Starbucks, the prestigious offices of the modern law firm?

30 06 2010

Reading in the legal press about the financial difficulties of UK law firm Halliwells, with many reports citing high property costs as the factor at the heart of their demise, I started thinking this morning about law firms’ property assets. My thinking was compounded by a meeting with Axiom, a pretty cool company, which has stripped out significant property costs from its operational model, and makes this reduced cost a core part of its value proposition by offering legal services to corporate clients at significantly lower prices than many City firms.

Smith & Smith Legal Advisors: would you like legal advice with that?

In my time as a client of law firms, although office based, I was free to work at home whenever I wanted. Law firms I’d worked at had certainly embraced remote working by this time, but there definitely remained an expectation by many partners that lawyers would spend the vast majority of their time in the office (when not out with clients).

However, my in-house time was genuinely virtual: my team was based across Europe and Asia, our stakeholders were there, plus the Middle East and Latim America, the General Counsel and our peers were  in the US, and our external clients were spread across the globe.

Aside from internal and external client meetings (which would be more frequent on deals than otherwise), all the team needed was a phone, blackberry, laptop and bandwidth. As with many other businesses, the offices were set up for hot desking, and with a very mobile workforce, there was no culture of “presenteeism”. Critically, this way of operating worked. Well.

When I instructed external lawyers, the majority of the time this was remote. Face to face contact was usually only on deals or  relationship meetings (one area where face-time is very valuable).  Aside from biscuit quality (an important factor in law firm selection),  the location and amount of marble and chrome never really made much on an impact on me as a client, not least because I was always acutely aware that clients were paying for the bells and whistles.

Since moving back into a corporate environment, and now being truly mobile (home based, for an off-shore outsourcer that practices what it preaches) I have embraced a new way of working which is more virtual still. Travelling to meetings, and with a 3g data card and laptop, and a good knowledge of where appropriate working spaces can be found (quiet coffee bars, hotels, friendly client/partner sites) able to work effectively in-between meetings; the new model works well. True, conference calls require a little more planning and an appropriate environment, and above all confidentiality must be considered and protected (both in voice and data communications), but with the right technology, awareness and training, this is a factor that can be managed.

Having worked outside the traditional law firm office environment now for nearly seven years, I do look at the hugely expensive property assets (often with one desk for every lawyer, plus all the support infrastructure) and wonder how much cash law firms could free up by rationalising them.

Of course team meetings, mentoring, supervision and training all need to be factored in (and for the majority of law firms at present, a fully virtual firm is probably not the answer either), but at the same time the old model of a super-plush office in a premium city centre location, with space for all lawyers and support functions, plus huge meeting rooms etc is unlikely to be the best fit for many law firms either.

Look around at your working environment. Does it work for you? What are the costs and benefits. If you were starting your business today, what would the property footprint look like?

If you want to chat through any of the points in this post, you’ll find me in the lounge area of the Landmark hotel in Marylebone ….

Lawyers’ love in? Working collaboratively with competitors

18 05 2010

Whether it’s the ongoing media focus on our new coalition government, or just the emergence of some spring sunshine, I’ve been thinking about happy togetherness this week. One of the things that used to warm my heart most in-house was when my key law firms used to work together collaboratively and effectively on projects for the company.

The panel firms thought this collaboration was going too far....

Talking about this subsequently, many private practice lawyers find the idea strange (perhaps even unpleasant): “what if the other firm dropped the ball?”, “what if we disagree and give conflicting advice?”, what about our opportunities to cross-sell?” and “surely it would be quicker/cheaper/easier with one firm?”. The short answer is of course that it just worked. However, a little more meat on that answer might be helpful.

Firstly, trust was critical to the network of relationships. I had invested time and effort in developing deep relationships with a handful of firms, and the law firms involved reciprocated this effort. These relationships were typically centred around different areas of work, geographies or specialism. The firms knew which other firms provided services in those core areas and that as long as those relationships continued to function effectively, the switching costs and loyalty involved would mean that this work would stay where it was. That fact, along with an understanding of my approach to buying legal services, meant that the firms never tried to eat each other’s lunch. That’s not to say they weren’t entrepreneurial or wouldn’t compete for work that was put out to tender, but that for the regular work, all the players in the team knew their role.

While I encouraged them to communicate, over time they began to discuss service delivery best practice, and work between them became seamless, and I think the ultimate validation came when problems did arise (as of course they would if a single firm was dealing with a complex transaction). Issues were resolved quickly and professionally, with no finger-pointing or backside covering.

