A Pitch for Common Sense

Moving on

2011-11-29T17:48:00.001Z

I have spent the last two and a half years working as a consultant, specialising in working with law firms and sets of chambers, both in the UK and in Europe. In January next year, I will be taking up a new challenge as Chambers Director at 2 Hare Court, a set of chambers which has long been recognised both nationally and internationally as one of the UK’s leading sets of chambers specialising in criminal law, fraud, professional discipline, regulatory work and other related fields

I have enjoyed my time as a consultant, and have met a good number of interesting people, but one of my main learnings has been that I am more suited to working inside an organisation where I can work, day on day, to get the firm running as efficiently as possible. I have missed the confusion of general management within an organisation, I missed having to think strategically and operationally at the same time, and I have missed working with people - people for whom I am responsible. I have particularly missed working with barristers - they are wonderfully intelligent people who make sure that I am at the top of my game (and not difficult at all - no, no...).

So the time has come to stop shouting from the sidelines and get back into the game.

With wonderful synchronicity, 2 Hare Court, have been looking for a new Chambers Director. After a number of meetings, we have decided that we suit each other and so, from January 2012, I will be taking up the challenge of working with a set of barristers at a difficult time.

I am looking forward to it greatly. I will have a steep learning curve as I get to know the members of chambers, the support staff, and our clients - as well as getting up to speed with the details of the industry.

I hope to keep up with social media - but I'm not sure whether I will have time to blog. If I do, it would not, in any case, be appropriate to do so through this blog. So this will be my last posting from Mar-aon Consulting.

Thank you to all my clients; thank you to those that read this blog; and thank you to all those commentators, writers, and bloggers who have inspired me.

More details about 2 Hare Court can be found here. I'll post my new contact details as soon as I have them. I hope that I can keep in contact with those bright people I have met through blogging and tweeting, and of course I'd love to hear from any of you who might need the services of world-class barristers!

Thank you all.

The Pitch Team

2011-11-04T10:38:00.001Z

I have been working on pitches recently - the sort that involve trying to win business rather than those associated with balls... These have been pitches for my own business, pitches in conjunction with other consulting firms and in offering advice to other business either about their pitches or about immediate post-pitch client service.

I've been surprised by two simple things. The first is the number of organisations both large and small who have a dedicated 'pitch team' - i.e. a group of often senior, experienced, high-flying members of staff who secure business for the firm. The second things is how often these same organisations are surprised that, as the contract starts, the client is unhappy that they don't seem to be working with the high-fliers and that they don't recognise anyone they are working with.

I completely understand the point of having a pitch team - and I think that having a few members of the team who may work exclusively on pitches is a fine thing. The team should, however, also have members of the service team who will go on to work with the client. This is vital so that the client can see who they are working with and so that the staff can properly understand the client's requirements.

By doing this you avoid my second point above. I'm amazed that businesses will go to great lengths to win business and then upset the client in the first week of the contact by having a bunch of strangers interacting with the client.

Only last week I was speaking with a large advertising business who had spent five months travelling the world to woo an international client. They had wheeled in all their big guns - global specialists from their business and a couple of consultants who gave the impression of being staff. They duly won the business although at a price they are already regretting (bad pricing and chasing turnover at any cost is a regular theme of mine in this blog that I will, I'm sure, return to soon). Five days into the contract, they received a call from the client essentially saying "Who the &*%$ are these people and where are the guys I was speaking to during the contract pitch".

So overall the pitch was a bit of a disaster. They now have an angry and upset client who is already, only a couple of months in, trying to find ways to terminate the contract - and the firm is irritated that it is servicing a contract with almost no profit in it (as they said to me "what does the client expect at that price").

As I said - I'm surprised. Surprised that the advertising firm doesn't realise that it needs to please its clients and surprised that such a large firm can get its pricing so wrong and then try to take its frustration out on the client.

The lessons are simple. Have a pitch team that includes the people who will work day-to-day with the client in the execution of the contract. Work to please the client. Talk with the client regularly to make sure they are pleased. And price your work properly - don't just chase turnover.

As with most things in management - it may sometimes be difficult but it certainly isn't complicated.

Barristers - the case for change

2011-09-22T16:45:00.001+01:00

I've heard from a number of barristers lately and a surprising number seem to be of the opinion that the structural changes to the industry will have no or little impact on their life and business. I'm not sure I agree.

As with all change, there are opportunities and threats. The threats to the bar come in a number of forms. The first is that the changes to the industry are built around efficiency (or at least they are supposed to be). Efficiency of process and efficiency of price. To that end, a set of chambers and its clerks will need to be able to demonstrate both. This will require a good understanding of their own processes, those of referring solicitors and those of their clients, whether coming through direct access or not. Efficient connections between processes will be vital.

This understanding of their own systems will then need to lead to an improved understanding of the prices negotiated and the client-value of the services provided.The next threat will come from ABSs. I'm still unsure what these will look like and exactly how they will work, but there is a threat there to the traditional referral model. As such, chambers need to be keeping a close eye on the Market. The latest great wheeze for chambers is the move to a "ProcureCo" model where chambers establishes a limited company to procure business and to enter into contracts with large entities. I spoke with two sets last week on this subject and sadly neither was clear about why they wanted to move in that direction. The most usually reason is so that chambers can bid for large panel work. What must be understood, however, is that pitching for this work requires some considerable investment - certainly in time and usually in reporting and communication systems. Once won, servicing these large clients is a considerable task requiring yet more time, trouble and technology. I do think more chambers should use this model - but only after some careful consideration of why they are doing it, the development of a plan, and wthe recognition that considerable investment will be required.

All of these issues are, of course, also opportunities. Chambers are, in general, already leaner than law firms in terms of their support costs and so are well placed to "steal" business. Barristers have spent generations working on a fee+refreshers basis - something that clients want and something that many are pushing law firms to adopt. When most clients talk about fixed fee work, they understand that contingent pricing is required - i.e. that an agreed fixed price is only agreed if the discussed perameters hold good. If more work is required (for good reason and explained in advance to the client) then most clients accept that an addition payment is required. This is the fee+refreshers model - or close enough that barristers and clerks should recognise it.

The real advantage for barristers comes from "lean" working. With fewer support staff and no atrium to support, barristers can be cheaper, or certainly more cost effective, than law firms. I was told a story recently about a commercial client who needed advice about a complex tax matter. They approached a large law firm who proposed an hourly rate in excess of £300 and suggested that a three person team would spend a week or so on the matter before reporting. A set of chambers was also approached. The clerk suggested that one of his tax Silks could examine the matter over the course of a weekend and offer an opinion on the following Monday, at a fixed fixed cost of £14,000. Cheaper and faster - now there is an advantage...

Changes are coming and I'd be much happier to be a barrister than a solicitor (so long as I wasn't trying to establish myself as a junior at the criminal bar - but that's a different story altogether).

Action before Strategy

2011-09-09T16:31:00.000+01:00

One of the joys of working with lawyers and schools is that there is little reason to be in London in August since there is almost no-one to see. My last week, therefore, has been engaged in throwing myself back into the joy that is "sales" visits with clients. Sadly it didn't take long for me to have my head in my hands...

I was asked to speak with a small-to-medium sized set of barristers' chambers (and that's my description, rather than theirs) who were planning to establish themselves as an LLP and to set up a ProcureCo. This does seem to be the 'sexy' topic at the moment. As is my way, I started the discussion by asking why members of chambers wanted to change structure. To my slight astonishment (well I have been on holiday), the response was "What do you mean. We're not really changing anything".

Ten minutes in, and I was still not sure what their strategy was - they seemed to be changing (and it is a change, as I kept trying to tell them) because they thought they should. So instead of plotting their LLP structure for them, I outlined some thoughts about how they might discuss and discover their strategy.

That didn't go down well...

They wanted action not, and I quote, "all that strategic nonsense". They wanted to do something - and an LLP and ProcureCo seemed to be the thing to do. Never mind that they were unsure about the need for a ProcureCo, how it would work, who it would employ, and what business it would bring. Never mind that they hadn't thought about - let alone discussed - funding the LLP.

Sadly I did not impress them - talking, as I did, "all that strategy nonsense" rather than about their cunning plan for an LLP. Oh well - there will be other clients, I'm sure...

The Lawyer as a Business Person

2011-07-19T11:00:00.000+01:00

Stephen Mayson wrote an interesting article the other day ("Does my BUT look big in this?") in which he answered a number of questions he had heard in relation to the regulatory changes coming to the legal profession this October.

I'd like to address only the first question he raises - “I didn’t become a lawyer to be a businessperson”. This is true of many of the lawyers I meet. They joined the profession to practice law, to interact with clients and to become an expert in their area of law. No lawyer I have ever met went to law school and joined a firm in order to manage it.

Why on earth, then, do so many do it? Mostly because they are asked to. I have no problem with this at all. My issues start if those 'promoted' to a management position in their firm (whether running a small department or as Managing Partner) do not (a) get some training (b) find a business person to act as a mentor and/or (c) get a professional manager in to run the business aspects of their firm.

In a smaller firm it will be down to the lawyer to run the firm - pragmatically there is no additional money to pay for a layer of management. This is not true in the top 200 or so firms, and yet few of them have a professional manager in place. By professional manager I mean a person with training and experience in running a business - they may have a background in law, but must have formal training in the skills of management and have experience in managing a business.

Consider Malcolm Gladwell's principle of "10,00 hours". As a partner in a good firm, the chances are that you have put in your 10,000 hours of practice and work. It is unreasonable to assume, however, that at the same time, you have also been able to get 10,000 hours' experience of business.

Specialisation is the key - have an experienced lawyer run the legal aspects of the business, and have an equally experienced manager run the business bits. Common sense, surely...

What Do Lawyers Care About - Weekly Result

2011-06-24T20:19:00.000+01:00

So - a whole week of analysing the news page of "The Lawyer" (on the principle that this will reflect the things that lawyers care about) and what can we say. Well - let's first look at the charts.

The split of topics discussed (and I immediately admit that my categories are completely arbitrary) is as follows (click on the picture for an enlarged version:

I then further grouped my categories into "About Lawyers" and "About Clients":

So - after a week of looking at the news topics aimed at lawyers, it would appear that most of the discussion (90% in fact) concerns lawyers themselves rather than anything at all about their clients. Given that "The Lawyer" is a public forum, I'm a little surprised to see that lawyers are apparently so little concerned about their clients. Surely the best advertisement about the quality of a firm or a lawyer is success on behalf of their clients - and yet stories about "Client Success" occupied only 3.3% of the news. Maybe it was a quiet week...

Less surprising to me was the fact that a third of the stories were to do with lawyers moving firms and that a further 16.7% were about the money that lawyers earn. Together these made up a very neat 50% of the news - and therefore, arguably, what lawyers care about.

So what?

Well - even if lawyers really do care so little about their clients, I'd suggest that their PR people work harder on positive stories about the work done for clients. We do look at these sort of news pages, you know. And if lawyers really do care about their clients - and lets say that most of them do - then they should be talking about that more, and about how much they and their firms earn a great deal less.

What Do Lawyers Care About?

2011-06-20T10:08:00.002+01:00

As someone who works with lawyers, it is important that I should understand the people I need to communicate with - and so I need to understand what lawyers themselves care about. One way of finding this out, I assume, is to read the news that lawyers read. My thinking is that news outlets which service lawyers ("The Lawyer" for example) will be sure that they are addressing their core audience and so providing news that lawyers care about.

On this assumption, I decided to analyse the main news section of "The Lawyer" for a week. I used the on-line version and took the headlines as they were at about 9am. I should like to point out that this is far from a scientific survey - I will only be doing an analysis for five days, I will be checking at some point between 9am and 10am, and will be assigning news to categories myself, as I see fit. Nevertheless, I hope it will prove instructive.

To get things going, my analysis of the news at 9am today is as follows:

So, with the caveats above and noting that this is one morning and so may not be representative, it would appear that lawyers care most about news about themselves rather than news about their clients.

This may not be a surprise since this is a journal aimed at lawyers not their clients. I should, however, be concerned if this pattern remains. It is all very well to be interested in who is working where and how much they earn - but this is a public forum and, as a potential client, I should like to see that client success was at the forefront of concern for any lawyer. Most firms will say something similar on their publications - but the news from "The Lawyer" would suggest something else.

Watch this space for some (slightly) more reliable data.

Rewarding Behaviour

2011-05-16T16:16:00.000+01:00

Motivating people at work can be a difficult thing. Not everyone is as driven and committed as you are and so an entire industry has developed which aims to help organisations get the most from their "most important resource".

Sadly, as difficult as it is to do it well, it's very easy to do it badly. Accidentally rewarding the wrong behaviour happens all the time. Consider the item posted by "Roll On Friday" about Morton Fraser(see here). They have, apparently, abolished the annual fee targets for their associates. This step is a very good one, given the poor value gained from using hours worked, or turnover, as a measurement of success. Sadly this is not their only change. Morton Fraser have also chosen to adopt what they call "Peer Benchmarking" whereby "...a league table is created for each level of fee earner, and the aim of the game is to get to the top of it."

Let's just look at the behaviour that this system will encourage and reward:

Reduced communication. There is no benefit, now, in associates helping each other or in discussing the matters that each is working on. In fact, the more secretive they are, the better, since each associate is in direct competition with every other associate
Reduced cross-selling. As mentioned above, there is no benefit for an associate to sell the services of another person if there is a chance that he or she is simply bumping up the hours of a competitor.
Slower work. More hours = more turnover, unless the client is on a fixed fee. Not only that, but there is actually a disincentive for associates to do a handover of going away on holiday. If the associate working on a matter is going away for a long weekend, it is in their benefit to lock the files away so that no one else can work on them.
More focus on turnover. As any regular readers will know, I detest the obsession with turnover that is displayed by most law firms. This system simple enforces a belief that more hours and more turnover is a good thing. No wonder the "long hours culture" remains.
No focus on profit. Associates are being rewarded for earning more for the firm. It doesn't matter if the work produced a net profit of 1% (or even a loss), the associate will still be rewarded for doing more work. This could be fatal for the firm.

So what should they do?

Well, removing the annual fee target is a good start. Why not have a "Contribution Target" instead - based on the profitability that they have added to the firm? Why not have a "Client Satisfaction" target and a "Partner Satisfaction" target for the associates they have worked with (and while on that subject, why not have a "Partner Satisfaction" target where the associates have some input).

Focus on cashflow and profit (in that order) and then, and only then, turnover.

Watching the Paper

2011-04-13T16:54:00.000+01:00

Law firms love paper. There is tons of it - when I was last employed by a firm, we measured our paper usage by weight...

This blog post by IBB Solicitors caught my eye - it deals with a warning dished out by the Information Commissioner in connection with the way that paper records were managed by the Council for Healthcare Regulatory Excellence (and they were asking for trouble calling themselves that...) and by NHS Liverpool Community Health. The quote from the Acting Head of Enforcement is telling:

“These incidents should act as a warning to other organisations who handle sensitive papers of the need to make sure their paper records management processes are as robust as their electronic data systems. The protection of data in all formats must be taken seriously.”

Law firms handle lots of sensitive paper with reams of it delivered every day. How many firms are really sure that their systems are sufficiently robust to ensure its security at every stage of its use and storage? I suspect not that many.

I spend quite a bit of time in law firms of differing sizes and it is usually fairly easy to come into contact with a pile of paper relating to one of the firm's matters. Just as importantly, however, is the care of incoming paper within the firm. If there was a fire or flood in your post room or office, would you really know what piles of paper had been destroyed. Is everything scanned when it comes into the building? Is it logged before it is scanned? If it is both logged and scanned - I bet that is a significant cost that the firm is looking very closely at...

This warning highlights the importance of having systems in place to ensure that paper records are managed as effectively as computer records. They must be in the right place at the right time so that they are valuable to the firm - and the firm must know what paper records they have (and where they are) at all times.

Thanks to IBB Solicitors for picking this one up and mentioning it on their Twitter feed (@IBB_Solicitors).

New Handbook - New Rules

2011-04-11T15:26:00.000+01:00

I have been reading with interest the new Handbook recently published by the SRA (available here). A number of areas have been tightened up, but the section most interesting to me (because it is the area in which I specialise) is chapter 7 (in the second section "You and your business").

I'd like to go though the "Outcomes" (which are mandatory) one by one:

7.1 "You have a clear and effective governance structure...". Well - where should I start. Governance is complicated in any partnership structure, but lawyers do seem to enjoy complicating the matter. I go into the area of governance in a recent book (blatant plug - more information here) but this is an area in which very few law firms cover themselves in glory. What exactly is the difference between a Managing Partner and a Senior Partner - and who is more senior? Who is the Risk Partner? Is the structure of the firm - and its connections with service departments - clear? Look at the number of firms with Joint Managing Partners - who is in charge there, and, more importantly, does everyone (including clients) know? There should be a separation between the strategic leadership of the firm (undertaken by a Managing Partner, for example, who should be a lawyer with years of experience in the field) and the leadership of the business (who should be an expert in leadership and management with similar experience in that field - and unlikely to be a lawyer).

7.2 "You have effective systems and controls in place...". Now this section is really about systems to ensure compliance with the principles and outcomes in the Handbook. It will, however, inevitably require a thorough review of all the systems in place in the firm. What is important is that the Firm - and so all of its partners and staff - are sure that their systems work, not that they think they might. Certainty is assumed by the SRA.

7.3 "You identify, monitor and manage risks to compliance with all the Principles...". Well this is a big one. I see far too many firms with ad-hoc Risk systems. I have seen firms - large firms too - which did not have a formal Risk Register, or who did have one that had not been looked at for a number of years. The Risk Register, and its associated programmes, will save your business one day - and now it is a requirement too. I do not believe it is possible to manage Risk without a formal register.

