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Saving private client | Feature

The low down

Tradition has it that we are bad at talking about death and have an easy facility for deferring any step that puts our lives in good order. With a Covid-19 death toll that has surged past 100,000, such subjects are no longer taboo, and private client lawyers have been working overtime. But they are not just marking an uptick in business. Looking to the future, they need to keep clients focused on reviewing their arrangements regularly and find ways to attract lawyers at the start of their careers to the private client department. And as life beyond the pandemic looms, should they go into business with independent financial advisers? 

Much of private client law is about issues in later life – from drafting wills and lasting powers of attorney to inheritance tax, estate planning and probate. Covid-19 has meant that this area of law has expanded over the past 12 months.

‘The pandemic has definitely focused clients’ minds on the need to get their personal affairs up to date [with regard to wills and powers of attorney] and on succession planning: in a sense, our clients have been a captive audience during the lockdowns,’ says Carole Cook, a partner at Mayfair firm Forsters.

Paul Clark, a member of the Law Society’s Private Client Section advisory committee and managing director of Spall Clark Solicitors, says there has been ‘a significant reduction’ in the average age of individuals instructing the firm: ‘We are seeing an increasing number of clients in their 20s and 30s coming to us wanting to put their public affairs in order because of the uncertainty of what the future may hold due to the pandemic.’

In order to meet increased demand and maintain profitability, practitioners have had to radically rethink the way things are done, both in the short- and long-term.

We found ourselves immediately thrown into a world where everyone was talking about death

Melinda Giles, Giles Wilson Solicitors

‘Covid-19 has had a profound effect on private client practice,’ says Melinda Giles, a partner at Essex firm Giles Wilson Solicitors. ‘We found ourselves immediately thrown into a world where everyone was talking about death and dying and therefore making wills, and yet our physical offices were in lockdown.’

The Wills Act 1837 still provides that wills have to be physically witnessed by two people and lasting powers of attorney require one witness, Giles explains. ‘We became innovative; the community of private client solicitors became closer as we helped each other out in enabling clients to get wills signed through car windows and French doors,’ she says. ‘We all coped with the tragic consequences of more deaths, leading to more probate advice at a time when the probate system was already struggling under the weight of introducing online applications.’

We are still seeing clients in person to sign their wills… Sometimes we have had to find novel ways to do this to ensure the safety of our staff and clients – for example, through windows, in gardens, and on car bonnets and park benches

Kate Mahon, Davidson Mahon Solicitors

Kate Mahon, director of Davidson Mahon Solicitors and chair of the Society’s committee, says: ‘We are still seeing clients in person to sign wills, lasting powers of attorney and other estate planning documents. However, we have had to find novel ways to do this to ensure the safety of our staff and clients – for example, through windows, in gardens, and on car bonnets and park benches. This was fine while the weather was good in the first lockdown, but has proved more challenging in the winter.’

Clearly, there has been little or no alternative but for practices to ditch traditional formalities and embrace change, including video technology and remote working.

Gary Rycroft, a partner at Lancaster-based Joseph A Jones & Co, says: ‘Having virtual meetings is great for reaching clients who otherwise would see attending our offices as a barrier to working with us.’

Sign-will-on-car

Growing private client: tips

  • At the core of every successful practice are the people, so ensure that you have a good team
  • Build a good professional network around the needs of your clients to include financial advisers, accountants and other professionals including lawyers
  • Raise your profile, locally or nationally or both – for example, through local sponsorships, charities and radio, and keep your website and social media pages up to date with interesting, engaging and reader-friendly content
  • Market to your will bank and, if you cannot, then find someone who can
  • Do not be tempted to fight your way to the bottom of the market on price – believe in what you offer. At the same time, focus on the correct pricing and charging structure  
  • Embrace technology by investing in cloud-based, robust IT platforms, to enable home-working
  • Look at alternative businesses structures for succession planning and external investment, including from independent financial advisers 

But he adds that the closure of the firm’s offices has also meant seeing clients in their own homes when face-to-face meetings are essential. ‘This has made for more successful meetings. You learn more about clients and they are more relaxed when you see them on their territory,’ he says.

