DAVID'S SOAPBOX

The heading to this article could be a continuing theme for the 50 years since I left school and joined a well-known solicitors practice in Brighton. 

I have found that if there is one thing that unites other solicitors’ opinion it is the ability to adopt a pessimistic view of our future. 

I do not believe in wallowing in self-pity as I think there is a real need for solicitors and that those solicitors’ practices where they adapt to what the public wants will succeed and be the stronger for it.

The latest bogeyman is something called “Tesco Law”.  So far as I know it has nothing whatsoever to do with that dynamic and excellent chain of supermarkets and convenience stores but all to do with a loosening of the regulations concerning third parties investing in, and being part of, a legal practice. 

It may be that Tescos have looked at this and are interested, it may be that they have looked at it and are not interested or it may be that they couldn’t care less either way.  So for the purpose of this article rather than calling it Tesco Law I shall call it “Outside Law”. 

Outside Law is where an institution decides to set up a legal practice and/or buys into existing practices and effectively controls them.

I believe that independence in the way in which the practice is run by solicitors and other suitably qualified persons will be crucial to the new regulations when they are agreed but if anyone seriously believes that independence exists where the purse-strings are in the hands of a third party they need to think again.

I have little doubt that when Outside Law comes to be, and at the moment I understand that the way in which it is going to work and the rules and regulations have yet to be defined, many solicitors will leave private practice and sign up.

So what?  There are only so many solicitors around and, in turn, there is only so much business for them to do.  So whether the solicitor does it as a result of being in private practice in the High Street or whether it is done under the umbrella of Outside Law the end result is the same – or is it?

The economic reality, if thought about in depth, is interesting.  Investors in Outside Law will not be putting their money up for any purpose other than to make a profit.  They won’t be expecting to do the work as well.

So, if somebody invests several million pounds in buying a High Street practice the Outside Law buyer is going to want to make a reasonable return upon their investment without doing an awful lot more than having the accounts audited once a year and declaring a dividend or service charge payment in their favour.  So this means that either the solicitors they are employing will have to earn less money to compensate for the money going to Outside Law or Outside Law will have to charge more than the firm originally charged to enable the solicitors to have the same income.  So there the public have it – the change is not to their interest at all but has to do with big business.

That is the basis upon which capitalism works.  The investor who has provided the capital gains an income and those working for the company are paid salaries and/or performance related payments.

A proper and efficiently run private High Street practice will be funded by its owners.  These will be qualified solicitors who are also working in the business.  They will either have funded the practice out of retained profits, which is my preferred method, or borrowed from the firm’s bankers.  The larger the firm the more the need for substantial external funding so the constant depressing tale that Outside Law will mean the end of the small and medium sized firms is just so much pessimistic nonsense.  Sometimes I think we are our own worst enemies.

Many of the larger firms are, in any event, somewhat removed from the day to day problems of ordinary people.  They rely upon large corporate transactions or multi-national companies to feed an army of lawyers. 

Large transactions both UK based and international, being big earners, these firms will continue to make considerable sums of money  in good times but have to drastically reduce their staff levels during a recession.  The large jobs are then either not there any more and/or their clients are fine-tuning their expenses, including fees paid to their lawyers.

There will always be people who will prefer to use the new Outside Law firms but these are likely to be the same people who now telephone half a dozen solicitors to see if they can save £10 or £20 on a bill involving a property transaction where they are going to spend £250,000 or more.  They are also likely to be the same people who are at present persuaded by various estate agents and others to use solicitors who are practising many hundreds of miles away, often in industrial estates, with large open-plan rooms full of people whose faces the client will never see.  So they are lost anyway and aren’t a huge loss at that.

I believe that the future of the High Street solicitor is in getting together teams of people who will provide a wide range of services that meets the needs of the general public. 

The following are some of the sort of problems and needs which I believe are best served by independent solicitors in the High Street:

1.         You are buying your first property.  You may be buying it alone or with a partner. 

2.         In connection with the purchase of that property you will need advice as to the best way to own it and to record any arrangement with your partner.

3.         You are thinking of marrying or entering into a civil partnership.  Your hopes are it will last for ever – in reality one in three doesn’t.  With this in mind you and your partner decide that you would like to record what will happen in the event that the relationship doesn’t work. 

