The size 0 law firm?

26 11 2009

Sitting in an Entrepreneur’s group meeting at accountants Price Bailey on behalf of a client, the conversation (nicely facilitated by Nick Mayhew) turned to the concept of  “lean”, which took me back to the operations management module on the MBA. While at first sight many of the process improvements that have led to successful improvements in manufacturing may not seem applicable to the world of professional services, if we scratch beneath the surface, there is much to ponder.

A good starting point is perhaps that one of the key drivers for operational improvement in manufacturing organisations was the need to do “more for less” ie improve output (quality, volume etc) in return for less (revenue, margin etc). The same dilemma is now facing law firms in the world of deregulation and global competition. One of the ways law firms can compete more successfully in this increasingly competitive market, is to improve their “operational excellence” (to borrow a phrase from the Value Disciplines management model). In my experience, when law firms thinking about improving operations, the objective is often just to strip out cost. Managing cost is of course critical (particularly in the current economic climate), but it is far from the only aspect of operational excellence.

Small cog in a big machine? More importantly, are the cogs turning?

One other key improvement area is looking at the process of actually providing legal advice, and seeing how it can be improved. I think the historic hourly rate pricing structure for legal services has traditionally provided a reason not to focus on improving the process (if the client will pay for the inefficiency, why remove it?). Now pressure is forcing firms to adopt new pricing models, which is in turn squeezing margin. If firms can make their processes more repeatable, more efficient and performed using the right level of resource each time, I believe they have the opportunity to create a more consistent, higher quality product, at a lower cost. Which is where they need to be right now (more for less).

If we look at some of the legal sectors that have faced competition from outside the profession earlier (conveyancing, insurance claims etc), there are examples of this type of process improvement (which of course may include a technology component). Some may protest that high end work is very different (it is), but while the same degree of commoditisation might not follow so quickly, I believe it is very unwise to believe the process for providing that advice cannot be improved. Ignore operational improvements at your peril, embrace them and see what is possible.

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3 responses

25 05 2011
The Balanced Law Firm

[...] of this blog will know, I believe there are plenty of opportunities for firms to sharpen up their operational efficiency through better processes.  There are lots of different ways to assess processes and measure [...]

7 10 2011
The legal market place – carnage or opportunity? « The Intelligent Challenge

[...] firms worry about hyper efficient, large scale competitors with a resource base, national reach, consumer brand and technology [...]

5 12 2011
The end of the beginning « The Intelligent Challenge

[...] technology,  the need for innovation and differentiation, and the even more pressing drive for efficiency and (truly) effective strategy. As fast as I could write, real world examples appeared in the [...]

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