I've just written a blog post over on Azrights blog where I express the view that the future of Legal Process Outsourcing (LPO), insofar as solicitors firms are concerned may well be here in the UK.
Niche firms and those with expertise in areas where another firm needs to make savings, are best placed to provide the efficiencies. There is an oversupply of solicitors and paralegals in this country, so why go offshore in search of outsourcing solutions?
It would be great to have others' views on this topic.
Showing posts with label Future of the legal profession. Show all posts
Showing posts with label Future of the legal profession. Show all posts
Wednesday, 19 January 2011
Monday, 27 September 2010
Securing your competitive future
The Law Management section’s event on 22 September was thought provoking despite some of the advice being contradictory. Although much of the content was aimed at the unsophisticated sole practitioner who may not even yet be online, and who practices in general commoditised areas like conveyancing where the fee to act for the lender can be as low as £50, I came away with solutions to some practical problems I had been grappling with.
For example, I had been distinguishing our Azright Online service from Azrights offline. Listening to Grahame Cohen’s talk helped me to see the error in positioning oneself in terms of online and offline "me the solicitor". They don’t need delineating. Clients contact you for one major reason - to solve their problem. You need to offer a solution that is appropriate to you both. As he put it “..if someone wants a shareholder agreement, they don’t care if it’s online or offline. Online conjures up price certainty for solicitors. They think they need to have a cheap fixed price online service.”
Changes
On 14 June 2010 the Legal Services Board published papers to inform debate about ABS and the impact on the market for legal services – entitled The future of the legal services – Emerging Thinking
This had clearly informed some of the speakers’ thinking, and so is well worth a read. For one it draws parallels between deregulation of the opticians market and legal services, and looks at the long term effects of the changes in that industry. However, it does pick up the point that the legal services market is much more complex than the comparators of general insurance or optometrists, because unlike glasses, legal services consist of many different types of services. I suppose this aspect of the report was not sufficiently addressed by the event, as there was little discussion about niche practice.
The paper also draws attention to the vast section of the population that earns too much to qualify for legal aid, but less than £50,000, and hence too little to afford the sort of prices law firms currently charge. As Grahame put it, there is at the one end of the scale high cost legal services – the traditional model, where clients pay for a bespoke, personal, easy to access legal service – and at the other end of the scale is an impersonal, do it yourself type service consisting of simple legal documents, either in the form of paper kits or delivered via a software/web interface. This low cost, convenient and impersonal solution is not something solicitors should try to offer.
Instead they should try to provide offerings in the big white space in the top right corner – namely personal service in an easy to access way at low cost. This space in the top right hand corner - what is often referred to as the latent market, in Richard Susskind speak - is where institutions will try to move in. More detailed information about the ideas informing Grahame's speech can be found here.
Institutions pose a threat
The institutions' greater investment will ensure that they capture a large share of the market. A possible approach the big brands might take to the "white space" is illustrated if you look at legalzoom.com in USA which is turning over $100 million a year. It’s an example of what’s possible. Consumers are gravitating towards it. Legalzoom which is described more here states on its About Us page
Every year, Americans spend millions of dollars on routine legal needs, from incorporations and trademarks to last wills. Others put off creating essential legal documents because of the inconvenience and high fees. As attorneys, we knew there had to be an easier, more affordable way to take care of common legal matters.
Our founding vision was for an easy-to-use, online service that helped people create their own legal documents. We brought together some of the best minds in the legal and technological fields to make this vision a reality. The result is LegalZoom, the nation’s leading online legal document service.
In the UK More Than offers the opportunity to buy fixed fee legal services. Also Barclays has packaged up the legal and accounting space – offering employment agreements etc.
Solicitors are in a different market
Solicitors don’t necessarily sit in the same space as these offerings, but need to be aware of what the institutions are doing and may do in future. Value, price certainty are all in the big white space – so the challenge for solicitors is to provide solutions aimed at the latent market where the prospective client is looking for a solicitor to do the work.
If people perceive their issue as a legal problem they will look for a solicitor to solve it. Solicitors providing services that the public associate with solicitors, therefore have a potential market of clients who are predisposed to using them.
Commoditised work
Chris Marston of Lloyds TSB advised solicitors to steer clear of commoditised work on the basis that such work would disappear once the institutions begin to compete with solicitors for legal work. However, little was said as to what he meant by commoditised work. But taking a look at LegalZoom a vast amount of work that is niche work which solicitors now do, such as employment contracts and trade mark registration might be described as commoditised work.
The question is whether to steer clear of such work on the basis that the institutions with their greater access to investment will wipe you out once they enter the market next year? The answer seems to be that if clients are looking for solicitors as the answer to their problems then you do not necessarily have to be the cheapest provided you offer a cost effective service.
