Over the last 15 years working as a consultant and for 13 years before that working as a lawyer I have seen so much change. Some change has been very positive, some change has been anything but …Change for sure is a constant. My sense now is that the pace of change is getting ever faster. If I am right then as a result decision-making will need to be quicker and more certain. I also suspect that the consequences of making poor decisions will be so much harsher.
There are so many commentators, so many opinions, so much noise and I really do not want to add to the noise; but I care very much that the legal profession should thrive. So as a friend, this is my note to law firms on the future of law firms.
My dear Law Firm,
Your expertise is unquestioned, your commitment to your clients and colleagues is exemplary; you work hard, play hard and you deserve your reward. I fear however that you are convinced this is enough. I do not think it is. While you know things are happening, you are still not sure that this will impact your world. I think it will. To be honest the fact you enjoy a comfortable income today is I believe your strategic weakness tomorrow.
Your model is based on generating activity to generate profit so that you can distribute profit quickly. The comfort you derive from plentiful profit today is not matched by the concern you should have for the threats to your income tomorrow. You may not be complacent, but neither are you urgent. You need to be urgent. I have 12 points I would like you to consider urgently:
- You will win less new work going forward. Growing your business from the wonderful relationships you have forged with existing clients is going to be your best route to continued success. Investing in such relationships is your key strategic goal.
- By the way, mergers between law firms do not work. Take-overs can work, but then you are either the firm taking-over or the firm being taken-over. If you truly believe in your brand and in your business do not allow yourself to be taken-over. Great names lost are lost forever.
- Your clients want increasing transparency in pricing. If they have not told you this, they are thinking it. If they have told you, don’t just listen, but act. Hourly rates are not dead, but you know and your clients know that less and less work will be billed on a time-charged basis. Be a leader and get some credit for leading. Don’t be forced to a follow and get no credit for catching up.
- In-house teams will not grow much bigger than they are already, but they will be under significant pressure to spend less money on law firms like you. The gap between demand and affordable, available resource will be closed by technology solutions, more efficient processes and flexible interim lawyers provided by law firms on secondment or through new business models like Axiom Law – http://www.axiomlaw.co.uk/; Halebury – http://halebury.com/; Lawyers on Demand – http://www.lod.co.uk/ and Legal Edge – http://www.legaledge.co.uk/ …Setting up your own interim business solution might just be a very smart thing to do.
- In any event, you really must diversify your services over the next 2-3 years. Clients will look for solutions such as process design, risk/demand suppression and compliance training. They will also want transparent management information in real time. Again don’t wait to be asked. Take the credit for offering and delivering.
- Incidentally some rather predatory international law firms will probably take a look at you. They will suggest a merger (see 2 above) in two situations; first if you are hopeless, but have great clients, second if you are brilliant and have great clients. Do not be flattered, either way they will promise lots and then suck you dry.
- Any law firm that is slow to act to any of these challenges risks disappearing inside 5 years.
- Your talented lawyers will increasingly want different ways to manage their careers. It is not about working less hard, or being less committed, but Partnership should not be the only way and other ways are no less important.
- Managing your talented lawyers and your support teams and your paralegals must become more empathic. What are your values, what is your culture, how do you promote these and make them real? Your clients will like this too. It isn’t rocket science, but it must be authentic.
- You will need to develop your lawyers’ business skills not just their legal skills. Effectively your lawyers will increasingly act as business consultants with legal expertise rather than legal experts with business acumen. This will be a very significant differentiator for you, invest now, invest significantly and invest deeply.
- Even so, your profit margins will get thinner. Do not panic, this is the new normal, but now you must plan to invest. Planning should be for the long term and certainly beyond an annual cycle. Become more disciplined more strategic and more efficient.
- Have ambition beyond your territory. Having an international perspective will attract clients and talent. However ensure your reputation speaks for you. Retaining a highly ethical and principled approach to all work will also attract clients and talent.
And finally good luck, you will need some, but I wish you well. The communities we live in, the society we want to build and the businesses we want to support all need you to be at your best. Take care.
Paul Gilbert, Chief Executive LBC Wise Counsel