process that is rigorous, data driven and measurable? Do you know where your clients come from? How do they find you? Do you have a process that takes them (in a systematic and trackable way) from enquiry to closed?

A couple of years ago, we were using Hubspot, an “off the shelf” sales tools, but it wasn’t quite working for us. In response we developed a module for our Portal (the tool we use to communicate with our clients). We created a Sales Pipeline, represented as a Kanban Chart, showing all our current prospects and their progress towards a sale.

It allows us to track progress, hold our sales team to account on that progress, and provide data for analysis and insight.

(For clients wondering, it’s a module available for internal use, and not displayed to clients! Get in touch if you want to know more.)

Is there scope to develop or improve your sales process? How does it need to change, now that face to face interaction is much less common?

Management Accounts

Do you know exactly where your business is? Do you know how much you made last month, which department/lawyer made it, and how that compares to the position last year? How much cash will you have in the bank next month, in 3 months, in a year? And can you “flex” these projections, taking into account all the uncertainties we face?

I’m embarrassed to admit that, before I met Catherine (the Cashroom’s founder, our Chariman, and from the outset, my Finance Director in a previous life as managing partner of a law firm), I didn’t know the difference between profit and cash, a balance sheet was a mystery, and I had never looked at a cashflow projection in my life!

But I suspect I wasn’t the only one, and I’m probably still not. If you’re one of these people (or suspect you might be(!)) the most important innovation you can make in the post COVID business world, is to have prepared regular, reliable and helpful management accounts.

Reliable and up to date management accounts and management information makes everything easier. It makes the uncertain, more certain and makes it easier to deliver changes and innovation – because, if you know where you are, working out where you’re going, how to get there, and what you need on the journey, is so much easier.

Business Processes Improvement

Is there something in your business that drives you nuts? A process or a procedure that’s grown up over time, driven by “its good enough for now”, with no regard to the bigger picture? Well sort it now!

Even if its “OK” ….. “”if it’s not broken, break it and make its better”!

And, if it’s got anything to do with the flow of money and cash through your business, how you run your accounts team, and how you ensure compliance with the rules … we can help!

David Calder, Managing Director at The Cashroom Ltd

For more information about our services.

In my last blog post I talked about innovation, and how facing the post COVID world has forced “5 years of innovation in 18 months”. And I admitted to being uneasy about facing that challenge.

Well, let me share a webinar that was shared with me (fair warning, not for those who are offended by the odd expletive!)

https://register.gotowebinar.com/recording/recordingView?webinarKey=3238680076256722704&registrantEmail=susan%40thecuratedconsultancy.com

TLDR – we need to become comfortable with uncertainty. We need to come up with loads of ideas, and accept that most of them are rubbish, and we need to be happy to fail, and get it wrong. Most importantly, we need to let people know it’s OK (even good) to screw up and get things wrong, as long as we learn from it.

If things aren’t broken, we need to break them and make them, better!

Scary stuff …. and easy to dismiss as the ramblings of a “swivel eyed loon”, that just doesn’t understand. But, be honest ….. is your model perfect, is it optimised? It’s maybe OK, but is it truly good…..!

“Gulp…!”

And I think as lawyers, we’re not very good at this. We struggle with the idea of getting something wrong. If goes totally against our training … as a result if people get something wrong, then there’s liability, and blame, and compensation.

Challenging stuff.

In Part 3, some thoughts on what a law firm might look at (fair warning …. bit of a sales plug!)

David Calder, Managing Director at The Cashroom Ltd

Find out more about our services.

But is it?

In 1942, after the battle of El Alamein, Churchill said …..

Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

I can’t help feeling this is where we are in the COVID Pandemic. We have weathered the initial storm, but there is a long way to go.

If like me, you’re beginning to emerge from lockdown, blinking in the sunlight, with the initial business continuity response behind you, and a business that is beginning to operate “normally” – you’ll be starting to think “well, what’s next?

Bluntly, I have no idea … and very few people (including our politicians) have.

However, we need to start somewhere, and I wanted to talk about a couple of things playing on my mind recently. Firstly, business continuity, and secondly, a return to the “office”.

Business Continuity

At the Cashroom we went from having 85 people in a traditional office setting, to 85 people, fully operational and working remotely in just over a week. I won’t pretend it was stress free, but our planning worked, and we did it.

We also continued to provide a fully remote service to our clients with minimal interruption to service, meaning they didn’t need to worry about business continuity planning for their accounts function.

So why is this still an issue?

