Tag Archives: lawyers

Deregulation And The Legal Industry – Exciting Upcoming Changes

Although “deregulation” of the legal industry in the UK was initiated by the Legal Services Act 2007 the new laws didn’t come into effect until 2011, and far from the “big bang” that was anticipated it was a damp squid.

There was an air of anticipation around Alternative Business Structures which were the new vehicle introduced to implement Lord Clementi’s recommendations.  Some people believed that the ABS would cause a sea change in the way legal services were provided because for the first time non lawyers could own a stake in law firms.

However, to date the radical transformation of the legal services market that was envisaged from deregulation hasn’t happened – at least at the small business end of the market where access to lawyers is still costly for many.

In my view, the new regulations about to come into effect in November 2019 which relax the rules around how solicitors may practice will have a far bigger impact in opening up access to legal services than anything that’s gone before.

 

New Alternative To ABS

The problems the legal market suffers from are down to the high cost of being in business. Once you remove some of the significant overhead costs by allowing legal services to be provided within ordinary businesses by solicitors, then innovation is bound to follow.

You see the new regulations don’t attempt to regulate the businesses solicitors form to solve the problems they see in the legal market. By removing the need for their businesses to be regulated law firms, and in particular removing the need for them to carry the special type of professional indemnity insurance that adds a significant overhead cost and risk for solicitors, I believe solicitors will be freed to be creative and responsive to the market needs.

It’s an exciting time for lawyers to set up in business and become entrepreneurs.

In my experience, a reason the impact of the ABS has not been felt too profoundly is due to the increased costs that regulation as an ABS entails, and professional indemnity insurance is a significant component of that extra cost of being an ABS.

Removing the requirement for the “gold plated” professional indemnity cover that law firms and ABSs are required to carry, makes it possible for solicitors operating ordinary limited companies to offer their services cost effectively.

These overhead expenses and costs of regulation are ultimately only of theoretical benefit to the majority of consumers of solicitors’ services.

Solicitors themselves will still be regulated and so consumers can have the confidence of using a solicitor albeit without the gold-plated PI cover. It will also be possible for such businesses to have non lawyers involved.

Freelance lawyers will be permitted to offer certain “reserved” legal services too.  So, it will be interesting to see how the insurance market develops for freelancer services.  Essentially, insurance is only a problem in the solicitors’ market because of the way in which the requirements for the insurance have developed.

 

What is The Solicitors’ Professional Indemnity Insurance Problem?

For reasons which have a lengthy background, the solicitors’ profession has developed some archaic professional indemnity insurance rules which make it difficult, especially for smaller law firms, to run and grow their businesses with the confidence that entrepreneurs generally run their businesses.

There are various reasons for this. Insurance premiums are extremely high. For small firms, even those with good claims records, it’s possible to experience a sudden, inexplicable hike in the premium instead of a no claims bonus like insurance companies usually give you.

This has a worrying impact for smaller firms because a higher premium means a higher run off premium if the business wants or needs to close for any reason, such as to merge with another law firm.

It’s incredible that you can’t take it for granted that when it’s time to renew your insurance you will be able to affordably, and reliably access insurance. The market is extremely unpredictable and volatile with premiums fluctuating wildly from year to year, based on whether the insurers have faced claims in the legal industry or not. It’s quite unrelated to whether you as a firm have any claims.

Some years it can be impossible to get cost effective insurance.  The premiums are so high, or the availability of insurance is so precarious that firms have been forced out of the legal sector. These firms could include those with no adverse claims records. I’ve known of firms that were dropped by insurers who had insured them for years, just before renewal, for no apparent reason. Suddenly these firms found themselves without an insurer.

Some of them closed, some managed to get cover days before their insurance expired, some got insurance by reclassifying their work as ‘commercial’ rather than intellectual property because at one time the market for IP had hardened. It is often difficult to get accurate information about what is going on and why.

Other legal sectors such as the Bar and Intellectual Property Regulation board which regulates trade mark and patent attorneys seem to manage the twin requirements of providing their members with affordable and effective insurance and protecting the public without all the drama that law firms face. For example, PAMIA insures trade mark and patent attorney firms for extremely low premiums, while also offering good protection to clients who may suffer losses.

These professionals may retire or close their practices without having to pay the eye watering sums that solicitors have to pay as “run off” cover due to their premiums being so high.

 

Why ABS Was Not The Answer

Smaller law firms could not justify the extra costs of becoming an ABS on top of all the other expenses of being in business as a law firm.  In particular, the burdensome professional indemnity rules, combined with the competitive market is a disincentive to growth and a serious concern for lawyers contemplating exit or retirement.  The more your turnover goes up, the higher your PI insurance premium will be. This is a tax on success effectively.

Professional indemnity insurance cover is supposed to protect both the professional providing the service and their clients in the event of negligence, errors or omissions, breach of professional duty and civil liabilities.

For most professions the insurance aspects work without the sort of problems that the solicitors market experiences. People can secure affordable insurance which gives them confidence and peace of mind in having an insurer available to finance the cost of errors or omissions.  The client has the benefit of having an insurer to look to if problems arise. Solicitors operating ordinary companies will be able to enjoy cost effective insurance cover if they want it. There is no requirement to get cover even.

This isn’t the forum for examining why the solicitors’ arm of the legal profession has evolved to have such undesirable PI insurance rules which go over and above the normal aims of insurance.

Insurers don’t like the so called “gold plated” professional indemnity cover they’re required to provide to solicitors’ firms. Nor do lawyers like it either as it has such a negative impact on their business. Although in theory, the consumer has the ultimate protection, in practice more consumers lose out through having to pay higher legal fees to access legal services that the PI rules cause than the few consumers who might benefit as a result of an extreme situation occurring. The PI rules are the result of people without any real world understanding of business being in charge of deciding what insurance should cover.

