Hello and welcome to this data law Webinar on good financial management. My name is Trevor. Hello. Well, and I'm here to take you through some of my thought. Anyway, on these this particular topic, I unfortunately for you, a solicitor. I've actually found the bulk of mine professional career on the training and consultancy circuit discussing a wide range of things with a wide range of audiences since the mid 19 eighties. Though I know it's hard to believe. Just don't look old enough realized anyway, the things that I just wanted to discuss today to do with the local management kind of based on the Rays competence statement with which we've had to comply since the first of November 2016 which requires all of us to reflect on our competences. Andi standard d three requires, amongst other things, that lawyers demonstrate an adequate understanding of the commercial and for Menschel context in which they work on and their role in it s o. We need to know something about money basically as well as the general law. We also need standard d three goes on to discuss to understand the contractual basis on which legal services provided, including how to calculate and manage costs on bill clients. Onda We must be able to manage available resources and use them effectively to its so against that background, I just wanted to ask a few questions and just discuss a few thoughts with you, which you can then take away and further develop if you wish to. I just wanted to pose the question that give wider law firms exist in the first place. What we there to do? How do we get paid for the work we do? How should we value it, which is a different question and in the next hour, I just want to review some key ideas with you. Look at techniques to improve our value and bill ability and just make some further comments in this new era of transparency. Andi cost reduction, which I think is at least part of the game plan of the ultimate regulators. So what I want to do is I want to discuss basic accounting information terribly. Basically, I want also to just discuss the calculation challenging rights that then I'll look at costs information that we have to give to clients both before they become Brunt and afterwards and I also want to mention a few thoughts about the art of billing. If I could put it that way on DFO cas, particularly on the concept of what I call total time capture as part of our cost recording process, I want to also think about efficient billing. And I also has a set. Want to give some thought to the future? You know, how are things going to change? We've got to transparency rules already, which we've had for nearly a year now. We've also got some new standards and regulations about to be released on us at the end of November on. Of course, there's the whole Brexit thing and everything else. But I don't want to get into the particular politics of that. I wanted just to reflect all this question. Why are we here when I'm asked this question off, trainees, I tend to get the on so that well, we're here to help Oanda. I suppose we have to earn a few quid at the same time. If I ask the same question off a group off, uh, more senior fear most sticky. Seeing your partners like ourselves, I get a completely transit. We're here to make money, Joe, and I suppose we have to help clients as well. It's there in the middle of those two extremes that I think there is most to be said. Yes, we have to help people. That is why we're here. We helped them with their legal problems, but clearly we also need half A I to the management of the business aspect of this. The popular view, I think, is that if we genuinely want to help Matt is, obviously are true motivation then that will draw clients in on the money will follow if we chase the money and make that our cash cow that the thing that we oh baby more than anything else then probably won't be doing the job correctly, andare business will fail. So it's a case of getting the the the medium line, I suppose, on this issue. And of course, the powers that be in the law firm will be reflecting on the finances off the practice. They need to know that the bills coming end of the bills get paid Andi soul and so forth. So I just wanted to mention some very basic accounting information from which we will extrapolated the calculation off basic hourly charging rates and all that kind of stuff. On this next light, I I show basically county information as being total see income, plus any interest that we may earn on client balances that they leave with us periodically. That's our total turnover. That is, ah, gross income from which, of course, we have to deduct the costs of running the business, the day to day expenses on the coffee and paper and toner for the the photocopying machines on DSO on, uh, other capital expenditure and buying a new computer system, for example, payments to clients that we have to make all the count off interest to the extent that we still have to do that under the new standards and regulations on And, of course, the other big welly the salaries that we pay to the staff we engage. But having deducted all of that lot were then left with a figure for net operating profit. I'm just put some numbers on it. I'm just basically taking average fees from across the sector. But if we