However, people’s trust needs to be earned. They want confidence from the service. You should not process clients. Think carefully about what the client does to find you. What sets you apart? How will you stand out? How do you get clients?
The importance of the net
50% of online legal searches in the UK contain the word ‘solicitor’. Over 2 million searches every month occur with the term ‘solicitor’ in the title. So, this suggests consumers are using the web to find legal solutions rather than to solve problems on their own. So Grahame’s message was to make your website very important, and get your web presence right.
Andrew Woolley on the other hand felt that people who were not already online had missed the boat and would have to pay a lot of money to get anywhere. He was also pessimistic about the future, prophesising that half the room will not have a firm in 5-10 years time.
The nature of legal service
Law is already a very competitive environment. Selling legal services – is it just like selling beans? What are we selling? How do we know consumers are looking for one stop shops? What do people want? Tesco which is now providing banking services, and had done some research on banking which is enlightening by analogy.
Although Tesco has said it is not intending to move into the legal services market, it has moved into banking despite the fact that its research initially showed a mere 4% of consumers would be willing to use Tesco for banking. The greatest majority in the survey expressed a preference to use a bank. However, the survey also showed that people generally trusted no one.
What this survey suggests is that solicitors should not be complacent. The fact that a majority of the public would look for a solicitor as the solution to their particular problems now, does not mean they automatically trust us, or that a few years from now they will still be perceiving us as the natural go to people to solve their legal requirements. We must win their confidence. Gaining clients’ trust is therefore key to building a successful practice as a solicitor.
The other fact that all the speakers seemed to agree on was the importance of not processing clients. Instead they should be given a feeling of receiving service.
Solutions to these challenges will require a step change in the thinking and approach of the profession. So what solutions are likely to emerge to meet consumer needs in the changing legal services market? There is currently much uncertainty. However, the ABS gives institutions a chance to enter the legal services market as full-blooded providers, as opposed to simply offering a branded referral service, which is what they are doing at present. These companies have the infrastructure, or access to it, through their banking, financial and insurance services arms. In my own opinion, it will be difficult, bearing in mind their likely advertising budgets, to gradually shift the public's perception as to who is the natural choice to handle their various legal requirements.
ABS
Once ABS become available post 6 October 2011 an entity that wants to become an ABS will be free to choose its regulator. So it’s possible to choose to be regulated by one body, while the individual solicitors working within that entity continue to be regulated by the SRA.
The ABS will allow ownership of solicitors firms by non-solicitors – subject to a “fitness to own” test as to ownership and management. To be eligible there must be a Head of Legal Practice (HoLP) and a Head of Finance and Administration (HoFA) responsible for those areas and answerable to the regulator. External ownership can be 100%. However a great deal remains unknown.
One such question is what will happen to the delivery of legal services?
As Tony Guise put it: Speculation is rife at the moment which does not assist in business planning. There are a range of resources on his website which may provide greater insight.
The Consultants Law Firm Model
Finally, Lucy Scott-Moncrieff partner in Scomo walked us through what has proved to be a very successful model both for her firm and for Woolleys - namely a virtual firm using the services of self employed senior solicitors working from home. Her firm's model is well explained in this Law Society Gazette article so I won't reiterate it here. The fact that I know of a number of others who are successfully using this model - Keystone Law, Cubism Law,Halebury is a sure sign that it works.
Lucy also mentioned her recent idea for firms to group together to share certain costs like insurance, while retaining their separate identities. This was recently discussed in the Law Society Gazette
Conclusion
So, currently clients are more favourably disposed to us solicitors than is commonly-believed, particularly when compared to non-admitted providers. The natural and automatic response to any problem or issue or situation of a legal nature is: "I need a solicitor to sort this", and this reflects a deeper, implicit belief that only a solicitor can sort it, and no-one else is to be trusted.
But if you look back in time, we used to be trusted business advisers that clients turned to for tax advice, but now it's accountants they think of for general tax advice. So, although nobody knows what will happen with ABS the best we can do is to focus on keeping ourselves top of mind for clients seeking legal services by making our businesses the best they can be. The other point to bear in mind (this is my own opinion) is that the institutions will be using solicitors to do the legal work, so how much of an advantage do we really have?.
Solicitor numbers have grown inexorably – will this change? Is it the end of the high street law firm? Probably not said some of the speakers, but firms will need to consider their:
However, while the next few years will undoubtedly present challenges, they may also present opportunities for law firms to find more suitable exit arrangements. After all, the institutions are going to be needing the services of lawyers and law firms to become full blooded competitors with solicitors.
