A protocol has just been released agreed between 11 insurers and 11 law firms to try to prevent game playing around deadlines, limitation dates etc during the Coronavirus crisis. Here is a link to the report in Litigation Futures: https://www.legalfutures.co.uk/litigation-dispute-resolution

Organisations can pledge their commitment to the protocol and see who has signed up on the ABI’s website.

In these times where we are supposed to be working remotely – how to you get documents signed? If you are used to posting documents out for signature – should you be making your clients walk/drive out to the post box?

Even without the coronavirus there was a strong argument for using digital signatures to make life easier for your clients, to speed up the process, improve conversion rates, improve efficiency and profitability. Now, the alternative is almost as bleak as: not being able to convert work or bring it to a conclusion = no income!

Last autumn the Law Commission concluded that there was no legal barrier to digital signatures being good signatures in law. Earlier in March this year the Law chancellor confirmed this – even for wills and deeds. https://www.lawgazette.co.uk/law/electronically-signed-deeds-are-legal-lord-chancellor-confirms/5103306.article

In October 2019 the Law Society issued guidance for digital signatures: https://www.lawsociety.org.uk/support-services/advice/articles/signing-and-exchanging-documents/

The Legal Aid Authority has, amongst other guidance for coping with the coronavirus crisis, stated that it will accept digital signatures in place of wet signatures: https://www.gov.uk/guidance/coronavirus-covid-19-legal-aid-agency-contingency-response#history

Several categories of particular importance come to mind:

1. Client Care Letters, CFAs, Retainers and other internal documents you need clients to sign – whilst in some circumstances you can operate on terms of trading, in others it is not possible, or you may not want to run the risk.
2. Wills & LPAs – sadly this is likely to be a growth area for the next few months. People will be faced with their own mortality. You can’t go out to visit people to take instructions and get them to sign – especially the elderly – for risk of infecting them. However, it may be urgent for them to get these documents completed (and you might need the money as other revenue streams may be constrained!). You will need to be careful about checking capacity and understanding. You will need to consider insuring against heightened risk, getting indemnities from the beneficiaries etc. However, a solution has to be found. Witnessing the signatures is also an issue.
3. Property – this is an area where I fear there will be a significant slow-down. We do not want any other problems adding to that. The Lord Chancellor has stated that a digital signature is a good legal signature, even for a deed. However, deeds for the transfer of land will not be registrable until the Land Registry issues a notice saying they will accept them. Over to the Land Registry to sort this out ASAP please. There is a potential issue over fraud. They need to square this circle quickly and find a solution.

Other areas are affected, but these spring to mind with particular urgency.

We believe that we have come across a solution which easily allows you to arrange for the electronic signature and does not require you to first of all buy a case management system. It also claims to have a solution for the witnessing of signatures. Contact us if you would like to learn more.

These are challenging times. As business leaders we have a duty to the safety of our families and the community - and also to maintain our business so there is work and income for them. Do not panic. We are all going through the change curve at the moment:

If you want to survive and indeed grow you will need to adapt. That starts with thinking positively. How can you adapt? Where are the opportunities. There is a massive change going on - that will create opportunities. Perhaps things you've thought about but not done... I've been talking to clients on how they can adapt - working through strategies for managing staff and indeed harnessing their potential to help. The same goes for your clients. Contact me if you would like to book in a session. LEAP users - I know there are several things you can use your system for to help. Others - lets explore.

It certainly will have an effect but what it will be no-one knows. Here are my thoughts for what they’re worth. I’d welcome other people’s opinions. This is obviously a fluid situation.

By Practice Area

Conveyancing – likely to take a hit – is moving house unnecessary travel? I wouldn’t be surprised if this will be a bit like the financial crisis in 2007, although, hopefully shorter.

Civil Litigation – courts likely to shut, already hearing on in-person hearings being adjourned. If they do, then cases will gum up in the system, as will cashflow from concluded cases – unless they settle out of court.

Mediation & other forms of ADR – face to face will stop – on-line will increase, especially as the courts will not be operating or be slower.

Criminal – crims are likely to keep ‘working’ – but courts likely to slow down - Jury trails are to stop from April onwards, don’t know if will affect cashflow. Not sure how much social distancing can be done in a police cell. Let’s hope the LAA will continue to process your payment claims with their normal speed and accuracy!

Family – likely to slow for now and then be very busy once we are allowed to move about again.

Immigration – likely to move on-line. Those firms that rely on face-to-face work are likely to suffer more

Commercial Property – pretty much the same as for domestic conveyancing.

Employment – likely to be very busy for employment lawyers – with people being made redundant or changed working arrangements.

Commercial – likely to be a spike as companies seek assistance with their documents, but then falling away as commercial activity is subdued.

Insolvency – likely to increase but be impacted by the inability to shift the main asset if that is a building.

