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Client intake:

Seven reasons why you struggle to onboard legal clients easily — and how to solve them

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Streamlined onboarding processes set the tone for the rest of the working relationship and speed up business outcomes

Onboarding new clients is a laborious yet non-billable task for law firms. It involves learning as much as possible about a client, their motivations, connections and suitability in the smallest possible amount of time.

A streamlined process will set the tone for the rest of the working relationship and speed up business outcomes. On the other hand, delays, mistakes or oversights will create a bad first impression of your law firm, and can even drive clients away. A lack of investment can result in onboarding clients who are an inappropriate fit for your firm.

Research from the Thomson Reuters Institute found payroll expenses rose by almost 11 per cent and overheads by almost 13 per cent in the three months to the end of September when compared with the same period in 2021. As the chances of a global recession look increasingly likely, a swift and efficient client onboarding process is an easy way for law firms to make savings.

This article will explore the key reasons why law firms struggle when onboarding clients, and explain how Xapien’s automated background research software offers solutions.

As a quick side note, automation does not replace the human elements of practising law. Instead, lawyers can spend less time on time-intensive, repetitive tasks. Not only does it help firms create a frictionless and rapid digital client onboarding process, it also gives lawyers back time they can use to focus on practising law for the right clients.

Problem 1: You spend a long time onboarding a client, only to later discover information that prevents your working with them

Considerable resources are invested in client due diligence, but 53% of lawyers do not have confidence that their onboarding process always provides enough information to decide whether to represent a client or not, according to Thomson Reuters.

This is unsurprising when you consider the vast volumes of information on any given topic on the internet. There is simply too much information for human researchers to read and comprehend, even before foreign languages and greenwashing are considered.

Law firms can invest hours or days on research before they find something that shows a client is unsuitable. Even worse, this information may come to light after the client has been onboarded, resulting in even more wasted time.

Existing compliance PEPs and sanctions look-up tools provide yes/no answers about known risky customers, but the results still need to be analysed and checked by manual teams.

Xapien reduces the time law firms waste researching unsuitable clients

It takes Xapien just five-to-10 minutes to process and deliver insights on all the information available in the public domain on an individual or a business.

When you enter a person or business’s name into Xapien’s search engine, it searches through existing datasets, from PEPs and sanctions lists to corporate records, as well as scouring the entire web and deriving insights from open-source information.

Once our cutting-edge AI technology has scanned millions of data points, it flags anything that might be considered a potential risk. These risks are easily missed due to language barriers or time constraints.

Beyond regulatory and reputational risks, the insights generated can help the firm decide if the prospective client is a mutual fit with the firm. This can lead to more fruitful relationships for both parties.

Problem 2: Excessive questions drive clients away

Due diligence requirements used to be fairly simple. Law firms needed to verify a client’s identity, their background for criminal convictions or past litigation, the state of their finances, and for any evidence in the public domain that shows they were not being truthful.

Today, sanctions and anti-corruption laws mean due diligence needs to go much further to ensure a potential client is a good fit. It can take teams of researchers days to trawl through all of the publicly available information on a client, as well as hours of interviews, questions and face to face meetings – which then need to be verified with another round of research using PEPs and sanctions look-up tools. This waste of time for both the client and your law firm creates a poor user experience.

How Xapien removes the need to ask excess questions

Xapien’s technology runs searches on PEPs and sanctions databases, news and media articles, corporate records and wider internet data from sites such as LinkedIn, Wikileaks, offshore leaks, and more. It reveals associates, networks, corporate and personal interests, providing answers to any questions onboarding teams might have, as well as those they might not think to ask.

Compliance teams and decision makers are equipped with the answers they need and can avoid burdening potential clients with too many questions. They can make quick decisions about the clients they take on, fully informed of any risks involved – even those they didn’t think to look for or ask about.

Problem 3: You cannot make strategic decisions because you’re unable to assess whether a client is a fit for your firm

Law firms increasingly need to consider whether they should work with a client, rather than if they can work with them.

Regulators have been focusing on the methods oligarchs, and other criminals and corrupt actors use to hide, launder and spend ill-gotten assets ever since Russia’s invasion of Ukraine at the beginning of 2022.

The sanctions imposed by Western governments did not apply to law firms, but many law firms decided to stop working with Russian-linked individuals and organisations due to the reputational costs.

Before that, the global investigative journalism that led to the 2021 Pandora Papers and the 2016 Panama Papers sparked massive global outrage over money laundering and tax avoidance.

In this climate, it is vital law firms know as much as possible about potential clients. This will help them assess whether they are a good fit, and prepare strategies to answer questions or criticism that arise from agreeing to representation.

How Xapien helps your law firm see the whole picture, so you can onboard the right clients

Consolidated detail and clarity is not scalable without the right technology. Xapien’s technology works at a massive scale, processing huge volumes of data with the intelligence of a human researcher. It makes sense of the information and uses context to zoom in on what’s genuinely useful.

