Legal Process and Compliance on DirectLaw

Any law firm thinking of adopting a system that lets them engage with clients online will naturally be concerned about compliance; in order to preserve its integrity, the legal profession is carefully controlled and regulated, and firms will rightly want reassurance that DirectLaw operates within the regulatory framework.

As you might expect, we have been particularly careful to ensure that the DirectLaw service is fully compliant for use by solicitors. By the very nature of our customer base, our software and processes naturally come under enormous scrutiny, and as a result a huge number of law firms have analysed the way the system works and have agreed that DirectLaw is completely compliant – they wouldn’t have deployed it if not.  We have also taken guidance both from the SRA and from independent counsel. Our own in-house legal team are always ready to address any detailed compliance concerns you may have, but the following are common aspects of regulation and practice that solicitors often seek our reassurance on:

'Client’ and ‘firm’ money

The DirectLaw system takes payment electronically using an ecommerce solution. Because the price of the services is known upfront at the time of the purchase and cannot be altered, and the scope of the service is explained beforehand, the payment is never taken ‘on account’.  It is an agreed fee and is therefore 'firm' money. All monies are, at the direction of the law firm, collected by Epoq (so the law firm does not receive the money at the point of transaction) who then account back to the law firm on a monthly basis. It is only because the money collected is firm money that the law firm is able to authorise this.

At no point is the DirectLaw system used to collect ‘client’ money.

Rule 2

In the case where a client purchases a service on DirectLaw upfront (in that they pay for the service ahead of it being delivered) then a Rule 2 (Terms of Engagement) notice is supplied electronically prior to purchase which must be acknowledged and accepted by the client before they can proceed. DirectLaw has a standard pro forma Rule 2 for this which has been designed specifically with delivery over the internet in mind, but a firm can use their own Rule 2 template here instead if they so wish.

If the client is using a service that does not require an upfront online payment, then the firm can choose how they would like to supply a Rule 2 to the client before they start work – the system can automate the provision of the Rule 2 on submission, or the firm can supply the Rule 2 to the client by whatever existing method they use for  non-online engagement.

In all cases the rule 2 is supplied before engagement.

Money laundering regulations

The DirectLaw system does not automate the money laundering due diligence process, and this remains the responsibility of the law firm. Careful analysis of the regulations surrounding the activities to which the due diligence requirements apply suggests that the services provided by DirectLaw do not normally require ML checks (and the fact that money collected is by definition ‘firm money’ and not ‘client money’ is also a key factor), but nonetheless, many firms will want to perform these checks for their own peace of mind.

DirectLaw assists here with a number of mechanisms which prevent the client from having access to the final legal document until the solicitor is ready; clients can neither print nor use the draft they generate using the online drafting process, and it is entirely under the solicitor’s control as to when they ‘release’ the final useable document back to the client, allowing them to perform money laundering checks in the interim.

Conflict check

Again, the DirectLaw system cannot in itself perform the conflict checks required for a case, but the same mechanisms for preventing client access to the generated draft as discussed above (for money laundering) can be applied while the law firm uses their  existing processes for conflict checking a client.

In a similar vein, a solicitor may wish to confirm mental capacity for a client before they supply any legal documents, usually with an office visit. DirectLaw facilitates this: once the draft is completed the law firm can choose whether to return the document electronically through the system, or to supply it using traditional means. It is by no means essential that a document that was initially drafted online by the client has to be returned to them in this way. The system will allow the solicitor to simply mark the case file as complete and leave the final document exchange in their hands.

For a fuller discussion of any relevant regulations that affect the DirectLaw service, please see this legal analysis from our in-house team.

Click here to download a pdf on compliance and engaging clients online