WATCH OUT- THERE’S A MYSTERY SHOPPER ABOUT

Anonymous businessman with paper bag on his head

By Trevor Hellawell 

 

One matter which suddenly seems to be all the rage is mystery shopping.

 

There is a lot of it about – some firms do it. Some firms engage others to do it on themselves or their competitors. Some organisations do it (full-time). Now the FT has published a new report based on 387 calls to firms and 100 interviews.

 

The results are much the same as what I found when I did it – very few bother to respond to their email forms. In response to a call the ‘conveyancing factories’ were better at following up than traditional law firms, but often the written product was below par.

 

The whole point of mystery shopping is to put law firms to the test when it comes to customer service and customer focus. How good are you at responding to potential future business?

 

For years we have been, as a profession, hopelessly bad at interacting with other human beings, let alone being at the forefront of customer service and value. Over the years, marketing has taken a hold and we have all printed off hundreds of leaflets which weigh down our cupboards. Latterly email has taken over and we now send thousands of emails into the trash folders of people who routinely empty them.

 

We’re lawyers, not salesmen.

 

But the market is very different now – speed and instantaneous access are the keynotes to successfully beating competitors to our potential clients. It is all about how the client perceives the impressions created by the business – its look, its feel, its speed, its familiarity with modern technology and its human face behind the tech.

 

There is much work going on in the support industry to equip the professional with everything they need to be able to impress a potential client – Brighter Law Solutions, for example, has technology that empowers a firm to issue quotes for conveyancing at the flick of a few switches AND enables clients to get their own quote when the office is shut. Cleverly, it also feeds management information to the firm about who has contacted it, and their contact details.

 

What it needs now is an instantaneous phone call to follow it up.

 

Imagine – you have obtained a quote from a law firm for your conveyancing. How impressed would you be if at 9.00am the following day (if not sooner) you had a call from someone at that law firm asking if the quote was acceptable, did you have any queries and wishing you all the best in your quest for a new home. If you want to instruct us, we are right here.

 

The message is one of concern and interest – and I think most genuine enquirers respond to a concerned and interested voice on the end of the phone. Many will have just been looking around speculatively – and that’s fine. But surely everyone deserves that kind of attention at the outset.

 

I query whether the fee-earners have the time or skill to do this kind of customer interaction well enough. But, what about a customer follow-up team drawn from within the firm? The report says you should choose the people who are best at it.

 

With every phone call being a potential new client, can you afford to miss out?

HOW MANY REGULATORS MIGHT WE GET?

regulations and rules

 

By Trevor Hellawell

In a recent blog I asked:

 

“Is the time soon arriving where we can reduce the number of regulators to say two – one for the unreserved business sector and another for the reserved business sector? That way we can have a clear set of rules depending on the levels of protection clients want – a cheap and cheerful high street ‘property shop’ model, or a better-protected (if more expensive) high-end version. Competition is not always a good thing.”

 

It seems the Legal Services Board (LSB) has a similar view.

 

Last week it published a paper entitled “Delivering better outcomes for consumers and citizens” in which it suggests that simpler regulation (than the confused mass of various bodies with subtly different regulatory frameworks) was ultimately good for clients.

 

Sir Michael Pitt was even moved to comment that if these proposals were to presage the end of the LSB itself, then so be it.

 

In outline, what is proposed is one regulator (without the overarching LSB – a product of the since discredited banking model that Clementi envisaged) for the whole legal services sector.

 

There would thus be clarity and a simpler approach to regulation than the haphazard status quo offers. That said, how will this suggestion fit with the existing SRA consultation on its new rules – will it even exist if the framework changes?

 

The LSB suggestion is that regulation be activity based, rather than by way of professional title, with special regulation for the high-risk activities. This would presumably do away with the current distinction between reserved and unreserved activities, with a new framework being proposed for the activities that are deemed fit for regulation.

 

Further, it would not matter overmuch what the professional shape of the entity was that served the client – their protections would be much the same in any event, no matter who offered the services. So, we may see the end of the traditional professional boundaries between solicitors and barristers – and everyone else.

 

The Law Society has pleaded that now is not the time for such revolutionary reform and that the Legal Services Act needs time to bed down – especially after Brexit – but to tolerate a position where there are 9 different bodies regulating different (and in many cases the same) activities is equally illogical.

