Tag Archives: Law Practice Support

The legal market place – carnage or opportunity?

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When you look at the legal marketplace, what do you see?

With the implementation of the far reaching Legal Services Act finally happening in the UK (albeit with some fairly significant delays in related regulation), it seems the right time to step back and assess the state of the market.

Talking to people in the profession about this, from partners to in-house lawyers, business development directors to IT professionals, through to trainees and law students, one thing is clear.

There is no single opinion on the state of the market right now.

In fact, nothing could be further from the truth.

Opinions are strong and polarised.

Is the glass half empty or half full?

The world of pain

One group see the profession as an industry in decline.

Painful struggles with increasing firm overdrafts and personal debt are symptomatic of underlying structural problems with the profession, and the cash flow challenges facing many firms are just another indicator that it’s time to get out before the interest rates rise and bankruptcy looms large.

With lawyers at both small and large law firms working harder than ever, increasing competition from overseas firms and LPOs becoming more visible, and constant talk of a new wave of competition, does not fill them with hope that easier times are ahead.

Small firms worry about hyper efficient, large scale competitors with a resource base, national reach, consumer brand and technology platform  that they simply can’t match. Large firms worry about transactions being disaggregated and large chunks of profitable work being placed with legal service providers with a cheaper cost base. Mid-sized firms talk about being squeezed, with larger firms looking for work in new markets just to keep their associates busy while they weather the current economic storm, and about smaller, more agile firms  punching above their weight.

These people can often see the need for change, but despair of the pace of change in many law firms, pointing out that the culture and consensual nature of partnership often make decisions glacial when they need to be made at the speed of the digital world we now live in.

They look at the management of their firm, and question whether they have the right skills and experience to thrive in such a turbulent environment. Management themselves wonder how they can free themselves from operational fire-fighting to spend time focussing on the strategic questions that will define their firm’s future.

The lawyers lower down the pyramid see equity structures remaining in some firms that encourage low performing partners to sit back and coast, while the best talent works their asses off and often still finds it impossible to break into the club.

Below them are a generation of students who have made a huge financial and personal commitment to enter the profession, and are finding training contracts like gold dust. Those that are lucky enough to find work may be confronted by suggestions that the legal training system is in need of reform and is not equipping graduates with the skills they need to excel in the profession and exceed client and colleague’s expectation.

They may also be confronted with a linear career path, and find that if that’s one they are willing to follow, then the demands made by the firm are at odds with a generation Y philosophy that puts greater emphasis on work/life balance.

Those who see the world in these terms often point to clients showing less loyalty and who have ever increasing expectations in terms of service standards, yet in the same breath are looking to pay less for that service. A widespread rejection of the hourly rate billing model leaves many firms struggling to come up with a viable alternative and without the capability to re-engineer their business model to support these new fee structures.

The downward fee pressure squeezes profit margins further, and even after several rounds of morale-sapping restructurings and redundancies, with economic growth in the core western markets slow at best, there’s no end in sight.

Pretty grim huh?

Now those that know me know that I’m on balance, a pretty upbeat person, so let’s try and bring a bit of balance to the picture.

There are plenty of people out there in the profession who don’t think like that. Who see the current time of change as tremendously exciting. These are the people who see

A world of opportunity

First and foremost they see an incredibly profitable sector that has weathered an unprecedented recession and shown real resilience with relatively few high profile casualties.

They see businesses with the ability to offer a broad portfolio of services that add real value to clients at critical points in their lives or organisational existence. Many of these services are counter cyclical (helping manage difficult economic conditions) and many of which allow the lawyer to genuinely claim that coveted position of trusted advisor.

It’s not hard to point to law firms that have access to senior people at some of the best and biggest companies in the world and advise some of the most influential people who are shaping society.

For those in the UK, having a core competency in the English language and the common law system that underpins many other legal markets means firms are well placed to support global businesses and expand intro higher growth international markets (as indeed many UK firms have done very successfully).

