June Newsletter 2008 for Law Firms

"A lawyer with his briefcase can steal more than a hundred men with guns." Don Corleone, The Godfather

"Welcome to the June Newsletter for Law Firms and Companies. I hope you find it of interest." Jonathan Fagan LLM Solicitor (non-practising), MREC, CertRP, Managing Director
Ten-Percent.co.uk Limited.

Equal Rights for Agency Workers

The government has announced this morning that agency workers will have the same employment rights as permanent staff after 12 weeks. This means that in some cases, locums not only get the benefit of good working conditions (ie being able to leave when they realise the senior partner is completely mad), but also gain equal pay to permanent staff. Tom Hadley, Director of External Relations for the Recruitment & Employment Confederation said: “...new regulations will impact on the viability of temp and contract work in the UK, especially at such a delicate time in the UK labour market. It is also a frustration for recruiters that the debate on agency work regulation has not been based on real evidence." In reality this is not going to impact at all on the work of locums and solicitors working on a contractual basis. This is because most if not all such contractors actually get paid more than the permanent staff at the same firm.. I wonder whether in the weeks to come a permanent member of staff is going to put in a claim to get the same conditions that a temporary worker enjoys in the legal profession...

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"The Firm looked more like a brothel" - the recent experiences of a candidate

This week we have experienced a phenomenon that I haven’t seen in place for quite some time. A law firm in the Midlands requested CVs for a number of candidates and it appeared they were selecting on a fairly tight set of criteria. Ten Percent Legal Recruitment booked the interviews which were to be held over three days and the candidates duly proceeded to attend.

We suspected something was not quite right with the firm after the first candidate had been and telephoned us to say that the law firm offices were above a kebab shop, looked like the entrance to a brothel, wasn’t quite sure how the person interviewing had passed themselves off as a solicitor as they certainly didn’t seem like one and gave the candidate a lecture for 20 minutes on why the firm couldn’t employ them. He explained that the law firm had then offered him a job paying £14,000 a year, that showed great opportunity and potential for him, but that he’d be expected to work the first three months free of charge. What’s more, he wanted the candidate’s mobile number so that he could avoid telling the agency (i.e. us) that the law firm had recruited the candidate. Fortunately the candidate found it all very amusing, and an interesting experience, but as a recruitment agency we were very embarrassed by this. The law firm have yet to comment on their actions and behaviour, or to explain why they were trying to interview and recruit candidates looking for considerably more than the measly amount they were offering as well as the free trial period.

How do you avoid such firms? Well, this is the first law firm I have come across since 2002 who have tried this out, and the last time a firm did something like this, they took three candidates, none of which we were aware of until we saw them on the Law Society Directory, and eventually we had to send bailiffs in to receive payment. The law firm was subsequently intervened, closed down and the principal struck off about a year later.

I suppose that this is one of the pitfalls of being a low cost operator in the recruitment world, and never meeting our clients except in exceptional circumstances. We do try and avoid such incidents from occurring, and get the facts from law firms before we send anyone for interview at the practices.

I must say that this sort of incident is about as interesting as the recruitment industry gets, as working as a recruitment consultant is never something that brings up many topics of conversation at the dinner table. I have to look back fondly on my days as a criminal defence solicitor when I could be discussing a murder over the table with my wife as we ate our dinner, and the various implications of it and any press involvement etc. These days I have to content myself with discussing business issues, and how many interviews I have arranged in a day.

Jonathan Fagan is Managing Director of Ten Percent Legal Recruitment . Ten Percent are specialist legal recruitment consultants covering the whole of the legal job market nationally and internationally including Ireland, Northern Ireland and Scotland. You can contact Jonathan at cv@ten-percent.co.uk or call him on 0845 644 3923.

Good debt management - our experiences and systems

As recruitment consultants, we have spent eight years trying to work out ways to get our clients to pay our invoices in good time, thus ensuring a decent cash flow for our company, but also ensuring that our terms and conditions are adhered to which then benefit the clients as they get generous rebate periods considerations if anything was to go wrong with a placement. In the eight years that the company has been operating, I estimate that on three separate occasions we have had to send bailiffs into firms, and on at least ten occasions we have had to issue proceedings either in the county court or using the small claims procedure.

