Law Society elections. The trouble with the profession is...
7 September 1996
There can be little doubt that Law Society president Martin Mears has tapped into a reservoir of disaffection. But there is a danger that the current elections will increase polarisation at a time when we need to find common ground to revive the profession.
The key issue is that the profession has not taken on board the consumer revolution of the past 25 years. Consumers of legal services are more sophisticated and competition is more intense both within the profession and from outside it. The response to this is not a retreat to protectionism and a hark-back to the good old days of scale fees and clients who never complained about the bill, it is to compete and this demands investment to improve the quality of services we offer. This means better systems of client care, file management and communication of billing methods but, more important, a concentration on real quality - delivering the best and being perceived by the client to do so. This will only be achieved by increasing our niche practice and by recruiting quality staff and training them to deliver.
This may seem contrary to Mears' proposals, but he has rightly identified two areas of concern - the structure of the Law Society and the financial problems of many firms. This article also looks at training, where presidential thinking could be out of tune with the needs of the profession.
The leadership of the profession has lost touch with the rank and file, and reform of the society's structures is long overdue.
The primary need, both in the profession and in our firms, is for leadership. Without good leadership, changes in the election process, structure and systems will be ineffective.
The election of the president has been by "buggins' turn" for many years and although we have had some good presidents, their role is marginalised by the brevity of their period in office. The compensation for this, in recent years, has been a strong secretary general with an impressive administrative team. In practice, this was simply a shift of power from one non-elected body, the council, to another, the administrative staff.
Mears is right that democratisation of the Law Society is needed. But we need the best people to lead us and the danger is that the polarisation into Mears and anti-Mears will not let this happen. Mears is also right that the society has become a cosy club. This is because of the structure of the institution rather than the people involved. Council members are not generally self-serving but are motivated to serve the profession. Instead, it is the structure of the Law Society which makes the council conservative in the face of the Government and Legal Aid Board on the one hand and the rank and file of the profession on the other. The fact is that it may be impossible for a council of over 70 people to govern effectively.
As well as democratisation, the Law Society needs restructuring, particularly if secretary general Jane Betts and her administration are to take a more back seat role. A smaller elected council may be appropriate while retaining the ability to enlist non-elected expertise as required.
Financial problems are at the heart of the profession's difficulties and many firms are not financially viable but do not recognise it. Management consultants say balance sheets regularly overstate the asset position and profit and loss accounts exaggerate profits by understating or completely failing to take account of a variety of expenses. The result is a vicious circle of firms trying to pay tax on profits which have not been made, leading to increased borrowing and cashflow problems so that partners have to reduce withdrawals and consequently become locked into their firms.
It is not only small and medium-sized firms which experience financial problems. Many large firms overcommitted themselves in overheads such as premises during the late Eighties boom and are now finding that their clients will not pay high hourly rates.
The momentum behind scale fees in conveyancing is a symptom of the general financial malaise but the idea is unrealistic. Scale fees operated in a pre-competition era and were difficult to enforce even then; they operated by general consent which is difficult and politically unacceptable to enforce today. More important, a return to scale fees would not be accepted by clients or by a large part of the profession.
Scale fees were abolished before competition hit the profession. But the effect of their abolition was not felt until advertising got into full swing, a result of panic over the perceived threat first of licensed conveyancers and then institutional conveyancing. In fact, neither has proved to be the problem anticipated and it is the self-induced downward spiral of fees that has made conveyancing unattractive. The mistake made by the Law Society in the early Eighties was to allow price advertising. This was resisted successfully in other jurisdictions but, despite warnings, was permitted in England and Wales.
Now there is no way back. Clients are rightly cost-conscious and, although there is a rogue element offering cut-price conveyancing, some firms offer an effective service at economical rates. Any attempt to distort market forces will fail and the solution is for the profession to learn how to bill effectively while regulating those who cut corners.
Another lesson concerns the quoting of hourly rates to clients. Disclosure of terms of business to the client at the outset is sound business and an essential element of client care - the obligation to disclose rates is in the Written Professional Standards. However, the society put too much emphasis on it in the publicity explaining client care provisions to the profession and many solicitors now feel obliged to disclose rates in all cases. In fact, the standards state other methods may be used to fulfil the obligation, including fixed fees, estimates and a percentage basis.
The result of this is that the profession has tried to move into hourly rate charging as it has fallen out of favour in other jurisdictions. Value to the client is the only effective basis for billing and, fortunately for the profession, this is incorporated in the statutory basis for solicitors' remuneration.
This issue was highlighted when the Law Society fought a rear-guard action over the Lord Chancellor's attempts to introduce fixed fees in legal aid work. Time and effort was wasted opposing the concept which could have been better used trying to get reasonable fixed fees. Continuing negotiations over financial terms of legal aid franchising offer another opportunity to pursue reasonable remuneration for legal aid work. But as the largest consumer of legal services in the UK, the Lord Chancellor cannot simply accept hourly rates - he must define as precisely as possible the cost of legal aid. Unlimited funding is not available and the issue is how we divide up the cake to remunerate the niche firms which provide quality service while not limiting access to legal aid and discouraging new entrants to the field.
Outside the legal aid sector, while each firm is responsible for proper remuneration of its services, financial training for partners is inadequate and the Law Society needs to look at how this can be improved.
Training is the secret of a successful firm although many have still not taken this on board. Training takes up an extremely low percentage of most budgets and some firms, while unwilling to implement their own training programmes, resent what they see as interference by the Law Society.
Best practice and the Professional Development Course (PDC) have served their purpose and are rightly being discontinued. PDC has been replaced by the Professional Skills Course (PSC), a vital link between education and practice which continues the practical training of the Legal Practice Course. But best practice targets the wrong people - management training should be more extensive and a requirement for those about to enter partnership or set up on their own. Continuing Professional Development (CPD) is necessary because of the poor training record of individual firms and the high level of client complaints. With the opening of training to a variety of authorised course providers, it is possible to find real quality and a wide variety of ways to satisfy the requirements.
Mears' suggestion of erecting a further barrier to entry into the profession is misguided. In the past 30 years, there has been a cycle of shortage and over supply of young solicitors and the problem in the profession is not that it is overstaffed; most solicitors are overworked and many firms have a counter-productive 'long hours' culture. Instead we need to learn how to work more effectively. This involves working in teams and places an emphasis upon obtaining quality recruits to the profession. Firms which are recruiting as we pull out of the recession will be the first to begin to restore profitability levels.
The LPC, with its emphasis on skills and practical training, is an improvement on the Finals and is producing high calibre students. But law is in a competitive marketplace for recruits and if the best brains go to other professions, firms will suffer. If this trend continues, the profession will soon find it difficult to find good recruits.
The key issue is whether firms can modify working and partnership structures to accommodate these quality entrants to the profession. Firms which do not will not survive.
Today's new entrant is tomorrow's partner and partners already locked into their firms will further reduce their chances of retiring by restricting entry to partnership; the only way out for them will be to run the firm down or be taken over.
Where current criticisms hit the mark is that the Law Society spends too much on policing the training by firms and course providers. The society needs to be more proactive in management training in particular. If this were compulsory and effective, it may be possible to abandon other compulsory post-admission training. Firms continuing to place a low priority on training would be left to pick up the bill in terms of client complaints and the Solicitors Complaints Bureau would be entitled to pursue a harsh policy of waiving fees and awarding client compensation for shoddy work under the Inadequate Professional Services provisions.
However, until there is an improvement in management skills, the current high level of client complaints will continue.