Marketing Successfully in the Post-Jackson Era

This article was first published in the Journal of Personal Injury Law and appears by courtesy of Sweet and Maxwell/Thomson Reuters.

The legal profession has been able to advertise since 1986. What was first a case of crossing the Rubicon for an instinctively conservative profession was quickly embraced and is now widely practised. But the Legal Services and Punishment of Offenders Act 2012 (LASPO) makes it more important than ever to advertise effectively.

This article focuses on digital media and how traditional promotional methods should work in tandem with digital technologies to reach more clients, concluding with an examination of how to monitor and measure the success of work generation strategies.

John Spencer draws on his own experience over the past 30 years, and especially since the autumn of 2011- during which period the author rebuilt his practice from one which depended exclusively on referral fee based sources of work to one which, in 2014, generates 70% of its work directly rather than from referrals.

The legal and professional framework

Since 1986 it has been possible for Personal Injury (PI) practices to advertise, but with the implementation of Legal Aid Sentencing and Punishment of Offenders Act 2012 on April 1, 2013, the necessity to market well and effectively has been brought home with renewed force. Indeed, in today's legal services landscape, to ignore marketing imperatives would be tantamount to commercial suicide. The welter of change to which the PI sector has been subject is as well-known as it is dramatic, involving the introduction of qualified one way costs shifting, the removal of recoverability of success fees and ATE premiums, the increase of 10% in general damages, a greater emphasis on proportionality of costs and the extension of fixed costs, as well as fundamental changes to the court's approach to case management and costs budgeting. Aside from all these factors, arguably it is the ban on referral fees (LASPO ss.56-60) which brings about the greatest challenge for firms having to 'self-generate' work for the first time.

This article does not focus on ways to circumvent the referral fee ban through one of the avenues available, whether by forming an alternative business structure (ABS) or embarking on a joint venture through an ABS, or through arranging for the provision of 'information' which would enable the recipient to provide relevant services to the client through the client him or herself, or indeed through other methods.

Instead, it focuses on how to generate work directly through other marketing techniques. But aside from the referral fee ban, what are the relevant regulatory provisions that practitioners need to have in mind?
In marketing, as in all areas of practice, the 10 mandatory principles in the SRA Code of Conduct are pertinent and form an overarching framework for practitioners. Principles most relevant to marketing are to act with integrity, not to allow independence to be compromised, to act in the best interests of each client and to behave in a way that maintains the trust the public places in the legal profession as a whole.

In addition, practitioners must comply with their legal and regulatory obligations. Outcomes from this part of the Code include ensuring publicity is not misleading, that charges are clearly and unambiguously expressed, and that unsolicited approaches in person or by telephone to publicise practices are avoided.

Taking code compliance as read, how should firms proceed to plan their work generation strategies?

Ethos and focus

Each practice should ensure that it has a clear position, established through focusing first on its clients and developed through engagement with all those working in its business. This will form the backdrop to the practice's business plan generally and specifically its business development plan. Never is it more important to have clarity in positioning than when communicating with the public. An established, clearly defined firm ethos will help establish priorities, for example whether the emphasis is local or national and which categories of injured persons and liability types are in focus (and in what order of priority). The ethos and targets will inform communication and advertising as will ancillary choices such as those with regard to sponsorship.

Existing clients are a goldmine of information. For instance they will inform the importance of reliable ancillary advice and home visits, as well as the sorts of information that injured people would like to be able to access through a firm's website. What questions they have, and in what level of detail they would like answers, can all help identify changes and enhancements to assist clients and potential clients. Clients will also reveal what matters most to them, perhaps the importance of their local community, and other issues which they see as a high priority. Each practice will have different dynamics to consider and will make different choices, but it is vital that there is this kind of engagement with clients. It is an ethical as well as a commercial mistake not to do this.

Traditional media

Traditional media should not be ignored, and the mix of media used will vary according to budget, locality, ethos and preferences. Digital resources simply provide new and more powerful ways of promoting a practice. There is still need to create written articles and comment, engage in conferences and be involved in and known around your community. Just as personal folders in Microsoft Outlook replace paper files, so the internet supplies the foundation for a relatively new and extremely powerful communication tool.

There remains the need have to have something to communicate which is consistent with the chosen ethos and focus and it must be credible. This remains core material for practices which now can reach so many more through digital technologies.

Moving away from referred work means that advertising in all its forms becomes vital. Through newspapers, radio and even TV, each practice will cut its cloth according to its budget taking account of its target audience. Consistency and core values become even more important here to ensure that practices are consistently presented; ideally, nothing should ethically jar.

Digital media

Digital applications are the single most powerful tool with which businesses can communicate today.  Referring to IT in his latest book Tomorrow's Lawyers, Richard Susskind states:

"IT is now pervasive in our world. There are over 2.2 billion Internet users … and every two days, according to Google's Eric Schmidt, 'we create as much information as we did from the dawn of civilisation up until 2003'."

Website

The website is the shop window of a practice and it must be right. If the shop window is wrong, people will not visit. The ethos, approach and philosophy need to be accurate and therefore credible and clearly explained. This needs to be consistently presented across all aspects of the website. Services need to be clearly explained, contradictory services should be avoided; if this is not the case there needs to be a focus on something other than service type to avoid contradiction. For example, a practice specialising in both claimant and insurer PI work may have a core value around excellent and fearless professional representation whatever the issue at stake, whereas an exclusively claimant practice can take a more unequivocal claimant-campaigning position if it so chooses. Visitors to sites need to be comfortable with where they have landed, and confident they will be well looked after. Advice needs to be relevant, clear and concise.

Moreover, potential client visitors landing need to be converted to be clients. Technologies like conversion analytics and heat maps to show where visitors tend to focus can help inform where an invitation to provide instructions might be most effective; it will also reveal areas of lesser interest to visitors. To most visitors external accreditations and kite marks are important, as are (perhaps more surprisingly) photographs of premises.

Pay per click

Pay per click is a method of advertising on a search engine when a user types in a certain phrase. But unlike most other forms of advertising payers only pay for the click once someone has interacted with it.

