Changes to the Law Society’s Conveyancing Quality Scheme (CQS) accreditation process will vastly reduce the amount of time it takes to re-apply for the scheme. There will also be major changes to the training for the quality mark.
Following extensive research,… Read full article on Practice News.No tags for this post.
PwC’s Law Firm Survey for 2015 has found marked differences in the fortunes of top-tier and mid-tier firms. The number of UK law firms increasing UK fee income is higher than at any time since 2008, increasing at 82% of firms, compared with 70% last year. However, Top 10 firms fared worse than all other bandings with only half achieving UK fee income growth (vs 71% of Top 11-25 firms and 89% of Top 26-50 firms).
- 82% of law firms increased fee income but mid-tier firms close the gap on Top 10 firms
- Profits per equity partner for Top 11-25 law firms increase by 17%; Top 10 firms’ up by 3.5% driven mainly by reductions in equity partner numbers
- International operations are increasingly diluting profitability: Top 10 firms’ UK profits per partner are 75% ahead of international
- Top 10 firms’ revenues reduced by 3.5% due to Euro exchange rate movement
Profits per law firm partner
All bandings of firm increased UK Profits per Equity Partner (PEP) in the current year, to varying degrees. Top 11-25 firms stand out with a 17.2% increase to £641k, achieved predominantly through improvements in underlying profitability with a fall of only 1% in equity partner headcount. Top 10 firms increased UK PEP by a marginal 3.5% to £1,067k, but with an average 5% reduction in equity partner headcount a major contributing factor.
While Top 10 law firms’ UK net profit margins continue to significantly exceed other bandings, the steady improvement of recent years has stalled with average margin broadly flat at 39.9%. Meanwhile the Top 11-25 have built on their prior year turnaround and have nudged profit margin upwards to 29.2% – the best margin recorded by that banding since 2009. A number of firms within this bracket have benefitted from mergers and lateral hiring programmes in recent years which are beginning to reap benefits, and there may be more to come as firms capitalise on economies of scale and refocused growth strategies.
For Top 26-50 law firms, a slight improvement to 24.5% nonetheless leaves them significantly adrift of the larger firms (although the average masks a wide spread of performance). This banding has reported an 8% increase in UK headcount (against flat average numbers for Top 25 firms), with their high staff cost ratio presenting a competitive disadvantage from a margin perspective. Top 51-100 firms have reported a notable deterioration in margin from 24.1% to 21.2%.
Given the relatively fixed nature of the cost base for law firms, in the short term at least, it is interesting that of the 82% of firms reporting top line growth, only 46% have grown profits at a faster rate. Pricing, staff cost ratios, and fee earner utilisation all have their part to play, together with the need to maintain tight control of the cost base.
PwC’s partner and leader of the Law Firm Advisory Group, David Snell, said:- “Our 2015 Law Firms’ Survey is set in the context of a recovering UK market, but with ongoing challenging macro-economic conditions for global law firms. The strength of sterling against the euro has adversely impacted many firms’ international performance on a Sterling basis – the basis upon which most firms distribute their profits to partners. However, the UK has enjoyed a more buoyant deals market, greater levels of regulatory activity and an active real estate sector.
“These factors are reflected in our survey, which shows a somewhat disappointing performance from the Top 10 firms, while at the same time a resurgent Top 11-25 who seem to have re-focused their strategic intent.
“Mid-tier City firms in particular have performed well through a combination of sensible lateral hiring programmes, mergers and acquisitions (M&A) and a focus on cost control and key metrics such as chargeable hours. However, a slow-down in litigation, and difficult conditions in some industry sectors, have been a drag on performance for some in the Top 26-50.”
Other key findings from the Law Firm survey 2015 include:-
- Rate per hour is becoming ever more important to law firms, with pricing pressure remaining acute across the spectrum and clients increasingly seeking favourable alternative fee arrangements.
- Fixed fee arrangements are becoming more prevalent particularly outside the Top 25, with 32% (2014: 21%) of Top 26-50 fee income and 38% (2014: 26%) of Top 51-100 fee income being billed on that basis (vs 23% in Top 25 firms).
- There has also been an increase in contingent/performance-based fees, predominantly amongst the Top 11-25, which now represent 15% (2014: 8%) of the total.
- 80% of firms recognise ‘the need to respond to the Digital age’ but only 23% have so far made changes to how they operate.
- 82% of firms acknowledge that digital technologies (including social, mobile, analytics, and cloud) will provide alternative channels to interact with clients and improve the client experience; yet most firms have yet to enable their websites or mobile applications to provide that level of interaction.
