CHE S'RA S'RA ...

Overtaken by events, this blogger has just rediscovered a media release dating back to 7 May from the Law Society for England and Wales which reads, in relevant part:

Over-regulation is bad for the profession and the public

The Law Society has welcomed today's announcement by the Solicitors Regulation Authority (SRA) that it is launching an initiative [details of which are available here] to reduce the burden of regulation on solicitor firms. This is an area of serious concern for solicitors, particularly for those within small firms, with many reporting that the cost of compliance is harmful to their business.

Responding to the SRA announcement today Law Society Chief Executive said the Law Society is keen to work with the SRA and with members to examine how regulatory burdens might be reduced whilst maintaining standards and serving the public interest.

“All firms, and small firms in particular, have had to weather very turbulent conditions in recent years. Easing the regulatory costs will help firms to focus on better servicing their clients. We all want regulation that is effective, proportionate and affordable. Clients should have confidence that high standards are paramount but if matters do go wrong they can be assured of quick and fair redress.  

...

It is critical that the SRA avoids unintended consequences and that changes to the professional indemnity insurance (PII) rules help to restore much needed stability to the PII market. The SRA's decision not to go ahead with its proposal for minimum financial ratings for insurers underlines the importance for any debates that will take place around proposals to be underpinned by careful research so that the consequences of changes which may seem attractive on paper are fully thought through and are proportionate in their impact. The Law Society will actively engage in that debate.” ...

All very interesting, but it does seem to this blogger that there's an awful lot of regulation going on.  He wonders whether there is any data to show that solicitors -- particularly those who practise IP -- are being better regulated now than in 2007 when the SRA was hived off from the Law Society: if so, what are the criteria by which any change is measured? And how does the SRA's performance measure up to that of the Intellectual Property Regulation Board (IPReg)?  Does anyone know?

Why UK may be the future of Legal Process Outsourcing for Solicitors

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.

Firm Links

Azrights has set up a networking group for small law firms (of fewer than 5 partners). It is called Firm Links.

Its purpose is to afford small law firms an opportunity to discuss matters of mutual interest. It will provide a perfect environment for generating new ideas, exchanging experiences, hearing other people’s views and therefore gaining a different perspective.

The first discussion forum is taking place at a central London location on Tuesday 2nd June, 2009 over breakfast. The cost to attend is £20 plus VAT. So far we have invited solicitors known to us through networking.

There is no limit to the number of solicitors who may be added to the invitation list. The way Firm Links works is that the first 25 solicitors to accept an invitation for a meeting will attend the meeting for that month. So, there is no obligation to attend regularly.

More about Firm Links

Small practices face unique challenges – particularly in the light of the changes brought about by the Legal Services Act and the likely increased costs of regulation. By getting together and discussing business matters with other law firms we aim to find solutions and generate new creative ways of improving our individual businesses.

Apart from picking up useful information, participants will make new contacts with a variety of other lawyers. The meetings will begin with an opportunity for each participant to give a 1-2 minute ‘elevator speech’ to introduce themselves to the group. We advise bringing plenty of business cards to pass around.

Firm Links will usually meet once a month over breakfast, but we may also arrange other events too. (Only one representative of a law firm may attend the same meeting, although more than one solicitor from that firm may be on the invitation list). There is no restriction on the number of lawyers specialising in a given area of law. The only absolute rule for now is that if a firm grows to more than 5 partners it will no longer be eligible to attend Firm Links.

Topic for 2nd June discussion - Professional Indemnity Insurance

The topic for discussion is Insurance following last year’s difficult PI renewal situation. The Gazette reported on 23 April that this year is also going to be a difficult renewal situation. With the current economic downturn, and the increasingly competitive landscape on the horizon, what impact does another adverse insurance season have on small firms? Does the current insurance problem have the potential to force the closure of yet more law firms? What are your thoughts on what the insurers will be looking out for? Have you developed or implemented any changes that might have a beneficial impact on your insurance renewal experience this year? What preparation can we make? Is Lexcel relevant to small firms? Does it help?

The Law Society has also produced a practice note on a dedicated website and is running CPD seminars, as part of its tool kit to help members “more effectively prepare their firms for obtaining or renewing their PII and developing best practice approaches for the long term.”

