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DictateNow advises readers of Private Client Adviser

Nov 17, 2017

DictateNow advises readers of Private Client Adviser

Our own Maxine Park explains to readers and subscribers of Private Client Adviser, why law firms need to consider carefully the recent Practice Note on outsourcing issued by the Law Society.

Private Client Adviser is a wealth management magazine that caters to solicitors, accountants and independent financial advisers, helping explain the legal and regulatory environment in which financial advisers operate, with advice from industry leaders.

Maxine’s article offered some valuable advice for law firms looking to outsource as a way of improving efficiency, with a few simple guidelines to ensure they find the right service providers and comply with their obligations to protect their clients’ confidentiality.

You can read Maxine’s article here scroll down to read it in full.

Law firms reminded of outsourcing responsibilities

The Law Society recently released a Practice Note on outsourcing and whilst it recognised it is becoming increasingly attractive as law firms seek greater efficiency, it sought to highlight the potential risks and ensure law firms consider their responsibilities.

The Law Society points out at the start that the Practice Note is their view of good practice in the area of outsourcing and is not legal advice, but makes it clear that when outsourcing work, solicitors must still satisfy Outcome 4.1 and keep the affairs of clients confidential.

This means taking all necessary steps to guarantee that service providers, not only sign adequate confidentiality agreements, but operate in a way that ensures their law firm clients can comply with the SRA guidelines on confidentiality and disclosure.

Outsourcing is a natural choice in the drive for greater efficiency, but solicitors remain ultimately responsible for any work outsourced. For some, the perceived risks of outsourcing, possibly re-affirmed with this Practice Note, are slowing the adoption of services already relied upon by the most successful firms.

Selecting the right service providers can be a complicated process and there is a danger this will tempt some individuals or firms to take short cuts and leave themselves open to greater risk.

Before assessing the relevant merits of individual service providers and the security of their service, the location of the operation is perhaps now proving just as important. Choosing entirely UK-based companies, allows firms to satisfy the need for the SRA to be able to enter the premises of service providers when required, which it could be argued is not necessarily the case with those based overseas.

The Practice Note reminds firms they should only outsource services when they are satisfied the provider has taken all appropriate steps to ensure clients' confidential information will be protected. Which raises the question; how do you make that judgment?

The first thing you should look for in service providers is whether they have achieved the internationally acclaimed standard for information security management, ISO 27001:2013. This new standard requires the business to set security objectives, monitor its performance against them, whilst addressing risks and opportunities as they become apparent.

This more proactive approach recognises the constant need for everyone to identify problems and develop solutions within the context of their own business, rather than just sticking rigidly to a set of general and security standards.

The Practice Note also suggests you might consider auditing and checking the outsourcing provider's confidentiality processes, which should largely be unnecessary for those providers displaying the relevant ISO certification.

The Law Society also insists that you make your clients aware you are outsourcing aspects of your business processes, ideally set out in client care letter, highlighting the potential risks. Again choosing service providers committed to confidentiality, with the right accreditations, is key to not upsetting clients who may demand to know the identity of the outsourcing service provider.

Conflicts of interest is a risk when outsourcing, given the limited number of service providers covering each discipline. From the point of view of transcription services, having a workforce spread across the UK, home-based and not working from a single location ensures conflicts of interest are highly improbable.

The Practice Note raises the question about quality of service. The question is whether work you are outsourcing is being done to the same standard as if it had been performed in-house and how you assess the relevant quality. Whilst this assessment of quality is subjective, a good start might be to consider using only service providers with a workforce based entirely in the UK.

And of course, the quality of service is clearly going to be maintained if you choose service providers employing individuals with experience of delivering the same or similar services within the sectors seeking outsourcing, whether that’s legal secretaries, IT teams or library and research services.

Which perhaps goes some way to explaining the rise in co-sourcing arrangements, when a service provider accesses a client’s system remotely and works entirely within the system as if they were sat in the office.

In our experience, this modern approach to secretarial support guarantees all the quality of office-based legal secretaries with none of the down-time, to help increase productivity and efficiency, which must surely be in the interests of both you and your clients.

In reality, outsourcing is a way professional service firms can deliver a better, more efficient service to clients, whilst keeping cost under control and increasing profitability. Choosing the right outsourcing partner requires common sense, due diligence, constant monitoring of the service and regular contact with the service provider to ensure they understand their responsibilities. In that respect, I believe little has changed.

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