A shiny new law firm

30 06 2011

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.

Simon paused a second to consider a future without his office in the most prestigious street in the City. Then he went back to work because the thought was just too horrible

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.


Your law firm doesn’t work like that?


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…..

So you’re an equity partner – big deal!

22 06 2011

Last week I was given a business card by a lawyer I was talking to. On the card, underneath their name, was written “Equity Partner” in a fairly bold, not-to-be-missed font.

Tony showed the proof of his "Legal Jedi Master" card to the managing partner more in hope than expectation

It struck me, that were I ever to hit those heights in a law firm (I bailed out of private practice before putting those magic words in my email signature) I’d probably be pretty pleased with myself. And rightly so. It’s a position many people strive for and certainly for those in the upper tiers of the legal world, can be very lucrative and rewarding.

The title marks you out as an owner of the business and as a result conveys a certain status within the firm which undoubtedly provides very practical assistance in getting things done quickly through the firm’s support infrastructure.

But, the question that troubled me was the message that the title communicates to someone outside the firm.
I posed the question on Twitter, and got some fascinating comments back.

adds pomposity and confuses clients

I think it’s wrong. Many clients don’t know what it means, in the real world.”

It’s a badge of seniority but non-lawyer clients might not know what it means. Also = unlikely to do much of your actual work.”

” It would make me think, “Ah, so you’re the reason for my large bill”

The theme that stood out strongly for me was the internally-focused nature of the title.

Of course for fellow lawyers in private practice, and for in-house lawyers, the title and connotations will be understood. However, aside from the fact that there a huge number of purchasers and influencers who may not know what it really means, I wonder if there is an opportunity lost in not using a job title that is more aligned with the lawyer’s actual role.

There are a number of ways that could be approached. For a start, as I’ve discussed before, a market strategy that is structured around a client’s vertical industry sector is quite common. Would reference to specialism in a vertical sector as well as a practice area (or even instead of…) make sense? What about an alternative based on a description of the relationship with the client, so for example separating out relationship managers (I know the “s” word is maybe a step too far), technical specialists, project leads etc. For large scale project work this delineation of responsibility could also add credibility to the project management ethos espoused by many of the top firms.

Another driver that could force to revisit job titles is the changing career structures that have been emerging over the past five years or so. Many firms now have a senior designation for those lawyers who want to stay with the firm long term, but do not want the additional commitments (time, financial or management) that go with partnership. As the next generation of lawyers move through the ranks with their different cultural approach to work, life and career, will the old hierarchical, largely tenure-based titles still prove effective?

Perhaps the biggest opportunity for fresh thinking in this area (at least here in the UK) comes from the influx of new competitors into the market when the winds of deregulation blow through the profession over the coming months. Much has been written about the potential impact on law firms serving consumers, but make no mistake change is afoot in the world of commercial law too.

Aside from further consolidation, which I believe will be driven globally as well as in response to our own market conditions, the emergence of the LPO model and flexible resourcing models such as those from Axiom or BLP‘s lawyers on demand, will challenge incumbent firms to revisit their business models. This will invariably have implications for resources and career paths, and presents the perfect opportunity to revisit job titles.

While it may seem trivial, job titles do usually matter both to the holder, and in some contexts, to clients and prospects. A new entry to the law firm market will have the chance to think about this afresh, not restricted by history or tradition.
My sense is that these organisations will not default to titles like “Assistant”, “Associate” or “Equity Partner” and in using something a bit bolder and more relevant, will be able to send a signal to the market, both to potential clients and potential employees!

Why timesheets rule but chargeable hours suck

16 06 2011

There was something deliciously ironic about me trying some new time recording software this week. It’s many years after I left life as a private practice lawyer but I can still remember that huge sense of freedom at escaping the tyranny of the timesheet. The feeling of being able to work on what mattered most and be judged on results rather than be measured purely on how much time I had spent working on client matters was incredibly liberating.

The IT director proudly unveiled the firm's latest timerecording application - robust, wireless and mobile, it represented the future of the firm's management information system

Subsequent conversations with other in-house lawyers validated that I was not alone in those feelings.

After I moved in-house a huge number of conversations with peers included the words  “….. and no-more timesheets”, with knowing glances being directed at any private practice lawyer in the room.

But within a few years, I was voluntarily tracking my time as an inhouse lawyer. Admittedly at the time it was a pretty crude mechanism – I tracked data in hour long blocks in an Excel spreadsheet over a period of months, but it did the job.

I’d been inspired to do this after reading Drucker’s book “The Effective Executive” (well worth a read) in which he makes the point that an individual can’t maximise their effectiveness unless they know where they spend their time.

In practice what it meant was that I could have much more informed discussions with my major stakeholders around how best to allocate my time to achieve organisational objectives. It allowed sensible and transparent choices to be made around different priorities (if I support this deal and this HR project, the position paper on IPR ownership will need to wait until next quarter, or we’ll need to resource things differently) which I believe kept me more aligned with the company and led to some very productive conversations.

On the other side of the fence, I’ve written a fair bit around what I believe the problems with charging by the hour are, not least the impact this has on the firms as well as how it affects the client relationship. My mind often turns to a partner I know who runs a management consultancy business, who almost immediately on taking over the department abolished time-based billing. Profitability increased along with client satisfaction and employee retention.

However, to my mind there’s a critical distinction between tracking time and charging purely based upon time. The most obvious point is that as knowledge workers, typically the cost of labour is one of the largest components of the cost of providing a legal service. Without knowing what the cost is, running a profitable firm (file, project,team, department etc) is nigh on impossible.

It’s also important to understand cost in other areas too. Law firms often talk about the challenges of calculating return on investment for marketing events such as seminars and events, but when looking at how business development budgets are prioritised and spent, much of the focus is just on the hard cash being spent on venues and collateral, rather than the cost of the people involved in preparing and administering the event.