were to say, for example, that we had total fee income of £10 million we would find the costs of running the business and other capital expenditure. Another outgoings probably would take up about four million of them. Onda salaries another four million off them, leaving us with a net profit of two million a net profit margin effectively off 20%. Now this is, of course, an average figure on none of us on average, where are the better or worse or something? But this, in average terms, is approximately what the legal profession is working on. So that's the kind of margin of money we're talking about now when it comes to discussing all this with clients. Of course, some different considerations apply at the moment. Of course, we have to comply with Outcome 1 13 in Chapter one off the code of conduct which talks were costs information for clients, strictly speaking, assed part of the client care conversation. Now, I just wanted Teoh hang in there for a moment because obviously do the other set of issues that we need to bear in mind for the transparency issues forced on us by rules from the S r a year ago, where we have to display information about prices and the key stages of work. And do the staff are who will be involved in respect of eight areas of work. Five for private clients, three for corporate clients. Andi, In respect of those matters, we have to display in a prominent place on our website all of that information. So we've got to be publishing our prices to the world at large. But front now. This is not what I'm discussing here. This is what I'm talking about where we need to become more specific with people who have actually instructed us. But the transparency rules which have us publishing this information on our website is intended to be of attraction to the market. Generally, you just want to clue as to how much it might cost to buy a house or undertake some immigration work all perhaps take a former employer to an industrial tribunal alongside dismissal. What we have to do is just given average price. Look, if you instruct else it'll be about 1000 quid plus disbursements. You're looking at a total of 2.5 1000. Quit in broad terms. No, that says maybe the firm next door might be charging more might be charging less. It's not the end all there. But we are giving this information to the potential client base in the hope of luring mainland instructing us. No, there are all kinds of thoughts about the transparency. Pardon to no, no, necessarily here to talk about in this particular session, but the might. My idea on this is that there could be a lot of could collateral benefits that rising from this transparency, not least the idea that if people can see how much we're charging, they might actually be pleasantly surprised. I know we are always guilty about how much we charge least I am on, therefore, you know, but But it might actually have a completely different reaction in the minds of the general public, because most of the general public realized, if you buy cheap, you buy twice and therefore they don't tend to go for the cheapest in the market will tend to go not either for the most expensive but for the second or third in the lists. And we may be appealing to that kind of mindset with this transparency information be that as it may, when somebody instructs us. We then have to put some detail behind that initial guest. Much such this relied on after 1 30 in the code of Cold Out says that clients must receive the best possible information both of the time of engagement, and when appropriate is the matter progresses about the likely overall cost off the matter. Now. The overall cost includes our fees, expenses, the 80 on that lot on and strictly speaking, disbursements as well. I'm just careful to differentiate between disbursements and other expenses that carry the 80 displacements. May or may not. It just depends, but we can pass on directly to the client without the addition of extra the 80 the true cost of a displacement, which is money that we spend on behalf of the client. And that's kind of a material to the work we're doing. If we are buying something in to enable us to advise their clients, that's technically not a dispersement. But this is again a different issue that I'm not really here to talk about right now, but this is still going to be a requirement off the standards and regulations when they come into force on the 25th of November and in the code of conduct four solicitors, paragraph 8.7 makes exactly the same point. So we need to be clear with the clients right at the outset. How much the likely overall total cost is going to pay. Underneath that we have indicative behaviour 1 14 which says that we must also without I clearly explain our feet the eighties 20% disbursements up 30 standard. But our fees is what we also have to explain, as well as a whole range of other matters. The fact that it's the clients duty to pay us the fact that they could make payments on account we might be entrant billing. We also need to undertake it. Cost benefit analysis is the ultimate benefit of instructing us going to be worth the money we're gonna be charging yet on. That's something which recent cases have criticized films for not doing. We also need to deal with the costs position in