Why our consultants don’t offer legal cover to clients

Many providers of HR services to small businesses offer some kind of legal insurance or guarantee, usually along the lines of guaranteeing to pay their client’s costs at a tribunal or represent them at no cost. If you set up an HR consultancy, whether it’s with us or another brand, or on your own, you may from time to time find potential clients asking about whether you do the same.

We have made a deliberate decision not to offer that service, so none of our consultants do. There are several reasons we’ve made this decision, but it boils down to not fitting with our ethos of bespoke, tailored, effective advice for clients.

Here are some of the problems with services that provide this cover and reasons why we’ve opted not to provide it:

“Don’t do that”

The focus of the service becomes negative and restraining rather than positive and enabling. The measures of successful performance for the provider becomes all about not having to pay out on their guarantee, rather than all about successful resolution of problems for the client. The easiest way of avoiding claims at all costs is to adopt a ‘you can’t do that’ ‘you’re not allowed to do that’ approach. Great, it means the client is very unlikely to be the subject of a claim, but it also means they are not being provided with advice on actually dealing with their problem.

Our small business clients need quick resolution of their problems as they can represent an enormous drain if allowed to drag on for ages. Money is tight, there is limited room for adjusting duties, redeployment, long sickness absences while they wait for ages to address the problem.

Does the cover really give peace of mind?

One of the big selling points for this type of cover is the peace of mind it offers. But does it really? We think clients would rather get peace of mind from confidence in their HR provider, a personal relationship with them and the knowledge that the consultant’s interests are aligned with theirs.

Big HR providers using an anonymous helpline have to offer legal cover really, as they don’t have much else to offer that gives peace of mind. But if clients want an HR advisor who knows them and their business, they want someone who doesn’t need to offer legal cover in order to get clients.

Our research has found that clients want someone who can demonstrate an excellent track record of successfully resolving difficult employment problems without legal claims, provides high quality advice, and is confident enough in his/her own knowledge and abilities to know he/she can avoid legal claims and help the client resolve your problems.

Making sure the advice you’re giving is truly independent

If an HR provider offers legal cover they will have insurance to cover that. But that means they are working for two parties – the client and their insurers. The interests of the client and those of the insurer will almost certainly not always be in alignment.  We think an HR provider should be free of third party influence and focused purely on helping the client address their problem.

So what happens if a client has a claim brought against them?

If they are using a provider with legal cover, yes their legal costs will be covered. But they will lose control over the situation. Their provider will choose the solicitor that will be used, or will do it themselves. They will make the decisions about when/if to settle a claim, and those decisions will be in their interests not necessarily in the clients. Our research shows that clients would ultimately prefer that in the unlikely event a claim is brought against them, they remain in control, can discuss the best approach to the case with their HR consultant, including whether or when to settle and on what terms, and would prefer to be able to seek recommendations for high quality local legal representation if required.

Helpline services

Legal cover often (though not always) comes from a big provider giving advice via a helpline. The staff answering the phone usually know little or nothing about the client’s business. They’ve probably not met the client, and have not had several discussions about the problem employee before and therefore do not know all the history. Their goal during the conversation is to answer the client’s query effectively and ensure they are not likely to do anything that may result in their employer having to pay out on its guarantee. They will provide generic advice.

This doesn’t fit with our ethos and way of working, which is all about knowing and understanding the client’s business. This means our consultants have probably discussed the problem employee with their client before so know all the history. They have the same goal as the client which is to resolve the problem quickly and effectively, but can take a long term view and come to the best strategy for that particular client and that particular situation.

Ultimately, if you’re thinking of starting your own HR consultancy, or are considering employment with one, you need to consider what your own ethos is when deciding on who to work with, or on how you will run your business. If not providing legal cover to clients is something you feel uncomfortable about, it may be that working with us is not right for you. It’s an important decision to get right and if you do want to consider working with an HR consultancy in some form, it’s crucial you understand their approach to working with clients, and agree with it.

If you’re interested in talking to us about becoming a partner with face2faceHR, do get in touch.