4.         Time has gone by and you either have inherited assets, have built up assets or the value of your property has increased substantially.  You need to make a Will because you want to make sure that if something happens your hard-earned money goes to the right person. 

5.         You have bought your flat.  You may need to extend your lease and possibly to join in with the other flats owners in order to buy and manage the freehold building.  You will need someone to advise on this and deal with the paperwork.

6.         You are in employment and have problems with your employers who you   believe have acted unreasonably.  You need advice in connection with a possible Employment Tribunal application.

7.         You are going into business on your own.  You need advice as to the setting up of the business, acquiring premises to operate the business from and various matters such as the organisation of the business, contracts of employment, terms and conditions etc.

8.         Your business expands.  You need to relocate, including disposing of your existing premises and moving to new larger premises.  You need someone who can discuss the issue of whether you should be buying a freehold property        for your new premises and, if so, to introduce you to suitably qualified people who can advise you on the finance available.

9.         Times are bad.  The business is having difficulty yet you feel it is worth trying to save it.  Advice can be given in conjunction with an insolvency practitioner to try and save the business.

10.       Times are bad in your relationship with your partner.  You need a divorce and advice as to how to divide your assets.  Even though there is a pre-nuptial agreement the Courts are still likely to look at the situation particularly if you have been with your partner for many years and the partner has contributed towards the asset situation or you have children. 

11.       You become involved in disputes with competitors or third parties.  You will need assistance in unravelling these and either going to Court or, preferably, reaching a prior settlement.

12.       An aged relative is, sadly, losing their ability to manage their own affairs.  You need someone to manage these and advise generally. 

13.       Your aged relative dies and all is not joy, harmony and happiness amongst the various relatives left behind.  You need someone to try and sort out the mess. 

14.       You have now reached a stage in life where your assets are considerable.  You will need to review your initial Will and possibly indulge in some tax and wealth management planning with the assistance of suitably qualified people. 

The above are merely a few specimen examples of where solicitors in private practice are required.  Each of the matters I have referred to are, as are many others, important and need careful consideration and advice, together with some sympathetic understanding where appropriate, from experienced professionals.

Contrary to what is assumed solicitors rarely make large sums of money.  Margins are tight so that the net profit figure in relation to the amount of work done is often surprisingly small. 

When I first came into the law the net profit, which is the figure available for distribution amongst the partners after payment of expenses, was reasonably healthy.

That net profit figure has steadily reduced over the last 50 years.  At the same time the amount of capital required to fund a practice has increased substantially.  The complexities of the various matters handled in a solicitors’ practice have increased out of all proportion due to the legislation which we have endured. 

In order to meet proper standards, quite rightly, we are highly regulated and what with the money laundering regulations and other duties imposed by law, a substantial proportion of the work we are obliged to carry out is non fee earning.

To answer the question “are solicitors doomed” I say definitely not.

I believe that there is an opportunity for a partnership with the general public whereby we become the advisor to our clients for their lifetimes.  To do this we need to have sufficient skills to be able to look at, and deal with in a satisfactory manner, the transactions and problem areas which I have outlined above and any others which come along.

At this somewhat late stage in my life I have an aim.  It is to have a situation where not only are the needs of my better-off clients catered for but also for those other hard-working members of society who will only occasionally need a solicitor and would prefer to deal with one practice rather than be shunted from pillar to post in a large organisation where profit is the motive rather than serving the public.

I am sure there is a need and use for large open-plan offices where your property matters are handled by whoever answers the telephone.  That person then taps in to a computer and brings up your file.  I do not believe that that is the way in which we should handle transactions of this importance.  I believe that a bespoke service should be provided at a reasonable cost so that holidays, illness and other absence allowing, you are dealing with one person throughout the transaction.

This is my aim and ambition.  It is to create a partnership with the client whereby we will do our utmost to put together a team of people who we believe will satisfy the vast majority, if not all, of your legal requirements and you, in turn, I hope, will be happy with the service we provide.

We cannot and do not expect to please everybody all of the time but I would like to think that we will do our best to try and do so as much as possible.  I believe there is a need for us and that the personal, rather than the Outside Law, approach can be the way forward if we all work at it.