Law Archives - The Cashroom

What is your strategy for law firm data security?

The news is regularly showcasing headlines about companies experiencing cyber breaches, as criminals refine their skills, finding sophisticated ways to get their hands-on personal data and intercept financial transactions. So when was the last time you reviewed your law firm data security?

But when it comes to law firm accounts, how are you able to ensure that the information the business holds is kept safe and secure? And how are you able to ensure that you’re remaining compliant for your regulators?

Law firm data security is one of the many facets of the day to day running of business. One that regularly competes for a solicitor’s attention but may not seem as high a priority as earning fees or other more profitable business opportunities.

Due to the increasingly cyber world we live in, having cyber policies and security in place is vital to ensure cyber criminals are kept firmly in the dark. However, The ‘Cyber Security Breaches Survey 2019’, released by the Department for Digital, Culture, Media and Sport found a number of policy omissions desperately needed to protect a firm and their clients from the clutches of cyber criminals.

Only one third of UK businesses have created a cyber security policy within their organisation, with 26% training staff to spot the signs of cyber crime. Fewer than a third of organisations had also planned for a data breach.

This is where outsourcing your management accounts can help to free up your time, to focus on money earning opportunities and other priorities, whilst leaving the law firm data security, compliance and cyber security in a safe pair of hands.

An outsourced management accounts team take a belt and braces approach when it comes to security measures. They’ll have procedures and policies in place like firewalls, encryption, password protection, physical data centre anti-intrusion systems, software updates and back-up procedures. This approach ensures that your law firm data is kept secure.

The Solicitors Regulation Authority speculated in 2018 that £11million was lost in the legal sector due to cyber crime, and as a result a plethora of regulations have been instigated to help tighten law firm’s defences, and ensure firms share information with regulators as soon as issues become apparent.

Third party suppliers are able to keep their fingers on the pulse of your accounts and flag up anything that seems out of place not only to you, but to the regulators, in a timely manner. This alleviates time pressures and potential to miss an issue and come under further scrutiny.

Why The Cashroom?

Here at the Cashroom our experts are on hand to take some of the stress away from day to day business. Our expert legal cashiers can help to improve the efficiency of your law firm, whilst ensuring firms remain complaint with the SRA Account Rule Changes.

If you are considering outsourcing legal cashiering and would like to chat to someone at The Cashroom, please get in touch.

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

What are the benefits of pensions for business owners?

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

Are you missing out on pension tax breaks?

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

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

Do you have all your eggs in one basket?

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

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

Getting the best from a pension

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

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

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

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

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

Mike Wardlaw, Chartered Financial Planner

Tilney Group

The Ultimate Guide To Outsourced Legal Cashiering

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

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

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

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

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

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

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

Kate Anderson, Director at Masson Cairns

Why outsource your law firm’s cashiering?

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

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

Reduce the cost and burden of managing employees

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

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

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

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

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

Respond quickly to a changing marketplace

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

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

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

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

Save valuable office space and costs

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

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

Reduce the compliance burden

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

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

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

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

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

Susan Ayre, Partner at Simon A Holt & Co

Plan for business as usual

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

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

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

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

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

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

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

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

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

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

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

Andrew Kwan, Solicitor-Advocate at Clear Law Solicitors

Help your law firm to grow

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

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

What type of firm needs outsourced legal cashiering?

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

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

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

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

Data security

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

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

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

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

The burden of managing a third-party supplier

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

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

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

Fear of change

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

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

Cost

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

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

Being stuck with the provider

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

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

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

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

Integration with other processes

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

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

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

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

Things to consider before you appoint an outsourced legal cashier

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

What questions should you ask your preferred provider?

Who will manage your account?

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

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

Can you get a reference from other customers?

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

What are the terms of your agreement?

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

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

Do they offer an online portal?

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

Remain Cyber Secure and GDPR Compliant

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

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

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

Improving Efficiency

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

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

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

How quickly can you get up and running?

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

Do they offer any other outsourced services?

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

Why work with The Cashroom?

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

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

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

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

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

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

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

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

Gareth Jones, Practice Manager at Easthams Solicitors Limited

What type of tasks can we help you with?

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

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

In conclusion

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

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

^[1] Hazlewoods, Chartered Accountants and Business Advisers

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

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

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

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

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

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

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

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

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

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

About The Cashroom

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

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

Brexit’s Impact on the Property Market

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

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

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

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

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

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

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

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

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

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

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

About The Cashroom

New SRA Accounting Rules 2019

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

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

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

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

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

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

Significant Changes to the SRA Accounting Rules

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

Other Key Changes to the Rules

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

Considerations in Advance of the Rules

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

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

The Cashroom Clients

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

Katie Wilson,

Head of Cashiering England and Wales

Top applications to help you run your business

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

David Calder, Managing Director, The Cashroom Ltd

Top Applications – OmniFocus

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

And then I discovered OmniFocus.