For example, I had been distinguishing our Azright Online service from Azrights offline. Listening to Grahame Cohen’s talk helped me to see the error in positioning oneself in terms of online and offline "me the solicitor". They don’t need delineating. Clients contact you for one major reason - to solve their problem. You need to offer a solution that is appropriate to you both. As he put it “..if someone wants a shareholder agreement, they don’t care if it’s online or offline. Online conjures up price certainty for solicitors. They think they need to have a cheap fixed price online service.”
Changes
On 14 June 2010 the Legal Services Board published papers to inform debate about ABS and the impact on the market for legal services – entitled The future of the legal services – Emerging Thinking
This had clearly informed some of the speakers’ thinking, and so is well worth a read. For one it draws parallels between deregulation of the opticians market and legal services, and looks at the long term effects of the changes in that industry. However, it does pick up the point that the legal services market is much more complex than the comparators of general insurance or optometrists, because unlike glasses, legal services consist of many different types of services. I suppose this aspect of the report was not sufficiently addressed by the event, as there was little discussion about niche practice.
The paper also draws attention to the vast section of the population that earns too much to qualify for legal aid, but less than £50,000, and hence too little to afford the sort of prices law firms currently charge. As Grahame put it, there is at the one end of the scale high cost legal services – the traditional model, where clients pay for a bespoke, personal, easy to access legal service – and at the other end of the scale is an impersonal, do it yourself type service consisting of simple legal documents, either in the form of paper kits or delivered via a software/web interface. This low cost, convenient and impersonal solution is not something solicitors should try to offer.
Instead they should try to provide offerings in the big white space in the top right corner – namely personal service in an easy to access way at low cost. This space in the top right hand corner - what is often referred to as the latent market, in Richard Susskind speak - is where institutions will try to move in. More detailed information about the ideas informing Grahame's speech can be found here.
Institutions pose a threat
The institutions' greater investment will ensure that they capture a large share of the market. A possible approach the big brands might take to the "white space" is illustrated if you look at legalzoom.com in USA which is turning over $100 million a year. It’s an example of what’s possible. Consumers are gravitating towards it. Legalzoom which is described more here states on its About Us page
Every year, Americans spend millions of dollars on routine legal needs, from incorporations and trademarks to last wills. Others put off creating essential legal documents because of the inconvenience and high fees. As attorneys, we knew there had to be an easier, more affordable way to take care of common legal matters.
Our founding vision was for an easy-to-use, online service that helped people create their own legal documents. We brought together some of the best minds in the legal and technological fields to make this vision a reality. The result is LegalZoom, the nation’s leading online legal document service.
In the UK More Than offers the opportunity to buy fixed fee legal services. Also Barclays has packaged up the legal and accounting space – offering employment agreements etc.
Solicitors are in a different market
Solicitors don’t necessarily sit in the same space as these offerings, but need to be aware of what the institutions are doing and may do in future. Value, price certainty are all in the big white space – so the challenge for solicitors is to provide solutions aimed at the latent market where the prospective client is looking for a solicitor to do the work.
If people perceive their issue as a legal problem they will look for a solicitor to solve it. Solicitors providing services that the public associate with solicitors, therefore have a potential market of clients who are predisposed to using them.
Commoditised work
Chris Marston of Lloyds TSB advised solicitors to steer clear of commoditised work on the basis that such work would disappear once the institutions begin to compete with solicitors for legal work. However, little was said as to what he meant by commoditised work. But taking a look at LegalZoom a vast amount of work that is niche work which solicitors now do, such as employment contracts and trade mark registration might be described as commoditised work.
The question is whether to steer clear of such work on the basis that the institutions with their greater access to investment will wipe you out once they enter the market next year? The answer seems to be that if clients are looking for solicitors as the answer to their problems then you do not necessarily have to be the cheapest provided you offer a cost effective service.
However, people’s trust needs to be earned. They want confidence from the service. You should not process clients. Think carefully about what the client does to find you. What sets you apart? How will you stand out? How do you get clients?
The importance of the net
50% of online legal searches in the UK contain the word ‘solicitor’. Over 2 million searches every month occur with the term ‘solicitor’ in the title. So, this suggests consumers are using the web to find legal solutions rather than to solve problems on their own. So Grahame’s message was to make your website very important, and get your web presence right.
Andrew Woolley on the other hand felt that people who were not already online had missed the boat and would have to pay a lot of money to get anywhere. He was also pessimistic about the future, prophesising that half the room will not have a firm in 5-10 years time.
The nature of legal service
Law is already a very competitive environment. Selling legal services – is it just like selling beans? What are we selling? How do we know consumers are looking for one stop shops? What do people want? Tesco which is now providing banking services, and had done some research on banking which is enlightening by analogy.
