STEP in the New World: David Harvey interviewed by Neil Rose

 In Comment

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The Society of Trust and Estate Practitioners

This article was first published in the Title Research E-Bulletin.

The Society of Trust and Estate Practitioners (STEP) was an organisation ahead of its time. Twenty years old this year, it brings together lawyers, accountants, financial planners and others in the field in a way that will become flesh in practice shortly through alternative business structures (ABSs) and multi-disciplinary practices.

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And with nearly 40% of STEP’s 16,500 members in the UK, the impact of ABSs is certainly high on the agenda of STEP chief executive David Harvey, who is about to mark a decade at the helm of the organisation. The views of members, gathered in research seminars last year, are that the future is one of big firms and specialist boutiques, but not much in between. And that means firms will need to adapt, especially with new competition coming on stream.

Mr Harvey says: “So if you are running a 10-partner firm where the aim is taking the profit share home at the end of the year, no matter how amiable it is, how well it works as a place to work, how much you get on, you’re not going compete with a firm that runs a limited company or a partnership with capital injected, where the focus is on structure.”

It is the practice structured with a number of partners with some junior staff working with them that is likely to lose out, “as opposed to the pyramid of expertise that you might see in a much more commercially focused company”. He adds: “I have no doubt there are people who actually make the current model work, but it will be much, much tougher.” He also expects to see more lawyers, accountants and others teaming up to offer joint services, which has already happened with some firms becoming legal disciplinary practices.

Those firms that want to stay as they are need to be more focused, Mr Harvey believes – “it should still be viable to be a three-partner firm in Dorking and say, ‘Right, we’re going to be the local firm people come to within three or four miles and people will know who we are’”. But with the link to the ‘family’ lawyer weaker than it was 10 or 20 years ago, firms will need to make more effort to secure a market position like that. So, for example, “if you’re near a station, be open at seven in the morning on a Thursday so that people can go in on the way to work”.

STEP engages with the so-called commoditisers, and Mr Harvey is unrepentant about doing so. “We all see bad things in change, because there often are bad things in change. There are personal aspects going, but there are good aspects about it too.”

First of all, he argues that the inheritance business of the UK is not “a one-size cake”. With so many people dying without wills, “I think the aim of getting many more people to do wills, through the commoditisers at £120 a shot, is a very good aspiration”. The reality is that many of these people do not have estates that require complex advice from a STEP-qualified lawyer.

Secondly, the commoditisers are approaching STEP, because they want their senior people STEP qualified and lower-level qualifications in will writing or estate planning for more junior staff (reflecting a change in STEP’s educational approach that allows ‘affiliates’ to take individual certificates). Mr Harvey adds: “Almost all of them are very clear that they’re not aiming to deal with complex estates or troublesome probates. And that’s where they’re forming relationships with STEP firms and STEP members.”

He cites the STEP branch in Gloucester and Wiltshire, where committee members have relationships with will-writers; the complex business goes their way and “the simple stuff the other way”.

This all feeds into the debate about reserved legal activities. Mr Harvey unsurprisingly welcomes the recent report from Professor Stephen Mayson, of the Legal Services Institute, which found “no reason based on public good” for the current narrow reservation of preparing probate papers, but said there are strong consumer protection arguments for reserving the preparation of a will or other testamentary instrument, and of powers of attorney, as well as estate administration.

STEP recently released research that said 75% of STEP members had encountered cases of incompetence or dishonesty in the will writing market in the last 12 months, such as hidden fees, will-writing companies going out of business and disappearing with their clients’ wills, and incompetence leading to significant additional tax bills.

It seems likely that the Legal Service Board will conclude (if not until next year) that will-writing should become a reserved activity, albeit that properly trained and regulated non-lawyers should be allowed to do it. STEP is looking to become a leading training provider, through its recently launched Certificate in Will Preparation, although Mr Harvey says the society has no intention of becoming a regulator.

STEP was ahead of its time in other ways too: championing specialisation before realisation dawned on the rest of the profession that the era of the generalist was over, while its international reach presaged the increasingly cross-border nature of many estates. It is changing too, however, by developing special interest groups for members and enabling those taking the qualification to tailor the course to their particular needs and interests rather than it being one size fits all. STEP is also more involved in lobbying, helping international bodies charged with tackling fraud to understand that trusts are not a vehicle for crooks, as believed by civil law countries that do not have the concept.

And what of probate genealogists? STEP has had a long association with Title Research and Mr Harvey says the collapse of one well-known provider at the end of last year “shows that it’s not an easy market and you’ve got to offer a very professional service”.

He has problems with “some of the more extreme” contingency fee arrangements, and STEP is shortly to issue a guidance note telling members that they need to understand what is on offer and consider the consequences of the different options open to them. Mr Harvey says:

“We want people to be fully aware of what they’re getting into when they deal with a genealogist.”

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