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

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

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

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

Emma O’Day, Marketing Manager, The Cashroom Ltd

Top Applications: Hubspot

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

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

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

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

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

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

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

Alex Holt, Business Development Director, The Cashroom Ltd

Top Applications: Good Notes

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

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

It’s hell, I tells ya.

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

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

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

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

Gregor Angus, Business Development Manager, The Cashroom Ltd

Top Applications: RD Client

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

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

Top 5 Tech Products For a Successful and Efficient Law Firm

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

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

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

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

My top 5 tech finds

The Link App

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

Amiqus ID

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

Breathe HR

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

The Cashroom Portal

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

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

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

E-CPD

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

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

Emma O’Day

Marketing and Communications Manager

Would you like a risk-free 2017?

I’ve never been a very keen gambler. The occasional office sweepstake for the Grand National is the limit of my daring. I just hate losing money on things outside my control.

Gambling with someone else’s money (see what I did there) would be even more scary I think. I spoke at a conference the other day hosted by Armstrong Watson Accountants, alongside Xyone cyber security specialists. It was pointed out that law firms are like mini banks, but without the security. It’s one of the reasons that more than ever law firms are under attack from these new-fangled cyber criminals. You’re probably yawning right now- “Not another hacking blog?” but no!! Grab yourself a coffee because I think we need to talk in a more broad sense about ‘Risk’.

After the strange global occurrences of 2016…Brexit…Trump…Leicester winning the title…Ed Balls on Strictly…it seems that we live in very uncertain times. It’s never easy to predict what is going to happen with 100% certainty, however putting the right measures in place can provide a solid yet agile basis to withstand risks while enabling your business to still remain highly functional.

This is all inspired (as many things are) by a business lunch- this time with Jake Fox (an independent Insurance broker of some note!). I mentioned the ‘mini-bank’ anecdote to Jake and we agreed that more than ever, a firm must pay close attention to its risk profile. As Jake pointed out, it’s crucial to look at it from the perspective of Professional Indemnity insurers. The insurer is quoting you a premium based on how risky they think your practice is and that relates to much more than just cyber threat. They will consider your previous track record of claims for negligence, the strength of the sector you operate in, the accuracy of your accounts procedures, your history of compliance with the SRA, the robustness of your IT systems for resilience as well as security, and the general quality of your people- both those within your organisation and those providing services externally.

Over the next couple of months we will explore ways to combat risk, and you’ll be relieved to hear that I’ll be roping in some far more qualified friends to provide guest articles around the subject. We will have Business Continuity specialists, cyber geeks, Compliance gurus, all augmenting some hopefully informative content from us around best/safe practice cashiering, and how better quality management account information supports decisions on business strategy.

So as we look ahead to what may be a turbulent 2017 I’d like to wish everyone a very Merry Christmas and a Happy and Risk-free New Year.

Alex Holt
Director of Business Development at The Cashroom Ltd

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5 Common Myths of Outsourcing

When I am out meeting solicitors, explaining what it is that we do, and how we do it, they are often surprised at just how simple it really is. They often have misconceptions about what is involved in outsourcing, so I thought it would be worthwhile jotting down my standard responses!

1. Myth 1 – That they will need new ‘IT’, or to learn how to use a new ‘system’
We do not have any ‘system’ or software, we simply access the accounts part of your existing Practice Management System remotely. So, all you need is a legal practice management system of some sort, and a means of us accessing it remotely. You send us instructions by email, to a dedicated email address we will set up, specific to your firm.

2. Myth 2 – That they will get a different person each time they phone/email
We allocate each client to a cashiering team, headed up by a very experienced senior cashier, essentially your ‘Head Cashier’. They will have a small team of people who will work on your firm, in order that holidays, sickness cover etc, are not a problem for you. You will get to know the two or three people working on your firms’ work very quickly, and build a relationship with them. You can pick up the phone or email these people at any point.

3. Myth 3 – That it would be impossible to bring the service back in-house in the future
In fact, quite the opposite is true. As per the response to ‘Myth 1’, we do not require you to use any new software/system, we are accessing your existing system remotely. If at any point you wanted to bring the service back in-house, it would be as simple as recruiting a cashier, changing the username/password for our Login to your system and online banking, and our access would be terminated. All data stays on your system, nothing is held by us.