While there would be an acknowledgement that the bar for client acquisition and retention is being constantly raised (particularly by increasingly sophisticated business development professionals and practices) this is raising standards in the profession and represents progress. There is still a huge opportunity to win by being ahead of this curve and setting the pace.

For those with one eye on the future, advocates of the profession will point out that the chance of a career offering not just the potential to earn big bucks, but one that can offer a lifetime of intellectual challenge and stimulation, will always attract its fair share of top talent, and that the training and development opportunities within law firms have improved massively over the last ten years.

Those who see opportunity see the ability to innovate as being a genuine source of competitive advantage, and are looking at technology, process and efficiency as ways of maintaining and indeed improving profitability in a fast changing market. The ability to change quickly is a key enabler, and they recruit the people with the ability to adapt and thrive to make this a reality.

They also see that market consolidation can offers opportunities. Low price acquisitions, the ability to pick and chose individual teams, to make strategic acquisitions of particular clients or relationships, and the clearing out of some of the noise in the market place.

Yes clients are demanding “more for less” but that’s a common refrain across all business these days – the change facing the profession is not unique and in  many other industries there are organisations that came out as big winners.

A somewhat simplistic categorisation, but I urge you to reflect – which messages resonate most, and critically, what are you going to do about it?

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What’s the end game?

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I was with a group of law firm partners from different City firms this week, listening to them discuss a case study about super-profitable US law firm Wachtell, Lipton, Rosen & Katz. Aside from their phenomenally successful business model and profitability (with the Amlaw100 reporting profit per partner of over $4m), one of the points that provoked most discussion was the idea that many of the partners would retire from the firm in their early forties.

Doris was overjoyed to hear she'd finally made partner

One response from the group was “that’s just coming into your lawyering prime”, which really got me thinking about careers in the legal profession, how they’re changing and ultimately what the end game is for many lawyers.

It used to be simple.

When I entered the profession in the mid/late nineties you joined a firm, did your training contract, hoped you’d get kept on, and if you did took your place on the conveyer belt. In the larger firms this often meant increasing specialisation and more often than not, increasing your hours.

In particular it was understood (albeit often unspoken) that the years between two and five years post-qualification were the proving ground. Where firms got to weed out those who were not suitable for partnership, and consequently lawyers were competing to prove they were up to the job.

This ethos, coupled with the leverage dynamic (with a smaller number of equity partners generating huge fees from supervising and managing junior lawyers) and chargeable hours model saw associates happily prepared to work all hours as they strived for partnership. The pot of gold at the end of the rainbow.

Every year their increased experience meant law firms could up their hourly chargeout rate, meaning in turn that as long as their chargeable hours stayed high, a nice chunky payrise was available, thus providing a short-term incentive for the associate to stay in the game.

Now this approach certainly had its faults, but it was largely understood and accepted and as a result it worked. Hell, early in my career I was certainly prepared to play by those rules.

But things have changed.

That model is breaking.

Firstly, the concept of work/life balance arose. Slowly, softly at first, it began to gnaw at some of the Generation Xers. Marriages came and went and at both points, people began to pause for reflection. Children brought matters into even sharper focus. None of these events were new, but society’s attitudes were changing and the legal profession was not immune from this.

With the emergence of Generation Y, the trend began to accelerate. I vividly recall a conversation with a managing partner of similar age to myself a couple of years ago, where he shared his frustration that many of his assistant solicitors wanted to leave work at 6pm. He understood this, but having put the hours in himself at that stage in his career, found this attitude difficult to reconcile with the drive and focus he expected from his young lawyers.

At the other end of the spectrum, change was also afoot. Many of those partners who had put in the hard yards and had been through the grinder were looking round and asking “is this it?”. Some had migrated into management as this was seen as the only upward progression, but either didn’t like it or weren’t suited with it. Others began to see the downside of their high levels of specialisation by craving a broader workload.