Although Tesco has said it is not intending to move into the legal services market, it has moved into banking despite the fact that its research initially showed a mere 4% of consumers would be willing to use Tesco for banking. The greatest majority in the survey expressed a preference to use a bank. However, the survey also showed that people generally trusted no one.
What this survey suggests is that solicitors should not be complacent. The fact that a majority of the public would look for a solicitor as the solution to their particular problems now, does not mean they automatically trust us, or that a few years from now they will still be perceiving us as the natural go to people to solve their legal requirements. We must win their confidence. Gaining clients’ trust is therefore key to building a successful practice as a solicitor.
The other fact that all the speakers seemed to agree on was the importance of not processing clients. Instead they should be given a feeling of receiving service.
Solutions to these challenges will require a step change in the thinking and approach of the profession. So what solutions are likely to emerge to meet consumer needs in the changing legal services market? There is currently much uncertainty. However, the ABS gives institutions a chance to enter the legal services market as full-blooded providers, as opposed to simply offering a branded referral service, which is what they are doing at present. These companies have the infrastructure, or access to it, through their banking, financial and insurance services arms. In my own opinion, it will be difficult, bearing in mind their likely advertising budgets, to gradually shift the public's perception as to who is the natural choice to handle their various legal requirements.
ABS
Once ABS become available post 6 October 2011 an entity that wants to become an ABS will be free to choose its regulator. So it’s possible to choose to be regulated by one body, while the individual solicitors working within that entity continue to be regulated by the SRA.
The ABS will allow ownership of solicitors firms by non-solicitors – subject to a “fitness to own” test as to ownership and management. To be eligible there must be a Head of Legal Practice (HoLP) and a Head of Finance and Administration (HoFA) responsible for those areas and answerable to the regulator. External ownership can be 100%. However a great deal remains unknown.
One such question is what will happen to the delivery of legal services?
As Tony Guise put it: Speculation is rife at the moment which does not assist in business planning. There are a range of resources on his website which may provide greater insight.
The Consultants Law Firm Model
Finally, Lucy Scott-Moncrieff partner in Scomo walked us through what has proved to be a very successful model both for her firm and for Woolleys - namely a virtual firm using the services of self employed senior solicitors working from home. Her firm's model is well explained in this Law Society Gazette article so I won't reiterate it here. The fact that I know of a number of others who are successfully using this model - Keystone Law, Cubism Law,Halebury is a sure sign that it works.
Lucy also mentioned her recent idea for firms to group together to share certain costs like insurance, while retaining their separate identities. This was recently discussed in the Law Society Gazette
Conclusion
So, currently clients are more favourably disposed to us solicitors than is commonly-believed, particularly when compared to non-admitted providers. The natural and automatic response to any problem or issue or situation of a legal nature is: "I need a solicitor to sort this", and this reflects a deeper, implicit belief that only a solicitor can sort it, and no-one else is to be trusted.
But if you look back in time, we used to be trusted business advisers that clients turned to for tax advice, but now it's accountants they think of for general tax advice. So, although nobody knows what will happen with ABS the best we can do is to focus on keeping ourselves top of mind for clients seeking legal services by making our businesses the best they can be. The other point to bear in mind (this is my own opinion) is that the institutions will be using solicitors to do the legal work, so how much of an advantage do we really have?.
Solicitor numbers have grown inexorably – will this change? Is it the end of the high street law firm? Probably not said some of the speakers, but firms will need to consider their:
- Business structure- a corporate vehicle is better than partnership.
- The work they do/services they deliver.
- Building brand loyalty based on one or more of:
- geography
- sector specialism
- service levels (people will pay more to get looked after well
- technical excellen
- value-building ethos
However, while the next few years will undoubtedly present challenges, they may also present opportunities for law firms to find more suitable exit arrangements. After all, the institutions are going to be needing the services of lawyers and law firms to become full blooded competitors with solicitors.
Friday, 27 August 2010
End of Lawyers and the Legal Services Act and Impact on Law Practice
In a recent blog post ‘End of Lawyers and the Legal Services Act’ I mentioned some of the current challenges facing those of us that run law firms. These include the need to become deeply multidisciplinary, and also to provide the more innovative solutions the market needs in order to drive down costs.
In my area of practice – which is Internet and IP law – ‘multidisciplinary’ essentially means having a solid grasp of IT. So, although like most growing businesses, I am constantly preoccupied with thoughts about what services to offer and who to employ, there is this underlying essential requirement that any staff hired should be highly IT savvy.
