In a challenging economy, many solicitors look to maintain a steady stream of work in their established areas of practice. Faced with the burden of keeping fees stable, some solicitors understandably decide that one method to increase fee income is to offer clients and prospective clients legal services in areas of law in which they haven't previously practiced.
However, dabbling in new areas can be detrimental to your practice in the long term. Acting on the odd bit of 'other' work that you do not have expertise in is not a risk worth taking. The potential lasting effects of dabbling can be disgruntled clients, claims and subsequently increases in your insurance premium; the downside of these far outweigh what might be earned from doing this work.
Pressure from clients
Saying 'no' to a long standing client can be tough, particularly if you are the only solicitor they are comfortable with. Solicitors can often agree to take on a piece of work for a client as a favour which can often result in negligence. Although it can be a tricky conversation to have, it is in both parties' best interests for you to say 'no'. If you do decide to undertake work that you do not have the expertise to deal with, this can lead to complications as the work progresses.
Understandably, solicitors sometimes fear that if they pass on a piece of work to another firm that the client will then take the rest of their work to the other firm. However, if you were to take on the work that you do not have expertise in and in turn results in a shortfall for the client, then the chances are you will lose the client - why risk providing novice-level service to a valued client?
The 'simple' transaction
Solicitors often drift into dabbling in other work areas, ancillary work can spawn from ongoing pieces of work they are undertaking. Some take on this other piece of work as it can often be deemed a 'simple' piece of work despite it being in an area of law that they have little or no expertise in. This in turn can often lead to errors being made and most likely an upset client and a claim being made against your practice. One can argue that the dabbler who is inexperienced in the practice area cannot make a truly informed decision as to whether a matter is straightforward or whether it requires more expertise.
As mentioned above, dabbling can lead to unhappy clients and often claims on your professional indemnity insurance. For obvious reasons this can affect the renewal of the professional indemnity for your practice. The work-split of your practice is a key consideration that underwriters take in to account when assessing the risk profile of your firm. By having 1 or 2% of numerous different work disciplines listed in your proposal form can sometimes raise concerns for insurers. Insurers appreciate that work in different work types can occur due to client requests or as a result of being a piece of ancillary work from an ongoing transaction. This being said, insurers will seek comfort that the individuals undertaking this work are experienced in the field. If insurers are not convinced that there is enough expertise and in certain work areas then it is likely for them to perceive the risk to be greater and therefore result in a higher insurance premium or even declining to put forward terms all together.
Diversification of practice areas
Smaller firms which provide specialist or bespoke services can find they could be particularly at risk of fees decreasing and diversification is a plausible option. However, this must be done with great caution to avoid the dabbling. If you are contemplating diversifying, it is important that consideration is taken as to whether there is any relevant expertise in the firm, whether appropriate supervisory procedures are in place, and whether relevant training has been provided to the appropriate staff. You should also always advise your broker of the new work areas so they can notify your insurers. All insurers have a certain 'appetite' of firm they wish to have as a client, and it is worth bearing in mind that if you decide to enter a different area of work to consider how it may affect your professional indemnity renewal.