Pay per click became very expensive in the immediate aftermath of the referral fee ban in April 2013.
Prices have settled somewhat but it remains expensive and each enquiry generated through pay per click may cost several hundred pounds or more. Pay per click is a bidding process where quality and price are relevant. If a practice is perceived to be of greater 'quality' it will pay less for a search term. This is another reason for firms to invest time and resource in optimisation in that it will improve its quality rating and consequently reduce the cost of pay per click. To increase scale will also reduce the cost of pay per click. However, I focus on quality in looking at optimisation.

Search Engine Optimisation (SEO)

In the United Kingdom, Google has 88% of the search market, with its closest competitor Bing/Yahoo having around a combined 10% of the rest. In the United States, Google is less dominant, having around 70% of the market. Maximising the impact of a practice through optimisation when people use search engines is important, especially so with Google given its dominant market share.

While pay per click advertising can get services onto Google, the majority of the content on the results page is still made up from organic listings. Organic listings appear on merit and what Google judges to be the most relevant content for what a web user is searching for.

Optimising content to try to rank higher in search-engine owner results, known as Search Engine Optimisation (SEO), is a long-term project, whereas pay per click provides quick and early wins. A practice can also calculate fairly accurately, once its strategy is established, what its pay per click spend will yield in terms of enquiries; this is not so with SEO. SEO is about quality content, and refreshing, reviewing and continually working to improve the number of visitors received. For a successful SEO strategy it is important to engage as many people working in an organisation as possible in the process.  There are different challenges with pay per click: it is expensive, and the lower the perceived quality of content the more expensive it is.

There are, however, dangers with SEO and organic listings. Search engines like Google are becoming increasingly strict. They want genuine websites that offer the most value and relevance, and without any manipulation. They regularly develop and change their algorithms (the rules which the search engine uses in order to rank pages), and are making concerted efforts to eradicate manipulation. Constant vigilance is required to avoid falling foul of their policing through optimisation strategies. In essence, optimisation must be genuine rather than seeking to enhance reputation falsely - which is what the search engines are trying to prevent.

Search engine policing

As stated earlier, Google is the overwhelmingly dominant search engine, and for this reason I use it as an example. However, the principles in operation will equally apply to other search engines.

Google monitors approximately 200 signals from web pages when deciding how to rank them in its results. This process is largely done automatically and algorithmically by constantly trawling web pages to determine which is the most relevant to display in relation to users' searches.

In theory, this means that pages which are the most relevant and offer users the most value will rank above those that offer less. Google details its ranking principles in its Webmaster Guidelines which sets out how pages should be built in order to provide users with the best experience.

But as with any rule, there are those who will seek to bend and even break them. For this reason, a large part of the guidelines relate to 'Quality Guidelines'. If a website breaches them then the practice will run the risk of a Google penalisation.

Google can and does take manual action on websites where it spots anything untoward, either with regard to unnatural links or otherwise trying to 'trick' Google or its users. Examples would be websites that hide text, that copy content from other websites or generally try to deceive users.

There have been a number of solicitors' practices which have been delisted following action by Google.

Rather more famously, Interflora's website was apparently delisted for a period of time after it was discovered that the company had financially incentivised bloggers to talk about and link to its website. The number and quality of links to a website is a key factor that Google takes into account when ranking websites.

Attempting to manipulate these links can result in severe penalties and manual action.

Complying with search engine guidelines

The SEO agency needs to be trusted implicitly. Due diligence and referencing is essential. Practice members need to speak to the agency and those people specifically allocated to its account. A firm needs to share its plans and hear its agency’s ideas and vice versa. There needs to be clear understanding of the practice ethos and business. Practices need to be satisfied that their agency’s ethics are sound. Return on investment needs to be evaluated and understood. It needs to be known how the agency intends to raise profile online; if any of this sounds like it is easy or too good to be true then it probably is.

Offers may be received from websites or agencies wanting to sell links to the firm's website, blog or even promising more followers on Twitter and Facebook. Many of these are trying to exploit search engine algorithms and if their covert efforts are discovered it will be apparent that they have done more harm than good.

There are organisations which operate solely to sell advertising on a so called 'churn and burn' basis.

These organisations set up a suitably and appositely named website and then set about selling sponsorship to firms, businesses and individuals who will be interested in instructions or workflow from such an organisation. However, the reality is that there may be little traffic to the website and their only goal is to sell potential sponsorship packages for 12 months.

Not all website listings and sponsorships operate in this way and some may add genuine value. For example, many people still use Yell.com and having an enhanced Yell.com listing may be valuable when attracting local clients. But when offered sponsorship of this type which apparently might be useful in attracting potential clients firms need to do due diligence to ensure there is likely to be a return on investment.

Social media 

The number of social networks (Twitter, Facebook, LinkedIn, Google+ etc) is ever-increasing and practices should have at least a basic presence on each major social networking site. Use of social media can range from publishing news items and content to taking part in discussions or engaging with clients.

Each network has its own technologies and audience, but it is important to develop a social media strategy that includes as a minimum:

• who in the practice is responsible for social media and interacting with each social network;
• what content is to be placed on each network;
• if individual lawyers are to use their personal accounts for business purposes; and
• ensuring guidelines and a framework is in place.

Visitor conversion and client retention

Once a practice has acquired visitors to its website it must then turn these visitors into clients. Once a firm is instructed, tight risk assessment procedures need to be in place. A dedicated and well-trained initial client liaison team may be the best way to ensure that potential clients are looked after and secured.

Over-worked practitioners are not always the best at converting and then retaining clients. It is beyond the scope of this article to say much more on this, other than to emphasise the importance of enquiries converting to instructions for your firm in meritworthy cases which clients wish to pursue.

Measurement and monitoring

There are various ways to measure effectiveness in marketing and there are no absolute answers to what is right or wrong. There are below set out some suggestions for areas to scrutinise.

Web content should be monitored, likewise the creation of blogs, articles and other content, including content on social media. It is important to have a clear and effective policy to ensure good content is generated which is useful to enquirers and clients. It is imperative it is accurate. Any opinions expressed should, where appropriate, be suitably caveated.

