Monthly Archives: November 2009

The size 0 law firm?

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.

The winds of change

The legal profession has been changing for some time now. In the 12 years I’ve been working in and around it, many of the traditional trappings of the lawyer have been slowly and surely eroded. But in the UK, as deregulation really sweeps away some of the protection that has been preventing supply matching demand (and in the process allowing some firms to make really healthy margins), things really are changing.

Can you feel the breeze?

What’s made me think about this recently, has the number of unrelated signals that are telling in their own right. I have lunch with an ex-lawyer from one of my former firms who is working on a pricing project for a law firm. I contact a partner at one of my former external law firms, only to find she has now set up her own business because she felt the law firm model no longer let her serve the clients in the way they needed. I had an interesting conversation with a BPO company about how the market for legal process outsourcing is really changing, with firms recognising that they need to look for a competitive advantage. Law firm business plans are full of talk of globalisation, commoditisation and differentiation. The change is real. The change is now.

So the winds are blowing, but change is not easy, particularly in a profession that can be introspective. However, don’t write the lawyers off. Now that the change is real, there are plenty of entrepreneurial firms out there that can find opportunity in change. Others may struggle, but for the adaptive ones, in touch with the markets, healthy margins are still to be had, they are just likely to be found in different ways and with different business models.

Strategy as a thought?

In the increasingly fast paced world we live in, it seems more and more difficult to make plans for the future. There are all sorts of ways of thinking about strategy; what it is, how it’s formed, and what it does (a favourite book of mine is Strategy Safari by Mintzberg), but a common view is that it’s a game plan. A way to compete and win.

The problem, as I see it, is that these days, game plans need to change, and change fast. Clients change, their needs change, competitors change, technology changes, everything changes. Yesterday’s plans can hinder not help. Yet at the same time, if an organisation changes its strategy in real-time, will it lose its identity? Cause confusion?  Allocate resources effectively?

There’s no single answer for this; every business needs to develop and adapt a model that works for their circumstances. What I do believe, is that those companies that go through a charade of an annual strategy process, and spend months working on long term plans with the intent of sticking rigidly to them over the coming years, face more and more challenges from agile, more relevant competition.

Often with these sorts of annual processes, the market information used is far removed from the market by the time it gets to the strategic decision makers; it is distilled, analysed and sanitised before it is used (not to mention often months out of date and/or originally prepared for a different purpose). Competitive information is often paper thin and much of it speculative. Thinking about the future is often incremental and conservative, constrained by the process itself. The process itself often takes weeks (if not months); how can this be right for today’s marketplace?

Thinking time; strategic and practical?

One school of thought might be to say that strategy of this type is simply not relevant any more, but I think that’s over simplistic. Somebody (everybody?) needs to be thinking about how to win (or how to collaborate?). The underlying principles of competition, industry analysis (Porter et al) remain valid and helpful frameworks; they just need adapting and using differently.

In a changing world, the way organisations think about strategy also needs to change, but in this period of transition it’s critical that organisations and people don’t stop thinking all together. Consider who is thinking, why they are thinking, and what they are thinking about. But don’t stop thinking (or doing, but that’s another post).


Related Posts:

Strategy without creativity

When fear stops you going forward

Thinking about new product development in law firms, the word innovation pops up. That market is one that’s getting more and more competitive, and law firms need to be different to succeed.

The problem (as I see it), is that for many firms, as innovation become increasingly important, firms will run up against the widely accepted wisdom that innovation requires you to be prepared to fail (“fail big and fail often is a maxim oft repeated in the business books).

Why is this a problem? Well, lawyers are trained from an early age not to fail; in a sense many professionals (not just lawyers) are. Use the word “negligence” and see them twitch. However, for lawyers I think the problem is more acute; much of their work involves negotiating, arguing and looking for weaknesses in another person’s case or argument, while protecting and defending their own position.

oooops, it went wrong

Did someone say negligence?

To come up with big new ideas, particularly “game changers”, businesses and people need to be prepared to see some fail. Aside from the fact that if people are not prepared (or allowed) to fail they are much less likely to  try and innovate, there is often some great learning in failure, and if a law firm is not prepared to admit failure, it may miss some crucial learning.

I’m not saying all failure is good; far from it, people need to be accountable for their use of resources (particularly time in law firms), but a place where people are institutionally conditioned not to accept failure is very different. Different as well  from a culture where people understand the risks of failure and may take some informed decisions on new products and other projects that may (whisper it) fail. Fear can be a powerful motivator, but it can also be an insidious inhibitor, and at the very least people and firms need to be aware of the role it is playing in their work lives.


Related posts:

You are wrong and I am right

Inside out lawyers

Death of an editor

Death of an editor? Please stand back

Death of an editor? Please stand back

The first thing that strikes me about blogging (blatantly obvious when you think about it), is the lack of editorial control. Clearly this has huge benefits in the immediacy and authenticity of messages, and as is oft quoted these days, information wants to be free.

But it makes me think for a number of reasons. Firstly, I’m lucky in a sense that after spending so many years as a lawyer (which many people might say is in itself unlucky!) I have learnt to write and edit my own work fairly ruthlessly. This doesn’t mean I’ve got anything interesting to say, just that I *should* be able to communicate it clearly. So I wonder how many messages are diluted because people don’t have the tools or skills to communicate effectively.

The other reason it makes me think, is that the end is in sight for my eldest child’s compulsory education, and I really wonder whether children are getting taught the skills they need to be successful in today’s fast changing world. The syllabus doesn’t seem that different to when I went to school, yet the world of work is vastly different (The Future of Management by Gary Hamel was the last book I read on the subject, but more importantly I have seen the vast changes as I’ve worked).

So death (or lack) of an editor; probably a good thing in this context, but in other areas it could be a problem if people are not given the skills they need to compensate for this.

And in the beginning……

Intelligent Challenge

Comfortable with uncertainty

Prompted by thinking about how social media can merge personal and business worlds, and the pros and cons of keeping them separate, I started thinking about blogging more seriously. Stimulated further by my failure to get a website up and running quickly enough, and then finally spurred into action by some reflection on the need to execute rather than plan, I have taken the plunge.

To some degree, the blog is also an adventure, a journey into the unknown, which is another theme I’ve been reflecting on lots at the moment; particularly after reading Bob Johansen’s excellent book “Leaders Make the Future”, where he talks about the VUCA world; volatility, uncertainty, complexity and ambiguity.

One of my key learnings over the last 18 months or so, has been to be more comfortable with uncertainty, and to move away from my inherent comfort zone of structure and planning. Anyone interested in this should also read Transitions by William Bridges; a classic on how people respond to change.

So, what to expect; well, Intelligent Challenge is a business aimed at helping lawyers and law firms be more effective, but I also expect this to evolve as I grow and new projects emerge. One such project I’m thinking about is a book; the concept is 80% formed, so watch this space.

I expect the blog to be much wider than just my business, but to stop short of my personal rants and the like, all of which will stay safely in the walled garden of facebook.

Finally, I’m a big believer in networks and communities, so if you are reading this, please do comment. I’m feedback agile too, and love to learn, so constructive criticism also welcome. Enjoy.