Headed up by Stobart’s legal director Trevor Howarth, the new business will link individuals directly to barristers and thus cut out the middleman – namely the the solicitor.

The idea apparently came after the Stobart legal team had been working directly with barristers in 2008 where they were so impressed by the savings they made that it occurred to them that they could operate barrister direct instruction as a business in its own right.

The web site, entitled Stobart Barristers, states that there were two reasons for the move:

1. We hate waste. We work hard to minimise non-productive time and maximise the utilisation of our fleet. It’s the same with the law – we think dealing with legal issues the old way is just wasting money, and
2. We’ve done it ourselves. We started going direct to barristers four years ago and we know it works. It saves us time and cost and we’re sure it will do the same for you.

Trevor Howarth said:

“Consumers don’t know where to look or which barrister to pick, leaving many to still having to rely on the advice of their solicitor. But in doing so they are forced to pay significant fees. Our model cuts out waste and opens up access to a national panel of barristers that are selected for their ability to meet our clients’ needs.”

In his Blog on the Stobart Barrister web site, Howarth accuses the legal sector of being “archaic” and “still coming to terms with changes designed drag it into modern practice” whilst the public feels “frustration at not always knowing why we were paying certain fees, and why there were such smoke and mirrors involved”.

We await with baited breath as to whether the Stobart fleet of trucks now starts to carry the names of the drivers’ favourite QC or whether it is the barristers who will have to have the wives/husbands/lovers name embroidered onto their gowns.

The Solicitors Regulation Authority have announced that as of 2014 there will no longer be an obligation for firms to pay trainees their trainees a minimum salary provided that the salary paid is above the national minimum wage.

The Board of the SRA, in a move which has angered many, has agreed that setting a minimum salary level for trainees above the national minimum wage main rate for employees was not in the public interest – but in order to minimise impact, the change will not come into effect until 1 August 2014.

During the Board’s discussions members admitted they had, individually, spent a long time considering the proposal, as the arguments were so finely balanced. They had given full consideration to the potential diversity issues highlighted by the consultation and Equality Impact Assessment, but concluded that setting a minimum salary was not the best way to address these.

Samantha Barrass, SRA Executive Director, said:

“We wish to thank everyone who responded to the consultation, and those who took part in the stakeholder meetings, focus groups, and the online survey for their views and information that were taken into account in reaching this decision.

“This decision was based on an objective consideration of very full and detailed evidence gathered through a variety of sources.”

Plans announced today by Justice Secretary Kenneth Clarke will mean that more women and those from minority backgrounds will be encouraged to become judges.

New laws are to be put in place which will remove obstacles limiting diversity in the judiciary – including:

• changing the rules to extend part-time working patterns for senior judges, and
• enabling ‘positive action’ for appointments

The second of these changes means that if two candidates are completely equal in their abilities, a selection can be made on the basis of improving diversity.

The changes, which are the latest part of ongoing work to bring more diversity among judges, will not change the over-riding principle of appointments based on merit, but are intended to enable clear career progression, encourage applications from a wider talent pool and continue to create a judiciary which reflects society.

Justice Secretary Kenneth Clarke said of the changes:

‘We are lucky in this country that we have the finest judiciary in the world. We intend to build on that – we will continue to recruit the very best judges but at the same time we will do what we can encourage top applicants from a diverse range of backgrounds, so that the judiciary better reflects society.’

The proposed changes have been brought forward following positive responses to a 12 week public consultation launched last November. They have now been included in the Crime and Courts Bill, which was introduced into Parliament on Thursday 10 May 2012. The measures will not take effect until such time as the Bill has been considered and approved by Parliament.

They have been included in the Bill alongside several other proposals to modernise the process for judicial appointments, designed to make it more efficient.

Other changes include:

• Having an independent lay person as chair of the selection panels for both the Lord Chief Justice and President of the UK Supreme Court, rather than a judge;
• Increasing JAC involvement in the selection and appointment of the judges who are authorised to sit as Deputy High Court Judges;
• Providing the Lord Chancellor with an increased and more effective role in appointing the most senior judges;
• Reducing the role of the Lord Chancellor in the appointment of less senior judges; and
• Introducing flexible deployment so judges can move between working in the courts and tribunals systems, to help judicial career development.

Meanwhile, other chnages whihc are to be found in the Crime and Courts Bill will include:

• Allowing broadcasting from courtrooms;
• Increasing the efficiency of fines by providing incentives for compliance, so offenders bear the cost for delaying payment, not taxpayers;
• Creating a Single County Court system and a Single Family Court for England and Wales to allow greater flexibility for the handling of cases; and
• Allowing data to be shared between the courts, tribunals service and other agencies so fee exemption applications can be checked electronically.