Let me give an example of how it works. Let’s say I was leading a build-operate-transfer technology outsourcing deal for my company. I would lead the deal and negotiations, acting as the primary legal contact and interface with the business. My go-to commercial firm (an excellent UK practice) would be my main support on the main documents and the ongoing service provisions. this would be the firm that best understood our commercial models and licensing terms and also had the greatest familiarity with the business people involved. On the employee issues would be a niche City firm that had harmonised our terms and conditions across many jurisdictions and who knew our HR practices and attitudes inside out. The “operate and transfer” part of the deal could have some complex corporate and tax aspects which required a global firm, and our London account partner would co-ordinate that advice from their overseas offices, calling on their background working with us on acquisitions.

Revolutionary? I think not. Part of a strategic master plan? Nope. Was it effective? Yes. Were the lawyers involved comfortable working that way? Yes. Worth considering in future if you are part of a group of firms working regularly with one client? I’ll leave that with you….

Money, money, money; but what would you spend it on?

4 05 2010

Entirely brushing aside any discussion about the consumerism that is rampant in our society, and indeed the inability of material goods to bring lasting happiness, I was recently confronted by the question “what would you like for your birthday?”. Effectively asking me how I would like to invest a small amount of capital to produce a return giving me maximum satisfaction. With the next stage of the implementation of the Legal Services Act here in the UK, some of the more forward-looking firms are asking them a similar question. However, instead of kindly friends and family asking the question, it will be external investors who will be looking for opportunities to find law firms helping them to get a return on their capital.

What would the firm like for its birthday? Socks?

So here’s the interesting question for lawyers in private practice, if you had an investor offering to put some capital in your firm, what could the firm invest that capital in to produce a significant return? What could the firm do that it simply couldn’t fund at the moment? I think this offers a great opportunity to do some really visionary thinking and prompt some challenging internal dialogue. What does the firm require to take it to the next level? Are there new markets you’d like to enter? New services you’d like to launch? What about a significant talent upgrade? Is the IT infrastructure creaking and holding the firm back? Does the brand need an overhaul and that, coupled with an investment in business development, provide an opportunity to really grow the top line? Is there anything that the firm’s clients are beginning to require that the firm can’t deliver (either at all, or cost effectively) at the moment?

Moving on from the basic questions about where the firm would invest these imaginary funds, there are a host of related questions that can deliver insight. What would your competitors do with that sort of capital? What will happen if they secure that type of funding and actually execute some of these types of plans? what type of returns do we think investors will want on their capital? Would we be attractive to external sources of finance, and if not, why not? If we secured finance and wanted to put some of these ideas into practice, could we successfully implement them? Does the partnership have the right mechanisms for deciding how to allocate this type of funding?

It maybe that external funding is not on the radar at the moment, and as such these questions seem irrelevant, but much like scenario planning (a strategic planning technique I’ve mentioned before), exploring a range of possible futures brings fresh insight to the present . If all you’ve invested is the time for a lunchtime discussion, I think that’s a pretty good return, particularly as you might have had some fun in the process.

For anyone interested, the birthday present I requested (but didn’t receive!) was a Black Russian Terrier dog. A little known but totally cool breed!

Test your lawyer with a moment of truth

11 03 2010

In the commercial world, cries of distress can often be heard. From corporate counsel, from HR directors, from CEOs. Every now and then, a big, bad and most of all URGENT problem arises. Maybe it’s a really important client contract going wrong, and somebody mentioned litigation. Maybe the IT team have found porn on the MD’s laptop. Maybe news of a top secret M&A deal has leaked and reached the market. Maybe one of the senior management team has been detained at an airport overseas for political reasons.

Sometimes when you need a lawyer, you REALLY need a lawyer

These are the moments of truth for law firms. When reputations, jobs and companies are on the line, this is the time to perform. And perform well. These moments can cement a relationship like no other. A law firm can spend a fortune wining and dining to impress clients and make them feel special, but if they don’t perform when it counts, then it’s money down the proverbial drain (which in the current climate is not a smart move). For the law firms that major on relationship management, even the strongest relationships  can be harmed in these situations. On the flip side, get it right, and I won’t say you have a client for life, but you will have made a major deposit in the trust bank account.