litigation, also need to put the client in charge of the whole matter by in neighbouring that put caps and limits on how much we care for them, etcetera, etcetera, etcetera. But it's this clear explanation of our fees. That, I think, is the bit I just wanted to come back to, because there are a range of ways in which we might calculate our fee to the client. The one I want to focus on is the hourly charging right, because that is the typical methodology that we've used. Andi Hourly charging rate times Time is on one interpretation. An inducement to be slow. The longer you take, the more money you get. But it's still the traditional method off calculation. But there are other variants on this. There is the fixed feed. Certainly there is a new agreed fee, which is a different concept, and agreed Fee is one which clients agree to pay you regardless of you doing any work for it. Which is a rarity. But it's no utterly uncommon. There are project fees will do the work for set some like if x tree effectively, there are percentages. We could take a percentage of the transaction. We could take commissions if the client has agreed to us. Doing so in advance. If we're dealing with litigation we could be conducting is over conditional fee agreements. The no win no fee type of arrangement, we could be supporting it with legal aid. I think there are about three people left in the country still eligible for it. Eso for acting for them. Obviously, that would work. But clearly, if we do legal aid, we'll know all this. And the final one is some benefits in kind. Andi. It's not uncommon for new startup companies to offer payment in shares in in preference to to share money. This'll has happened in a number of instances on by. The Bio is not a legal adviser, but they say that Barlow, the lead singer of U two, has actually made more money off the shares and put in off the money put into Google than ever he's made is a musician, so benefits in kind can be terribly lucrative. But there are, of course, difficulties in coming to arrangements of that kind with particular clients. Now, I just wanted to go back briefly to this this calculation of the hourly charging rate and if you recall the numbers I was playing with an Iran, I was suggesting that the firm, as an overall total income of 10 million on, ends up with a net profit of two. In the end, by the time all of its expenses being paid, this would be the normal basis off the calculation of charging rates, and the next slide illustrates how this might work. But this total of 10 million quid needs to be allocated between the theaters because the only way the phone firms going toe is if people fear. Now, if we assume that there are, say, 50 feet Aziz, that is a total of £200,000 each on average, some might have bigger total. Others might have, unless a total. But on average, it's £200,000 each. If we then add in the salary that we're having to pay to these people, then let's say Party A is paid £85,000 a year party a must build £285,000 per year to pay his way. No, this would equate to approximately 1718 100 hours that kind of thing six hours a day, five days a week, 48 weeks a year. It works out to about 2000 hours. But if one was just to her on the side of caution that, say, 1700 hours a year. That would work out about £267 an hour. No to anybody on the national minimum wage of about £11 an hour. This is startling money, but the point is that that is what it costs us to t do this particular piece of business no smart couples. What I just wanted to ask now briefly, though, is given that that is our calculation. How much would we actually charge the clients Now? I've got two case studies that I would suggest all request that you have a look at. They are fairly lengthy case, that is, but they are not entirely out of kilter case. So he want involves on elderly widow who wants medical advice, sort advice about a medical claim against her consultant, which, it turns out, we don't think is worth pursuing. Case Study two involves a local entrepreneur who considers himself to be extraordinarily important on, comes in with a pile of papers and demands an answer. By 8 30 the following morning, on the questions on both of these case studies asked, How much would you charge these people? Assuming your basic cost rate to be about 100 £70 on our calculated in the way that I'm just have Now what I'm going to suggest is that you just take 10 minutes. Maybe 15 takers only wish just to have a look at these case studies and just work out whether there is any commonality of view as to what you would actually be charging these two particular clients. And if you want to pause this, uh, webinar now I'll give you as long as you like Teoh, go over those case studies. Also, you shortly welcome back. Or if you haven't taken the opportunity, I just want now to talk over briefly what you might have come up with by way off costs that one might have charged these two clients. Case study one. The elderly widow has asked for a partner to go and see her to discuss the needs. She likes personal visits, all that kind of stuff. So he takes several hours over the actual interviews. But it takes almost as long driving there and back this certain correspondence. Andi, various telephone calls. Andi. He says when he first visits