Content must be consistent with a practice's culture and ethos. Non-lawyer as well as lawyer input can be appropriate. Writing does need to express personality, which can be an area of difficulty for lawyers, for whom care and precision of expression rather than personality are more natural.

Some practices, according to size and resource, may employ PR agencies and again measurement and engagement is vital.

With digital agencies content should be monitored, so too the exposure that they gain and the traffic they generate to a practice's website. Agency performance should be scrutinised for evidence of the agency's appetite and quality of new ideas and targeting and general 'nose' for a good idea or opportunity.

Each practice will make its own decisions regarding what it chooses to review and measure, but the following might usefully be considered:

Organic performance:

• what search terms a practice is aiming to rank for and progress towards achieving these rankings;
• amount of organic traffic to the website;
• visitor conversion rates, i.e. the number of site visitors versus the number of enquiries made;
• client retention rates, setting an appropriate period or periods for measuring and evaluating this; and
• the quality and quantity of links to websites; as mentioned earlier not all links are beneficial.

Pay per click:

• keywords, the most relevant search terms for services that are being targeted;
• Impressions, how often advertisements are shown;
• clicks, how often advertisements are clicked;
• cost per click, and what a practice is willing to pay for a targeted visitor; and
• cost per enquiry, how many clicks have been paid for to generate an enquiry.

Marketing and financial:

• work generation;
• cost per enquiry;
• cost per converted and retained case;
• abandon rates;
• billing rates;
• risk rates by case category; and
• case acquisition cost by type, to take account of any disbursement write offs, both fault and no fault.

Conclusion

It is a regrettable fact of life that such is the intensity and uncertainty of change that even for the excellent there is no guarantee of success. Forecasting is, at best, an educated guess. Time alone will tell how successful a firm's marketing strategy, digital or otherwise, has been.

Following the implementation of LASPO as well as rapidity of technological change, the dynamics and cost of acquiring work are now very different - especially to how they were back in the days when law firms were prohibited from advertising. The fees which can be earned for every type of Personal Injury work have altered, and for some types of case the alteration is dramatic. Changes are compound and cumulative and cover recoverable fees, procedure and process, not to mention increased client competition fuelled by the increasing prevalence of consolidation through the availability of ABSs.

Add to all this the need for most to invest in wholesale new procedures and processes, and training and retraining, and one can readily conclude that these are very uncertain times. However, the vast majority of practitioners are highly motivated and determined people, who will hopefully survive and, indeed, flourish. In order to do so is, though, they need to embrace the brave new world and ensure that the firm is at the cutting edge of digital marketing.

Consumers deserve a better insurance industry

ABSs, as they are known for short, are in the news again following the application by Direct Line to the Solicitors Regulation Authority (SRA) for ABS status. As reported last week by The Law Society Gazette, Britain’s biggest car insurer intends to create a new, wholly owned law firm, DLG Legal Services, to operate in partnership with existing law firm Parabis.

If the application is successful - and there is no reason to suggest it won't be - it will result in the largest ABS to date.

There are various reasons for disquiet about the development - and, indeed, about insurers acting outside their remit generally. Before I explore them, let me first say that historically I acted for Direct Line. I'm not, though, penning this piece as a 'poacher turned gamekeeper' comment on the company. It is a reputable institution and I have no axe to grind with it. My concerns are with the ABS regime and with the conduct of insurers generally.

Conflict of interest

The Direct Line Group comprises various insurers. As such, it already provides customers of its own Direct Line, Churchill, Privilege and other insurance brands with some legal services in-house, as well as through outsourcing agreements with a panel of law firms. This brings me to my first reservation about Direct Line's application for an ABS: how will it not result inevitably in conflicts of interest, in acting as insurer and a claimant representative under the same and shared ultimate ownership?

Access to justice?

Direct Line maintains that its ABS application is based upon providing "access to justice", but how can sidestepping longstanding rules on conflicts of interest be commensurate with “access to justice”?

The company also says its move is "in the clear interest" of consumers. That strikes me as doubtful, for another key reason: ABSs might be renamed 'Awful Bits of Sidestepping' because they are a cast-iron way round the Ministry of Justice's ban on referral fees. When insurers and claims management companies can own and invest in law firms, they can handle PI claims from start to finish. They will therefore control the whole process. The raft of ancillary fees paid by those outside the legal profession, the likes of garages, reporting engineers, towing companies and trade unions, can just continue in another guise.

Where did all the ethics go?

In September last year the Office of Fair Trading referred the UK's private motor insurance industry to the Competition Commission. The referral followed a study by the OFT in May 2012, which found that there were reasonable grounds to suspect that there are features of the insurance market that prevent, distort or restrict competition.

In other words: there is reason to think the insurance industry is not serving its customers well.

It's a year since the study that, in turn, led to the referral to the Competition Commission. Perhaps, if we look back at the study, we might find that insurers have started to get their house in order, ahead of the report of the Competition Commission in September next year?

Dubious Practices

Sadly, the short answer is 'no, they haven't'. The OFT, in its summary of the referral, put it thus: in focusing on "the provision of replacement vehicles and vehicle repairs", it was thought that "the insurers of drivers responsible for an accident ('at-fault' drivers) appear to have little control over the way repairs and replacement vehicles are provided to the 'not-at-fault' driver." The OFT  added that this "may enable the insurers of not-at-fault drivers, and others such as insurance brokers, credit hire organisations and repairers, to engage in practices which appear to result in the cost of replacement vehicles and vehicle repairs provided to not-at-fault drivers being higher than they might otherwise be."

What is meant by the use of the word "practices"? Let's be clear. This means the payment of referral fees. The Legal Aid, Sentencing  and Punishment of Offenders Act (LASPO) may have banned the flow of these between solicitors, claims management companies (CMCs) and insurers, but they are alive and as insidious as ever when it comes to garages, credit hire companies leasing vehicles to drivers after accidents and recovery companies.

A Conduit for Backhanders

If little, if anything, has really changed, there's worse. An (unintended?) consequence of the Alternative Business Structure (ABS) regime, which came into being in January 2012, is that insurers have a ready-made way of circumventing the referral fee ban: they can now simply buy or merge with law firms. The backhanders keep flowing.