Well, if I understand the epidemiology (!), the lockdown has flattened the peak, but by preventing the majority of the population catching the virus, as the lockdown is loosened, there’s a risk of a second peak, as we have not yet reached the stage of “herd immunity”. Or in other words – the lockdown stopped people getting the virus so they can still get it now, because they are not immune.

And look to history. The 1918 Spanish flu pandemic hit in three waves, with the second killing more people than the first. The 2009 swine flu pandemic started in spring and, in the northern hemisphere, was followed by a second, larger wave in the autumn.

Chances are, this will not be the only lockdown.

So, let’s not pat ourselves on the back too soon. It’s likely we will dusting off our business continuity plan once again. And as this article argues (https://www.continuitycentral.com/index.php/news/business-continuity-news/5136-looking-ahead-to-a-second-pandemic-wave-why-acting-now-to-strengthen-your-crisis-management-capability-is-the-key-to-building-future-resilience) the second wave will hit already weakened businesses, and may be more devastating than the first.

We’ll be reviewing our business continuity plan, making sure we’ve learned the lessons of the first lock down, and making sure we’re ready for a possible second.

Returning to the Office

In the UK we’re hoping to return to the office sometime in late summer/early autumn. It will be gradual, and cautious, but it will happen …… maybe!

Setting aside all the discussion about whether office life is dead, and whether there is any need for businesses to return to an office at all, the practicalities of making a typical office environment “COVID Safe” are daunting.

Read this article from the CIPD – https://www.cipd.co.uk/knowledge/fundamentals/emp-law/employees/workplace-guide-returning-after-coronavirus, and if you’re brave, look at the detailed guidance from HMG here https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19/offices-and-contact-centres

Now, some will have no alternative. But if you do, if you can operate your business remotely, using technology and outsourced providers, why would you risk a return to office life …. particularly if there is a risk of a second outbreak, and a second lockdown.

Summary

So, lots to think about as we find our way safely to a “new normal”. But it seems to me that agility is the key. The more flexible your workforce, and your systems, the better.

We all need to be prepared for disruption, and a lot less certainty than we’re used to. And we need to design our businesses accordingly.

And if you are thinking about outsourcing your finance function, you know where we are! 

David Calder, Managing Director at The Cashroom Ltd

The demand for legal process outsourcing has gathered considerable pace in the past few years.  In the next decade, it is expected to become vital in enabling law firms and in-house legal departments to grapple with the challenge of delivering a competitive, efficient, safe, and innovative service to clients.

What is Legal Process Outsourcing?

Legal process outsourcing enables law firms and in-house legal departments to utilise the services of external specialists to perform specific legal functions on their behalf.  Services such as eDiscovery, client billing, legal cashiering, management accounts, contract drafting, document review, and compliance assistance are now commonly outsourced to third-party experts, rather than being undertaken in-house.  There are many reasons for doing so, including handling a sudden influx of work for which there is insufficient internal capacity, to reduce wage costs, to drive efficiency, and ensure compliance with the latest standards and best practice.

Focusing on core competence

Legal process outsourcing enables legal teams to focus on what they do best.  This is important as modern law firms have to be agile, allowing them to move in and out of legal markets as demand changes.  Traditionally, providing new service offerings may have necessitated the hiring of new resources, training, and the implementation of new systems and processes, but in the age of legal process outsourcing, law firms can now focus on their core competencies.

According to the Law Society, legal process outsourcing “can allow law firms more opportunities to offer a wider range of services to clients, potentially attracting a broader client base”.  And crucially, they say that legal process outsourcing “allows lawyers to concentrate on the task for which they are trained and paid, free from the inevitable bureaucracy that surrounds any legal service”.  This is a win-win for law firms as by freeing staff to perform higher-level functions, without becoming bogged down with paperwork and administration, not only will the client receive a better service, but the employee will be more fulfilled in their role.

Ready to hit the ground running

The best legal process outsourcing providers will not only have experienced staff ready to perform the function required of them, but they will also do so in a manner which ensures compliance with GDPR, and all other compliance requirements.  That said, it is essential that law firms and in-house legal departments engage external providers with the necessary skills, experience, and compliance credentials to undertake work on their behalf.  For example, if a third-party will be processing data on behalf of the law firm, it is vital that they do so in accordance with GDPR.  It is also important to ensure that the scope of the work, timescales, and delivery expectations are set and agreed, thereby avoiding any confusion or problems at a later date.