A formal agreement has been reached between regulators from across the legal, accountancy, financial and property sectors that will allow even greater sharing of information.

The Memorandum of Understanding was completed on 2 May and will allow regulators to co-operate by sharing of information where there is a public interest in doing so.

The Memorandum was prompted by recent changes in the legal services market – particularly the launch of alternative business structures allowing firms to operate under several regulators at the same time – and will ensure that regulators act properly in relation to issues such as consumer engagement, evidence gathering and common standards and definitions. This will be useful for example in the event of a regulatory breach within a multi-disciplinary practice.

The Memorandum will also be useful where there is a synergy between two codes of conduct as this could lead to the MDP having to deal with only one regulator.

Simon Blandy, CLC Director of Policy and Standards, said:

“The legal services market is going through a period of enormous development and change and this MOU ensures that we as regulators are able to meet the challenges presented by these developments. Consumer protection is at the heart of regulation and it is vital that we regularly review working practices to ensure that we are all working together.

“This increased cooperation will see the regulated community benefit from a reduction in duplicated regulation and will increase the standard of protection for consumers.”

Ewen Macleod, Bar Standards Board Head of Professional Practice, said:

“The BSB is pleased to have entered into a working agreement with regulators from the legal, financial and property sectors. To ensure consumer protection and market integrity in today’s rapidly changing legal services market, regulators must work together with key regulatory partners and cooperate and communicate constructively. Under this agreement, the various regulators will coordinate resources and activities to avoid duplication of effort and to increase consumer protection.”

The signatories to the MoU are the five main legal regulators;

• SRA,
• Bar Standards Board,
• ILEX Professional Standards,
• Council for Licensed Conveyancers, and
• Intellectual Property Regulation Board,

together with seven external regulators or professional bodies, namely:

• Financial Services Authority,
• Law Society of Scotland,
• Royal Institution of Chartered Surveyors,
• National Federation of Property Professionals,
• Institute of Chartered Accountants of Scotland,
• ICAEW, and
• Ministry of Justice acting as the Claims Management Regulator.

The memorandum of understanding can be downloaded from the SRA web site at www.sra.org.uk/documents/SRA/news/framework-memorandum-understanding-regulators.pdf

I am sure I cannot be the only one who has observed a growing trend amongst solicitors towards giving, or needing to be prepared to give, free advice.

Legal Futures has reported, for example, that some lawyers who sign up to US online document services that are setting up UK operations – Rocket Lawyer and LegalZoom – will be required to provide some document review services for free.

These are not isolated examples. Law Pivot puts forward a very similar message in the US, whilst a number of schemes in this country such as Justanswer, RightSolicitor and LawontheWeb all promote free advice.

From looking into these services more closely, the rationale behind them would appear to be akin to the sprat and the mackerel – do something for free and you will undoubtedly reap the rewards a hundred fold in terms of the paid work that will flood through your door. Pardon me if I remain a sceptic.

I did think of trying it in my local Marks and Spencer. Give me a tie for free. I’ll wear it for a while and if I like the quality I will come back and buy a suit. I am not sure that it would have worked. I know for a fact that the idea does not work with plumbers. Mine charged me for 20 minutes’ work mending a leaking radiator even though he knew he was waiting to hear from me about having a new bathroom fitted.

The pressure to work for free

Why is it, then, that solicitors should be so determined to do work for free?

It often seems that the pressure to do work for nothing is one which is thrust upon lawyers from outside – mainly by other organisations keen to profit from the lawyer’s desperation/naivety/philanthropy/lack of self worth (delete whichever is inappropriate). Neither Justanswer nor RightSolicitor is owned by a lawyer and although LawontheWeb was set up by a solicitor, it is owned by EverythingLegal which is a registered claims management company (and was bought last year by legal expenses insurer DAS).

Lawyers tend not to be businessmen and rarely understand concepts of marketing, selling and advertising. If someone tells them that they have to offer something for free to attract clients to the firm, then many will accept this as the truth and do it. In all likelihood they are driven by fear that if they do not do it, then others will and as a result clients will go to the competitor who is offering the free advice.

Some lawyers do seem to be just a little too self-conscious about charging for the skill and expertise which they have all had to work very hard to gain? It is possible that many have become victims of the anti-lawyer lobby to such an extent that they have come to believe in their worthlessness.