Every law firm at some time or another has experienced the unpleasant side effects that PI renewal can entail. Inability to secure affordable insurance cover should not be an issue that businesses face for reasons that are outside their control. Hopefully, the relaxation of the rules allowing solicitors to offer legal services outside a law firm will therefore have a far bigger impact on opening up access to legal services than the ABS or anything before it.

 

The Future

Before these changes solicitors wanting to provide legal services without setting up a law firm could either do it by giving up their practising certificates and telling consumers that they were non practising solicitors, or they could operate as consultants attached to an existing law firm.

Now they will be able to offer their services as solicitors – except for a few “reserved services” such as probate, conveyancing, and litigation – and they will be regulated as solicitors even though their business is not a law firm.

As an intellectual property lawyer I’ve worked with clients include startups looking to position themselves and stand out with distinctive names and branding. Having run a law firm built from the ground up for the past 15 years which has many entrepreneurial clients I am keen to support lawyers wanting to explore the possibilities that the new regulations open up.  If you’re a solicitor, no matter what stage you’ve reached, you’ll want to explore the opportunities and risks of the impending regulations.

So if you want to set yourself up on the right path for 2020 register your interest

Yes Please Add My Name To The Attendee List for the Next Dinner.

Why I’ve Set Up A Second Business And Expect To Crush It As An Olderpreneur

According to this Institute of Directors report a growing number of people are starting their own businesses in later life. In their article, Over-50s are the new business start-up generation, the Financial Times has very encouraging statistics for anyone considering starting out again after 50, namely that businesses set up by the over-50s are more likely to still be trading five years later than those established by younger age groups.

A study by Jones, Javier Miranda of the U.S. Census Bureau and MIT’s Pierre Azoulay and J. Daniel Kim looked at an expansive dataset and supports these findings. Their research shows that older entrepreneurs have a greater chance of success in their projects than younger ones. The most successful entrepreneurs are middle-aged. This research said: “We find that age indeed predicts success, and sharply, but in the opposite way that many observers and investors propose”. “The highest success rates in entrepreneurship come from founders in middle age and beyond”

They find no evidence to suggest that founders in their 20s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged.”

The study found the average founder of the fastest growing tech startups was about 45-years-old — and 50-year-old entrepreneurs were about twice as likely to have a runaway business success as their 30-year-old counterparts.

As Jones says, the findings “… could help unlock more innovative potential from the many people in the economy that are middle-aged and beyond,”

Why Older Entrepreneurs Are More Successful

Explaining some possible reasons for these findings, the authors of Age and High-Growth Entrepreneurship point out the greater management, marketing, and finance experience that older entrepreneurs tend to have, as well as a richer, deeper knowledge of an industry. Also, quite important is that older entrepreneurs are likely to have larger financial resources to tap and more social networks to mine for support in leveraging their idea.

Writing in the Harvard Business Review they explained “we found that work experience plays a critical role. Relative to founders with no relevant experience, those with at least three years of prior work experience in the same narrow industry as their startup were 85 percent more likely to launch a highly successful startup.

The IOD report attributes this trend to the shake-up from the recession, a view backed by the FT. Apparently the over 55s are unable to get corporate jobs, and so are turning to self-employment instead.

This is all music to my ears. Previously I’d been seeing reports in the media about how baby boomers were coming up to retirement and leaving the workforce, rather than about how so many of them are starting up ventures in their 50s and 60s and crushing it by all accounts.

Reasons To Start New Businesses

The desire to supplement income may just be part of the story. After all, money is never the only driver for engaging in an activity.

I wonder whether these reports may be overlooking another important reason people may be starting up in business in their retirement years.

For myself, the work I do gives me a sense of fulfillment and purpose. I love to have a project, and that’s why, far from wanting to retire, I’ve gone on to set up a second business to exploit my skills, Azrights International Ltd.

Professor Dame Sally Davies, the chief medical officer, wrote a report a couple of years ago saying that those between the ages of 50 and 70 were healthier if they kept on working. Even the over-80s benefit. Reportedly an 89-year-old former soldier, Joe Bartley, from Devon, advertised for a job because he was “bored”. He now works as a table-clearer in a local café.

But is this really news? When we reach older ages none of us actually feels old. I have as much mental energy as I ever had – in fact, more so as I’m now free of childcare responsibilities and can devote my energy and time to the pursuit of my life and business goals.

People don’t change just because their age advances by a few years. Retiring into the sunset to put your feet up and while away the time, is rarely an appealing prospect for anyone, except perhaps for those whose skills involve physically challenging work, or for those who have absorbing hobbies to pursue which they prefer over work.

For the rest of us who have built up skills over a lifetime, an existence without work would lack purpose and meaning.

I personally want to work till I drop. I would hate not to have a project to keep me connected to the world. I love entrepreneurship, innovation, and new technologies.  So, why wouldn’t I want to continue working?

Yet we live in an ageist society that reveres youth.

Ageist Society

When society is expecting us to retire rather than start up new ventures it’s inevitable that some attitudes will be internalised so that we believe this somewhere deep inside us. The 20 or 30-year old me would have written someone of my age off. I would have thought myself completely past it by now.

How prejudiced was I! And here I am now, an older person myself. It’s just the way of the world I guess. Doesn’t every younger generation tend to regard even those who are just 10-15 years older than them as vastly aged?

