Legal Recruitment from Ten-Percent Legal

Wednesday, November 28, 2018

Solicitors can work without professional indemnity insurance and freelance solicitors can work in unregulated practices – what’s new?

Are Dodgy Geezers the Future for the Legal Profession? Apologies to the model above who presumably is not dodgy at all!

The SRA have today announced that freelance solicitors can work directly with the public provided they have the appropriate indemnity insurance, and solicitors can work in unregulated companies. It seems that the work solicitors do in unregulated companies has to be non-regulated work, i.e. work the solicitor does not specifically need to do. It is not clear exactly what freelance solicitors working directly with the public are allowed to do and not do, but it seems that they are allowed to do regulated activity as well as unregulated activity, provided they have the appropriate indemnity insurance in place.
It is not yet clear exactly what level of protection the public will have from either group of solicitors, whether it’s those working in unregulated companies or freelance solicitors working directly on behalf of the public, but the SRA seem to have managed to create an almighty mess of the current regulated system of providing legal services.
But what’s new?
Firstly, freelance solicitors have been able to work directly with the public as locum solicitors since the year dot, because the vast majority of solicitors firms have professional indemnity insurance in place that enables the locum to work for them through their own professional indemnity insurance, and not actually have to have their own professional indemnity insurance to act for clients, provided they are doing this via solicitors firms.
The difference will be in the way freelance solicitors are now able to give advice directly to the public in the same way that direct access barristers can, namely they have their own offices rather than needing to set up as a solicitors firm. The only requirement will be that they have their own professional indemnity insurance.
On this point surely every solicitor in the country should be celebrating because presumably it means that if every solicitor sets up as a freelancer rather than working via a solicitors firm, they no longer need to be regulated by the SRA and deal with the various regulations that end up tying up partners in knots for hours on end every night trying to stay compliant? Surely the future for the profession is simply for everyone to turn into a direct access solicitor and try to avoid regulated work? Is this the plan of the SRA to essentially write themselves out of the future of a good chunk of the legal profession and end up in the same way law firms in the USA work with individuals lawyers being named and identified as acting for their clients, and no longer working as law firms? 
Are solicitors going to end up directly competing with barristers on every single front including working out of chambers?
 Do all the requirements for individual solicitors to have their own professional indemnity insurance blow any chances of this out of the water?
The recent mess that the IR35 provisions and HMRC tightening in local authorities has caused on the locum scene is apparently heading also into private business arrangements, and it is going to be interesting to see how the new decision to essentially remove most regulation from freelance solicitors is going to impact on this in defining self employment, because if solicitors are now able to be freelance and providing their services directly to clients then presumably they fall well and truly within the definition of self employment, and local authorities will not have to adopt such a rigid structure of determining that everybody is not self employed.
On the other front of solicitors working in unregulated companies undertaking unregulated work, I am not entirely sure what the difference is between now and say yesterday, because solicitors have always worked in companies providing unregulated advice. In fact there are armies of solicitor consultants out there now working for legal consultancies which are definitely not law firms, providing unregulated advice to clients. Only the other day I was looking at a website of one of the larger consultancy companies which has sprung up out of the big city firms (and seem to charge some amazing hourly rates) and noted that one of our locum solicitors was listed on their website as being a legal consultant. Presumably they have already sought authority from the SRA to do this and are carrying on practice in an unregulated company providing unregulated advice, and before any decision to change the rules.
So is the change of rules simply a case of the SRA pretending they have a handle over the current situation and changing rules that have been ignored for well over the past 10 years? It remains to be seen what difference in practice any of these changes will make.

Jonathan Fagan is Managing Director of Ten-Percent Legal Recruitment and a non-practising Solicitor. Ten-Percent Legal Recruitment provides online Legal Recruitment for Solicitors, Legal Executives, Fee Earners, Support Staff, Managers and Paralegals. Visit our Website to search our Vacancy Database.

Wednesday, November 07, 2018

Legal Recruitment News November 2018

How To Avoid Paying Recruitment Agency Fees - Guide to Worst Practice

TP Legal Recruitment and Interim Lawyers have been operating in the UK and overseas for almost 20 years, and here is our list of top methods for avoiding paying recruitment agency fees, as personally experienced:

Tell the recruitment agency to sue you and don't pay.

Fairly simple to do, simply use the recruitment agency to recruit a candidate, go through the motions of the recruitment, thank the recruitment agency for their sterling service and then inform them that you have no plans to pay them and tell them to sue you.