 

As things stand, there would appear currently to be 2 main ways in which legal services could be offered:

 

  • Reserved business; Regulated entity
  • Unreserved business; Regulated entity

 

No matter what kind of work you do, you need regulation. Often at high cost. Often unnecessarily.

 

This is the rigidity that the SRA are attempting to relax by saying that there should also be a third way, that of the:

 

  • Unreserved business; Non-regulated entity (or lighter-regulated) model

 

This, they say, would enable access to solicitors for a vast range of work without the costly regulatory requirements. The extent of the clients’ rights of complaint and redress should be made clear to them,if they really cared much anyway.

 

The arguments about this short-term approach will rage, but if the LSB is planning on rearranging the apple-cart more fundamentally, where will that leave the SRA?

A VICTORY (OF SORTS)

Public or private. keyboard

By Rob Stafford

 

Unless you’ve been under a rock or deep in cryogenic sleep the past few days, chances are you’re aware of the decision to delay Land Registry privatisation. Minister for Business George Freeman said that the proposal lacked popular support among MP’s and the decision is now likely to ride upon the next administration.

 

May we be the first to point out, that the next administration could arrive later this year, in 2020, or anytime in between, so it’s either a short stay of execution or a victory, depending on your personal vision for where the country is heading. This in mind, we thought we do a run-down of the top 10 arguments against Land Registry privatisation.

 

1) Starting with a simple one, a recent poll by campaign group ‘We Own It’ (3 guesses what their stance is), revealed that 70% of the general public oppose it. In fact, only 5% of respondents to the Coalition Government’s consultation thought that privatisation would boost efficiency and effectiveness.

 

2) Unlike other public sector services, the Land Registry operates a monopoly service.  There is little rationale for privatising a body which has no competition. We’ve seen with other monopolised services such as National Rail, privatisation rarely means a better service or competitive pricing.

 

3) All too rarely for any organisation, public or private sector, the Land Registry runs at a 98% customer satisfaction rating. It’s hard to see how this can be improved upon, what’s the end goal 99%, 100%? Such small margins hardly justify such a huge shake up.

 

4) It’s one of the few facets of government which generates a surplus. The Land Registry paid a dividend of £19.1m to the exchequer in 2014/15, coupled with a further £100m reflecting ‘over-recovery’ from customers in previous years, as a result of higher than forecast volume of transactions. In fact, the Land Registry has generated a surplus in 19 of the last 20 years.

 

5) This in mind, it’s extremely short-sighted of the current administration to deny future governments a much-needed source of revenue. With an ageing population and a creaking NHS, the decision to deny future governments a source of income, which generated £297.1m of revenue in 2014/15, could prove nothing short of catastrophic.

 

6) The human cost. The Land Registry currently employs some 4,500 staff, past experience tells us that the first step in privatisation is often job cuts. In a time when the job market is at a precarious point in its recovery, can we really afford another round of mass redundancies?

 

7) There is a real fear amongst conveyancers that the lack of any competition will lead to private investors holding Land Registry data to economic ransom. Not only hitting conveyancing departments up and down the country but also hitting beleaguered home buyers in the pocket.

 

8) The Land Registry underpins the guarantee of title for £3 trillion of property in England & Wales alone. Do we really want this in the hands of a corporation?

 

9) The Land Registry, in dealing with transactions, disputes and changes/updates to the register, must retain impartiality and remain free from any suggestion of a conflict of interest. This is quite simply impossible if it is privatised.

 

10) Transparency is crucial to identifying and dealing with corruption and tax avoidance, as well as identifying and investigating offshore ownership arrangements.

UNREGULATED SERVICES- THE WAY FORWARD?

Regulated Vs Unregulated Switch Approving Laws Rules Guidelines

By Trevor Hellawell 

 

As part of the Law Society’s response to the SRA’s consultation on the future direction of travel for their Codes of Conduct and Accounts Rules, the Society make much of the suggestion that, in future, firms can choose whether or not to be SRA-regulated at all. They question many of the SRA’s assumptions.

 

Part of this suggestion is the SRA assertion that there is a significant unmet legal need in the market and that the general public should be able to access legal services at a cheaper cost. This, they say, is to be achieved by allowing solicitors to act as such through the medium of an unregulated provider, which will have none of the costs of regulation to bear, and nor will it have all the burdensome PII premiums and complaints machinery that engaging a solicitor brings with it.