7.4 "You maintain systems and controls for monitoring the financial stability of your firm and risks to money and assets entrusted to you by clients and others". That word 'stability' is the key. Any regular readers will know that I have problems with the way that so many firms review their financial performance. For far too many partners, turnover is equal to success. Let me say this one again in the context of this new Handbook - turnover does not have anything to do with financial stability (or it has very little to do with it). Financial stability is based on two things. A strong balance sheet is the first - and how many partners really examine their firm's balance sheet? How many that do examine it really understand it? Few firms own their buildings and so their assets are usually mostly Debtors, with funds due from members or partners running second. Net assets will usually be balanced by member or partner equity and debt. Given the importance of the Debtors figure, however, it is surprising that little analysis is usually available about how the Debt is made up - nor is there a thorough understanding, and explanation, of the real likelihood of collection. The second key to financial stability is cashflow. This should be the first thing that partners are concerned about and should be the most important metric published to them. Partners should know how healthy their firm's cashflow is.

7.5 "You comply with legislation applicable...". Well of course. As a partner in your firm, you have checked this, haven't you...?

7.6 "You train individuals working in the firm to maintain a level of competence appropriate to their work and level of responsibility." Of course we do this, you will say. Really? Note that the Outcome specifies 'individuals working in the firm' and not 'fee earners' or 'lawyers'. The implication is that all staff must be properly trained. Not only that, if a partner is going to take over the running of the Marketing department, for example, he or she must be properly trained. I'd argue that proper training to run a marketing department of a £50million law firm will require a degree in marketing and a number of years of experience at a senior level.

7.7 "You comply with the statutory requirements for the direction and supervision of reserved legal activities", which of course you will.

7.8 "You have a system for supervising clients' matters, to include the regular checking of the quality of work by suitably competent and experienced people". Note that your firm needs a system to deal with this - which means that the supervisor will have to record his or her supervision and that this supervisor's work will itself have to be checked - and that there will have to be a system to ensure that a person is suitably competent and experienced, and that your firm has a process to record experience rather than simply years' worked, etc etc...

7.9 "You do not outsource reserved legal activities to a person who is not authorised to conduct such activities". I should hope not, but your firm will need to prove this.

7.10 "You... ensure that Outsourcing... does note affect your ability to comply with... your obligations...". So, just because you have outsourced some work (and note that operational activities are specifically included here), it doesn't mean that you have outsourced your responsibilities. So far as the SRA are concerned, the fact that you have outsourced a function is immaterial to your responsibility to control it.

Finally I should like to mention the 'Indicative Behaviours' for this section. These are not mandatory, however it will, I believe, be difficult to construct a good defence unless these behaviours have been followed. They are:

the safekeeping of documents and assets entrusted to the firm;
controlling budgets, expenditure and cash flow;
identifying and monitoring financial, operational and business continuity risks including complaints, credit risks and exposure, claims under legislation relating to matters such as data protection, IT failures and abuses, and damage to offices;
making arrangements for the continuation of your firm in the event of absences and emergencies, for example holiday or sick leave, with the minimum interruption to clients' business.

Number (1) above should be in hand already. The firm will, however, need to demonstrate its control of budgets, which will be interesting for those firms whose budget is often not agreed until towards the end of the first quarter of that budget year. I don't that demonstrates control at all.

I have mentioned Risk Management above, but points (3) and (4) above are concerned with Contingency Planning - something else that few firms do well. A scenario based approach is necessary and frequent testing required for both fee earning and support functions as well as exercises to show how the whole firm would respond to an incident.

Here is the sales pitch - Mar-aon Consulting can help with your firm's understanding of all of the above. Contact us today for more information and an informal discussion.

A more formal City?

2011-04-04T11:25:00.000+01:00

I spend quite a lot of time walking in the City of London from meeting to meeting or to my office. In the last few months, I'm much more aware of men wearing ties than I was before. My feeling is that, as times have been tough, City workers are turning to more formal dress in the office - and that fewer men are going with the 'suit and no tie' combination (that seems to be the consultants' uniform).

Looking to see if I could find evidence of this, I could only find some 'research' from 2008. I am wary of the term research because all of the statistics seemed to come from garment sellers. Remembering that caveat, however, Moss Bros reported (as reported in the Independent) that tie sales were rising at their fastest rate for five years.

The same report used the phrase "scruffy people are the first to be sacked...". While I doubt there is any science in that statement at all, I can see the sense of it. A scruffy employee gives the impression that he or she does not care - and it is that, rather than any concerns about their dress sense, that will get them to the front of the redundancy list.

So - to return to my survey of City people. I do believe that the City is a little smarter than it was. I have more clients now who wear ties than I did last year (although that, of course, might well be a reflection on a slightly changing client base). Personally I welcome it. I like to see smartly dressed people as I walk in The City. Perhaps, however, I'm just getting old...

Why is customer service variable?

2011-03-10T11:28:00.000Z

This question has been vexing me recently - why do we put up with poor customer service in some areas and not in others?

I won't wait in line to go into a restaurant - and yet I wait in line in the bank, quite often, and certainly spend a good deal of time queuing in the post office. I like to feel special when I buy things in a shop, and yet put up with being ignored by my bank. Why is this?

The question was put into focus for me recently by two 'transactions'. Working with a client (a large law firm looking to borrow about 8% of their turnover in total), I was arranging a change from bank A to bank B - moving accounts, loans and overdrafts. I understand completely that compliance officers are being more cautious than previously - but there seemed to be an expectation that the compliance team would work at their speed ("Compliance, eh! What can you do...?") and that we all just needed to put up with a delay. They returned some forms because the signatures (just) fell out of a box - it was perfectly legible and in the right colour ink (!) but did indeed cut the edge of the box and so was not acceptable. The compliance team had forgotten that they - just as much as the unfortunate customer liaison people who had to bear the brunt of out frustration - worked for us, the customer. Why did it matter that the signature had crossed a line? That was never explained - it was just a rule. Why did someone who was borrowing £25k in an unsecured loan need to give five years' worth of income details and the values of all the property they owned? That too was never explained and it was expected that we just needed to put up with it.

This is a clear case of forgetting who is important. Yes, of course compliance is important - but the bank's client should be the most important. Compliance teams need to trust their sales people - that the new clients they have found are good credit risks. Everyone concerned needs to think about customer service - are they working hard to ensure that the experience is a good one for the customer? Sadly no.

My second experience was a personal one. I have traded in my old Volvo (which has given me over 120,000 miles of service) for my first brand new car. I moved away from Volvo partly because of the models available but also partly because of the shoddy support that has been provide over the years every time the car has been serviced. It was quite usual to book the car in for a service, deliver it first thing on the booked day - and then to find that they hadn't, as such, actually done anything to the car that day and so needed a second to service the car. We would only find that out, of course, when ringing to see if we could collect the car - the conversation would usually start with them saying "We've found a couple of problems..." before admitting (once I knew to ask) that they hadn't really started.

So we decided to buy a new Audi - partly because I like the A3 and it's wonderful milage, but partly because I had higher hopes for their service. Oh dear - perhaps I'm just unlucky and so have been the only customer who had not been contacted post-sale and whose car had "by accident" been delivered to the wrong dealer. I accept that these sorts of things happen - but, again, I only found out there was a problem when I rang to check that the promised delivery date was still ok. Once again I had a conversation which started "Ah, there seems to have been a small problem..."

Issues seem to have been resolved (although I have had to make more calls that I would have liked and I suspect that I am now considered a difficult customer) and I hope to collect my car, as planned, later today. What has struck me, however, is that I could not - and certainly would not - consider treating one of my clients in the same manner. Imagine if I could simply decide that a problem meant that I could not be on site as planned with a client - but waited for them to ring before telling them.

Many years ago I worked in a banqueting department. We did a lot of weddings - providing the catering and venue for couple's special day. I used to have a fantasy of standing on the entrance steps and greeting a brand new bride and groom with "Ah. Hello. There's been a bit of a problem and we're not going to get things working today. I've sorted things out, though, and worked really hard - so we should be able to do your wedding on Tuesday. Wednesday at the latest...". While we all know that this would never work for a wedding - substitute the circumstance to that of a plumber and a client, or a car dealer, or an estate agent, or a bank (or a consultant...) - and suddenly it does seem much more likely, and perhaps even normal.

I don't believe that I expect too much from companies. Sadly, I think that we all expect too little. Let's all raise our expectations - and accept that we may need to shout a little until those raised expectations are met.

The Matter Gross Profit.

2011-02-22T12:29:00.000Z

In an earlier post, I discussed the sort of measurements that most firms could be using and the different view of the firm that they provide.

So what?

Well the point of finding and using better measurements is to provide a better record for managers to be able to run the firm in a more efficient and effective manner - or just better. Most law firms tend to have fairly short term views of their own success. You will see many items in the legal press highlighting increases in either turnover and/or PEP 'compared to last year'. It is, however, trends that are important rather than one year 'blips', whether upward or downward. By looking at the trend in the firm over a five or ten year period, even turnover can become interesting and useful. By looking at that period, it becomes quickly apparent which years are anomalies - and so which sets of results should be set to one side when deciding if the firm is successful.

So having decided that a longer term view is sensible, just what trends should you be watching? Although most law firms enjoy talking about PEP and turnover, by far the best measurement is a long term examination of 'Matter Gross Profit' - that is turnover less direct costs and staff costs (including partner remuneration). This is a measurement of profit that helps to focus fee earners on those aspects of a matter that they can most easily influence - the price and the allocation of work.

Continuing the examples form the previous blog entry, the Matter GP figures do not look good:

The Matter GP percentage is reducing:

It is possible, therefore, to conclude that the firm is less efficient than before, even though, as previously discussed, it would probably think of itself as successful.

The Matter GP measurement can be used by the firm to reverse the trend (together with sensible cost-control measures). All fee earning staff should be bonused not on hours billed or turnover - but on achieving a Matter GP target for their section, department and for the firm as a whole. In this way, every fee earner is motivated directly to consider the profitability of work and will find that it is not in their interest to simply throw resources at a matter as a deadline looms.

Much more about this subject and about firm governance is available in my new Report, available from the Ark Group (publishers of Managing Partner magazine). Follow this link for details.

Report Published

2011-02-09T19:16:00.000Z

After months of writing, editing and proof-reading, my report entitled "Law Firm Governance and Measurements of Success" has been published and is available for purchase.

The report is available from The Ark Group, publishers (amongst other titles) of Managing Partner Magazine - the link to their book shop is here or by phone on +44 (0)20 7566 5792.

To quote from their sales site:

Managing Partner’s report on Law Firm Governance and Measurements of Success provides a vital examination of:

New governance models for law firms of different sizes and complexities;
Law firm growth stages and the structural changes necessary to succeed;
Overcoming the cultural barriers/issues involved with changing your governance and/or measurement systems;
Current measurements of success – internal and external;
New medium and long-term success metrics to better support long-term thinking, and payment and reward structures;
Attracting clients and external investors through effective reporting of your firm’s success; and more…

I'm very pleased with the report and really believe that it is a useful tool for law firms of all sizes. Buy it now while stocks last!

The Numbers Don't Lie

2011-02-02T11:51:00.017Z

Following on from my last post, I've been asked to offer an example of the sort of numbers that a firm should be looking at (and it was very gratifying to know that people read my blog!). Given the feedback, I'm going to use a (fictitious) law firm as an example (and another caveat here - I use a lot of examples in my work - and in a major report soon to be published. None of the examples or anonymous cases are firms I've worked for, no matter what you think).

Our firm - like most in the industry - is obsessed with turnover. In its first five years as an LLP, it has had rising revenues and has been happy to shout about them in the press:

Its year 6 turnover is down, but the firm is content to rely on 'poor economic conditions' as a reason. The firm's belief is that the above chart shows the firm's success. PEP (Profit per Equity Partner) has been rather all over the place. The firm has been content, however, to emphasise the large increases in PEP in years 5 and 3 (over 66% in year five) without feeling the need to look at the actual numbers, the fact that the large increase was the result of a poor result the year before or the trend:

We know, however, that neither PEP nor turnover are robust measurements (although looking at their multi-year trend can begin to be useful), and so our examination should move to other metrics. The trend in Net Profit is worryingly downward - and this from a 'high' of just over 18% which I would normally categorise as 'barely acceptable'. For comparison, the average NP% of the UK's top 100 firms (as defined by "The Lawyer" in 2010 was 24.3%. Our firm's numbers are bad and the trend is poor:

I have an in-depth report coming out very soon which examines a number of new measurements for examining the success of a firm, one of which is 'Net Profit per Total Staff' which divides the net profit made by the firm by the total number of staff it employs (including partners) and so examines the efficiency of its staff. On this measurement, too, the firm is in trouble:

Its efficiency is dropping and its staff numbers are increasing - and so expected efficiencies of scale are not happening. Looking at the staff numbers:

it would appear that there has been a degree of gaming of the firm's PEP figures - that the increase of PEP in year five has been helped significantly by a drop in the number of equity partners and that the firm's overall profitability has been driven by cuts in staff numbers. While this may be necessary, it can be counter productive if the firm sees a drop in turnover (as it has) partly driven by a reduction in marketing staff, marketing effort, and a desire on the part of partners and staff alike to be seen to be billing work rather than spending (unbilled) time looking for new work and new clients.

Ignoring the turnover figures, the numbers suggest a firm in trouble. Their cost cutting exercise has either been insufficient to address their poor net profitability and seems to be accompanied by a reduction in turnover. All the major trend lines are downward. Partners are staff are - and should be - worried.

In my next posting, I'll examine some of the things that the firm should be doing.

The Right Numbers

2011-02-01T13:22:00.000Z

In the last few weeks I seem to be concentrating on financial analysis for and with clients. I have worked both with sole traders and with larger, multi-million pound organisations, and with both sorts of organisations I have led discussions about which of the metrics firms should be watching.

Any regular readers of this blog will know that I have a problem with firms spending too long (or indeed much time at all), watching or thinking about turnover - no matter how tempting it can be. With my sole trader clients I've had some very interesting discussions about accounting systems. As a non-accountant who has run accounts departments, I have some key reports I look for from accounting systems. For me, any system needs to be able to delivery quick, accurate and useful management accounts - reporting on cash flow, gross and net profit. I want to be able to see what money the firm is owed, what money the firm owes, who the aged debtors are, and the bank position.

In my own business, I use Kashflow (an online system which works on monthly subscription thereby meaning I can avoid a capital outlay for software - and that my data is backed up by Kashflow) which seems simple enough to use and which provides an opening dashboard to give me the information I need at a glance. I can also use an iPhone/iPad app to access my account information and so see it when travelling. There are a few competitors - Sage has just brought out a similar, cloud-based, product - but I like Kashflow, the price is good, and the online and email support is pretty good.

In larger firms, I try to introduce the concept of a 'Project Gross Profit' (or a 'Matter Gross Profit' in lw firms) - which examines Revenue and then accounts for direct costs and salaries to arrive at PGP. This is a way of examining the immediate profitability of individual projects or tasks while accounting for the most liquid of overheads - people. It is usually easy to allocate time to projects and tasks and so the calculation is simple. I also try to get this measurement adopted at the Costing stage - so that the firm can be sure that the work they are pitching for will be profitable, and not just some attractive-looking turnover.

Times are still quite tough for most firms, and so it is more important than ever to be sure that every project, every person and every task is providing profit to the firm - and that the firm has the information to be sure that this is happening.

Phew!

2010-12-20T16:33:00.003Z

At last - I have finished the report I've been working on for a good few months.

Today is supposed to be the first day of our Christmas holiday, and my report was due with the publisher today - so yesterday I finished all the proof reading, gathered all the necessary files, and sent the lot off to my (very patient) editor.

The report is on the subjects of Governance and Measurements of Success in Law Firms - subjects that clients and regular readers will know are fascinations of mine. You may be glad to know that I'm not going to go into the detail of the report now - partly because I hope that you will all buy one (it's a thrilling read even if some of the characterisation is a little weak) and partly because I've thought of little else for the last few days and so am really glad to be thinking about almost anything else.

It's been interesting to set my thoughts in a structured way. Initially I was concerned that I might not be able to write 45,000 words on the subject - but towards the end the problem was more one of keeping to a maximum word count.

I hope that (a) you'll buy one when it is published (by the Ark Group - more details here) and (b) that you will at least find it useful and perhaps even enjoy it. Until it is published in the New Year, I'm planning to have a break, be very nice to my wife who has had to put up with me while I was writing it, and to catch up on some reading.

Have a wonderful holiday!

And it begins...

2010-11-27T14:27:00.000Z

The "Law Society Gazette" reported, this week, that a new, interesting, player had joined the firms offering their services to Wigster.com - an online legal price comparison website.

What makes it interesting is that the new entry is from "Access Legal" which is the consumer services arm (apparently no-one calls it "commodity legal services") of Shoosmiths - listed in 2010 by "The Lawyer" as the 33rd largest UK firm by revenue and with a total staff (excluding the Access Legal staff) of over 1,100. Shoosmiths, therefore, are a big player and one of the first of the 'big boys' to engage with a comparison site.

Wigsters report that there are a number of big firms waiting in the wings to join their service, and, given that other online services appear to be very popular with the public (notwithstanding various irritating advertising efforts).

This could be the way forward - affordable services offered to customers based around commoditised services, but with the backing of a large law firm capable of dealing with things when a case goes off the rails. It would appear to be a win-win for the customer - a good price and the backing (and the name in the case of Shoosmiths) of a big legal player.