One of the advantages of being a regulated law firm is that there is no shortage of highly motivated and talented ‘would be’ lawyers constantly knocking on the door in search of work experience. However, surprisingly few of them offer the level of IT competence we ideally want to see in candidates. Being in their early 20’s I would have thought they would emerge from their studies extremely proficient in IT, but that is rarely the case. The level of knowledge of Outlook, Word, Spreadsheets, and other applications often leaves much to be desired, and as a small law firm we simply do not have time to train people up in these areas. They need to be able to hit the ground running. I've learnt that a distinction in the LPC, or a First in Law, is generally not indicative of suitability to work in a fast paced environment like ours where the ability to multi task, to be practical, learn fast, and have common sense, are more likely to lead to success.
Similarly, the ability to write is such a key asset to be able to offer an online business such as Azrights – but this is unfortunately not a skill generally evident among those who are aspiring to become lawyers.
Therefore, offering advanced IT or writing skills would stand out from the crowd of CVs. My advice to ‘would be’ lawyers, for what it’s worth, is to acquire these skills and once you have them highlight your abilities in your CV.
Currently law graduates offering work experience in related areas, such as journalism, marketing, PR, internet marketing or web design are more attractive than those who just offer law, regardless of class of law degree. So instead of focusing purely on legal knowledge and learning - which is actually rarely a unique selling point given the level of competition out there among law graduates - it is better to acquire these wider skills. In my view, this upskilling, and acquring a good understanding of marketing, would enable a law graduate to stand out from the crowd and stand a good chance of getting a training contract in this fiercely competitive market.
The world of law is indeed changing rapidly, and the sooner this is reflected in the education ‘would be’ lawyers receive the better for everyone. Those finding it difficult to get a toe hold in the profession, would also benefit from reading Richard Susskind's books and the article by Stephen Mayson both of which are hyperlinked in my earlier blog post mentioned above. An understanding of the market forces that are changing the face of the legal world will help the new generation of 'would be' lawyers to understand the type of skills they may need to acquire.
Monday, 15 February 2010
The future of small IP firms
Having just posted a blog on the Legal Services Act 2007 - specifically, the changes that a deregulated legal industry might bring about for our law practices, I remembered that Richard Susskind, at a recent interview which was broadcast at the Computers & Law conference last year, predicted a rosy future for small specialist law firms. In his view clients perceive value in expertise, and are happy to pay for it, but see less benefit in the work done for them at more junior levels which tend to be at expensive hourly charge rates.
If anyone knows the interview I am referring to, or knows more about Richard Susskind’s thoughts on this or, indeed, has their own views on this, I would love to hear your comments.
Azrights is focused on innovation, in that if there is one sector of the legal market I would like to better satisfy it is what Richard Susskind describes as the “latent market”. Finding cost effective solutions appeals because the latent market is by far the largest market, and not one that is overcrowded, in terms of law firms chasing after it.
Reducing reliance on one to one consultancy model.
One very simple way we are reducing reliance on the one to one consultancy model is by developing products. We produced one on SEO recently, and are following with two more next month: one on commissioning a website, and the other on website compliance.
Unlike the businesses selling contract templates we aim to also educate about the surrounding commercial context. So our products give extensive video tutorial explanations about the pitfalls and issues to be aware of before engaging given services. We also provide a general interest explanation about contracts in general, as well as talking about the particular contract template that is the subject of the product. We cover key issues such as how it is not necessary to sign a document to be bound in contract, what happens if you think you are agreeing terms when in law your contract is already formed, the purpose of contracts, when long legalistic contract templates may be appropriate and when they are not, how one sided contracts are based on the assumption that the parties will negotiate the terms, which may be inappropriate for small businesses who expect to just sign the document that is placed before them, etc etc.
Use of multi media
Another way in which we are innovating, is through use of multimedia to service our existing clients. For example, during trade mark registration, we often find that despite explaining legal principles in simple plain English letters, some of our trade mark clients either do not read the letters closely enough, or for some other reason do not grasp key issues about the law and procedure.
When time is money, the need to re-explain points to lots of different people, becomes expensive. But on the other hand, clients who purchase a fixed price trade mark registration service might take a dim view if we were to try charging them for extra time just to have something explained to them so they can provide further instructions, such as about how many classes they will proceed with, for example.
So, for us, it was a logical step to deliver some of our explanations by video and podcast. This works because it takes far less time to produce one podcast or video than to explain something ten, twenty or more times – or worse still, have confused clients who do not really feel they received an adequate explanation.
As people differ, it stands to reason that some will be more receptive to receiving information through the spoken word than through the written form. So, a fairly easy change in fact revolutionises legal services, because it reduces the need for one to one consultancy time, while delivering more value to the client.
