Wednesday, April 22, 2009

The Budget 2009 - any effect on the legal market?

Budget is out again, and lots of things relevant to lawyers and law firms:

Most important first.....
CIGARETTES, ALCOHOL AND FUEL
• Alcohol taxes to go up 2% from midnight - putting the price of the average pint up 1p (arrghhh).

CAR SCRAPPAGE SCHEME (does this mean someone could start buying up 10 years old cars and sell them on at a profit? Anyone using this idea, please ensure you pay me a fair commission!)
• From next month until March 2010 motorists to get £2,000 discount on new cars if they trade in cars older than 10 years
• The government will provide £1,000 with the industry expected to provide the other half
TAX
• Income tax for those earning more than £150,000 to rise to 50% from April 2010
• Tax relief on pensions to be reduced for people on more than £150,000 a year from April 2011

UK ECONOMY
• Growth expected to pick up in 2010, expanding by 1.25%.
• Economy to grow by 3.5% annually from 2011

JOBS AND TRAINING
• All long-term unemployed under 25s to be offered job or training (May become relevant for conveyancers?)

HOUSING
• Scheme to guarantee mortgage backed securities to boost lending
• Stamp duty holiday for homes up to £175,000 to be extended to end of year
• Extra £80m for shared equity mortgage scheme
• £500m to kickstart stalled housing projects - including £100m for local authorities to build energy efficient homes

Not sure what difference much of this will make to the current state of the market - the mortgage market needs a big kick and cant see much of one here...

HELP FOR BUSINESS
• Help for loss-making companies extended - they will be able to reclaim more taxes paid in the last three years until November 2010
• Businesses' main capital allowance rate doubled to 40%

PENSIONERS
• Grandparents of working age who care for their grandchildren will see that work count towards their entitlement for the basic state pension.

We have looked at this before - it used to be that the grandparents had to be registered with social services, but the only way to get registered was to look after other children from different families which of course most grandparents do not do.

Hard to say what difference the budget will have to law firms - I suspect nothing much will make a difference until people get back into the habit of purchasing houses again...

Jonathan Fagan,
http://www.ten-percent.co.uk/

Friday, April 17, 2009

Consumer Credit - an Insiders Tale

We keep hearing reports of this area of law ('get your loan written off'', 'cancel my loan if over £7,000 and under £25,000 and before 2007', 'reduce my debt', 'clear my debt for life' etc.. etc..), being the new potentially big money spinner for a lot of law firms, and have been keeping track of recent developments. A candidate has recently sent us the following feedback from working for one of the operators in this field..."I had been working for x Solicitors who are linked to a claims management firm. As I worked there it became increasingly obvious that there was a lack of independence for us to advise our clients as to the strengths and weaknesses of their claims. Many files did not have claims at all but we were actively discouraged from telling clients upfront that there was no defect in the agreement. Management asked us to advise clients whose files had weak or very poor legal arguments that their files were being sent for further investigation. This delayed refunding clients who had already waited for long periods of time for their files to be addressed.

One day in particular a couple of weeks ago I had a client on the phone screaming at me because I felt I could not tell her she was due for a refund as there was no real prospects of success. I told her it was being further reviewed. She screamed 'you're my solicitor why can't you update me'.? She was perfectly correct.

Many of the difficulties stem from the fact that the representatives tell customers that agreements can be written off or deemed unenforceable and build up false hopes. Many files come through with very poor legal basis for claims.

One argument apparently is being appealed at Court of Appeal later this year. However we were actively encouraged to pursue claims based on a case hopefully being overturned in CA.

This was a firm with poor working practices and sullies the image or profile of those firms who operate in a correct and professional way. There are genuine issues under the Consumer Credit Act but they need to be tackled professionally in order to maintain the public's trust."

Monday, April 06, 2009

US Job Market for Lawyers Collapses

Recently it has been reported that the law firms in the USA are being badly affected by the global credit crisis. There have been reports in the US of the larger law firms making sudden redundancies, but the reports in the various logs and articles in the US legal news indicate that the actual reality is much worse. Apparently there are teams of lawyers being laid off, firms closing down right across the USA and very little work coming in to keep the remaining firms open and trading.

The situation is fairly similar in the UK, except probably not as bad as that.

In the last few weeks we have seen a large number of candidates register due to recent redundancies, but I have to say that most of the candidates I have seen coming through have been fairly high earning mid-level solicitors, and probably the sort that could be replaced by a firm with somebody more junior, and with a bit of investment, time and training could probably generate similar fee levels to a more senior solicitor on a higher salary.

This probably sounds very callous, but it is usually the harsh reality of fee-earning, and also generating a profit from legal services.

It will certainly be a similar scenario to when some of the bigger players outside of the profession get their hands on some of the market. Paralegals and junior lawyers will see their salaries increase when they join the big players, but then discover after a while that they are surplus to requirements.

This will be something that carries on for quite some time maybe in the legal profession, and I do not envisage the redundancies stopping until the market picks up. I cannot see the market picking up though until well after the summer as there will not be the usual spate of recruitment in May that there usually is.

However, one of the problems with this recession is that quite a lot of the actual scenario is down to people talking themselves into a recession and deciding not to do certain things. We have seen a number of firms in recent times tell us they have vacancies and when we find very good candidates for reasonable amounts of money and send them for an interview, the firm decides to put the vacancy on hold, having spent a considerable amount of time and effort trying to recruit and then deciding they just don’t want to anymore when they are halfway through. This unusually has nothing to do with the recession, but more to do with firms looking at the newspapers and thinking that they are exposing themselves to too much risk by considering recruitment at this time.

As soon as this changes, I think the market will pick up again.

Jonathan Fagan is Managing Director at Ten Percent Legal Recruitment. You can contact Jonathan at cv@ten-percent.co.uk or telephone 0207 1274343.