How firms can take advantage of the rise of alternative finance
Peer-to-peer lending has provided opportunities for lawyers to increase their value by assisting clients with financial matters, explains Louis Mathers
2 December 2016
The legal profession was once steeped in the tradition of being at the centre of commerce. Critical to that union of the interests of the client and the interests of the mercantile world was the ability for lawyers to know how – where and when relevant – to source and provide financial assistance through their network. This ranged from referring clients to accommodating banks and merchant banks to marrying other commercial interests together.
The legal profession was at the centre of that relationship. The last few decades has seen this stripped away as the banks resume their relentless centralisation programme and their desire to ‘own the client’. Often banks make it impossible for the client to use their traditional solicitor and work is duplicated in other parts of the profession at the cost of the borrower. It is the classic case where the muscle of large banks have allowed them free rein to prevent clients from using the legal profession in the way they used to.
Parnalls has a 300-year-long history of enabling the business owners to arrange private mortgages. Often this was merely documenting a relationship that already existed or by opening doors for clients. The key element was always that the lawyer was relevant and that if you rip out financial matters from a client’s affairs, you are left with a less relevant relationship with that client.
Peer-to-peer lending (P2P) has provided opportunities for lawyers to reclaim some of that ground. While modest at the moment, P2P is here to stay and here to grow. £8bn in loans made since 2005 reinforces that view.
Mark Parnall and I created our own P2P business, Folk2Folk, and harnessed the latent demand we had in our community. This has now been launched throughout the UK and you may have seen local or regional announcements.
Broadly, if a solicitor is to fit into this growing sector, there must be familiarity and associations with P2P providers. This comes from investing time in those relationships, which will show reward for the lawyer in creating value and relevance for their client. With Folk2Folk this often starts with the firm becoming a legal panel member. Folk2Folk relies on lawyers to carry out the security work in their area.
Many clients have difficulties accessing finance and lawyers stepping up to assist them is a worthwhile piece of husbandry and client investment. If you do that to present it to a bank, which then effectively removes the legal work from you with centralised panels, this not only stretches your patience but also that of the client, who will be sorely tested in the process of accessing the finance. The end result will be that you will have gained little new relevance with your clients.
The P2P industry works closely and quickly with professionals. Speed and simplicity for clients is more often than not their key demand when accessing finance. Of course, it is not always the cheapest, and for that reason the banks continue to hold the high ground in respect of being able to provide ‘cheap’ rates. However, often those rates are not so cheap as regards cash flow when you take into account some pretty stringent capital repayment schemes which may make it unaffordable for the client.
A lawyer should understand this and work closely with the client’s accountant to build business communities and financial resourcing to ensure both the high-street lawyer and the City lawyer remain at the centre of the client’s activities.
Brexit has arguably provided a boost to small businesses – whether this is perceived or real we do not yet know, but if there is to be a period when things are up in the air, it is for lawyers to step up and help make client aspirations a reality.
Louis Mathers is a partner at Parnalls and a co-founder of Folk2Folk @Folk2FolkUK
Article from Solicitors Journal 2.12.16
Has your personal information been shared without your permission?
Planning your escape to the country, what you need to consider – part 2
Government consultation on new national model for shared ownership
Choosing a partnership structure
Planning for what happens when you die by Deborah Adams
Changes to legislation could offer protection for tenants in the private rental sector
Move to the country - Part One
The risks of DIY probate
Will your septic tank still be legal in January?
The death knell for ‘kiss and tell’?
Making a will when you retire
Selling your property at auction
Not looking so good - your guide to compensation for botched non-surgical cosmetic procedures
New threshold of seriousness in defamation proceedings
Legal considerations when building a granny annex
Choosing the right person for your power of attorney
Formal Interviews - Do you need legal representation?
Privacy rights and aerial images
Trustees’ duty to give information to beneficiaries
Five problems with a leasehold property
Taking your first commercial lease
Is your organisation protected from employee social media legal risk?
Have you been targeted by negative social media posts?
Farmers be alert when being inspected
Help for House Sellers?
Don’t let your digital assets end up in a digital grave
Valuing an estate for probate
Development proposals and your local authority search
What can you do if your child is injured in a serious accident
NetRights welcomes new protection for social media users
SHOULD I GET A LAWYER FOR A SPEEDING OFFENCE?
Supreme Court recognises that social media is a “casual medium” in libel battle
Choosing the best conveyancer who is right for you
Making a will after a second or subsequent marriage
Option or promotion agreement – which is best for landowners?
Anonymous pub and restaurant online reviews leave a bad taste
Have you had an accident involving a horse?
Help to Buy – beware of some cracks in the structure
Understanding Lasting Powers of Attorney
Changes to Energy Performance Certificate for Landlords
Had a cycling accident? Your route to obtaining compensation
New year, new home: tips to sell your home in the New Year
Tax Planning for your inheritance
Hearing loss: when your employer may be liable
Buying a home for your retirement, five things you need to consider
Farmers plan to diversify after Brexit
Ministers press ahead with probate fee shake-up - reports BBC News
Botched dental treatment? You may be entitled to compensation
Why a Health and Welfare Power of Attorney is a good idea
Will the new charge on building developments in Cornwall affect you?
Energy Performance Certificates – Do They Matter?
HMRC Challenging Stamp Duty Land Tax Payments
Ben Mitchell qualifies as a solicitor
The potential implications of Brexit on employment law
Appointing a guardian for your children
Houses in multiple occupation – new rules from October 2018
New Agriculture Bill published
Will Brexit affect my pension?
Dreaming of a holiday home? Sort out the legals before putting your feet up
Lasting Power of Attorney by Deborah Adams
Settled status after Brexit by Alexis Hager
How to choose an executor to administer your estate when you die
How overage agreements can boost profits from your land
Top tips for first-time buyers
How Could Brexit Affect My Farm?
Wills & Succession in Spain by Deborah Adams
Brexit – an international and local view by Alexis Hager, Litigation
Capital gains tax - important facts for non-residents of the UK
Buying a home: the importance of making sure the seller is entitled to sell
Changing a will after someone has died: it is possible and it could save you money
Your responsibilities when you have people working in your home
Sad passing of Battle of Britain pilot who served with Parnall family member
Considerations when buying a heritage property
Disciplinary proceedings at work: guide for employers
Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.