I would love to hear what others think about the issues I have raised here, and on my own blog, and how they are responding to the future.
If anyone knows the interview I am referring to, or knows more about Richard Susskind’s thoughts on this or, indeed, has their own views on this, I would love to hear your comments.
Azrights is focused on innovation, in that if there is one sector of the legal market I would like to better satisfy it is what Richard Susskind describes as the “latent market”. Finding cost effective solutions appeals because the latent market is by far the largest market, and not one that is overcrowded, in terms of law firms chasing after it.
Reducing reliance on one to one consultancy model.
One very simple way we are reducing reliance on the one to one consultancy model is by developing products. We produced one on SEO recently, and are following with two more next month: one on commissioning a website, and the other on website compliance.
Unlike the businesses selling contract templates we aim to also educate about the surrounding commercial context. So our products give extensive video tutorial explanations about the pitfalls and issues to be aware of before engaging given services. We also provide a general interest explanation about contracts in general, as well as talking about the particular contract template that is the subject of the product. We cover key issues such as how it is not necessary to sign a document to be bound in contract, what happens if you think you are agreeing terms when in law your contract is already formed, the purpose of contracts, when long legalistic contract templates may be appropriate and when they are not, how one sided contracts are based on the assumption that the parties will negotiate the terms, which may be inappropriate for small businesses who expect to just sign the document that is placed before them, etc etc.
Use of multi media
Another way in which we are innovating, is through use of multimedia to service our existing clients. For example, during trade mark registration, we often find that despite explaining legal principles in simple plain English letters, some of our trade mark clients either do not read the letters closely enough, or for some other reason do not grasp key issues about the law and procedure.
When time is money, the need to re-explain points to lots of different people, becomes expensive. But on the other hand, clients who purchase a fixed price trade mark registration service might take a dim view if we were to try charging them for extra time just to have something explained to them so they can provide further instructions, such as about how many classes they will proceed with, for example.
So, for us, it was a logical step to deliver some of our explanations by video and podcast. This works because it takes far less time to produce one podcast or video than to explain something ten, twenty or more times – or worse still, have confused clients who do not really feel they received an adequate explanation.
As people differ, it stands to reason that some will be more receptive to receiving information through the spoken word than through the written form. So, a fairly easy change in fact revolutionises legal services, because it reduces the need for one to one consultancy time, while delivering more value to the client.
I would love to hear what others think about the issues I have raised here, and on my own blog, and how they are responding to the future.
Wednesday, 23 September 2009
Professor Susskind acknowledges SOLO contribution
It well worth listening to the College of Law podcast in which Professor Susskind and Mike Semple Piggot engage in conversation about the future of the legal profession.
You will be well aware of Professor Susskind's evangelistic advocacy of all things IT and commoditised that he believes will replace large swathes of lawyers' work in the future. He has seen this future for many years but maybe we are really getting closer now. One of the examples he discusses is a sole practitioner, so it is encouraging to believe we may be part of the future.
Certainly the IT tools I use in my practice for case management, accounting and communication are essential and I could not practice unsupported without them. Indeed they free me to add that strategic advice and wisdom that only an individual brain can add.
I am however less enthused about the idea that we and our clients should outsource entirely. Rio Tinto has taken their patent work offshore. Professor Susskind sees this as extending the team, which is fair enough. I suspect they might have done better to re-examine a strategy that demands they factory file patent applications in the first place.
Another area that concerns me about factory drafted legal agreements is that they tend to be verbose and beyond the comprehension of many clients. So, sadly, do many law firm drafted products. Having learned to draft contracts after I learned to draft patent specifications, I tend to make less use of precedents. My short documents can cause consternation and frequently are substituted by the other side's prolixity. However I keep coming up against problem situations created by misunderstood or missing legal documents:
- a negotiation between two small firms held up because one wants a 9 page confidentiality agreement
- investment delayed because the proposed investors don't want to spend the entire investment on drafting the shareholder agreement
- disputes unsettled as the drafting of the settlement agreement takes forever and the parties forget where they are going
- re branding prevented because there is no licence to use the new logo
The less0n must be that we do need to keep some sensible legal advice available at a reasonable price. If the price of the real advice can be reduced by IT and commoditisation then I am a supporter but don't take the lawyer out of the equation.
Thursday, 25 September 2008
Let's learn about professional indemnity insurance
It has been a difficult month for most IP Solo lawyers as the underwriters have taken their time to give quotes, and refused to insure some firms. I personally have been extremely worried and distracted by this issue, but thankfully now it’s all sorted for Azrights. However, I feel great empathy for anyone still trying to secure insurance so late in the day.