Corporate – likely to be a lot to start off with as businesses seek assistance, and then some ongoing as those which are in better shape see opportunities

Private Client – likely to see a significant increase at all levels, although completion of probate might be held back by the slow down of the property market.

Suggested Immediate Action

1. Try as best as you can to identify the impact on the likely model of what you think might happen. Identify the cases likely to be stuck and the areas that are likely to slow down or get busy. Put in place plans A, B & C. Analyse the likely impact on cashflow (It’s lack of cash that kills most businesses). We can help to provide additional resource – is needed. Please contact us.
2. Look to how you will get new work in these changed times. Those relying on digital means are best equipped – although competition is likely to intensify. If you are relying on footfall etc then look at other methods. Again, we may be able to help. Please contact us.
3. Move as much as you can on-line. By now most firms will have put in place home working. This may be a sysmic shift in our working patters. I suspect that after this is over a lot of businesses will continue with a lot more homeworking than was the case before. Look to move onto the cloud – there are case management systems out there that are on true cloud. Video conferencing and conference calling are now available as options. Electronic signing of documents by parties has recently been approved by the Lord Chancellor as good signature – even for deeds. If you would like assistance with any of this we can help, either suggesting technological solutions or specialist support.

Changing ways of working is always hard. Inertia is the strongest force in nature. ‘We’ve always done it this way’. People fear change and so put it off.

I am naturally a shy person (my wife laughs at that comment, but it is true). However, I’ve learned in life to face my fears. They are normally less bad than I feared. Self-analysing, I can see the tendency to avoid change. So, I have taught myself to embrace change by looking at the opportunity. Weighing up the pros & cons and then getting on with it.

You can put the move to change into 3 categories:

1. People who adopt change because they pro-actively look for opportunities and embrace change
2. Being forced to change through regulatory pressure (usually more planned but some coercion)
3. Distress Purchase – you can put current moves caused by the coronavirus into this camp

Remote working: the technology is there but the thinking can lag behind.

You will note that a lot of the Cons are actually barriers to ‘How to do it’ rather than objections in principle.

In a ‘Distress Purchase’ situation, you need to work through these issues quickly with a plan. I encouraged remote working when I took over running my department of 60 litigators. It aligned them better with the hours our clients wanted to contact them. It allowed my staff the ability to save commute time. It produced higher productivity. We weren’t on the cloud but used citrix as a virtual platform. I could always manage them by the reports and phone calls. I would now have better technology available to manage them.

How to do it?

• Decide on policies of how people should work
• Look at the barriers and how to address them - other firms have managed
• Seek advice to speed your progress
• Explain the strategy and plans to your staff so there is good understanding
• Seek their ideas – they may have some good suggestions, if handled well it will increase their engagement
• Decide how you will measure performance – reports etc (and tell your staff!)
• Decide how you will maintain cohesiveness (conference calls etc)
• Decide how you will manage phones & post
• Do you need to print?

Some Practical suggestions

• If you are cloud based it will really help you
• If you are server based then you can use platforms such as citrix to host your server and for you to remote in. Good IT support can be essential here. If you do not have this we can recommend in some of our trusted partners.
• Phones – again there are ways of managing this remotely. See the point above re IT assistance
• Conference calling – we have come across a good free conference calling software that we use. This could be used for morning firm meetings, for example.
• Computers can be moved and set up at home, if needs be. Laptops are no problem to move.
• Scanning – you can take a picture on your phone and then email it and save the attachment.
• Delegate someone to go into the office once a day and pick up any post & scan it to the appropriate people.

Feel free to contact us to help you work through these and other issues.

Looking forward

I was recently visiting a village near where I live. Increasingly villages where there is good internet are finding buildings are being turned into small office units. It struck me that a revolution is quietly going on: small office-based businesses are moving back into the rural villages as people are freed from the need to set up in a town or city. Why not have a nice environment where you work and less of a commute? Then that encourages other businesses that support them – the café in the village etc. It’s certainly something I will be raising when advising someone thinking of setting up a new law firm.

If you are struggling with the move to remote working for your business, or just want to talk through the strategy then feel free to contact us.

These rules came into effect as mandatory on 6th December 2018. They affect you if you are regulated by the SRA and carry out work in the following practice areas:

Services for the public: 

• Domestic Conveyancing
• Probate
• Motoring Offences
• Employment Tribunal Work
• Immigration

Services for Business:

• Debt Recovery up to £100,000
• Employment Tribunal Work
• Licensing

We have a Support Package to help you: https://hunningsconsultancy.co.uk/?page_id=3249

Here is a link to the rules and guidance on the SRA website: https://www.sra.org.uk/solicitors/guidance/ethics-guidance/transparency-in-price-and-service/

I was working with a law firm a little while ago, helping it through some changes in it’s practice. The managing partner said to me “You know, were really just a collection of sole practitioners”. That summed up beautifully one of the business models have I come across many times when working with firms. I explore 2 business models below.

