Lexel - Helping practices to improve profitability

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Section 2

Lexcel Assessment Bodies

The following ISO 9000 or Investors in People Assessment Bodies have been authorised to conduct Lexcel assessments on behalf of the Law Society (they can also answer technical queries about the Lexcel assessment process):

The Lexcel Practice Management Standards

The Lexcel Practice Management Standards (PMS) were revised in July 2000.

Lexcel's Practice Management Standards provide a guideline against which practices can measure the way they currently manage themselves as well as a checklist for planning improvements and developments.

The Standards do not prescribe procedures and systems in detail. Instead, they identify the key disciplines in which procedures and systems are needed that will suit the needs of both the practice and their clients. Sources of precedents and further guidance are suggested below.

Compliance with the Solicitors Practice Regulations.

All solicitors are subject to the general law, the Solicitors Practice Regulations, Solicitors Accounts Regulations, and other Society Regulations. These requirements are not repeated in these Standards. However, establishing systems and procedures as suggested by the Standards will assist practices in ensuring compliance.

In order to achieve Lexcel:

• practices must comply with all the core Practice Management Standards which are indicated by the words "will" and “must” and the use of bold type
• while "should" indicates a recommendation
• and the word "may" conveys discretion.

A: MANAGEMENT STRUCTURE

A1 Practices will have a written description of their management structure which designates the responsibilities of individuals and lines of accountability. There will be a named supervisor for each area of work (a supervisor may be responsible for more than one area). The supervisor must have appropriate experience of the work supervised and be able to guide and assist others.

A1.1 The management structure should be appropriate for the partners, principals, and staff, the size of the practice, its location, and the type of work it does.

A1.2 Practices should be able to explain their management structure, for example to incoming partners, principals or staff, and the written description may for example:

a) List the designated responsibilities of individuals in the practice (including responsibility for adherence to these Standards)

•  Name committees (if any) and summarise their terms of reference

c) Describe reporting structures in the practice, for example by including a "family tree".

A1.3 Supervisors should be able to describe their experience and the ways in which they guide and assist those under their supervision.

B: SERVICES AND FORWARD PLANNING

B1 Practices will document:

•  Key objectives for 12 months and an outline strategy covering a further two years to provide a background against which the practice may review its performance and may take decisions about its future. Plans must identify the resources and skills necessary to deliver the strategy, with a finance plan and budget. Plans must include an information technology strategy

•  The services they wish to offer; the client groups to be served; how services are to be provided; and the way in which services are designed to meet client needs

•  Their approach to marketing

d) Reviews of all elements specified in B1 at least every six months.

Practices may choose the format and level of detail of documentation that suits them best.

B1.1 This documentation need not be disclosed to third parties.

Strategy

B1.2 The strategy should be sufficient to provide a framework for decisions about, for example, capital expenditure (including computers), office location, staffing, strategic and business risks facing the practice, changes in the external environment and targeting new business, but need not be written in considerable detail.

B1.3 Most practices will already have agreed annual budgets, financial targets etc. (as well as views about how the practice ought to develop) and these provide a useful starting point for strategy planning. A finance plan may consist of a projected profit and loss account in detail for one year and in outline for the subsequent two years.

B1.4 Practices may wish to consider the following:

•  Setting goals for the practice for the coming five years

b) Adopting a "practice purpose statement" describing the long term aims of the practice.

Services

B1.5 How the practice provides services will depend upon its clients and services. Issues may include location of offices, physical access to the premises, languages spoken, facilities for clients, electronic communication etc. These issues should normally be addressed in the practice's strategy.

Marketing

B1.6 A marketing plan should form part of the practice's strategy. For those satisfied with their current quality and level of business, a marketing plan will need to be less detailed than for a practice wishing to expand, develop a new specialism, or uncertain about its future client base. For some areas of work, the plan may need to describe how to contain demand to an acceptable level (rather than how to encourage additional business), taking account of that work's profitability and the resources of the practice.

B1.7 A marketing plan may:

•  Describe the services to be provided and client groups to be served, how services will be delivered, and the practice's client care policy

b) Describe the practice's resources including skills and knowledge

c) Set out objectives for the clients or business to be developed, which should be measurable and related to a time frame

•  Explain how the structure or personnel or organisation of the practice will need to develop if those objectives are to be attained

•  Provide a timetable for marketing activities and a budget

•  Allocate and describe appropriate individual responsibility for the marketing activities

•  Describe arrangements for monitoring response to the marketing effort (for example recording sources of referrals etc).