We have tried a whole raft of measures over the years with law firms to get payments made in good time, and this has become the following procedure:

When we issue an invoice, we ask the firm to choose their charity for our charitable donation (Ten Percent donates ten percent of annual profits to a charitable trust which subsequently distributes the money to various charities). We also point out the benefit of payment within the period stipulated in the contract as a firm is then able to take the benefit of our rebate periods.
We issue a statement exactly 14 days after a candidate has joined a firm reminding the firm that payment is due within the 21 days to take the benefit of the rebate.
We issue another statement exactly 28 days after the invoice has been issued and the candidate has started work advising that the money is payable.

We issue a final letter requiring payment after exactly six weeks of the date of the invoice and after the candidate has joined the firm.

We send a credit control letter advising that interest and costs have been added in accordance with the statutory position (is the Commercial Debts act, (I can’t remember the exact name) 1998) and setting out a timetable for action which involves giving the date the matter will be passed to external solicitors for them to recover the outstanding debt.

This final step takes place seven days after that letter and without further ado, we send the debt off to our external solicitors and ask them to proceed for us.

We provide the external solicitor with the full case, including all the evidence required to issue proceedings so they can speed up the process and have a brief discussion with our solicitor as to whether a statutory demand issued and bankruptcy proceedings taken or whether we issue proceedings in the county court or using the small claims track.

We sit back and let the external solicitors deal with the matter and see how long it takes us to get the money out of our clients!

The worst case to date was a central London firm who ignored everything sent to them including telephone calls, emails, faxes and letters, right up until a statutory demand was issued and bankruptcy proceedings started, at which point they disputed the contract, and we ended up in the country court approximately two years after the original invoice had been issued.

The firm eventually agreed to a consent order to pay the outstanding invoice plus all costs, by which time the costs were almost the same as invoice, and even then failed to pay within the time stipulated in the consent order. We recovered our money from them, approximately two weeks later I noticed in the Law Society Gazette that the firm had closed down, we had been just in time with our proceedings.

I recall as a solicitor that a lot of firms are very poor at collecting outstanding debt especially from clients where they think there is the potential of further work and are worried about upsetting them. I think this then passes onto the solicitors' suppliers, as the solicitors think that their suppliers consider things in the same way.
My take on this is very different. Many years ago I worked for a small company in Leicester, with a senior partner who although was not the most likeable, was a very good businessman and gave me two pieces of advice when I left the company. The first one was that a bird in the hand is worth infinitely more in the bush, and that one should never allow discounts or a lack of payment on the basis of future work promised. I have stuck rigidly to this in my time in business and have found time and again that when I have had to take action against firms to get payment, they have come back to me as clients regardless of how long it has taken to get the money out of them. It’s a very interesting phenomenon because some of these firms have had the full works taken against them including court action, yet they almost respect this and come back to us to use the service again as they can see that it is quite cost efficient but also that we run a tight but firm ship.

In summary, when dealing with debt collection, I would apply the same rule to all my clients uniformly, regardless of whether they are going to be good, poor or indifferent clients over the years, although important with any particularly big clients to ensure that obviously you do not upset the apple cart too much when requiring payment.

Register Vacancies Online

Ten-Percent handle a wide range of assignments, from finding a newly qualified solicitor for a post in September through to assisting a partner with a following move from one firm to another. The company also deals with the whole spectrum of legal jobs, from support staff, paralegals, office managers and cashiers, through to NQ solicitors, FILEX executives and senior solicitors.

You can email us at cv@ten-percent.co.uk
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Outside investment in law firms.

The Law Society Gazette on 1st May 2008 carried an article saying that firms had to shape up for the stock market.

So how likely is it that a high street practice is going to be attracting the likes of Duncan Bannatyne from Dragon’s Den and receive pot loads of money to become a national player?

I suspect every solicitor knows the answer to this one and it would be simply that it is extremely unlikely that anyone would want to put money into solicitors firm. I suspect the only outside investment that will come into the high street firms and smaller regional commercial practices will be from legal executives and non-qualified family members. I would be extremely surprised if anyone with any business sense wanted to put money in as the returns are so slight on most legal work. The only difference is of course when work is done in bulk and there are reasonable profit margins about. However firms like Hammonds Direct, the other volume conveyancing operations have been the first to announce redundancies due to the recent credit crunch, and I think this is a good indication of the fickle nature of the legal markets in general, and this is highly likely to deter any investments into anything outside the magic circle firms in London.