It is encouraging that Shoosmiths are so confident in their placement with Access Legal that they feel they can join the comparison game. I suspect that as this market become crowded and more and more firms join then Access Legal might one of the first to 'do a Direct Line' and have, as their marketing tag, the fact that they aren't available from comparison sites. Only time will tell.https://www.wigster.com/

Be Aware!

2010-11-09T17:46:00.000Z

I have lots of meetings through my working week. If I don't meet in a client's office, and I'm in London, I can meet people at the Institute of Directors in Pall Mall. It's not a perfect space - it is sometimes noisy and there are just not enough power sockets - but it is a professional set of rooms where we can have a meeting with a degree of privacy.

I also spend some time in coffee shops. Part of the joy of working for myself is that I can decide that it's coffee time and I can choose where I sit. Very often, as I am sitting there calmly watching the world go by, I can hear other groups of business people having their meetings. I get to hear all sorts of information - about firms, about people and particularly about relationships. I hear an awful lot about people's feelings for their clients, colleagues, their boss and their subordinates.

Entertaining as this can be, in what I admit is a somewhat voyeuristic sort of way, it can be a little shocking that professional people are willing to have such private conversations in such public places. It's not that I'm deliberately listening out for information (honestly) but sometimes it can be difficult not to hear. I've picked up a great deal of information about a couple of local law firms, a consultancy (and it's a very good thing I'm not one of their clients, given how they talk about them) and a couple of large IT firms.

No-one would dream of standing in the street and shouting out insults about their clients - so why do otherwise sensible business people think that a public coffee shop is a good place to have a sensitive meeting?

I'm not suggesting that you should never use a coffee shop - merely that you remain aware all the time that you are in a public place. Be discrete. Have your most sensitive meetings somewhere else. Most of all - please be aware of your surroundings and think before you speak. Perhaps, too, don't say bad things about your clients in a situation where there is any possibility of them, or their friends, listening.

Succession Planning - Thinking Ahead

2010-11-01T11:01:00.000Z

I have been talking with a number of clients over the last few weeks on the subject of succession planning. It's the art of making sure that you know what you will do as positions become free in your organisation - and the actions you will take to make sure that the right people are ready in the right place with the right skills to do the job. Simple!

I'm no longer surprised at the number of people I speak with who are not making plans for the future - whether that it succession planning, strategic planning or anything. Working mostly with law firms and now schools, I regularly hear "Oh I'm far too busy to have time to deal with all that". Sadly I don't think you have time not to.

Worryingly, some other bloggers seem to have what I think are slightly relaxed ideas about this too. I was reading "What Makes a Great Managing Partner" on the Adam Smith Esq blog and found myself muttering in disagreement from time to time. The blog argues that having a formal succession plan cand invite "jockying for position, ...concomitant gossip, innuendo and navel-gaxing, and distractions for the incumbent...". The blog goes on to suggest that without a formal succession plan you invite "chaos...when the Managing Partner does step down, intergenerational conflicts and a divided electorate".

All of this is, of course, possible - but only if you try to put a succession plan in place in isolation. If it is executed as part of a strategic plan and if the succession plan is talked about, and if everyone in the firm has a proper development plan, then there should be few problems - and certainly many fewer than by not having a plan in place at all.

To be fair, I think that 'Adam Smith' and I mean the same. His final paragraph (in that section) says "Don't put a formal process in place..." but then describes what I would think of as one type of formal succession plan.

Perhaps I'm just not that formal a person.

The point is that you must think about the future - your firm or school will depend on it. Think about where you want your organisation to be, have a plan, think about the succession and develop your people to the point that they can do the jobs you need them to do. Yes - you will develop some of your best people out of the door as they are headhunted into bigger (and better?) places. This is, however, a good thing. You gain a network of people you have helped into positions of success, your current staff see that you want to help them, and you will have the right people when you need them.

Succession planning really is one of those few "win/win" situations.

The Ethical Stance

2010-10-07T11:38:00.000+01:00

Isn't it good to be able to report that lawyers are taking an ethical position and fighting, in the courts and pro bono (mostly) for something that they believe in?

The case of Paul Chambers has been reported in many parts of the media. It is a shocking case of over-reaction, incompetence from the CPS, rushed advice to a client and an apparently heavy-handed judge. For those of you unaware of Paul, her was the "Twitter joker' - the case is outlined by the Guardian here. Mr. Chambers was undoubtedly silly - but I suspect that many of us have felt the same way he did, even if we have restrained ourselves from voicing our frustration so publicly.

What I find heartening is the number of lawyers who feel so strongly about this nonsense that they will work, generally for free, to secure Paul's release. "The Lawyer" details the list of those engaged in the project here. I think they should all be congratulated publicly. This is a tremendous demonstration that lawyer are not (all) money-grabbing, self-centred leaches and that they understand when a law or the application of a law is just plain wrong - and are then willing to do something about it.

Thank you: David Green, Stephen Ferguson, Andrew Sharpe, Tom Cassels, Ted Mercer, Robert Dougans and Joanne Casg - and all the others.

Keeping Up To Date

2010-09-28T16:40:00.002+01:00

I am not an expert in either marketing or in social networking. I don't think, however, that it needs an expert to know that:

Your marketing materials should always be up to date;
Your website is part of your marketing effort
If you wish to engage in social networking, then you need to actually engage in it and not simply ignore it after a while

This minor rant has come about as a result of some research for a number of different clients. I have been working with clients in the legal, educational and charity sectors in the last couple of weeks (I'm very lucky to have the variety) and have noticed that many of the companies/schools/charities I looked at seemed to get one or all of the items on the above list wrong.

I've seen blogs with the latest entry over a year old and have found links to non-functioning Twitter feeds. I've seen websites with broken links and links to events which are impossible to attend, what with them being in 2008. I've seen websites boasting that the company concerned (no names, no pack drill - but this was a law firm) could contact you by "post, fax and email" (wow).

I've looked at schools which offer the web visitor the chance to see content from pupils - only to find that eight of the ten pages were empty and the two that had content were ten months old.

In my opinion it is perfectly acceptable for small organisations - whether law firms, schools or charities - to have a small web site. Organisations this size are unlikely to have spare resources to support real-time engagement and may not have time for regular web updates. No problem. The problem comes when engagement is started or offered - and then not carried forward.

If you own or work for a small organisation, you should have a web site, I think. It can be very simple with basic information about who you are and what you do. Schools should have some dates on there and charities should have some way of accepting donations (which can be done from a link to a third-party) - and everyone should have contact information. That's it though.

Much better to do a little well than to try to be all things to all people and to come unstuck.

PS - as a result of this research I had a good look through my own web site and did a little housekeeping!

Looking after the future

2010-09-23T12:53:00.000+01:00

Some good news at last. Even I have become worn down with what can sometime seem like endless bad news. If it's not "firms going bust" it's the "return of the old management style" for those firms which think that the recovery has started.

It is good, therefore, to see that Herbert Smith are playing a bit of a long game with their 'Networked' programme (more here) in which they will support five Year 12 students from 'some of London's most deprived boroughs'. In response to complaints that the legal profession was essentially a closed-shop to people from poorer backgrounds (as reported by Alan Milburn in 2009) this does seem to be a serious attempt to show that background need not be a barrier to success in the law.

It is interesting to see solicitors getting involved in this. The Inns of Court have, for many years, run scholarship programmes in order to ensure that access to the bar is not restricted to the rich. It's good to see that solicitors are joining in.

Tough Times for Equity Partners

2010-09-14T12:35:00.000+01:00

Perhaps the title should read "A tough time to try to become an equity partner" which, although more accurate is less snappy.

It would appear from the statistics and results being released that there are fewer equity partners in law firms that in previous years. Firms (or rather existing equity partners) have protected their own earnings and the PEP figures (which they seem so fond of) by the simple expedient of either not increasing their partner numbers or by actively reducing them. Five years ago, perhaps, an equity partner would be 'carried' to an extent by his colleagues - for a while at least. Not now. The principle now seems to be 'perform or out'.

Only one major firm (as reported in "The Lawyer") has increased its ratio of equity partners over the last five years - although that figure is skewed by the partner activity over the last 12 - 18 months. Field Fisher Waterhouse, for example, have reduced their equity partners (that is, full. "A" level partners) from 41 to 27, according to "The Lawyer".

So what? Should we care? Only to the extent that it is another demonstration of the ruthlessness of the industry. In a way it is nice to see that this ruthlessness is applied to fellow equity partners as well as to employees. No-one would appear to be safe.

More seriously, however, this could be (some firms will, of course, have given the matter more thought than others) a further example of short-term thinking. Presumably those partners who no longer have equity in a firm will fell a little miffed. I suspect that it is, therefore, unlikely that they will continue for any length of time in that firm. Of course, this might not be a problem, if the partner really wasn't performing. I doubt, however, that this can be the case with all of them (surely?).

The other serious issue is that of motivating about-to-become-equity-partner level staff. Most lawyers only have one promotion path in mind - that of making partner. This progression has suddenly become more difficult and so firms will need to become ingenious in motivating the people before whom they used to dangle an equity partnership.

It will be interesting to see movement in this market over the next few months - and the clever ways in which firms work with their good senior associates or fixed share partners in order to keep them.

New Term - New Report

2010-09-07T13:12:00.000+01:00

"The Lawyer" has just released it's "UK 200 Annual Report 2010" (which is available online here). It is interesting reading. There are a number of claims about new measurements - but the focus on revenue remains as does the industry's fascination with PEP.

I encourage you to have a thorough read of the report. What the suggests is that, by adopting new scales such as "Days to Profit" (on page 6 of the report), the magazine is keen to try to reduce the "gaming" of statistics that goes on. For example - an easy way to increase PEP is to reduce the number of applicable equity partners - something a number of the top firms have done. It's certainly easier (if perhaps more expensive in the long run) than trying to increase profit.

While the "Days to Profit" is interesting, I was more taken by the table on page 8 of the report showing the top firms by cost reduction. The report orders the firms by the size of the one-year reduction from last year to this, but for me the interesting numbers are those in the five-year difference in costs. The leading "one-year-cutter" is Freshfields who have cut their costs by 19.3% in one year. Without more detail I can't comment on the efficacy or long-term effect of this size of cuts, but it is, I will guess, related more to the booking of redundancy costs in the previous year than to anything else. Over the last five years, Freshfields have increased their costs by 22.93% which doesn't seem too bad. Hammonds show a five-year change of -5.9%, although I'm not sure I'd use Hammonds as s good example. Wragge & Co show restraint with a five-year increase of less than 10%. These longer period measurements are more useful because they avoid the peaks and troughs of "spend and cut" than tend to characterise the industry.

The tope four firms are analysed in some depth and their performance examined over five years, but with the rest of the firms in the listing, it is business as usual in terms of focussing on turnover, PEP and figures for a single year.

Surely if there is one thing that the last two years have taught us, it is that looking at performance for one year is now use at all in terms of examining the success of a firm. I look forward to the day when firms are ranked by their rolling five-year net profit, amongst other longer-term measurements.

Still - small steps, and the new measurements are better than before.

From the report, my highlights are:

Barlow, Lyde and Gilbert for strong five-year cost reduction
Beachcroft and Wragge & Co for doing well on the "Cost per Lawyer" category
Dickson Minto for achieving 7th place in the "Revenue per Partner" list and performing well again in the "revenue per Lawyer" category
Sacker & Partners for achieving 7th place in "Revenue per Lawyer"

Fault, responsibility and strategy - or none of the above...

2010-08-03T09:15:00.000+01:00

Dear oh dear - what a mess.

Ian Austin, the former Managing Partner and Executive Chairman of Halliwells, has been talking to "The Lawyer" (see here for their story) - or rather he has been giving his version of their descent into administration. It turns out that it was the partners' fault, or the external consultants, or the boards' or... someone else's decision or fault. I quote one example from Mr. Austin:

the decision to move into Spinningfields was a decision taken by a board, by external consultants [Sheppard Robson] in conjunction with group heads. This was not a decision of my own making..

What? He was the Managing Partner - his is the responsibility, whether or not it was his fault. He is also quoted as saying that the loss of the insurance team in December last year was the "straw that broke the camel's back". One of the comments on the story points out that his firm was still recruiting & promoting 6 months later. In a limited company or a PLC surely this would be "trading insolvently"...?

I suppose I should be more shocked at the lack of responsibility that is shown here and at the lack of strategic thinking that allowed the firm to distribute £15million to the equity partners in 2008 (keeping a whole £5million for investment in the future - well in the firm's future). Mr. Austin's excuse/justification for this seems to be along the lines of "the money was there and we wanted it" or "at the time everything looked rosy". On a much larger scale this is like saying "I didn't need an umbrella - it wasn't raining yesterday. It's not my fault I got soaked". I'm not sure this even qualifies as short term planning.

As I said in a previous blog (see here), one of the most shocking aspects of the Halliwells debacle is that the equity partners walked into new jobs - the very people responsible for the mess are those least affected by it. Mr. Austin himself negotiated his own safe transfer from the sinking ship before the deal on Halliwells' assets was completed - an action he justifies as being "...the right thing for me."

That last phrase sums up the state of management and ethical behaviour in Halliwells - the equity partners removed £15million of cash from the firm 18 months before it went bust because they wanted it; the same people walked into new roles, leaving trainees and junior staff to their fate, because they could and it was the best thing for them. With that level of strategic thinking and personal thinking rather than firm thinking, my only wonder is that it took them so long to go bust. I'm sure Manches are heaving a huge sigh of relief that they didn't merge (or buy) with Halliwells in 2009.

Responsibility and Leadership

2010-07-26T09:33:00.002+01:00

As regular readers will know, I have issues about the way that many law firms are managed - specifically that firms are, in general, run by "enthusiastic amateurs" who have an instinctive suspicion of those professional managers who do not have a law degree (merely having advanced degrees in management, for example).

I was reading the story of Halliwells over the weekend (see here for the least impartial view) and was struck at the difference in the outcomes for partners, junior legal staff and support staff. It would appear that many of the partners have simply walked into new roles at other firms while most of the others are currently - or will soon be - out of work. I am sure that most of them will secure new employment soon, but it is striking that it is the owners and managers of the business - those who presumably made the decisions that got the firm into its current mess - who are least affected by its failure.

It occurred to me, however, that I might have been thinking about this in the wrong way. I have been constantly comparing law firms with more commercial organisations when, perhaps, they are not business at all. Most are simply collections of solicitors who have no consideration of the firm as an entity and who seem to have no motivation to look after anyone but themselves.

Does this sound too cruel? Perhaps. I'm sure that I am describing one end of the continuum. I am, however, sure that many partners seem to have a poor understanding that the firm is larger than just them, their team or the legal staff. My recent analysis of 186 of the top 200 firms (as measured by "The Lawyer") showed that, on average, 45% of staff in those firms were non fee-earners (with the maximum being 64% and the minimum being 12.5%). That is a large number of people to look after. The partners in law firms have a responsibility for these people, even if many of them seem to think that this responsibility can be discharged by email...

So - the learning is this. Your firm is more than just you. It is a collection of real people who (in general) work hard to provide you with additional profits and who, in return, hope for consideration and respect - and a long term future. As a partner, you are asked to be a leader for the whole firm in return for which you are given wealth, status and security. It is not sensible to assume that you can have one without the other. Lead your firm, please.

Holiday Time

2010-07-20T09:23:00.000+01:00

It's that time of the year again - the time to rush out of the office two hours late, into an over-packed estate car with various family members, and to endure a long car journey to your holiday destination. Having arrived, much later than planned, tired and stressed, your first action will be to take your Blackberry out of your pocket as see if you get signal - thereby upsetting your partner to the point of being able to get the first row of the holiday out of the way there and then.

There is an alternative. It does, however, require a little planning. That's why I suggest it now. So - sit back, read carefully and find a way to actually enjoy your holiday - from the first day.

Plan your last day. Think about all the appointments you have that day and establish a realistic time to finish. If you have a 5pm conference, arranging to meet your family outside the office at 6pm is a recipe for stress. Much better to meet later, but without having to rush.
Arrange a single point of contact. If you have a secretary, then she is a good person to control contact with you during your holiday. There should (where possible - many bosses are less keen on the idea...) be only one person who is delegated with contacting you if necessary and who has the full details of your trip, including hotel numbers, airline details etc. Check in advance if there is a mobile signal - if not, then you may choose to have a land-line chat every couple of days with your contact-person instead.
Have the "emergency" conversation. Sit down with your contact-person and talk about what sort of incidents and events might constitute the sort of emergency that would require your input. You don't want to be contacted two or three times a day because it has been difficult to find a client - but, equally, you don't want to return to the office to find a smoking ruin and an assistant saying "...well, we didn't want to bother you..."
Talk with your team. Speak to the people who work for and with you. Make sure that they know that you are going on holiday - and that they know that they will not be able to contact you other than through your contact-person (se above). Make sure that they understand your deadline on your last day (and I'd recommend that you tell everyone you are leaving some hours before you actually hope to.
Update. If you are going away from the office for a while - two or three weeks, say - then arrange to have a written update emailed to you at the end of each week. This should be a short-ish document (2 or 3 pages) bringing you up to date with the important issues. Obviously this needs to be written by someone you trust to tell you the truth, to understand the important issues and to tell you that your input is required only if it really is.
Tell your clients. I know that this is contentious, but it really is better than they can think of you as human. Say who will be heading their case/matter/issues and tell them about your primary contact-person.
Have the email conversation. Let's be honest - you're probably going to read your emails. Set a time at the beginning or end of the day - but make sure that someone else has been though your emails and flagged the important ones that you might be able to look at briefly in that 5-10 minute period. Note that you are not guaranteeing to read email every day - you are guaranteeing that you will not read emails other than during a narrow window. After all, you've already arranged what will happen if there really is an emergency...
Have some time alone in between finishing work on your last day and coming home as a "holiday person". You need to change your perspective and you need to positively think about being away from the office, about being on holiday rather than at work, and you need to prepare to be available to your partner / children / dogs from now on.