Non-discrimination

B2 Practices will document procedures on non-discrimination, and have regard to guidance on non-discrimination in accepting instructions from clients and the provision of services issued by the Law Society from time to time.

See also D8.

C: FINANCIAL MANAGEMENT

Responsibility

C1 Practices will document responsibility for financial affairs .

Financial information

C2 Practices will be able to provide documentary evidence of the following:

•  Annual budget (including, where appropriate, any capital expenditure proposed)

•  Quarterly variance analysis of income and expenditure against budget

•  Annual profit and loss account

•  Annual balance sheet

•  Annual cash flow forecast

•  Quarterly variance analysis of cash flow.

C2.1 In addition, practices may find it helpful to maintain the following management information (but note that it will not be practicable to produce much of this in the absence of full computerisation):

•  Separate capital expenditure budget

•  Weekly or monthly aged list of debtors

•  Analysis of the cost of services (including apportioned overheads)

d) Analysis of cases by category

e) Analysis of cases by client name

f) Analysis of fees by fee-earner

g) Analysis of fees by category or department

h) Analysis of working capital.

C2.2 Note that practices will not normally disclose financial information to third parties; but, for example, they may in appropriate cases instead make available an accountant's certificate that systems to provide the relevant information within the practice itself are in place.

Computerisation

C2.3 Implementation of a computerised accounting system will assist cost-effectiveness. It is unlikely that most practices could comply with these Standards in the absence of computerisation. Practices will note that B1a requires an information technology strategy.

C2.4 Computerised accounting systems can maintain financial records as required by the Solicitors Accounts Rules and provide other reports and information as well. Details are given in the Law Society's directory publication: "The Software Solutions Annual Guide".

C2.5 There is a significant cost in money and time attached to planning for development of information technology, including purchase of software, training and support following implementation. But, if properly planned, this investment will be worthwhile.

Time recording

C3 Practices will have a documented system that ensures that time spent on casework can be properly recorded and attributed.

C3.1 The system may provide that some matters or types of matter need not be subject to time recording (for example, where a fixed fee has been agreed) and in that case time recording should be carried out on a sample basis.

D: MANAGING PEOPLE

Job descriptions

D1 Practices will document the skills, knowledge and experience required of fee-earners and other staff, the tasks they are required to perform, usually in the form of a written job description; but employment contracts may reserve job flexibility.

D1.1 Practices may prepare a personnel plan to help ensure that skills, knowledge and experience within the practice are developed to meet needs indicated in the forward planning documents (section B).

Recruitment

D2.1 For example, applicants may be sent a copy of the job description and a form to complete; and the contents of completed applications may then be checked against the requirements in the job description; and questions at interviews may be related to the completed application and to the job description.

New post-holders

D3 Practices will have documented arrangements to provide an induction process for new post-holders.

Objectives and performance appraisal

D4 Practices will have documented procedures to:

a) Record the responsibilities and objectives of each partner, principal, and member of staff in the practice

b) Evaluate performance of staff at least annually against those responsibilities and objectives

c) Record in writing the performance appraisal, the record to be kept confidential to the practice and to the post-holder.

Training

D5 Practices will have documented arrangements to ensure that:

a) All partners, principals, and staff are trained to a level of competence appropriate to their work

b) Training and development needs are assessed for each person against the objectives of the practice and are reviewed at least annually

c) Skills and knowledge required for the management and organisation of the practice (as well as for legal practice) are provided for in training and development

d) Appropriate written training records are maintained.

D5.1 Practices should also ensure that for cost-effectiveness and to maximise development of the practice's own resources, skills and knowledge acquired by fee-earners and other staff are communicated within the practice through training in-house.

Communications

D6 Practices will have documented arrangements (informal or otherwise) which foster communication within the practice, and encourage suggestions for improvement.

Supervision

D7 Practices will ensure that there are appropriate documented arrangements for supervision (supervision of casework is the subject of F10).

Equal opportunity

D8 Practices will document procedures on equality of opportunity including recruitment and employment procedures and have regard to guidance on equality of opportunity issued by the Law Society from time to time.