One side effect of the bill permitting outside investment is probably unthought of yet, but there is the possibility that any potential trainee solicitor with money to invest could in fact buy their own training contract.

Whilst you may think this is slightly fanciful, I have at present registered with us a firm in the north east of England who has been running a successful property investment company for some years, and are is on the lookout for a firm to give him a training contract with the very good possibility that he would invest in that practice in return for the chance to qualify. Whilst this might sound slightly desperate, it is going to become more difficult for anyone other than students with straight A’s and B’s at A level, a good 2:1 from a red brick university, and a straight forward career to date to obtain the training contract. There are more and more legal practice course graduates out there without a training contract, who are going to be continuing to apply for training contracts for a good number of years. Whilst all the colleges are expanding the numbers on their courses are more out piecing students, and here to take more money off potential lawyers before they have the chance to qualify, this is going to get increasingly worse over the years, I think. It may even return to the old system almost of potential lawyers needing to have family connections to firms or the finances behind them to able to qualify as posts although look as if they are paid for the purposes of the Law Society minimum salary are actually posts where the potential lawyer is expected to invest in the practice from the outset, thus ensuring his or her commitment to the firm.

I suspect that the Legal Services Bill will make no difference at all to most practitioners outside the firms such as Clifford Chance and Linklaters, I am sure will eventually end up with external shareholders capitalising on the rather large profit levels that sort of firm that seems to make.

Jonathan Fagan is Managing Director of www.ten-percent.co.uk, specialist online legal recruitment consultant covering the whole of the UK and the international legal job market. He is available for comments and for free careers advice at cv@ten-percent.co.uk

The destruction of Legal Aid by the Legal Services Commission?

This week we have been retained by the not for profit organisation in Kent, looking for a housing solicitor to deal with housing law at three county courts in the south Kent area.

The post has been part funded by Lottery funding by the looks of it, plus other sources as well as the Legal Services Commission. It has amazed me in the time I have been in the legal profession, which dates back to the mid 1990’s, the number of firms and organisations out there covering specialist advice such as welfare benefits, housing, employment, the non-criminal legal aid side also dramatically, in such a short space of time. I have to say that it looks as if the Legal Services Commission have decimated the provision of advice that was out there, and it has ended up with a small number of firms dealing with the work in areas of high concentration and the rest of it being left to Citizen’s Advice Bureaus and charities to deal with.

I always recall from my own days in practice that it was often the most difficult clients, the most awkward circumstances, who were in specific need of this sort of advice, and that when the work was dealt with, often at least half your time spent with the client could not be billed for even back in the days when the Legal Services Commission did not query every single item on a bill.

I fear for the future of this area of law, as my anecdotal experience as a recruiter is that it is often left to trainee solicitors and newly qualified solicitors if that to deal with, although the vast majority of the work is probably covered these days by non-qualified advisors at not for profit organisations. Non-qualified advisors are often very good, and if they are specialists, usually known a lot more than some of the more generalist solicitors. However it is a damning indictment on the Legal Services Commission that such practitioners are giving advice on such technical issues without or being able to refer to solicitors.

I have had a positive response from the housing solicitors registered with us in relation to this post simply because of the shortage of posts further into London and the south east, and the need to carry on working. However the salary levels on the post are pretty shocking for a qualified solicitor and it just goes to show how far behind the legal profession is when it comes to dealing with the bottom end of the market and the salaries that are offered.

If a three year qualified solicitor cannot earn more that £30,000 dealing with an area of law, I do not think it will be long before the vast majority have simply moved into other fields or cross qualified into another career and left the way open for yet another solicitor to come through and realise how awful practice can be in certain fields and areas of the UK. This may sound slightly disgruntled, but I am unable to see how the current situation will change in years to come unless providers like the legal services commission recognise the need for such a service, and start to fund it again.