- 2015 has seen recruitment and retention firmly back on the people agenda, with the war for talent bringing disruption to reward strategies, particularly amongst the larger firms. US firms are recruiting aggressively, and lateral moves between law firms are prevalent.
- The Law Firm 2015 survey reports modest growth in UK fee earner headcount in response to increased activity levels. PwC continues to see excess capacity against target utilisation (averaging 7% in Top 10 firms, 12% in Top 11-25 firms, and 17% in Top 26-50 firms).
David Snell added:- “This year’s survey shows a sector that is continuing to evolve, with the pace of change beginning to pick up as global economies improve. Alongside economic improvement we see rapid technological change, innovation in business models and changing client buying patterns. The agile firms are not only responding to these factors, but beginning to anticipate the next likely developments. They are not alone: at the same time, new market entrants are bringing disruption to the market and fuelling the need to innovate.
“All of this will require significant investment and firms will need to consider how best to fund this, against the backdrop of a traditional ‘full distribution’ partnership model. For those who don’t – or can’t – respond to this change, the future will become increasingly difficult.”No tags for this post.
The international property information division of dmg plc, dmgi land&property emea&apac (“dmgilp”), has announced that it has acquired the entire issued share capital of Estate Technical Solutions Limited (“ETSOS”).
ETSOS, based in Caton near Lancaster, is a leading provider of technology to conveyancing solicitors and other property professionals. ETSOS plays a key role in helping solicitors identify and manage risks in property transactions, and helping them grow their business efficiently.
dmgilp provides information to the same end user markets through its leading brands SearchFlow, Landmark and Argyll Environmental. dmgilp is part of dmg information, a group of business-to-business information companies covering a broad range of sectors including property, finance, energy, environmental and education. dmg information is a division of DMGT plc, the international media and information business.
“This is a great opportunity for ETSOS,” said Phil Natusch, Managing Director of ETSOS. “Both ETSOS and dmgilp share a vision of providing innovative, high quality technology solutions, backed up by superior customer service. I am very excited by the opportunities that the combination of ETSOS and dmgilp will bring.”
Mark Milner, CEO of dmgilp, comments: “We are delighted to be investing in ETSOS. Phil Natusch and his co-founders and team have built an excellent business with a well-deserved reputation for innovation and customer service. This investment fits our strategy of backing high growth businesses with first class management teams.”
dmgi::land&property emea&apac is part of dmg::information, a group of global, market-leading business-to-business (B2B) information companies covering a broad range of sectors including property, finance, energy, environmental and education. dmg::information is a division of DMGT plc.Tags: Mergers and Acquisitions
Changes to the way the Solicitors Regulation Authority (SRA) authorises sole practitioners have been agreed to by the Legal Services Board (LSB).
The LSB has exempted SRA’s proposed changes from its normal decision-making process. They will therefore form part of Handbook amendments that come into effect on 1 November. The SRA Board agreed in July to the proposed amendments to rules that will bring the SRA’s existing processes for authorising sole practitioners in line with all other firms.
Currently, there is an endorsement procedure in place, which means a solicitor may not practise as a sole practitioner unless they have a “sole solicitor endorsement” on their practising certificate (PC). The endorsement has to be renewed every year. In contrast, other firms go through a one-off authorisation application process, rather than an annual endorsement.
As a result of the changes, the endorsement procedure for sole practitioners will no longer be required. From October, when sole practitioners renew they will be issued with a practising certificate without an endorsement, as is already the case for managers (partners etc) at other type of firms. The same application form will be used to renew a practising certificate and pay a periodical fee.
Crispin Passmore, SRA Executive Director of Policy, said:- “These changes will harmonise and simplify regulatory arrangements for sole practitioners, moving away from an annual endorsement and replacing it with a lifetime authorisation which does not need to be renewed annually.
“In reality, the changes should have little or no impact on firms and sole practitioners, and they should apply for PC renewal as normal in 2015.”
Following the renewal exercise, a Certificate of Authorisation will be issued. Further information for sole practitioners is available in the mySRA frequently-asked questions.No tags for this post.
In his first keynote speech as Chair of the Bar Standards Board (BSB), Sir Andrew Burns urged barristers and key stakeholders to engage with the regulator on the future direction of Bar regulation at a networking function tonight at Lincoln’s Inn.
The BSB is in the third and final year of its current three-year strategic plan. Sir Andrew sought input from attendees about what the Bar regulator should focus on in the next strategic plan for 2016-2019.
