SILVER SERVICE LAW
Riding the storm
Maybe the storm has been ridden. There are apparently some 200 Alternative Business Structures, but they are having almost zero impact on the legal market.
The well-publicized financial problems of the Co-Operative Bank are hardly helping what credibility Co-Operative Legal Services had. It would be interesting to know how many, or rather how few, cases they actually have. They are remarkably unforthcoming on the subject, but we know that they are losing money hand over fist, and that any firm of solicitors performing so badly would risk intervention. I wonder if the Co-Op have had that little letter from the SRA asking about their bank balance for the last three months.
Eddie Stobart? Apparently the haulage firm has emerged as a leading contender for the criminal legal aid contracts. One suspects that even Lady Thatcher is turning in her grave at that.
The head of Stobart Barristers has described traditional law firms who rely on legal aid as “wounded animals waiting to die” and accused rival lawyers of sending his firm messages to “Truck off.” (Guardian 8 May 2013).
Yes, thank you Edward. Thank you for helping to get the Legal Services Act 2007 repealed. I cannot now pass one of their lorries without imagining 100 barristers inside, waiting to leap out and advise, and hoping that the transport of such counsel complies with the European Union Sheep Movement Regulations – hope they are getting sufficient hay and water.
Stobart & Co-Op. Sounds like a great law firm doesn’t it?
Then there are the banks. Loved and trusted by the British people? Perhaps not.
Tesco, Virgin, John Lewis? Now that would be different, but so far none has shown any interest in offering legal services.
I was concerned that trusted brands entering the legal market would present a serious threat to the legal profession, but so far that has not happened and although ABS licenses have only been available for 18 months, the Legal Services Act 2007 is six years old, and so those potential serious players have had plenty of opportunity to prepare for entering the market had they wished to do so.
None of this means that lawyers have any grounds for complacency. Although service levels are generally far better than 20 years ago that is not the case universally.
In particular service levels in personal injury and conveyancing have plummeted, although there are signs that that is changing as the factory firms go bust. The banning of referral fees will drive the worst firms out of the market.
It is a myth that clients, or in other fields consumers or customers, always go for the cheapest; the evidence is that people want value for money and are prepared to pay more for higher quality. Thus the price/quality equation is crucial. This is even more the case now that clients in personal injury matters are expected to pay a significant fee to their solicitor, typically 25% of damages.
Client service levels
Clearly there are different models appropriate for different firms.
The key features of our client services levels are:
– we see every UK-based client;
– a partner speaks to or sees every new client;
– files are audited and audit results for each lawyer are published on our website each month;
– our four core promises
– payment of £100 each and every time any of our four core promises are not met.
Our four core promises:
” 1. We will see you within 5 minutes of your appointment time or your arrival in the office, whichever is later.
2. We will contact you each calendar month to tell you how your case is progressing.
3. If you telephone us before 3.00pm we will return your call within 3 hours.
4. Any email received from you by 3.00pm will be answered the same day.”
These appear in our client care letter.
We offer secure 24/7 electronic file access. We have a lawyer on call 24 hours a day, seven days a week. This is easy and un-demanding – it just requires an office mobile phone.
Explaining the New Regulations
Contingency Fees, Fixed Fees, Funding Options and Conflict of Interests
DBAs arrived on 1 April 2013 and are a bastardized form of contingency fee agreement, firstly because credit has to be given pound for pound for all costs received from the other side, including counsel’s fees, and secondly because the indemnity rule applies, that is that a solicitor entering in to a DBA caps recovery from the other side at the maximum payable by the client under the DBA.
Neither of these considerations applies in relation to a non-recoverable success fee in a conditional fee agreement.
However if in a small claim neither of these points matter as there is no recovery and therefore no credit to be given and the indemnity principle is irrelevant.
Clients love the simplicity and certainty of contingency fee agreements, something I can testify to having dealt with employment cases on this basis for over 35 years.