 

The SRA say that such a body could pass those cost savings on to the customer and offer unreserved and unregulated legal services to the general public at a much lower cost. The Consumer Panel of the Legal Services Board will no doubt welcome this pressure to lower costs, as it continues with its pressure to publish average costs as a banner of consumer choice.

 

The SRA also trumpet protection of the consumer as another of its aims. I wonder whether these two aims are inconsistent.

 

I am all for reducing unnecessary costs, and the profligacy of some, but I wonder whether the aim for ever-lower costs will ultimately work against the interests of clients.

 

Take conveyancing fees for instance. Most firms who offer quotes set out to compete with everyone else and thus reduce the per-matter fee to something around £400-500 per transaction. Bear in mind what that will buy you – a reasonable armchair, perhaps, or two-thirds of a laptop for the new school term, or one-tenth of the last service bill for my car. What are you getting for that?

 

What you should be getting is the focused attention of a legally-qualified fee-earner on all aspects of the transaction – obtaining and interpreting searches, investigating title to your property, drafting the key documentation, advising on Stamp Duty issues, affecting exchange and completion and attending to registration – and liaising over all the transactional infrastructure of completion, moving etc.

 

Clients will expect all this, and the possibility of complaint, redress, secrecy, confidentiality, insurance, overarching supervision and the ability to sue the lawyers if they send their money to the wrong place through no fault of theirs – and all for £400?

 

Many law firms have been bemoaning the state of the conveyancing fee market for some time but without doing much about it. Is it time for us to set our charges at a more realistic level? We all know that ‘factory firms’ will offer a service but with none of the bells and whistles that clients demand these days. The SRA say that as lawyers we must make it clear to the (uninterested) client what their protections are – but how many will roll their eyes heavenward when they realise – too late – that their chosen conveyancer only did half a job for the cut-price they were quoted?

 

Maybe, as a regulated profession, we are not cheap. But there is a good reason for that.

 

FAMILY HOLD BACK- COSTS AND THE NEW ACCOUNTS RULES

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By Trevor Hellawell

One of the key changes under the proposed SRA’s new Accounts Rules is the ability to bank any money a firm receives for its costs (and other liabilities for which the firm is liable (the main routine disbursements)) immediately into its own coffers.

 

For decades this has been regarded as client money until such time as the legal work is done, and a bill of costs (or other written notification) sent to the client. The main exception was always for ordinary disbursements that were incurred but yet to be paid, or indeed any disbursement that the firm had already paid out of its own pocket.

 

The justification for this is that it may remove the need to have a client account altogether for some firms, and reduce the average balances below the minimum threshold for obtaining an accountant’s report. This will make life easier for many.

 

The change allows a firm to bank immediately (in office account) any money relating to legal services provided by the firm (whenever paid) together with any funds that will go towards the payment of disbursements such as conveyancing searches, medical reports, counsel’s fees, courier fees etc. The new Rules fail to make any distinction between professional and ordinary disbursements.

 

In years of teaching, I have described this notion as that of ‘family hold back’ – the lawyers and the professional team were the last to get paid – after all the work had been done, the bill of costs issued and terms of payment expired. Over the years, interim bills and money on account of costs have become commonplace (and good sense) but it was always still the case that the work had to have been done, and a bill issued before the funds could be withdrawn (within 14 days) from client account and put into office account.

 

There were VAT issues over work-in-progress too, that made scheduling a nightmare.

 

On a basic human level, this discipline at least forced the profession to speed up, deliver a decent service and keep the customer satisfied so that we could justify sending them a hefty bill, which of course was our intention anyway. Management commentators would also say that genuinely wanting to help clients should be our overarching motivation – the money, which came later, should be regarded as our reward for having done a decent job. If we did, the amount of money would be more than satisfactory.

 

This change in the Rules allows us to bank any payments that are referable to our costs straight into office account, regardless of when those costs are paid. So if a firm can give a quote (say for conveyancing) early on in the transaction – and request payment of it – then it can be paid directly to the firm, regardless of whether the work has actually been done or not. This may have a bearing on the fee-earner’s incentive to continue to press on with the transaction after countless phone calls to and from the estate agent and client, and in many cases, the tedium of sorting out the minutiae of a typical house-move may get too much. The continuing downward pressure on conveyancing prices surely won’t help this.

 

I have much sympathy for the financial plight of the law firm and anything which enables it to operate on a more manageable cash flow basis is to be applauded, but I wonder whether the incentives that drive individuals to offer superlative service will be eroded.