The whole experience has left a nasty after taste. The fact that ones business can be so arbitrarily at risk of ending up in the assigned risks pool, and having to pay 27.5% or more of turnover for insurance cover, is mind boggling. Some law firms have had to take a rapid decision to shut down, and provide their services as non regulated experts. It is shocking to have to take such action so suddenly, when you have not had time to survey your clients first in order to establish the likely impact on securing future work. On the other hand if you secure insurance for a vastly inflated premium your run off cover premium is going to be that much higher if you shut down next year.
What is unclear is whether the assigned risks pool is actually likely to happen to any firm with a clear record who still hasn’t found insurance cover by 1st October, and wants to stay in business as a law firm. The assigned risks pool is, after all, supposed to be for firms that are a poor risk due to their level of past claims or other extreme circumstances. Is it the case that for firms that do not fit the profile of an assigned risks pool firm, they are likely to find that one of the insurers will quote, albeit at a steep price (hopefully lower than 27.5% of turnover though).
It is difficult to get accurate information about what is going on and why. Is it a combination of market conditions, and the fact that the SRA has raised the bar for being a regulated law firm so high, that explains why some firms are now facing this terrible situation? Another noteworthy point is that some firms that have been dropped by AON have managed to get alternative quotes, often by reclassifying their work as ‘commercial’ rather than IP. It seems the market has hardened more for IP than for commercial work in general. There is a particular problem if you have ‘US domiciled’ clients, and anecdotal evidence is that if your turnover is less than £50,000 you are unlikely to secure insurance as an IP practice.
Jeremy suggested we run an event soon where we invite an insurance broker along to discuss this whole question of IP risk. I am willing to organise this, and would also want to invite PAMIA along (PAMIA insures trade mark and patent attorney firms for extremely low premiums). I would be curious to know who insures barristers and whether they have a broker we could also invite along.
However, it would first be useful to establish whether there is sufficient interest for such an event. Please let me know here, or indeed let me have any comments by email or on this blog.
Sunday, 31 August 2008
Further thoughts
I was encouraged to see some interest in the topic of my post ‘Food for thought’ in the form of two anonymous comments and a few emails from people, the majority of whom were not looking to join my proposed network – indeed could not qualify given that they were neither UK solicitors nor UK based. But people did raise interesting points which I would like to answer in this post.
One theme that emerged from comments was how much some solos value the solo life with its absence of hassles of managing staff, having to recruit, run offices etc etc. Life is so much simpler just working solo, and the regulatory burdens are not too onerous for many in other jurisdictions. This may possibly be because they don’t operate the equivalent of our client accounts. Without doubt in most jurisdictions operating a client account is what brings into play the full weight of the regulatory burdens. Many also feel that their clients receive a better service from them than from large law firms.
I have to say immediately, that facilitating for solos the sort of lifestyle they currently enjoy and want to maintain is precisely what I’m trying to offer them the chance to continue in the future when it may be less possible to practice as solos – at least in the UK as solicitors. They could do so by joining the Azrights network and working from home.
One theme that emerged from comments was how much some solos value the solo life with its absence of hassles of managing staff, having to recruit, run offices etc etc. Life is so much simpler just working solo, and the regulatory burdens are not too onerous for many in other jurisdictions. This may possibly be because they don’t operate the equivalent of our client accounts. Without doubt in most jurisdictions operating a client account is what brings into play the full weight of the regulatory burdens. Many also feel that their clients receive a better service from them than from large law firms.
I have to say immediately, that facilitating for solos the sort of lifestyle they currently enjoy and want to maintain is precisely what I’m trying to offer them the chance to continue in the future when it may be less possible to practice as solos – at least in the UK as solicitors. They could do so by joining the Azrights network and working from home.
As to the threats on the horizon that is potentially going to endanger the lifestyle of true solos See for example comments in the Law Society’s Gazette in the July 2008 supplement on Professional Indemnity Insurance (which unfortunately is not available online for me to link to), by Simon Young, a practice management consultant and Law Society Council member who
“predicts that increasing compliance demands are likely to give further impetus to the wave of mergers among smaller firms. He draws a parallel with sole practitioner independent financial advisers (IFAs), who struggled to cope with compliance issues on their own when the amount of regulation affecting their practices grew exponentially. IFAs were either forced to merge, outsource compliance at great cost or be roped in as tied agents…. There are now very few one-man-band IFAs. Compliance for the legal profession is undoubtedly a resources issue and I am afraid it militates against small businesses and sole practitioners in particular"..
