The law is a noble profession, where to succeed requires not only flair, but business acumen. This is as true for in-house solicitors (whether commerce or government-based) as it is for private practice. We all have to work within a budgetary framework and provide outputs and outcomes relative to cost.
We all have to manage our resources efficiently to deliver the most effective service to clients or organisations. And we all have to represent the interests of those that we serve to the best of our ability. If any firm or legal services department fails in any of these objectives, it cannot survive in its current form. This is especially true in a period of heightened competition.
To succeed, any business or organisation has to control costs, recruit and retain the best staff, and maintain a high level of excellence. The Law Society can assist by mitigating the effects of external factors which have an impact on day-to-day operations.
To begin with, the two major fixed costs of any legal business – professional indemnity insurance (PII) and the practising certificate (PC) fee – are regulatory obligations. This outlay can obviously affect an organisation’s ability to hire and retain the best staff. At the same time, the Society has a major role to play in the provision of training and continuing professional development to allow all solicitors to update, renew and refresh their skills.
PII continues to be a major concern to many solicitors, as it has been over the past two years. The saga over Quinn Insurance has reminded many of the stress and effort of PII renewal. Certainly, the PII market has been tough, though Law Society surveys on the issue have indicated that around 80% of firms have experienced no difficulties in obtaining reasonable PII cover. A body of evidence suggests that the firms which experienced the greatest difficulty were small firms, typically with four partners or fewer, usually practising in areas such as conveyancing and immigration.
This year will again be difficult for PII. Overall, the Society expects to see overall premium levels rise to cover the cost of claims in the system. The SRA has proposed changes to the assigned risk pool (ARP) which are designed to lower the number of firms in the ARP. However, these are unlikely to have a significant effect on premiums in the short term. Ultimately, market conditions will depend largely on how many insurers are in the market and what types of firms they are willing to underwrite. We will not know this until much nearer the renewal date. As it stands, the market remains virile and the vast majority can still find insurance easily. But at what cost?
What solicitors can do – and where the Law Society can really help – is to stay as informed as possible about the PII market and to start (and finish) the PII renewal process early. To increase the chances of securing the best deal on your PII, solicitors should stay up-to-date with market trends and developments by accessing a range of sources in the lead up to the renewal date. Last month, the Society published the second edition of Insurance Matters in association with Aon. Insurance Matters is provided to every firm in England and Wales three times a year to provide the latest information on the insurance market generally and the PII market specifically. It contains key intelligence and advice which all private practice solicitors would do well to heed.
On the PC fee, the Law Society has a real responsibility for ensuring that the cost per solicitor is kept as low as possible. It is for this reason that the representative Law Society froze its call on the PC fee for this year. The bulk of the total PC fee lies in the cost of regulating the profession through the SRA and the LSB. Here the Society’s responsibility is to ensure that the budget for regulation is properly scrutinised and that the cost is spread fairly. The SRA’s proposal to split the fee into two parts – one payable for an individual (40%) and another for the firm (60%) – reflects this. It is only reasonable that the cost of regulation should be borne primarily by those who give rise to the risk. In-house solicitors should not be unfairly burdened by the costs of the regulatory system, much of which – such as the arrangements for protecting clients’ money – are not directly relevant to them.
In implementing any reform, we have to be mindful of the potential for unintended consequences. The Association of Women Solicitors was right to raise the risk of the new PC fee arrangements acting as a counter-incentive against employing solicitors on part-time hours because of the proposed abolition of the low-earnings discount. For some time, the Society has encouraged the profession to build flexibility into its employment practices so that those with responsibilities beyond the workplace are not excluded from the market. However, it is one thing to ask firms to show flexibility in their employment practices, but it is the job of the Society and the SRA to make sure that we do not impose unnecessary obstacles to firms achieving that.
At the same time, the Society has to assist solicitors in keeping their skills up to date. The new online CPD portal will prove invaluable for firms and solicitors who are looking to identify and cater for their development needs. The portal is the result of extensive research, development and testing to build a product which is both easy to use and of great use to our members. I am sure that it will help busy lawyers to make the most of their CPD hours.
The Society has an obligation to ensure that standards are maintained, that the reputation of the profession is protected and that the public are able to access legal services with confidence. It is also committed to making solicitors’ lives easier. These objectives are not always easy to reconcile, but it is imperative that we never stop trying.
Robert Heslett is president of the Law Society