In response to this changing regulatory environment, a increasing number of new products have entered the market to help practices better manage their regulatory obligations, with the increasing acceptance of cloud-based software helping to make these products more accessible and cost-effective for many practices.  Many of these new products seek to improve the process of organising the collection and reporting of information relating to compliance. Examples of software such as Riliance, are helping firms to meet their regulatory obligations through the co-ordination and organisation of many different streams of compliance that run through a practice (e.g. money laundering, file reviews, complaints, etc.).

The use of bespoke software offers a more systematic approach to information management which offers great advantages in efficiencies over traditional paper-based methods or by having multiple spreadsheets containing bits and pieces of information. In many practices, especially smaller firms, the person taking on the new role of COLP or COFA will also be a fee-earner, so utilising technology to cut some of the administrative tasks they are currently required to undertake can free up more time for fee-earning. Using a computerised workflow system also offers practices much greater overall control in terms of reporting and auditing – a ready-made system is there to store and organise data, while all actions and responses are automatically logged, providing immediate access to an accurate audit trail which makes evidencing compliance with their regulatory obligations a far less daunting task.

One of the many areas where the new compliance officers will have to pay particularly close attention relates to the handling of residual client balances as outlined in the Solicitors’ Accounts Rules.  COFAs in particular have specific responsibility for ensuring compliance with Solicitors’ Account Rules, including Rule 20 which relates to the withdrawal of funds from client accounts. While admittedly not the most pressing issue the industry faces, how to handle residual client balances – money that belongs to a client– is a continual cause of concern and frustration for many firms.

It was against this background that we began development work on our online workflow system that automates various steps of the residual client balance tracking process (such as an in-built letter sending function) and provides timely prompts with regard to the next action that needs to be taken for a particular client (perhaps a follow-up phone call).

Solicitors’ Accounts Rules state that if a legal firm makes all reasonable efforts to trace a client to return their money, but the individual still cannot be found, the funds can be donated to charity. For sums less than £50, practices can self-certificate before donating, while for larger amounts, authorisation must first be obtained from the SRA. In both scenarios though, what often appears at first glance to be a simple administrative process can actually become a frustratingly time-consuming and difficult task.

Taking ‘all reasonable steps’ to find the relevant person could involve telephoning numerous different numbers, writing letters to various addresses, checking electoral rolls for necessary information, and liaising with banks, building societies, and even the Department of Work and Pensions to try and obtain the required details. This in itself is obviously a very time-consuming process, but practices also need to factor in the requirement to evidence all these steps to ensure final sign-off from the SRA. All this administrative work has traditionally been carried out manually, either through masses of paper trails or staff inputting information into Excel spreadsheets and Client Management Software.  This type of approach can lead to inefficiencies as it can be difficult to manage the workflow which is exactly the function that bespoke software provides. With historic legacies, these issues are of course exacerbated with practices having to tackle more fundamental issues such as ‘has the client moved address?’ or ‘has the original fee-earner moved to a different practice?’.

It seems evident that without a more systematic approach to manage multiple clients at all stages of the process – and to document the efforts taken to trace these clients – residual client balances will continue to remain a troublesome, time-consuming task. Indeed, during the initial development stages of devising our Client Balance online workflow system, the SRA advised us that many legal practices were still getting in touch with them for advice on the matter.  And our own discussions with a number of solicitor’s firms of various sizes and geographic locations indicated that many of them too had significant residual balances to address, both in terms of the number of clients to contact and the size of the balances concerned.

Of course, it’s probably fair to admit that the legal profession hasn’t always enjoyed the reputation for being a sector that is quick to embrace technological advances, so many will wonder if such a system is suitable for them.  Likewise, with respect to other areas of compliance, practices will need to consider how technology and information systems can be utilised to achieve better working practices that engender an increased engagement with a compliance culture.

In the first instance, practices – led by the COLP or COFA – need to review their current processes for managing and reviewing their compliance information and establish how they are working, and whether technology could help improve overall efficiency. It may be that for smaller practices in particular, improved in-house solutions could be introduced, such as changing from a paper-based trail to a simple spreadsheet. For others, an off-the-shelf software package may suffice, while for others, a more bespoke technological solution may be required. With all of these options, there will be a varying degree of associated cost, plus the time needed to design, implement and communicate standard operating procedures to ensure that the technology is appropriately integrated into the day-to-day operations of the practice.  These short-term pains will hopefully be offset by the longer term gains in overall efficiency that using such software will lead to. In particular, where cloud-based software is adopted, they can often be a very cost-effective solution, whilst obviously offering the advantage of business continuity, as a practice’s data can be accessed from anywhere by the relevant staff.  It is worth noting that the potential risks relating to data security associated with using cloud-based software should be considered and managed by practices that seek to use these services.