the client that he doesn't think there is a case. She, however, is insistent on Dhere, therefore suggests an independent medical report to back up his view, which ultimately that report then does. So he has to say to decline again. I'm sorry, but I don't think there's any merit in the claim. So I'm afraid we're gonna have to close it there really up simply she accept his advice. How much would you challenge this client? The basic cost at £170 on our is £2295. Andi. Many off you discussing this might have been tempted to discount that. It sounds like a lot of money for not very much. She's an old client she's in for. It's an unsuccessful I'll come and of course, we may be lost leading. You know, we might get some other instructions from other might net us a bit more money. Who's many off you might have. Bean attempted to keep the cost of the basic cost figure of £2295. This is not a poor client. She's used us before. She's had the costs explained to her. If we've done our client care properly, and her insistence almost going over the ground again is her request. So it's her request. And if at that first meeting we say to a look, I don't think there's really much point in pursuing there's all well, you know, I think I just want another the Okay, well, look, what I can do is I can get in. The independent expert will have a look at what they reckon, and then we'll have another chat in Will. Will will settle it one way or the other. No, you have to realize the costs are going to expand in pursuing this. And you could be looking at 2 2.5 £1000. Are you sure you want to spend that money? Because I don't think my advice is going to change. Oh, yes, dear. I think I think I just want the extra reassurance time. Okay. On that basis, I will go ahead and I will get it for you. Some there are suspect the minority off. You might have been tempted to increase the amounts that we were challenging. 2295 is what it has actually cost. And that figure of £170 is the basic cost rate, and the other thing that I asked you to appreciate is that there is no profit element in that. So we really to be adding for profit before we're making any money at all. She's not a poor client. You could have explained the costs, as I did briefly a few moments ago, and dumb the cost benefit analysis for you know you're going to spend half assed much money again. But the same amount of money again we've already spent on the advice may well not be any different. So the consequences of the abortive costs have also been explained. Nevertheless, she insists that you do it fine. Okay, then I will do it also. So I think the what you charge is entirely up to you. But you can take the opportunity where presented to increase the amount that we may have been tempted to charge. There's no compulsion, but it is a possibility. The second case study, I think, is rather more obvious and graphic, and I think most of you almost everyone will have increased the amount chargeable in time terms. The cost is 1500 quid. Well, £1530. But everyone will probably have increased the amount chargeable because that £170 cost rate doesn't show any profits. So we won't do out at least 20% possibly 30 Possibly more. Further. He's a business client, so there are the 80 implications when he's not gonna have to pay the 80. I wouldn't have thought the importance off the matter to him. He says that he believes that he's getting a good deal if we give it the go ahead. So I think there's every expectation that he's prepared to pay us for the green light. If that's what we want to give him. There's also complex documentation that we need to peruse. There's an acquisition agreement that employment law matters, this litigation in there. We also have to look at the last three years accounts, and we will give him an answer at 8 30 the following moment. In order to do that, we're gonna have to dislocate other clients and other business. We're gonna have to work until having those work time in the morning, but antisocial hours and he is demanding and he will get an answer at 8 30 the following day. I wasn't born here. If the answer is yes, go ahead. It's a good deal. Go for it. He's gonna get it. Make make a savings in the acquisition over what he was expecting to have to pay. On the other hand, if we say no, don't touch it, it's a dog. Then arguably, we're saving him even more. But neither which way he gets an answer. Promise. Now, I think in those circumstances, this local tomorrow may well be prepared to pay £5000.7000 pounds. Seven. Laugh. You know, you can put your finger on it. It almost becomes a project price type of things, a fixed price out of all proportion to the amount of time we spend. And that's the other point I want to dimension. There are a number of factors that weaken roll into the decision about what we charge somebody. We can be remunerated for. The difficulty, novelty or complexity of the issues raised the skill, labor and specialized knowledge that gets swept up in all of this. The time we spend is obviously a factor as all the place and circumstances, the importance of the documentation without regard to their length. The sums of money involved the importance of the matter to the client and the clients express approval to the incurring of particular items on