Covid-19 and the Legal Sector – Part 2

In part 2 of our series looking at the issues the legal sector is facing during the Covid-19 pandemic, we focus on staff, the courts and compliance:

Staff issues

The government has asked that everyone that can work from home does work from home. You have a responsibility to ensure that staff are not at risk and should not be demanding they attend the office when it is not advisable to do so.

The Law Society has advised that it is highly likely that there will be periods over the next two years where the government requires parts of the workforce to stay at home, so it is vital that you consider how a home working default policy can be implemented as standard now.

The government has also confirmed that “those essential to the running of the justice system” are classed as key workers. These include advocates required to appear before a Court, including prosecutors; other legal practitioners required to support the administration of justice, including duty solicitors and those working on imminent or ongoing Court or tribunal hearings; solicitors acting on the execution of wills; solicitors advising people living in institutions or deprived of their liberty. You should be aware that some staff may fall in and out of the above categories intermittently and it is for the individual to decide if they fall within the above categories. The above groupings would qualify for their children to still attend school if there are no other options.

As part of your finances and workflow review, you may consider that you have too many people in certain areas of your firm and you may be taking advantage of the government’s coronavirus job retention scheme (announced 20 March).

Your management team should be reviewing staff timesheets on a daily basis, as accurate time recording is more vital now than ever. Monitoring productivity will be essential to make the correct decisions on which staff to furlough, to ensure your practice is cutting costs wherever possible if there is not enough work for everyone.

Salaried Members of Limited Liability Partnerships (LLPs)

It has been confirmed that Members of LLPs who are designated as employees for tax purposes (‘salaried members’) are eligible to be furloughed and receive support through this scheme.

The rights and duties of the members of the LLP are set out in the LLP agreement. To furlough a member, the terms of the LLP agreement may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP, the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

Our FAQs on the scheme can be found on our website here.

Attendance at Court

158 priority Court and tribunal buildings remain open for essential face-to-face hearings. In addition, another 124 buildings will remain open to HMCTS staff and the judiciary to support video and phone hearings, progress cases without hearings and ensure continued access to justice. Guidance from HMCTS about which cases will go ahead has been requested. The starting position for Court attendance is not to attend unless told otherwise. Only urgent cases are set to proceed. If in-person attendance is require, those solicitors will be contacted directly.

Governance and Compliance

With the likelihood of restrictions of movement being in place for a period of time, law firms will need to change the way they work and how they are governed. Decisions about how you can continue to operate during this time will need to be taken collectively.

Key roles:

You should already have absence planning in place for the key roles in your firm such as the COLP and COFA, MLRO and MLCO, and we must hope that any cases of coronavirus are relatively mild and subsequently any absences are no longer than usual holiday periods. However, you should also consider informal deputies for these roles, and if any absence does become prolonged then you should apply to the SRA to replace these roles.

For the COLP and COFA roles you can apply to the SRA for temporary, emergency authorisation, and for the MLRO and MLCO then you need to inform the SRA of their replacement through the completion of a FA10b, for which a DBS check would also be required.

Sole practitioners may want to consider an agreement with another solicitor to be available for any absences.

Compliance

The SRA expect firms to continue to do everything they reasonably can to comply with the Accounts Rules and to keep client monies safe and this includes obtaining the independent accountant’s report. However, the SRA have said they would be pragmatic regarding the six month deadline given the exceptional circumstance, but there must still be a good reason and those reasons should be clearly documented.

The safety of client money remains a key focus for the profession, and the SRA has stated that it is vital the five week reconciliation statements should not be delayed if at all possible, and that you should already have contingency plans in place to prevent his from happening. If those contingency plans fail for any reason, you should take whatever steps you can to assure yourself that client money is being dealt with correctly.

Inability to comply with your professional obligations

You must notify your client as soon as possible that you cannot provide any services they require. You should also provide the name (or ideally three names) of another solicitor to try to take over from you.

There are various firms that can provide services to your clients if you cannot meet your obligations. These tend to be on an agency fee share basis and may be suitable for you where certain fee earners have been furloughed.  Please do not hesitate to get in touch if you would like us to put you in touch with one of these.

You also must ensure that any out of office email has all relevant information on – it is vital that any client does not suffer because they are expecting you to respond.

Virtual meetings and document approval

You should follow the government guidance on meeting face to face including social distancing and hygiene. If you judge that a physical visit is imperative, choose personnel who are not a risk to the client and who are not at high risk themselves. Both the client and the employee will need to agree to the meeting despite any risk.

Ideally, holding virtual meetings is considered to be a good option, particularly as many clients requiring legal services now may be classed as particularly high risk to coronavirus.

Further guidance has been sought on this area, but at the time of writing, it is not permitted to witness a will via video messaging – this may be something for you to keep an eye on for further developments via the Law Society.  The witness must currently be physically present.  It is possible to supervise the signing of a will using electronic means where you are not acting as a witness to the will.  The Law Society has suggested to members that they ask clients to video record the signing of the will if possible and keep good file notes on how instructions came in and how the will was signed.  You may also want to think about discussing re-signing the will with clients once social distancing requirements are lifted, where this is appropriate.

The Future

None of us know for how long the coronavirus pandemic will last but it is clear that the effects on business and the way we work and operate will have changed forever. Looking to the future, the hope is that as people settle into their ‘new normal’ that life begins to re-start and as such, so does business and legal services.

For law firms, some of the practices and decisions that have been forced upon them through this crisis are decisions that should have potentially been made in any case. The law firms that still remain when this is over will be leaner, more efficient and well equipped to deal with clients from any location in a profitable way.

We’d expect certain work types to see a return to normal levels more quickly than others – family (divorces), litigation (potentially if there have been breaches of contract throughout this crisis) and employment (if redundancies rather than furloughing starts to occur).  Although conveyancing may be slower to pick up, interest rates have been reduced to an all-time low, which may encourage some market stimulation (and some reports from China suggest that the property market has returned to 50% of its pre virus level already).

As a sector, we must hope for the best and that we can return in full health to some semblance of normality as soon as possible, but unfortunately we all must monitor, measure and plan for the worst case scenario.

The author of this article is Tom Blandford (and collegaues) of Armstrong Watson. Tom can be contacted at Tom.Blandford@armstrongwatson.co.uk or 07793 621 951. Other members of ALFMA can be contacted here.

Useful links:

The Law Society – https://www.lawsociety.org.uk/support-services/coronavirus/

The SRA – https://www.sra.org.uk/sra/news/coronavirus-update/

The CLC – https://www.clc-uk.org/lawyers/coronavirus/

The Law Society of Scotland – https://www.lawscot.org.uk/news-and-events/law-society-news/coronavirus-updates/

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