So, unsurprisingly I do find the widespread ageism affects my self-belief occasionally. I catch myself fleetingly having a limiting belief. For example, recently I’ve been planning to improve my public speaking skills. Public speaking is an activity I’ve been ambivalent about most of my life. If I’m asked to speak I accept, but I never actively seek out opportunities to speak. However, I realise that when you have a message to communicate to the world then speaking on stage is a necessary part of that.  So, I am trying to dispel the fleeting negative thoughts that cross my mind occasionally as I hear myself thinking: “why bother with public speaking at your age?” “Aren’t you a bit past it?” “What are you realistically likely to achieve now?”  “Isn’t it too late to improve your skills by now?”

No, it’s never too late. I’m inspired by stories such as about the Japanese artist, Yayoi Kusama, who at 89 years of age has emerged in the last 5 years to become a highly sought-after artist. Success had eluded her till her 80s – according to this Guardian article about her

It heartens me when I hear of people achieving success so much later in life or continuing to have thriving careers well into their 80s. Take Mary Berry who is still featuring in the BBC’s TV shows in her 80’s.  And there is Pru Leith who not only has a highly successful career, but has also found love again and remarried at age 76!

Work And Contribution

 Millennials are certainly likely to need to continue working into their 70s judging by the pension crisis. I’ve always advised my own daughters to pursue work they love. It’s especially important if you’re a millennial to do work you really enjoy, given you may have to be doing it for a very long time.

 Certainly, in my own case, after 14 years in business, I’m still looking to contribute in more meaningful ways, and engage in activities that are truly fulfilling for me on a personal level. I’m a different person today to the one who first started out in business in 2004.  My business skills are honed by now, adding to the depth of expertise I can offer in my core topic of intellectual property.

Intellectual Property is what enables people to protect what’s theirs, their market share, avoid having their best ideas ripped off and copied, and more. So, it’s a subject that is inherently intertwined with business.

That’s why I set up my second business to provide online courses and coaching. It means I can help people make the most of their ideas, decide what to protect, how to choose a good name and so on as part of a coaching service if they need such help.

I have big plans for Azrights International Ltd. The Legally Branded Academy online course that I’ve created will soon be rolled out to medium-sized businesses. It’s currently suitable for start-ups and small businesses and is the culmination of 6 years’ work distilling intellectual property to a few basic processes that businesses need to adopt. So, I can help any business to introduce systems and processes to protect their Intellectual Property on an ongoing basis as they develop new ideas and projects.

You see, much of IP protection happens very early on. The very act of choosing names, making decisions to commission branding, websites, apps and the like, deciding what information to reveal to others, how to promote new concepts and so on have significant implications on a company’s IP prospects. These steps necessarily happen before a lawyer is even consulted. So, having insight about what to do and what not to do at various touch points is essential for businesses to take on board.

IP is an essential business skill. It’s not just a legal subject to leave to the lawyers. Without it, you’re at a disadvantage when implementing new ideas and projects in your business in today’s digital economy. I can make a greater contribution by adding business coaching to the services I offer. It’s exciting to use my knowledge and skills in new ways and I am intending to expand my topics to include related non-law ones too such as the marketing considerations that impact branding and naming.

The entire activity of branding is closely related to intellectual property, and yet there are a lot of people selling design services under the umbrella of branding.  Many people believe that a brand is a logo! So, this is a topic that needs greater professionalism to be brought to bear. Anyone who is choosing names and doesn’t understand the IP implications of naming needs to upskill themselves urgently. They can do so by getting Legally Branded Academy.

Expanding the topics I know deeply means I can keep learning, something I love to do, and then contribute in wider ways.

Conclusion

Life is short and at the end of the day you’re going to ask yourself the question, or your children will wonder on your behalf, what was it all about, what were you up to during your short time on earth?

I believe that what we do can touch other people’s lives in ways we’ll never know. So, it’s not necessarily my own visible achievements that will ultimately matter the most. Who knows how others might be impacted or benefit from my existence or ideas?

The important thing is to continue contributing to the world. I’m so pleased the ranks of “olderpreneurs” look likely to swell further in the future. Olderpreneurs have wisdom and experience and so much to give. They also have many years of productive work ahead of them.

 

Why Resolving Disputes Costs Ten Times More Than A Contract

Lawyers are expensive, particularly if you are in dispute with someone. However, because prevention does not sell, many small business owners tend not to use lawyers except when they are unfortunate enough to face litigation. In the meantime, rather than use lawyers to draft any agreements for them, even important ones like terms of business. They are turning to the burgeoning industry of contract templates and buying standard precedents to use.

The problem is many of the contract templates on sale are every bit as lengthy and complicated as legal precedents used by contract lawyers. Unless you’ve got seven years of legal training under your belt, these so called “simple templates‟ can be an overwhelming place to start for the layperson!

Even where the templates ARE written in plain English they have a fundamental flaw: It is difficult to know how to use or alter them because it’s the details of the commercial transaction which will determine how you should tailor the document. If you lack an understanding of the business context and the dynamics that would entail the need to alter a standard template how can you properly adapt it to your situation? Rarely are transactions so standard that a general legal document is adequate. As I explained in my blog  Why use a lawyer when you can buy a legal agreement? Last week entrepreneurs would do far better to just use plain English and avoid any legalese when writing their own agreements.

If you’re left to grapple with complex drafting alone and then there’s a dispute on that agreement,  you are unlikely to be well positioned to contest the dispute, and it will cost you a lot more than it need do to resolve it.

You do not need to sign a piece of paper to be bound by its terms.

There are many misconceptions about contracts, including the belief that it’s necessary to sign a piece of paper in order to have a contractual relationship. That’s not the case.