It's not easy to discern in the terms of the OFT referral but there is clearly a huge question mark over the conduct of insurers and their representative body, the Association of British Insurers (ABI). The ABI has proved adept at spinning the yarn that 'compensation culture' fuels hikes in insurance premiums and makes our lives a hostage to unscrupulous bounty hunters who will issue a claim at the drop of a hat - and yet it is the ABI's very members who cause the 'blame and claim' syndrome in the first place.

These thoughts lead inevitably to a consideration of the ethical standards - or absence of them - at play among insurers. Time and again stories of outlandish litigation in the media turn out to be bogus or wildly exaggerated; time and again we encounter insurers blaming the increase in the cost of premiums on everyone but themselves.

In truth, investment income - which is what our premiums are used for - has flattened out because of the global recession and so insurers seek to ramp up their profits through a back door which has become nothing but a conduit for backhanders. It's a vicious cycle: as one insurer ups the ante, passing on costs to another, so does its competitor. And so on, and on - until, hopefully, the Competition Commission will do something about it.

Wishful thinking?

Meantime, as Duncan Minty's excellent blog recounts, insurers continue to fall short when it comes to acting ethically. This post, for example, reveals that a "survey by CSR Europe and KPMG of five European insurers and five European banks found that 80% had no ethical objectives or targets of any kind, while only another 10% had a qualitative target." As Minty notes, while admittedly a small survey it shows "that ethical objectives and targets remain a challenge for insurers."

From a claimant solicitor's perspective, I'm tempted to go further and say that acting ethically seems to resemble a brick wall for insurers. But bricks walls don't stand forever. Even the Berlin Wall came down eventually. Minty has produced a free e-Book on setting ethical objectives and targets for your business. Here's hoping that the CEOs of insurance companies download it, read it and learn from it. Wouldn't it be nice to think that they'll do so, ahead of the Competition Commission's report next year?

An ethical ABS is to be applauded - but there remain grave reservations about the regime

I've written previously of my reservations about the Alternative Business Structure (ABS) regime, first proposed by Sir David Clementi in 2006 and a fact of legal life for nearly a year and a half now. Because they enable insurers and claims management companies to own and invest in law firms, ABSs are the Trojan horse in the battle against referral fees. It seems that no sooner were referral fees been banned, than we have been confronted with the means to get round the ban and perpetuate the very problem the Ministry of Justice sought to curtail.

But last week, a story on the excellent Legal Futures website gave me cause for cheer. The Community and Law Service (CALS) in Leicester has become the first not-for-profit organisation to set up an ABS. CALS has been authorised by the Solicitors Regulation Authority (SRA) to launch Castle Park Solicitors Community Interest Company. Its profits will be channelled back into continuing the work of the charity.

CALS gets there first

Image by JosephGilbert.org

CALS has beaten the application by Islington Law Centre to establish a not-for-profit ABS, which was made last November. Castle Park and CALS will not be sharing office space; from its premises, Castle Park will provide legal advice on family, immigration and employment law. Its intention is summed up by Glenda Terry, head of finance and administration: "We set it up because we wanted to have the facility to provide good-quality legal advice and representation mainly in the areas going out of scope of legal aid. We have pitched our fees competitively and hope it will be attractive to those on low to medium incomes."

This is a laudable aim, and one which will help to mitigate the effects of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), which, for me, remains one of the most poorly conceived pieces of legislation to have made it onto the statute books in recent years. Legal aid has been decimated by LASPO, so too the ability of solicitors to bring meritorious claims for impecunious clients. The emphasis is on commodification and wholesaling, rather than considering and caring for an individual's needs.

Helen Grant misses the point

It is no use hearing Justice Minister Helen Grant acknowledge that LASPO's reforms to civil justice will bring "some pain initially and uncertainty for a while." The fact is that LASPO's provisions will have a dire effect on those who need legal advice, making it commercially impossible for many solicitors to represent them.

At least, though, CALS and Castle Park have used the ABS regime to counter LASPO. Here, utilising the ABS model ensures that paid-for services are introduced alongside traditional free services. Castle Park will thus generate income for CALS, which offers free housing and debt advice. In time, it is hoped that CALS will become less reliant on government funding and grants.

The ethical underpinning of both CALS and Castle Park is welcome, not least as insurers continue to push for ABS status so that they can, in effect, become law firms themselves. The SRA has already approved the creation of Admiral Law and BDE Law, joint ventures between insurance giant Admiral and law firms Lyons Davidson and Cordner Lewis. Ageas, which jointly underwrites Tesco's car insurance policies, has set up a venture with New Law, the PI firm based in Cardiff. Direct Line has got an application for an ABS in the pipeline, and the SRA says there are 104 similar applications currently being processed.

Not only do such ABSs allow insurers to refer claims to lawyers, but conflicts of interest are surely inevitable in this changing legal landscape. It is only a matter of time before an ABS law firm represents a client who is insured by the parent insurer.  It will be interesting, when this scenario comes to pass, to see what the Justice Minister and the SRA make of it.

The ABS Regime: who watches the watchmen?

The Alternative Business Structure (ABS) regime has been with us for a while now. First proposed by Sir David Clementi in 2006, ABSs became possible at the beginning of January last year. It was then that the Solicitors Regulation Authority (SRA) began accepting applications for ABS status.

A year later, the SRA announced that 454 firms had applied for ABS status. In a press release dated 11 January, it stated that "some 117 firms have completed the submission of all necessary information and 74 licences have been granted ... a further 19 [are] close to completion."

ABSs on the rise

No doubt the numbers have increased over the past few months. No doubt, too, that this will please the government. It has long trumpeted ABSs as a force for good and a means of driving "greater efficiency", especially in criminal legal aid. Speaking about this sector, the Lord Chancellor, Chris Grayling, recently declared, as reported by Legal Futures, that "we are proposing a model of competitive tendering, where solicitors’ firms must compete to offer the best price they can for work in their local area. This will mean successful firms expanding or joining together, to achieve economies of scale which can be passed onto the taxpayer in savings to the public purse."