If you do not want miss out on the first meeting on 2nd June, then please email us here before 28th May. Email the same address if you would like to be added to the invitation list for future meetings.

Rethinking insurance

I am pleased to hear that the Law Society is considering staggering the renewal dates for Professional Indemnity insurance and a return to the Solicitors Indeminty Fund (SIF) (although whether the latter is the best option is not something on which I am qualified to comment).

Clearly something drastic was needed following the insurance fiasco firms faced this summer. This resulted in a six fold rise in the number of firms that went into the Assigned Risks Pool – a place normally reserved for firms with poor claims records, or some other serious problem. As the insurers were taking their time in issuing quotes it was scary. Many of us were left imagining how awful it would be to end up in the ARP on the one hand, and then thinking surely that's impossible given that I have a completely unblemished claim free record. What I hated the most about the experience was that one was completely powerless to do anything about it. Only 3 insurers would look at IP work, so this so called competitive market place where one could shop around was simply non existent. What made matters worse was that some brokers were implying that IP was a No Go area - far too risky to entertain.

Interestingly, some of us had a meeting with Redvers Cunningham of the Bar Mutual Insurance Fund Ltd. He is also a director of PAMIA. Amazingly he told us that IP is in fact one of the lowest risk areas of work – particularly where that work is done by practitioners who specialise in the area. So, I hope the Law Society’s PII group will speak to knowledgeable individuals like Redvers when reviewing PII.

Solicitors Regulation Authority Roadshow

I attended a Law Society roadshow on 16 April, which was an eye opener about the SRA's approach to regulation. There are a number of consultation documents in the pipeline, and the SRA was using the roadshows to update the profession on the latest issues. The meeting was attended predominantly by small law firms.

Among other things, we heard about the Practise Standards Unit (PSU) and how it has visited half the profession, and intends to visit the remaining 5,000 law firms in the next couple of years. We were informed about some typical breaches that the PSU uncovers, such as charging clients general disbursement of, say £25, which is a breach of the accounts rules (one is hence guilty of making a secret profit) if in fact only £9 were incurred on the file in bank charges, and no specific records were kept of any other disbursements on that client's file. It was not acceptable in such situations to charge £25 for general disbursements. Instead our hourly rates should take care of such overheads. Disbursements are to be reserved for actual expenses that are incurred and recorded on a client's matter. Well now we know. However, judging by the restrained questions (after all we had just been told this was a breach), many solicitors in the room did not already know this.

At the end of the presentations, there were a few murmurs from the floor to the effect that the SRA would regulate many of us out of business altogether with its PSU visits, and overly prescriptive approach. To me this example about general disbursements says it all about the SRA. If the SRA can be so petty as to concern itself with trifling sums, at a time when it is supposedly adopting a light touch, risk based approach, then what hope does it offer as an effective regulator? I am not surprised so many practitioners are planning to cease practising as solicitors in future. Surely, there should be some sort of de minimis figure, to justify the time and expense involved for the SRA to police such rules, not to speak of the time and expense of solicitors who are trying to make a livelihood having to get to grips with all these trivialities. Someone pointed out that banks do not face the burdensome and overly regulated approach that solicitors operate under even though they make far more money than solicitors do, and hold much larger amounts of client funds.
I was amused by the way in which the SRA announced its plans to endorse the practising certificates of sole practitioners to record that they are entitled to practise as sole practitioners. This was announced in a most apologetic manner, suggestive of many a discussion held behind closed doors when disgruntled sole practitioners on the SRA had no doubt objected to these plans. Yet all the time I was wondering why this archaic approach towards how many solicitors are involved in the running of a practise? Does it really matter whether a practise is run by a sole practitioner or by two or three solicitors? A bad egg in even the largest of law firms can do a lot of damage. If statistically most serious breaches of the accounts rules involving the compensation fund are caused by sole practitioners, then surely the approach should be to look at the types of sole practice that such breaches emanate from, rather than to conclude that sole practitioners as a whole present a disporportionate risk to the profession. Size is surely just one issue among many. I would guess that any inefficiently run business will pose more of a risk than whether the practise is owned by a sole practitioner or by several practitioners. So, I wonder what sort of people are running the SRA, and whether the legal profession can do anything to have a more business minded regulator in charge at a critical time like this?