The model was also being tested by the market. A growing rejection of hourly rates, and more sophisticating procurement of legal services caused clients to question firstly whether hourly rates were suitable, and secondly, if they were, why they should be paying more for a particular resource than they paid a couple of months ago (simply because they had another year PQE and their rate went up) when the value delivered was exactly the same.

As the career model began to crack, the consequences began to emerge. Moves to in-house roles, into venture capital and private equity companies became more common, and law firms began to adapt by creating different career paths and non-partner senior roles such as “Of Counsel”, “Legal Director” and of course “Consultant”.

But with the structure of the profession fundamentally changing due to trends such as outsourcing, technology, commoditsation and globalization, is this enough?

While the supply of law students far outsrips demand, the answer I suspect is that the slow changes to the status quo will probably be sufficient in the short term, but ultimately as the profession reconfigures to meet the changing needs of the market, new and better career structures must emerge or I believe traditional law firms may begin to lose heavily in the global war for talent.

 

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Lawyers – Just. Do. Something.

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It seems like there was some sort of psychic alignment in the UK legal blogging community last week.

James took a break from his corporate finance practice and went down to the firm's somewhat impressive atrium to think about what was happening in his market

As the news came rolling in on changes facing the UK market (Neil Rose’s site Legal Futures is often a good place to start), the Entrepreneur Lawyer   Chrissie Lightfoot wrote a great post about the disruption and fear facing the profession. Julian Summerhayes then followed up with a thought provoking piece on the need to avoid apathy in client relationships.

All the time my mind was whirring with two related themes – massive change, and the need to do something.

The first message that I really (really) want to get across is that change in the profession is happening NOW. I mean right now.

Many of the lawyers who are waiting for the full implementation of the Legal Services Act with a “let’s just wait and see” attitude are either deliberately burying their heads in the sand, or are sleepwalking through a time of significant change, leading to both opportunities and threats.

Just look at the recent headlines:

Take a step back and take a fresh look.

This is change that’s happening right now.

It’s not round the corner.

It’s not things that might happen.

It’s happening.

Now.

The other point that’s really important to grasp, is that the change is affecting the whole profession. It’s not just a B2C issue, there is fundamental change going on all through the profession. From the sole practitioner whose livelihood is threatened by consumers being offered quicker, cheaper and easier solutions from competitors that didn’t exist three years ago, to the multi-million pound law firm facing disaggregation of the large scale projects that used to be the foundation of the partner’s seven figure salary. The change is real and far-reaching.

Finally, please trust me when I say that there is much, much more going on which is not public at the moment.

Since I left practice as a lawyer, I’ve been fortunate to be involved in the profession in a number of different roles, including consultant and LPO provider. Some of the conversations I’ve had with law firms, in-house teams and other consultants have shown me that there is some really forward thinking going on in the background, leading to business models being re-engineered and investment being secured.

So why are so many firms not doing anything?

Well, putting aside the difficulty many law firms have with change generally (which I’ve written about before), and some of the negative behaviours driven by the hourly rate billing model,  I think there are a number of other reasons why it’s not top of mind for every law firm partner.

The first is that there are more pressing short term challenges. Cash flow being one of them. The last two to three years (depending on the make up of your practice) has been incredibly tough, and amidst the restructurings and insolvencies, there are plenty of firms that quietly weathered the initial storm but  are finding things getting harder and harder as the road out of recession continues to be a slow one. Whether it’s cash flow, refinancing or opportunities for consolidation, short term survival is often the top priority.

Another reason is that it’s just plain difficult. The market is moving at a tremendous rate now, with new competitors, new technology and regulatory change coming in waves. Just keeping on track of the environment is tough enough, let alone analysing it and working out how to respond. Many firms don’t have strategy experience in-house (and there was a great article this week on how forcing strategy work on non-strategic thinkers doesn’t often work out) and I suspect many just don’t know where to start.

But whatever the reason, now is the time to act. The speed of business these days is too fast to wait and see.