Consolidation is the name of the game

Consolidation, motivated by the desire to save £220m from the legal aid budget, is the name of the game, as heralded by Jack Straw in a speech in March 2009. Inevitably this will change the legal landscape as we know it - though I will add that the advent of so-called 'Tesco law' is far from universally applauded - I continue to have a major concern about ABSs and their impact on the personal injury arena. In a nutshell: they could serve as a way round the Ministry of Justice's ban on referral fees.

As I've said before, ABSs are Trojan horses in the battle against referral fees. They enable insurers and claims management companies to own and invest in law firms, thereby circumventing the laudable effort to rid us of referral fees and what the government condemns as 'compensation culture' (though this is, as none other than the Master of the Rolls, Lord Dyson, recently observed, a perceived compensation culture, not an actual one). When insurers and claims management companies can own and invest in law firms, they can handle PI claims from start to finish. They will therefore control the whole process. The raft of ancillary fees paid by those outside the legal profession, the likes of garages, reporting engineers, towing companies and trade unions, can just continue in another guise.

Moreover, I have recently encountered conduct that shows just how ethically suspect some insurers can be – and how their own behaviour is what fuels our 'compensation culture'.

Quis custodiet ipsos custodes?

Recently a colleague of mine was involved in a road traffic accident. The other driver opened their car door into the side of her as she drove past.  Doing so made quite a mess of the front wing of the car and my colleague was understandably shaken up.

The other driver's insurer made contact with my colleague within 24 hours. Remarkably, despite her not even mentioning any injury whatsoever, the insurer made her a pre-medical offer of £2,000. My colleague did not provide any response to the offer as she was more interested in ensuring that she had use of another vehicle.  The next day the insurer called to increase the offer to £2,400, and also make an offer for her son of £1,500.

My colleague was unlikely to have made a claim at all. And yet she finds herself offered nearly £4,000 in PI compensation.

Who, then, is really fuelling the so-called 'compensation culture'? Surely it couldn't be the insurance industry? Could it?

(For those who don't know their Latin, I'm no expert either. But 'Quis custodiet ipsos custodes?' means 'Who watches the watchmen?' It seems appropriate here.)

Australia-bound

Some half a year ago I wrote about the reasons for becoming a personal injury lawyer. Among them I cited the ability to right wrongs, the fact that PI law immerses its practitioners in the real world, and the constant challenges of this fast-evolving sector.

Given that I'm writing this blog about to depart for Australia you might think that regular travel is another reason to become a PI lawyer. I admit, as I'm about to board a plane to Australia, that lately I've seen a fair bit of the world. However, it’s not always like this – far from it, in fact. And this trip, to the national conference of the Australian Lawyers Alliance, will be the last for a while.

This time round, I'm travelling to Glenelg, in South Australia. This is a suburb of Adelaide and yes, I reckon that the weather will probably be better there than in Britain. But from tomorrow I’ll be wrapped up in the conference and preparing for my session at 4.45pm on Saturday. I'm speaking then about PI and litigation reform in the UK. This, of course, is a topic close to my heart - not least as LASPO enters its home straight.

The Legal Aid, Sentencing & Punishment of Offenders Act will become law on 1 April 2013. I will be speaking to conference attendees about the deficiencies in LASPO and ancillary changes, which I have often mentioned on this blog.

While in Australia I'm hoping to meet with various lawyers after the conference, by way of gleaning as much information about the legal profession and PI sector there as possible. In particular, I hope to discover more about the way in which outside ownership of law firms - pioneered in Australia - has panned out.

I’ll write about my trip as soon as I can. Please look out for the resumption of this blog in due course.

Postcard from Portugal

I'm just back from an interesting trip to Portugal. It was my first visit to the country, and I found it to be a charming, likeable place – and not just because of the glorious weather.

From our base at The Oitavos Hotel, near Cascais, my wife Susanne and I enjoyed a cycle ride to the beautiful beach of Guincho, some great swimming and a couple of whistle-stop tours of Lisbon and Sintra. Both are quite wonderful places, though our two days of downtime wasn't enough to do them justice. What was clear to me, though, was the remarkable courtesy of the Portuguese people. It's a quality that's ever so slightly tinged with melancholy (witness the tradition of fado music), but the Portuguese sensibility – putting a premium on good manners, warmness, and welcome – is undoubtedly very attractive.

I was in Portugal for a conference hosted by the New York State Bar Association in Lisbon. It focused on various legal issues but my role was to speak about Alternative Business Structures (ABSs) in the UK. This I did at a plenary session last Saturday morning, chaired by Kenneth G. Standard of New York firm Epstein Becker & Green. Ken was an impressive character. Able and charismatic, he managed the session very well and also, via initiatives like a breakfast meeting for attendees, ensured that the session was effective and productive.

It was interesting to encounter the American view on outside ownership of law firms. As with so much of American life, debates take place on a federal level. Often, consensus isn't across the board; it's more a case of each state having its own view. When it comes to law firms being taken over, or invested in, by non-legal businesses, there did, though, seem to be a consensus. With the exception of the District of Columbia, the American view is hostile to outside ownership. There's a great deal of nervousness about the possible compromise of professional standards, independence and ethics. The worry is that the primacy of the clients’ interests will be sacrificed in favour of shareholder value.

As regular readers of this blog will know, I am  open minded but sceptical about ABSs and outside ownership too. However, as one or two participants, speaking from the floor, observed, to try and resist the influx of outside interests is rather like King Canute's attempt to quell the sea. The tide of change is on its way; as one American attorney said, we'd better get used to it.

That said, I think it's salutary to remember what brought about change in the UK. The ABS regime is a direct consequence of the reforms proposed by Sir David Clementi. Those reforms – which include the enactment of the Legal Services Act 2007 and the creation of  the Legal Services Board came about because of the perception that the provision of legal services in Britain was byzantine, fragmented and failing. There was a perception that the legal profession had become protectionist and restrictive. The public was not getting the profession it deserved.

Reform has arrived here in Britain, and although I have sympathy with the nervousness of my American and Portuguese counterparts I believe that their resistance to change can only be justified if what they are seeking to preserve is beyond reproach. Thus, in the same way that here we must insist that strictly ethical behaviour and principles underpin ABSs, so too must overseas lawyers look squarely at their profession and be satisfied that they act, at all times, not just in accordance with the law but ethically and professionally too. Only in this way can they - and we here in Britain, where change is not just in the air but on the ground - ensure that he who pays the piper doesn't call a discordant, morally dubious tune.