Law firms can proceed to onboard new clients with confidence, assured that they can prepare for any questions from the media or public that might follow.

Problem 4: Critical but hard-to-spot information about a client is missed

The recent information explosion is a boon to any researcher. It has transformed the transparency and traceability of legal history, sources of funds and fraudulent or corrupt activities.

At the same time, the volume of information can be overwhelming. When law firms conduct research, they need to allocate and prioritise resources. Trade-offs are inevitable and can lead to crucial information being missed because they don’t have the capacity to look everywhere and verify everything.

An initial check of a potential client could also generate results that suggest they may be undesirable, and lead to a quick rejection. More thorough analysis would allay these concerns, and lead to a successful new client relationship.

Although traditional research tools can identify, read and report on all publicly available data, analysts then must sort through the data to find key insights.

How Xapien reveals vital information and highlights what you need to know

As an advanced AI platform, Xapien uses human-like techniques to cut through this noise. By applying Natural Language Processing (NLP) Xapien can take just a few pieces of information, such as the name of a person and their organisation, to tell you what is useful.

Xapien’s NLP reads text from across the internet. It extracts key events, sentiments and personas and then builds a ‘knowledge graph’ connecting individual pieces of information together. This creates a rich view of the subject and their network of connections in the same way a human researcher would.

AI can disambiguate between similar people and identify matches. A ‘John Smith’ who is being investigated for connections to the Russian government will not be confused with another ‘John Smith’ who works at Waitrose. It can also read and understand the difference between John Smith who was working on a software trial and one who was on trial for software fraud.

The insights can help lawyers understand exactly how to best represent a client. This can lead to more fruitful, long term relationships for both parties.

Problem 5: Onboarding is too slow, so the client looks elsewhere

In order to stay ahead of the competition, law firms need to be able to onboard the right clients, quickly. But thorough due diligence can take days when done manually. When a client needs legal representation fast, they are likely to turn to a firm who can offer the fastest onboarding in a reliable manner.

The traditional background checking process:

Step 1: PEPs and sanctions look-up tools provide yes/no answers about known risky clients. However, these tools are not updated in real time. They do not highlight people who are about to be sanctioned, or close associates of those who have been sanctioned. Analysts need to run additional, manual PEP and sanction checks.

Step 2: Analysts must go through and analyse the results to screen out false positives by applying other contextual information known about the subject. This costs time and money, but is work that cannot be rushed.

How Xapien reduces due diligence turnaround to 10 minutes

Lawyers with the most basic technical skills can use Xapien to generate readable, shareable reports in five to 10 minutes on any individual or company. They could be working with them within half an hour, and are able to take quick, decisive action based on relevant, actionable, and correct information.

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Problem 6: A client is a legal fit – but not an ethical one

After Russia’s invasion of Ukraine, the multitude of sanctions unleashed by Western governments against Russia-linked entities did not extend to law firms in the same way they did to accountancy and PR firms.

This puts many legal professionals in an awkward position. Legally, they can work with Russian clients, but should they? This is not simply an ethical decision, but a reputational one with major financial consequences. With anti-Russian sentiment high, many UK law firms cut ties with Russian-linked individuals and organisations due to the reputational costs of these ties.

How Xapien helps law firms make ethical decisions about onboarding new clients

Here’s how Xapien helps a hypothetical law firm onboard a new client.

A potential client approaches law firm A about working on a merger.

Law firm A’s risk and compliance team runs their standard search process and finds none of the companies’ benefactors on a PEP or sanctions lists. Further checks on Google, using keywords such as ‘fraud’ and corrupt’ reveals no problems. The process takes a day.

Law firm B (firm A’s major competitor) is also approached. Law firm B uses Xapien to conduct automated research on the client. Xapien’s analysis of open-source data takes seven minutes and finds news reports showing the benefactor has ties to Putin. The owner is believed to hold assets on the Russian president’s behalf.

Law firm A has no knowledge of those links. If it onboards the client and facilitates the merger, it might have to deal with global headlines saying it is helping Putin. This could lead to an exodus of clients and employees.

Law firm B can make an informed decision about taking on the client.

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Problem 7: New regulations require constant due diligence, even after a client has been onboarded

Regulators are being endowed with greater funding and investigatory powers, while public opinion is more focused than ever before on global corruption and its facilities. Once a client has been onboarded, due diligence needs to be continuous and ongoing as new regulations are constantly being introduced – yet doing so requires continuous investment.

How Xapien makes it easy to carry out continuous due diligence

Xapien generates readable, shareable reports in five to 10 minutes on any individual or company, so their suitability as a client can be reassessed at any point.

Not only that, NLP identifies key networks and affiliations that enable lawyers to be aware of clients who are likely to be added to sanctions lists in the future, helping them stay ahead of potential risks. For example, someone might not be directly sanctioned, but could be mentioned in media articles as a ‘close friend’ of a sanctioned figure. Traditional sanctions checks would not flag these risks.

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