So now you can relax. You know that the work is being done, everyone knows what to do and that both you and your office understand when contact is necessary.

It is important to have a proper holiday. You and your family deserve it and your team deserves to have you at your best (and, to be honest, they may enjoy you being out of the office).

Relax, chill out, play silly games, walk in the sea, count clouds, pick flowers, talk at length with the people you love, chat with furry animals, sleep. It's what holidays are for.

What's the problem with PEP?

2010-07-16T10:30:00.000+01:00

I had an interesting conversation yesterday. I was talking with a lawyer friend of mine (who will remain nameless) and was continuing on my recent theme of measurement within law firms and, specifically, the problems with PEP (profit per equity partner). I won't repeat my issues with PEP here - just have a look at my last post if you'd like to see what I think.

My lawyer friend is not a partner (yet). He suggested that, since he was going to be a partner, and since PEP was published for almost every firm, this measurement gave him a fine way to compare firms. Our conversation went something like:

"PEP is great - I can see which firm is best", he said.

"No - you can see which firm might give you the most money when you are an equity partner. PEP isn't a measurement of which is best"

"Well it's the same thing, really..."

I countered with a story about a mutual friend who is a corporate finance manager in a large company. He had recently moved firms and during the process had gone through the books of prospective firms in great detail, examining profit flows, balance sheet health, forward strategies and client surveys. Yes of course he was concerned about the amount he would be paid - but he was as concerned that the company he was about to join was healthy.

PEP gives no idea about the health of the firm. Look at the results from Shoosmiths (as published by Roll on Friday). They have published an increase in PEP of 70% despite a decrease in revenues of 9% - and have issued a statement that this has been possible because of "...developing existing clients and ...winning new ones". Just to repeat - they have managed to take more money out of the firm, even though less came in. Not only that - but they justify this by saying that they have "developed clients". What does this tell us about the health of the firm. On the face of it, nothing at all. In fact, however, it suggests that Shoosmiths either have no idea about forward planning and building reserves, and so are content to pump money out of the firm at the very time that it needs it - or that they are content to paint a rosy picture to prospective employees and partners. Neither is very good at all. I am not suggesting that Shoosmiths are any worse than any other law firm. The majority of the larger firms (by revenue) have posted similar increases in PEP and decreases in revenues - while suggesting that this is good.

I suggest that prospective partners look well beyond revenue and PEP before moving from one firm to another. At the very least I suggest that they:

Look at five years worth of balance sheets to see

the ration of liabilities to assets
the amount of band debt written off
reserves

Look at the strategy of the firm and whether it has actually been implemented
Look at the marketing strategy of the firm to see if it actively supports the firm strategy and whether pervious measures of success have been achieved
Look at staff and partner satisfaction surveys
Look at client satisfaction surveys
See evidence of business training for partners - after all, you will probably be asked to take some sort of role in the management of the firm.

If a firm is unable to supply any of the above - if, for example, they have no firm measurements of success for marketing or do not take satisfaction surveys - I'd be a little worried. It might not be a deal-breaker, but it's a large red flag that suggests that the firm you are looking at may not be amongst the "best" after all - no matter how much money they might give you.

Understanding the Numbers

2010-07-14T11:01:00.003+01:00

Revenue down - bad. PEP up - good! That seems to be the message from the industry as published by The Lawyer (see here). The top 30 firms (as always, measured by revenue) have shown a drop in revenues of nearly £0.5 billion. "Don't worry", would appear to be the message, "PEP has risen".

I know that this has been a theme of mine recently, but let's just see what this means.

Revenues down
This means that clients are spending less. There is a smaller amount of money in the industry. It's not a small sum of money, either. The industry has contracted significantly and so almost the same number of firms (sorry Halliwells) will be chasing a smaller pool of work.

In any other industry this would see prices fall as market power moves to the client and would see businesses doing everything that was required to get their organisation through the difficult times - cost control, improvements in efficiency, increasing or using reserves as required (this is the rainy day that every firm should have been saving for).

Firms have been talking about cost controls - but for most law firms this means firing people. Care needs to be taken, however, since there are significant costs associated with both firing and with hiring staff - redundancy payments, legal fees, lost work time for meetings, poor use of executive time, recruitment charges, "ramp up" costs (as new staff find their feet in a new environment) etc etc. The last time I did a calculation for a law firm, it was cheaper to retain an associate if they were likely to be fired and then someone hired 17 months later. Let me repeat that - it was cheaper for the firm to pay an associate to sit at their desk doing nothing than for the firm to fire them and buy someone else in 17 months later. Never mind the fact that there would be some useful work for them to do - or the PR/HR benefits in being seen to retain staff wherever possible.

I'm not seeing many efficiency improvements. Many firms seem unaware that they have processes never mind looking to see how these could be made more efficient. As for reserves - most law firms seem to think that these are not necessary. I'm am amazed that there is no appetite to smooth out the highs and lows in PEP. Reducing pay outs in the good years would enable a smaller reduction in the bad. May daughter understood this piggy-back mentality when she was ten...

PEP Up
At first glance this seems to be good news - Profit per Equity Partner has gone up. Surely if profit has improved that is a good thing? Yes - except that PEP does not simply measure net profit. PEP is a measure of the net profit that has left the firm. This is the amount of money that the Equity Partners removed from the firm to their own accounts.

Why would firms boast about this? I will never understand why the most favoured measurement of a firm says "look how much we've stripped from the firm!". I don't know of any other industry that makes such a noise about partner or executive payments.

What would be more impressive for the good of the firm would be a measurement of retained profit or a statement of reserves. Why have law firms not been building up reserves to see them through this sort of market? Yes, there are tax advantages in the way things are done now - but this is a very short term view of business.

What is unfortunate is that PEP makes lawyers as a whole and partners in particular look greedy.

Neither revenue nor PEP should be the numbers the industry discusses. Let's look at simple net profit or retained profits or profit per fee earner over five years - or the trend in profit per fee earner or partner over five and ten years. These are useful measurements which focus on the firm rather than on the industry or the personal interests of the partners.

Halliwells - should we be surprised?

2010-06-30T12:06:00.000+01:00

It is always sad when a firm files for bankruptcy as Halliwells did this week - as reported in "The Lawyer" and the rest of the legal press. It should not, however, be too much of a surprise.

Like many firms during the glory days of the mid to late 90s, Halliwells embarked on an aggressive growth strategy. Sadly they appeared more focussed on turnover rather than profitability - and on taking as much money from the firm as possible, rather than re-investing in it.

I quote from "The Lawyer":

The firm, which posted record profits and turnover during the bull market, ran into difficulties when it took on new Manchester headquarters at Spinningfields in central Manchester in 2007, paying top-of-market rent believed to be £35 per sq ft. It subsequently distributed a property-related windfall to partners as opposed to investing it in the business.

Let's just have a look at this in more depth, because this paragraph sums up the problems with the firm - and the problems that are likely to face more firms in the near future. Halliwells posted record profits and had record turnover - but seems to have decided that this market was normal and expected that the record level of turnover and profitability would continue. Not only that - they appeared to make no provision for the future. Look at the last sentence above - the owners of the business rewarded themselves with a windfall rather than investing in the business. Just imagine if the directors of a listed company had acted in this manner - even if the windfall was given to the shareholders rather than just the executives. They took one-off profit out of the business with no thought for the firm's needs in the medium and long term.

Looking at Halliwells' results, however, suggests that they have not focussed on profitability for a while. I am finishing off an in-depth analysis of law firm results with a view to proposing new measurements, some of which I will preview when talking about Halliwells. On the traditional measurements of law firm success - turnover and PEP - Halliwells were 38th in rank by revenue and 61st in rank by PEP. So they have already dropped considerably down the table when profit starts to be considered. In 2009 their net profit was 14.2%. It becomes more interesting when one considers other profit-based measures.

Looking at Net Profit per Fee Earner, Halliwells dropped to 86th place; and they were 82nd in Net Profit per Total Staff. All rather poor for a firm with pretensions to grow.

Not only has the firm appeared to concentrate on the wrong things, they have consistently removed cash from the firm whilst appearing to give little thought for that "rainy day" that was surely coming (to be fair to Halliwells, this equity payout at the expense of investment in the future does seem to be the industry standard).

A parting thought - have the equity partners, who benefitted year-on-year from profits, considered funding the firm through this crisis. Perhaps they could repay super-profits and that property windfall? After all, their last published results (for 2009) show PEP of £280,000 and an equity spread of £110,000 - £400,000. Even using the average - and asking for 50% re-investment in the firm - the 38 remaining equity partners could offer £5,320,000 in immediate cash, and this is without asking the fixed equity partners to join in...

The full report analysing 187 law firms and suggesting new benchmarks will be published soon by Mar-aon Consulting.

Spot the difference

2010-06-18T14:10:00.002+01:00

Two news stories today - both from "Roll on Friday" (always a good source!).

The first is about Eversheds who are, apparently about to outsource its entire fiance team. Well, I say outsource - the story in fact says that the team will be made redundant and the work moved to an outsourcing firm in India. Outsourcing does seem to be the current "thing to do" - last year it was redundancy, this year it's outsourcing. Eversheds are also, apparently, looking at outsourcing some legal work to regional firms.

The second story is about Edinburgh firm Shepherd & Wedderburn who have just announced that they will be compensating those members of staff who agreed to take unpaid leave last year. In the height of their recession, S&W asked staff to take unpaid leave to avoid further redundancies. Apparently 98% of their staff agreed with the proposal and the firm survived. One year on and now that things are recovering, S&W have announced that they will be repaying 50% of the amount staff lost by taking unpaid leave. Patrick Andrews, the firm's CEO (and I won't get into the whole subject of a law firm CEO who is really, at best, a Managing Partner) in on record as saying that "...[it] without doubt the right things for us to do for the medium to long-term". Absolutely - let's acknowledge that the staff did something for us when needed and so we will repay that trust in the firm as soon as we can.

Spot the difference in approach to a firm's staff. In one firm, staff appear to be thought of as drones who do not add any strategic value and who can be replaced by either cheaper people or machines. In the other firm, staff are people who contribute to the strategic future of the firm and who make a contribution which is recognised and acknowledged by the firm's management.

I know which I would rather be working for.

A sinking feeling...

2010-06-10T17:28:00.002+01:00

I read "The Lawyer" today and was hugely depressed by a story about CMS Cameron McKenna. I quote the section that gave me a particularly sinking feeling:

The quarterly associate time recording (ATR) bonus was still paid as usual to associates who recorded 400 billable hours in the last quarter. However, an additional performance-linked bonus available to senior support staff has not been paid.

What is being rewarded here? Associates are being rewarded for running up the clock while senior support staff are effectively told that, no matter how well they do their job (and we have to hope that the performance measures used will be (a) sensible; and (b) linked to longer term things like profitability and good staff management), they will receive no bonus.

To summarise: don't worry if you are doing good, profitable work so long as you are cranking in the hours.

Oh dear.

Apples and Oranges

2010-06-02T19:05:00.001+01:00

Following from my last past, I shall continue my theme of "measuring the correct thing".

For the last few days the media, and the BBC in particular, have been obsessed with the publication of the salary of civil servants who earn over £150k - or, as the BBC insisted of describing it "more than the Prime Minister". I'm all in favour of the publication of salaries - certainly in publicly funded bodies - but the comparison is unfortunate at best. The salary of a civil servant and the Prime Minister should not be compared - the jobs are not similar, the attraction of the jobs are different, the motivations of those in post are different, and the period of employment is significantly different. The last three Prime Ministers have gone on to earn good seven figure salaries having left office, and there is nothing to make me think that the most recent ex-PM should be any different. Comparing the two simply causes confusion - does it mean that the PM is underpaid or that the civil servants should be given a pay cut?

The reason that I mention this is that the same confusion is caused when firms insist on focussing on the wrong numbers - revenue and PEP, for example. There are plenty of examples - Olswang are happy that their PEP has risen by 38% while revenue rose by 2% (and are happy with the phrase "a draconian line on discretionary spend" worryingly). Eversheds published an increase in PEP of 28% while revenue dropped.

I had said this many times before, but it would appear to need repeating - these are the wrong numbers to be concentrating on.

PEP is a measure of personal wealth - not a measure of how well any firm is working. It does not measure client satisfaction, client retention, long term planning, quality management - or any other useful indicator. The only thing it says is "look how much the partners here earn!". What other industry does that. I can probably find out what the partners at KPMG earn - but it's not easy. I tried to find out what the partners at the Brunswick Group LLP - but couldn't. That's probably because, as experts in communications, they understand that to boast about partner pay is not useful or sensible.

I may never understand why law partners both insist on using PEP as a measurement and then actually publishing it. It would be wonderful if the industry would move towards measurements based on the firm. Let's look at firm profitability, or an increase in profitability over a period, or increase in client satisfaction or any of the measurements used by most other types of companies.

The time has come for law firms to join the "sensible measurement club". Please.

Revenue down; Profit up. Is that good?

2010-05-20T11:03:00.001+01:00

"The Lawyer" ran a story this week about the results from Denton Wilde Sapte (see here). The headline is a 22% increase in PEP while revenue has fallen.

I'm with Zook & Allen (Their excellent "Profit from the Core" - have a look on Google or buy it at Amazon - it's worth a read):

growing revenues but not profits does not lead to long term economic value
growing profits but not revenues is unsustainable
growing revenues and profits but not exceeding cost of capital and you just run out of capital

Let me just emphasise the second point - no firm can just increase profit but not revenues for long. It's just not sustainable. I was so puzzled, I did some analysis, using figures from the article in "The Lawyer" above and from Dentons own web site:

Let's have a look at that in detail (and we'll ignore my mathematical dispute with the article about PEP). The number of total partners went down by 4.4% (from 181 to 173) while the number of Equity Partners increased by 1.2% (from 86 to 87). These partners produces slightly less revenue (a fall of £2.3million or 1.4%) but managed to produce significantly more profit (£5.9million or 23.3%) - leading to an increase of 29% of profit per partner (all partners) or an increase of 20% in PEP.

How is this possible? Well savage cost cutting will do some of it - although there will have been some "extraordinary costs" to go along with this sort of cost cutting (such as redundancy payments). Everyone will have been expected to work harder - or at least longer. A 29% increase in profit per partner, however, is a huge amount.

Rather than being impressed at Denton's performance, I find it rather worrying. I bet WIP has decreased - but that acts to pull revenue and profit from this year into last, which makes this year's performance more difficult. My main concern is this - what were partners doing in the years before that they could pull an increase in profit per partner of 29% out of the bag. Were they all going home early? Were they just not billing for some hours? Will this new level of profitability be maintained? Was this increased profit paid to partners at the expense of retaining money for investing in the firm and its future?

My other concern would be as a client. Look at it from their point of view - Dentons have screwed more money out of every penny spent by clients. If I was one of those clients, I'd want a share of that increase profit.

Increasing profits without increasing revenue is unsustainable. It simply is. This might be a "blip" year for Dentons - but I'd still be worried and would be concentrating hard on ensuring that there was sufficient investment in the future and that there was a good, sustainable, long term plan.

I'd probably stop making such a noise about profitability and PEP in a difficult market too!

A Step Too Far?

2010-05-17T12:57:00.002+01:00

Last week, CMS Cameron McKenna announced that it was "outsourcing its entire business support function" to Integron which seems to involve transferring 200 support staff (including IT, HR, Finance, Facilities and Admin) to a newly created service centre. The plan, according to "The Lawyer" is that all nine firms in the CMS network will join suit over the next three or four years. The longer term plan is that the service will be made available to other firms.

I doubt that it will come as too much as of a surprise to find that I have some concerns about this idea - even though Prof. Richard Susskind said that the business case was "compellingly strong" (according to the Law Society Gazette). My concerns are about perception rather than morality - although I do have concerns about appearing to "dump" staff no matter their length of service or the quality of their work.

What I mean by perception is that the firm has taken the most simple measure of worth in a firm - fee earning. The view from CMS would appear to be "well they don't make any money so they don't add any value". Oh dear. I had hoped that this sort of narrow view had died out in the 90s - sadly not. Law firms are knowledge businesses - they need to supply high quality knowledge and experience to their clients, and be able to suck that knowledge out of the minds of its lawyers so that it can become the property of the firm. To that end, surely the "Learning and Development", "Library and Information", and "Research" departments are very close to the firm's core business. Surely this can be an area in which the firm excels and in which it adds strategic value? Why should an outsourced "Research" department function to the specific good of one firm when the valuable research (now the property of a third party) could be sold more than once? Given that most law firms have an obsession with billing and fees, how is it sensible to outsource "Accounting and Finance" - surely this needs to be incredibly tightly controlled by the firm. I acknowledge that its not a core function - but my goodness it's important. The next to consider is "Human Resources and Training". I could possibly be persuaded to outsource training - and most firms already do - but is it really sensible to outsource the planning of training? Is it really sensible to outsource the HR function? Surely the management of people is core in any organisation - let alone legal services? Are CMS really suggesting that these departments have added no strategic value to the firm? If the answer is that they have added value - then why on earth are they being outsourced? If the answer is that they haven't - surely that is an indictment of poor management in the past?

Support functions can be part of the firm's strategy - in fact they must be. Strategic value can be added by these functions - and at the very least, the firm should be able to achieve some operational excellence and short term advantage from them. Outsourced functions become part of the outsourcing contractor's strategy - which will be to add value to their firm, not yours. If a function is not work particularly well - manage it better, don't try to outsource the problem to someone else. Perhaps the firm could just outsource the legal work too - then there would be no need to deal with those difficult lawyers?