For example, having a top partner at a City law firm prepare for, attend and follow-up at a seminar overseas which takes him or her out of the office for a couple of days is a significant cost which can be accurately measured but is often overlooked.

The other non-chargeable area that it’s important to track is product development. As law firms begin to think more about efficiency and identify some more standard, repeatable services (some firms have been doing this for years) which are nicely packaged for clients at a set price, they usually “get” the idea that the service becomes increasingly profitable as volume of sales increase. The documents needed for the service are all ready and the people involved get quicker and more skilled at providing the service as they get more experienced. But often any upfront development cost in creating the service (market research, pilot projects, legal research, designing template documents) is lost because it is recorded under a general non-chargeable code. This makes comparing the return on investment for the project challenging and without an idea of these sort of development costs for previous legal products, makes forecasting and budgeting for future product development more difficult.

So back to my current quest. I was inspired to revisit this after reading tweet from a contact saying he was trying a web-based package called timerescue. This was a million miles away from the clunky, manual time recording systems I’d used in law firms (when I first started practice it was a paper timesheet pad) – running in the background and capturing application use, automatically learning behaviour and applying tags. All in all, a fairly sophisticated tool, with some nice web-based analytics to use to understand the data.

However, while I’m a big user of many cloud services, I wasn’t entirely comfortable with sending some of this data (document names, email titles) to a company I knew little about, so after a very short trial, I binned it. I then installed a similar piece of software locally, called Manictime. I liked this a lot, but it led to stability issues, so now I’m back to a more traditional system called Grindstone2.

The application is, of course, irrelevant other than it needs to be quick and easy to use, and provide the data in a format that’s useful.

The key point I wanted to make is that while the market may be (thankfully) steadily moving away from time-based billing, there is much to be said for the discipline of recording your time.

The International Man Of Mystery?

7 06 2011

Are you the law’s international man of mystery? The answer to the prayers of corporate counsel in global companies? Can you leap jurisdictions with a single bound? Effortlessly unravel the tangle of law, culture and procedure? Wrap your arms around a wriggling mass of seemingly conflicting regulations, and fearlessly work with them to make compliance a reality?

Toby, the firm's anti-trust specialist, was convinced he'd got the right look for the international project kick off meeting


Well don’t worry, you’re not alone.

Conversations with in-house counsel about the difficulties supporting business overseas often have familiar themes (more on this later), but what’s becoming clear is that these challenges are becoming more acute.

Whether it’s the sheer volume of international business increases, the interest in emerging markets continuing to heighten as western markets stagnate or become saturated, or technology adoption increasing the ability to communicate effectively across the world, more and more in-house lawyers are being asked to operate in jurisdictions which are often way outside their comfort zones.

Bear in mind also, that many of the challenges described below might be experienced by those in a law firm that is supporting an inhouse client with an overseas project (and this applies even with a global firm working cross-office) almost to the same degree as an in-house lawyer.

The problems start with the ability to quickly identify what the relevant issues are. It may be that you have an idea of what they are – the big headline-grabbers like anti-trust, employee issues and anti-corruption legislation are obvious examples. However, it may be that there are a bunch of the infamous “unknown unknowns” which  might be substantive law, but they might also be difficulties around the legal process or simply understanding the legal system.

Some of them you might be able to get an overview from research or asking the right people, but others will require hands-on experience of the situation you are facing.

Which leads on to the next step in the journey – selecting and managing local counsel.

Given that the problems above (not knowing what the key issues might be) immediately cause difficulty in having productive, early-stage conversations with business colleagues, it’s not surprising that they can also make the relationship with local external counsel much more difficult to manage.

The first challenge is finding the right lawyers for the matter in hand. Existing contacts, referrals from trusted sources and directories (online, paper) are often the first port of call, but even then the answer might not be the right one.

When I was inhouse I had difficulties both with specific offices of global firms (delivering anything but a consistent global service) and local firms that were recommended at a firm level, but who had individuals that weren’t up to scratch.

The next step is of course instructing the local counsel, which is understandably more difficult than using external lawyers in your own jurisdiction. Lacking an understanding of the key issues means giving a tightly defined project scope is difficult, which has a knock-on impact on costs and timescales.

There may also be softer factors at play, ranging from the more obvious such as language and cultural barriers (“what do you mean he’s out for lunch and won’t be back for three hours, we close the deal this afternoon!”) to those that are more difficult to put your finger on such as differing views of risk and mismatched service expectations.

For multi-jurisdictional projects, this is the point at which project management skills come into play. Assuming those skills exist (which is not always the case), invariably the international element to a transaction adds a bigger administrative overhead to the project, and critically for the business, lengthens timescales.

Which leads nicely on to billing.

It’s horrible.

Managing billing on an international project, particularly one in multiple jurisdictions, is invariably a nightmare which would warrant its own post. I’ve found the best strategy is to close my eyes and wish really (really) hard that all the bills arrive in the right currency, on time and for the agreed (or a reasonable) amount. Admittedly it didn’t work that often.

So, there we are. A post full of problems this week. There are mitigating strategies at almost ever stage of course – getting contacts on the ground (folks in the business can be a mine of useful information) is a great start, as is developing your own network of trusted advisors in major jurisdictions. Getting a baseline understanding of different international cultures helps (have a look at Riding the Waves of Culture: Understanding Cultural Diversity in Business) as does up-front conversations about expectations on both sides of the table.

However, my point was really that as a profession, we need to crack this. To efficiently serve clients, whether internal or external, in a global business environment, we need to provide a seamless service. It’s difficult, but not insurmountable – don’t you think?