Some think that by giving free advice for the small jobs, they are likely to ingratiate themselves with clients who will, as a result, choose them when the time comes for a large job to require handling.

There are even those who think that they have to establish their credibility as advisers by proving to clients that they know what they are talking about by giving away free advice.

None of these, I would suggest, are good reasons to do work for free.

The simple fact is that many people think that what you get is only worth what you pay for it and if you pay nothing, it is more than likely worth nothing. Thus, by giving clients and prospective clients free advice, all that the firm may be doing is devaluing that which they would later want to charge for.

Worse still, making the advice seem worthless may simply mean that the client then has no qualms about going elsewhere for other advice when the need arises because they don’t feel in any way obligated to the firm for the advice they have so far received.

Is there a case for free advice?

So should solicitors be offering to do work for free? Are there occasions when there is a business case to be made for doing work for free or is something that should be avoided at all costs?

The simple answer is yes – there are times when doing something for free is worthwhile. But it is a decision which should be taken for the right reasons and not from a general fear of being left behind or left out.

Pro bono work is a case in point. Legal Futures reported in January 2011 that pro bono work in 2010 had been worth an estimated at £475m, a rise of 19% on the year before, and represents 2.3% of the total gross fee income for private practice.

Many firms are part of LawWorks or other pro bono schemes such as the Solicitors Assistance Scheme and give free advice – either because they have a social conscience and genuinely want to help those who are needy and who cannot afford legal services or because they value the publicity which they can get from undertaking pro bono work.

This is totally different from doing work for a prospective client for free because the client is unlikely to be needy and therefore there is no social purpose in giving up a profit, and it is almost certain that the client will not tell anyone else how magnanimous the firm has been in doing the work for free, so there is no publicity value either.

Another area where firms may want to do work for free is as part of an overall service to a loyal and repeat client. If the firm regularly receives large commercial property jobs from a commercial client and the client wants to know the answer to what is a simple legal question, then it would possibly be seen as somewhat mean-spirited to raise a bill for that advice.

However, a better way might be to turn the informal arrangement into a formal one – especially if it starts to become a regular occurrence – by, for example, having a retainer agreement that scoops up all of the small bits of advice.

The third area where firms might justifiably want to give free advice is as a loss leader, although even here following the lead of the supermarkets in offering “two for one” or “buy one, get one free” might be a better option than “here you are – take it and I hope you return to buy one”, which most legal free advice seems to be.

In the case of a loss leader, however, it is necessary to think it through thoroughly and not just embark upon that course of action on a whim. Issues to be considered include:

• What it is the firm is offering?
• To whom is it being offered?
• Why is it being offered?
• For how long it is to be offered?
• How is it to be promoted both before the event and afterwards?

Additionally, firms will also need to:

• be sure that those to whom the free advice is being offered know what it is really worth (so that they value it appropriately);
• monitor the effectiveness of the offer so as to make a judgement as to whether it is a cost-effective course of action; and
• ensure that the free offer does not undermine any paid for offerings that the firm may have – for example, retainers with third-party organisations who realise they are paying for what others get for free.

The fourth area where firms might want to think about giving some free advice is where that advice is very much of a preliminary nature – in other words it is the kind of information that a client might need in order to decide whether to obtain legal advice or not.

However, even here firms may wish to be extremely circumspect in how they describe the advice, perhaps referring to it as a “preliminary fact-find” or a “diagnostic interview” designed to identify the potential issues should the prospective client choose to instruct rather than as “preliminary advice”, which carries with it connotations of the person already having become a client.

The final area where free advice might be justified is in connection with a separately promoted service or feature that the firm uses as a means of advertising itself. An example of this might be to have a blog where generic advice about an area of expertise is provided as a way of promoting that expertise. Here the firm would be in control of the topics that are addressed, the amount of information that is imparted about each topic and, to a degree, the extent to which that information can be used – for example by expressly stating that it is not intended to act as legal advice and that anyone requiring advice about the topic should contact the firm.

Indeed, this latter is the way that many law firm websites now operate, included our own Lawyers Defence Group website.

Here Be Dragons

However, everyone should be very careful about how free advice is given. Just because it is free does not mean that the firm will not be liable for it should the advice turn out to be wrong.

The recently decided Court of Appeal case of Padden v Bevan Ashford [2011] EWCA Civ 1616 should, if nothing else, cause all solicitors to pause and give serious thought to whether they can afford to undertake work for free at all. This is especially so if the only way in which the free work can be undertaken is by entrusting it to those who may be a less expensive resource for the firm or by the firm not going through the normal steps of involved in the usual file opening and case recording system.

