Over the last couple of years covering legal aid for the Gazette, I have got used to writing stories of the doom and gloom facing lawyers and their clients, as fees are cut and bureaucracy increased.

But I have not seen the mood as low as it is now, and that mood will only be worsened by the anticipated quarter of a billion cut to the legal aid budget that the justice secretary is expected to propose to the Treasury, as part of the Ministry of Justice’s measures to meet the government’s spending cuts.

At a meeting of the All Party Parliamentary Group on Legal Aid this week, lawyers from across the legal aid spectrum gave accounts of the impact that fixed fees, the Legal Services Commission’s payment regime, and the recent tender exercises have been having – and will continue to have – on their work and ability to stay in business.

The regime, they say, is driving many quality providers away from legal aid, while the payment mechanisms incentivise poor quality providers to take on easy cases and do as little work as possible.

The unanimous message the lawyers wanted to get across to MPs was that the cumulative impact of the whole regime is driving down the quality of service available to clients who are often very vulnerable.

They noted that spending money appropriately on legal aid saves money elsewhere in the system. For instance, the cost to the taxpayer when someone is evicted is estimated at £35,000, while the legal aid fee paid to a lawyer to keep someone in their home is £174.

Read more

Outlining proposals for reform of the professional indemnity insurance (PII) market submitted to the Solicitors Regulation Authority, the ABI said insurers want improved access to SRA files and ‘more open and faster reporting of disciplinary proceedings.’

The ABI said insurers should be allowed to exclude solicitors’ claims for fraud and dishonesty from standard policy terms, meaning that solicitors would not be insured for the fraudulent actions of another partner unless they had taken out additional cover. It said insurers should also be able to exclude claims made by financial institutions.

The ABI proposed in addition that the assigned risks pool (ARP) be funded by a levy on the profession and that the single renewal date be scrapped.

The ABI’s director of general insurance and health, Nick Starling, said these were ‘not draconian changes’ and ‘simply reflect what happens in a normally functioning insurance market’. The standard PII policy terms do ‘nothing to incentivise proper behaviour’ among solicitors and mean that ‘insurers have their hands tied when it comes to taking action against fraudsters’, he said.

Starling added: ‘A thriving insurance market is competitive, flexible and innovative, with insurers working in partnership with their policyholders to help them manage risks to an acceptable level. This is not happening with solicitors’ professional indemnity insurance, which is why [this year’s] renewals are set to be extremely challenging for solicitors and insurers alike.

Read more

The UK’s top law firms have managed a major rebound in profitability this year despite the aftermath of the global recession handing the group its first collective fall in revenues in recent memory.

Legal Week‘s 2009-10 results, the first comprehensive picture of the performance of the UK’s top 50 law firms, shows revenues across the group fell by £461m, from £12.33bn in 2009 to £11.87bn.

However, the impact of an unprecedented round of pay freezes, job cuts and partnership restructurings in the previous financial year allowed the group to achieve an average rise in profits per equity partner (PEP) of 8.8%. The result took average PEP across the top 50 to £524,500.

Despite the fall in income, a stark contrast to the 10%-plus annual growth rates seen between 2006 and 2008, the performance will be seen as evidence of the UK legal market’s resilience.

As expected, the magic circle were impacted by the sustained slump in deal activity and were below-trend performers. The group’s turnover fell on average by 7.2% against the previous year with combined revenues of £4.97bn. However, profits at the five withstood tough market conditions after restructurings at three of the group helped PEP rise by 4.1% on average.

Allen & Overy (A&O) senior partner David Morley commented: “I doubt I could have predicted the results we recorded if I had been asked a year ago. All I can say about the upcoming year is that I think we are very well-positioned based on our mix of practice areas and global reach. The market is still uncertain.”

Read more

Despite often clearly spelling out their payment terms SMEs are having to wait an average of 41 days over the agreed payment terms from many of their customers.

Recent research shows that in 37% of cases customers are stretching payment terms by up to three months and at any one time £24billion is owed to SMEs.

The increase in VAT will only worsen the situation warns the Law Society and urges small business owners to guard against the problem of late payment.

The Society says that not enough businesses are aware of the protections available to them which safeguard against cash flow blockages. Solicitors will be able to help SMEs take advantage of these.

Read more

A new Company with accompanying website was launched this week. SolicitorsSearch.com is a new type of web portal that promises to show-case UK Solicitors and Legal Professionals like no other website has previously done.

A user-friendly service that offers not only a listing, but a showcasing of solicitors near you. They highlight all relevant information about participating law firms in the UK, making the task of finding the right solicitor easier than ever before.

