Law firms and Financial Services

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1 Law firms and Financial Services The number of law firms providing in-house financial services in England and Wales has dwindled to fewer than 50, and there are a similar number in Scotland. The main reasons for this decline are as follows: Firms have failed to integrate financial services as a mainstream activity Firms have been intimidated by the robust regulatory approach of the FSA Solicitors have failed to appreciate how financial advice can complement their services Solicitors have looked down on financial advisers as non-professional. What is Changing? The Legal Services Act is causing firms to consider ways of developing their client proposition in anticipation of increased competition, and there is widespread interest in developing business relationships with firms of financial advisers. Fortuitously, efforts by the FSA to increase professionalism among financial advisers have resulted in the emergence of an elite tier of fee-based and highly qualified IFAs who are poised to enter the professional community. There are essentially two forms of association between solicitors and IFAs: The traditional client referral relationship, though in the light of the robust approach now being taken by the SRA in relation to the need to account to clients for shared commissions, referrals are now commonly unremunerated and solicitors motivation is the wish to provide a complementary service and to ensure that the client receives high quality advice. Joint ventures, in the form of jointly-owned companies or LLPs which are managed by the financial advisers, who also assume responsibility for FSA compliance, and from which the solicitors are able to draw a dividend provided that the JV is fee-based. SIFA (Solicitors Independent Financial Advice) SIFA is an independent organisation run by a solicitor and two senior ex-law Society executives, whose purpose is to facilitate relations between solicitors and financial advisers. Its directory of professional financial advisers is endorsed by the Law Society and accessible via the Law Society web site. SIFA provides training and compliance services and produces a range of technical handbooks addressing the common ground between legal and financial advice in areas such as trust investment, Court of Protection work, older client affairs and pensions and divorce. It has produced a joint venture documentation kit in conjunction with DWF LLP Solicitors and its handbook Financial Services for Solicitors is published by the Law Society. SIFA conducts regular seminars for solicitors on the Legal Services Act and financial services matters and has assisted in establishing many referral and JV relationships. However, assisting solicitors to construct and monitor the business plans required to ensure the commercial success of such relationships is a role for which Inpractice is better equipped than SIFA.

2 The Role of Inpractice UK Organisations such as Co-operative Legal Services are poised to capitalise on the commodity end of the legal market, and this is likely to drive private practice solicitors up-market where their advisory skills will command a premium. However, their dependence on transactional work leaves them at a disadvantage when it comes to maintaining client relationships. Financial advisers have the advantage that their business model is relationship-based, and they are required by their regulator to collect and maintain copious information about their clients. This makes them excellent partners for solicitors. Furthermore, there are many areas of business in which legal and financial advice are complementary, and the pervasive nature of financial advice can assist solicitors to regain their historic role of trusted advisers. We see the key factors here as: Client relationships where lawyers routinely fail to extend their interest beyond the transaction in hand with the client, never mind to their family, friends and business colleagues; Local knowledge and personal connections which are often taken for granted, so the benefits are rarely actively exploited. Specialist knowledge but lawyers too often aim to justify higher fees as specialists in work that doesn t require their expertise, or where the value is very often diluted because they claim to handle too wide a range of work to be genuine experts. Specialist knowledge is not just about the type of legal work being provided but also of the business sector or social environment where potential clients operate and live. Effective integration of financial / wealth management services into a legal practice should be a catalyst for change provided the lawyers recognise the vision of a different kind of service their practice should become for the future. One focused on satisfying a range of clients needs as part of a lifelong relationship, rather than completing legal transactions on demand. This is just one stepping stone in repositioning your practice. It requires a change of mindset; lawyers need to believe the importance of delivering non-legal services to their clients and envisage as early on as possible how it can work, to establish and maintain momentum. They also need to understand how they can communicate non-legal solutions to their clients and contacts and buy into a structured approach to making it happen. What We Do Inpractice UK will work with you to help you: Determine which of your firm s services give rise to the need for financial advice Secure agreement by all the partners as to a policy for the referral of financial services business, having regard to the Lexcel due diligence checklist on the selection of IFAs Appoint a partner with overall responsible for the firm s financial services activity and for liaising with the nominated representative(s) of the IFA firm(s) Discuss and agree how the IFA relationship should be described and promoted to clients in promotional material and on the firm s web site