Much has been written about the change in the product development world and the speed to market imperative (“fail fast”) – how it’s no longer realistic to test extensively to get a product perfect before launching.

The parallel I’d draw here is that now is not the time to assess the market to nth degree, and then craft a perfect strategy over the coming months, before pulling together a detailed project plan and implementing through the annual budget cycle. All of these steps may well have merit, but given how fast the market is moving, it’s more than likely that by the time you’re done, you’ll be too late. The opportunities (of which I believe there are many) will have passed, or the threats manifested.

So to wrap up, now’s the time to act. Block out an afternoon and at least do some thinking, or if you’re not at the thinking stage, some sensing to find out what’s happening in your market segments. Then take the lead and turn thinking and dialogue into action.

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The Tao Of Law Firm Strategy

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Differentiation is getting harder for law firms. We all know that.

Botchit & Co were delighted with the originality of their new logo - there was something fresh yet timeless about it

Clients constantly state that they want their lawyers to have deeper knowledge of their business and environment.

As the market changes, more and more firms are re-examining their business model and questioning how they are going to compete and win in the future.

Some think about doing more of the same. Some think about doing the same thing but cheaper. Some think about doing the same with a twist.

But how many think of doing less?

Actually stopping doing a lot of work types and focussing on a core that they can do better than anyone else?

  • Drop the unprofitable work.
  • Drop the work that doesn’t fit with the core.
  • Drop the work no-one likes doing.
  • Drop the work that can be done better or more efficiently or in other ways (automation, offshore etc).

What’s left? Could it work as a business?

With so much focus on consolidation in the market, who is looking for the gaps?

Where are the agile players that can really own market segments?

Finishing with a (very!) different approach to any I’ve done before. Inspired by verse 80 of the classic of Chinese culture, the Tao Te Ching (Ralph Allen Dale translation), I give you “The way of the niche”

Let us create small firms
With genuine specialists
Who, without stress, can produce
More than their clients expect
Who are so happy with their practice
They have no thought of moving elsewhere

Who forgo billing targets
Because they have no need of them
Who return to honest forms
Of serving clients,
And the simple enjoyments
Of practising law

Although these firms
May be so close to each other
That they hear the tapping
Of each other’s keyboards
And the ringing of each other’s blackberries,
Living profitably, they will have no need to invade each other’s markets.

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A shiny new law firm

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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.

What?

Your law firm doesn’t work like that?

Really?

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…..

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Partner Smackdown!

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Admit it. All of you who have worked in law firms have met one.

The head of Squiman's corporate team was not to be messed with

The partner you want to avoid in the lift. Perhaps she’s the one with the really (really) bad temper. The table thumper. Maybe he’s the one who makes trainees cry. Is it the one who seems to have avoided any sort of diversity training at all?

Lots of law firms have at least one of these stereotypes. Hell, maybe you’re one yourself!

What I’m investigating today is bad partner behaviour. I don’t think the behaviour really needs much in the way of explanation beyond that in the paragraph above – let’s just define it as behaviour which is inconsistent with the firm’s values and which most people would view as unacceptable.

But this isn’t unique.  This behaviour happens in corporate life too, and the public sector, so why focus on law firm partners?

I believe there are a number of factors that make this type of behaviour harder to stamp out in law firms than in other organisations, and that’s what I’d like to explore.

Firstly, as I’ve discussed before, cultural change can be particularly hard in law firms, and many of the reasons why organisational change is difficult apply equally to changing individual behaviour.  However, when it comes to large scale change, it maybe that to effect change firms dedicate resources and engage particular external expertise if they don’t have it in-house – This type of focus is unlikely to be applied to changing the sorts of behaviour we are looking at here.

But perhaps linking this type of behaviour with culture change is too abstract. Maybe it’s just a simple people management issue? Call in the HR team?