See also B2.

E: OFFICE ADMINISTRATION

Responsibilities

E1 Practices will document the facilities needed to provide services including:

•  Maintenance and support services

•  Health and safety conditions

•  Annual review of risk.

E1.2 Issues addressed in the review of risk in relation to facilities should include health and safety considerations.

Forms and procedures

E2 Practices will maintain an Office Manual collating information on office practice, which must be available to all members of the practice . There will be documented procedures to:

•  Note each page with the date and/or number of issue

•  Review the Manual at least annually

•  Update the Manual and record the dates of amendments.

E2.1 Precedents for office forms and procedures are offered in the Law Society's Lexcel Office Procedures Manual.

Legal reference material

E3 Practices will have documented arrangements to ensure that:

a) Fee-earners have ready access to up-to-date legal reference material for the areas in which the practice offers a service

b) Fee-earners receive timely information about changes in the law, practice and procedure relevant to their work.

F: CASE MANAGEMENT

Systems

F1 Practices will have documented arrangements to:

•  Maintain an index of matters

•  Facilitate identifying any conflict of interest

•  Monitor the number and type of matters undertaken by each fee-earner to ensure that they are within his or her capacity

•  Maintain a back-up record of key dates in matters

•  Ensure proper authorisation and monitoring of undertakings given on behalf of the practice

•  Ensure proper risk management procedures are in place, including:

•  Appointing an overall Risk Manager for the practice

•  Maintaining information about the generic risks associated with the type(s) of work carried out

•  Listing and defining types of case which are likely to fall within acceptable risk levels

•  Listing and defining types of case which are likely to fall outside acceptable risk levels

•  Implementing procedures to manage all cases which fall outside acceptable risk levels, including mitigating actions and contingency plans, where appropriate

•  Conducting an annual documented review of all risk assessment data generated within the practice.

F2 Where required to do so by a third party funding the legal costs of a matter, or by a client instructing the practice in a number of matters, the practice will have a system which enables all relevant matters to be identified.

Client Care

F3 Practices will have written procedures to ensure compliance with the Solicitors Costs Information and Client Care Code 1999 and to provide for clear and regular communication with clients, third parties and the court as necessary in relation to costs.

They must:

•  Inform clients of the basis of charging

•  Provide the client with advance costs information including:

•  The best information possible about the likely cost, including a breakdown between fees, VAT and disbursements

•  Where time spent is a factor in the calculation of the fees, a clear explanation of the time likely to be spent in dealing with the matter

•  Agreeing a fixed fee; or giving a realistic estimate; or giving a forecast within a possible range of costs

•  Informing the client if any estimate or quotation is not intended to be fixed, and if charging rates may be increased

•  Explaining to a private paying client that the client may set an upper limit on the firm's costs, which may be reached without further authority

•  Explaining to the client the reasonably foreseeable payments which may be required to be paid to the solicitor or to a third party, and when those payments may be needed

•  Arrangements for updating costs information and informing the client at regular intervals (at least every six months)

•  Whether the client may be eligible for any public funding, and if so, the costs implications for the client, particularly in relation to the statutory charge, where applicable

•  Whether the client's liability for costs may be covered by insurance or another party, e.g. a Trades Union

•  Whether the client's liability for another party's costs may be covered by insurance.

F3.1 Practices may use standardised checklists to ensure appropriate information is obtained and given at each stage of a matter.

At the outset of a case

F4 Practices will establish a documented procedure for taking instructions which will ensure that fee-earners:

a) Agree and record:

•  The client's instructions and objectives

•  A clear explanation of issues raised and the advice given

•  Action to be taken by the practice and likely timescale

•  Strategy decided upon and any case plan

•  The name and status of the person dealing with the matter and the name of the person responsible for its overall supervision and whom to contact about any problem with the service provided

b) Confirm these with the client (ordinarily in writing)

c) Provide written information to the client about complaints procedures

d) Identify key dates in the matter and record these in the file and in the back-up system

e) Discuss with the client whether the likely outcome will justify the expense or risk involved, including, if relevant, the risk of having to bear an opponent's costs

f) Consider whether there is any unusual degree of risk to the practice associated with the matter and record this on the office file

g) Implement procedures to manage risk to the practice assessed at unacceptable levels in accordance with the practice's documented procedures.