Furthermore, ‘encouraging staff to work in a flexible way has shown it can be done without the world falling in and the same amount of legal work can be produced’, according to Rycroft.

Philip Munro, a wealth-planning and tax partner at Withers, says that many meetings have moved to Zoom or Skype, including those for completion of certain documents where this was appropriate. ‘In terms of business opportunities, the use of these technologies essentially allows for more meetings with more clients more often, at no cost. It is hard to speculate on professional life post-pandemic, but these technologies do allow for more client engagement, which is something that we will be trying to continue.’

‘We are conducting a lot more “meetings” via Zoom or phone calls,’ says Paula Nichols, a partner at Oxfordshire firm Mercers Solicitors. ‘This has allowed us to reconsider how many face-to-face meetings will be necessary in the longer term and how much space we need to allocate for meeting rooms within our offices.’

Mahon tells the Gazette that her Warwickshire-based private client niche firm was originally set up with cloud-based technology and VoIP phones because it was always the intention that fee-earners would be able to work from anywhere. This meant ‘very little disruption’ to the business during the national lockdowns.

‘Also, because we are a small firm, we are able to adapt to new ways of working quickly and easily,’ she says. This also reduced the need for a big office. ‘We have scaled back our office space dramatically, which has ultimately saved on overheads.’

Spall Clark Solicitors has had ‘a very successful’ business since launching in September 2019 as a ‘virtual’ firm specifically to meet demand from clients as they become more familiar and comfortable using technology.

A challenge has been educating clients as to the benefits of using solicitors rather than ‘going it alone’ and doing it themselves

Paul Clark, Spall Clark Solicitors

‘In many cases, most of our process is completed online with no documents sent by post,’ says Clark. ‘We have established a network of meeting rooms, which means we have the flexibility over where to meet clients, which costs us less than a fifth of the cost of having just one physical office in Cheshire.’

This has enabled the firm to be competitive on price without sacrificing profitability. The mass shift to virtual meetings via Zoom or Teams has also ‘resulted in clients who may favour the traditional law firm with a big high street office feeling more comfortable about using a virtual firm’, he says.

For Rycroft, ‘the benefit of excellent technology cannot be overstated. It means that we have more time to spend on the soft skills of listening to clients and thinking through their situations, rather than being on a legal conveyor belt yourself.’

Clearly, some practices are further down the road than others, but legal consultant Viv Williams recommends that all firms, regardless of size, invest in building ‘a robust IT platform’ to enable partners and fee earners to work from home. This not only avoids unnecessary commuting and reduces the cost of office accommodation, but also has other benefits.

First, he points to the ‘huge rise’ in professional indemnity insurance premiums, particularly in conveyancing, because insurers are concerned about the lack of supervision and the potential rise in claims. ‘Private client firms working on wills and probate without a robust IT system that encourages supervision could fuel a rise in claims,’ according to Williams. This could be a cloud-based solution that enables fee-earners and compliance personnel to review files in the cloud so that compliance file reviews and supervision of fee-earners’ work can be done remotely.

‘Most firms seem to have strong cash balances at present but by deferring VAT and tax payments, the imminent repayment of CIBLS and BBLS [government-backed Covid loans], plus increased PII premiums, could result in a difficult future for some. There will be no government-backed loans to bail them out in 2021,’ Williams warns.

Second, despite the volume of probate work due to Covid-19, those firms that did not have robust IT platforms insisted their private client lawyers come into the office and not necessarily maintain social distancing rules, according to Williams.

‘We have seen growth in the consultancy consolidator models with new entrants and existing businesses growing at significant rates since March 2020. The fee-earners forced to work in a potentially unsafe environment have made lifestyle choices to leave their employer and join a consultancy, with many more to come,’ he says. High-profile exemplars include Keystone Law, Setfords Solicitors, Gunnercooke and Taylor Rose, while Nexa Law and Parity Legal are among the new entrants.

Beyond Covid

Beyond Covid-19, as Cook puts it, ‘the main challenge remains the same: it is not possible to target private clients directly.’

‘Reputation is key,’ says Sarah Murphy, head of private client at Preston-based Brabners, who also sits on the Society’s Private Client Section advisory committee. ‘The best recommendation for any lawyer, but especially a private client lawyer, is a personal recommendation. This means that you have played a key role in the life experience of a client who has made the recommendation.’