The ethical danger is the temptation to under-settle and thus get out early, meaning a quick fee, beneficial to cash flow, for doing little.
Thus if a case is worth £5,000 but may take 30 hours of work an early offer of £4,000 when just 10 hours of work has been done is attractive. If the contingency fee is 25% then to earn another £250 (25% of the extra £1,000) the solicitor would have to do another 20 hours’ work. Exactly the same consideration applies in work being done for a fixed fee.
At Underwoods Solicitors we have had for 15 years now an appeal process for clients in any contingency fee (fixed fee) case, whereby they can appeal, at our expense, to a named QC and we will abide by his or her decision. Thus if we have settled for £4,000 and the QC thinks that the case was worth £5,000 we pay the extra £1,000.
In fact clients are usually happy to get a very early, albeit lower, settlement and thus contingency fees can be a virtuous circle.
So far our use of this procedure has overwhelmingly been in employment tribunal matters and clients have found it very re-assuring.
The wording is as follows:
“If we are working for you in return for a fixed fee or under a contingency fee agreement or a Damages-Based Agreement then our fee is not directly related to the amount of work we do.
This creates a risk that a lawyer will under-settle the claim so as to avoid too much work and to get the fixed fee or contingency fee for less work than the matter needs.
We have strict rules within Underwoods Solicitors to avoid this happening and we will never settle a matter without your authority.
However, if you are unhappy about the terms of settlement in a case dealt with by payment of a fixed fee or a contingency fee then you may use our appeal procedure. This enables you to appeal to a QC and we will pay his fees and abide by his decision. Thus if he decides that we under settled by £1,000 we will pay you that sum.
We trust that this will never happen but we regard it as important to have such a procedure in place. For more information about our appeal procedure please contact Kerry Underwood at this office.
This is additional to and separate from all other rights of redress you may have and does not affect them.”
There is potential for misunderstanding of what is on offer. Assume the contingency fee is 25% and an offer of £10,000 comes in. It is essential to make it clear to the client that they will receive £7,500, not £10,000.
Throughout the life of the case we always apply the 25% deduction to any figures. Thus we would write to a client in an employment matter:
“If we succeed on all parts of your claim we expect to get £20,000 and under the terms of the agreement between us you would get £15,000 and we would get £5,000.
However, due to the issues discussed at our meeting, I advise you to accept any offer of £16,000 or more, meaning that you would get £12,000 and my firm would get £4,000”.
The Personal Touch – Establishing Relationships
We see every UK-based client. We do the best coffee in town. As far as we are concerned this is what the job is about and it allows us to explain matters in a way that cannot be done over the telephone or in an email.
It also alerts us to potential problems. Fraudulent personal injury claims would stop overnight if all solicitors saw their clients.
It builds up a practice as it establishes a relationship. It allows us to cross-sell. We get friends and relations of clients as clients. None of this is rocket science. It is exactly how all firms operated until the referral fee aberration.
We explain the funding issues. With DBAs in and CFA success fees now being paid by the client, with all of the regulatory issues about explaining the reason for the level of success fee returning, with retrospective Qualified One Way Costs Shifting (QOCS) in from 1 April 2013 and Part 36 uplifts and non-recoverable After-the-Event insurance to be paid by the client, those solicitors who do not see clients may as well just say “sue me”.
In particular the issue of whether to take out ATE, non-recoverable and therefore payable by the client, in an age of QOCS, is a difficult one.
With QOCS to be extended to all work – in September 2013 the Government announced its extension to defamation cases, all litigators need to understand it. It is not simple. I deal with QOCS in great detail in my blog – https://kerryunderwood.wordpress.com/2013/05/17/qualified-one-way-costs-shifting-qocs/
Each month 10 files per lawyer are audited, with a different 10 each month, and the results published on our website.
At first our staff saw this as a policing exercise but it is now seen as a positive structure, especially as a 100% score results in a bottle of champagne!
