Assessing the Commercial Impact of Mazur v Charles Russell Speechlys on Law Firm Business Models

The commentary around Mazur v CRS tends to fall into one of two camps:

1. It changes nothing

   
   

2. It changes everything

But there is little that helps firms unpick which of these statements is true for them.

Practically, beyond the most clear cut examples, firms are likely going to wait for further regulatory clarification on the distinction between working under supervision vs conducting litigation, with paralegals, trainees and certain barristers and CILEX members particularly affected.

I'm NAL and feel no need speculate on where that clarification may land. However, firms can get ahead of this to at least assess their current delegation and supervision models and the potential risk areas pending that regulatory clarification.

I understand two immediate temptations. The first - to allocate files away from non-qualified (or perhaps "authorised" is better) fee earners. The second - to dive into a spreadsheet and model out utilisation, margins and staffing models based upon an assumed shift in work towards more expensive fee earners.

However, it would be informative for firms to assess (A) the design effectiveness of their supervision model and (B) the operating effectiveness of that.

(A) Design Effectiveness

For firms and practice areas with a high ratio of non-qualified fee earners to qualified I would generally expect a decent level of documentation around Standard Operating Procedures and flowcharts to provide a decent grounding, but failing that a simple swimlane flowchart is likely the quickest way to surface any potential issues.

By way of a very quick and dirty illustration:

Basic swimlane flowchart

Evidently, if your process design doesn't have qualified lawyers (i) reviewing court filings and/or (ii) conducting periodic case reviews you've likely got a problem (and also had one prior to Mazur v CRS).

Similarly, if your process design has qualified solicitors performing all of the tasks illustrated above then you likely don't have a regulatory issue, although I'd wager your matter profitability isn't as good as it could be.

But many firms will be operating within the shades of grey between these clear cut positions. Areas I would be taking a second look at:

• Matter inception - what involvement does a qualified fee earner have in assessing the file and setting direction up front

  
  

• Court filings - belt and braces here is for the qualified fee earner to both conduct a review and evidence it by them signing it, even if a paralegal has prepared it. I've seen (I hope tongue in cheek suggestions) that paralegals save images of solicitors ink signatures to insert. Again, NAL but rather an ex-auditor - this is not a good idea!

  
  

• Periodic case reviews - how often, what is the scope, and as above, what is the expected evidence that this has taken place? File notes in the case management system from the supervising fee earner? Emails? An informal chat? Time recording on the matter file?

Much hangs on the simplified 'qualified' vs 'non-qualified' distinction here - how do you treat CILEX Fellows as particularly pertinent example. But as and when that regulatory clarification comes you'll be able to update the first pass of your swimlane flowchart and redesign the workflow accordingly.

(B) Operating Effectiveness

There is often a gap between how a process is designed on paper and how it operates in practice. There are many reasons for this, such as:

• Increasing trust between supervisor and supervisee and increasing capabilities of the latter can lead to those review points not happening. This is natural, and a positive, but for the regulatory position - supervision needs to happen not for a lack of trust or ability, but because thems the rules

  
  

• High caseloads leading to corners being cut, see also late filings or near miss late filings as further indications of this

  
  

• Commercial pressures, namely rates being too low for effective supervision to take place or it takes place but the time is not recorded to notionally inflate matter profitability, realisation or recovery rates

Having defined the key supervision points (as above), I'd suggest looking a sample of files to ensure that the evidence is in place. There's a lot of science that can go into sample selection, but on the assumption this is a quick pre-regulatory clarification check I'd suggest a small sample ensuring a cross section across matter types, teams and supervisors.

If you find an issue in a particular area, you then expand the sampling to better identify the underlying root causes.

Pulling it together

By performing the above steps, firms should be able to take a preliminary view on where there are existing gaps in the design of their supervision framework and where there are gaps in compliance with that framework.

As and when further regulatory guidance is issued, you'll have a decent leg up to be able to assess the commercial impact of any changes - for example, if greater supervision is required that will impact caseloads, time spent on files, team shape and size, and ultimately the profitability of the matter and department.

The time for modelling this through spreadsheets will come, but first you need to bottom out the gap between how you think the process works vs how it actually works and then layer in the potential changes once that regulatory position is clarified.

Assessing the commercial impact of Mazur v CRS