Offering a personalised service is paramount in this area of practice, which is why Giles says that ‘knowing your clients and showing them that you know and remember them and their context is vital. Gaining a reputation for this increases referrals from other professionals who want to ensure that those they recommend are well looked after’.

Giles, who represents the Private Client Section on the Law Society Council, also recommends ‘keeping in touch with those who have made wills or powers of attorney that we have traditionally retained in our “vaults”. [This] is a good way to sustain a good private client practice’. It also serves the purpose of ‘reminding clients of the need to review their family and financial situation every so often, at certain personal milestones or when the law changes’.

Many private client firms have large numbers of wills in their possession, but have done nothing with them for many years due to lack of time and staff, according to Williams. He says that reviewing a will every two or three years would generate new work including more wills, LPAs and even trust work.

Despite the advantages for firms and clients, digitisation is a double-edged sword. ‘A significant number of people are looking at creating their own wills and [LPAs]. A challenge has been educating clients as to the benefits of using solicitors rather than “going it alone” and doing it themselves,’ says Clark. His firm informs clients about what they need to consider and the risks they face, as well as how to mitigate them: for example, by ensuring inheritance tax allowances are claimed.

‘The tax savings would more than make up for the legal fees,’ according to Clark.

In keeping with the profession’s SRA-mandated move towards pricing transparency, Murphy’s firm offers a fixed-fee structure, but she says that this should not ‘encourage the public to undervalue the importance of what is provided. This is something that private client lawyers have battled with since the infamous cut-price, over-the-counter DIY will packs’.

The firm’s approach is to educate clients not to view private client services in isolation but to make a will in conjunction with consideration of LPAs, inheritance tax planning and the use of trusts to preserve assets for future generations.

‘For clients where it is relevant, we also encourage them to see how their personal arrangements impact upon their business, their retirement planning, and pension provisions,’ Murphy says. ‘We have sought to encourage clients to view our services as supporting them through their life journey.’

Will-on-phone

Virtual world

There have been several changes to the probate service over the past six months, including regulations that came into force on 2 November that mandate all solicitors and probate practitioners to submit non-contentious probate matters online (there was a grace period of until 30 November for paper applications).

 

On 28 September, the Wills Act was temporarily amended (until 31 January 2022) to permit virtual witnessing of wills in certain circumstances. The changes took effect retrospectively from 31 January 2020.

 

Melinda Giles, partner and head of private client at Giles Wilson, says that although this was greeted with some relief by practitioners, it represented a ‘huge change in the law’ and posed some significant risks, and so was ‘difficult to embed into the traditional private client practice’.

 

One of the risks is undue influence (whereby a will is invalid if it is found that the testator was unduly influenced by another) and the Law Society has recommended that solicitors discuss re-signing wills with clients once it is safe to do so.

Strong links

Practitioners also recommend building a professional network around the needs of clients, both in the UK and overseas. This includes financial advisers, accountants and other lawyers. ‘Close relationships with other practices help to cement your success as inter-firm referrals grow,’ remarks Giles.

‘We have sought to strengthen the links that we have in the UK and beyond with like-minded professionals to whom we can signpost clients and vice versa,’ says Murphy, pointing to organisations such as STEP and the ‘cross border’ practitioners who are members of the Society’s Private Client Section.

Clark advises getting involved in the local community – from supporting dementia groups and providing ‘will weeks’ to helping charities fundraise.

‘But the support must be genuine, as it is very easy to see through initiatives that are clearly there just for marketing purposes,’ says Clark, pointing out that ‘a significant number of clients’ instructed the firm as a result of its charity initiatives.

Like other businesses, private client law practices must also factor environmental considerations into their operations – both to win clients and reduce costs. ‘We are moving towards paperless working, using emails and scanning more,’ says Nichols. ‘This has the effect of reducing overheads for stationery and printers, as well as being more environmentally friendly.’

Clark’s own firm, which is now ‘paperless’, has clients who, in deciding whether or not to instruct a solicitor, will also consider their ‘environmental impact’, he notes.

