As part of Assent’s mission to champion the consultancy industry, Jess from Assent Risk Management has been interviewing experts from all sectors of the consulting profession. In this interview, Jess talks to Will Whawell, a Legal Project Manager, ISO 9001 auditor, and Lexcel Consultant with over 30 years of experience in legal costs.
Brief Overview of Lexcel
Lexcel is a quality standard that has been designed for law firms and in-house legal departments that is very similar to ISO 9001 (Quality Management). If you’re familiar with ISO 9001, you’ll see a lot of similarities between the standards. Where Lexcel goes over and above, it is very closely linked to legislation around money laundering. So anti-money laundering regulations and source of funds, so if you’re doing conveyancing, knowing who your client is. Is your client a Russian oligarch, for example, or a Chinese company, where are the businesses located and where does the source of funds come from?
It goes into some depth to keep up with the regulations that are constantly being put out by the government. But in its essence, it is very similar to ISO 9001, in which you go through various stages, various points, and key elements to create a quality management system. Though there are, quite a few differences between them, but if you’re familiar with one you would easily understand the other.
What are the key themes of Lexcel?
The key themes of Lexcel are really the way that you plan and you process. There are seven main areas of Lexcel, which are:
- the structure and the strategy of the firm
- the financial management of the firm
- the information management of the firm
- people management
- risk management
- client care
- file and case management.
All of those elements would be very familiar to anyone in a legal Practise and they are the key things that you do. So your strategic plan, the objectives, have to be measurable, which again, is similar to 9001.
You have risk calculations, and information management, so how you store information is very, very important within a Lexcel environment, just as it would be in another firm. There is financial management, there’s a responsibility within a law firm for who is responsible for various areas. For example, what is known as a ‘culp’ or a ‘coffer’, are designations for the people who look after the various financial aspects. You also then have your money laundering officer, you have your data protection officer, so those are that within that area.
So again, financial management would be very similar to what you would have in ISO and then so you basically follow those main elements through and you would start building up your profile of the firm and see where you are. So again, it is a similar idea though the GAP analysis is slightly different.
What are the benefits of Lexcel?
The benefits of Lexcel are that it’s a quality mark that people can look to. It does encourage better work practises and it is very much there for firms to follow so that they can do certain areas of work, though it’s not compulsory to have Lexcel by any stretch of the imagination.
But the benefits to a law firm are, again, I would say similar to ISO 9001. It encourages everyone to understand how the organisation works. So you don’t have this idea of always just the partners controlling everything. It does encourage the ability to run matters properly and effectively. It creates the opportunities to flag up when there are issues such as money laundering and source of funds, which, as I say, are a real area of concern within the legal sector. Where does your client’s money come from? Is your client genuine? And I would say that it can be used to encourage the firm to become better.
You can extend within Lexcel if you want to, the sort of quality management principles that you again, you would see within the ISO world. So you can really show that you can do certain types of work.
It can be used as a benchmark for businesses to use a firm. So again, you can be assessed against your own standard. For example, if you were a law firm who wanted to tender to some work and the person who was raising the tender could say, well, we’ve got Lexcel.
The breadth of people who can have Lexcel is effectively law firms in England and Wales, international law firms who are operating in England and Wales and they can have their foreign offices certified to the standard in-house legal teams. So anything from, say, a pharmaceutical company with in-house legal to a local authority so they can use that as their benchmark. They can come and say well, we’d like to see your system, how you operate. So it is encouraging quality at the end of the day which people would assume should be built into law firms. But again, we all know the reality of business doesn’t always mean that every law firm operates the same way.
What are the similarities and differences between Lexcel and ISO 9001?
In my view, the key difference between ISO and Lexcel would be that Lexcel is very much linked to legislation. There are three key pieces of legislation, which would be the Data Protection Act 2018, which is ongoing in being changed, the Money Laundering Act of 2017, which again is an ongoing piece of legislation, which is constantly changing, and the Criminal Finance Act 2017, which again is constantly being updated and changed and guidance being sent out. Those three main pieces of legislation.
You also then have the Solicitors Regulation Authority and their Code of Conduct and how that fits within the standard itself. That would be the main difference is that Lexcel is very much driven by, legislation, even though law firms who aren’t Lexcel certified have to follow the same laws and the rules within Lexcel, it is very much part of your assessment.
Also, the Lexcel cycle is different; you have your initial assessment, you then have year one, your annual monitoring visit, year two, your annual monitoring visit, and then year three you have a full reassessment. And that is slightly different to how it would be in ISO.
I would say that Lexcel is a lighter touch in how it operates. The conformances and the minor and major conformances are done very differently on a Lexcel assessment, if there’s a minor nonconformance, you have three weeks to sort it out. If you can’t do it within three weeks, it goes to become a major, but you still have time to sort it out and supply the documentation that goes with it. There isn’t the same level of, say, support from the consultants as there would be within ISO.
In some ways, it’s a heavier touch because of the financials. So that, I think, is the key thing. ISO 9001 touches on many areas, but you’re not being asked to prove where money comes from and who is in charge of things all the time. Whereas in Lexcel you have to have designated people like the Culp, the Coffer, the MLRO, the Data Protection Officer. So those are the key things and you have to show that you’ve got those in place and if you don’t, then that is where the issues start arising. So, I would say it’s the financial management that is the biggest difference between the two.
Then also there is case management and client care, which again is different from person to person and from business to business. With your client care, if you’ve got elderly clients or clients who have got any form of court protection attached to them, so they’ve got dementia, and they have a guardian or a deputy appointed by the court. Lexcel goes into those areas a lot more as well, how you handle them, how you doing, but it is then all linked to the solicitors regulation authority and the rules they bring out and how that links back into how you run your accounts. It is very much geared to the legal sector and it is in those areas that the real differences start coming to the fore.