The challenge with these situations is that they might in some way be outside the usual scope of the relationship. It maybe a different work type, a different person in the client organisation calling, an unusual time or simply a bigger piece of work than usual. The question the law firm has to answer, is whether their operational model can deal with these requests effectively.

Often it’s not the legal advice that is difficult. If the call comes in out of hours, will it reach the right person in time? If it needs a different skill set, can the account partner get the internal resources allocated in time? If the firm needs external support (a forensic accountant for example), does the law firm have the relationships in place. If the key contact person is tied up, can the incoming message be effectively prioritised by someone else in the firm. If matters need escalating (either within the firm or within the client) can the law firm facilitate this?

Scenario planning is used often in the strategy departments of companies to ask the question “what happens if”, and to start analysing the implications of different scenarios on current plans. While a full scale planning exercise may not be necessary, asking the question “what happens if” and then discussing possible outcomes within the firm and indeed with clients can be helpful for lawyers. It’s a skill lawyers are good at, and a question they often ask clients when advising, but one that’s not often applied to day to day activity.

To finish on a positive note, the law firms I used during my time in-house did step up to the plate, and that’s one of the key reasons why I continue to recommend them long after I last instructed them.

When individuality is not all its cracked up to be

8 01 2010

It’s great to be an individual, right? Creativity, expression, setting yourself apart? We celebrate these things in many areas of society, but in the business world, it’s not always so straightforward. Take law firms for example; individuality can help drive the creative streak of the business to break the mould. It’s pretty difficult to stand out as a law firm (take a look at a few websites to see what I mean!) and similarly (particularly in some larger firms) difficult to stand out as a lawyer. Individuality at firm or personal level can help you stand out and be distinctive, and when you think about the practice of law, there are many ways to do it. You can be super pragmatic, and just get things done, you be a technical master, whose contract drafting is a work of art, a master negotiator who gets clients a great deal, a tenacious litigator who fights to the death for clients; the list goes on. It’s very much horses for courses, but the point is, the law as a discipline and a career does offer opportunities for individuality, and many people and organisations don’t make full use of that.

What's up punk?

The flip side of the coin, the yang to the yin of individuality, is the need for consistency and a common approach. If a client engages with a particular law firm, while there will of course be variations between lawyers and work types, the firm will have a particular theme or ethos. If a lawyer is so individual that they regularly act outside these cultural norms, how can the client know what to expect from the firm? And therein lies the challenge for management. Lawyers are notoriously independent thinkers, and getting any sort of conformity to a particular practice or approach can be very difficult. This can be the case, no matter how compelling the reason for implementing a particular practice or following an approach. Consistency and conformity also have benefits; it may be standardisation reduces costs (translate into “higher margins” to make that seem more appealing), it maybe it gives more consistent quality, but if lawyers, and particularly partners, don’t play ball, dark clouds may gather.

Ok, so it maybe change management 101, but for the New Year, have a think about where you and your business (whether lawyers or not) fit on the continuum of individuality to conformity, and think about the pros and cons, it maybe there are some you hadn’t thought of.

Have a great 2010.

The advisor of last resort?

2 12 2009

Speaking with the general counsel of a large multi-national recently, I was struck by the number of opportunities that her external advisors had to impress her. Many law firms often complain that it is hard to develop close, long term relationships with clients because the clients only contact them when they have a problem; the “advisor of last resort”.

Call for the advisor of last resort?

I think there are two key points to consider here. The first is that this highlights the fact that lawyers are largely used to solve client problems. Now this might sound like a no-brainer, but there are millions of companies worldwide trying to sell goods and services for which the client need is not so clearly defined. If a client has a definite problem, then the law firm has a distinct opportunity to help them. Note that “help” is the critical word. Buying and using the legal service shouldn’t be difficult for the client, and if done right can lead to a real sense of gratitude from the client. The bigger the problem and the better the service, the truer this is.

The second point is that many of these problems can be nipped in the bud early, or indeed prevented altogether, if the client has the right advice upfront. Rather than waiting for the client to arrive with a problem, law firms can sieze the advantage and proactively go and talk to clients and prospects about this, rather than sitting and waiting for the phone to ring. Note however there is a big difference between initiating a dialogue with a client about a problem they are facing or may be about to face, and going to talk to a client to tell them about a service the law firm can sell them. It may sound like semantics, but in reality it is about ethos and intention, and the law firms that get this right, have the opportunity to build trusted and enduring relationships with clients that many other suppliers and advisors would envy.

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.