HOW MANY REGULATORS DO WE NEED?

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By Trevor Hellawell 

The LSB is currently undertaking a review of the various Regulators in the market – SRA, BSB, CLC, ICAEW, ICAS – in order to determine whether appropriate standards are being observed.

 

For a decade now we have had ‘competition between Regulators’, something which always mystified me.

 

Surely, in the interests of public protection of clients there cannot be a competition? Surely, protection is protection.

 

Competition would appear to be an open invitation to alter standards of entry, regulatory restraints, prescriptive rules and codes of conduct in order to weaken them, make them easier to comply with and ultimately, to reduce prices.

 

I acknowledge that Rules should be proportionate, not too prescriptive and not a barrier to innovation and development (and competition will help drive that), but there must then be some irreducible minimum below which a regulated ‘professional’ entity must not be allowed to drop.

 

That, as I understand it, is the point of the current review. The LSB is looking into the current rush amongst entities to look at alternative regulatory models as they strive to compete in a harsh market for legal services. Given that most things can be undertaken by pretty much anyone (unreserved activities can be carried out by accountants, banks, insurers, estate agents, local property shops and the like) the temptation to avoid the full rigour of SRA regulation (for example) is understandable.

 

To be able to provide property services without the tedium of the SRA’s requirements, PII insurance, accounts rules, legal professional privilege and the rest should allow firms more commercial freedom. The continued pressure from consumer groups, comparison websites and the CMA for clients to ‘shop around’ and for firms to publish their prices online all further press firms to reduce their fees further.

 

But, the enquiry asks, is this rush motivated by the firms’ commercial aims rather than by what is in the interests of the public and the clients?

 

True, the availability of insurance is a prerequisite for most regulators. Consumer protection is available in many guises. The ability to recover compensation for a poor service is also a given. Codes of Conduct are common. But, it is the duty of the regulated entity to make these distinctions clear to the client, so the client knows what their (reduced) fees are (not) paying for and what other stitch-ups may be hidden in the small print – witness the current debate around online estate agents, versus the high street, shop front version.

 

The vast plethora of regulators – all with subtly different requirements and protections – does not help the poor client who has to have all this explained to them. The client may not care too much anyway.

 

Is the time soon arriving where we can reduce the number of regulators to say two – one for the unreserved business sector and another for the reserved business sector? That way we can have a clear set of rules depending on the levels of protection clients want – a cheap and cheerful high street ‘property shop’ model, or a better-protected (if more expensive) high-end version. Competition is not always a good thing. Benevolent dictatorship anyone?

DON’T QUOTE ME ON THIS…

By Trevor Hellawell

 

Couple At Home In Lounge Using Laptop Computer

 

Amid suggestions that the Law Society will shortly require all estimates or quotes to be kept for 6 years in case of complaint, the Legal Ombudsman has recently reminded everyone of the need for accuracy in any communications with clients in respect of costs and charges.

 

The Ombudsman says that “we often see cases where the costs information provided to customers was not sufficient. Commonly, the biggest mistake firms make is not putting the information in writing or recording it properly on their case management system. Whether providing initial quotes, fee reductions or increased costs, it is important to document the information”.

 

For example, Mrs. J instructed a firm regarding the sale and purchase of a property in May 2014.

 

The client entered a verbal agreement with her friend, a solicitor at the firm, for a fee of £200. However, the friend was soon taken ill and replaced by another solicitor. The firm did not quote any other fees verbally or in writing, though there was evidence from an attendance note that the new solicitor would have to charge increased fees. The conveyance also turned out to be more complicated than expected, which meant the firm incurred more costs.

 

Mrs. J complained after being charged more than expected. The final bill was more than £2,000. The Ombudsman decided that the firm should refund 50% of the fee.

 

It was clear that the firm had not provided any costs information to Mrs. J, either at the start or throughout the process, particularly when the new solicitor took over the case; nor when it became clear that the sale and purchase was becoming more complicated.

 

It has long since been good practice for a firm to send a letter at the beginning of the instruction, and then to update their customer if costs increase beyond the original agreed estimate.

 

Quotation engines – like Brighter Law suite – enable firms instantaneously to issue accurate, tailored, written quotations at the outset of a matter and to enable any changes to that initial estimate to be logged, as well as being sent to the client, cutting off the potential for bad practice at source. Why take the risk?