The last few months have been awful…
Whatever your political leaning, whatever your own perspective on how things should have been and how they should be, we are all clearly experiencing the global economy having a major tantrum; toys thrown out of the pram with gusto.
Banks are tumbling, resembling castles made from cards rather than the mighty edifices we all thought they were; and easy finance, as a result, is no longer a lubricant in the economy’s engine but might as well be sand. Companies are struggling to plan for the year ahead, workers are being laid off, savers don’t know where to put their money and consumers are not spending anything like enough to bring confidence back into the markets.
It is as if we have all caught a sort of global flu bug and all we can do is go to bed for a while and feel sorry for ourselves.
In the midst of this whirlwind of bad news and concern law firms are clearly not immune. It is however interesting to see that the legal press mostly reports the impact on lawyers in one of two ways; either the fact of law firms being appointed to run the latest big banking merger/rescue deals (an “ill wind” perhaps) or the fact that some law firms are having to reduce headcount in the face of the economic slowdown.
However, as yet, I have not seen anything written about how law firms should be responding to clients in this new environment.
I once wrote that it was all very well for law firms to make a lot of money when the economy was with them, but that it only takes one prick to burst a bubble. Perhaps unkindly I suggested that the city of London was not prick free and we should therefore imagine that the bubble would burst…but cheap shots are easy, the question remains, what should be done?
I think law firms of whatever size or complexity have to do three things internally and three things externally:
Actions law firms should take internally:
1. First, engage with every member of the team. What can we each of us do that will help us be more alive to the necessity to run our business a little more tightly? Not arbitrary cuts that always seem to be handed down from on high by the people who have taken the biggest salaries, but thoughtful and meaningful engagement. The fact that budgets are threatened is not going to be a surprise to anyone, everyone understands that, but what grates is when decisions are taken too far away from the point of impact. Engage, involve and share.
2. Second, make sure your intelligence about clients is up to date and, again, shared within the firm. More than ever now we should be looking at clients as being “of the firm” not to be jealously guarded by a relationship partner fearful of their client suffering a stampede of well intentioned but inept cross-selling opportunities. The requirement is to make sure that the client feels supported and appreciated, but before this point the firm has to have a forensic appreciation of how the client operates, their threats and their opportunities and then how those threats and opportunities translate into threats and opportunities for the law firm.
3. Third, law firms have got to be so much more inventive now. This isn’t something you can just turn on; it is about encouraging a level of debate and thoughtfulness from the junior ranks up. If the prevailing climate is fearful, invention is not what you get. Fear suffocates invention and chokes opportunity. This therefore is a leadership challenge and if the law firm’s leadership can encourage invention there are three areas to focus on:
a. To be more inventive around fees (are hourly rates still a feasible charging method when every client is trying to have budgetary certainty?) but consider as well how the firm can be aligned to cashflow in their clients. It is almost now about financial planning and an ability to have adult conversations about risk and reward.
b. Law firms must also be more inventive around ancillary support finding ways to embed the firm within the client – for example with secondees, knowledge management and risk management.
c. Finally law firms must be more inventive around packaging services so that the communication of what the law firm does is not centred on subject specialism, but around value add. Clients don’t want to buy litigation but they might buy risk reduction consultancy if the price is right and the value well articulated.
Having therefore focused on three things law firms should do internally, what are the three things law firms should do externally?
1. This is not the time to mess up with any of your current contacts and everyone has a part to play. Reception staff who meet and greet clients, assistants who answer the phone and of course lawyers working directly with contacts have got to be at the very top of their game. Treat every client well, return their calls, be punctual, don’t over elaborate, stay on budget, etc etc. Just do it as well as you possibly can!
2. Be as thoughtful as you can around supporting clients in need and be alive to their concerns so that you do not appear to profit from their misfortune. It is a cliché to talk of “sharing pain”, but what impact do you think it would have if the firm wrote to an important client and unilaterally offered to reduce legal bills by 10% for a period of 6 months as a gesture of goodwill in these straightened times? I use a phrase a lot in workshops which is to encourage lawyers to be “literally thoughtful”. What can you do that will make a difference to your contacts?
3. Finally, don’t look desperate! Recently I have heard some partners almost plead for work and others who have been gratuitously critical of other firms in a bid to talk up their credentials. Most clients are turned-off by this sort of behaviour. In a crisis (and it is a crisis for many) there is always credit to be won for behaving well. Don’t let your standards slip.
I am not sure every cloud will have a silver lining and I am not sure every silver lining will be enough to preserve every job, but there is still opportunity in adversity and those who seize the opportunities will survive and be stronger for these times.