When you engage someone to perform a service for you, or agree to sell something to someone, a contract exists between you and the other party whether you realise it or not. The exception is if it’s purely a domestic relationship, which the law treats differently.

If either of you put forward written terms at the right time during your discussions you would have a contract on those terms even though nothing was signed.

It’s important to realise that your email discussions, and telephone conversations are enough to create a binding contract. If you don’t document the agreement then it will be quite messy and expensive to resolve any disputes later.

In my blog I explained how to document your own agreements informally using plain English instead of relying on bought templates. Here I just want to explain what happens if you can’t negotiate a solution with the other side and need to involve a lawyer to help you resolve the dispute.

Resolving disputes using lawyers

Lawyers start by gathering background information to try to work out the legal answers to the issues in dispute between you. They will question you on the oral and written discussions you had with the other party before the contract was formed. Details of who said what and when will be relevant to shed light on your mutual intentions and what you “signed up to”, as will any written terms either of the parties put forward.

After building a picture of the background circumstances, the lawyers would apply their knowledge of contract law principles to your situation to pin point the time when the contract was formed in the eyes of the law. This date would also give an indication of what terms were incorporated within it. Your discussions or documents sent after that date are generally unlikely to have contractual effect. It can happen that the contract is formed before people  realise it and the  legal agreement they used had no effect!

Say your dispute is about an ecommerce website being delivered late. You had engaged a PR company and incurred various other expenses relying on the web developer’s promise to deliver your site on time. The delays left you considerably out of pocket.

Your lawyers decide you have an arguable case to claim that the other side broke the contract. So, they would write a letter claiming compensation on your behalf. There has to be a lot of posturing to get the other side to want to conclude the matter without resort to court. so, the dispute will generally mention legal actions and remedies that the parties could avail themselves of if the other side fails to agree to their demands.  It can therefore be quite unpleasant to be involved in a dispute.

The other party’s lawyers will hopefully give advice along similar lines. So if you have a good case, it’s likely they will suggest their clients be ready to make an offer of compensation to you. They may not do this straight away, but they will advise their client of the strength of your case. When the offer is made it will probably be lower than the sum you claimed. That’s just the way negotiations tend to go. However, you never know whether the other party is serious or just bluffing, and risk losing the chance of a settlement each time you reject their offer. Some correspondence will ensue before a final compromise is reached or the matter is escalated to issue of legal proceedings (which is not to say you will end up in court).

If the other side’s lawyers glean some information which they think weakens your claim, they will respond to say you contributed to the delay because of something you did (such as changing the brief) or failed to do (such as providing a list of requirements by a set date), and therefore are not entitled to any compensation, or as much compensation as you claimed and so on. Generally, after some correspondence back and forth the matter is resolved. Only a tiny number of disputes end up in court. 

That’s not to say it doesn’t matter what document you use. The better your documentation, the cheaper it will be to resolve disputes, and the less likely you will be to be to need lawyers to help you resolve matters. The real purpose of a legal agreement is to achieve clarity. It’s not just to have a piece of paper. The reason for having a legal agreement is to encourage you to think through the details and discuss them with the other side before the contract between you is formed. Hopefully if you are like minded you will do a deal and if you’re not, the pre-contract negotiations will highlight it so you walk away from the deal.

Why use a lawyer when you can buy a legal agreement?

In business, contracts and agreements are part of daily life. Consulting a lawyer to draft all your agreements can be expensive, so in practice, only bigger businesses have the resources to get legal advice every time they need an agreement.

As an entrepreneur you will find it necessary to document many of your own agreements, and should know which ones are too important to draft yourself.

Written agreements are binding documents that define the obligations of the parties involved in a specific project. So it’s advisable if you sell a good or service, to have a clear record of what was actually agreed. Memories fade, and a written record ensures that if disagreements arise later about what was actually intended or agreed, you will have documents to look at to see what was actually intended when you entered into the arrangement.

So, should you buy a legal agreement to use when entering into a new type of arrangement?  In my view this can be dangerous because there is no such thing as a standard template.  The context in which you use a template will differ from the ‘standard’ scenario envisaged in the basic template.  So, you will need to tailor the template to suit your particular transaction.

The terms of your particular deal are more likely to be accurately reflected in your document if you avoid using a ‘standard’ template.  I’ve seen many completely rubbish agreements signed by entrepreneurs who drew comfort from the fact that they were using an existing template.  Unless you have solid familiarity with the template and know how to adapt it to suit your particular transaction it may be better NOT to use legal templates as the starting point when drafting your own agreements .  Instead perhaps use them as a guide as to what to include in your own drafting (subject to the point I make below about avoiding use of any legal terminology, or clauses you don’t understand).

If you have a lawyer create an agreement for you and negotiate and redraft variations of it, you may develop the necessary familiarity with that particular template to reuse it on your own.  But otherwise, in my experience it’s safer to record simple agreements by emailing details of the ‘deal’ and asking the other party to confirm by email that the terms are correct as written in your email. Here are a few elements of written agreements to focus on:

1. Define the scope of work.

2. Indicate exactly what is to be done by whom and within what time frame. Also indicate who determines if the work has been completed satisfactorily.

3. Establish time frames.

4. Indicate how long the agreement lasts and how you will be able to terminate it sooner if for any reason either of you want to do so.  There should be a clear exit strategy.

5. Establish milestones and indicate when payments are to be made and clarify payment arrangements.

6. Focus especially on clarity about money issues: who pays what, when and how. What happens if payment is not made on time?

