Changing brakes: Regaining control of client intake procedures

Key takeaway points:

1. Ensure consistently high standards. Society and clients alike expect lawyers’ compliance work to meet the same high standards as their case handling work.

2. Focus on quality. The effect of an administrative reorganisation will often be a reduced draw on company resources, yet the aim of a reorganisation should at all times be to improve quality.

3. Keep management at the forefront. A decision to implement major administrative changes should be made at board level, and management should be visible throughout the entire change process.

4. Get IT on board. Extensive IT support is necessary and calls for a high level of data quality, including with respect to historical data.

5. Learn by doing. Exchanging knowledge is a key learning element, so frequent controller group meetings will be a wise investment.

 

Just like any other business, a law firm must abide by certain rules and obligations which, in a narrow sense, have nothing to do with the primary activity of the business, which is to provide legal services. These obligations have one thing in common: the task of ensuring compliance with them is typically undertaken by individuals who do not participate in the primary function of the business.

All major law firms operate a very deliberate specialisation concept which, for external purposes, aims to offer clients the best possible service and, for internal purposes, to operate a profitable business.

Traditionally, case administrative tasks, including compliance tasks, have not been covered by this specialisation concept. However, compliance should be considered a core part of any law firm’s business and therefore covered by the firm’s specialisation approach. In this article, I will review the procedures that were applied by Bech-Bruun in this area.

Changing processes

There are two compliance elements that require special treatment: conflicts of interest searches and anti-money laundering monitoring. While conflicts of interest searches have traditionally attracted much attention in law firms, less effort has been given to the correct handling of anti-money laundering rules.

This is, of course, due to the fact that conflict of interests rules have traditionally been considered critical to the business, for the simple reason that errors made in this area are very likely to result in negative reactions from clients and the public, to the detriment of the firm’s reputation.

By contrast, anti-money laundering rules have traditionally been regarded as bureaucratic, a source of irritation, contrary to the ways of the business and an inconvenience to clients.

Also, the risk of sanctions imposed by supervisory authorities has been minimal, ?in Denmark at least, due to the fact that ?the Danish supervisory authority was not granted authority to conduct on-site inspections of law firms and demand that specific cases be presented for control purposes until January 2008.

Bech-Bruun did not deviate much from this picture until around 2008. Compliance tasks were not regarded as one of the focus areas of the firm, but rather something to be handled on a case-by-case basis. In actual fact, compliance tasks were handled by individual secretaries.

We were fully aware of the risk of the varying quality of anti-money laundering monitoring, and therefore offered secretaries internal training in this field, particularly following the introduction of the new rules on the supervision of law firms. Of course, in-house training programmes that had been conducted before 2008 had proved quite rewarding. However, it is only fair to acknowledge that a few secretaries felt that they were faced with a cumbersome task and that they did not get the necessary support to perform the compliance procedures in accordance with standards of acceptable quality.

As part of our increasing focus on compliance, we conducted a number of random tests. These showed that resources allocated to internal training had not proved to be a rewarding investment – the standard simply was not good enough.

Interest in a generally improved compliance standard coupled with a wish to improve the efficiency of the business thus formed the basis of our decision in the winter of 2009-10 to reorganise our case administrative procedures. The aim was to remove compliance procedures from secretaries and to allocate them to a select group of employees entirely dedicated to the task.

Statistics showed that, on average, the firm created 1.5 cases per week per secretary, that the case administrative functions were undertaken by all but constituted a modest workload, and that higher quality, improved efficiency and generally increased job satisfaction for all may therefore be expected by allocating compliance functions to a limited number of employees.

It is a well-known fact that most ?people wish to perform a decent job. ?Our assumption was that, by allocating the administrative tasks to a group of staff in this way, we could expect to obtain increased focus on the tasks, just as we could expect the relevant employees to put a more conscious effort into performing their jobs in the best possible way.

We found that it would be necessary to draw on external consultants. This was for two reasons:

1. the planning and implementation ?of administrative changes is not ?one of the core competences of ?a law firm; and

2. we expected that there would ?be significant concerns and ?even opposition among both ?our lawyers and secretaries to ?the changes ahead.

Our reason for expecting these challenges was that, as a point of departure, the group of administrative controllers, as they are now called, was to be recruited from among existing staff.

As a result, partners and lawyers had to wave goodbye to ‘their’ secretary. We needed to encourage those of our colleagues who we wanted to perform the relevant functions to take on the task, even though they might have felt that they were being put under pressure from their closest cooperation partners.