Alas, this is often not as straight forward as it is in a corporate environment. Firstly, the partnership structure of the majority of law firms means that the problem partner is likely to be an owner of the business, and as a result have a certain amount of weight (actual and perceived) that comes with ownership. By contrast it’s unlikely at the moment that the HR Director will have equal status, although this may change in the years to come.

In practical terms this can mean firstly that junior lawyers and support staff might be less likely to report the unacceptable behaviour. Secondly, it may mean that the HR team are not as empowered as their peers in corporate environments. One structural observation I’ve made in larger firms is that often the HR Director is a relatively senior professional, brought in to advise on strategic issues (such as talent management), but that they are supported by a relatively junior team on the operational side of matters. Thus the HR personnel at the “sharp end” of behaviour complaints can often be outgunned by the partner in question.

So if the HR department has challenges, how about peer group management? Surely the partnership as a whole will quickly identify and deal with the problem behaviour?

Maybe, maybe not.

It certainly depends on the firm (which circles back to the earlier link to the firm’s culture), but in my experience this is something that partners find very difficult. Perhaps again the partnership structure and the idea of relative equality among the equity partners plays a part, but I suspect more likely it’s that a large proportion simply prefer to avoid the conflict and hassle associated with peer-group people management, and critically that they haven’t been given the skills and tools needed to do the job effectively.

Given that exiting a partner does typically remain more complex than removing an employee (particularly if the law firm want to avoid any subsequent legal action and bad publicity), the last factor should not be underestimated. Law firm partners, even in the biggest firms, have often received a limited amount of management training, particularly when you consider that managing professionals is known to be among the most challenging categories of people management (good reads here are “When Professionals Have to Lead” by Delong Gabarro and Lees, and “Aligning the Stars” by Tierny and Lorsch).

The lack of training and reluctance to head into what might be a difficult conflict (another great read is “Difficult Conversations” by Patton, Stone and Heane) can be compounded by the fact that resolution may not be swift, and often partners get little credit for this type of non-chargeable activity, no matter how valuable it is to the long term health of the firm.

Finally, and perhaps most importantly, let’s not overlook the elephant in the room. Economics. In reality, the reason the unacceptable behaviour has carried on for so long is often that the perpetrator is a rainmaker. Huge billings = lots of power. While this may seem cynical, it might be that the firm management are aware of the behaviour, and are prepared to tolerate it to realise the revenue stream from the partner in question. In other firms it may be less overt, and the problem simply manifests through the fact that the high billing partner just has a lot of power.

Plenty of reasons not to deal with the issue, but I think we all know that’s not the answer. Aside from all the direct consequences of this behaviour (potential claims, loss of productivity, morale damage etc), it maybe that the junior assistant who walks out of the door, is the managing partner of the future.

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You are wrong. I am right.

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I read a great book recently called “The World Cafe; Shaping The Future Through Conversations That Matter” (by Brown and Isaacs). It’s all about a new form of dialogue that allows people to access a group’s collective intelligence, and was a fascinating read. If it all sounds a bit woolly, the principles are all heavily grounded in research and case studies, and I plan to try the approach out soon, and will let you know how I get on.

Andrew smiled at the World Cafe, safe in the knowledge he was absolutely, hundred percent, right

Anyway, one of the points that really made me stop and think was a passage around people fighting to prove they are right, and in particular pointing out that you may well win the argument, but in doing so, what has been the cost?

This seemed to resonate with me in my capacity as (former!) lawyer. It might be a stereotype, but lord knows lawyers do like to prove themselves right. Maybe it’s the type of people who are attracted to the law, maybe it’s the training and experiences that lawyers have, but if you put five lawyers in a room, I bet at least two of the five would argue black was white if the other three had already asserted that white was, in fact, white.

I started to think about this from two different angles. Firstly, developing the ideas in the book around the impact on relationships and individuals resulting from a dogmatic and “robust” approach to an argument. How many people have notionally “lost” an argument, and then (a) sat and simmered, wishing ill on the victor; and (b) not been convinced that they were in fact wrong anyway?

