All by myself: sole practitioners

The spectre of the Legal Services Act has haunted the industry since 2001. And, as it threatened to turn from nightmare to reality, it was one of the reasons I chose to set up in sole practice last year.

The Legal Services Act will fundamentally change the marketplace for sole practitioners and smaller firms. The general view among practitioners is that smaller firms will largely disappear over the next few years; absorbed into QualitySolicitors-type enfranchisements or taken over by regional heavyweights.

Those that do not act quickly enough, or that are perhaps simply unlucky, will not survive.

Adapt or die

Amid the doom and gloom, there is still a place for private client solicitors. But we need to change approach and mentality. In particular, we need to:

• concentrate on individual reputation rather than a faceless brand;

• seek out high-end, complex work; and

• offer superb client service.

In addition, we must streamline every regulatory process and aspect of case management, so as to make the most ?of reducing profit margins.

In this respect, sole practitioners may even be at an advantage compared to their larger, less nimble, brethren, unburdened as they are by the two millstones of traditional firms; ‘decision by committee’ and the need to consider the firm as a whole when investing in new resources.

I am relatively unusual for a sole practitioner, in that I have already experimented with some of the tools that are available to us, including paid referral sites and online legal drafting.

Experiment one: paid referral site

The last two years have seen a huge increase in the number of paid referral websites for legal services. The Legal Services Consumer Panel published in February 2012 a report stating that only one per cent of consumers who had bought legal services in the last year ?had used a comparison website, ?but concluded that comparison sites “have the potential to benefit competition between providers on price, quality and service features” and can help to make the law more accessible.

As a start-up without a deeds room full of potential probates, I was concerned that I would not have enough trust and estate work. I therefore signed up with one of these referral websites in August 2011, which I will call ‘Meet-a-Lawyer.com’.

My initial subscription was £350 plus VAT a month. This did seem high, but I was assured that I would receive a steady stream of profitable probate, will and charity referrals. At the time, I estimated that a third of my billing would come through Meet-a-Lawyer, which would more than justify that fee. I later negotiated the fee down to £60 plus VAT a month plus 15 per cent commission.

In total, I have had four to six referrals a month, most of which have been looking for free/cheap advice, or have been for non-private client work.

More concerning is that, as a female sole practitioner, I have not always felt comfortable meeting potential Meet-a-Lawyer clients on my own. I refused altogether to meet one, as he was very volatile in our initial communications. ?I met a second with a chaperone. A third appeared to think Meet-a-Lawyer was ?a very expensive introduction agency ?as he told me that he was not looking for a lawyer, but rather “a friend, a confidante, perhaps a wife”.

I accept that I will act for all sorts of clients and that there is no way that ?a referral website could personally vet each potential client. However, I have always felt confident meeting clients that have been personally recommended: ?I didn’t mind at all when one personally recommended client pulled down his trousers to show me a scar on his right buttock, as I had been forewarned that he always did this to prove that he wasn’t his estranged twin brother.

In all, only three Meet-a-Lawyer matters have progressed, resulting in total fees of £4,400 plus VAT. These are good clients that pay their bills on time, but the cost has been too high: £1,200 plus VAT in fees (i.e. 27 per cent of fees) plus the time lost dealing with the poor leads and the additional admin.

All in all, my initial experiment ?with a legal referral website has not been successful and I will not be renewing ?my contract.

Experiment two: online ?drafting system

Last year, the private client section of the Law Society ran a well-attended lecture ‘Will making over the internet – can we or can’t we?’, which highlighted another big question: to what extent should we give our clients access to online legal tools and in particular should we provide a virtual or online wills drafting service?

Unsurprisingly, the prospect of virtual wills has been met with a lot of resistance in the profession – as Karl Marx apparently said: “Sell a man a fish, he eats for a day, teach a man how to fish, you ruin a wonderful business opportunity.” If we make wills drafting look too easy, we devalue our hard-earned skills and risk being the engine ?of our own destruction.

It is also naïve to think if we ‘build it, they will come’ and that, by simply offering an online drafting service, we will be inundated with wills enquiries. However, there is no doubt that there is ?a potential for huge growth in this area.

The main provider of online wills drafting software, DPL Professional, estimates that their systems produce 20-25 per cent of all wills prepared in the UK, an increasing proportion of which are prepared online. This is unsurprising as they provide the platform, for instance, for two major providers of online wills – Irwin Mitchell (which in turn provides a drafting service for HSBC and Barclays Trust) and Which? Legal Services.

For sole practitioners, the cost of adding DPL’s standardised online system to their website is remarkably low: £5 plus VAT per will (subject to a monthly minimum of £30 plus VAT).

The other main player, Epoq Group, provides their platform direct to 33 major high street brands, including the Halifax, More Th>n, DAS, Barclays and the AA, and the customers of these brands prepared just under 10,000 virtual wills in 2011.

The Epoq platform includes libraries for family, private client, employment, landlord and tenant and business law and in 2011 customers produced a total of 390,000 legal documents on the platform. Even with a conservative estimate that each of these documents results in fees of at least £100, that is £39,000,000 worth of work!

Epoq offers a similar platform for law firms to use (DirectLaw) which enables law firms to provide drafting functionality for their own clients.

I have signed up with DirectLaw and, as a sole practitioner, I pay £350 plus VAT a month for their private client library, which enables me to provide wills, general and lasting powers of attorney, a DIY probate service and basic trust documents via my website.

The clients complete the online questionnaires. When they click submit, I am emailed a link to an advanced first draft, which I can then amend and discuss with the client.

For example, if a client wants a simple will and their situation is straightforward, I can now offer them the option to make an online will for £150 plus VAT.

As part of this service, I speak to them on the phone to make sure that they’ve completed the online questionnaire correctly and that their situation really is as simple as they think it is.

If a client needs legal advice, then I charge £450 plus VAT for a face-to-face will. In both cases, I include the caveat that there may be additional fees for travel and/or complex drafting or tax planning and I make sure that I properly identify the client and send them a client-care letter.

So far, I have not been inundated with requests for fully online wills – although I have noticed a slight increase in the number and quality of speculative queries that I have received via the website. I suspect that this is because the increased functionality makes my firm look more credible. While a few extra virtual wills a week via the website would be welcome, it’s not the reason why I signed up.

The main benefit of the system is that it is now much easier for me to market my firm to quality third-party referrers (IFAs, accountants and non-private client solicitors). IFAs, in particular, are constantly frustrated at how difficult it can be to persuade their clients to make a will and are very interested in any system that will encourage their clients to do so.

As well as an increase in the number of high-net-worth clients referred to me by those aware of the system, I have had offers from three IFA companies to email all of their ‘C-list’ clients (i.e. the ones that need a will but do not have the money or inclination to pay for a full face-to-face will).

Another benefit is that the system helps me to differentiate between the drafting of the will (which has decreased in value due to the availability of DIY and online wills) and the associated estate planning and tax advice. It is much now much easier to justify the higher cost of a face-to-face will and clients are less likely to quibble on fees.

So, while it is still early days and I am under no illusion that I am about to become Irwin Mitchell’s main competitor, I am very happy with the integration.

The next few years are going to ?be make or break for many law firms. ?It takes at least a year for any new system to ‘bed down’ and for fee earners to get to grips with it. It is therefore essential that firms make changes now, before we really start to feel the bite of the Legal Services Act.

Alison Armstrong is a sole practitioner practising under Armstrong Private Client, seehttps://www.armstrongprivateclient.com/