Market overview - hints and tips before buying!
Businesses of all sizes face a huge and growing burden in managing work place laws and regulations – from employment law issues to employment relations to health and safety compliance.
The difficulties of regulatory compliance and the financial uncertainty of high legal fees and compensation have created a new market for regulatory services that challenges the traditional “pay as you go” solicitor’s model.
The concept is simple – a single fixed annual or monthly fee buys you unlimited advice and assistance; contracts of employment, policies and documents that are updated as necessary; plain English legal updates; training; representation at Employment Tribunals; and employment protection insurance that pays any compensation awarded against the company (or any out of court settlement which isn't a contractual obligation) plus any associated legal costs if things go wrong.
One might have expected solicitors to capitalise on this trend – they have not. The most successful business model in this sector comes from entrepreneurial teams that combine employment law skills, personnel and health and safety professionals with legal expenses insurance. These businesses are known as “regulatory consultancies”. The market is already worth about £350 million and growing at about 20% per annum. Source: Arc Research - November 2006.
For businesses the great attraction of the regulatory consultancy is clear. It is a fraction of the cost of employing additional legal or health and safety professionals on site and with the long stop of insurance it has the added benefit of security and certainty of cost.
Can the regulatory consultancy model really deliver the high quality and responsive service that you need? The answer is a cautious “yes” – but be careful!
Client feedback suggests that the best regulatory consultants offer super service at great value. However, as ever, it is important to sound a note of caution.
The Law Society does not regulate this market and there are, of course, some cowboys out there. If you are considering a regulatory consultancy, follow these simple rules:
- Seek written confirmation that all employment law advisers are either qualified solicitors or otherwise qualified by legal examination.
- Seek written confirmation that the fee includes unlimited advice and assistance (including drafting), tribunal representation and insurance to pay compensation awarded against you.
- Seek written confirmation that the business is DIRECTLY regulated by the Financial Services Authority.
- Seek written confirmation that an independent insurance policy will be purchased in your company name and ask for a copy of it (beware those that promise only a “guarantee”).
- Carefully check the monetary limits that the insurance policy imposes?
- Check that the contract does not tie you in for anything longer than 3 years and that the firm is willing to offer different contract term options.
- Check the contract does not demand a lengthy notice period to cancel at the end of the fixed term - for example 6 months? What happens if you don’t give sufficient notice that you want to cancel? Do you automatically get renewed and locked into another long term commitment?
- Check that all documentation provided will be tailor made, specifically for your business.
- Ask for at least 3 client names and take up written references? Carefully check that the service delivered is as good as the sales pitch.
- If a provider is promising great service and great service quality, seek tangible evidence of such claims. A good provider should be able to point to the results of objective client research to prove actual client satisfaction rates.
- Finally, be realistic! If you are promised a great service at a bargain basement price you will be disappointed. Pay peanuts, get monkeys!
The best regulatory consultancies are now challenging some of the UK’s best firms of solicitors for employment law and HR support work from some of the UK’s leading employers. That can only be a good thing!