In our experience of the recruitment industry we think about 50% of recruitment consultants at this point will simply write off your debt. The other 50% will take great pleasure in suing you for the fee due plus commercial costs and interest. Why do 50% of agencies not bother suing? Simple economics really; if you have been through the county court system in the UK you will probably know that it is fairly complex and cumbersome to an extreme. As most lay people struggle to comprehend the technical terms used to commence and progress proceedings, justice was removed for most small businesses when legal costs were removed from claims of £10,000 or less. This means that unless you have a good grasp of what are known as the CPR Rules (the Civil Procedure Rules), you will find it very hard indeed to utilize the courts to recover your money, and as most recruitment consultants are not solicitors, they are very hesitant to go down this route for a smaller sized fee.

* Risk factor - 50%
* Chances of success - 50%
* Damage to your moral integrity - 75%.

Advise the recruitment agency that the candidate they have introduced has in fact cost you considerable amounts of money and that if they think they're getting paid they have another thing coming.

Fairly effective, particularly when considering that at least half of all recruitment agencies simply won't bother suing you. You will of course need to make up some spurious allegations of malpractice, incompetence or negligence on the part of the candidates you have taken on and seek to scare the recruitment agency sufficiently that they will not seek to take any action against you.

This may be harder than it looks because the recruitment agency will know the candidate is still working for your company and therefore will also know that they're obviously not as bad as you are making out. So the risk on this one is a little bit higher, but again, perfectly possible unless you meet a recruitment agency prepared to litigate against you.

Risk factor - 50%
Chances of success - 66%
Damage to your moral integrity - 65%.

Take the initiative and threaten to sue the recruitment agency for negligence, breach of contract or incompetence, even before they have asked you for any money

Easy option this one, simply write to the recruitment agency, advise them that you have been thoroughly dissatisfied with their service, and regardless of what their terms say in terms of limiting liability (most recruitment agencies have such a clause) you threaten to sue them for £100,000 or to countersue them for the same amounts if they so much as breathe near a county court. This will involve making up a load of spurious allegations against the candidate or against the recruitment consultants, but it is probably quite an effective method for avoiding paying any recruitment agency fees, as a good number of recruitment agencies will read your letter, immediately panic, think of their dwindling bank balance and dismiss any thoughts of claiming a fee from you or your business. Of course, some will relish the challenge and you could end up with a great court bill, but we estimate that again quite a large number of recruitment agencies will avoid any action at all and simply move onto their next contract.

Risk factor - 40%
Chances of success - 75%
Damage to your moral integrity - 80%.

Go bust.

Quite an extreme technique for avoiding paying a recruitment agency, but if you think about it, fairly effective to get out of one fairly sizeable fee in most cases, simply by closing down or transferring all your assets out of the business into something else and starting over again. Particularly good if you had a very senior member of staff join you, or you have taken multiple staff on from the agency in question. Even more useful if you have already got another company set up ready to carry on trading and you simply move everybody across to it.
Closing down a limited company is fairly easy to do, doesn't take much effort and is a very useful tool these days for avoiding your creditors. Partly because the HMRC and Companies House investigators lack any resources to investigate circumstances where this happens and so many directors seem to get away with it.

Risk factor - 60%
Chances of success - 100%
Damage to your moral integrity - 25%.

Commit Fraud

Fairly simple to do - simply pretend that a candidate has not joined your firm and that you have not hired them. Or, alternatively claim you dismissed them after 24 hours because they weren't very good and then make them a partner of your law firm. Alternatively, you could claim that the candidate is working at your firm, but in reality they are not being paid anything and therefore no fee is due to the recruitment agency.

* Risk Factor - 100%
* Chances of success - 10% (most agencies are good at tracking candidates)
* Risk of getting struck off - 10% (when we have reported the incidents above to the SRA (Solicitors Regulation Authority) and in one case to the government Modern Slavery Unit no action was taken).
* Damage to your moral integrity - 100%.


In the 20 years we have been in recruitment we have seen all of these techniques used by employers, with varying degrees of success. It is very often much simpler simply to pay the agency fee rather than try to avoid it, as some dodgy clients over the years have found out when they have finished up with a charging order on their house, block of flats or business, together with a hefty bill in addition to the agency fees.

Is it morally acceptable to try avoiding paying a recruitment agency or, for that matter, any professional once you have had the service from them? We would suggest that it is definitely not. If you have taken the benefits of a service, knowing that a fee is going to be due and knowing what that fee is going to be then it is your hard luck if you have entered that agreement and then decided that it is not for you or it is inequitable. So pay your fees when they're due, sleep well at night and develop a reputation as being a morally decent, nice and happy business to work with and for.

Jonathan Fagan is Managing Director of Ten-Percent Legal Recruitment and a non-practising Solicitor. Ten-Percent Legal Recruitment provides online Legal Recruitment for Solicitors, Legal Executives, Fee Earners, Support Staff, Managers and Paralegals. Visit our Website to search our Vacancy Database.