With fewer overheads, it should be easier to focus on hiring, training and retaining top talent, which is key to growing a successful business in this area. As Nichols puts it: ‘The golden rule is to recruit high-quality staff and treat them well. The rest, to a certain extent, should follow from that.’

Notwithstanding this basic mantra, firms should beware the challenges. Munro notes: ‘We are keen to engage and bring through trainee solicitors and retain them as associates. But increasingly there is a shortage of good private client lawyers in the market and, as firms increasingly recognise the importance of having an international private client team, there is competition to retain and promote talent.’

Munro also notes that any practitioner in this area needs to be ‘both a specialist and also a generalist: it is a broad field’; he further highlights ‘the notable pace of legislative, tax and regulatory reform over recent years’ and the consequent ‘challenge to stay on top of all the issues that we may be presented with’.

Consequently, it pays off to build in enough flexibility to respond to a fast-changing environment. ‘The complexity of the UK’s tax system and transparency initiatives such as the Common Reporting Standard mean that taxpayers may need to interact with HMRC regardless of how strict they are with their tax compliance,’ says Munro. His firm hired Jeff Millington, a tax advice and litigation specialist who had previously worked as an HMRC tax inspector for over two decades.

As part of the UK’s implementation of the EU’s fifth Anti-Money Laundering Directive, the Trust Registration Service was significantly expanded last year – new regulations came into effect in October, requiring almost all trusts with a link to the UK to register with the online service.

‘As a private client practice, we have been working with both our clients and their other advisers to ensure that, where appropriate, they are compliant with the requirements of the TRS,’ says Murphy. Legislative and regulatory reforms also present an opportunity ‘to touch base with our clients and their advisers’, she adds.

Whether because of Covid-19, market forces or both, the world of will-making, trust law and probate administration has changed ‘hugely’ in recent years, according to Giles. The legal profession has been working alongside will-makers (both regulated or unregulated), IFAs and probate administration companies.

‘Although the application for probate itself remains a reserved activity, this does not mean that probate administration cannot be done by anyone who sets themselves up to do so, and personal applications for probate are now actively encouraged by gov.uk,’ she says. ‘In order to remain in the game, as it were, we have to provide the best quality legal advice and client care.’

The IFAs are here

Williams points out that several IFAs have entered the legal space, some acquiring law firms in an alternative business structure – examples include Chesterton House and Penguin Legal. Although there are only about 30 solicitors firms in the whole of the UK jointly regulated by the SRA and the Financial Conduct Authority, those firms are ‘very profitable’, he says.

Some private client firms may find it beneficial to work closely with an IFA to form a joint venture or an ABS, according to Williams, since IFAs are adept at researching clients in a way that enables them to provide additional services. He says there are IFA firms considering entering the private client sector through acquisitions or building law firms from scratch.

‘They will look at acquiring will banks to market to and, sadly, some law firms who will be unable to sell their practice, because no one wants them, may find selling their will banks on an annuity basis their only solution prior to a controlled winddown,’ he says.

Clearly, the challenge for both small and large private client practices is preparing a strategy for the future, bearing in mind that it is not just the clients who must leave their affairs in order for the next generations.

Mahon changed her firm’s business model from sole practitioner to ABS to ensure business continuity: ‘As the firm grew and I started employing people, I wanted to ensure that my firm could continue if something happened to me – for example, if I died or became mentally incapable. As a sole practitioner, if you die or become mentally incapable your firm cannot continue because the authorisation is with you personally.’

She opted for an ABS because she wanted her husband to be a co-director although he is not a lawyer. ‘I hope to appoint other lawyers and non-lawyers as directors of the business so that ultimately I can retire and ensure the firm can continue,’ she says.

If all firms are grappling with new opportunities and threats, certain fundamentals do not change.

‘Success is subjective,’ says Giles of her private client practice. Comprising six solicitors, one trainee and two paralegals, it is ‘small but perfectly formed. Our view of success is one that has, at its core, integrity, great legal advice and good client care. If you can achieve this, then coupled with a good team of people with the right culture, this will lead to profit, longevity, and a sustainable business’.

 

Marialuisa Taddia is a freelance journalist


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