4. Myth 4 – Loss of Control
Some feel that by having ‘their cashiers’ offsite, they will somehow lose some of the control over what is going on. In our experience, again, quite the opposite is usually the case. Clients tell us time and again that they have a better understanding of what is going on by dealing with our cashiers. Before outsourcing, the cashier at their firm often controlled things, choosing what they wanted to disclose to the Partners. By outsourcing, it puts control back in the hands of the Partners of the firm, rather than the cashier!

5. Myth 5 – That it doesn’t really save money
As a rule of thumb, we can offer a saving of around 20-30% on the salary costs of inhouse cashiering staff. This will vary from firm to firm, depending to a large extent on how well they pay their staff, but in some cases the saving can be as much as 50%. This is simply due to economies of scale, and efficiencies we are able to introduce with the experience of best practice from working with so many different firms. There are additional savings, although more difficult to quantify in monetary terms, such as the additional office space which can be used by fee earning staff, the savings on recruitment / training of new staff, the management time of a Partner in dealing with appraisals, performance issues etc, as well as the cover for holidays/sickness.

If you are thinking about outsourcing your cashiering / accounts department, but have concerns about it which are not covered above, please feel free to get in touch with me by email (Gregor.Angus@thecashroom.co.uk) or telephone (01506 401 284 / 07875 598 593).

Gregor

The Change House

I am lucky enough in my job to spend a bit of time with lots of people in different types of businesses. As in life in general, there are people in business with a million different skills sets, outlooks, attitudes to change, to risk etc . A common theme though, is that those people and businesses with an openness to change become the most successful in the long term. The only constant is change, as they say.

Change, however, is not something that many law firms embrace! Whether it is down to difficulty in getting Partners to agree on things, being too busy with client work, or the dangerous old attitude that ‘we have always done it that way’, the vast majority of law firms do not try new things, or change course with any great speed.

I recently read an article by Roger Harrop, author of “Win! How to Succeed in the New Game of Business” (https://www.rogerharrop.com/books/ ). Roger uses a model called ‘The Change House’…

Roger states, I think correctly, that the only safe room to be in is the ‘The Renewal Room’. More importantly, he says, is that you need to stay there, and not be lured next door to ‘Contentment’. There are so many examples of businesses that have been caught out in ‘The Contentment Room’, or below, in ‘The Denial Room’. Off the top of my head, I am thinking about Kodak, Blockbuster Video… but the list is just about endless. Both Kodak and Blockbuster had numerous opportunities to renew their offering, and innovate along with new technology, but they chose not to, or were unable to, ultimately leading to their downfall.

So how does this relate back to law firms. Well, I think it is very straightforward really: you need to keep trying new things and look at ways to constantly improve and evolve. This might be new service offerings, new ways of offering the service, or even ceasing to provide a service. It might be investing in new technology, revisiting your branding, or moving office to a better location. These are merely a handful of ways in which you could look at renewing your firm. Some things will work, others won’t, but you must try. You will spend some time in the ‘The Confusion Room’, but that is the only way to get to the ‘The Renewal Room’, and it will be worth the trip!

The legal industry is still going through huge changes, and with new entrants, technology and innovative business models, it is more important than ever to keep your firm in renewal mode, in order to seize opportunities, and just as importantly, retain the business you currently enjoy.

Gregor

Please connect with me on LinkedIn and Twitter for future articles and blogs

Should I Stay or Should I Go?

I recently came across an article from January 2014 which reports that only 68% of junior lawyers aspire to become a Partner. Perhaps more interestingly, of the 1800 lawyers surveyed worldwide, just 37% of those aged 26-30, and 43% of those 30-40, viewed law as a job for life. I suspect that a similar survey a generation ago, or even 10 years ago, would show a vastly different result.

The key concern identified was flexible working, and a desire for a better work/life balance. It made me wonder whether the legal profession has fallen behind others in terms of technology, or alternative, more flexible, ways of working. Perhaps it is just the nature of a lawyers’ work, or the fact that a reduction in available work has meant lawyers having to do more work, and resultant longer hours, to make the same fee income as they did 6 or 7 years ago.

The other article I came across was again on the The Lawyer website . It reports that Mishcon de Reya, the international firm with offices in London and New York, have told their lawyers they can work as many or as few days as they want. In other words…unlimited holidays! They can also work anywhere they want. Sounds good doesn’t it?

For those who have felt awkward about working from home for a morning / day, for fear of it being deemed as ‘skiving’, a culture where this is the norm sounds great. In my personal experience, working from home is in fact often far more productive. With nearly every firm operating a time recording system of some sort, or means of tracking fee income per fee earner/Partner, those sitting at home watching Jeremy Kyle would soon be caught out anyway.