expenditure. These are all factors which, according to the old solicitors, non contentious business remuneration order 2000 and nine were entirely legitimate factors to bearing two wheel into this whole calculation. But I think if you say to that local entrepreneur, look, of course, I will help you come back at 8 30 tomorrow and I'll give you an answer one way or the other. But you have to know I'm gonna have to displace other clients. I'm gonna work until it's done. So I'm gonna be working through the night. I'll look at this. I look at that, look at the accounts and I'll give you an answer one way or the other. If I'm going to say yes, go ahead, you'll be saving two million quid on the purchase price. Or if I say no, I'll save you the entire purchase price either. Which way we costs will be 71 Fashion. Quite. How do you feel? What's he gonna site? Because, of course, go ahead. Fine. Lovely sudden love, Grandma. It's not a problem. As long as the clients understand the implications, we can take all of these factors into account. So what? I think I'm urging on all of you and I'm saying this is much for my psychological well being is anything we can charge more than we think we can. We need a greater sense off robustness on DSA sell value. And there is a psychological element to this which is mentioned to me by a client of mine. He said, Look, we have upped our fees and you know, the staff of feeling so much better for it because before they were slaving away, bashing their heads against brick walls for a few 100 quid. Now they're prepared to do that because the rewards of far greater were charging a couple of 1000 they are feeling better for it. It's why they came into the business in the first place. And now this thought that we can be too cheap, I think is a a genuine worry. As authority, said, the clients understand if they buy cheap, they buy twice and reassuringly expensive is a marketing ploy that did start Well, no harm. So you know, there's all that kind of thought process, and as I say, the theory on this is born out by marketing. Statistics would suggest that the buying public that we want to sell ourselves to are not generally attracted by the cheapest price they want to pay, but they want to get good value in return. But that hopes the market a good deal, I think, and of course, expertise is no treat. It's hard to pin down. I mean, I have flashes of inspiration and our time doing, Oh, how that's how it's gonna work. How do I value that in time terms? It's a few minutes a couple of minutes, but in value terms, it's the most critical. A bit of the entire lot, as they say, 80% of our value comes from 20% of our work sizzle of that going on now, the other slight dodge that I would mention is if we added 5% to the top line, that 5% drop straight to the bottom line, just illustrate. Let's say our total income is 100% 100 quid. Let's say out of that 6 80% rather goes on costs and expenses, most leaving us with 20 pence left. If we charged 105 pence, what difference does that make to the costs of running the business in the short term? None. What difference will it make to the salaries he paid your staff? Answer non. It drops straight to the bottom line and turns a net profit of 20% into a net profit of 25%. By how much have you increased your net profit answer 25%. You increase it by 1/4 by doing what? Very little. Just adding 5% of the top off the escape Now, having said all of that, of course, I know that what I'm sounding like is a sounding like I'm suggesting that we have the opportunity suit to overcharge, which, of course we don't. It's still unethical to overcharge. And of course, we have Old case law, which says that if we were to over challenge our clients by more than 15% then a court would probably remove the excess tax. It offers the phrase used to bay. And there are, of course, particularly in connection with the transparency, rules, warnings, honest to beware costs Creek, as I call it, pitching at an unrealistically low level, the costs involved knowing full well that we're going to be able to march the climb up to higher levels later. We just don't told most bits right now. I'm I've bean on the receiving end of this kind of, um, strategy before. Now I take it very didn't view of it. Some friends of mine were involved in a, uh, financial came against a financial adviser on bond. The way went to a specialist law firm for the specialist advice. And I said, Look, you really got me thinking in terms of cost 10 grand or more. Um, we went in. I said, Okay, could you tell my friends how much even the charge and said, Oh, well, it'll be about 10 grand or so of the okay five found on, then half way through the fact that so Well, we're gonna have to increase the feast sort of 15,000 or thereabouts. And when it went to the the mediation hearing, it was settled and my clients were asked for their costs, which doesn't actually 20,000. But I wasn't too bothered about that because the other side would pay them of the day after the case was over running. My friend, since I know how are things going? So if you're happy and I paid the bill and I said, What, Bill? I thought the other side was paying that it's Oh, no, just paid the excess. And so how much was that? 10,000 quid. He was charged £30,000 at the end