A very attractive website that is extremely easy on the eye with a cutting-edge search engine which caters not only for locating quality solicitors but also assists job seekers within the legal industry.

Have a browse through the website.

Noting ‘a perception of poor complaints handling by [legal] regulators and the individuals and entities that they regulate,’ the LSB said that firms must make it clear how clients can complain to the firm, and if they are unhappy with the firm’s response, how they can take their complaint to the Legal Ombudsman.

The requirements come into force when the Legal Ombudsman opens in the autumn.

The LSB said it is currently working with the legal regulators to ‘ensure that consumer expectations on complaints handling and signposting requirements are met’. The regulators are required by the LSB to monitor, enforce and improve upon these requirements.

Read more

Divorce is always difficult, bringing with it many emotional, financial and practical problems. When one, or both of a married couple own a business then things get even more complicated. It is even more critical than usual to appoint specialist divorce solicitors. But how do the courts approach a division of business assets in divorce?

The main aim when dividing a couple’s family assets is that the division is done in light of each spouse’s contribution. Nevertheless, when it comes to business assets the courts have demonstrated a reliance on the precedent of a 50/50 split between spouses.

When dealing with business assets, the court can award a 50/50 split irrelevant of contribution to the business itself. This is a frequent occurrence where one spouse works and the remains at home. It is assumed by the court that the homemaker party has scarified their career on the basis of financial security received from the business assets in question. Not only this, but the non working party is assumed to have supported the working party in their business ventures.

In situations such as this, the court will not necessarily enforce a sale of the business to fulfil the conditions of the split. Maintenance money may be awarded instead of an outright payment if the business provides an income which supports both spouses and their family. Selling individual assets from the business whilst keeping it as a going concern can fulfill the claims of a divorce.

How does the court achieve a settlement?

Read more

In regards to Pay-Per-Click (PPC) ads, as an example, law firms that were spending $5 per click to rank on the first page of Google for “Los Angeles Entertainment Lawyer” are now paying $15+ per click. With an average online conversion rate of 1-2%, such a law firm will spend $1,500 on PPC ads before getting a hot lead and hopefully converting it. Most large law firms that I have consulted for in the past receive anywhere from 300-1,000 clicks per day on PPC ads. This equates to (on the low side) $4,500 per day or $135,000/month.

These same law firms are also paying big bucks to advertise in legal directories, which are semi-effective. The way I look at it, why pay to place one’s law firm in a directory with a bunch of other law firms? The goal is to set oneself aside from the crowd not put oneself in the crowd. Catch my drift?

Read more

During my year as president, mortgage fraud has been a recurrent issue. We have consistently provided support to members affected by changes in panel terms and conditions, and have worked to influence the approaches of lenders.

Be assured, however, that the Law Society, as the representative body, has no interest in supporting those who choose to engage in mortgage fraud to line their pockets. Apart from the resultant losses experienced by lenders and innocent consumers, these individuals tarnish the profession’s reputation. Even so, the reality is that those who knowingly commit mortgage fraud are a very small minority.

Other solicitors who find themselves caught up in mortgage fraud are not active participants, but unwitting third parties who are used by the perpetrators of fraud.

A lack of awareness or intent is no defence. The extension of the definition of fraud in the Fraud Act 2006 and the UK’s anti-money laundering regime can mean that a solicitor will be found criminally liable if their client commits mortgage fraud, even if they are unaware of the fraud. Courts expect solicitors to have a high level of knowledge and education, and do not look kindly on cases where there is evidence that appropriate due diligence was not applied.

Read more

A north-east solicitor yesterday settled his libel claim against the owner of a website that blacklists solicitors and law firms.

Scott Eason, principal at Eason Law, had instructed libel lawyers Carter-Ruck to bring a claim for damages of between £50,000 and £100,000 and obtain a High Court injunction against Rick Kordowski, who runs solicitorsfromhell.co.uk.

Under the terms of a High Court order, Eason agreed to drop his claim for damages and costs if Kordowski removed allegations against Eason and Eason Law from the internet; undertook never again to publish allegations referring to Eason or his firm; and wrote to Eason to apologise.

Carter-Ruck said in a statement yesterday: ‘Scott Eason has today settled his libel action against Rick Kordowski, owner of the website Solicitors from Hell. Mr Kordowski has removed the false and defamatory allegations from his website, agreed not to publish them again and apologised to Mr Eason.’

Eason said in a statement released by Carter-Ruck yesterday: ‘I am happy and relieved that this case has now settled. I felt very strongly about what was published about me and I could not allow the allegations to remain on the internet.

Read more