Given the turbulent nature of the legal market today, there are of course an increasing number of challenges that law firms and lawyers face, and if many of these end up in arguments and disagreements, what does this do to the web of relationships that underpins the organisation (which are of course critical in a knowledge-based organisation), as well as the morale and energy of those working there?

Often when a person expresses a point of view, if it is attacked, they will dig their heels in and defend their position more passionately, rather than take on board an alternative perspective.

Many of the classic negotiating texts (like “Getting to Yes“) are based on ways round this problem, and there is a heap of  research from the psychology of influence that can help explain this (Cialdini is one of my favourite authors here) – in essence society likes people to behave predictably. As a result many countries encourage people to behave consistently, and consequently once a point of view is stated, people will fight to defend it (and appear consistent) rather than change their mind.

This brings me on to my second stream of consciousness, which is based on a lot of Edward De Bono’s work around how people think in Western society. He aims a lot of criticism around our preference for “socratic argument”, where a selection between two competing ideas is made through knocking down the opposing viewpoint, rather than constructively exploring the issue and looking for alternatives.

In a law firm, where colleagues are often competing for resources, would it be possible to examine these challenges more collaboratively, or is that niave?

What if the disagreement is with a client? Or another team? Is the issue resolved with one party “right” and the other “wrong”? The dynamic is undoubtedly different from being across a negotiating table, but often the behaviour is very similar, and not everyone is a collaborative negotiator.

When working as an in-house counsel, when problems arose I was much less interested in pointing fingers, and more interested in sorting out the consequences quickly and effectively, working out how the problem arose (the framework in the book “Difficult Conversations” calls this assessing “contribution”) and then making sure we (collectively) avoided a re-run. I found this productive, and the external counsel took a similar problem-solving approach to drive a deeper relationship and more effective service delivery. I don’t pretend it was perfect, but I do believe it was an improvement on the blame game, even though I didn’t get as many opportunities to demonstrate I was right (which of course I was!).

I hope that has provoked some thinking and would be interested in any comments you may have. Please note however, that if you express a different opinion to me, you will be wrong and I will be right………

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The value of discipline (sort of)

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With the New Year approaching, given the title of this post, you may be expecting a post on all he productivity benefits that can flow from self-discipline coupled with some suggestions for New Year’s resolutions. But no. I’m combining the D-word with one of my favourite words, “value”, to bring you a little morsel that I hope you can chew over until 2011.

Bertie was not impressed with his owner, the managing partner's, approach to discipline and didn't think the partners in the law firm would respond well to offers of dog treats

Value Disciplines is a model created by Treacy and Wiersema, and as well as being one of my favourites that I studied at B-school, it is one which I have found really resonates with lawyers and law firm management (their book is called “the discipline of market leaders” and is well worth a read).

In very simplistic terms, the theory asserts that an organisation can succeed in its market place by excelling in one of three “value disciplines” (ideally coupled with also practising the other two value disciplines to the market standard).

The first value discipline is operational excellence.  In their original Harvard Business Review article (available here), they define this as “reliable services at competitive prices delivered with minimal difficulty”. This is an interesting model for law firms, as in my experience few law firms really look to compete on this basis (operational excellence is not simply about having low prices) and indeed as I’ve discussed previously, hourly rate billing has often encouraged inefficiency – arguably the polar opposite of operational excellence.

However, with the emergence of LPOs and the increasing number of law firms hiring Lean Six Sigma specialists, plus of course the imminent entrance in the UK market of alternate business structures, I think operational excellence is a strategy that is going to have increasing relevance to the legal profession, and the bar that represents the market level of operational excellence, is definitely going to rise.

The second value discipline is “product leadership” which is all about getting the leading edge services in the market. Here speed to market is critical, and as we saw with a plethora of Bribery Act offerings in the UK market, both from law firms but also the larger consultancies, some firms do this better than others.