Collection of Sole Practitioners

So, what did my client mean by this phrase? I think it was as much attitude as size. The attitude would be one where the clients belong to the solicitor (partner). The connection is personal. They either do the work or they direct and delegate to their team – which might be a secretary, team of secretaries, paralegals or suchlike. Each partner operates independently of the others and brings to the partnership the fruits of their labour. In this model the business is the sum of the parts that each brings.

Pros:

• Easy to bolt on a new service line, new partner
• Simplicity of the model
• Direct accountability to the ‘owner’ of that area
• Well suited to a start-up
• More flexible – can scale back more easily

Cons:

• Easy for the ‘partner’ to leave with his/her service line
• Can lead to everything being measured by the fees generated by each partner
• The business can be less stable
• Can lead to factions and infighting
• Can prevent cross-selling
• The business seldom adds up to more than the sum of the parts

 The Integrated Business

In this model the interests of the business are placed above those of the individual owners. All effort should be aimed at driving value into the organisation. This takes more effort and is not natural to many people working in the professional services sector. The risk is that everything can become less personal – which is not good when the business is focused on providing a personalised service to clients. However, that can be avoided with good management. If the business has invested in its processes, it can better withstand the departure of one of the owners or staff. The business can be more than the sum of the parts. This model is seen more commonly in other areas of our economy but can also work in the professional services sector.

Pros:

• Is more resilient
• Can give a better return on investment as it better facilitates scaling of the business
• Harvests better cross-selling and cross-area operational benefits
• Better supports a shared goal and so can better harness staff potential
• Succession may be easier
• The business can build up genuine goodwill
• Facilitates hiring experts in running particular aspects of the business

Cons:

• Involves more investment (thought as well as money)
• Difficult if the business is very small
• The needs of the business overrule the preferences of the partners
• May be difficult to change behaviours of those used to a more traditional approach
• Difficult to scale back if you lose critical mass

These are just a few thoughts. What will be appropriate will depend on the circumstances in each case. A typical consultant’s comment! There are other business models and ways of doing things. I’ve only looked at 2. Seeing the variety is part of what I enjoy.

We’d be very interested to learn people’s views and hear of other pros and cons and people’s experience.

From 6^th April 2020 capital gains tax on the disposal of residential land is payable within 30 days of completion. Here’s a link to HMRC advice: https://www.gov.uk/government/news/get-ready-for-changes-to-capital-gains-tax-payment-for-uk-property-sales

Delighted to share that we have been informed that HCL has been awarded: "Best Law Firm Business Consultancy – Midlands" in the SME News Legal Awards 2020.

Please note – we are not tax accountants – BUT this is something that businesses, including larger law firms, need to be aware of. Get appropriate tax advice.

IR35 – a bear trap for companies hiring external help. Basically, the Inland Revenue wants to ensure that the state is not being done out of taxes through the use of a service company instead of the staff being regular employees, paying PAYE etc. So for some years now, if external help has been hired by an arm of the state (including local government, the NHS etc), the hiring party (or end client as HMRC calls them, eg, NHS) has to make a determination as to whether the hired help is an employee. If so, the end client needs to pay employers NI etc. If they say that they are not an employee and HMRC decide they got it wrong the end client will need to pay the missing tax to HMRC.

On 6^th April 2020 this regime is extended to larger private companies hiring external help. By larger they mean companies meeting 2 of the following criteria:

a) you have an annual turnover of more than £10.2 million
b) you have a balance sheet total of more than £5.1 million
c) you have more than 50 employees

Several factors influence whether HMRC will regard the external help as an employee; such things as

• how many organisations the external help has worked for in say the last year (if it’s just that end client you are likely to have a problem), or indeed do they work for more than 1 at a time;
• the level of control the end client has over how the external help works;
• how open-ended the contract is;
• do you get any employee benefits;
• other things that depict independence, such as carrying your own business insurance, use your own equipment etc

HMRC has created an easy to use tool to check if an arrangement is likely to fall foul of IR35. Crucially, it is anonymised, so one may check out a scenario before entering into a contract. Here is a link to it: https://www.tax.service.gov.uk/check-employment-status-for-tax/disclaimer

A lot of organisations will need to consider how they work very carefully. This will even affect mid-sized Accountancy & Law firms, given the criteria above. Many law firms hire ‘Consultant’ Lawyers. It’s a way of getting experienced talent in to cover a need within the business. Typically, the consultant solicitor will have their own company through which he/she trades. If they are there long term, as they are most likely to just be working for that firm, there is a strong likelihood that they will be caught by IR35 after 6^th April 2020. This is a shame, as the arrangement allows flexibility within the workplace that suits both sides. Feel free to contact us to talk this through, as we might have a solution.

Here are some useful links to the rules:

Understanding off-payroll working (IR35)

https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

Who the changes apply to:

https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-clients

What the April 2020 changes are:

https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-intermediaries#off-payroll-working-rules