By trying to find a way for solo lawyers to exist in peace in future as practising solicitor solos, I am hoping to find a solution that produces a WIN WIN outcome for everyone. Anyone who can see the writing on the wall – namely, that the growing regulatory burdens in the UK are going to increase the costs of operating a law firm, and so make it unviable for solo firms to operate as sole practices in future, will want to look around for possible solutions. The one I mentioned of joining Azrights network is one such possibility. Doubtless there are others. However, burying ones head in the sand is not a sensible option.
In view of the incredulity from some people showed as to whether the Inland Revenue would accept that solicitors operating in this way could be self employed, rather then deemed employees, I can confidently say 'yes' because the model is not a new one. There are many law firms operating this way, and indeed IFAs too. So at the time of writing the Inland Revenue does not have a problem accepting this way of working in the legal profession as anything but self employment. For further information about this and how the lifestyle works, here are some articles relating to a law firm in the UK – Keystone Ltd - here and here
“predicts that increasing compliance demands are likely to give further impetus to the wave of mergers among smaller firms. He draws a parallel with sole practitioner independent financial advisers (IFAs), who struggled to cope with compliance issues on their own when the amount of regulation affecting their practices grew exponentially. IFAs were either forced to merge, outsource compliance at great cost or be roped in as tied agents…. There are now very few one-man-band IFAs. Compliance for the legal profession is undoubtedly a resources issue and I am afraid it militates against small businesses and sole practitioners in particular"..
By trying to find a way for solo lawyers to exist in peace in future as practising solicitor solos, I am hoping to find a solution that produces a WIN WIN outcome for everyone. Anyone who can see the writing on the wall – namely, that the growing regulatory burdens in the UK are going to increase the costs of operating a law firm, and so make it unviable for solo firms to operate as sole practices in future, will want to look around for possible solutions. The one I mentioned of joining Azrights network is one such possibility. Doubtless there are others. However, burying ones head in the sand is not a sensible option.
In view of the incredulity from some people showed as to whether the Inland Revenue would accept that solicitors operating in this way could be self employed, rather then deemed employees, I can confidently say 'yes' because the model is not a new one. There are many law firms operating this way, and indeed IFAs too. So at the time of writing the Inland Revenue does not have a problem accepting this way of working in the legal profession as anything but self employment. For further information about this and how the lifestyle works, here are some articles relating to a law firm in the UK – Keystone Ltd - here and here
They are by no means the first or only such business, as there have been others before them, such as Woolley & Co who were one of the first virtual law firms.
My hope is to do something interesting using this model for growing an IP and Technology law practice. It remains to be seen whether there will be sufficient interest from small IP practices in the next few years to make it happen. Watch this space as they say!
Tuesday, 29 April 2008
The IP Profession is Needed for
What with Jeremy's earlier post suggesting that the IP profession is no longer loved and the talk about the patent profession dying in France because of the plot to merge it with the legal profession, someone has to stand up for patent agents.
Let's see what has happened in a country where there are very few: Eire. Nice place but with very few patent agents there has been no pressure on the patent office to keep up with the times and if you cannot get to Kilkenny you can't file a patent application and pay in cash. In the UK I can file without a fee. I can file by fax and I can file online. I can get a date and go talk in confidence in moments. Not so for the Irish inventor. There are Irish inventors and they get good tax breaks but because most of the Irish patent attorneys are working in England - they are not encouraging their office to implement all the good practical things that WIPO got into the Patent Law Treaty.
Although Ireland has now amended its legislation under pressure from Europe so that you can use an address for service anywhere in Europe,you can't pay a filing fee unless your money comes from an Irish bank.
So if you're reading this in Ireland and you're an IP practitioner - stand up for the profession before it ends in the rubbish. Oh and please don't charge €2000 for submitting the applicaiton to Kilkenny.
Sunday, 30 March 2008
Future of self employment for solicitors
The prevailing view of the likely impact of the Legal Services legislation and the Carter Review on the legal profession’s composition is the disappearance of at least 4,000 small law firms. For example, see here
Having over the years attended conferences and read articles, I know it is generally accepted that the future is big and niche (rather than small and niche). However, I have trouble reconciling this prediction with the other trend in society today, of the rise in the number of the self employed, and people setting up their own small businesses. For many people it is the ultimate dream to generate their own income, and not be beholden to an employer. Solicitors and other professionals are similarly choosing to set up their own practices. So, I have difficulty understanding how the prediction that the future is big corporate entity, can sit alongside the fact that so many people in society nowadays do not want the corporate lifestyle and all that it entails. What is to happen to them in the new climate? Are we likely to see an ever growing increase in businesses like Lawyers Direct that offer lower cost legal services by using solicitor consultants who are self employed? In many ways this might mirror the Financial Services Industry where it is common for a large corporation to take care of professional indemnity and regulatory matters, using a network of self employed consultants. Any future predictions anyone?
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