Having robust procedures in place to deal with issues such as residual client balances demonstrates that a practice takes wider compliance and risk management seriously. Not only does this improve day-to-day practice efficiency, but it also brings about wider benefits. Demonstration of compliance is one of the key factors in practices achieving certification such as the Specialist Quality Mark or Lexcel’s practice management standard. Such quality marks are becoming increasingly recognised by the public – and consequently becoming a much more important factor taken into consideration when choosing a solicitor – while evidence of a rigorous approach to compliance can even help practices get better deals on their professional indemnity insurance renewals.

In such an environment, where these issues are becoming increasingly important to the day-to-day operations of a legal practice, compliance software will play an increasing role in helping to manage regulatory obligations.  Streamlining the system of handling residual client balances in an effective and efficient way will hopefully play a part in empowering COLPs and COFAs to create a greater culture of compliance throughout the wider legal industry, and we look forward to working alongside them in the months to come.

The post Why COLPs and COFAs should consider automating the process of dealing with outstanding client balances appeared first on Client Balance.

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As you may be aware, when resolving your residual client balances if you can’t trace the client you can donate the funds to charity. Here is a list of the charities suggested by the SRA which provide indemnity in case you need to retrieve the funds. Please note the SRA still recommend that you contact the charity before donating.

Against Breast Cancer

Age Concern Carlisle and District

Alzheimer’s Society

Arthritis Care

Asthma UK

BBC Children in Need Appeal

Biasan Housing Appeal

Bluebell Wood Children’s Hospice

British Heart Foundation

British Lung Foundation

Cancer Care

Calvert Trust Lake District

5th Carlton Scout Group

The Central British Fund for World Jewish Relief

Chai Cancer Care

Children’s Hospice South West – Little Bridge House, Redlands road, Fremington.

Community Foundation Serving Tyne and Wear

Cystic Fibrosis Trust

Dormers Wells Trust Limited

Demelza Hospice Care for Children

East Anglia’s Children’s Hospices

East Anglian Air Ambulance

Eden Valley Hospice

Faith, Truth and Hope

Glanford and Lindsey Lions

Great North Air Ambulance

Guide Dogs for the Blind Association

Harpenden Lions Club

Help for Hero’s LTD

Herriot Hospice Homecare

Ironbridge Gorge Museum Trust

The Kereth Trust

Kidscompany

LAMP Luton Acommodation and Move-on Project

The Lawyers’ Christian Fellowship

Life Path Trust Limited

Limoges Charitable Trust

The London Legal Support Trust

Lottie Loosemore Music Bursay

Lubavitch Limited

McMillan Cancer Support

McMillan Caner Relief

The Mango Tree Orphan Support Programme

Medical Foundation for the Care of Victims of Torture

MIND

NCH, The Children’s Charity

Naomi House

Norfolk and Norwich Heritage Trust Limited

North Devon Hospice

Oakhaven Hospice Trust

Overgate Hospice

Oxfam

PDSA

Pembury Portage Support Group

Prince’s Trust

Promise Dreams

Queenscourt Hospice

The Iain Rennie Hospice at Home Charity

Royal Humane Society

The Royal Horticulture Society

The Royal Marsden Hospital Charity

Radio Merseyside Charitable Trust

The Rotherham Hospice

Royal National Lifeboat Insitution

SSAFA

St Barnabas Hospices

St Christopher’s Hospice

St Elizabeth Hospice

St John Ambulance

St Peter’s Hospice

St Raphaels Hospice

St Wilfred’s Hospice

Samaritans

SCRATCH

Shaare Zadek UK

Smile Train

The Donkey Sanctuary

The Shooting Star Children’s Hospice

The Society for the Protection of Ancient Buildings

Solicitors Benevolent Association

Theatre Royal Plymouth Ltd

The Southend Fund

Tracy Sollis Leukaemia Trust

Ty Hafan

Wessex Children’s Hospice Trust

William Nuttall Cottage Homes

Guildford YMCA

York Against Cancer

Zimkids

Zoe’s Place Trust

The post SRA Recommended Charities appeared first on Client Balance.

1) What is a residual client balance?
It is money that belongs to a client that, for whatever reason, has not been returned to them after a matter has been closed.

2) Can I keep residual client balances?
SRA rule 20.2 requires you to return this money to the client it belongs to.

3) What if I cannot find the client?
If you cannot trace the client and have made reasonable steps to do so, you can self-certify and donate the money to charity if the value is below £50.

4) What if the balance is more than £50?
If the balance is over £50, you can still donate the money to charity but you have to get authorisation from the SRA to do so.

5) Which charities can I donate the money to?
You can donate to any charity you like as long as they provide indemnity, just in case the client comes forward at a later date and the funds need to be returned to them.

6) Do I have to use a tracing agent to trace clients?
The SRA advises the use of a tracing agent and/or a newspaper advert where there are balances of over £250. For all your balances you might want to use a management tool like Client Balance which will let you know when to consider the use of a tracing agent, send letters, search on-line directories and audit your tracing efforts for you.

7) Do I have to document the steps I have taken with each balance?
Yes, the SRA require you to provide evidence of your efforts to contact and trace the client who’s money you are trying to return regardless of the outcome.