I'll be watching this one carefully. I do not believe it will work - it might not fail spectacularly, but there is no way that the firm will be in a better strategic position because of it.

Finally - I know that the firm has long term plans to sell the outsourced services to other firms in due course. It's not going to happen - sorry. No firm of equal size will use the service because of worries about dealing with a competitor. No larger firm will use the service because they are still using their own in-house services (a lesson to be learnt there). No smaller firm will be able to afford the fees. I really don't think it will happen - but if it does, if some other law firm starts to use Integron for its 'middle office', how will this filter its way to CMS? Surely this will be another client for Integron? They might not even get a finder's fee.

Outsourcing can be sensible in some cases - but be sure of the strategic value that exists in every area of the business first, and then ensure that the actions you are about to take will actually add value to the business. Outsourcing the entire 'middle office' (to use their term) will cause concerns for all the support staff - and other staff will be looking to see when the outsourcing axe will fall on them.

A job as a legal secretary at CMS anyone?

Business Continuity and the Head in the Sand

2010-05-10T11:51:00.001+01:00

Before you go any further with this post, you should be aware that I will be including a naked plug for my consulting service. The plug will come towards the end, and I'll make sure that the "plug" paragraph is obvious - so, if you like, you can read most of the post and ignore that section.

So - Business Continuity. Every firm - every type of firm - must be considering and planning its business continuity. Surely that's obvious. Every firm thinks about what would happen if some sort of major problem or disaster were to occur? Sadly it would seem that a great number of organisations have not thought about it in any sort of systematic manner. I should very much like £5 every time I hear "Oh we all know what to do - but it's not, as such, written down...". I don't doubt that they understand how to evacuate the building (although I have known that to be a problem too) - but Business Continuity is so much more that that. What will happen the next day if the building remains unavailable? Where will people work? Will the telephones work? How will we get our email? Where are my files...?

According to statistics generally agreed and quoted so often by diverse organisations including The Institute of Risk Management, 90% of companies that lose data in a critical incident go bust within 2 years, and 80% of businesses without a Business Continuity plan are forced to close within 12 months of a fire or flood.

So why don't organisations do it? I find it very surprising - particularly when law firms are required by the SRA (through Rule 5) to manage risk and ensure continuity. More importantly, how do they sleep? I remember when I had operational responsibility for large organisations - my first though was, to quote "Marathon Man" "Is it safe?"

Business Continuity Planning (BCP) is not difficult - in fact most of it can be quite fun for those involved. At the heart of most BCP is scenario planning - getting an appropriate group of people together in one room for a few hours to "walk through" some sort of incident to see what would be done now and what could be done better in the future. I have yet to find a firm that wasn't deeply concerned after the first walk through a scenario - as it becomes quickly apparent that communication systems are inadequate and that there are wide differences in understanding and expectation throughout the firm.

I repeat - this is not complicated and yet so many firms do not do this. Small amounts of planning before an incident will ensure that the firm recovers from it - something that is not otherwise guaranteed.

OK - here is the naked plug. I have a good deal of experience in introducing firms to structured assessments of risk and to BCP. Let me come on site and walk through one serious incident with your team. After two to three hours we will see the state of your Business Continuity. If all is well then you will have the satisfaction not only of being assured that your firm is well managed and of having passed this audit, but of knowing that your can sleep a little more easily at night. If issues arise during the walk through then you have the satisfaction of knowing that you have started to consider your risk and that you are well placed to sort the problem out.

Contact me for more details: Peter Blair 020 3286 5610 or 07885 901297 or the Mar-aon web site.

Hung Parliaments, Negotiation and the Way Forward

2010-04-28T11:28:00.000+01:00

I was going to avoid any form of political comment during the election, I really was. There is so much comment in the media that one more voice was just too much.

Until, that is, the nonsense about a hung parliament. Both of the (previously) major parties - the Conservative and Labour parties - seem to be obsessed with the idea that a hung parliament will be a disaster "for British democracy". Why?

Let me put it in my own simplistic way. For as long as I can remember, either the Conservatives or Labour have won a majority of the seats in parliament at a General Election. This meant that they could get on and run the country in the way that they had promised to do in their manifestos. Well no - not always. Both parties have had to make changes between manifesto and government - of course it was because things changed in the economy, for example, which made their promise impossible to keep. All the other parties were out of luck - the winning politicians could, essentially, ignore them and their policies for the mean time. The winning party could use Whips to ensure that none of its members jumped away from the party line - and it didn't matter that much if anyone else didn't like what was being debated. The party leadership could move from thought to Act very quickly.

In a hung parliament, however, deals need to be done - possibly on a Bill by Bill basis (as in Scotland) to get law enacted. Is this really such a bad thing. Is it really a problem to ensure that more MPs are in favour of a law before it can come into force? I agree that it may take more time - but given the number of quite badly drafted laws which seem to have hit the Statute Book lately, a little more thinking time would be a good thing. I can think of many new(ish) Acts which needed more thought & debate.

Businesses are rarely run in a democratic manner. There is a Chief Executive (or Managing Partner) who has the power. Most Boards, however, are more like hung parliaments - there are different factions and sets of belief, none of which has overall power. Things get done by persuasion, negotiation and debate - and most businesses (and even law firms) manage to get things done, to do business and to succeed. Why, therefore, is the idea of running government in an inclusive, negotiated manner so abhorrent then? I can't see the problem. I should like my MPs to behave in a more civilised manner (am I the only person who is embarrassed by the way that MPs "debate" in the House of Commons? My daughter stopped behaving is such a childish manner years ago). I would welcome the idea that MPs needed to engage in adult negotiation with people who held fundamentally different views before a new law could come into force.

I do not suggest that voters should actively try to get a hung parliament. Everyone should vote for the party of their choice instead of worrying about tactical voting. I've never believed that "well at least we're not a bad as them" was much of a vote winner. I do not, however, think that we, the voters, should be concerned about a hung parliament. Perhaps it will be more difficult for the MPs or for the executives in the House. That is not a reason, however, to be concerned about it. We have tried majority politics for decades now and the result seems to be badly behaved MPs and a disengaged public. Perhaps it is time for a hung parliament and the changes that will come with it.

Style and Substance

2010-04-15T10:51:00.002+01:00

So - the great UK "Leaders' Debate" starts this evening. The leaders of the three main political parties will engage in a live TV debate (the first of three) in what is supposed to be the centre-piece of the forthcoming general election. Most of the media agencies have been gearing up for these debates for ages (take the BBC for example) - desperately trying to encourage the viewing/listening/reading public to believe that these debates are fantastically important to the outcome of the election. Sadly they are probably right.

I say sadly because I would really like the election to be decided by issues of policy and belief. I agree with Alex Thomson of Channel 4 News who said (sarcastically) today on his Twitter feed:

"Thankfully election TV debates are decided by serious issues like sweat, suits, looking at watches, put-downs and one-liners... Not trivia like policy, candour or answering a question"

In another part of their site (here), the BBC itemise the ways in which the debates could change the election and cite "The Gaffe" and "The Reaction Shot" amongst their list. I find this very depressing - that there is so little to choose - apparently - amongst the main parties that an accidental error in an 90 minute live broadcast or even a look of surprise or anger might swing the election. Are we electing the best party to run the country - and don't forget that we actually don't get to vote on the party leader unless we happen to be a member of that party (there is nothing to stop all three parties changing leader the day after the election) - or are we electing the best performer, the best trained actor or the main with the best media coach?

In an ideal world it should be both style and substance. In an ideal election we would all:

Know the policies of all the parties in detail
Be in a position to question both our own local candidate and party leaders
Have a good understanding of our own context and that of the country and understand the macro political/economic/social environment - and so be able to select the most appropriate leaders

All that being equal we might easily then choose the best looking candidate or the one with the best sense of humour or dress. I suggest however that the substance is more important than the style.

Of course, we are not engaged in an ideal election. The parties seem to assume that we all care about style and that the detail of the content - the real substance of their case - can wait until after the election. Vague promises seem to be the order of the day. It is, after all, about politics - not about common sense.

I had a discussion yesterday with a friend in a law firm who will soon be voting for a new Managing Partner. It would seem that he is in the same position as I am with the "Leaders' Debate". The candidates for Managing Partner (I was going to shorten that to MP but even I found it confusing) are already positioning themselves with regard to the wider partnership and political stances are being taken. Promises are being made and factions established. I suggested, naively it turns out, that the partners should ask the candidates about their leadership styles and about their managerial experience and plans. "Don't be ridiculous", I was told "it's not about skills - its about power". It is, apparently, about who has built the best power-base; who has the right "friends" and about who has made the right promises.

In law firms, as with the country as a whole, it would seem that (often) style is much more important than substance. Sadly even if I accept that this statement is true (and I suppose that I have to) - it is only true during an election. After the election it is the substance that will be important - the substance that will drag the economy out of the mess it is in and the substance that will position the country (or the firm) over the next four to five years. Surely, then, we should all be looking for our leaders a little more closely through the style at the substance?

Action, please

2010-04-13T16:20:00.001+01:00

Spring is sprung, the grass is riz... and it's time for law firms to roll out a new strategy.

My eyes were drawn to a story in "The Lawyer" entitled "FFW protects new strategy moniker". The main thrust of the article is that Field Fisher Waterhouse LLP have announced a new three-year strategy and have trademarked their name for that strategy (and since it is trademarked and I have no permission to use the term, I won't. That is presumably what they wanted to happen by trademarking it...?)

I wondered how the new plan would fit with their last published strategy "2012" (I don't think they can have trademarked that one, surely...), or whether it replaced it given that it was adopted the other side of a financial meltdown. The online article was very brief, so I had a look at FFW's web site, but could find no mention of it. I have no real problem with that - it is much more important that every one inside the organisation knows the detail of the strategy and how it fits with (or replaces) other stated plans. There might even be a benefit to the firm in keeping aspects of the strategy secret.

FFW are not the only law firm talking strategy at the moment. I've spoken with a number of lawyers recently all of whom talked (off the record, on the qt, and very hush hush) about changes to strategy or strategic reviews taking place. I'm sure, too, that the legal press will see a good few announcements concerning new strategies over the next few weeks.

I have two simple points I'd like to make. The first is that a strategy which is reviewed too regularly or frequently (and annually is too often) is not a strategy - it's at best a plan. The second is that more effort should be expended (in every firm) in putting the strategy into action.

Three to five year strategies will, of course, be reviewed. It is vital, however, that the long term remains the focus and that tactical planning changes are made with the overall strategy in mind. The firm must know itself and its environment very well - and must have a thorough understanding of its own strategy and of how that fits into its context. Without that overview, the danger is that the firm will lurch from plan to plan, all the while thinking it is acting strategically. Without the overview, it is entirely possible that each new "strategy" is pulling in a different direction which simply serves to confuse the firm and waste resources. Much of what is referred to in law firms as strategy is in fact operational excellence (i.e. operational issues which can be readily copied rather than considered thinking offering the firm an advantage in the medium to long term).

Having done the analysis and spent some time achieving a real strategy, firms must ensure that time is spent actually putting the plan into action. I have seen too many firms adopt a strategy with a great fanfare after which everyone in the firm returns to their desk and business-as-usual. A three year strategy must be worked on consistently throughout the three years - not to change it, but to ensure that a strategic shift has actually happened and that people are actually performing the strategy.

I'm not suggesting that FFW is in this "all show and no action" category at all - they have achieved solid and consistent growth (as per strategy) over the last few years. Every firm, however, should be aware that setting and announcing the strategy are actually the easy bits - putting it into action is where the great firms are separated from the rest.

Customer Care -What you do and what you don't

2010-04-12T10:09:00.000+01:00

I'm lucky enough to be able to work from my home/office which is in the centre of the City of London. We have a flat in a block of 16 in what is otherwise a business district. Since moving in about four years ago, I have collected the mail that is delivered each morning and put it into my neighbour's post boxes. I have also returned mail addressed incorrectly or to people who have left the block.

For four years, therefore, I have been returning envelopes, in particular, to Capita, Prudential plc, Bank of America & Merrill Lynch - all addressed to the same company. For four years I have been marking the envelopes "Not Known at This Address" and putting them back in the mail. And still they come on about a monthly basis. What a waste.

Allowing for Royal Mail to lose a few, I must have returned about fifty pieces of mail to each of those companies - and still they continue to send mail. I can only think of two reasons for this. Either they receive the returned mail and get in touch with "Finsbury Data Services" - at which point someone from that company instructs them to continue sending mail to EC4. Or, and surely this is more likely, the "group of four" above simply don't get it together to update their records. Why would that be? I know how expensive it is to send direct mail out, and so it must be in their interest to update their records? I can't believe that the firms named above are simply incompetent - they wouldn't have survived at all if that was the case. I assume that "Finsbury Data Services" told everyone they were leaving this building - it must have been some time ago since "Finsbury Data Services" were acquired by Reuters in 1986 and the building was renovated for residential use in 1999. That's a lot of lost mail.

As a non-customer of those firms I can only assume that they just don't care. That leads me to assume that their customers are not that important to them (assuming, of course, that "Finsbury Data Services" are a customer, although I arrive at the same opinion if they are a supplier). My opinion of those firms is reduced because they don't seem to care.

It cannot be difficult to have a system to get information from the mail room to the customer's record. After all the only reason that I know who is sending these flyers etc is that there is a large company name and log on the envelope, together with a return address. These are huge companies with lots of employees - surely that could have one who is responsible for the flow of data from mail room to marketing or customer services.

In the meantime I will continue to return mail as it arrives in the hope that someone somewhere will actually so something with the knowledge I am returning to them - and that they will search out "Finsbury Data Services", find their new home and communicate with them properly.

Leading the Modern Firm

2010-04-07T10:13:00.000+01:00

In my last post, I offered a manifesto for the modern law firm. I have received quite a few comments about this posting which have, in general, been positive. Since writing that post, I have been thinking about Leadership - partly, of course, because of the forthcoming General Election in which the main parties are already trying convince us to select them to Lead the country for the next few years.

Rob Goffee & Gareth Jones have a wonderful book entitled "Why Should Anyone Be Led By You" - I encourage you to read it. I wanted, however, to try to distill some principles of leadership and so I offer the list below condensed from the main writers on the subject of Leadership.

Leadership Requirements

Be Self Aware. Leaders must know their weaknesses and must strive to improve their own skills. Study, take classes, meet with other leaders, reflect.
Be an Example. As the organisation's Leader, you must be an exemplar of everything it stands for. Not only must they hear you saying what the firm must be, they must see you acting in the appropriate manner.
Know your People. You cannot Lead people you do not know and who do not know you. In large organisations it is, of course, almost impossible for you to know every one of your thousands of employees. Take the time, however, to know as many as you can and to speak with even more. Encourage your managers to know their staff. Be available to as many of your staff as possible.
Pass on Information. Leadership is about communicating. By explaining your plans you will be able to lead people forward rather than having to push them reluctantly from the back.
Be Responsible. Leaders will search out responsibility and should not hesitate to take responsibility for their actions. Encourage responsibility in the people you lead. Watch your managers explaining the strategy and the plan - that way you can be sure that they understand it thoroughly. Be as quick to take responsibility for the mess as you would be to take it for the success.
Make Decisions. We never have enough information to make a decision and any decision making process could probably be improved with more time and more data. Given. Decisions must be made, however, and the Leader must be able to make quality decisions in difficult circumstances. Be confident in your decision making - that might be enough to make it the right decision. Admit, however, when the decision is the wrong one or when the right decision has unfortunate consequences.

Leadership is difficult and every Leader is going to make a mess of things at some point. Admit your errors, reflect on the changes required, communicate with the management team, make the necessary changes and carry on. Remember too - the lessons learnt last year worked last year. There will be a whole new bunch of lessons to learn in order that you are an effective Leader this year too.

Every kind of firm - from a law firm to a charity - needs a good Leader. Leadership needs to be practiced and its skills honed.

But then the good, self aware, Leader will know that!

The Very Model of the Modern Law Firm...

2010-03-20T14:08:00.001Z

In a meeting this week I was asked to provide a model for the modern law firm - what I think it should look like and its governance. This was in response to the person I was speaking with commenting on this blog and suggesting that I was better at saying what people were doing wrong rather than suggesting what they should be doing instead. I'm not convinced that criticism is entirely fair, but in the spirit of his suggestion I offer the following "rules" for the people in a successful law firm and for the firm itself:

Be passionate about what you do. It sounds very obvious to me, but the people involved in the running of the organisation (and, really, that's everyone) should be passionate about the thing they are doing it. I'm sure that most solicitors can remember their reasons for coming to the law and I'd be surprised if many of them mentioned money. .
Be good at what you do. Yes, I do think this is secondary to passion - but excellence in your chosen area of work is also essential. Work hard at it, practice it, refine your skills every day.
Remember what is important - don't confuse with the urgent. It's very easy to get caught up in the day-to-day activities of work and to forget what is important. It's very easy for tasks to seem important just because they are urgent. Decide what is important, talk about it, and focus on it
Use experts & specialise. Partners in law firms are very good lawyers - I can't think of many that aren't. They are experts in their fields. Following on from points 1 and 2 above, the reason they are experts is likely to be because they are passionate about it and good at it. The same applies throughout the organisation. Find accountants and IT people who are passionate about their subjects. It is vital that the firm finds someone to be passionate about the administrative task of running the firm. Trained, professional, managers and leaders have that passion. Let everyone specialise - let the lawyers practice law, they the IT people sort the IT out and let the managers manage.
Communicate. All the time. With everyone. Communicate with your clients - as a passionate and expert lawyer (see above) they will be engaged, interested and, eventually, hooked. Communicate with the staff - engage them in the firm. Communicate about strategy - never assume that "everyone knows what we do here".
Be mobile. Physically and emotionally. Physically - go to your clients. Don't always have them come to you. Seeing them in context can make a huge amount of difference. Wander around your office - don't just walk through reception to your office. It will give you opportunities to communicate - and remember that communication is a two-way process, so prepare to listen. Be available for the "while you/re here" conversation that would not happen if you were not wandering past. Emotionally - don't be afraid to change your mind or to try something new. "All change is bad" is a mantra that has no place in any good organisation.
Ask questions. You have employed experts to run your firm - but ask them questions. They like to know that you care and are interested in the work they do for you and for the firm. Be interested in the running of the firm and, if possible, get engaged in the strategic decision making process. Question what the firm is doing (in a structured and sensible manner, of course).
Care. Care about your clients, care about your colleagues, care about your staff, care about your work, care about your environment.