of the day when he was told initially the cost would only be 10. I find that kind of approach butterly unethical. Uh, but that's just my experience, and I leave it to you to decide how to play it. But we just need to be careful that were being realistic about the initial expectations. If we see things that we haven't anticipated, then yes, of course we can legitimately add something on for that. But of course, the S R raise on the legal ombudsman's jurisdiction is still present still with us, and we need to observe the jurisprudence of those bodies, all of which cancer is fine, provided the information on which we're basing it all is indeed correct. Andi, we're assuming in the two case studies that we've looked at, the costs are as set out on the page. How do we know that now we will have time recording protocols in our business that will have people recording time and so on. And it's on those time records that we've based the assumptions that we've made in those two case studies. But, um, I can't emphasize enough the importance off time recording on DTI. I'm going protocols and policies and procedures on DSO on. And I'm deeply aware that many of us a guilty of moral editing, well, think to ourselves shot in three hours to the That should only have taken me to I'll put down two hours, and this, I think, is a wrong approach. I would urge us all to think in terms of total time, capture those two minutes of inspiration that I have everywhere again. Ideal. Stick him down as an hour, Um, but total time culture. I just record every single bit of what I'm doing so that nothing is messed. I I know we have time recording in terms of in blocks of six minutes, all that kind of stuff, but it's critical that the records that were keeping are fully accurate because what we are playing to there is a method off discovering what it costs to run the business, know how much we're going to charge the client. That's a different question, but we need to assess how much it has cost to run this particular piece of business. We might have to write something off in order to accommodate the client's expectations on the rest of it, that that's just unfortunately, part of the game and right off so foot of the most circumstances be a source for blame. If it takes you three hours, it takes you three hours somebody more experience than you might only have taken to. But that's why the charge more so. There's all kinds of reasons why we shouldn't be editing the time we're taking. It just creates problems for yourself in the long run. So that, I think is is the Exide. We need to know how much this piece of business cards that I know from speaking to clients that what they have done in conveyancing work, particularly is there actually analyzed all of the matters that they've quoted prices for how much time the matter actually cost on every single one of them. They were losing money. So on the other thought on this is that, of course, clever businesses will have mechanisms for timing there in cult in order to suit certain outgoings the whole time income to come in at the end of the year for tax returns and the quarter for the 80 outflows regularity for clients budgets they might have working capital needs overdrafts to pay off. There might have other cash requirements for expenditure on certain things, all of which can be timed against the receipt off income from the clients. At least that is the theory, anyway, between beyond to the question then, of how we get clients to pay quicker. Now, this is all part of the cash flow cycle. If you want to put it that way, when we start work on the matter, we invest money in it, which may well be borrowed on overdraft. So having to pay interest on it the whole time whilst we're doing work last, we've sent the bill whilst we're waiting for them to get around to paying us back again in you and in average terms. It can take eight or nine months for people to get paid for the work they did, so you would get paid in August for we didn't generate. It's when you look at the figures. That's the kind of average lag that creeps into the system. So anything which can accelerate that receipt would, of course, be very welcome. So of course, we could ask the clients for money on account, which at least gives us the reassurance of knowing the money is there so that we can take it. When we've done the work and sent the bill, we might have agreed fee arrangements with clients where they agreed to pay us a certain amount per month just to have us there at the end of the phone. If they need us on def, they don't need a cellphone pay. But if they do need us, then obviously will be run righted looking after. But yeah, that's that's just the nature of the game. Interim Billy, of course, has a lot of cash, no advantages to it. Every month. Just send the climate bill for the work you've done for public. We could offer discounts for early payment we could leave it till the end of the matter, send them a bill and say, Look, if you pay it within three weeks, we'll give you 10% off or whatever. We could, of course, use threats for late payment, but that tends to sour the client relationship. The thing I wanted just reflect on briefly, for now is this idea of catching them at their most grateful because there is a school of