We therefore joined forces with the Danish branch of an international consultancy firm which, together with our dedicated internal project manager and a steering committee, prepared and implemented the project.

Development work

As part of the preparation, we gave a presentation describing the status quo and where we wanted to be headed, and performed a detailed review of existing work procedures.

We also created a scenario in which ?all of the administrative functions involved in the handling of a case were covered by the administrative controller concept, from the initial client assessment to the handling of conflicts of interests, and from anti-money laundering to invoicing and completion of the case, including filing.

An overall objective was for all processes to be supported by IT to the widest possible extent. As we are all aware, not all IT systems allow for discretional decisions and, therefore, ?we needed to define a set of very ?specific rules to be applied for IT ?system support purposes.

As for the conflict of interests rules and anti-money laundering monitoring, ?we sought to view the specific rules from an ‘if…then’ perspective for the purpose ?of being able to design, to the widest extent possible, our IT support in such a way that the system, on the basis of a given registration, was capable of determining that additional conflict of interests control or money laundering verification was not required and, on that basis, jump to the new specific relevant step in the establishment of the case.

We have, for example, in relation to anti-money laundering, defined the duty to continuously monitor client matters in such a way that if anti-money laundering monitoring has been conducted within ?a period of two years from when a new case is established at the firm, then anti-money laundering monitoring will not be required again.

In such a case, the IT system will simply tell the administrative controller ?that the most recent anti-money ?laundering monitoring activity has been conducted on a given date, skip the anti-money laundering module and go on to the next step.

Similarly, we have defined a number ?of case types and sub-types to the ?effect that if a case is classified as, for example, assistance in connection with ?a service agreement or an office chairman at the general meeting of a company, then anti-money laundering monitoring is not required due to the nature of the case. At this stage, we used the specific case types currently in use to determine profitability and so on.

It goes without saying that, when relying on an automated system in such a way, the historical entries and any current entries must be correct. In other words, data quality is a critical factor in an automated system. Therefore, we have, as part of the transition to efficient case handling, completed a very comprehensive data wash procedure to ensure the quality of historical entries is adequate.

The development work was ?performed in cooperation with a designated test administrative controller who was assigned to assist a limited number of partners for project purposes. This process was a very challenging learning experience, not only to the administrative controller, but also to our consultants and the people, including myself, involved in it.

Being faced with even the simplest tasks is an extremely valuable experience, as a finely designed system must necessarily take these into account to avoid the user turning against it because it creates more problems than it solves.

Change management

The implementation of an organisational change always requires careful consideration, particularly when you are looking to break away from a system which is the only system ever known to the parties involved.

In addition to posting an internal notice of vacant administrative controller positions, we decided to target our recruitment efforts at those best suited and to persuade them into filing an application, just as we carefully considered in which order we were ?going to implement the new system ?within the organisation.

It would of course prove expedient ?to start the process in areas likely to ?cause the fewest start-up difficulties – meaning practice groups in which the composition of cases and clients called ?for limited or infrequent anti-money laundering monitoring.

However, we attached greater importance to getting the system off to ?a positive start. We were therefore seeking to establish an order of succession allowing us to, hopefully, be able to use our experiences in promoting the system to the practice groups which, to begin with, were not overly amused, to say the least.

Quality improvement

We have, over a period of just over six months, rolled out the system to the entire firm. It has received a warm reception and we can now see how the administrative controllers take great interest in their work and how, in relatively short amount of time, they have built significant competencies in the areas in which our firm used to face severe challenges.

The bottom line is that we have seen an improvement of quality exceeding our hopes and expectations. The administrative controllers take immense pleasure in their work and demonstrate specialist awareness. The secretaries ?are relieved to have a task that is not directly related to assisting lawyers taken off their shoulders.

We all – particularly those of us who have pulled the strings from the engine room – take pronounced pride in the fact that our firm now lives up to the highest compliance standards.

We are now left with the task of rolling out the remaining part of the system to the firm. We expect a substantial relief of the workload when we introduce automatic invoicing for all clients with which we have not concluded special agreements on the documentation of work performed.

These experiences have reaffirmed for the firm the maxim that if something is worth doing, it is worth doing well.

Lars Lindencrone Petersen is a KM and compliance partner at Danish law firm Bech-Bruun (llp@bechbruun.com)