Be sure to avoid using legal language unless you know really well what those terms mean.  Legal terminology if misused could have unintended consequences on your circumstances.  For example, if you intend to give someone sole rights to distribute something but use the wrong term and give them exclusive rights instead, the legal consequence is that you give the other party all the rights, and deprive yourself of the right to distribute that thing yourself.  Nor should you ever say ‘sole and exclusive’.  This is a tautology.  Each of these words has a very precise legal meaning and consequent impact on the scope of the rights granted.  Be clear whether you mean ‘sole’ or ‘exclusive’. That’s why in my opinion  it’s far better to avoid such pitfalls by using plain English.  Say exactly what you mean in ordinary language you both understand.  Whether you’re agreeing something with clients, vendors, joint venture partners, affiliates, or anyone else for that matter, by ensuring the details are documented in a style and language you both understand, it’s much more likely you’ll end up with an effective written agreement.   

The benefit of recording the terms of your agreements in writing is that you air issues upfront and sort essential details out so you stand a better chance of negotiating your own solution if things don’t work out between you.  Next week I’ll explain what tends to happen when two parties end up in a dispute they can’t resolve without the help of lawyers.

Going through this process of documenting your agreement could very quickly show if you are about to engage in business with someone you shouldn’t be entering into business with.

Obviously, complex agreements (especially where a great deal of money is at stake) should always be drawn up or reviewed by a lawyer. It would be false economy not to consult a lawyer if the transaction concerns a commercially significant issue for your business.  Otherwise you will spend ten times as much ultimately on legal fees.

Never A Pedantic – A Reply To Revolting Pedants by @LegalBizzle

Reading Legal Bizzle’s very interesting article Revolting pedants made me  uncomfortable as he concluded:  “And I’m happy to say it loud: I’m a pedant, and I’m proud”.

Much as I want to agree with Legal Bizzle, I can’t do so given my strong dislike for pedantry. The word has connotations of officious types who are sticklers for rules and stand by formality when all reason points to more pragmatic solutions. To me pedantry means pettiness and trivia – arguing over unimportant minutiae. Which lawyer would be proud to be associated with such negative connotations?

Certainly a good lawyer needs attention to detail but so do many other professionals. In most areas of life the small stuff, the minute details can and do matter enormously.

So I turned to the dictionary for a definition of pedantry. According to the Chambers English dictionary, to be a pedant is to “attach too much importance to merely formal matters in scholarship”.  However, none of the examples Legal Bizzle gave in his blog fit this category. Far from being formal matters, the clauses he mentioned involved serious commercial consequences. So, I don’t think Legal Bizzle is a pedant, though it mystifies me why he should want to be one.

Being ‘commercial’ is a desirable attribute in a lawyer. I would argue it involves knowing when NOT to be a pedant. So I can’t agree that a good lawyer is a pedant. Far from it.

To pay attention to detail, does not a pedant make. Pedantry is to lose sight of the importance of a point of detail. This can happen when a lawyer doesn’t really understand why a precedent is worded in the way it is, and feels safer therefore in defending it against amendment. But the more experienced a lawyer is, the less likely they are to let imprecision slip through in a clause having serious implications, and will understand when a point is trivial and can be conceded during negotiations.

For example, with “best endeavours” it will depend on what the other party is to achieve, as to whether it is worth arguing whether the contract should impose an obligation on them to use their ‘best’ endeavours or whether ‘reasonable’ endeavours would be adequate.

Any lawyer may start off by trying to get the best deal for their client, and so would propose ‘best’ rather than ‘reasonable’ as a starting point. But whether it’s then worth arguing the toss is another matter. As long as the client appreciates that ‘best’ requires more effort than ‘reasonable’, it’s up to the client to decide what’s worth insisting on with the other side. To argue the point simply because you know that ‘best’ is better than ‘reasonable’ when the client doesn’t think it’s important would indeed be unnecessary pedantry – unless you are doing so on purpose as part of an overall negotiation tactic, to have concessions to trade later.

Legal Bizzle then gives the following clauses as an example of how difference of wording matters:

The supplier shall not in any event be liable for any indirect, special or consequential loss, howsoever arising (including but not limited to loss of anticipated profits)

The supplier shall not in any event be liable for any loss of anticipated profits or for any indirect, special or consequential loss, howsoever arising

Whether to exclude liability ONLY for anticipated profits or for all indirect losses, of which anticipated profits is one small example is clearly not just a formal stickler type of objection. Most clients would understand that if they are not insured for certain liabilities their business would suffer, and will not regard discussions over such clauses as pedantic. It’s the very essence of what they use lawyers for – to look after their interests.

However, often contracts include many quite tedious procedural details which don’t really need to be in the agreement at all. For example, for many SME web development projects the standard web development precedents are overkill in my view. They run to 15 pages, and among other things, spell out in excruciating detail how acceptance testing should be carried out and notifications of errors sent, and how these will be remedied/retested etc. Whole pages of standard web development contracts can be cut out and a much briefer document created that just focuses on important risks and essential commercial issues. Most clients prefer briefer contracts, although longer contracts have their place – usually in larger projects.

Perhaps if as a profession us lawyers could see the wood from the trees more, and focused on creating shorter, clearer precedents that addressed the real risks of transactions, clients would better understand how we add value. But as long as we continue to have epic contracts that seek to address every single risk, regardless of the amounts at stake, or the commercial realities, we are at risk of seeming to be pedants arguing over unimportant trivia.

For me good lawyering is about being commercial and business like first and foremost. Pedantry has no place.

It is harder for in house lawyers as they may not be able to simply advise their client and ask them to indicate how to  proceed. Say the issue is, for example, whether to insist on ‘best’ rather than ‘reasonable’ in house lawyers themselves will have to weigh whether it’s worth insisting on this during negotiations as their client is the company, and a company has many stakeholders whose interests need to be borne in mind.