thought that client gratitude when graft. So there follows a bell diagram sort of Tyler Bell curve, a type of approach where their gratitude reaches a peak and thereafter tends to degenerate the later you leave it to send the bill, the less grateful they are to have you on, the less inclined they are to shell out. But captain it, then most grateful captain at the peak of the bell curve and they pay you well far quicker. This was illustrated to me once I was working in ever sense on all the matter that we had on is the environmental matter. He was expected to last for three weeks, a criminal trial that was expected to last for three weeks, and we have it kicked out on a technicality by 11 oclock. On the morning of the first day on, the client was leaving the court, clicking his heels as he went alone. Oh, send me the bill. So I went back to the office and my boss said to me, You know, how much do you think you challenging and a sudden said Move in Total Probably about 15 grand. Double it, he said. Double it and send the bill now. So utter. Build it and send the bill now on by her bus, for he paid it staggering, absolutely staggering. But that is the notion. The concept we done a brilliant job for him is well pleased with it. Weapon. The cash he pays with with gratitude on that was marvelous. So Bill quickly, I think, is the essential message. Most of us in the the feeling world, I think, more preoccupied with what we're doing than the actual building part of the process. But that should be equally involved. So bill quickly. You can also try the technique used on me by my accountant. He will always ring may when he's about to send the bill on. He apologized. Three grasping accountants or after you again. We're after 1500 quit this year or whatever it might be, you know? Is that okay? I have only questions and no, no, no, that's absolutely yeah, thanks. Thanks for letting me know. Click. I have just accepted his built and it's a very clever technique because if I have any disputes over the bill, he's on the phone now asking me, what do I have any problems? And if I do, I have to say so if I don't say so, I have lost the opportunity. So he sends me the bill, and I have no excuse, but but to pay it. So I think this this question of you know who should exert credit control, who is best placed to chase the bills? I would say it's the fear now because of, but many of you have the relationship with the client that you can then call upon in order to get the money coming in. So I just have awesome General Conclusionary thoughts, and this, I knew, is ah, controversial suggestion. But I'm just thinking ahead now to how things will be when the new standards and regulations get introduced. the new standards and regulations will not change anything much for existing legal businesses s already regulated businesses employing SRE regulated solicitors will not have a great deal of alteration to make. Okay, you're gonna change the paperwork and drop references to outcomes indicated, baby, Thank our stuff, but that's about it. The changes that are being ruled are going on around us. They are intended to enable us to offer legal services to the general public on an easier, more accessible and arguably cheaper basis. Statistics are suggesting that with decent legal advice, people have better outcomes, so they need access to our services. But historically, we've put up barrier after barrier after barrier and that has put off 90% off the please don't tell to which we are intending to apply. This unmet legal need is quoted by the S all right as justifying the whole raft off. Ah, regulatory reform. 90% of our client base will not consult a lawyer do, ostensibly to their perceptions about our pricing. How expensive? Well and all the rest of it. Now, if that is the move, then I'm minded to suggest that I put it no higher in that that the days of posh offices, the glass palaces that we occupy, the fast cars in the car park, the Audi R rates and Porsche's and the rest that we drive may well be in decline. Not for everybody but it. That tends to be the suggestion. Obviously, the city firms the large practices with the commercial clear hotel who drive posh cars to want somebody of a like kind who can advise them that the general population, I think very much against this. We see this creeping through in the uptake of vegan diets, Elektronik, communications, all that kind of stuff. The old way of doing things is in decline, and what I would be inclined to think is, yes, we could take charging opportunities when they offer themselves. But equally we should be looking at the other side of the coin and looking at cost saving and accessibility issues, too. This is partly why the transparency rules were introduced, but it's also the agenda behind the electronic office that paperless office hot desk ING strategies, all of that kind of stuff just to minimize the outgoings that we are having to bear Andi. If it means that you cannot have a new portion this year, then I'm sorry, but you get after weight all. You're gonna have to buy something a little bit less extravagant. But that's just the way of it. And I feel as if there is some pressure, all of us to just rethink our expectations of what we can legitimately take home at the end of the day. The