I accept entirely having been in practice myself that there are a number of unscrupulous law firms out there who simply rack up the bills in order to get paid without actually providing much assistance to their clients. However the vast majority of law firms do not practice in these areas to make a massive profit, they practice in the area because it is their chosen career, their line of expertise and because they wanted to make a difference and help others. The problem with the Legal Services Commission, I suspect, is that they have no interest at all in this, and are more interested in budgets and accountability.

Jonathan Fagan is Managing Director of Ten Percent Legal Recruitment, www.ten-percent.co.uk. He regularly commentates and provides advice to solicitors and law students free of charge at cv@ten-percent.co.uk

Jobs for Australian law students

Every year we get emails and telephone calls from law students and graduates in Australia, New Zealand and South Africa with requests for advice. Usually the advice comes in the form of an email about two pages long and lists all qualifications the person has and requests assistance or advice in finding a suitable law job in the UK.

Often the person is fairly gifted, has a bit of work experience, and is travelling round the world on a student visa. They contact a lot of agencies in the UK to see if they can pick up some work whilst they are travelling.

It has got to the stage now where our agency (www.ten-percent.co.uk) is unable to help or even read their emails simply because of the number, and we have to delete them without giving detailed advice.

Therefore I hope this blog entry is picked up by Australian and New Zealand law students as the best advice that our company can give.

Firstly, we are unable to assist you find temporary placements or get work experience in the UK. Our agency primarily deals with solicitors and legal executives with UK experience. Although we do locum work, this again tends to be for qualified solicitors and legal executives and not law students or graduates.

There are agencies in the London area who deal with such placements on a regular basis and are often on the lookout for suitable candidates for short term contracts. I am unable to give details of these agencies, because I am not sure they would be grateful to me for the referrals as I suspect they are fairly inundated with applications. The sort of work you would be doing would be photocopying, proofreading, collating and answering queries on files. It tends to be done en masse, with rather a lot of others checking similar documents in a large room or in a basement. You could find yourself working for the likes of Clifford Chance, Linklaters or Freshfields, being paid a reasonable amount of money for the work.

If you were thinking of doing high street work or smaller commercial practice work it is probably not going to happen for you, as the competition to get unqualified legal work is immense and the posts simply do not come up in enough numbers to enable any one agency to have regular placements for anyone travelling and looking for a few months work. It is possible to get it, and it is also possible to get work in local authority and government departments dealing with legal issues but again, it does tend to be more on an ad hoc basis than with any certainty that the post will be there.

In summary, my advice is that www.ten-percent.co.uk is unable to assist with such legal recruitments, but there are agencies out there who are able to help, although you will need to find them.

Jonathan Fagan is Managing Director of Ten Percent Legal Recruitment (www.ten-percent.co.uk). He regularly writes and commentates on the state of the legal profession and gives advice to law students and graduates free of charge on the website or by email at cv@ten-percent.co.uk

Referral fees. What’s the point?

In the Law Society Gazette last week was an article on referral fees with a leading insurer questioning whether solicitors could actually afford to pay them.

My experience of referral fees relates to personal injury, company commercial, conveyancing and medical negligence matters. It also relates to experience in the recruitment industry, where one agency will pay another one a referral fee for cross-referring into different fields.

I have to say that I am yet to come across anyone apart from claims management companies who appear to have made any money out of paying referral fees. Often the fees are fairly hefty, and eat into the profit margins quite substantially. I seem to recall a firm telling me they had signed up to an internet conveyancing referral site that was charging in the region of about £200 to £300 for each of its referrals. If you consider that an average conveyance will only cost in the region of about £500 to £700, it does not leave much left for a solicitors firm to make any profit on.

In the claims management industry, we watch every year as a claims management company opens and another one closes down. There seems to be a fairly consistent pattern of firms opening and closing and struggling to find any real consistency because of the fact that the profit margins are so low. The heady days of people stood in streets asking passers by if they have had an accident so that the company could refer the matter on to a firm of solicitors appears to have disappeared, and in fact the whole industry was a bit of a myth anyway because when figures were looked at there was no increase in the overall number of claims across the UK even when solicitors were suddenly marketing their wares.

I recently had a car crash and was injured in the crash and required the services of a solicitor.

