Friday, 21 February 2014

State of Play

I have been working as an independent consultant to law firms and chambers since about 2009. I do work with organisations in other fields and this is useful in offering some context. In five years a great deal has happened to the legal industry - has the profession changed in turn to address the new reality?

Sadly - the answer, in general, is no. There are of course some wonderful firms who have embraced industry changes and who have offered either a radically changed model of operating, or a completely new one. It is obvious, however, that most law firms - and in particular most sets of chambers - have made almost no change to the way that they manage themselves. Even more worryingly, very few see the need for more agile management or for better internal processes and practices. Organisations in other industries are at least trying to do things differently understanding that continuing to work in the same way will yield the same, poor, results.

Law firms are still obsessed by turnover and think that publishing PEP figures is the same as being concerned by the profitability of the firm (never mind having an understanding of profit at a matter level). Staff management is generally antiquated - support staff are dismissed easily with no thought of building loyalty. Strategy is discussed but poorly understood and badly implemented.

Sets of chambers seem to be slightly worst. Very few have a robust understanding of finance or even access to good financial information. Most chambers I see outsource their ‘accounting’ and receive monthly ‘management accounts’. In fact they actually outsource their accounts to a book-keeper who dumps some information into Sage and hits the ‘Profit and Loss’ button once a month. Few chambers work with their Management Committee to make sure that they understand the finances, have a good cash flow model, and monitor their budget. I know of only a couple of chambers that look at trends properly - trends in member turnover, contribution and chambers profit. Not many sets have a good staff bonus scheme - either it is so simple that the clerks can ‘game’ it to their hearts content - thereby annoying members - or is it so byzantine in its complexity that no-one actually understands it. In both cases the bonus scheme is not doing what its their for - to motivate staff. I know of about four sets who actually have a strategy for chambers in place (most are talking about strategy and probably have a strategy written down - that almost no-one knows about and which certainly isn’t followed).

So far as I can see, almost nothing has changed in the industry in five years. Law firms and chambers look at the few innovators - I’m thinking of people like Riverview Law for example - with fear, but with no thought to examine and learn lessons.

With no organisational change, the recession has meant much lower margins which most law firms and chambers have reacted to by firing staff and dumping buildings. The first sniff of an upturn and the same firms are suddenly talking about hiring staff. I spoke with a mid sized law firm recently who were surprised that they were having problems hiring good support staff and seemed hurt when I suggested that it might be because they had so brutally dumped staff a couple of years ago.

So - whats the point of this article? The state of play in the industry is obvious to anyone who looks. My point is that those innovators in the industry have done really well. By looking differently, by managing differently, by really caring about and caring for their customers, those ‘new boys on the block’ are cleaning up as the existing players stand by looking on (and quite often tutting to each other while saying ‘it’ll never last you know’).

There are real opportunities in managing better - better financial understanding and practices; better staff management; better strategic thinking and planning; better profitability.

As ever - I would, of course, be delighted to discuss the opportunities. Just get in touch.

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