When the immediate  ‘instructing client’ is the sales staff who may regard the lawyer as an obstacle to a signed deal it can be extremely challenging. The sales staff are likely to be cavalier about contract wording, so the lawyer will be operating in difficult conditions. Maybe Legal Bizzle has to be proud to be a ‘pedant’ because it can feel like pedantry operating in such a scenario.

Niche Firms for Legal Process Outsourcing and White Labelling

Last week Azrights announced the launch of its trademark registration white labelling solution for law firms.  It is the first comprehensive trademark white labelling service for UK law firms.

UK Regulatory considerations

The impetus behind it was the Solicitors’ Code of Conduct Rules 8 and 9 which prohibit fee sharing with non lawyers, and regulate referral fees.  These rules complicate solicitors’ ability to benefit from trademark registration work which they are often in a position to refer to others.

To run an effective trade mark registration service requires investment in IT, and other resources.  Many law firms offering such services have difficulty doing it cost effectively, and price competitively.  Their high charge out rates, and culture of invoicing larger sums generated from litigation, make it difficult for them to make money from the relatively modest amounts invoiced for trademarks.

Azrights introduced its white labelling service for two types of firm.  The first currently do not do their own registrations.  A virtual department would generate an additional income stream for them without an accompanying increase in overhead costs.

The second type of firm offers trademark registration services and may be looking to outsource the work in order to  focus its resources on more profitable, higher skilled work.  Legal Process Outsourcing is a much bandied about concept nowadays because law firms are under increasing pressures to reduce their costs.  So, it’s worth considering what is the difference between Legal Process Outsourcing (LPO) and White Labelling.

White labelling and Legal Process Outsourcing (LPO)

According to Wikipedia a white label product “….enables a successful brand to offer a service without having to invest in creating the technology and infrastructure itself”.

The FSA defines white labelling as arrangements where a product or service is offered under the brand of one company (the distributor) while a separate company (the producer) actually makes the product or provides the service……. “White labeling allows producers access to a wider market than they would otherwise reach, and allows distributors to offer a wider range of own-branded products or services”.

According to wiki LPO is the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company.  When the outsourced entity is based in another country the practice is sometimes called Offshoring.

So white labelling might be a more complete solution, while LPO may just involve a discrete aspect of legal work being outsourced to the LPO provider.  Taking trade mark registration as an example, white labelling will deal with every aspect of the work, from beginning to end, while LPO may cover just specific aspects of operations, such as renewal of trademarks.

The continuing pressure on legal fees, the scope of SRA regulations, and consequent search by firms to find more cost effective solutions, points to law firms looking at solutions right on their own doorstep.

Why use a niche UK law firm for LPO or white labelling?

It is preferable for UK law firms to look to niche law firms in the UK when searching for the cost reductions that LPO can offer.  Lora Bentley, across the pond, expresses a similar opinion in her post Need to Outsource Legal Work? Try Boutique Firms in U.S. First

For example, by using the Azright white labelled trademark registration service UK law firms benefit from the investment in technology, and expertise that Azrights has built up over a number of years.  They get access to highly skilled help without the concerns that LPO as such entails.

Given they’re outsourcing the work to a regulated law firm in the same jurisdiction, few  concerns about quality and reputation that are usually associated with LPO arise.

Legal work requires a specific education, and training, and is regulated.  So, why send the work to other professionals whose rules are dissimilar to those of solicitors, let alone to overseas lawyers who are not educated in English law?

Often offshore LPO providers use as a selling point the fact that they have highly qualified lawyers whose hourly rates are a fraction – one tenth – that of a solicitor.  However, if paralegals in this country are well managed and supervised, and work in a process supported by effective technology and senior lawyers, they are, in my view, better able to offer the quality required by a UK law firm.

It is a mistake therefore to compare the hourly rate of an attorney in India or other offshore location with that of a UK solicitor in determining the savings that may be made by a successful outsourcing LPO provider.  If the work being outsourced is relatively low level and repetitive, or is administratively intensive, then it does not need highly skilled lawyers.

Indeed is it beneficial to use the services of highly skilled lawyers who may be over qualified for low level tasks?  I would worry they would get bored and prove less efficient.

On many types of work that are outsourced it may therefore be more appropriate to compare rates with paralegals in this country.  A very affordable service can be provided in the UK by a law firm that knows how to use IT, and different skill levels within an efficient process.  Access to IT and use of good management and supervision are key to LPO success.

A niche firm within the same jurisdiction has the specialist skills and experience to run an efficient operation much more cost effectively than non specialist firms or larger law firms.  Being subject to the same regulations it is therefore a safer place to entrust compliance with regulatory obligations by outsourcing law firm.

In the UK we currently have a surplus of well qualified law graduates, motivated to get experience.  Could it be that Richard Susskind’s End of Lawyers? is wrong in its assumption that LPO will go offshore, leaving a dearth of training opportunities for future lawyers in this country?  Perhaps Richard Susskind would have benefited by taking a closer look at smaller law firms, and the quality of personnel available to them due to the oversupply of law graduates seeking to train as solicitors.

Find out more about outsourcing, and our whitelabelling service on our website:Whitelabelling for solicitors
Outsourcing

 

5 Questions to ask before you engage a business lawyer

If you are starting up in business, getting the right legal help can be a key to success – especially if you are a creative business.  An effective Intellectual Property strategy to properly structure your IP rights from the beginning really does make a difference to the value of your business as it grows.