Finding trusted partners is key

New legal process outsourcing providers are launching each year, offering new services in innovative ways.  By engaging with a provider you can trust and building a long-term relationship, the boundaries between the different businesses become seamless.  As staff from the legal process outsourcing provider get to understand the processes and the slight nuances of the law firm they are assisting, work can be completed with even greater efficiency and in higher volume.

Final words

Legal outsourcing offers transformative benefits for small and medium-sized law firms trying to compete with the big players.  Not only will legal businesses be able to operate with smaller cost bases, and those costs be better controlled than wholly in-house resources (i.e. due to fixed pricing arrangements), they can operate in a much more agile manner, providing greater strategic flexibility.  Make 2020 the year your law firm starts to leverage the potential of legal process outsourcing.

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

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

Merely months after I left high school, I was determined to get straight into the business world and gain experience that would open doors anywhere I go. I applied to start as a junior for The Cashroom. Now, over seven years later, I am a qualified legal cashier in a team servicing 28 clients – still with The Cashroom.

On a daily basis, I am responsible for ensuring that our client’s books are up-to-date. This is achieved by ensuring all transactions from the previous day have been posted to the client’s Practice Management System (PMS). We would then do a bank reconciliation on the PMS using their bank statements. The bank reconciliation will highlight any omissions or errors. Oh, and our clients do not all use the same PMS. There are several large businesses in the UK which provide a wide range of different systems. Compared to an in-house cashier, this means that my colleagues and I must be able to use and adapt to these systems.

Once these daily tasks have been done, we then focus on queries from our clients and ensuring any ad-hoc tasks are completed. This can range from our regular compliance checks (credit balances not moved in two months for example) to preparing a purchase ledger payment run. Different practice management systems are not the only challenge that we face. Our clients work in various locations and practice different types of the Law.

We also deal with various projects outwith the general cashiering tasks. For example, one of our clients may decide to move from one PMS to another. These changes can provide a lot of benefits to our client, but the changeover is not a simple procedure. As the cashiers, we need to analyse the data on the current system and work with the new provider to ensure it is dealt with correctly on the new system.

Another example would be to assist with a Law Society inspection. Whilst most practice units keep the prospect of an inspection in mind, it’s not always at the top of the list. This can make an inspection notice a stressful process. It is our role as cashiers to provide all the reports that an inspector will need and to assist with any queries or issues raised during the inspection. This allows the practice unit and its staff to focus on their work.

But I am more than just a cashier! Over the years I have expanded into several areas of the business. I volunteered to help our Service Transition team, joined a steering group for The Cashroom’s own web-based Portal, organised our ambitious social committee with colleagues, and accepted a place in The Cashroom’s Future Leadership Programme.

No day at The Cashroom is the same as the last. One day I could be helping my team ensure that all our clients are being serviced with the highest quality of care. The next, I could be in and out of meeting with the Portal developers making sure we are always innovating and deploying new features for our colleagues and clients.

There is no satisfaction in staying in the same place. That is why I push my limits each day to expand my knowledge base. A example of this would be voluntarily undergoing training with some of the UK’s best-selling practice management system providers for example. Doing this allows me to do my daily cashiering work with full confidence and assist our clients to unlock their system’s full potential. You may not be surprised to hear, that’s not all the training I do, I also help train juniors who start the same way that I did over seven years ago. My experience in all the aforementioned areas, combined with my personal journey through the same route that they are on, guides our newer staff in the right direction.

As you can see, there are many different aspects to my role as a Legal Cashier at The Cashroom, and it is the variety and great experience I get from all of these that keep me motivated at work on a daily basis.

Kyle Stratton, Legal Cashier

The Cashroom Ltd

The importance of innovation and law firm efficiency cannot be overstated.

The profitability of any law firm is proportional to the amount of time it takes to complete the chargeable legal work completed.

With many legal services moving toward fixed fee pricing models there is additional pressure to ensure as much work as possible is completed with the minimum of demand on fee earners. That said, law firm efficiency must be balanced with the need to ensure work is completed thoroughly and to the required quality.  For Solicitor Regulation Authority (SRA) accredited Solicitors, this means they must adhere to the Accounting Rules, Principles, and Code of Conduct.

The vast opportunity of increased legal innovation and efficiency

According to Thomson Reuters Legal Executive Institute, there are huge opportunities to be realised by increasing law firm efficiency.  A 2019 survey of small law firms revealed that many faced a wide variety of “significant challenges”, in particular the excessive amount of time being expended on administrative tasks; accounting for up to 40% of the average lawyer’s time.  As such, law firms are now focused on improving efficiency through a wide variety of means.