We do have costs’ targets, but it is made clear to everyone that first we look at the Audit results. If these are poor then no amount of billing is an excuse.
Some firms pay lip service to audit results as compared with hitting billing targets.
An office: A thing of the past?
Far from it. Homeworking has proved to be unpopular, anti-social and inefficient.
Offices are of key importance in establishing and maintaining the culture of the firm and in encouraging staff to share clients, that is to get the best lawyer dealing with any given problem and in being a warm and reassuring place in which to see clients.
Localism is clearly returning. Farmers’ markets are flourishing. Supermarkets fall over to open Metro, Express, Little or whatever – Vast out of town hypermarkets are not what they were.
Excellent High Street law firms are about to see a new flowering; the bean-counters and lawyer wannabees have predicted their extinction for decades and they are as wrong as ever. Significantly now (October 2013) it is the medium-sized and large firms who are seen to be at risk of financial failure.
We email all of our clients regularly – see here for examples. We telephone clients at the end of their case to try and gauge their perception of our service.
We telephone or email anyone who refers a client to us or recommends us.
We seek to set the agenda, that is to advise clients as to:
– the best outcome;
– the level of offer which should be accepted;
– the level of offer which should be considered.
This avoids the risk that we are seen to be reactive to a defendant’s offer, an ever more important consideration with the increasing incidence of very early defendants’ offers.
A Part 36 offer is made Day One on every case.
Every client is initially spoken to and seen by a solicitor.
We do not employ paralegals. Everyone is either a qualified lawyer or on their way to qualification, that is a trainee solicitor or trainee legal executive. However all of our secretarial work is carried out by our staff in South Africa, meaning that costs are kept down overall. Many firms reduce the cost of the lawyers to a minimum but pay far above what is necessary for support staff. I do not understand that.
Difficult Clients and Complaints
Difficult cases I love; difficult clients I do not like.
Each client is spoken to by a solicitor first of all.
– getting our name from an internet search without looking at our website;
– asking for free first interview;
– querying price;
– already got solicitors;
– near to limitation period;
– suggestion that the case will raise our profile.
If we think that any particular client is a complaint in the making then we will not act. Some people are prone to complain whatever service they get. Don’t act. Let them go to the Co-op.
There is always something that the firm can learn from a complaint and complaints should be taken very seriously, not because the SRA/SDT/LSB/LSeO or whoever now regulates us – I genuinely do not know – but because it is sound business sense.
Maintaining Standards in the Fast Track
Fast-track Fixed Recoverable Costs, with the addition of 25% of the client’s damages charges to the client, provide a sufficient fee to enable standards to be maintained in the fast-track.
Solicitors should generally look to deal with all aspects of fast-track cases themselves rather than use counsel.
However we save costs on all of our work by having all of our secretarial work done in South Africa.
Is it really possible to have a culture within the same firm of doing some work less well than other work? Is a dedicated lawyer capable of cutting corners?
If a job is worth doing, it is worth doing well.
We do not pay bonuses and we do not regard the level of billing as the most important thing.
Trends in the solicitors’ profession Annual Statistics Report 2012
The trends in the solicitors’ profession Annual Statistics Report for 2012, published May 2013, shows a reduction of exactly 100 firms between 31 July 2011 and 31 July 2012, that is a drop from 10,202 to 10,102, or a fall of 0.98%.
Those statistics are remarkable given the state of the economy and the emergence of Alternative Business Structures with effect from January 2012.
Admissions to the roll fell by 24.66% and the number of training contracts fell by 10.51% during the same period.
I make a bold prediction: in 2 to 3 years’ time there will once again be a shortage of lawyers.
It has not been easy recently for those of us who aim at high standards and who do not pay for work.
I am hopeful that the days of factory law firms are coming to an end and that once again quality and level of service will be king.
Sometimes things become possible if we want them bad enough.
T. S. Eliot
This blog is taken from my speech at the APIL business conference on 8 October 2013.