I was inspired by the Personal Family Lawyer site to consider what I think are important questions to ask.  This is the first in a series of blog posts aimed at those who are about to engage a business lawyer.  This first one focuses on the 5 questions to ask before engaging a business lawyer so you get a good deal from your lawyer:

1. What services can you offer to help me set up my new business?

Setting up in business is extremely time consuming.  There is so much information to absorb, so much to learn.  There is no shortage of advice and information – in fact there is far too much, often contradictory, out of date, and not really appropriate information to sift through.

So, look for a lawyer offering a cost effective way to help you reach the right decisions and manage the information overload.  Can they help you work out what is the best way to proceed for your business matter?  Can they help you to distinguish the essential, from the nice to have legal compliance?  Will they be willing to explain why something is required, and when it might be acceptable to use a standard template, and how to implement it?

2. How do you invoice for your services?

This naturally leads into one of the most important questions you should know – how they charge for the work they will do on your behalf.   No one wants surprises!

If the lawyer will not send you clear information about how they bill for their services beware – you could be in for some big surprises about what things cost down the road.

Look for a lawyer who bills on a fixed fee, project basis rather than on an hourly basis, (unless you are engaging in litigation when Court rules often dictate hourly rate charging).  The lawyer you choose should promise to never send you an unexpected bill for quick phone calls or emails.

3. How are you able to be responsive to my needs on an ongoing basis?

You can and should ask your lawyer how they will respond to your ongoing needs, how quickly calls will be returned, and whether there is someone on hand to answer quick questions.  Should you expect to be put straight through to them when you call the office?

A well run practice should not be putting you straight through to your lawyer, because how can such a lawyer be effective and efficient if they are taking every call that comes through?  Calls should be pre-arranged when you are both ready and can focus on your specific needs.

An effective system should give you the names of team members who are able to offer help if you ring the office.  This is because many of your queries are likely to be within the capability of appropriately trained staff to answer.  They will know if they cannot answer your question to fix a set time for you to talk with your lawyer later in the week, or that day if the matter is urgent.  At the appointed time you will have the  lawyer’s full attention to focus exclusively on your matter – meaning you get more value from the interaction.

4. How will you proactively communicate with me on an ongoing basis?

Unfortunately, most solicitors do not proactively communicate with their clients on an ongoing basis. The general thinking in the legal industry is that legal work is transactional in nature and clients will call when something changes. But, this is faulty thinking.  Look for a lawyer who has systems and processes in place to communicate with you proactively.

At the very least your lawyer should proactively communicate with you at least monthly via an informative, easy to read newsletter.

5. Do you offer an ‘in house lawyer’ service, so I can call about any legal problem I have within my business or private life?

In today’s complex world, lawyers must have specialized training in one or more specific practice areas, such as business, intellectual property, or corporate law. You definitely do NOT want to be working with a lawyer who professes to be an expert in whatever walks through the door.

Trust me, you probably don’t want the lawyer who advised on your branding to also handle your divorce.

However, you do want to be able to tap into the knowledge, skills and insights your business lawyer has developed through years of training and experience as a legal practitioner.  So, you should be able to consult your lawyer on all sorts of legal or financial issues knowing they will be able to guide you towards the exact right expert to help you.

When you ask these 5 questions before hiring a business lawyer, you will know you are engaging an advisor who will help you to make the very best decisions for your business, and who has your long term interests in mind.

What Next?

Register for the Free Teleconference to find out about our new system for assisting online businesses to access legal help at prices all SMEs can afford.

This post is part of a series, to view all of the posts in this series, please click here.

Social Media Policies for Law Firms

Social media for the legal profession

This is part 2 of the blog post ‘Would the Zappos Social Media Policy be Right for you?’ which I began yesterday.  As mentioned there I want to briefly touch on some of the issues law firms may want to bear in mind when devising their social media policies.

A wide variation of approaches is possible when it comes to social media.  Some organisations, such as the British Library, do not allow their staff to have their own individual blogs, while as we saw yesterday Zappos is at the other extreme in seemingly placing few curbs on their staff.  So when I noticed the number of lawyers tweeting in their individual capacity and linking to their own personal blogs on Twitter I began to wonder whether this was a result of advanced thinking by law firms or more a sign of neglect to adopt any specific social media policy.

As someone who runs a law firm, my personal preference is to encourage staff to be social.  However, I feel it is better that they put their blogging energies into promoting the firm’s blog rather than maintaining their own individual blogs.  This is in line with Kevin O’Keefe’s Ten Questions to Consider when considering your firm’s blogging policy.

The benefits to a firm’s brand of having its lawyers tweeting as representatives of the firm rather than as individual solicitors could be significant.

The importance for firms of having a brand – being more than a group of solicitors

If a law firm takes charge by positively formulating a social media policy I suspect many would opt to raise the profile of the firm to gain more brand exposure from its solicitors’ social engagement.

Therefore, firms might consider setting up firm blogs for individual practice areas and encouraging its lawyer staff bloggers to help create a blog that stands out from the crowd.  The firm would need to incentivize its lawyers to blog in the same dedicated way they would do if they maintained their own individual blogs.  Here the way in which a law firm rewards its lawyers for work they introduce to the firm, could get in the way of achieving a corporate rather than an individualistic outlook, so careful attention to these matters goes alongside devising a social media policy.

If the appropriate remuneration schemes were set up to encourage team effort, wouldn’t that lead to a better way to benefit from the social media engagement of individual solicitors?  The individual solicitors would still be recognized for their contributions, but the firm would stand to benefit from brand promotion in the process.  Social media, is after all, just another way to network with others.  You would hand out your business card if you were networking offline, so why not do the same when networking online?  This is a useful article for guidelines on reducing the risks

Legal Services Act

With the Legal Services Act changes just a year away, the question arises whether law firms will be able to attract investor interest.   The answer partly depends on whether they are perceived to be scalable businesses.  The problem for law firms and people based consultancy businesses generally is how to become more than just a grouping of experts organized into individual departments.  The fact that the firm has some star solicitors benefits the firm, but it should have a sufficiently attractive brand as a firm to be able to draw other star lawyers to want to work for it.