Simple really. Writing it down certainly is and I accept that actually doing it is much more complex. That doesn't, however, detract from the fact that trying to be and do all the things above is vital to an effective and efficient firm. Remember that they apply to everyone in the firm - partners and associates, paralegals and secretaries, consultants and contractors, support staff and managers. The list also applies to the firm as a whole and as an entity.

Look at your firm to see how much of this they are doing, You may be pleasantly surprised - and if not, you are in a position to begin the change.

Investment from the Owners' Perspective

2010-03-17T09:57:00.001Z

In my last post, I suggested that it might not be wise (or successful) for a law firm to float. Over the last few days I've had a couple of interesting conversations based on that posting and so feel that I should comment further.

Law firms are unusual in terms of their structure in that they tend to be small (ish) partnerships - the business is owned by a comparatively small number of people. It is not unusual for a top 40 firm, turning over £70-100 million os so, to be owned by 100 or so lawyers. Few other businesses that size are owned in this way. It is not only the governance structure that is odd - the financing of a law firm is often done entirely through funds from the owners and from cash flow. I know a number of £100million turnover law firms with no debt other than an overdraft.

I suggest that the shock from floating to both of those structures will be enormous. Not only would the partners have to get used to other people wanting information and wanting to be involved in decision making, they would have to justify themselves, their actions and their pay to these other owners, who might not even be lawyers... How would it work too? Would each partner be given an equal number of shares? What would be the basis for the initial offer? Would there be an internal market in shares amongst the partners? That might mean, surely, that a junior partner might be able to own a larger proportion of the firm than a more senior partner. It can all get messy very quickly.

An analogy would be Cadburys. There is a lot of fuss in the press at the moment about, and a committee of the House of Commons has, this week, been discussing, the "selling to a foreign buyer of a great british institution". Personally I think that the press is whipping up this story - after all this is a commercial enterprise. The point, however, is that the problems did not start with the bid from Kraft - the problems started when the family first decided to float the company and to offer the shares on the open market. I'm sure that they made lots of money and found new sources of finance for the firm. They also, however, lost control of the organisation since the new owners of the business were free to do what they liked with their ownership share (unlike a departing member of an LLP).

The time may come when a mid-sized firm is ready to be floated - but I don't think that time is now. The cultural change would be too great, too disruptive and is likely to lead to many unintended consequences.

Playing with the Big Boys

2010-03-12T11:44:00.000Z

Like many commentators (including James Dunning and Robert Sawhney), I was interested in a "Times" report which said that "up to 20 law firms might be floating".

I find this idea very interesting and have said before that I'm not sure I can see the benefit for potential investors. Yes, law firms are profitable, but the profits are, in general, removed each year. I'd be surprised if venture capital would be interested since they are usually looking for a large and quick return - not something I can see happening with a mature, top 20, law firm.

So - would I invest in a top 20 firm? Would I actually buy shares? Well - I'm not sure. I like to have lots of information before I invest - lots of data about profitability (I really don't care about revenue), lots of information about past performance, lots of information about growth potential. If something innovative is not going to happen then there is no particular reason for the shares to rise all that much. I'd be nervous of using "law stocks" for long term investment since I know that the partners want to take their profit out - and I'm unsure about short term return unless there is clear differentiation.

It's also worth thinking about the impact of external investors on the firm. As owners of the firm, investors - particularly institutional investors - will expect an ongoing, continuous relationship with the firm. They will expect lots of news and will want get results very quickly. They will not care (like me) about revenue and will be very concerned at the focus on PEP, unless the firm can prove the link between increased PEP and increased investor return. I think it might be a bit of a shock for most firms - if nothing else they may need to hire some professional investor-relations people.

Many firms have not done too well in putting up with "interference" in the running of "their" firm from their own support staff - how will they cope with non-lawyers joining in? My goodness - given the relative strength of the Euro, the investors might not be British!

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This is my 100th post and I think it's appropriate that investment forms the subject!

All about teamwork

2010-03-10T12:02:00.000Z

I read James Dunning's recent blog posting (here) and was prompted to find my own comparison. Knowing even less about football than James, I felt it better to use another sport as my comparator and so selected Formula 1.

It is, I think, one of the ultimate team sports. Yes, there is the "name" driver sitting in the car during the race, but speed and reliability require very close communication and understanding between the driver, the engineers, the designers, the coaches, and the managers.

The same requirement for close working and communication exists in every business - and so in the law firm it is necessary that the lawyers work in conjunction with the support staff and that they work out a way to communicate with each other. Sadly in many firms the relationship is one in which success is often achieved in spite of the communication and trust (or lack of) which exists between lawyer and support, and occasionally the two are actively working against each other (think of marketing budget - some of which is controlled by the marketing team and some by the legal departments, who have been known, in some firms, to act without contacting the marketing team or with no regard for the marketing strategy of the overall firm).

Another thing that interests me about F1 is that the team principals are rarely ex-drivers - or certainly rarely ex-F1 drivers. Ross Brawn is one of the most successful in recent years. He comes from an engineering background but has a passion for F1. He has instinctive managerial skills, being able to motivate and direct a large group of people towards one single goal.

So the man running the organisation is not the star of the show - is not the person who, ultimately, "brings the prize home". He is, however, the person the the best experience in running the team and it is understood, throughout the organisation, that the driver has to be allowed to focus on his own area of expertise and his own job - that of driving the car as well as possible and of communicating the way the car is working to the engineering and design teams. No-one would expect the driver to jump out of the car and to start running the whole organisation - no-one would expect the driver to take a business-related call while on track. Schumacher is a fine driver - one of the best ever - but he knows his limitations and understands his (vital) place within the team, and he understands that his success is based on him being able to focus on his own skills while others get on with theirs.

This, however, is what seems to be expected of most senior lawyers. They will have achieved partnership and a place on the board through their hard work and legal expertise. They are then expected - at the same time as maintaining a business practice and their billing hours - to run the firm.

What is required is a Brawn for every group of Schumachers. Let the stars do the things they are good at and don't distract them with the (necessary) work of running an organisation. Yes of course they will be involved strategically - but then each member of the team should specialise - let the lawyers work and the managers manage. In particular, have one key manager who will run the firm while the partners do what the partners do - excellent legal work while developing new business and clients.

Optimism - Really?

2010-03-09T17:30:00.001Z

My last posting on the subject of optimism seemed to generate some interest. I was surprised to find that two potential clients had read it, and felt the need to comment on it. I've also had a couple of emails to go along with the comments on the blog. One of the comments seemed to sum up the general response:

if nobody reads this thing, why bother posting it anyway?

In one sentence the author, about whom I was unable to find any information, managed to convey a lot. He - and I will assume it is a male reader for absolutely no good reason - immediately supposes that no-one reads this blog. What a pessimistic view - but one that I would categorise as typically British (or more typically English). We live in a culture that does not embrace optimism - rather living in a cynical and unemotional world. Fortunately I am blessed with some readers - but, of course, the author himself presumably read the blog before commenting.

He finishes with a "why bother". Well even if I had no readers at all, part of the reason for writing this blog is self-satisfaction - I do it partly for the simple joy of doing it. And why not?

My comment author was not alone, however, in questioning the place of optimism in business. "Business is a serious endeavour...", I was told on one occasion (by someone working in a not-for-profit organisation too), and he went on to suggest that there was no place for, or need for, optimism in a "grown-up" business.

I disagree. Strongly. All too often, the optimistic response is not considered by mature businesses. I recently set up a "Disaster Response Training Session" for a client. We talked through a scenario of a fire on the floor above my client's offices. The attendees were great - but did not consider the most optimistic outcome. Happy to consider the total loss of their offices and all their data, they did not, before I prompted them, consider the outcome that had the fire protection working, the data security working and their people doing all the right things. From a risk management point of view, this is not good. From a morale point of view it's not good either.

There is nothing wrong in looking at the optimistic outcome as well as the more pessimistic ones.

The same applies to strategic planning and marketing. Perhaps you already have the competitive advantage; perhaps you already have the competences that are needed to thrive in a market. Perhaps your strategy will work to the point of needing more staff, more offices, more support? These situations must be considered.

Be optimistic - there is nothing wrong with it. You will examine the same options as a pessimistic, but perhaps add a few new ones of your own. Given the choice, optimism is, if nothing else, easier to live with.

Optimism

2010-03-02T11:09:00.001Z

In the last 12 months, two different blog posts have struck a particular chord with me. I wrote in August about lessons from a musician (see here). One of the main thoughts from her post was to "have inspired conversations". Last week I read a piece from comedian Mark Watson on the subject of optimism. He writes very well about trying to be more optimistic, particularly since his natural inclination is to be pessimistic.

The same is true in the two fields in which I work. I searched "The Lawyer" today for optimistic stories. On starting to read through the various items, I realised that I needed a good definition of "optimistic" - after all, was the news that a firm had won some business optimistic? This way I could separate what might be a good news story from real optimism. The definition I most enjoyed (and, of course, I was selecting the most favourable definition according to my own set of unconscious psychological filters) was the following from the Merriam-Webster Online Dictionary (revised 2009) was:

an inclination to put the most favorable construction upon actions and events or to anticipate the best possible outcome

With that definition in mind, I started to trawl the "The Lawyer" web site, and was surprised and a little disappointed to be unable to find a really optimistic story. I rejected stories about firms re-starting partner distributions because I didn't think they were doing it because they were anticipating the best possible outcome. This was perhaps good news (certainly for the partners concerned) but the story was not optimistic. The closest I got was a story about sets of chambers discussing the post-LSA environment. I suppose it was optimistic, but I didn't really feel optimistic having read it. Perhaps it was the reporting, since it is rare for journalists to use optimism - I don't think it sells.

I decided that I should examine my own "house" before looking any further. Before this one, I have 96 posts on my blog. Looking as dispassionately as possible, I decided that less than ten were optimistic (although a fair number were at least upbeat!).

Looking more widely at the world of business, I found it hard to find much in the way of optimism. Most stories mentioning optimism also used the words "cautious", "waning", and "limited". I'm not sure that real optimism can be "cautious" - isn't the point that optimism is many steps away from caution?

Optimism is much more visible in the world of charities. The only word regularly added to optimism in this world in my experience in "blind". Charities have to be optimistic - they have to believe they are doing the best thing in the best way. With belief, commitment and optimism they can conquer the world...

This is a lesson to be learnt for the world of business. I have spoken with many people from many firms of different sizes over the last few months and have come away with the over-riding impression that staff, management and owners have become worn down. It is not, however, poor economic news that depresses people and firms, nor is it poor performance. It is a lack of optimism.

I do not suggest that we should all blindly stick our heads in the sand and shout "everything will be fine!". What I do suggest is that we should all try to anticipate the best possible outcome - or at least to try that more often than we do. Optimism lifts people in organisations.

Be optimistic - it's alright! Make sure that the best possible outcome is included in your analysis, into your strategic thinking and into your interactions with colleagues and staff. If you are a manager, try to create a mood of optimism in your team. Optimistic people are happy people and happy people are more effective in everything that they do.

Optimism is, after all, perception. By turning our heads slightly and looking at the world in a more optimistic manner, we might not improve the world - but it will undoubtedly seem and feel better, and that is surely a good thing.

The 2.0 revolution - is it really?

2010-02-25T13:11:00.000Z

Recently I seem to have been talking either about Law Firm 2.0 (a governance structure I work on with law firms and which I wrote about last year), Charity 2.0 (a discussion about improved engagement I had with a medium sized charity) or Web 2.0. It seems that "2.0" is suddenly being used by firms as a way of saying "look at us - we're up to date!" and seems to be used as a proxy to suggest "revolutionary"change.

The recent Web 2.0 discussion was started for me by the excellent blog from Peninsulawyer (Jon Bloor) on the subject (see here). He speaks very well about the use of interactive technologies, their applicability in the world of the law firm web site, and what he thinks is the way forward. He suggests that firms of the future will have a core web site which is publication rather than interactivity but which links to external sites.

This sounds enormously sensible to me - and is the way I've tried to arrange my own site, with "flat" information and connections to this blog, my Twitter feed and Skype which hope to encourage participation.

Jon Busby took the debate further forward on his blog. He speaks very sensibly about the importance of remembering that new technology must form part of a communications or marketing or strategic plan - it cannot and should not hope to replace previous technologies. I love technology and am delighted to be working virtually most of the time (or virtually working as a colleague prefers, unkindly I think, to describe it) - I don't have a permanent office, I use Skype to provide a "land-line" number and all I need, most of the time, is my laptop and an internet connection. I use LinkedIn, Twitter, email, and Skype - but still make telephone calls, go to see people, and use a paper note book to scribble ideas, thoughts, messages and, well, notes. The new must work seamlessly with those good and reliable existing parts of your business.

The same is true of Law Firm 2.0. Yes, it's a new way of thinking for most law firms and, yes, this will be difficult. It does not mean, however, that everything is going to change. The best change is not destructive - instead it builds on what is already good and efficient in an organisation, adds carefully new ideas and best practice from other industries, and raises the organisation to new levels.

Charities are becoming better and better at engaging with supporters - or at least the good ones are. I declare an interest in being the Chairman of The Living Rainforest - but I think that is a good example of engagement (and follows Jon Bloor's model) in having a core site which includes blogs and has links to Twitter and Facebook where supporters and visitors can become involved in the Rainforest and the issues of sustainability which are core to its presence. There are lessons here for more commercial organisations - engagement, debate and involvement. The lessons for law firms are that engagement does not mean free help - it is an additional way to build a relationship so that you and your firm become the first people the client thinks of when it needs something done.

In my view the "2.0' metaphor should not be a revolution - it is an evolution. Organisations are (slowly in some cases) learning how best to use the technology which is available to them and are starting to relax a little about breaking down the barriers between the firm and its clients or supporters. This - properly thought out and properly managed - can only be a good thing. People want to do business with people - not with firms. Web 2.0 technology already exists - so why try to re-invent it. The same is true for Law Firm 2.0 or Charity 2.0 - best practice is out there in other industries, so why try to re-invent management? Why not choose the best that exists and use that?

Decisions - good and bad...

2010-02-24T10:47:00.002Z

This does seem to be the week for decisions - or at least for the announcement of decisions. I wrote yesterday about a brave decision from Outer Temple chambers in trying to get the jump on the ABS structure.

Also in yesterday's press was a story from "The Lawyer" about my old firm - Field Fisher Waterhouse. Friends and colleagues usually expect that I will have nothing good to say about the firms I used to work for - and I will admit to falling into the bad habit of the blogger of tending to talk about bad news more often than about good. I certainly have no ill feelings towards any of the firms I've worked with and in this case it would appear to be good news. The story is about FFW cutting its graduate intake numbers "...by a quarter."

I'm never entirely sure with "The Lawyer" whether they are for or against any particular story and it is perhaps my own problem that I read the headline as a criticism. The word "slash" does not, after all, have good connotations. What the story reveals, however, is what I think is a measured and sensible decision to reduce the number of graduates taken on from 20 to 15 (which, yes, is a 25% cut - but it would have been less sensational simply to have said "five fewer" - but then I'm not trying to sell advertising), to increase engagement with the graduates before they join, to change the programme to four seats of six months (better, I think than the previous six seats of four months), and to incorporate graduate recruitment into the firm's main career development framework.

These all sound like sensible moves. Yes there will be fewer graduates taken on, but I haven't noticed a dearth of solicitors at the moment. It is surely sensible to engage more fully with fewer people and to work to ensure that they receive a better experience.

I know that the firm has been thinking about this change, and planning it carefully, for some time. Tempting as it may be to attack what might be seen by some as a brutal cost-cutting measure, I think they have made a good decision.

Who's next..?

The Way Forward?

2010-02-23T13:19:00.000Z

"The Lawyer" carried a very interesting story earlier this week - "Outer Temple goes with post-LSA strategy". It details the move from Outer Temple Chambers to launch a company to get international work and so establish a new, post-LSA, business model.

I will be very interested to see how this works. Initially, with secretariat and administration being handled by chambers, it looks rather more like a marketing effort than a whole new paradigm - but the differentiation of thought may well prove highly successful. What is great is to see a legal enterprise doing something strategic and long term, rather than merely slogging away at operational matters.

It may not be successful - to me, however, that is not the point. One of the comments on the news item suggested that Outer Temple do not have the "quality in depth" that will be necessary to succeed. I'm not entirely sure what the phrase "quality in depth" really means, although I'd guess that it simply means experience. Again this may be true. This sort of action, however, is one of the ways to get the experience. Experience can only be obtained by bravely taking a deep breath and jumping into a new market or field or set of actions.

It is brave of Outer Temple to set this up - especially given that the regulatory framework is nowhere near clear. The Bar Council are still consulting on post-LSA governance. I believe that Outer Temple are to be congratulated - for thinking strategically, for planning long term and for getting on with establishing themselves in a post Legal Services Act world.