other thing I'll mention is, of course, artificial intelligence. There's been a lot of stuff said published about artificial intelligence. Um, the only applicable, uh, pick applicable application. Yeah, I mean, the only legitimate application over artificial intelligence at the moment would appear to be in document assembly and document checking systems, which, as I understand it, are no more, although no less accurate than human beings doing exactly the same job. But they are phenomenally faster, and there are certain benefits to be had from artificial intelligence. I don't know that way yet in the position that the medical profession find themselves in where computer algorithms can actually give you Ah, diagnosis since the what is wrong with you. I'm sure those aren't much more than a year or two away, but they're not quite with us yet, but these document checking proof reading tools are available, and I think they could do with some degree of scrutiny. The other thing I will mention about the future, uh, is that, of course, the future is you geared up. To generate innovation, the IRA has issued on Innovation Challenge over the summer, inviting fresh ideas, new ways of doing things, new thoughts, new ways of delivering legal services, fixed costs, agreed, feeds, discounts, range of anything, mechanisms, electronic communications so that we're not having to tie up hundreds of thousands of pounds and square feet of spare office space with high vaulted ceilings. They're lovely to look at, but they're just not essential. And not only is there a necessary challenge which invites these kinds of innovations, but that is effectively what the new standards and regulations are intended to encourage to they are relaxing the regulatory rigidities that we've had to work with. Natalie, these new relax ations will be enforced wrong the 25th of November. So in a little over two months time, and they're encouraging novel configurations off business. If you don't want to be as are regulated, you don't have to pay. Oh, there are certain things for which we need regulation by somebody. Not necessarily, yes. Sorry, but by somebody. But the majority of legal work does not need regulation by anybody. So the structures of business, the regulatory requirements of business will be relaxed. And indeed, the insurance component of this, I think, is not to be overlooked. The legal, the compulsory minimum terms and conditions standards of P II covers have put off a on as an insurance. They have left the P II markets. They left it in August of 2019. So the P II market is going to shrink, and that might induce people to rethink other ways off doing things. The other point I want to make about the standards and regulations. There are a couple of thoughts in here which I think are repay some some consideration. The first is they do allow us to write off any obligation to pay interest to clients on client balances. We could simply if we've advised clients of their of position told them so they can make an informed decision. We can simply right out off any obligation to pay interest. Tooth. Um another thought, which is becoming increasingly common, is the third party managed account, or t b m. A. This is an option given to us by the accounts. Rules which form part of the new standards and regulations and the TPM Ai popularly have said. I don't think that's gonna be great in appetite for it, but she order paying The organization offering TVM A is the only one I think to come to market so far, records they already have 40 firms signed up for it, including some substantial city firms. So it's it's a cost saving that I think it's worth reflecting upon the other thing which I think the newer capture ALS will allow us to do is they will allow us to bill clients even before we've done the work for them. Now, I I emphasize that because under the current account Charles, the rule is that we have to do the work, then send the bill, then get the clients to prayers. And that is true whether we've got money on account or whether we're just sending the bill to the fact we've got to do the work first. Now I see nothing equivalent to that in the new account rules, the new account rules simply make a division between work that we have built for, which is ours, to spend as we please and work which we haven't built for, which is still client money and needs to be protected. But it's Newt on the point of whether or not we have to do the work first. So they're open. There may be opportunities for accelerating our receipt of money. We could trimmer costs and expenses down. We could restructure some elements of the business to offer the services more flexibly. There is a whole range of things we could think of doing that has never bean open to us before when we don't necessarily even have to wait until November. If you are painting to get these new thoughts to the market, you could applying to the sorry now for a waiver off their current rules, that is, that persuaded of the benefits than they will grant that waiver. But having said that, there are only a couple of months to wait on. But I think there is everything to to to go for under these new rules and regulations. Thank you. I'm looking to you for this thing
Webinar
Slides
1711 Users
7 Courses
61 Reviews
