Category Archives: Legal News

Solicitors expected to go head-to-head for £650 million public sector contract

Solicitors and law firms are expected to go head-to-head this year after the Government revealed plans to set up a £650 million marketplace for the public sector to procure legal services.

It forms part of the public sector’s plan to cut down on the costs of external legal advice.

The Crown Commercial Services (CCS) said it wants to set up a “commercial vehicle” to provide commercial legal services, which will cover more than 35 “legal practice sectors” and 75 smaller “practice areas” – ranging from banking and finance to competition and EU law.

Bidding firms must “be able to demonstrate the capacity and capability within the bid entity to fully provide at least one of the ‘Practice Areas’,” it said.

“The Crown Commercial Service is looking to set up a commercial vehicle or vehicles for the provision of a comprehensive range of commercial legal services to all UK public sector contracting bodies, to include central Government departments and their associated bodies including Devolved Administrations — Scotland, Wales and Northern Ireland, the Wider Public Sector including Health and Education bodies, Local and Regional Government organisations, Emergency Services and Third Sector organisations,” the CCS said in its prior information notice.

“Presently, there are two commercial vehicle types being considered, a dynamic purchasing system, and/or a framework. The choice of commercial vehicle(s) will be decided after the results of in-depth market and customer engagement sessions currently being planned.

“The Scope of services provided by the vehicle(s) is envisaged to cover more than 35 ‘Legal Practice Sectors’ with subsets of more than 75 smaller ‘Practice Areas’.”

At The Fish Partnership we have a long history of assisting a wide range of legal clients with tax and business advice and support. If you would like to know more about our services, please contact us.

Law firms may need to review approach to pricing and customer service, study finds

A new industry report suggests that many commercial law firms may need to rethink their approach to pricing and customer service, as a significant number of clients feel that the legal services they receive do not represent good value for money.

Researchers from Nisus Consulting quizzed some 800 corporate clients in relation to their experiences with solicitors and law firms.

Sadly, the survey unveiled that law firms only ‘met or exceeded client expectations’ in terms of value for money in around half (49 per cent) of cases.

The report identified the most common pricing strategies and habits which are leaving corporate clients dissatisfied or disappointed.

It found that charging by the hour, failing to stick to initial estimates and failing to keep clients regularly informed of changes to estimates and the reasons behind such changes were all leaving clients dismayed and “feeling that value [for money] is poor.”

The report raised concerns that some clients felt they were “paying through the nose” and that they were not convinced their law firm was “delivering real value” in exchange for the level of fees charged.

Tim Nightingale, Founder and Director at Nisus Consulting, suggested that solicitors ought to take a more hands-on approach with their clients, offering proactive “solutions to problems,” such as changes to estimates, where applicable.

He said: “It really doesn’t matter how well a firm is judged to perform on its professionalism or its offices, however new and shiny they are, understanding what’s important to clients in general, and individually, is really the game changer and what we all need to get our heads round because service matters to clients.

“Clients want to work with people they can get on with; people who can think strategically – who can see the bigger picture for the client company and how the legal advice works in that context.”

For more information about the tax and financial services The Fish Partnership can provide to clients in the legal sector, including advice in relation to VAT, please contact us.

Figures suggest law firms are not making the most of apprenticeship vouchers

Almost half of businesses paying the apprenticeship levy are writing their payments off as tax, according to new figures – amid concerns that law firms are not reaping the advantages of extra training.

The Department for Education (DfE) revealed that just 10,500 eligible businesses are registered to receive apprenticeship vouchers, compared with the 19,150 paying the levy – with more than 200 of those operating in the legal sector.

The levy is designed to fund the Government’s pledge to create three million apprenticeships by 2020. Employers with a wage bill of £3 million or more each year are required to pay the levy – charged at 0.5 per cent of their annual pay bill.

All organisations have an apprenticeship levy allowance of £15,000 each year, meaning they only pay the levy on any amount over £3 million.

Joe Dromey, senior research fellow at the Institute for Public Policy Research, told the HR publication People Management that the low uptake suggested employers were not engaging with the levy as hoped.

“While these are early days, with the levy introduced just six months ago, these figures will be a cause for concern,” he said.