Sir Andrew said: “The most significant changes to legal regulation have been changing consumer demands and expectations, technological advances and global competition. These factors place both the public interest and the free market above preservation of traditional practices and what some see as ‘vested interests’.
“We’re already seeing the effect of some of these pressures in the market. To highlight just a few – increasing numbers of Litigants-in-Person, reductions in public funding and reform of the Court system.”
Sir Andrew highlighted two main tasks in the coming years for the BSB:
- To reconcile in the public interest our understanding of how best to maintain the rule of law and improve access to justice with, on one hand, changing consumer needs and expectations and, on the other hand, the ability of the Bar to adapt and prosper in an exacting environment.
- To reconcile high professional standards for entry to and practice in the profession with an increasingly strong drive from government to lower the costs of legal services, reduce regulation and red tape, promote competition and innovation and encourage the emergence of disruptive new business models.
One of the key elements in the BSB’s next strategic plan is the need for it to become a more risk based regulator. Taking a risk-based approach to our role means that we:
- look to understand where things are going wrong for consumers and where the rule of law is being put at risk, and;
- focus on the areas where we can make the biggest difference, allocating our regulatory resources accordingly.
Sir Andrew went on to identify three broad themes relating to risk which the regulator is asking for help to address:
- There is the risk of the profession failing to meet changing consumer needs, driven by new avenues opened up by technology and further complicated by low levels of public understanding of what is already available from the legal profession.
- There is a risk that discrimination, lack of diversity and outmoded working practices limit the profession’s ability to meet effectively the needs of a diverse range of consumers who need and rely upon legal services.
- Economic pressures, market uncertainty and commercial strain could affect the quality, independence, availability and supply of legal services.
Sir Andrew said, “The BSB would like to nurture a deep dialogue with the profession and consumers so that what we propose and what we do can be demonstrably and incontestably evidence-based and risk-focused.
“We want to take a 360 degree look at some of the key issues we have identified in the Bar to build stronger insights and target more effective interventions where they may be needed. We are looking for new and creative ways to do this.
“This sort of engagement with experts, innovators and key stakeholders is core to the new way of working at the Bar Standards Board.”
A full transcript of Sir Andrew’s speech is available on Bar Standards Board website.
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The world’s leading provider of intelligent information for businesses and professionals, Thomson Reuters, has acquired Business Integrity, a leading provider of document assembly and contract creation tools to the world’s most innovative law firms and corporations.
Business Integrity has strong proprietary technology and is well-established in the UK legal market as well as the US and other key jurisdictions around the world. Its primary product is a document and contract automation software solution called ContractExpress, which provides lawyers and end-users with a faster, more efficient way to draft documents while ensuring consistency and reducing risk.
Thomson Reuters has a vision for growing and investing in Business Integrity and will continue to support its innovative template automation tools.
Business Integrity’s leading solutions make an excellent strategic fit and a natural complement to the strong brands and content owned by Thomson Reuters, including Practical Law, Westlaw and its innovative legal software and services offerings.
Thomson Reuters managing director for the UK & Ireland legal business, Jan-Coos Geesink, said:- “The acquisition of Business Integrity helps support our vision of a more efficient and connected legal ecosystem that incorporates powerful technologies and workflow solutions. It complements our existing core offerings and allows us to share new capabilities with our customers around the world,”
“As such, this is an exciting acquisition and I’m delighted to welcome our new colleagues to Thomson Reuters.”
Business Integrity is headquartered in London and has an office in New York City and effective immediately, the company will now form part of the Legal business of Thomson Reuters.Tags: Legal IT, Legal Software, Mergers and Acquisitions
A new statutory ban on referral fees in criminal cases is among proposals announced by the Legal Aid Minister Shailesh Vara.
Referral fees are paid by an advocate in exchange for instruction. There are concerns in the legal profession and more widely that this practice is abused by firms who refer clients to advocates with whom they have a financial relationship, thus denying clients the potential choice of a suitable high quality advocate.
Despite a number of restrictions already in place, there is anecdotal evidence that they still occur. Today (1 October 2015) the government has launched a consultation on changing the law to crack down on this practice. The government is also seeking views on how to better identify and prevent disguised referral fees.
The consultation also proposes the establishment of a panel of publicly-funded criminal defence advocates. Only advocates on the panel would be able to secure criminal legal aid work. The panel is designed to address the concerns raised in Sir Bill Jeffrey’s 2014 report on the provision of independent criminal advocacy and by members of the legal profession.
Other proposals in the consultation paper include the introduction of stronger measures to protect client choice and safeguard against conflicts of interest.