As with operational excellence, I believe the discipline of product leadership is of growing importance to law firms as the market increases in competitive intensity. The struggle to differentiate is recognised and discussed by many management teams in law firms, and having a kit bag full of unique products and services, each with a strong value proposition, is a real asset in this battle.

The third value discipline is “customer intimacy”. Organisations that excel here have strong client relationships and are able to customise products and services to meet their precise needs. Now while this blog has *occasionally* suggested law firms could do more to listen to their clients (hey, I’m only trying to help!), I actually think this is the value discipline that many law firms practice well.

What this means in practice however, is that the benchmark for the industry in this value discipline becomes higher, and the challenge for firms who want to dominate their industry, is how to raise the bar and really become the market leader in client intimacy. One way to think about this is to investigate how far the client intimacy ethos permeates the firm’s entire operating model – in my experience often there are pockets of excellence in a firm, but often other areas where the standards are not so high.

However, one thing to ponder, is that one of the firms that I think does this best of all (a smaller City firm) is also the firm that put together the highly tailored tender response I mentioned in my post a couple of weeks ago on excellent responses to RFPs (requests for proposal)  for legal services. This suggests to me that the firm starts REALLY thinking about the client’s needs before they are even a client of the firm, which I think is a pretty good demonstration of really living that value discipline and the benefit it can bring the firm and its clients.

 

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Law firm elves (the missing skillsets)

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As snow continues to bathe the United Kingdom in its cold fluffiness, and our transport infrastructure predictably fails to cope, I’ve had plenty of time  to think up a suitably Christmassy post for this festive week.

The business analyst's office was a little off the beaten track

Now Santa Claus(e) is pretty busy at this time of year, arguably busier than even the most stressed managing partner. Sure, cash flow and chasing WIP may not be an issue, but he has millions of presents to procure and wrap, and then a logistics nightmare to contend with. His relentless focus on execution is impressive, but he certainly couldn’t deliver on time and on budget alone. The reindeer may get the media plaudits, but the unsung heroes are undoubtedly his legion of elves. Working quietly in the background, they make sure his ambitious plans are carried out, deal with last minute changes and generally keep things ticking over.

Maybe that’s what law firms need.

So, I started thinking, which elves could help law firms in 2011…….

1. The Sales Elf.

“Sales!” I hear you cry. Heresy! Burn him! But wait a second. Law firm business development has developed tremendously in the last decade and sales training by organisations like the PACE partnership and Huthwaite Fleming is now accepted as delivering solid business benefits. Yet I still see many business opportunities lost because a law firm doesn’t have the right sales capacity or capability. Business development directors in law firms are often in strategic or marketing-focussed roles and if they do have selling skills are rarely given the chance to use them.

Is employing a dedicated sales force going too far? Some may argue that culturally it’s a bridge too far and that professional services can’t be sold in that way? I’m not convinced. I think if you get the right fit between sales person and firm, that focus on generating new business and the skills that go with it, could really turbo charge a law firm’s performance.

2. The Analyst Elf

Outside of the very largest law firms, there is often a lack of internal business analysis capability.  There’s no shortage of raw information, with many firms taking an “arms race” approach to subscribing to market and business research services, yet often the same firms struggle to make best use of this information, with no dedicated resource to synthesise and analyse it.

For the firms looking to position themselves as experts in a particular sector, how helpful would it be to have some proprietary analysis of what was happening in that sector, and to use that to generate some real though leadership, rather than simply offering comment on a recent news item?

The skillsets needed are widely available – investment banks use them, management consultants use them, large accountancy practices use them and corporates certainly use them, yet in comparably size law firms, they are a rare species indeed.

3. The Process Elf

Talking to some legal sector recruitment specialists, this is a hot area. With downward pressure on price and the increasing rejection of the hourly rate billing model, law firms are looking for ways to maintain or improve service quality while at the same time reducing cost. Looks and smells like a Lean Six Sigma type project to me.