Technology is underpinning the drive for legal efficiency

The need for law firm efficiency is one of the primary drivers towards the widespread adoption of digital technology, including artificial intelligence (AI), electronic discovery (eDiscovery), data analytics, and online client portals.

The law sector, both locally in the UK and internationally, is experiencing a considerable technological shift.  Organisations who have maintained many of the traits we know as “traditional law firms” are under pressure from new dynamic entities which are able to deliver legal services in a consistent, rapid, and high-quality manner, and still with high levels of customer service.  To do this, fee earners need to be freed up from onerous and time-consuming work which can now be completed by automation tools and software.

Leveraging external service offerings

Law firms are also realising the importance of law firm efficiency by freeing up resources to work on more complex and, ultimately, higher-value work.  In addition to technology, outsourcing of essential business services is enabling internal legal resources to focus on what they do best – practice law.  Small, medium, and large Solicitor practices are increasingly utilising the knowledge and skills of external business services, including cyber security specialists, IT, and financials (invoicing, legal cashiering, and management accounts).  Such is the demand for ‘as a service’ expertise (e.g. software as a service, marketing as a service), each year more and more providers are starting up, with most offering fix price monthly pricing.  This approach to law firm efficiency also reaps rewards by reducing the demand for office space, ensuring adherence to the latest standards and legislation, and reducing internal headcount and associated costs.

Final words

As we enter a new decade, Solicitors of all types and sizes are focusing on improving law firm efficiency.  Whether it be through process analysis and control, digital technology, and outsourcing of essential business functions, there will be two primary winners for those who are ultimately successful; Solicitors who can engage in more meaningful and high-value legal work (and of course law firms themselves), and their clients who will benefit from the extra time that can be spent focusing on their needs.  Increased law firm efficiency provides a win-win for all concerned.

Established for over 10 years, The Cashroom are experts in helping law firms become more efficient when it comes to cashiering, management accounts and payroll. With extensive experience in the legal sector our solutions are tailored to the needs of the changing legal landscape.

Our investment in our products and services means we help to improve efficiency and security beyond the capability of many law firms.

For an introductory discussion please contact a member of our team.

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

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

The EU’s General Data Protection Regulations (GDPR), which were enacted into UK law by the Data Protection Act 2018 (DPA), place strict requirements on law firm data security.  While the GDPR relates to any business using personal data within the EU, given that law firms are required to handle often highly sensitive personal information, they must go the extra mile to mitigate any potential risk to their clients.

Data controllers vs data processors

Core to understanding law firm data security obligations in the context of the GDPR is interpreting the terminology used.  Firstly, both data controllers and data processors are required to adhere to GDPR.

According to the UK’s Information Commissioner’s Office (ICO), data controllers are defined as any “natural or legal person, public authority, agency or other body which, alone or jointly with others, determines the purposes and means of the processing of personal data”.  And data processors are any “natural or legal person, public authority, agency or other body which processes personal data on behalf of the controller”.  In other words, the controller determines what information should be processed and for which purposes, whereas the processor undertakes the actual processing work.

As such, law firms may find themselves acting in both roles.  As confirmed by the law society, however, law firms assessing their law firm data security should not just assume they are acting in the role of data processor when they may not be.  For example, for a law firm undertaking electronic discovery in-house, it is likely they would need to conform to the GDPR rules for both controller and processor.  If discovery is being contracted to a third party, it is likely the external entity would be classed a processor and the law firm would be the controller.  The European Data Protection Board provides some useful information to make this decision.

Seeking assurances from third party data processors

When assessing law firm data security risks where third parties are used to process data on behalf of the controller, it is essential to ensure that the processor is able to comply with their legal obligations under GDPR – this should not just be assumed.  Failure to verify this could lead to a ‘supply chain compromise’ whereby the third party fails to adequately secure the IT systems that hold your (and your clients) data.

The National Cyber Security Centre (NCSC) states that a vulnerable data supply chain can be avoided by adhering to its principles, under the following categories:

• Understanding the risks
• Establishing control
• Checking your arrangements
• Continuous improvement

For example, the NCSC recommend that where necessary, data controllers may wish to use the Centre for Protection of National Infrastructure (CPNI’s) Personnel Security Maturity Model to assess the effectiveness of their people security arrangements.  While this may seem onerous, to fully ensure law firm data security, it may be the only way to mitigate any risks fully.

Wrapping up

It is critical then that law firms take their responsibilities seriously, especially considering the financial penalties and reputational damage which may be levied for non-compliance.