I recalled a solicitors firm advertising in the local paper saying that they could give 110 percent of your claim back, so rather than just getting 100 percent of your claim, they actually got an extra ten percent on top.

However, the fact that you could get 110 percent back on a claim hadn’t registered with me the name of the solicitors firm, and I simply resorted to knowing a good firm in the area myself and phoning them to deal with the claim.

The moral of this tale is that the advertising and the claims management that has been going on over the years probably has not made that much difference to the actual provider that most people would think of going to. A lot of solicitors work is by recommendation, in a similar way to recruitment consultants (we pick up a lot of our good candidates from referrals from other good candidates and this is how we often make our placements).

So when it comes to referral fees, we are not sure whether the quality of the referrals sufficiently merits spending such large amounts of money on receiving them in the first place.

It can be likened a little bit to the jobs board industry that has sprung up across the world, and the rather expensive costs of sourcing candidates via them. The obvious exception being Chancery Lane at www.chancerylane.co.uk, which charges very low fees and covers a whole wide range of fields of law and concentrates on solicitors.

Jobs boards charge thousands of pounds to agencies to advertise on them, yet the quality of the candidates you usually receive is fairly poor because the majority of the people registering with the job sites register with all of them and with all the agencies, and this means that when you get a decent CV it is likely to have been with at least three to four other agencies at the same time.

In summary I suspect that the vast majority of referral fee arrangements do not actually produce a large amount of work for the solicitors firms involved, or if it does, the profit margins are so slight that the work is second rate and the solicitors firms try to avoid doing any work in the first place. Each time a new marketing idea come along, solicitors seem to take the recommendations of business consultants and jump on board and see where that particular marketing exercise is going, without auditing or weighing the effects or the results that they may or may not get.

Jonathan Fagan is Managing Director and business consultant with www.ten-percent.co.uk, specialist legal recruitment consultancy in the UK. He can be contacted for comment or advice at cv@ten-percent.co.uk

Sole supplier agreements – what is the point?

Ten Percent Legal Recruitment offer sole supplier arrangements with solicitors firms, in house departments and local authorities up and down the UK. We have been offering them for a good number of years, and almost every campaign we have ever run has resulted in a successful placement. In recent years quite a lot of firms have tried to avoid them in the hope that they pick up more candidates by going to multiple recruitment consultants and sourcing candidates from various locations, websites and publications.

What is the point of having one agency handling your recruitment for you?

The first benefit is the cost. If you take a retained consultancy with our company (www.ten-percent.co.uk) the fee is automatically reduced by at least 30 percent, if not higher. The actually fee depends on the length of the contract, and also the quality of the type of placement that you are putting with us. However if you consider that our usual fee is 15 percent you are likely to be paying around ten percent, if not closer to 7.5 percent depending on the circumstances, the advertising and the sole supplier arrangement we agree.

Secondly, we handle all the advertising for you. We place adverts across the web on various job boards, forums, chat rooms and with paid advertising as well if necessary, as well as advertising fairly prominently on our own website. We also get discounted advertising from the Law Society Gazette, who give agency discounts with incentives for such arrangements, so that we can offer you advertisements in the journal that your firm might not have been wanting to pay for or been able to consider.

Thirdly, we can design the advertisement for you. This means that you receive our expertise as recruiters knowing what is going to attract a candidate to make an enquiry, both passive and active searchers. Quite a lot of firm place advertisements that we look at and shudder, as we know that the sort of response they will get unless a candidate is desperate is going to be minimal, whether this is because they have included too much information on one issue or whether it is because they have missed off some of the information a candidate would need before they made an application.

Fourthly, all enquiries are handled by the agency, which means that none of your staff get pestered by potential applicants enquiring about the post. This also means that other applicants who would not have otherwise applied can call us in confidence and discuss the application without them needing to be embarrassed that you may find out who they are before they have made a firm decision to apply to you.

Fifthly, you get no telephone calls at all from other agencies, job boards or publications trying to sell you advertising space for your job, which is a fairly regular occurrence – for example, I recently placed an advertisement in the Law Society Gazette and had three telephone calls in two days, one of which was from The Lawyer magazine wanting me to place the same advert with them. This is fairly standard practice and I think that every time I have ever placed an advertisement in the Law Society Gazette, The Lawyer have immediately called me to see if I want to place it with them.