The case, which was essentially one concerning professional negligence, revolved around whether the firm was liable for not advising a client fully at the time of signing a document even though “free advice” had already been given by a newly qualified solicitor who advised the claimant not to proceed with a transaction.

In his judgment the Master of the Rolls, Lord Neuberger, emphasised the fact that just because advice was free did not relieve the firm from the responsibility of giving full advice and did not prevent the firm from being subject to the “core minimum” duties set out by Lord Nicholls in Royal Bank of Scotland plc v Etridge (No2) [2001] UKHL 44, [2002] 2 AC 773. He said: “I do not think that their duty was any different from what it would have been if they had charged.”

It is vital, therefore, that firms follow closely their own procedures when undertaking free work and, if necessary, treat the matter as if it were a fee-paying client. If the client cannot or will not provide sufficient information to enable a considered response to be given, then decline to advise rather than guess.

Make sure that if any advice is given, that the limitations upon it are clearly brought to the attention of the client and if necessary, be prepared to follow up that advice in writing.

The Law Society has issued guidance on preliminary interviews covering issues such as conflict checks, identity information, costs advice (including that the interview is free where appropriate) and duties of confidentiality. This can be found in the society’s practice notes. It is quite possible that having read through this many will decide that free work is not something they want to risk!

Above all, be circumspect. Remember that there is little to be gained from a prospective client who has been given bad advice – whether they have paid for it or not.

This item first appeared on Legal Futures on 14 February 2012

The Solicitors Regulation Authority (SRA) has announced today that it has licensed its first three alternative business structures (ABS).

The three who are first past the post are:

• Co-operative Legal Services,
• John Welch and Stammers, and
• Lawbridge Solicitors Ltd.

Application to be an ABS started to be made to the SRA three months ago on 3 January 2012, after being designated a licensing body by the Ministry of Justice in December 2011.

Co-operative Legal Services is part of the Co-operative Group and was set up in 2006, but, until now, the range of services it could provide has been limited to personal injury claims; will writing; probate and estate administration; conveyancing and employment law. Co-operative Legal Services currently employs around 400 staff and is in the midst of a recruitment drive which will see at least 150 more employees join this year. ABS status will allow it to diversify into family law later this year as well as considering how else it can meet the needs of consumers.

John Welch and Stammers has seven fee earners and eleven support staff and has been operating in Witney, Oxfordshire since 1932. ABS status will enable the firm to continue and develop, as one solicitor partner retired in December 2011 leaving two solicitor partners and Bernadette Summers, who has been practice manager for the past 12 years, will be appointed as a non-lawyer managing partner. The firm is a general solicitors practice offering services in domestic and commercial conveyancing, family, personal injury, civil litigation and Wills and probate.

Lawbridge Solicitors Ltd is an existing incorporated recognised body, which has just one solicitor/fee earner, Michael Pope. His wife Alison, currently the practice manager, will become a director of the firm with a significant shareholding. The business is based in Sidcup, Kent, with a local client base, and offers a mix of employment work, litigation and commercial/corporate legal services.

Antony Townsend, SRA Chief Executive, said:

“We’re delighted to announce the first ABS organisations. This represents a milestone we have been working towards for nearly two years.

“The arrival of ABS should foster a more flexible and innovative market for legal services. By stimulating competition and encouraging innovation, we should see consumers’ experiences enjoy a major boost.

“Some people may be surprised that there are two high street practices with a handful of staff among the first wave of ABS organisations that we’ve authorised. But we’ve always said that ABS offers options for all firms, not just large organisations.

“We’ve had to create a system of authorisation flexible enough to deal with a range of companies with hugely varying corporate structures, but that’s also robust enough to apply the same stringent suitability criteria by which traditional firms are judged. We make no apology for ensuring that the systems we have in place are thorough and in some cases, time-consuming.”

Jonathan Djanogly MP, Justice Minister, added:

“This is a huge milestone for UK legal services and the future of Alternative Business Structures. “ABSs introduce more competition in the market place, delivering competitive pricing, higher standards of product and more choice for the consumer.

“Our UK legal services are unrivalled around the world and these changes will allow them to reach new heights, as solicitors’ firms develop new markets, seek external investment and join up with other businesses to offer different products to consumers and provide opportunities for growth.”

The SRA will continue to process the completed Stage 2 applications it has received from organisations across England and Wales. Around 60 Stage 2 forms have been submitted so far after initial interest from nearly 180 applicants.