At business school, we were taught to separate the quality of the decision from the quality of the outcomer 0 i.e. some decisions are right, even if the outcome is poor. No matter the outcome in this case- Outer Temple have, I believe, made a great decision.

Profiteering on the Motorway

2010-02-19T16:57:00.000Z

I often have coffee in Costa Coffee on Ludgate Hill. I probably have four or five coffees a week in there – the staff are lovely, I like the ambience and there is plenty to watch as people wander past on the way to St Paul's.

I’ve been on the road quite a lot over the last few days and have become fed up with the naked profiteering that goes on on the motorway services. A glorious example is with Costa Coffee. In my usual haunt, my standard order of small black americano costs £1.80. On the motorway it costs £2.19 – an increase of 39p or 21.6%. This is a shocking level of increase. I do not believe that Costa pay their staff on on the motorway any more (although I’d be delighted to be proven wrong) and I can’t conceive of any justification for this level of difference – other than this is the price that they can get away with.

Shame on you, Costa!

Strategic Thinking

2010-02-14T15:40:00.001Z

I've been spending the last couple of weeks engaged in the first two of a four session course on strategy with a law firm. It has been really interesting to be able to start at first principles - to think about what strategy actually is, and what the firm wants to be.

It is rare to find any firm - and certainly any law firm - that is willing to admit that it needs a complete re-think so far as its strategy is concerned and so I have really enjoyed debating areas where strategic thinking is going to provide real competitive advantage. We have been discussing frameworks which, of course, means looking at Porter. I went through a short phase when I was at business school where I was scathing of Porter - thinking that it was too restrictive, not dynamic enough, and seemed to refuse to see rivalry as, potentially, a positive force. Now that I've worked with more firms - and am, hopefully, a little wiser as well as just older - I think that it is still a very useful way of examining the strategic environment - perhaps with the addition of an other model as an audit. My clients seem to have accepted the usefulness of the model and talked well as we examined the forces acting on the industry. I think we've already started to add value to the firm.

I've already spent 6 hours or so with partners from the firm and am looking forward to the final two sessions next month - they are engaged and willing to learn. What is more impressive is that they are willing to admit that they may not be expert at every aspect of law firm management - which is sadly not true of many law partners. We discussed Malcom Gladwell's 10,000 hour rule. To paraphrase, he suggests that expertise in any field - whether sport, music or business - requires 10,000 hours of practice. I was pleased that the partners accepted that, while they will have put in their 10,000 hours in the practice of law, they had not had the opportunity to put in the 10,000 needed for effectively managing a business.

So - a good few weeks behind me and the prospect of two more exciting and engaging sessions.

I have been doing these sessions in my capacity as a consultant with Geotrupes. James has done most of the grunt work in putting each session together and in preparing the slides - leaving me to personalise them, and to deliver the training - something that I enjoy doing. I think we've made a good team - I've certainly enjoyed the teamwork!

The consideration of strategy itself would certainly benefit almost any firm. If you'd like to discuss a programme for your firm, please contact either me or James.

Do something different in 2010

2010-01-30T12:44:00.000Z

I have been reading "The Lawyer" again and have finally been able to re-read an article from 4th January entitled "Law firms ready to ring in the changes for uncertain 2010". I've had to re-read it since the first time I read it I experienced such a depth of anger, frustration and depression that I almost broke my computer.

The article interviews some of the great and the good from the profession and states that "Senior figures have highlighted a number of challenges that firms need to meet to sustain profitability in 2010 and beyond". Just before I get into the detail of the article I'd like to highlight a couple of things from that sentence. Firstly - a firm cannot thrive by meeting challenges. That suggests passivity - waiting around to see what challenges there are before finding a response. The thriving firm will force its way forward - bravely setting a strategy and offering a dynamic operational excellence in support of it. My second issue is that if any firm has waited until January 2010 to know what it will do to survive the year - I suspect it will not.

Ok - let's look at what these leaders are suggesting. Peter Kalis from K&L Gates suggests"

The law firms that remain conservatively financed and diversified across nations, markets, currencies, practices, industries and clients will absorb the shock of the seismic events in the global economy. Other firms will disappear or fade into irrelevance.

Oh dear - this is not a strategy. Why should firms remain "conservatively financed"? Surely that has got firms to where they are now? Why don't law firms look for other sources of finance? I suspect it is because it would involve an uncomfortable change of style for most partners - one in which they were expected to perform every year (and would be measured in something other than billable hours) and one in which the firm had to become more like a business. I agree with some of what Mr. Kalis says - but it's not very brave is it?

Charles Martin at Macfarlanes says :

...prudent law firms will continue to sharpen efficiency levels, look at better client service and improve ways of organising themselves internally

Firms should have been doing that a long time ago! This should not be news for any firm.

I could go on. It's quite a depressing list because there is almost nothing in there about strategic advantage. Only Chris Perrin from Clifford Chance (and interestingly he is General Counsel there - quite a business-like role) talked about the need to "offer something different". To quote Michael Porter (and a shocking number of people who run law firms do not seem to know who he is):

The root of the problem is a failure to distinguish between operational effectiveness and strategy...

I can summarise Mr. Porter as follows: operational effectiveness is doing things better; strategic advantage is doing better things. Operational effectiveness must be assumed - it is the firms that bravely (and carefully!) do something different that can hope to not just survive but to thrive in 2010 and beyond.

If you're going to do it, do it properly

2010-01-25T15:42:00.001Z

I have spent some time over the last few days looking at a number of websites for both legal providers and for small charities. It has been an interesting exercise, and some interesting things became very obvious to me.

The first of these is that many law firms - and regional law firms do seem to be rather worse in this respect - seem to have spent a very small amount of money on their website, and to have spent this some time ago. Since that small expenditure they have obviously not felt it necessary to either spend any more keeping it up to date, or even to have visited it recently. The shining star in this regard was the site of Connell Associates (http://www.connellassociates.co.uk/). Until very recently, they had a spectacularly bad web site, full of typographical errors, spelling errors, and sentences that made no sense at all. They have now, as you will have seen if you clicked on the link above, put a new "holding" page in place which is, at least, in English this time. Congratulations on doing something about the mess that was your last site.

Sadly they are not unusual. Many of the sites I have been visiting appear to have been written by someone's 14 year old nephew who has spent many minutes learning to write HTML or to use Dreamweaver. Few have given any thought to their design and many are so badly put together that they are difficult to read. This from a profession which professes to be concerned about the details.

What is more interesting, however, is the amount of space spent on profiles of the partners and lawyers and copies of things they might have written. The sites appear to be based on the principle of "they [the clients] will want to know about us". As a client, I'm not sure I care about the lawyers - I'm more interested in what they will do for me. A remarkably small number of law firm websites had any form of recommendation or review from clients.

Contrast that with many of the small charity sites I have been looking at. An almost equal number of them appear to have been designed by amateurs, but what is really interesting is their focus. It can be hard to find profiles of the people running the charity. Instead the sites focus on the activities of the charity and often have quotes from the beneficiaries - the "clients".

This is all by way of continuing my theme of placing the client at the heart of what your organisation does. The law firms were remiss in that they seems to avoid even mentioning their clients - which certainly gives the impression that they don't really care that much and will expect a client to fit in with what they do.

This is not complicated. It's quite a simple exercise to sit down and think about what the clients want. You could even ask them... Personal clients of law firms who are looking at a web site for the first time will have two main concerns - neither of which are usually addressed. The first is - can this firm do the work properly. This can be addressed by client quotations, recommendations and, perhaps, by a survey ("80% of our clients were delighted with this service in our recent poll", for example). The issue of cost can be addressed by showing fixed prices on the web site. Most sites I viewed went very far out of their way to avoid this. As a prospective client who is shopping around, I do not want to visit a web site to be told that I need to phone someone to get a price. Nor does saying that the first meeting, or first half hour, is free - I still want to know how much it will be after that.

So - both types of organisations can improve. Expenditure on a web site is an investment. Have a professional design and professional implementation - it does not need to be vastly expensive. Secondly - address the concerns of your clients. If you don't know what these are, then ask!

I will now declare an interest - I recommend the following site as a good example of an effective web site. It is the site for The Living Rainforest - and my interest is that I am the Chairman. Notwithstanding this - the site addresses the key audience and gives out the required information. It is simple, easy to use, gives good information - and, vitally so far as I was concerned - was excellent value for money. Have a look and see if you agree with me.

Focus on the Client

2010-01-17T15:13:00.001Z

There seems to be something wrong - either with law firms or with the way that the industry is reported. I offer as evidence the main news stories (as shown on the front page of the web site) from "The Lawyer" on Sunday 17th January 2010, which I believe is fairly representative:

K&L Gates smashes through $1bn turnover mark
Former Mayer Brown partner gets seven years for fraud
Jackson proposes sweeping reforms to cut litigation costs
Simmons named Stonewall's top gay friendly law firm
Withers faces Commons investigation over email to MP
Eversheds covets commoditised market with South African pilot
Fried Frank and Simon Thacher to advise on Virgin Media's £1.5bn bond
Ashurst acts on National Express' £350m bond issue
Linklaters names next Asia head as Shao departs for JP Morgan
Ashurst revamps management board as Sparrow vacates seat
White & Case sends London partner to head Singapore arbitration practice
Latham scoops Ashurst partner for City corporate push

This from one of the two industry voices. What can we tell from the list: two stories from ten about clients (and both about money); the big news is "look how much money we made last year; two worrying stories (numbers 2 and 5) about the sort of people who may be in the industry; and the rest of the stories very inward looking. Perhaps no client has ever read "The Lawyer", but there certainly doesn't seem to be any interest in them as a group - other than from the point of view about how valuable (in cash terms) they are. Even the stories that don't seem to be about individual earnings often are. "The Lawyer" has a story about legal fees ("Legal costs emerge as defining issue of 2010’s biggest cases"). In all the discussion about high costs in cases, there is no mention of the fact that the high costs come from the high fees charged by the lawyers - i.e. personal earnings.

From reading this news, and from further digging in the web site, it would appear that the industry and the lawyers who make it up are obsessed with their own earnings, their own position within the industry and see clients as "cash cows". This cannot be good.

In case this is normal in any industry, I also examined "Third Sector" on the same day, one of the main "voices" for the charity sector. I'm not going to list the news stories out again, but lets look at the break down:

Stories about fraud - or poor practice: 1
Stories about training or new developments in the industry: 4
News roundup: 1
Appeal for funds (for the DEC): 1
Industry news: 1

Note, please. No stories about people inside the industry. No stories about personal earnings. No stories about how much charities turned over (and surely that is something that one can be proud about..?)

My point is this. The law is about clients - serving them as well as possible and serving them as efficiently as possible. The client's wishes should be at the fore-front of the industry. If this was true, it would inevitably be reflected in stories about the industry. "The Lawyer" would be reporting the benefits of cases won - the benefits to the client that is. There would be stories about pro bon work - and I know that there is a good deal of this done. There would be stories about new practices in the industry which are designed to save costs to the benefit of the client and not to protect or improve PEP.

Focus on the client and the rest of your business will fall into place. Make every decision by saying - what benefit does this have for our clients. Save money so that your firm can charge less or do more pro bono work - not so that PEP can increase.

Follow up: this piece from "Legal Week" seems in line with what I'm saying.

Fundraising - Time for a Review

2010-01-14T17:31:00.001Z

The news from last year is not good. A fall in charitable giving is to be expected in a downturn, but the "Third Sector" reported that there was nearly a 10% drop:

Poll by Investec Private Bank indicates a drop in donations of more than £500m on previous year.

The amount of money donated to charities may have dropped by £574m last year, according to new research.... Seventy-one per cent of respondents gave money to a charity last year and the average amount donated was £110.20 per person. A fifth of respondents said they had given less money to charity in 2009 than they did in 2008.

All very worrying., but what can be done?

Well the first thing to do is to audit your fundraising. Make sure that you completely understand all the fundraising done by your charity and how it all fits together. Examine the list carefully - is the charity working with a layered approach to donor (private, corporate, government, grant-making bodies etc) and does each layer support the others? Is your charity talking to all the right people? Is your charity gathering donations in kind (as appropriate to your charitable purposes) and are these measured and thanked in the same way that cash donations are (you do, of course, thank every donor, no matter how small their donation, don't you).

It is possible that your overall fundraising strategy was established some time ago - or that there is not so much a strategy as much as different kinds of fundraising set up at different times. Beware of a new fundraising push which takes donations from your other fundraising efforts - make sure that new donors really are new.

None of this is difficult - but it can be time-consuming, and time is often as rare for smaller charities as funding. It is, however, well worth the effort. A few hours or days now will reap rewards later this year.

You could, of course, as for help from a consultancy which understands small charities and their need for funds...

Even the finest companies can make a mess of it

2010-01-12T12:40:00.000Z

I am an Apple user and a huge fan of the company. Anyone who has worked with me will have suffered through my teasing of PC users who were struggling to boot up or get on-line.I still think that they are a wonderful company, but my enthusiasm for them has been dented over the last week - not by their technical staff or by the quality of their computers, but by the quality of their communication with me the customer. I'm particularly surprised since this was one of the areas in which I expect them to shine.

At the end of the Christmas holiday, my two year old MacBook Pro failed with what looked like a disk problem. Since I was on holiday and in rural France, I was content to live without my laptop until I could get it back to the Apple Store in London. Everything started well - I booked a slot with the Apple Genius Bar on-line and was seen at the appointed time. A "dodgy" disk was detected and I asked them to have a look at my CD/DVD drive which had been playing up. "No problem", I was told, "everything's on warranty and so we'll simply replace the disk and multi-drive. No charge". How wonderful.

One of the last things I was told as I handed over my laptop was "I'm not sure we'll be able to get it back to you today - but it's listed as an urgent repair" (I had told Apple that I needed my laptop for work). Now I wasn't told that I could have my laptop back within 24hours - but that was the implication (and to be fair, the last time I had a problem, they turned the repair around in less that that time). Off home I went, content in the knowledge that Apple were once again proving their place at the top of the customer-care list.

At the end of the next day, I had still heard nothing and so called the store. After a 12 minute wait, I was told that the parts were there and assigned to my laptop. "So I can have it tomorrow?", I asked. "Yup - seems like it" was the reply. I was busy the next day, but the day after I phoned again. This time I was put through to someone who appeared to be in charge and who (apologetically and very nicely) told me that there was a huge backlog of repairs and they were going for a 7 - 10 day turnaround. Today - 7 days after the laptop went in for repair - I called (10 minute wait this time) to be told that it was ready (the store had apparently left a message on my home phone rather than calling my mobile as requested or sending me an email). I picked it up to find that, for whatever reason, the new disk did not have the latest version of the operating system (why would they do that?) - which meant that I could not start restoring my Time-Machine until I spent an hour or so updating the new OS.

Now let me just make clear that Apple have, without question or prevarication, replaced two pieces of hardware in my laptop at no cost to me and have, in the end, turned a warranty repair around in less than a week. Were this almost any other company I would be delighted - and if, when I took my laptop in for repair, I had been told that repairs were running at 7 - 10 days, I would be pleased to find my machine back so soon. I have, in the past, suffered though warranty repairs with Dell, Toshiba, and Microsoft and if the problem had been fixed in on 7 days I'd have been jumping with joy.

The mess that Apple made was in the communication. They must have known there was a backlog when I was first at the Genius Bar - and if they did not, they should have done. Why was I not told then? Why was I not told about the delay the first time I called? Why on earth was my machine returned to me without the latest version of the OS - that's just odd?

So there you have it. In the end, not too much of a problem. As I used to say sometimes to my daughter - I'm not angry, I'm disappointed. I expected much better from one of my favourite companies.The lesson is clear - any company can "drop the ball" when it comes to customer service. I am a long time Apple fan and so I know that this is not typical Apple behaviour. What would happen, however, if I had been a new Apple convert? Perhaps I'd be converting back again to PC-land. Come on Apple - get it together!

New Year, New Start II - The NFP and Charity Action Plan

2010-01-04T21:38:00.001Z

You run or work for a small or medium sized charity (or even a large, multi-national charity), and the new year is a good opportunity to sit back abnd think "how could we be doing this better?" (whatever "this" is).

Now is the time, then, to examine the way that your charity is running and to make sure that the business side (and there is always a business side to any charity) is supporting the charitable aims, rather than consuming cash and thwarting them.

I suggest the following items as a small "action plan" - things to think through and discuss whether as a Trustee, Manager, Employee, Volunteer, or Supporter of a charity:

Governance

Is the charity being governed efficiently and is the charity supported by it's Trustees as much as ios possible?

The Trustees

Aer all the Trustees sure of what they are there to do?
Does everyone involved with the charity know the Trustees and do the Trustees know the people who do the work?

Meetings

Are meetings efficiently run and productive?

Strategy

Does the charity have a clear strategy which is well communicated to everyone?

Financial Control

Do the Trustees and Managers have all the financial information they need?
Are they confident of the financial security of the charity?
Have the Trustees (and anyone else who needs it) been offered training in understanding the numbers?

Fundraising

Is there a strategy?
Is it working?
Can the charity say what they will do with a donation - whether it is £2 or £20,000?

Risk Management

Have all the risks facing the charity - operational, financial, reputational etc - been considered and addressed in a systematic way?

Staff Management

Are staff trained and offered personal development opportunities?

Communications

Does everyone know what is going on?
Is good news celebrated?

Considering these questions - or at least some of these questions - is a really good start to the year.

New Year, New Start?