Lisbon-bound for the NYSBA seasonal meeting

Today, I’m Lisbon-bound for a conference hosted by the New York State Bar Association at the Pestana Palace hotel. By all accounts this is a fine, city centre hotel, though I’ve opted to stay away from the hustle and bustle at The Oitavos Hotel, some 40 minutes drive from Lisbon.

This is my first trip to Lisbon, and next week I’ll post a snapshot of my impressions of this venerable and historic city. As I write, however, the task in hand is preparing a short speech I’ll give on Saturday morning, as well as a panel discussion. Between 9.00 and 11.00am, debate will centre on Alternative Law Firm Structures around the world, in a plenary session chaired by Kenneth G. Standard of New York firm Epstein Becker & Green. Other panellists include Vasco Marques Correia, the president of the Lisbon District Council of the Portuguese Bar Association; Junlu Jiang, of King & Wood Mallesons, Beijing; and Steven Younger, from Patterson Belknap Webb & Tyler LLP, New York.

I will be talking about Alternative Business Structures (ABSs), first proposed in Britain six years ago by Sir David Clementi, then given statutory footing in 2007 by the Legal Services Act and finally ushered in by the Solicitors Regulation Authority earlier this year. ABSs were much touted prior to their arrival as heralding a brave new world that would be of great benefit to consumers. They would allow non-lawyers to own and invest in law firms, thus revolutionising the legal profession because clients would have a cheaper, one-stop option for their legal needs.

Among those who sounded cautionary notes about ABSs were sole practitioners and small firms, who were wary of the notion of ‘Tesco law’ and ‘one size fits all’ for legal problems. I was also dubious about ABSs given the way in which they could be deployed to circumvent the Ministry of Justice’s  ban on referral fees in personal injury cases to be implemented in April 2013.  Because ABSs enable insurers and claims management companies to own and invest in law firms they can sidestep the MoJ’s efforts. It cannot be good for the consumer for a culture to arise which sees insurers start handling PI claims from start to finish.

In Britain, the take-up for ABS licences has been relatively slow, but the bandwagon is moving. More and more law firms are set to form alliances with other businesses, creating more ABSs. I do not object per se to the idea of ABSs, provided not only that a watchful eye is maintained on their ability to sidestep the ban on referral fees but also that the profession as a whole abides by its age-old principles. By this I mean that professionalism and ethical conduct must not be allowed to play second fiddle to the commercial dictates of outside ownership or too obsessive a focus on shareholder value.

The danger, with ABSs, is that he who pays the piper calls the tune. As lawyers, our tune must sing to the client’s good, first and foremost. ABSs are acceptable, so long as this is not forgotten. This is the most serious issue for debate.

Looking back on the ideology of the law

I was pleased to see a number of comments to my post last week, in which I argued that being a PI lawyer is a rewarding and fulfilling occupation rather than the selfish, profit-driven role of media cliché. Since writing that piece, I’ve been thinking about what draws people to the law as a career. Are there lessons to be learnt if we cast our minds back to what propelled us into the legal profession in the first place?

My story is perhaps typical, in that I wasn’t motivated by ideology pure and simple. But it’s also typical, I think, given that when I look back on it, I realise that an ideological commitment was present, if ill-defined, by dint of the very nature of the law.

I qualified as a solicitor in 1985. My entry into the law came via a mixed social sciences degree at Hatfield Polytechnic. My first love was economics, which was part of the degree, but as time went by I found the maths involved more difficult. Law, though – which was also part of the degree – came more easily. I gravitated increasingly to law and then discovered that if I majored in it I was deemed to have completed what was then known as the ‘Part 1’. (Qualifying as a solicitor entailed Parts 1 and 2; compared with today, passing Part 1 was the equivalent of completing a law degree or the Common Professional Examination.)

I went on to complete Part 2 (the equivalent of today’s Legal Practice Course) at Leeds Polytechnic. For a time, I flirted with the idea of becoming a barrister, but ultimately settled to the solicitor’s calling. The reasons, when I look back on it, dovetail with the points I made in last week’s post. Early on in my articles, I realised that being a solicitor meant helping people. They would come into the office with all manner of problems, and the solicitor’s job was to help them find solutions. The work was meaningful and interesting, and it meant being intimately involved in people’s lives.

Many years have since passed. I have worked primarily as a litigator throughout my career, with two abiding specialisms: child care and PI law. I also enjoy the business side of the law, a factor which has been instrumental in a previous role in one firm as managing partner and which now provides a large slice of my day’s work at the helm of Spencer’s.

But if ideology was not a core driver when I joined the law, it was nevertheless key to every lawyer’s practice when I entered the profession. Lord Benson’s principles of ethical behaviour were second nature. They were inculcated at degree level, throughout articles, and by one’s peers as one’s career developed. What happened, then, was that ideology was absorbed as if by osmosis. Solicitors were trained to put the client’s needs first, and think of their own profit second. Of course, some solicitors bucked this trend, but I strongly believe that the majority epitomised Benson’s ideal that ‘ethical rules and professional standards ... should be higher than those established by the general law’ .

Things are different today. All manner of incursions have been made into the law as it was 30 years ago. The ABS regime is the most obvious, but it is part of an overall commodification of legal services – the ‘Tesco law’ blueprint which threatens to alter the legal landscape beyond recognition. I strongly support greater efficiency, eradicating all waste and moving with the times, but this should never be at the expense of professional standards.

When I look back on my decision to join the law, I realise that one of its prompts was pragmatism – the sense that here was a good career, which would provide me with a living. But why was the law so obviously a ‘good career’? I think it had this flavour because of the way in which solicitors conducted themselves, because of the sense of duty and service that went with the territory.

Ideology, then, was there all along, and as we look at the many changes to today’s legal landscape it strikes me that it would be no bad thing if it were foregrounded for today’s young lawyers. Lord Benson’s principles should become second nature to them as much as they were for those of us who entered the law two decades or so ago. 