“They seem to validate concerns raised around the lack of awareness of the levy – even among firms paying it – and that many levy-paying employers will simply see it as a tax and write it off.”

Elizabeth Crowley, skills adviser at the CIPD, added: “In our view the Government needs to be doing more work to ensure employers are making a choice in not using the levy, instead of being unaware of it.

“It is equally important that if there is an underspend, the funds are ring-fenced and used for supporting employer training, as there is a danger it could simply go back into the Government’s coffer, and not be used to increase skills training and investment in the UK economy.”

A separate study, published by the British Chambers of Commerce earlier this month, found that one in four firms had no understanding of how the levy worked or how their company would respond.

At The Fish Partnership, our legal sector specialists are highly experienced in advising solicitors and law firms on a range of tax and financial matters. We can support legal practices by ensuring that you are as tax-efficient as possible, which in turn can help you to achieve greater profitability. For more information, please contact us.

Green light for CMA to reform transparency in legal sector

The Legal Services Board (LSB) has given the Competition and Markets Authority (CMA) the green light to proceed with plans to improve price transparency in the legal sector.

It said the CMA’s proposals “represent a sufficient starting point for the necessary reforms which will increase market transparency”.

In December last year, the CMA found that there was not enough information available on price and services to help those who need legal support to choose the best option.

It recommended a new requirement that providers display information on fees and associated costs, alongside the development of comparison sites to allow customers to compare providers in one place.

The LSB said the measures would ensure there is better information available for clients in relation to price, quality, redress, and regulation.

Commenting on the review, Neil Buckley, Chief Executive of the Legal Services Board, said: “We also highlight some areas where more work is needed by some regulators to address the challenges outlined by the CMA.

“These areas include understanding current levels of transparency, finding the right mix of mandatory requirements and voluntary guidance and enabling consumers to compare the quality of legal services as well as price.”

Rachel Merelie, Acting Executive Director for Markets and Mergers at the CMA, said: “You might not need a lawyer very often but when you do it will often be at a crucial point in your life – whether that’s buying a property, resolving a dispute or getting expert advice on financial and employment matters. So the transparency, affordability and accessibility shortcomings we have identified are a real concern.”

At The Fish Partnership we have a long history of assisting a wide range of legal clients with tax and business advice and support. If you would like to know more about our services, please contact us.

Law firms could face hefty tax bills following recent FTT decision

Concerns have been raised that solicitors and law firms could face huge tax bills, after a First-Tier Tribunal ruled that VAT is payable in relation to electronic local authority property searches carried out by third-party firms.

In the case in question, the Tribunal said that the searches should not have been treated as disbursements, and the anonymous law firm involved was ordered to pay some £68,000 in backdated VAT.

The decision came after the Tribunal agreed that the searches were used as part of its advice to clients – rather than simply acting as a middle man to collect the search fee.

The law firm was using the search provider Seachflow between May 2012 and June 2015.

HM Revenue & Customs (HMRC) argued that the searches “constitute consideration obtained, in return for the supply, from their client, and which forms part of the charges for their services”.

It added: “HMRC contends that the information within the search results is used by [the law firm] to give advice to their clients, and hence recovery of the outlay represents part of the overall value of the solicitor’s supply to their client.

By comparison, the Revenue said VAT would not be payable by either the search company or the solicitor if they passed it on “without analysis or comment”.

Judge McNall, presiding over the case, said: “The appellants are not simply a conduit or post-box for search results. Simple common sense dictates that clients engage the appellant in transactional work since the appellant knows what it is doing, knows what a search is, knows what searches to obtain, knows how to get them quickly and conveniently, and knows what to do with them when it gets them.

“In my view, this reasoning can be extended so that silence from the appellant as to the searches which it had done and their results would be taken by most clients as an ‘all-clear’.”

The judgment may have significant implications for law firms who use a search provider or have used a search provider in the past.

A Law Society spokesman said: “We are considering the implications of this decision for our practice note on VAT and disbursements.”

For more information about the tax and financial services The Fish Partnership can provide to clients in the legal sector, including advice in relation to VAT, please contact us.

Government puts divisive “flexible court hours” scheme on hold

A controversial “flexible court hours” scheme that was due to be imminently rolled out across several jurisdictions has now been put on hold by the Government.