Launching the consultation, Shailesh Vara said:- “This government is determined to ensure we continue to have vibrant and effective advocacy in our courts. That is why we cancelled proposed cuts to criminal legal aid for barristers earlier this year, and today we are going further.
The payment of referral fees to secure instruction is unacceptable – which is why we want to change the law in order to tackle this issue. The guiding principle in advising clients on their choice of advocate must always be the competence and experience of the advocate – rather than their willingness to pay a referral fee.
The creation of a panel of publicly funded criminal defence advocates will deal with the concerns expressed by judges and legal practitioners, as well as Sir Bill Jeffrey during his Review of Independent Criminal Advocacy.”
Alistair MacDonald QC, Chairman of the Bar, said:- “We welcome the publication of proposals to safeguard the quality of advocacy in England and Wales. A comprehensive ban on referral fees and measures to ensure that clients have a genuine choice of advocate are vital to maintaining an independent Bar in the public interest. We shall study the government’s proposals very carefully.”
The consultation paper proposes measures to preserve and enhance quality standards, reduce financial incentives and make the process of choosing an advocate more transparent.
Preserving and enhancing the quality of criminal advocacy
The detailed proposals are:
A panel of publicly funded criminal defence advocates
If implemented, the panel would ensure that publicly funded criminal defence advocacy in the Crown Court and above would be undertaken by advocates who have successfully applied and been accepted onto the panel. This would provide valuable quality assurance and enable the government to have greater confidence in the quality of publicly funded defence advocacy in the most serious cases.
A statutory ban of referral fees
A new statutory ban on referral fees is proposed. The government want to ensure that advocates are instructed because they are operating at a high level of competence and have the right experience to do the job well – not because of their relationship with an instructing litigator, or because they were prepared to pay a fee to secure that instruction.
Identifying and prevent disguised referral fees
Views are requested on how disguised referral fees can be identifying and prevented. These can include ‘administration’ or ‘management’ fees paid by advocates. If such payments are in practice a way of securing instruction, they are unacceptable.
Stronger measures to protect client choice and safeguard against conflicts of interest
A client should be able to make an informed choice of advocate on the basis of clear and impartial advice. The government wants to ensure there is no conflict of interest in a litigator’s advice on choice of advocate, which could arise from financial considerations. Views are welcomed on steps that could help prevent any conflict of interest, for instance restricting the instruction of advocates within the same firm as the instructing litigator, or amending standard contracts to better reflect the obligation of litigators to provide impartial advice to clients on their choice of advocate. This could include a requirement for the litigator involved to sign a declaration, to the effect that client choice had been provided, giving reasons for recommending a particular advocate.
The consultation paper ‘Preserving and enhancing the quality of criminal advocacy’ is aimed at anyone with an interest in the provision of criminal advocacy in England and Wales.
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Creditors of liquidated law firm Manches & Co are seeking legal advice to bring a judicial review of the Solicitors Regulation Authority’s handling of the liquidation after being left with a £4.2m shortfall in tax receipts. HM Revenue & Customs is Manches’ largest outstanding creditor accounting for around 83 per cent of debt owed.
Read full story by The Lawyer here
Aimed at large global corporations and mid-sized companies, the consultancy enables customers to build an end-to-end technology-led solution to address their legal needs. Crucially, it will take just four weeks to create a live ‘proof of concept’.
The consultancy uses Riverview Law’s proven technology, legal expertise and implementation model to create a solution that encompasses instruction management, triage, case management and document creation, along with activity, quality and risk reporting.
The end result is an operating model that ensures legal work is undertaken by the right people, in the right place, in the right way, at the right time and at the right price, whether that work is undertaken in-house or by external providers.
It also enables in-house legal functions to establish a clearer understanding as to how technology, workflow automation, reporting and data visualisations can help make their function more effective and efficient on a sustainable basis.
This latest development follows Riverview Law’s recent acquisition of CliXLEX, which allowed it to expand its R&D and Client Management Centre in Bridgewater, New Jersey and its partnership with the University of Liverpool to leverage the university’s Artificial Intelligence expertise.
Riverview Law’s Chief Executive, Karl Chapman, said:- “Most businesses are, or are becoming, technology-led. Riverview Law is no exception to this. However, on its own being a technology-led business, from automation and visualisations through to Artificial Intelligence, is of limited value without legal domain expertise.
“Riverview Law handles thousands of matters every year for global corporations, mid-sized and fast-growing businesses. We are excited by this addition to our service offering, which we are launching following demand from customers and after running a number of these prototyping sessions with global corporations. The results delivered in four weeks always exceed expectations.”