For more information about residual client balances you can watch our Client Balance video. If you still have queries feel free to contact us on 01743 234 031 or email finola.mcmunn@clientbalance.co.uk.

The post FAQ’s On Residual Client Balances appeared first on Client Balance.

1. Make time to deal with any matters now and avoid putting it off. If you can dedicate or delegate one hour per week to residual client balances you will have them solved in no time.
2. Sort your matters in to two categories, ones that need SRA approval and ones that can be self-certified. Deal with the self certified category first as these will take less time to complete and you don’t need to wait for SRA approval.
3. Feel confident that the SRA want you to submit your matters for approval. Many firms feel that residual client balances are a sore subject but through conversations with the compliance support team at the SRA, they welcome matters that need authorisation as it means firms are showing a willingness to comply.
4. If you have questions contact the SRA or visit their website, they are very helpful and happy to help.
5. If you feel that you need more support with residual client balances then seek help, Client Balance will help you manage your matters and do most of the work for you. Contact us today on 01743 234 031 to sign up for a free trial or to discuss your needs.

The post Top tips to resolve residual client balances appeared first on Client Balance.

As I am sure you are all aware, when returning residual balances it often happens that you can’t trace the client and so you are left with the responsibility of making sure those funds go to a good home.

As stated in the SRA handbook, rule 20.2, these funds can be donated to the charity of your choice but you may want to check their policies on returning the funds in case the client turns up in the future. Speaking with the compliance team at the SRA this morning they recommend donating the funds to The Solicitors Benevolent Association (http://sba.org.uk/) but if you would like to know of other charities to donate to they have a list of suggestions. Ultimately it is up to you, you might wish to donate the funds to a charity local to you.

Just remember that all balances £50 and over have to be authorised by the SRA and you do need to notify them of which charity you will be donating the funds to.

If you would like more information about donating funds or support with residual client balances feel free to contact us on 01743 234 031 or email Chris.buffery@wellmeadow.co.uk.

The post Which Charity? appeared first on Client Balance.

We have recently added an easy on-line sign up option so you can register for your 30 day free trial with less effort. All you have to do is fill in the form and we will create your account and send you your log in details. If you sign up using our on-line system we will even give you 10 free letter credits to get you started. To start your free trial just select the button below.

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Last week we sent out an article about whether lawyers should live without their secretaries. If you didn’t get a chance to read it just follow the link below.

Thank you to everyone who responded to the article, I hope we didn’t upset too many secretaries! We had some really interesting views put forward. In particular many responses saying they ‘would not be able to live without their secretaries’. I think it is safe to say there is no right or wrong answer and it will be different for every firm. Hopefully the practice equation will help in assisting you to work this out.

If you have not seen the practice equation and would like to request a copy please email finola.mcmunn@clientbalance.co.uk

The post Great feedback! appeared first on Client Balance.

We have put together a spreadsheet to help you organise and manage your unclaimed client funds which is completely free to download and use.

If you feel you feel you need more support with unclaimed funds you may want to consider using Client Balance. Save yourself time and energy with automated directory searches, letter sending and fully documented audit trails. If you would like more information or to request a quote please contact us.

The post Free Client Balance Management Tool appeared first on Client Balance.

In our work helping firms of solicitors, we are often asked this question.

The problem is that a younger breed of lawyer is coming to the profession and can type reasonably competently. Their more senior colleagues adopt a more traditional approach and make full use of a secretary, dictating their work, and arguing that it makes them more productive. Who has got the right approach?

We decided to analyse this problem using an algebraic approach. Now if you are a solicitor reading
this, I suspect you want to browse somewhere else straight away.

But if you can bear it, read on and see if you agree with our point. We started by comparing two fictional fee earners, one with a secretary and a higher ratio of chargeable hours in the day (“productivity”), and another who works without a secretary and as a result has a lower “productivity”. If both approaches are equally valid, then the gross fees from the fee earner with the secretary should exceed those of one without by the equivalent of the full cost of employing a secretary
(including a computer, office space etc).

Taking this analysis through to its logical conclusion led to a remarkably simple formula. If you measure a fee earners productivity by chargeable hours divided by attended hours for any period of time, then there is a formula for how much that fee earner’s productivity should exceed the productivity of the fee earner with no secretary. It worked out that the difference in percentage points is the hourly cost of the secretary divided by the charge out rate of the fee earner. This means for a secretary costing £15 per hour and a fee earner charging £150 per hour, the fee earner needs to achieve 10 percentage point higher “productivity” than the colleague with no secretary.

If you want to see how this is worked out, then please contact us through the website and we will happily send you the workings.  In the meantime, it’s worth collecting the data for your fee earners to see who can justify keeping a secretary with and where it might make sense to promote secretaries to paralegals instead.

Wellmeadow limited works with variety of privately owned firms in all sectors, including several firms of solicitors. We take a very hands-on approach to helping companies with profit improvement and partnership or board level support. If you’d like to find out more about what we do then please call us or contact us through the website.

The post Should lawyers live without secretaries? appeared first on Client Balance.