So, the point is – will we see more of this in the future, as a way of firms retaining staff in the profession, and in their firm? It could also mean that large firms need less office space, thereby saving on rent, heating and lighting etc etc.

The flipside is that some will say the arrangement at Mishcon de Reya will actually result in people taking less holidays. Without the ‘structure’ that comes with an annual holiday entitlement, will people compete with each other to take the least holidays? One key phrase that Mishcon de Reya state is that the flexible working is unlimited, ‘as long as it doesn’t affect their clients’. Will it mean that lawyers can never fully switch off, or leave work behind?

I am interested in your thoughts on this, and whether such measures at your firm would actually make a difference to your views on whether law is a career for life?

Gregor

Please connect with me on LinkedIn and Twitter for future articles and blogs

Becoming a Partner at a Law Firm

You may have worked hard for years, progressing through the ranks from Trainee, to Assistant, to Associate, before finally getting invited to become a Partner. On the other hand, you may be an Assistant who is frustrated at the management of your firm, or simply decided you like the idea of ‘going it alone’. Either way, you are to become a Partner in a law firm. So, what do you need to do from the point of view of your regulatory body? The answer is…very little!

In Scotland, provided you have 3 years unrestricted practice, you require to attend a 1 day mandatory practice management course within a year of becoming a Partner. That’s it! No assessment to pass and no further training, even if you are to set up alone, be responsible for accounts rules compliance, setting up anti-money laundering procedures, or dealing with client complaints etc. In England and Wales, you do not even require to attend such a course, and there is no requirement of being in practice for a certain length of time before becoming a Partner.

Should the regulators require more of a Solicitor who intends to become a Partner? If the regulator is seeking to ensure the protection of clients, should those becoming a Partner require to demonstrate that they understand the responsibilities of their role? Does it depend on whether they are going to be in practice alone? Does it depend on the type of work they are going to do? Does it depend on whether they are going to be responsible for cashroom compliance, or anti-money laundering?

The Law Society of Scotland recently instructed an independent review of the mandatory practice management course and associated practice rules. The report makes for an interesting read. I think that it reaches a sensible conclusion that if there is to be a mandatory course, there should be some sort of assessment to ensure that those who are required to attend, understand what they are being told. Otherwise, it is simply a tick box exercise to say you were there, and whether you engaged in the content or not, is irrelevant. The report also recommends an additional module for those likely to immediately become cashroom partners, or solely responsible for running the business, and refresher modules for all partners in certain areas as part of their CPD cycle (every 3/5 years).

I would welcome any comments / ideas you have, and would encourage Scottish solicitors to respond to the Consultation which is now underway. I think that more guidance on the various responsibilities required of a Partner can only be a good thing, and that some form of assessment ensures that. We do however require to be careful not to make this too onerous, so as to put practitioners off becoming a Partner or setting up their own firm. What do you think?

Gregor

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Law Firm Fees: What do you do when your client asks for a discount?

We have all been there…you listen to your client give you chapter and verse on a legal problem they need advice on. You give them a general overview of the work involved, and then comes the ‘killer’ question: “how much is this going to cost me?”

You set out the usual disclaimer that it depends on this and that, and give them a range of figures, the lower end of which is probably very unrealistic. Sometimes the client is happy, and goes away in the hope that your fee note is going to come in at the bottom end of the range you have quoted. Others will tell you that the figures are more than they were expecting, or more than they have a budget for, and ask for a discount. The question is, what do you do in that situation?

The answer is…firstly, ask the client why? Often they are not actually looking for a discount, but simply certainty as to the cost. That is a completely different request, although the client doesn’t realise it. You may be able to agree a fixed fee, at a level you reasonably expect your WIP to be at by the end of the matter (meaning it is not, in fact, a discount). This will often result in a happy client, simply because they know exactly what their spend is going to be. An awkward conversation has then turned into a ‘win, win’ situation, leaving both you and your client happy.

In the situation where a client is genuinely looking for a discount because they have a budget they cannot exceed, or because they have a cheaper quote from another firm, you need to think about a number of things, such as:

Is this a loss leader that will definitely lead to further, better paid work for you, or others within your firm?
Can you get the client to do some of the ground work themselves, thereby taking up less of your time?
Can you delegate the work, or parts of it, to more junior fee earners?
Can you offer to carry out the work in stages, with a fee cap for each, and the decision on whether to proceed further lying with your client?
Should you say ‘no’ and refer the work to another firm?