The plans, which are heavily opposed by the legal sector, will see the crown court sit until 6pm, civil courts until 7pm, and magistrates until 8.30pm.

Robert Bourns, the Law Society President, said solicitors would be expected to attend court during unsociable hours for no uplift in pay, as fees for criminal legal aid work have not increased for more than 20 years.

The goodwill and morale of the criminal defence community has severely diminished following an 8.75 per cent cut in fees in 2014 with the prospect of further cuts to come, he added.

Susan Acland-Hood, Chief Executive of HM Courts & Tribunals Service, said the start of these pilots will be delayed until the department is satisfied that it has a robust, independent evaluation system in place.

She said the consultation process will be re-opened in order to recruit an independent organisation to lead the evaluation work.

“Many of the concerns raised about flexible operating hours point to issues in the way cases are currently scheduled and listed.

“Unpredictability features in the system now, and makes it difficult for many to contemplate anything that increases the window in which cases might take place,” she said.

“Of course, listing is a judicial function and judges must always have the final say. They must balance many things in making their decisions, and there will always be a case for ‘warned lists’ while so many trials do not go ahead as planned. But, as part of our reform programme, we know we need to improve the way we do the work that underpins and informs those judicial decisions. And we think there’s scope to make a lot of difference.”

At The Fish Partnership, our legal sector specialists are highly experienced in advising solicitors and law firms on a range of tax and financial matters. We can support legal practices by ensuring that you are as tax-efficient as possible, which in turn can help you to achieve greater profitability. For more information, please contact us.

Calls for solicitors to deliver greater cost transparency to ‘vulnerable’ consumers

New research carried out by the Legal Services Board (LSB) suggests that the majority of ‘vulnerable’ legal services consumers who have mental health conditions such as dementia would benefit from greater cost transparency.

The study, which surveyed 60 mentally ill clients and consumers found that, for the most part, such consumers received an “extremely positive” and “appropriate” service from their solicitor.

However, it found that the majority of consumers wanted their advisers to give them more information in terms of costs.

Many clients said that they would like to see services that are not only price-transparent, but also “jargon-free” to enable vulnerable clients to better understand how their solicitor can help them.

The LSB’s researchers found that many clients “felt confused about the services on offer” and “needed more time or space” to decide which steps they wanted to follow when enquiring about popular services such as Wills or Lasting Powers of Attorney (LPAs).

Commenting, Neil Buckley, chief executive at the LSB, said: “Sometimes small actions can make a big difference to consumers, particularly those who are vulnerable.

“When providers take simple practical steps this can make a big difference to the consumer experience.

“Consumers can help too, for example, by telling their lawyer if there are things they could do that would help make things easier for them.”

At The Fish Partnership we have a long history of assisting a wide range of legal clients with tax and business advice and support. If you would like to know more about our services, please contact us.

HM Land Registry warns solicitors and conveyancers to watch out for ‘property fraud’

HM Land Registry has been issuing important email reminders to solicitors and conveyancers stressing the importance of being on the lookout for so-called ‘property fraud’ – which can result in significant financial losses.

The email reminders follow a series of leaflets recently issued to law and conveyancing firms in a bid to raise awareness of the issue – which appears to be growing increasingly common.

A leaflet recently sent out to such firms, with the intention of distributing to their clients, reads: “Fraudsters can and do target properties for fraud. By pretending to be you they can try to sell or mortgage your property, leaving you to deal with the consequences. Fraud of all kinds is on the increase, so it’s important you do what you can to protect yourself.”

It warns that homeowners are likely to be more at risk if their property is rented out, empty, mortgage-free or not registered with HM Land Registry.

Homeowners are subsequently advised to sign up to the Land Registry’s free Property Alert service – which will notify them of any applications put forward or issues raised concerning their property, including applications for new mortgages or changes of ownership.

It adds that if properties are targeted by fraud and encounter subsequent financial losses, owners can only be compensated if the property is correctly registered with HM Land Registry.

Meanwhile, solicitors and conveyancers are warned to report any ‘suspicious’ property transactions they are asked to carry out as soon as possible by contacting HM Land Registry’s property fraud line on 0300 006 7030.