To prevent “supply chain compromise” ensure you work with organisations who have a similarly transparent and compliant approach to data protection and proactively demonstrate this to you, providing you with full assurance for your law firm and your clients.

The Cashroom understands the potential pitfalls of data security. We take data security and protection seriously. To find out more about our approach to data security have a read of our recent blog here.

We’re happy to share our experience with our clients and our own data protection policy is available online here.

The Cashroom helps law firms stay on the right side of compliance, whether it be GDPR, data security and SRA or Law Society of Scotland Accounts rules.

We bring our extensive experience in the legal sector to you, whether you are looking for outsourced cashiering, help with the production of management accounts, or support with your payroll.

For an introductory discussion please contact a member of our team.

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

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

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In a leafy part of England a merry band of 70 suppliers of services to the legal sector gathered for the LSAS conference. It’s an annual event at which ideas are shared, contacts are made, and the occasional sherry is supped.

A theme emerged from the numerous excellent talks throughout the day…

The need for any sale of services to be a win for both parties.

It seems obvious doesn’t it? Yet when you think about it, often one or other of the parties comes away feeling not quite so happy. Either the client feels they’ve paid too much, or the suppliers feel they’ve been talked down on price. Perhaps the issue is the financial one.

After all, the cost of something is always relative to the worth it represents to the buyer, isn’t it?

So it’s crucial that a supplier takes the time to really understand their prospective customer- the needs of the firm, but also the requirements of the individuals within the firm who will be interacting with the product or service. A panel of senior people from law firms was gently grilled by Chris Bull, Legal Sector Consultant and it was slightly depressing to hear that often suppliers don’t think about who they will be talking to when they make contact. We were told in no uncertain terms that a call from a supplier who hasn’t taken the time to research the firm and the individual contact will receive a much cooler reception.

Crucially, the ‘buyer’ is often not the firm. It’s the individual for whom you will be solving a problem, or fulfilling a need. What do they need from you so that they can be convinced themselves, and what do they need so that they can take information and convince any other influential people within their firm? By treating each sales engagement as a collaborative process, and acting with respect and integrity throughout (essential elements for any relationship to work), the benefits to the individuals and the firm can be drawn out and supported, making the discussion around price a far more involved negotiation as the dialogue is now around a value proposition.

The final shift over the line to a sale is often, we were told, the vital addition to the conversation of stories. Case studies. Testimonials. Existing happy clients or buyers. Real people who have experienced your products and services and will speak glowingly of the benefits. They take the ideas and lists of promises from conceptual to real.

Coming away from a conference like this with more than just a headache is always welcome…on this occasion invaluable ideas were as plentiful as the wine.

Alex Holt, Business Development Director

The Cashroom Ltd

I’m no psychologist. So you’ll be delighted to hear that the ideas I’m about to put forward are not my own, but those of far more learned proponents of the science.

When engaging with your prospective clients, do you understand what their present state of mind is?

There are three modes that you should consider-

OK or Even Keel – This is when your prospective clients are basically happy with their lot. It does not mean they are not a potential buyer, just that they don’t perceive an urgent need for what you’re selling. With this kind of client, it’s important to stay in communication. Keep them informed of your services and products. Make them aware of the benefits of working with you. But don’t in any way go for the hard sell. You want to be in their mind when they move into one of the other two modes.

Fear or Problem – this is often the mode in which clients of law firms find themselves. Litigation. Divorce. Bereavement. Classic reasons for needing a lawyer. At the point when your prospective client is considering your services are you thinking about their state of mind? Are you shaping your products and messages to appeal to someone who is probably stressed and worried? Are you responsive and communicative?

Hope or Aspiration – these clients are a different challenge. Perhaps they are growing a business or trying to do deals. They have a big idea and they are buying your services as part of a strategic plan. You will need to convince them you can match their requirements and ambitions with a service that enables them to achieve their goals. Should you consider a more project based approach to deliver your services in alignment with the client’s timescales, and should that lead to a slightly different discussion around pricing?

It sounds so simple, yet so many sellers of services or products fail to put themselves in the shoes of their customer or client. What is the end goal they are trying to achieve when they consider your service? A conveyancing transaction is not how your client looks at it- for them it’s a move, against a removal deadline, into their new home. A litigation matter is not an intellectual challenge- for your client it is a stressful and unwanted expense. Your approach and manner of client handling should reflect such differences.

Alex Holt, Business Development Director

The Cashroom Ltd