Process mapping and re-engineering are perhaps the most obvious quick wins, but actually having a dedicated resource to think about operational efficiency and help drive the personal and organisational change that is needed to deliver the results is essential and I don’t believe it will be achieved by someone doing the job in their “spare time”.

4. The Pricing Elf

On a recent tender exercise for a NYSE listed outsourcer the request for proposal document made it clear that the company did not wish to buy legal services on an hourly rate basis, and asked law firms for alternative pricing models for four different work types. The diversity of responses across the ten law firms was significant. Some were well advanced in their thinking, giving a variety of models, an explanation of the type of work and volumes that would make them work, and detailing how scope changes were managed. Others were being dragged kicking and screaming from their hourly-rate comfort zone, with vague promises to think about fixed price projects and retainers, provided certain caveats were discussed and agreed.

In a world where the market is requiring different pricing models, and given the very (very) direct link between price and profit, doesn’t it make sense to address this seriously? Is setting up a pricing committee made up entirely of lawyers really the answer?

5. Other elves

The need to go and do my Christmas shopping precludes a longer discussion, but some other elves to think about – the change management elf, the project management elf, the product development  elf and the innovation elf.

This is likely to be the last post before Christmas, so if you are celebrating, have a great time and I hope you’re back here again, fully refreshed, for the New Year post, which may well tackle the classic New Year topic of (s)elf improvement!

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The beautiful ones (law firm responses to tenders)

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Aware that often the third part of a trilogy can be a disappointment (think Return of the Jedi….) I want to finish my musings on how law firms respond to tenders on a high. In the previous two posts (here and here) I’ve looked at some of the mistakes I’ve seen when evaluating law firm responses to RFPs (requests for proposals), now it’s time to celebrate some of the goodness!

Inspiration for the tender design was taken seriously at Scratchit & Co

When I think back to those responses that have really impressed evaluation panels (and not just me), I think the key word is “relevance”. The more effort the law firm puts into the document or presentation, in terms of tailoring it for the prospect’s specific needs, the stronger the submission.

The challenge for me is to give examples without giving away any trade secrets. So here goes.

One project that I put out to tender five years ago spanned around 15 European countries. The firm who won the project submitted a tremendous document that had a huge amount of material that really created value for our organisation. It had points for us to think about both for the project as a whole and for each country in the project scope.

This did two things. Firstly it showed that the law firm had experience of the areas of law we needed help with, in these particular countries. Secondly it give us a “heads up” of things we should be aware of, even if we didn’t select the law firm in question.

The other thing that the winning law firm did on that pitch, was make sure that all examples of experience were relevant (even down to tailoring CVs). The amount of responses I’ve seen where standard blocks of text and vanilla CVs have been appended on the back is huge, so when a firm goes to the trouble of really thinking about what the prospect organisation wants, it stands out a mile.

I’ve seen a similar approach taken at presentation stage. At a pitch I ran for financial services legal support, the winning firm gave a virtuoso presentation. The lead partner had asked some great questions early in the process, and had clearly spent significant time thinking about the issues we would face, and how best to deal with them. Rather that the presentation being a verbal version of the paper RFP response (which often happens, with firms taking the opportunity to spend an hour using extensive powerpoint to tell the prospect how good they are) the partner and his team took the evaluation panel through a mini-workshop, illustrating  points with war stories and other relevant examples.

We came out of the presentation with a much better understanding of the project, a good rapport with the law firm, and a clear action plan if we chose to work with that firm (we did).

Another area where firms can distinguish themselves is in the presentation of the document. I’ve seen a wide variety of creative approaches, from mocking-up a trade publication, through using corporate colours and imagery, to just some really nice, clear presentation (I respectfully refer people once again to Impact by Jon Moon and Presentation Zen Design by Gary Reynolds). Of course presentation is superficial, but it does make a difference, particularly if it makes the content easy to digest. It’s also another area where law firms can demonstrate they have thought about the particular client, rather than just plugged the information into the tender-team sausage factory.

So, it’s relevant, it adds value and it looks great?

Go forth and win!