Finally, you do not actually pay any fees at all until the agency has found you a suitable candidate, which means that all the work undertaken is completely free of charge if the eventual agreement does not produce you the results you require. Obviously you have to pay the Law Society advertising costs, but the remainder of the cost, for example the Chancery Lane advertising or the job boards online or the forum work is all entirely free. We may also, if we know anybody in the area who may consider the post, actually telephone and headhunt on your behalf, and again, this is at no cost. The other massive benefit is, of course, that you get the candidate search done through our own databases as well and this is free of charge. The arrangement can be cancelled at any time and you do not have to stick with the sole supplier arrangement for longer than four weeks if you do no wish to. Most of the time, they are successful, but of course, in this game, nothing can be guaranteed and some assignments can be particularly harder than others. It does mean that you can hand over a particular recruitment task to someone externally and sit back and wait to see what happens, without needing to worry about it for the time of the sole supplier arrangement.

If you would like to enquire about a sole supplier arrangement with us, please get in touch either by telephone on 0845 644 3923 or cv@ten-percent.co.uk . Further details can be found on our website at www.ten-percent.co.uk/er.html

What fees do recruitment consultants charge?

What fees do recruitment consultants charge?

There are over 40,000 recruitment consultants working in the UK at this present time. I recently read an article where it said that the recruitment market in the UK is one of the most developed in the world, with other companies less likely to use agencies for permanent work than companies in the UK. Agencies cover just about every walk of life, be it a librarian, a lorry driver, shop assistant or even a solicitor. The reason they have sprung up in such numbers is because of the tax advantages of using one. The entire bill is tax deductible and it means that advertising, time spent dealing with applications by staff, administration costs can all be factored into one fee by handing over assignments to recruitment agencies.

Obviously there are good, bad and horrible recruitment agencies, and some truly dreadful ones. The whole industry has a trade body called the Recruitment Employers Confederation (REC) and there are a couple of smaller rival trade bodies as well.

The sort of fee that you could expect to be paying a recruitment agent can range from ten percent up to 45 percent, depending on the assignment and level of candidate you are looking for.

If you are looking for a lorry driver or a shop assistant on a permanent basis, most agencies charge about ten percent if not less for the placement. If you are looking for a solicitor earning £45,000 a year with partnership prospects, then most agencies will be looking to charge in the region of 25 to 30 percent of the first year’s salary for finding that candidate. If you are looking for a sole supplier to headhunt or source you a chief executive, then it is possible that you would be looking at a bill in the region of about 40 percent of the first year’s salary.

So why are the fees so expensive?

Firstly, they do not have to be. Coming onto the market now are new providers, such as www.ten-percent.co.uk who charge a standard fee across the board, with Ten Percent, for example, charging 15 percent (and donating ten percent to charity, hence the name). The larger companies working on the high street or in office blocks have to charge higher rates because of the overheads of running a recruitment agency. Time after time I have been in business, I get informed by the owner of a company that all I have done to place a candidate with him is send him a CV, and he or she has had to do all the other work. He or she is unable to see that the recruitment agency has had to find the candidates in the first place to send to the company, something the company may have struggled with. They cannot see the hours of processing the candidate and sending through vacancies, for sometimes up to five or six years before they find the right post, and neither can they see all the abortive interviews that have gone before for that candidate. A lot of work goes on behind the scenes at recruitment consultancies that companies and firms are unable to see or to quantify in terms of cost. The fees charged reflect these overheads, but also a good profit margin on top of this. A recruitment agent charging 25 percent fees is probably looking at about 60 percent profit margin on that fee. Obviously if an agency is charging less, but not dealing in bulk, then their profit margins are much lower.

On the temporary side, there is usually a margin charged by the hour and although the agency I work for does not tend to do these very often, I have heard it said that the usual rate is between 12.5 and 25 percent margin on the hourly rate being paid to the employee.

Jonathan Fagan is Managing Director of Ten Percent (www.ten-percent.co.uk), legal recruitment consultants in the UK charging flat 15 percent fees. He can be contacted on 0845 644 3923 for press comment or emailed at cv@ten-percent.co.uk