The Solicitors Regulation Authority (SRA) has issued a consultation on changes to rules 4 and 22 of the SRA Practice Framework Rules in respect of the link with section 15 of the Legal Services Act for in-house practice.

The purpose of this consultation is to seek views on proposed amendments to rule 4 to help clarify the purpose and limitations of the rule in relation to the statutory position under section 15. The proposed changes are planned to coincide with the end of the transitional provisions mentioned above and the proposed changes related to these provisions. The consultation is not intended as a wider review of the area of in-house practice which we anticipate undertaking later this year.

The proposed amendments also address the transitional provisions which appear in rule 22.7. These reflect the deferral of some aspects of rule 4 when the Handbook came into effect in October 2011.

Those wishing to respond will find further details on the SRA web site at www.sra.org.uk/sra/consultations/practice-framework-rules.page

The Law Society have announced that the Clydesdale Bank and Yorkshire Bank are backing their Conveyancing Quality Scheme (CQS) by restricting membership to its mortgage lender panels in England & Wales to firms with the CQS mark or which are already on its approved panel for undertaking business lending work.

Michael Webber, Head of Legal Services for Clydesdale and Yorkshire Banks commented,

‘Clydesdale and Yorkshire Banks see CQS as a positive development and is encouraging further membership of the scheme. The new arrangements for England and Wales will apply to all applications received on or after 16 April 2012. Arrangements in Scotland are unchanged.’

Law Society chief executive Desmond Hudson said:

“Lenders make their own decisions about their panels, so we regard Clydesdale and Yorkshire Banks’ decision to make CQS a requirement for panel membership as further demonstration that CQS is a trusted community of skilled practitioners. Not only is it an assurance of high standards in conveyancing for lenders, but by showing its commitment to CQS, they are also putting customers’ interests first by maintaining a wide panel of trusted firms.”

The Law Society has so far accredited 1300 firms in England & Wales, with a total of 2000 outlets throughout England & Wales.

The Junior Lawyers Division (JLD) of the Law Society is calling upon the Solicitors Regulation Authority to delay its consultation on scrapping the minimum wage.

The JLD says that the SRA could not have chosen a worse time to consult on scrapping the minimum wage, with the Legal Education and Training Review (LETR) still going on, as well as a lack of evidence over the impact removing the minimum wage will have on diversity and social mobility.

Camilla Graham Wood of the JLD executive committee said:

‘The reasons for not consulting on this now far outweigh the reason for doing so, apart from the obvious fact that the economic climate remains unstable, there is also the uncertain matter of what impact alternative business structures will have on trainees and their pay. Add to that the potential fall out from the Legal Aid, Sentencing and Punishment of Offenders Bill and its impact on young lawyers working in legal aid and it is clear that the timing of this is atrocious.

‘With legal services going through drastic change, removing the minimum wage could be a risk. There is a real danger that without the minimum salary protection in place, those from less affluent backgrounds could be denied entering the profession.

‘At the very least, the SRA should opt for common-sense and await the outcome of the LETR before even contemplating putting a removal of the minimum wage on the agenda.’

The JLD has made a freedom of information request to the SRA on a range of questions concerning the current trainee solicitor pay landscape.

The JLD has issued a “Trainee minimum salary review – call for action” in which it urges the SRA to retain the minimum salary. The JLD states that the majority view amongst junior lawyers is that they disagree with the SRA and think the minimum salary should be retained. The JLD is therefore keen to take forward the views of its members and persuade the SRA that their proposals are unfair and would deter talented lawyers from entering the profession.

Further information can be found on the JLD web site at juniorlawyers.lawsociety.org.uk/minimum-salary-campaign

Whilst still not being able to inform the profession as to the final date for nominating their Compliance Officers for Legal Practice (COLPs) and Compliance Offices for Finance and Administration (COFAs), the SRA has announced that it will be extending the deadline “in order to give firms more time to finalise their nominations to the SRA, and to allow for further checks on the application process”. The fact that the online nomination form could still be six weeks away may also be a factor!

However, it would appear that it remains the SRA‘s intention to make approval decisions on all nominations by the original date of 31 October – the date upon which COLPs and COFAs are supposed to start fulfilling their duties.

In the meantime, and perhaps somewhat belatedly given that many firms will already have made their decisions, the SRA has issued what it is referring to as advice as to what it will be looking for in nominations. This can be found at www.sra.org.uk/sra/news/press/colps-cofas-nominations-advice.page