Principles lost? The loss of professionalism in the personal injury system

In 1992 Lord Benson stated there were nine key principles of professionalism to which lawyers should adhere. Two, in particular, should be second nature to lawyers: the principle that ‘ethical rules and professional standards ... should be higher than those established by the general law’ and the principle that legal practitioners ‘must not allow themselves to be put under the control or dominance of any persons or organisation that could impair that independence’.

Regrettably, adherence to these principles is not always second nature, especially if we take a bird’s eye view of the personal injury sector. Here, as well as potentially referral fees – which the government intends to ban – there are a myriad of other practices which conflict with Lord Benson’s principles. Alternative Business Structures (ABSs) have been heralded as signalling a brave new world but they create a route to absolute ownership by insurers, who then effectively bypass the referral fee issue and achieve wholesale ownership of the entire process, from providing insurance as an indemnity insurer to solicitors making the claim against the third party. The government’s failure to any action given that ABSs will have this effect is symptomatic of a worryingly piecemeal and uncoordinated approach to the referral fee problem.

Some might say that the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) will reform the personal injury sector. It professes to ban referral fees but, given the loopholes carved out in various places, is likely to be a paper tiger. Moreover, simply banning referral fees will not show insurers, CMCs and indeed some solicitors the error of their ways; in all likelihood, it is likely to push the practice further into the shadows. New practices will inevitably be devised which will share the detrimental and profit-driven features of referral fees. Some in the PI industry have already described to me the receipt of calls from CMCs offering to sell information with regard to prospective clients under the guise of ‘marketing information’ – a euphemism for ‘referral fee’. 

It was the proliferation of referral fees – and their associated, seemingly endless ancillary services such as car hire and medico-legal services – which have done so much damage to the PI system. Wedded to these are the advertising campaigns which CMCs and some solicitors have embarked upon. Not only do they sail dangerously close to inciting litigation, they cheapen the legal profession to such a degree that the title ‘ambulance chaser’ is not an entirely inappropriate label. Add the sale of personal data and underhand marketing tactics such as spam text messages, and we are faced wholesale systemic failure in this vital branch of the law.

If we want to grapple seriously with all the issues, we need wholesale cultural change. The government’s piecemeal, reactive approach is flawed. The interests of the public and victims of accidents must be the priority in the minds of all professionals, with profiteering stamped out.

Cynics might say such a utopian ideal for the PI system is unattainable. However, I would counter that it can exist if we rediscover and implement Lord Benson’s wisely drafted principles.

What underpinned Lord Benson’s approach is the notion that to be professional is to act in the public interest. The barometer by which he proposed to measure the standard of the profession is the degree to which individuals and their governing body act ethically. These principles should be the foundation of reform, and, even more important, practice. If the mindset of all the participants within the personal injury system is focused on acting ethically in the public interest, there will be no need for ‘catch-all’ regulation. Although a minority may still exploit loopholes in the system and evade regulatory oversight, they will eventually be stamped out by market forces. In fact if you speak to potential private equity investors in the profession, they see the value of retaining and emphasising professional standards.

Such a picture may seem uncharacteristically optimistic from someone who has written of his dismay about our industry and current efforts to reform. However, for every organisation or individual I have encountered who has displayed contempt for the public good, I have met dozens more who wish to do the best for their clients. It is because of this that I am certain that our profession and the industry can save itself from ruin and regain the principles which have been lost.

For any readers who are APIL members it is intended to publish a fuller article on this subject in the May edition of Focus, or if you are not and prefer please let me know and I will provide a full copy of the article.

Will the brave new world of Alternative Business Structures undermine the government’s objective in banning referral fees?

At long last, the Solicitors Regulation Authority has announced a date for the application process for those wishing to avail themselves of the Alternative Business Structure (ABS) regime. Appropriately enough, the date is 3 January, the first working day of 2012. After what seems an age since Sir David Clementi first proposed them (six years, in fact), the new year thus ushers in the brave new world of the ABS.

Is it, though, a world which we will like? I am not so sure. ABSs were much trumpeted following the passing of the Legal Services Act 2007, given that they will revolutionise the way in which solicitors run their businesses and allow non-lawyers to own and invest in law firms. Many high street sole practitioners and some small firms, fearful of the advent of ‘Tesco law’, were quick to sound a cautionary note over the ABS regime, but they are not the only people who have reason to worry. Those of us who believe in the legal profession, especially in the personal injury sector, also have cause for concern.

Image courtesy of the Travel Blog

For me, ABSs are Trojan horses in the battle against referral fees, in particular, and the sometimes over aggressive and unprofessional approach to PI marketing. They enable insurers and claims management companies to own and invest in law firms, thereby circumventing efforts by the Ministry of Justice to reform and improve the personal injury sector – because insurers and claims management companies could, in 2012, now start handling PI claims from start to finish. They will therefore control the whole process. 

Antony Townsend, the chief executive of the SRA, is looking forward to the new world, saying, in a press release dated 1 December: “We welcome the news that we will become an ABS licensing authority from 23 December. This is a milestone that we have been working towards for nearly two years.” He goes on to add that “the public can have confidence that ABS providing reserved legal activities will be regulated according to the same rigorous professional standards as traditional law firms.” 

But how will the ABS regime tackle this issue? There is also a raft of ancillary fees paid by those outside the legal profession, the likes of medico-legal companies, garages, reporting engineers and towing companies. These bodies all habitually pay referral fees, thereby fuelling a vicious circle of money generation around some personal injury cases.  What does the SRA intend to do about this, and the fact that these companies are likely to apply for licenses to set up ABSs? 

There is, though, still time to deal with this issue. The ABS regime gets underway from 3 January, but it does not emerge complete and fully formed. The date represents the start of the application process, but it is thought that actual ABS licences will not be awarded until late February at the earliest. It is to be hoped, between now and then, that a way is found to ensure that the brave new world of ABSs does not undermine that part of the government’s commitment, namely profiteering out of personal injury claims, which many of us support. It is further to be hoped that the professional conduct of cases by the solicitors profession is fully recognised and protected in this short period,  and not fatally undermined.

