With deregulation of the market
looming here in the UK, opinion varies wildly over what the likely impact will
be.
- Some speak of decimation of the high street, and the
end of the traditional law firm as we know it.
- Others are more conservative and see a simple
acceleration of the move from a traditional profession to a collection of
more business orientated organisations.
- Some see different changes in different market
segments, underpinned by core drivers such as the increasing role of
technology, globalisation, vertical market focus and more specialisation
driven by a need to differentiate.
- Finally, some bury their heads in the sand, unwilling
or unable to contemplate large scale change in a profession that once was
conservative and safe.
So, against that backdrop, the
question I ask you today looks at the changing market from a different
perspective. If you were a new market entrant, free from the constraints and
history of existing law firms, what would you do differently to build a
successful legal service provider?
Here are some thoughts to get you
started....
1. Real Estate
For a start, I wouldn't invest vast
amounts of capital in plush, city-centre offices. Sure, there's definitely a
need for an accessible meeting place both for internal and client meetings, and
the space should be highly functional and consistent with the brand. But no
massive atrium, no marble or fountains, and definitely not hundreds of
expensive people crammed into premium real estate with the sort of eye watering
rent that causes agonised soul searching within two years of every rent review.
I'm not saying all law firms should
be virtual, and I'm not saying that firms should be central, but there are
plenty of big, impressive organisations that work just fine without all their
people in a building in a premium post code. A firm's cost base matters, and
people and property make up a pretty hefty chunk of a law firm's cost base -
avoiding the big numbers here could make a huge difference to long term
profitability.
2. Technology infrastructure
Often years of under-investment, and
a patchwork of applications and networking have meant maintaining and upgrading
law firm systems is a nightmare. The ability to add a new application, device
or method of access can be hugely time consuming and expensive. Being free of
that legacy a new law firm could start afresh with proven, enterprise class
software platform, that had an open architecture to allow maximum
interoperability and future proofing.
The march to the cloud seems
unstoppable at the moment, despite the fact that within the profession
questions remain around resilience and security. Whatever the choice, a new
entrant could have a fully functioning platform and a clean set of data to
reside within it, all without the pain of a huge data cleanse and migration
project.
3. Resource profile
Freed from the current business
model of gearing and billable hours, a new law firm could sit back and work out
what resources it really needed to service the work it was planning to
generate.
How many partner level people does
the firm really need? Are they managing client relationships, project managing
or providing complex/strategic advice? If they are not doing the high grade
legal work, are their other professionals who could do the work better or to a
similar standard but cheaper? What is the right blend of junior lawyers? Would supervision
and quality control be a separate function? What about training? What other
skills would you bring to the organisation? Project management? Process
expertise? Social media and digital marketing experience? Lower cost legal
resource?
There are so many options, and the
right combination would of course depend on the firm and the type and volume of
work, but I think it's fair to say that not many firms would start with a large
number of equity partners, add a bunch of assistant lawyers and trainees to
generate the fees to pay them, and then add a support infrastructure around
them.
4. Corporate structure
The benefits of the partnership are
clear. Consensual decision making, meaning everyone (well, the partners anyway)
has a voice and feels heard. Sharing the profits gives not just a built in
performance incentive, but a shared sense of ownership and responsibility. All
this builds a tremendous sense of trust and an atmosphere that fosters
collaboration.
What?
Your law firm doesn't work like
that?
Really?
Particularly as firms have got
bigger and the pace of business has increased, the partnership model has begun
to creak a little. Granted, some firms have it cracked, but I'd wager a lot
more struggle. Slow decision making, turf wars, those at the top of the
lockstep enjoying rewards that they perhaps haven't fully contributed to and
difficulties removing underperformers are not uncommon.
For a new firm I'd think very hard
about keeping ownership and management separate, and use a structure that
encouraged fast decisions and business agility. Incentives would follow the
corporate model, and be performance based (which of course offers a huge amount
of options, and can be tailored depending on what behaviours management wish to
drive).
5. Sales force
Some lawyers can sell. They are
really, really good at it. A great many however cannot.
I'm a huge fan of sales
professionals - they generate the revenue that drives the business. Yes I know
that other people do the delivery (lawyers in law firms), but first things
first, you have to win work to do it.
Now other than the best of the best,
the chances are that a lawyer is not as good at selling as a salesperson - and
why would they be? The salesperson wouldn't likely do much of a job advising on
the TUPE
provisions of an outsourcing deal. So surely if you accept the need to sell
legal services, you'd get the best people to do it. It's likely as well that
not only might a salesperson have a lower base salary (although if good can
more than make up for it through commission), but it would also free up the
lawyers to do what they are best at, and generate the fees from the work that
the sales people have won.
A law firm with a professional, well
trained and motivated sales force would be a serious force to be reckoned with.
So what?
I know, I know - you've already got a
law firm thank you very much. And you can't relocate, rip out the IT and employ
an awesome sales force. But, that doesn't mean you can't pause a minute to
think about these issues, not just in terms of your own firm, but in relation
to changes your competitors may make, or crucially what impact a well
capitalised competitor might have if they adopted some of these ideas.....
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