Progress of the matter

F5 Practices will have documented procedures to ensure that:

•  Information on progress of the matter (or reasons for lack of progress) is given to the client at appropriate intervals

•  Information about changes in the action planned to be taken in the matter, strategy or case plan, its handling (including person with conduct), or cost, is given to the client promptly

•  The client is informed in writing of any circumstances which will or may affect the degree of risk involved or cost benefit to the client of continuing with the matter

•  A timely response is made to correspondence and telephone calls

•  Information on cost, and in publicly funded cases, the effect of the statutory charge if any, is given to the client in writing at least every six months and timely reference is made to the client when an agreed limit on costs or stage in progress is approached

f) In litigation matters information about adverse costs orders is given to the client immediately as payment may be required forthwith

g) A case plan may also be prepared in a complex matter, agreed with the client, and periodically reviewed and updated.

Documents etc.

F6 Practices will have documented procedures to ensure that they are able to identify and trace all documents, correspondence and other information relating to a matter and that these are properly stored and are readily accessible.

At the end of the case

F7 Practices will have documented procedures to ensure that at the conclusion of the matter, the practice:

a) Reports to the client on the outcome and explains any further action that the client is required to take in the matter and what (if anything) the practice will do

b) Accounts to the client for any outstanding money

c) Returns to the client original documents and other property belonging to the client if required (save for items which are by agreement to be stored by the practice)

d) If appropriate, advises the client about arrangements for storage and retrieval of papers and other items retained (in so far as this had not been dealt with already, for example in terms of business)

e) Advises the client whether they should review the matter in future, and if so, when

f) Carries out a concluding risk assessment in relation to the case

g) Notifies the practice's overall Risk Manager if the final assessment differs from the initial assessment, and provides a written explanation.

Services from others

F8 Practices will establish a documented procedure for using barristers, expert witnesses etc. in providing the practice's legal services which will include provision for the following:

a) Use of clear selection criteria which should not discriminate in relation to gender, sexual orientation, race, disability or religion

b) Where appropriate, consultation with the client in relation to selection, and proper advice to the client on choice of advocate

c) Maintenance of records (centrally, by department, or by office) on barristers and experts used

d) Giving of instructions which clearly describe what is required and which, in litigation matters, comply with the rules of court and any court orders

e) Checking of opinions and reports received to ensure they adequately provide the information sought (and, in litigation matters, comply with the rules of court and any court orders)

f) Payment of fees.

File management

F9 Practices will have documented arrangements to ensure that:

a) The status of the matter and action taken can be easily checked by other members of the practice

b) Documents are arranged in the file in an orderly way

c) Key information is shown clearly on the file (for example at the front of the file) which will include details of any undertakings given on behalf of the practice.

File review

F10 Practices will have documented arrangements to supervise the conduct of casework, and these will include:

•  Availability of a supervisor to guide and assist others

•  Appropriate procedures to allocate work in relation to the qualifications and experience of fee-earners and their workloads

•  Arrangements for the management of case-files to be reviewed periodically and the review will (except where there is only one fee-earner in the practice) be carried out by a fee-earner who has not been involved in the day-to-day conduct of the matter

•  A record of the review to be kept on the case file and on a central record

•  Arrangements to ensure that any corrective action identified is carried out promptly.

F10.1 It will be a matter for each practice to determine the frequency of such reviews and whether all files are reviewed or a sample selected.

F10.2 Practices may also adopt other arrangements to ensure appropriate supervision of casework. Options include:

•  Checking incoming post

b) Outgoing post signed by supervisor

c) Regular review sessions with a supervisor, covering:

•  New cases taken on, and discussion of "case plans" in complex cases

•  Progress review for current cases

iii. Evaluation of outcomes of completed cases

•  Consideration of training needs in relation to legal knowledge and skills.

Complaints

F11 Practices will have documented arrangements for complaints handling, including:

•  Definition of a complaint

•  Making the complaints procedure accessible to all clients, and providing a copy of the complaints procedure on request

•  Reporting and recording centrally every complaint made by a client

•  Responding appropriately to any complaint within a defined timetable

•  Identifying the cause of any problem of which a client has complained, offering any appropriate redress, and correcting any unsatisfactory procedures

•  An annual documented review of any complaints to establish issues where client care may be improved, including clients' perceptions of the procedure itself.

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