Making headway in the labyrinth

Yesterday I appeared before the House of Commons Transport Committee, which sat to take oral evidence on the rising cost of motor insurance. Giving evidence with me were Paul Evans, the CEO of Axa, Andrew Dismore, of the Access to Justice Action Group, and a man who needs no introduction, the Rt Hon Jack Straw MP. I was representing the Motor Accident Solicitors Society (MASS), of which I am the vice chair.

This was the second time I’d attended a select committee meeting. In November 2010, I gave evidence before Louise Ellman MP, who is the chair of the Commons Transport Select Committee. Then, as now, I found that the experience of engaging with Parliament has its Kafkaesque moments.

As in the Czech novelist’s great novel, The Trial – which sees Joseph K search fruitlessly for justice, having been arrested for a reason that is never specified – the splendour of the surroundings is inescapable. The Palace of Westminster, where I gave evidence in 2010, is awe-inspiring, both in its sense of history and architecture. Portcullis House, where yesterday’s hearing took place, is rather less grand but still has an august flavour, perhaps because of its name: it is so called after the chained portcullis used to symbolise the Houses of Parliament on letterheads and official documents.

But for all the grandeur, the business of actually appearing to give evidence isn’t easy. Last year, it seemed as if I was asked to wait interminably outside an apparently limitless number of doors, rather than ushered directly to the Committee. It was only by dint of determination that I managed to find the room in the Palace of Westminster in which the Committee was sitting. This year, the venue was changed (from the Palace to Portcullis House) at the last minute – but no one thought to tell me. It’s almost as if because everyone within Parliament knows the drill, they forget to tell the rest of us.

Jack Straw, indeed, is a man who knows Parliament like the back of his hand. Perhaps this gave him the confidence to breeze into the hearing a few minutes after it had started; certainly, I was in the midst of introducing myself when he arrived.

Attending a hearing in the company of a heavy hitter such as Jack Straw means that one has to be determined to be heard. Here, my previous Select Committee experience stood me in good stead. I felt that I made MASS’s point: that unless the Government tackles systemic failings within the personal injury industry, a ban on referral fees alone may do more harm than good.

Moreover, albeit that I have long campaigned for a ban on referral fees, I have also consistently said that implementing the ban needs to be handled with great care. Accordingly, a key component of any ban will be adequately defining what a referral fee is, and consequently what it covers. For example, will the Government include ancillary services which are also involved in personal injury claims, such as car-hire companies, in the ban? There are also a myriad of questions over advertising standards and data protection, with unsolicited texts, cold calls and adverts which encourage litigation, being used to the detriment of the public and the injured party alike. We also need answers as to what the advent of Alternative Business Structures will do to the personal injury system. Could a claims management company (CMC) or insurer take over a law firm? Market rumour is indicating that a vast majority of CMCs have expressed interest in doing just that when the time comes.

All these issues, not to mention the practice by which insurers intercept claimants before they have access to independent legal advice, need to be addressed. If they’re not properly looked at, the culture of profiteering in the personal injury sector will continue unabated – and accident victims will be no more likely to obtain justice than Joseph K.

Reform in haste, repent at leisure

The old saying is that the wheels of the law grind slowly. This is true. However, if it means that we get things right, it strikes me that patience is no bad thing.

When it comes to referral fees, I find myself champing at the bit for a quickening in the pace of reform, and yet, having reflected further on the Ministry of Justice’s recent announcement that referral fees in PI claims are, at last, to be banned, mindful of the need to cover all bases. Moreover, consideration of some of the finer points arising from referral fees reveals that while a ban is welcome, there is still a way to go.

Take, for example, the definition of a referral fee. At present this is conspicuously absent from the Solicitor’s Conduct Rules. Lord Justice Jackson, in his Review of Civil Litigation Costs, proposed that a referral fee is "any form of payment or other consideration to a party for introducing clients to a solicitor". His Lordship expressly suggested that this should be subject to input from the Solicitors Regulatory Authority (SRA) and the Legal Services Board (LSB).

It seems to me that Jackson LJ’s definition is a good  starting point. We need it because, if we are to stamp out what his Lordship described as an “abhorrent” practice (ie, the endemic paying of referral fees), we need to be clear about what is, and what isn’t, a referral fee. It is to be hoped that the two professional bodies to which Jackson LJ referred revert to him speedily, and certainly rather quicker than has been possible with the SRA and the licensing of Alternative Business Structures (ABSs).

ABSs were much trumpeted following the passing of the Legal Services Act 2007, given that they will revolutionise the way in which solicitors run their businesses. The Legal Services Act allowed non-lawyers to own and invest in law firms, and the ABS regime was due to come into play on October 6th. Many have lamented delays in its implementation, the latest of which the SRA  currently attributes to  the ‘parliamentary timetable’. Now, it seems, the SRA has been given the green light to be the licensing authority for ABSs, but as Professor Stephen Mayson notes on his blog: “We have had more than six years since Sir David Clementi first proposed [ABSs]. They are not a new idea; and it’s not as if no-one has spent any time thinking about both the principles and the detail since then... Where have these members [of the legal profession] been for the past six years?”

That aside, there is another significant issue with regard to ABSs – one which means that the delay understandably criticised by Professor Mayson might be a blessing in disguise. The fact is that ABSs are Trojan horses in the battle against referral fees. They enable insurers and claims management companies to own and invest in law firms, thereby circumventing efforts by the Ministry of Justice to rid us of referral fees and what the government condemns as ‘compensation culture’ – because insurers and claims management companies could be handling PI claims from start to finish.

There’s more, too. What of the raft of ancillary payments made by those outside the legal profession, even once the ABS regime is in place - the likes of garages, reporting engineers and towing companies? These bodies all habitually pay referral fees, thereby fuelling a vicious circle which ultimately means that accident victims’ claims may be handled by inexperienced, non-expert lawyers – and meaning that drivers’ insurance policy premiums endlessly increase.

It all adds up to a situation calling for reform, but reform done well. A little delay, so that we can think through all the issues properly, may be no bad thing. Or, as is said of another sphere of life to which most of us can relate: ‘marry in haste, repent at leisure’.