So far, the Land Registry claims that it has been successful in preventing hundreds of fraudulent applications from being registered, representing properties valued in excess of £117m.

The warnings come shortly after separate research revealed a rise in so-called ‘conveyancing fraud’.

This kind of fraud typically sees cyber-criminals commandeer communications between conveyancers, homebuyers and estate agents by hacking into email exchanges and posing as solicitors.

In these instances, police crime watchdog Action Fraud reports that hackers are attempting to re-direct conveyancing fees and deposit funds into their own bank accounts, by informing homebuyers of a bogus ‘last minute change’ to the conveyancer’s bank account details.

For more information about the tax and financial services The Fish Partnership can provide to clients in the legal sector, including conveyancers, please contact us.

Changes to SRA rules will make it easier for solicitors to switch regulators

Proposed changes to indemnity insurance rules will make it easier for law firms to ‘switch’ between regulators, the Solicitors Regulation Authority (SRA) has said.

The SRA announced plans to overhaul existing rules earlier this week, in a bid to encourage greater competition in the market.

Currently, law firms ‘switching’ regulator have to obtain six years’ run-off cover for their professional indemnity insurance.

In this situation, firms often find themselves needing to have dual cover in place, which the SRA says can often act as a ‘barrier’ to firms switching, thus hindering competition in the market.

But the SRA says that new plans – which would see that run-off cover is “not necessarily” triggered when a firm switches to another approved regulator – will improve competition while simultaneously “still offering protection for the public”.

It explains: “The new regulator will then be solely responsible for making sure there is adequate indemnity insurance available for future claims for financial loss. This includes claims for prior work carried out, or in progress, before the switch.”

To make sure that all clients remain protected, the SRA is working alongside approved regulators to agree a framework which will enable information to be freely shared when a firm wants to move to another regulator.

Crispin Passmore, Executive Policy Director at the SRA, said: “There was overall support for our proposals to remove the obligation for run-off cover if a firm switches regulator.

“The current approach makes it difficult for firms to be able to switch to the regulator they feel is right for their business.

“This change would give firms that choice, encouraging a modern, competitive market that provides affordable and accessible services for the public and businesses,” he said.

“We recognise that although such a change could have benefits for consumers, there are potential risks around protections for clients. We are therefore working closely with the other legal regulators on a switching protocol.

“This is to make sure consumers remain protected and the new regulator has all the information they need to establish [that] the transferring firm has adequate cover, including for past activities,” he said.

“The way we are proceeding provides a clear, straightforward approach to making sure appropriate consumer protections are in place,” he added.

The Legal Services Board will need to approve the changes before they go ahead, but the SRA insists it is aiming for the change to be enforced before the beginning of October this year.

At The Fish Partnership, our legal sector specialists are highly experienced in advising solicitors and law firms on a range of tax and financial matters. We can support legal practices by ensuring that you are as tax-efficient as possible, which in turn can help you to achieve greater profitability. For more information, please contact us.

Study sheds light on what businesses look for when outsourcing work to solicitors

95 per cent of UK businesses believe that a law firm’s level of ‘transparency’ is most important when outsourcing work to external solicitors, a new study reveals.

According to research carried out by Thompson Reuters, the majority of business clients value ‘responsiveness’ and ‘understanding’ over ‘value for money’ when appointing external law firms to assist them.

However, 65 per cent of those quizzed said that flexible payment options were highly important to them, while 60 per cent added that a breakdown of hourly fees was ‘crucial’ in order to enable them to compare different firms’ offerings.

The survey, entitled Differentiation factor: What do businesses value most from external counsel?, also found that clients were growing increasingly frustrated with having to “chase” solicitors after contracts had been secured.

One survey respondent, on behalf of online travel website Expedia, said: “I’ve had law firms saying they will get back to me within two days and then when those two days are up, they say it will take longer.

“That puts me in a difficult position because I have to then go back to my client and let them know I am unable to get back to them in the timeframe I had agreed.”

Another respondent said that they preferred law firms that offered “fixed or capped fees”.

They said: “This is a big factor in our decision-making process and most firms accommodate capped fees, though not all offer discounted fees.”

At The Fish Partnership we have a long history of assisting a wide range of legal clients with tax and business advice and support. If you would like to know more about our services, please contact us.