3 Secure the commitment of individual partners and fee-earners as to the type and value of financial services business which they will be targeting to refer Formalise partners respective contributions in a business plan Agree the necessary compliance documentation and processes Agree a marketing programme Agree a training programme for partners and fee-earners Agree a routine for reviewing performance and up-dating business projections Agree a programme of up-dating and briefing meetings with the IFA partners Why Involve Us? Lawyers and IFAs may believe they can work all of this through on their own. However, there are many potential pitfalls, and experience of what does and does not work is invaluable. Our involvement will ensure that: Neither party pushes the other too far Initiatives are still stretched as far as is they can be on both sides to produce results Every potential opportunity is explored Old traditions are not allowed to inhibit new initiatives You have access to as much ammunition as possible from outside to drive change Allan Carton Solicitor, MBA Director, Inpractice UK

4 Introduction to Inpractice UK Our objective is to help legal practices to increase bottom line profits by taking effective steps to retain existing clients, develop new business, improve performance and productivity, reduce wasted time and expense. Inpractice UK is a specialist business consultancy offering experience and strength in depth on many of the issues facing professional practices today. We help lawyers get to grips with the opportunities and the challenges presented by the fundamental changes proposed to open up their services to more competition. Our experienced team of specialists in Marketing, Technology, Quality systems, CRM and People Development give you access to a wide range of management skills and tools to help you produce the results you want faster and with confidence. The Inpractice UK Team There is more background on Allan Carton who would lead this project here >> Clients We work primarily for mid-range legal practices across the UK; those ranked from about number 75 in the Legal 500 to firms of about 50 people, although we also do some work for both larger and smaller practices. We also work for other businesses that have an involvement or an interest in the legal services sector. Our services include, but are not limited to:

5 Inpractice UK Services Strategy & Development: Strategy & Planning - Marketing, IT, HR Management Restructuring - Roles, rewards, accountabilities, performance, communication Implementing Mergers & Acquisitions - Preparations, planning, integration, IT, people, marketing In-House Workshops - Marketing & business development, Performance Management, Cost Reduction Marketing, Promotion & Business Relationships: Market Research current, new markets, sectors; opportunities, perceptions, routes to market Databases & Management Information rationalise, consolidate, to improve access and use Client Experience Management - changing lawyers mindsets, new ways of working Client Listening & Transaction Reviews for client retention, increased business, cross selling Bids & Tenders - gearing up your in-house team, support on specific bids Design, Web Design & Web Ranking (SEO) - corporate ID, adverts, brochures, newsletters New Media & Skills - production of webcasts, corporate radio & videos, on-air presentation Improving Productivity & Risk Management: HR Support performance management, remuneration, rewards, delegation, empowerment Coaching for Senior Managers - working with you to develop personal skills Improving Business Processes analysis, mapping, implementation, managing change Risk Management SRA compliance, Lexcel, ISO, IIP & EFQM audits and implementation Business Continuity & Disaster Recovery - planning for contingencies Strategic Cost Reduction - improve cashflow now and productivity long term Technology: Maximising Use of Existing Technology Getting the best from your investment Leveraging Your Databases and MI - Centralise, cleanse and consolidate what you have already IT System Selection Practice, Case & Document Management, HR, CRM, Management Reporting Implementing New Technologies PMS, CMS, DMS, HR, CRM, Hosted solutions Outsourcing IT - Hosting, Managed service, Software as a Service (SaaS) IT Troubleshooting integration of systems on merger, issues with suppliers Also see our Legal Practice Management Solutions Blog here >>>