To add to the difficulty that law firms have of attracting investors, is that, according to anecdotal evidence, many of them reportedly rely on a single client for more than 25% of their income.  This reduces the perception of the firm as a business because it is too reliant on the continuing goodwill of a single client.

If the head of a department leaves a law firm and takes a sizeable number of the team, then what remains of the particular area of expertise at the old firm?  Is it more at risk of losing key clients?

The law firm as a brand

So a law firm’s reputation needs to be less reliant on its ‘star’ experts, and social media is one way firms could better promote themselves.  Setting up a firm blog(s) and branding the firm more is the opportunity that social media presents.

What about ownership of social media contacts?

As to whether the list of connections and followers an individual solicitor builds belongs to the firm or to the individual solicitor, in my view it is not important for the firm to try to own those connections.  For background issues on this topic see Law Donut discussion

It is so easy for anyone to copy your Twitter database by following your followers using software that automatically follows competitors’ followers that even if you divested the individual solicitor of their Twitter account when they left the firm, their employers could have already copied across most of those contacts, or already have them in their own list of followers or contacts anyway.  Social media has the effect of making the world shrink into the equivalent of a small village as far as contacts are concerned.  Everybody seems to know everybody else.  How an individual cultivates those contacts, and the quality of the relationship is what makes the difference.

In the new world order that social media is creating it will be futile for an employer to want to try to maintain ownership of the list of contacts by specifying that the account may only be used for business purposes.  The very nature of social media involves a blurring of the boundaries between the personal and the professional, and the law is going to have to find more innovative ways to protect employers against the activities of former employees than by basing the decision on whether the employee was only allowed to use the account for business purposes.  Artificial ways of describing social media lists so as to maintain that they are confidential, is soon going to be an inadequate approach.  Also it could do a brand reputational harm to become known as an employer that divests its staff of all their Linked in, and Twitter contacts when they leave the firm, than if it just accepted that it is a necessary feature of social media that employees take their social media contacts with them when they move.

Further reading

Connections staff make while in your employ will be too difficult to detach from them as individuals.  As Hubspot argues in its excellent book Inbound Marketing, in future businesses will be engaging staff by assessing their competence as Digital Citizens and the connections they have formed.

Worth looking at for anyone wanting to delve more into the branding questions on culture, core values, customer experience, passion, and purpose – and financial goals is to look at the movement that Zappos has now launched – www.zapposinsights.com.  Also there are a number of law firm risk resources here.

Conclusion

Our own current policy at Azrights is to encourage staff to be social.  However, as we are a small team, trying to make massive progress on a number of fronts with various projects, we are only managing to maintain a semblance of a presence on Facebook, Linked In, You Tube and Twitter. If we had more time for social media, then we would know better what problems can arise.  Certainly I am mindful of the dangers – see for example a recent Times Online report.  In the meantime, staff are encouraged to let me see anything that may be controversial before it is posted.

I would appreciate comments on this topic particularly by lawyers, but if anyone wants to contact me personally then please email me.

The End of Lawyers? The Legal Hybrid is already here

end-of-lawyers

end-of-lawyers

Reading Richard Susskind’s book the End of Lawyers I identify myself as already being the sort of lawyer Susskind suggests will become increasingly multi-disciplinary in order to succeed.

Susskind describes us as ‘legal hybrids’ and quite different to the lawyers of today who already claim they are deeply steeped in neighbouring disciplines, as project managers, strategy and management consultants, market experts, deal-brokers, and more.  As Susskind puts it

“these forays into other fields are not strategically conceived, formally planned, or supported by rigorous training.  They are rather ad hoc and piecemeal initiatives.  In contrast, legal hybrids of the future will be superbly schooled and genuinely expert in these related disciplines and will be able to extend the range of the services they provide in a way that adds value for clients.”

The future is already here and I am one of the new breed of intellectual property and internet lawyer who is ‘superbly schooled and genuinely expert” in the related field in which I work, namely internet marketing and branding.

How did I get here?  I first became intensely interested in the internet when I was doing my Masters in law at Queen Mary and Westfield’s Commercial Law Unit.  There was such a buzz in the Technology course I was doing, and that is where I first heard about the internet.  That was 1996.  I immediately went home and told my husband about it (he has his own software consultancy business).  We downloaded software and were soon set up and able to surf on the web.

The internet has come a long way since those early days, and my interest in it has continued and grown.  The subject is also very relevant to the areas of the law in which I specialise because doing business online brings into question your trade mark, branding and domain names.  As with so many other areas of business, the internet introduces subtle differences to the advice you would offer to someone doing business offline, and so it is important for trade mark lawyers to extend their learning to encompass the differences that the internet necessarily introduces.

Having advised web designers on internet contracts, I have already acquired good general knowledge as an internet lawyer.  But the main way in which I claim to already be one of the ‘legal hybrids’ that Susskind describes is through what I have experienced and learned during the last 4 years of running my own business – Azrights – and its website, as well as through my intense interest in the internet.

I am now on my fourth website and naturally have learned a lot about websites and internet marketing along the way.  I have attended courses, read voraciously, and picked up a lot of knowledge about the internet.  What’s more I have made a strategic decision to provide internet services.  So, I fulfil all Susskind’s criteria for being the new breed of lawyer.  Over the next week I will be explaining why this matters, and what this new breed of lawyer can do for businesses going online.