Private client services and public sector drag

 In Gill's Blog

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

Every practitioner who produces Wills, undertakes estate administration, prepares LPAs and administers trusts will know that the past three years have seen an intensive use of their services, in many cases delivered partly or wholly remotely, the introduction or development of the use of technology and the huge delays in delivery by government departments.

All of this impacts a firm’s productivity, recoverability, cash flow and profits. Let’s take a look at each area:

Wills

During the pandemic, the ways of producing a valid Will had to include taking instructions in novel ways (e.g. in a car park; in the client’s garden) or via video conferencing, a piece of tech that took off during Covid and which will remain highly popular for the future. This is because it saves clients visiting the office or enables flexible working for staff who are working from home but able to ‘see’ clients.

However, assessing testamentary capacity and being satisfied about the absence of undue influence are both harder to do remotely and remain a risk for practitioner and client alike. Also, not everyone who needs to make a Will has access to or the skills to use devices for video conferencing purposes but this should not stop the willing and able utilising this convenient tool.

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Key areas of importance in preparing Wills are the taking of instructions accurately and the conversion of the instructions into an appropriate Will with the provision of correct explanations as to how the terms of the Will operate. Technology can be a useful friend here for the practitioner, helping to supplement legal and personal skills e.g. Arken.

There are a number of companies offering software to produce Wills, some can even be used via the cloud for clients to input their own data. However, many practitioners value the initial contact with the client although this is probably the most time-consuming element. Using skilled professionals an appropriate form of Will can be chosen and then the data entered into software to produce the relevant Will, but also in many cases, ancillary documents too like severance of a joint tenancy, letters of wishes and LPAs, all cost-effectively at the touch of a button.

Electronic signatures are not yet permissible for Wills, but this is an area which is being explored by the Law Commission.

Therefore, the provision of Will drafting services will remain largely a personal service with some elements of technology helping productivity and risk management. Firms utilizing appropriate staff, providing proper training and supervision and using technology will be able to produce cost effective standard Wills and may even price them with a profit margin. Wills involving more complex family structures, with more vulnerable testators and with enhancements like estate planning or tax advice will continue to be priced more highly but still can be supported by the same technology.

As with many services, the more efficient the provider and the swifter invoices are produced, the higher the likelihood of full recovery. Cash flow here is definitely in the hands of the firm save for the few cases where the client goes ‘asleep’ and does not progress matters in a timely fashion.

Estate Administration

Estate administration has long utilized paralegals and technology to support delivery. Increasingly, those firms which do not employ both these resources will fall behind on productivity and business development as more of their clients will either undertake the work themselves or choose more efficient providers.

To increase productivity senior practitioners must learn to delegate to paralegals and improve their supervisory skills.

However, no matter how well organized or managed the firm is the cash flow drag of not being able to obtain a Grant of Representation for many weeks, now 16 weeks for the more complicated paper applications, means fees not being met even if timely invoices are rendered.

Despite the development over several years now of the online probate service, taxable estates still have to submit the IHT 400 to HMRC manually and HMRC still have to process the payment of the tax due and the calculations with old systems which do not ‘talk’ to the HMCTS.

Stops are still happening in large numbers to probate applications because of the absence of the IHT 421 and chasing time by practitioners is largely unbudgeted for at the outset and yet is part of the process. Practitioners need to wait 25 working days from submitting the IHT 400 before applying for probate to be sure of the IHT 421 having reached HMCTS by the time they apply for a Grant.

Once you factor in the time it is taking asset holders to provide information about assets and also to obtain valuations before an application for a Grant can be made the whole process is now very protracted and therefore pressurized. Beneficiaries are intolerant of the delays. Goodwill of the profession is undermined. Opportunities to apply for loss on sale relief of stocks and shares diminished.

We need technology to work together across government departments, and the ability of legal technology to utilize API keys to be able to inject quickly completed forms into HMRC and HMCTS systems without having to be re-keyed.

Working from home was attractive and firms have to offer it but maybe after this three-year experiment what people now crave is a four-day week rather than working longer hours all the time. Tired people are not productive. Pressurised staff make mistakes and burn out.

Accurate estimating and supervision are key to profitability here, as is managing client and beneficiary expectations and introducing different means to pay the bills such as monthly invoicing, asking PRs to pay up front and seek reimbursement from the estate once the Grant is obtained and using new lenders to the scene such as Tower Street Finance.

Lasting Powers of Attorney (LPAs)

There are many ways that LPAs can be produced using IT, not least the government’s own system. LPAs are an essential component of managing a client’s finances in particular and health and welfare decisions too. Most clients, particularly after the pandemic, see the value of having LPAs.

The tragedy is that the OPG is now taking 20 weeks to register them and the prospect of introducing an online system is filling many practitioners with alarm given the experience of the installation of the online probate system and the use of practitioners as guinea pigs as it was issued to users as a beta testing experience rather than ready to go.

As mentioned above, most of the Will drafting software offerings will also produce LPAs.

Charging by the profession for the production of LPAs is largely more reflective of the time taken and risks involved than say for the pricing of standard family Wills. However, the cost of registration and the delay in registration may increasingly put clients off making them. In addition, even the OPG is recommending general powers of attorney are used at the moment because of the delays in registration! Firms do need to invoice clients at the end of the production process rather than following registration given the cash flow problems this would cause otherwise. Maybe two invoices are better than one: one for 80% of the quoted fee on production of the LPA and a further 20% once the registration has taken place.

Trust Administration

There are fewer tech systems to support trust administration than say estate administration but nevertheless they exist. However, there is a real divide in uptake depending on the scale of the firm’s trust services. For the larger firms, trust and tax software will be used (such as thewealthworks and CCH) and is cost effective when administering a large number of substantial trusts e.g. 250 or more.

For many high street practices, software is not an option for the number of trusts in administration. Most firms will set up a Will trust with lay trustees, register any trusts arising which need registration and then leave the administration to the lay trustees with ad hoc help from the law firm. Often, even if the law firm acts as agent in the administration this would not include producing trust accounts and dealing with taxation, things which are often outsourced to accountants.

Trust registration has placed a large burden on the profession over the past 12 months and the risk is that many firms unfamiliar with trusts will be missing situations where a trust should have been registered and not advising clients to register or failing to carry out discrepancy reporting.

One of the more difficult and time-consuming areas is supporting older trustees who need to obtain a Government Gateway account in order to authorize a firm as the trust’s agent online. So, technology will provide the government with a list of trusts, but it is at the cost of the client and practitioners. Legal technology firms would also like to see the release of API keys to help integrate their offering with government systems.

Conclusion

Automation is with us and over the next 20 years will completely change private client services but for the here and now, government departments are causing a drag on the financial success of law firms by impacting negatively on the client’s journey given the delays in processing and poor technology implementation, and adversely affecting the cash flow of law firms.

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