In order to answer these questions, and others which will likely arise, you need to know the ‘value’ of your time, and whether you can do work profitably at a certain rate. You also need to understand your firms’ strategy (which will often be far from clear!). For example, are you a high street firm that wants to retain all business, regardless of whether some of it is not profitable, or do you want to be the market leader, or niche firm for a certain type of work, where people will be willing to pay slightly more for an expert service.

What is important to remember is that saying ‘no’ is sometimes a very powerful, and in the long term profitable, tool. By saying to a client that you cannot do this particular piece of work for the price they are looking for, you emphasise the value of what you do. On one hand, you may make the client think that your service is worth paying for, and get the work at a profitable rate. On the other, by referring them to somebody else who can do it cheaper, there may also be a number of benefits. Firstly, it will free up your time to do profitable work. Secondly, your client will respect your honesty and appreciate you finding a cheaper way for them to get the work done. Having built that trust with them, you will probably find that when they have a different legal issue that they consider justifies your price, they will come back to you. In addition, by referring work to another firm, the chances are that firm will refer other work to you when they have a conflict of interest, do not have the particular expertise, or perhaps even in another area of law where they cannot do a piece of work for as cheap as your firm can!

So, remember the next time a client asks for a discount, to think carefully about your response. It could be an opportunity to agree a fixed fee, or emphasise the value of your service. Also, hard as it can be for many lawyers to comprehend, sometimes saying ‘no’ is the best and most profitable way forward.

Gregor

Please connect with me on LinkedIn and Twitter for future articles and blogs

What does the future of the legal profession look like?

When people consider the future of the legal profession, many still think of solicitors sitting behind large wooden desks, in grand old buildings, a library of books behind them on a bookshelf, and filing cabinets full of client files. While that may still be the reality for most, we are seeing more and more firms going ‘paperless’. This often means documents being stored more securely electronically, in a way that is easier to find and access at a future date, and freeing up space within their office for staff that make the firm money.

We are also seeing a growing trend of solicitors considering whether they even need an office at all. The new generation of client wants value for money, access to legal advice at a convenient time for them, and in a convenient way. With internet/email access and a mobile phone, many types of legal work can be easily done outwith the traditional setting. Often legal work does not require many face to face meetings, and in fact in some types of work (eg personal injury), a solicitor may never meet their client. Therefore, if a firm can provide a slick and efficient service, for a lesser fee, by cutting unnecessary overheads, they are going to win more clients. Even if your line of work does require meeting in person, there are many serviced offices available in convenient locations for your client, and I don’t think clients are bothered these days about whether your name plaque is on the wall. The additional services required, such as somebody to answer the phone, to run your cash room, and to type letters/documents, can all be easily outsourced.

Even for larger firms, who are going to maintain an office, these are no longer old grand townhouses, but modern buildings designed to accommodate up to date IT services. I think that the forward thinking of these firms will also continue to encourage provision of remote access, hot-desking, flexible working arrangements and amended hours. Why wouldn’t they?

Remote/home working allows firms to retain young talent, male and female, who may have children to look after, but still want to progress their careers. The same applies for amended hours (eg starting/finishing earlier and condensed hours) which will often work better for childcare arrangements. There may also be a benefit to your clients that somebody is there to answer the phone, or respond to enquiries, before the rival firm down the street that doesn’t answer calls until 9am.

Flexible/remote working and hot-desking also frees up space within your office, or may in time allow you to lease slightly smaller premises and thereby make cost savings. It also appeals to young lawyers entering the profession. These are people who would happily work from a laptop, in a café or at home. In fact, they are not only happy to do it, but they expect to be able to do it. I have heard of banks and large accountancy firms seizing upon this, and putting clauses in employment contracts that require staff to work outwith the office a certain number of days a week. I think that law firms will eventually catch up with this.

The issue which may take longer to address is the perception that the person who sits at his or her desk for the most hours every day, is the ‘hardest worker’. This doesn’t take account of two important things: (a) people working more efficiently, and (b) people working remotely or flexible hours. Perhaps over time, firms will look at efficiency and fee/new client generating work as more important than spending endless hours at your desk!

So what does the future of the legal profession look like? Who knows, but I think it is being forced to look at cheaper, more efficient ways of providing legal services to clients. The future of the legal profession is likely to lead to new and innovative ways of running a legal firm, with less non fee-earning staff, less need to be physically present in an office all day, and increased use of technology to provide services at times and in ways more convenient for the client, rather than what is convenient for lawyers. With the advent of Alternative Business Structures, there is now competition from non-traditional law firms, who are likely to have a better awareness of client behaviour and demands. Lawyers are no longer able to sit within their comfort zone, where they only have to compete with other lawyers.

Gregor

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