2010-01-04T11:15:00.000Z

The first full day of the working year, and the first article in the legal press about meeting the challenges of the 2010 economy for the legal sector. For example I give you today's lead story from "The Lawyer" ("Law Firms ready to ring in the changes for uncertain 2010"). I will start the year as I left 2009 - slightly incredulous at how late law firms are in making strategic and structural changes to their business model, and shocked at how un-aware firms seem to be at their own failings (being "busier than ever - don't know why" is no response to being told your firm is inefficient or badly run...).

Law firms are in the second difficult year - and most have done all the easy things, or all the things they know how to do, to address the difficulties. They are now stuck - and in a position where well managed firms will thrive at the expense of the poorly managed firms. To quote "The Lawyer":

Some have suggested that the leaner, more demanding marketplace of the future could even spell the end for firms with weak management strategies.

This is not the future however - this is now. Sadly I do not believe that many of the firms making up the 30-100 ranks of the Top 100 firms (or smaller firms) are up to the task. Let's look at the advice from "The Lawyer":

Charles Martin, senior partner at Macfarlanes:

"Sharpen efficiency levels"
"Look at better client service"
"Improve ways of organising themselves internally"

Gavriel Hollander (the article's author)

"Efficiency - whether changes to outsourcing policy, client charging or further rounds of redundancies"
"Diversify"
"Merge"

David Stewart, managing partner at Olswang

"Strong client relationships"

So - efficiency seems to be a major theme. Why are law firms focussing on that only now? Perhaps the large profits, and large revenue increases in the years before 2008 suggested that there was no need? Perhaps firms couldn't be bothered to making structural changes to instill efficiency when the firm's owners were earning plenty? Or perhaps, since the Board and/or the Partners were running the firm part-time, there just wasn't time to make changes?

All of these things are probably true, although I suggest that there is more of the latter reason than any other. Law firms are unusual in that they are generally run part-time by a sub-set of the owners as they continue to engage in the task which "won" them ownership. How many other firms are run in this way. How many firms - and remember that these are multi-million pound, national or multi-national firms which employ hundreds of staff - are run like this in other industries?

I'm all for efficiency but many firms confuse that with "cost-cutting". The two are not the same. Mr. Hollander suggests that there may be more redundancies coming - I agree, there probably are. It is unlikely, however, that these will lead to efficiencies. Unless a firm is really incompetent, it will have got rid of any poorly-performing staff already - so only good staff remain to be made redundant. Mr. Martin sensibly suggests improving customer service. How will that be achieved with fewer (good) staff?

Most commentators suggest that the UK will move out of recession this year (yes, there may be a "double dip" coming, but who can tell) - if that is the case, expensive redundancies will be followed soon after by expesive recruitment, leading to two more years of "one-off HR costs and write-downs".

I'm concerned, too, about mergers - or rather the word "mergers". I imagine the partners saying "wow - we're having real problems generating income and becoming efficient. I know - we'll merge with another firm, become larger and that will be easier!". I do not beleive we will see poorly-performing firms saved through merger - they will be bought out by more efficient and better run firms. Actually it may not be be necessary to buy them out - better firms (particularly those few which have built a reputation for treating all staff reasonably well) can simply get in contact and poach the best people without the need to collect expensive buildings too.

In this new year, I hope to see law firms starting to act more like businesses and less like personal projects. I suspect that, if they are to survive, that's what's necessary.

Charities and Business - The Christmas Crunch

2009-12-17T13:12:00.000Z

This is one of the highlights of the year for many charities. In the run up to Christmas, they can rely on a higher place in many people's thoughts and in past years have been able to benefit from corporate Christmas generosity.

Things may be a little different this year. I have spoken recently to a number of charities who have seen a Christmas corporate donation of cash turn into, at best, a Christmas donation of time from employees. Now please don't think that any charity would be anything other than grateful that a gift of any sort is forthcoming. Gifts in kind, however, take a little more organisation that does cash. The charity needs to be sure what they want volunteers to do - and be sure that what they are doing is useful. Not only that, they need to provide work for the volunteers that satisfies them - while useful for the charity, it is unlikely that a charity for the homeless could (without some very good communications work) satisfy volunteers at Christmas by asking them to paint the offices, no matter how urgent that was.

I have looked from the other side too. A number of the law firms I work with have felt unable to support charities with cash as some of them have done in the past. Most are hoping to be able to increase their donation in kind, however, and some have said that this is how they see their support happening in the future.

So - a small crunch for charities this year. The key is to expect the change and have programmes ready for volunteers. Make sure that donations in kind are valued - for example if a team of ten from a law firm spend a day with a local children's charity, this could be worth, say, £2,500. The charity's administration should consider this value of donation and be appropriately grateful. If the Patron of the charity personally writes to donor who gift, say, over £10,000 then the Patron should also write to donors in kind of that value.

All gifts are good - every charity just needs to be ready to receive them.

Earth to Solicitors...

2009-12-10T15:17:00.001Z

Sometimes I wonder if some solicitors live on a slightly different planet where they exist in a different context to the rest of us. For exhibit one I refer you to this story in "The Lawyer".

The central point of the story above is that lawyers and law partners will be hit hard by the newly announced increase in National Insurance and that this is a step too far and "...It could be the straw that breaks the back for some". We are talking about a half-a-percent increase in tax payments for people earning well in excess of four, five or six times the national average wage. I can understand lawyers thinking this but I'm amazed that any wanted to see them published. The vast majority of those who will pay the new rate of NI will be those between the threshold of £20,000pa and those earning just the other side of the average wage - all of whom are unlikely to be too sympathetic to lawyers appearing to say "poor us - we will need to pay a little more of our enormous salaries in tax". Perhaps they are concerned that bankers are streaking ahead in the "being hated by the public" stakes...?

Please note that I am not one of those who feel that no-one should be paid more than a set sum, or who would normally complain about lawyers' earnings. Most lawyers work pretty hard and if someone is willing to pay them hundreds of thousands of pounds each year then they would be mad to refuse it. Taxation based on income is, however, much more fair than a flat tax paid by all - such as the UK's VAT. While high earners will pay more tax - they do, of course, earn more money in the first place.

Rather than selfishly whining about NI, perhaps lawyers should be seen in the national press to be concerned about society's issues - such as the return to 17.5% VAT which will hit the very poorest the hardest. I'm sure that solicitors have a social conscience, so it seems unfortunate that press stories such as that in "The Lawyer" portray them as money-grabbing and insensitive.

Context is everything. Paying a little more tax on a high salary is a nuisance - but you can afford it. Perhaps we should all consider those who will face real difficulty. Imaging earning £22,000 a year - now faced with an increase in NI, no increase in the Income Tax thresholds, and an increase in VAT which will mean that almost everything you have to buy will cost more in January than it did in December.

Context: Bhopal

2009-12-03T19:21:00.001Z

I started to write a post about the Royal Bank of Scotland and the prospect of a fight between the Board and the Government with regard to bonus payments. Two things stopped me. The first was that Peninsulawyer had already written a better post that I was going to (here). The second, however, was the anniversary of a man-made disaster - the Union Carbide plant at Bhopal. The BBC have a good summary of the story here - I've used their graphic below.

It's a dreadful story of corporate incompetence and lack of care which led to the deaths of a huge number of innocent locals. The contrast in the numbers associated with this event are staggering. Seven thousand dead; over six hundred thousand affected. What is worse, however, is the number associated with the "pay off" from Union Carbide - $470 million. It sounds like a lot of money, doesn't it. I suspect that's the point. Divide it amongst the families of 7,000 victims and 600,000 other affected people, however, and it is insignificant.

Imagine this disaster happening to a town on the outskirts of London. Firstly, of course, the chances of a rather wild chemical plant being sited near to wealthy people is not high - Union Carbide didn't choose Bhopal because it was handy, after all. Let's get past that point and imagine that a chemical plant near London suffers the same sort of problem - i.e. incompetence, poor management and an almost total disregard for the safety of people living nearby. Can you imagine a payment of only $470 million? No - of course not. Can you imagine that no-one would ever be prosecuted for the disaster? No - of course not. There would be massive payments, and a fund established for future problems. Western lawyers working for rich insurance companies would not led anyone off with a "full and final" settlement in 1989, when the effects are still being felt in Bhopal. It is a scandal that there are - statements from the Indian Government notwithstanding - still health problems in the area. It is a scandal that there has never been a criminal prosecution.

In this context, the idea that some bankers might be paid a lot of money rather pales into insignificance for me. Perhaps they will read the news and donate half (say) to the families still living in Bhopal? No, probably not...

Good News

2009-11-30T15:53:00.000Z

I have been accused of writing only down-beat stories here and, reading through past posts, I am inclined to agree with my wife that I have been concentrating on things going wrong or done badly (although, in my defence, I do believe that I offer solutions, rather than simply pointing out problems).

So - some good news. Well "Legal Week" is carrying a story about Georgina Blackwell, the beautician who successfully defended her mother in court. Sky news (from whom I borrowed the photograph) have the full story of her case here.

The "Legal Week" story is about BPP offering Georgina a scholarship to do her LLB on their new programme. I think this is a wonderful story - not withstanding the fairly naked PR plant of it in the legal press (after all, the PR staff at BPP have to earn a living too). It is wonderful because someone is being given an opportunity to do something that they possibly thought out of their reach. It is wonderful because some personal good has come out of a selfless act. It is wonderful because justice was seen to be done in the person of this young lady. Finally it is wonderful because she is exactly the sort of person who should be a barrister - committed, concerned, brave, and hard working.

Congratulations Georgina.

Too Early to Tell?

2009-11-30T10:11:00.002Z

I read "The Lawyer" this morning. It carried, as its main story on the web site, "Streamlined firms emerge from ashes of annus horribilis". I wasn't initially sure whether I was going to read a good news story or a bad news story, although I was fairly sure that "The Lawyer" would try for some sort of sensational take.

I've read the story a few times now. It is based on a table of "information" about law firms, which I reproduce here:

The table shows partial results for ten firms, although four have no data for the turnover in the first half of this year. Some of the data seems strange. Have Freshfields really only made 4 people redundant? As it turns out no - I quote from the same article:

The total number of partner resignations at Freshfields Bruckhaus Deringer - the only magic circle firm not to have had a substantial redundancy programme - was much lower at 14.

So which is it?

The ten firms show an average reduction in revenue (for those showing data), of about 10% or so. All in line with what the firms have been saying we should expect. My point is this - is this really news? I'm not convinced that this story was ready:

Only 60% of the data was available
The top 10 UK firms are only really representative of the top 10 firms - they certainly are not representative of the rest of the top 100, never mind the bulk of smaller UK firms
The conclusion reached is that firm have performed much as expected
Do redundancies equate to streamlining?

So far as the last point is concerned - my view is that the two are rarely the same. If the redundancy round has been a strategic decision rather than a knee-jerk reaction, and if the people chosen for redundancy are the worst performing over a period of time, then this could be thought of as streamlining. I suspect this has been the case in most of the top 10 since I like to think that this huge firms will be reasonably well run. My experience with other firms - both mid-sized and small - is that there was rarely this amount of though given to the process.

I'm not sure, too, that the story showed a pattern of streamlining leading to recovery - which is suggested in the title.

Come on people - we can all do better than this, surely? If it's too early to tell with regard to any recovery, please don't suggest otherwise.

Just Because You Can...

2009-11-23T10:53:00.001Z

In a move which seemed to surprise solicitors, the Bar Standards Board voted last week to approve some "fundamental changes" for barristers. The full press release is here but let me summarise:

Barristers can become managers in LDPs
Barristers can practice in more than one capacity at a time -i.e. as LDP managers and in independent practice
Barristers are "discouraged" from being shareholders in LDPs for the moment, until some of the regulations are sorted out
Barristers can form "Barrister only Practices" (BoPs - isn't that a great acronym!)
Barristers will be able to work in LLPs and other barrister-only companies

Essentially the BSB is giving barristers some flexibility. Many commentators seem to think that this has given barristers the jump over solicitors whose regulator seems to be caught in an "all change is bad" loop at the moment - see James Dunning's take here.

However - will barristers take up this opportunity. Undoubtedly some will, particularly more junior crime practitioners. As I have said before, I can see the junior Criminal Bar almost disappearing. Other barristers? That seems to be a different matter.

Barristers are the specialists of the legal world and are very bright people. I have little doubt that someone who has made a good career as, say, a barrister specialising in tax law, would be able to join a magic circle law firm. They would probably earn more and would probably have a larger support network. And yet they don't do that. Barristers are self employed because they want to be self employer. If they wanted to be working in a business with other types of lawyers, they have plenty of opportunities now. So I can't see why the new flexibility allowed by the regulator will change that.

I can see barristers using BoPs and I can see that some specialists might want to form a business working up and down "the chain" - working with insurers and solicitors, for example. I suspect, however, they will be in the minority.

Barristers will remain specialists - supplying top-end expertise to the profession and to clients. There is a reason that there are only about 14,000 of them working at the moment. Their specialist knowledge and experience will remain invaluable to other lawyers and to clients - but why would a law firm want to employ such a specialist when they can have the knowledge when required without the overhead of continuous employment (whatever form that employment took).

Just because they can form partnerships with solicitors doesn't mean that they will.

Not Change, but the Consideration of Change

2009-11-19T13:51:00.000Z

I was at FoxWilliams this morning for the launch of the report written by Jon Robins entitled "The Big Bang Report: Opportunities and threats in the new legal services market". An electronic version is available from Byfield Consultancy here.

The report makes very interesting reading - and I'm reading it very thoroughly at the moment - but there were a few points raised in the discussion which followed the launch which have got me thinking.

One of the speakers was Tony Williams, the Principal from Jomati, who made a point that I have been trying to make for a while - namely that of the "deliberate decision". It is important for firms and chambers to decide what it is that they want to do, the market they want to work with, and to examine the competition they face now and will face in the future. Not rocket science. The point is to make a deliberate decision about the future of their firm or set of chambers before the market makes one for them. The decision may be to do nothing - that their model works and that those running the firm or chambers believe that they are well placed in the market. That is fine - it is a deliberate decision.

Decision time is here for legal services, there is no more time to prevaricate. Crispin Passmore from the Legal Services Board reminded the attendees that the Bar Standards Board was meeting today (November 19th) to consider the possibility of barristers working in partnerships, which (assuming a "yes" vote) would be a major step towards Alternative Business Structures (ABSs). He also said that the LSB expected to see the first ABSs in mid 2011. This is not very far away and so I repeat - now is the time for barristers and solicitors to seriously consider their business and what they would like it to be in the future.

I'm particularly interested in how the changes to the profession will have an impact on the bar. For many sets of chambers, I think that, following thorough analysis, the view might well be that they are more in the B2B (Business to Business) market than the B2C (Business to Consumer), and so their branding and marketing is focussed on professional firms rather than on the "end users" of the justice system. Many sets are specialised or have barristers who work at the very top end of the profession and so are likely to remain in demand after the shake-up. This will not be true, sadly, for every set of criminal chambers. The new large branded law firms which are widely expected to enter the market are likely, as part of an ABS, to try to scoop up public defence work, while the Criminal Prosecution Service are squeezing the bar from the other side. I can almost see the junior end of the junior criminal bar disappearing - working for the new ABSs before starting in independent practice later in life when they can start to work on more specialised areas of criminal law. This will have a huge impact on the bar, on the Inns of Court, on barristers and solicitors and on clients. Exactly what that impact will be - I don't know.

In times of change, the only real fault is to do nothing - or rather to accidentally do nothing. Deliberately doing nothing to change your business model after careful thought is a positive decision. Firms are already starting to try new ways of working. Look at Turcan Connell a law firm based in Edinburgh with offices in London and Guernsey. They have expanded their Private Client work to include Asset Management - they have analysed their market and are providing their clients with the services they need, whether those are legal services or not. In all but name this is an ABS. Firms in England and Wales will, I'm sure, be examining Turcan Connell's success and analysing their business model. It could simply be one of the first of such practices.

So - my learning from this morning. Your firm or set of chambers must be considering the changes in the industry now. They should be engaging with advisers to examine their market, their place in the market, their strategy, their governance and their operations - and they should be doing this very soon. The bar in particular has been remiss in failing to address the Legal Services Act soon enough. Sets of chambers cannot wait for their regulator before they start to act. By starting the process now, they will be well placed to add what regulatory changes are decided by the BSB to chamber's strategy.

Consider the change now - before the market changes around you and your firm or chambers is no longer relevant in this new market.

Spent it Now!

2009-11-16T10:32:00.001Z

Having just blogged about not panicing (see my last post), I'm back on my favourite theme - that of short-termism in the industry. What is it about partners and those running law firms that makes them focus so much on this month, this quarter and, in we're lucky, this year - while seeming to ignore next year and the longer term?

Look at this news story from "The Lawyer" entiled "Lovells partners in line for post-merger windfall". The story explains that with the merger of Lovells and Hogan & Hartson, partners will be eligible for performance based bonuses. Lovells were in the same publication last week in connection with half year results - where they were predicting flat results. Now that is better than most firms at the moment - but is it the sort of results that should merit additional bonus payments.

More importantly (because I think the move to a meritocratic system is a good one, all things considered), I can't find any information about the proposed merger that talks about investment in the new business. There seems to be lots of news about the benefits to the partners - but none about the benefit to the firm itself. In fact I couldn't find any news about the merger on Lovell's web site at all. Hogan & Hartson's did carry a news item (see here) which does seek to show benefits for clients - although these are mostly along the lines of "we'll be bigger and bigger is better - right?".

I would be really impressed if the firms had made an announcement that any additional bonus payments would be based on longer term objectives and measurements (sounds like the suggestions for bankers, doesn't it?), or if the news talked about investment for the future. Instead the news (and I acknowledge that "The Lawyer" is looking for a good story rather than anything else) is all about short term, personal, benefits.

Isn't this one of the issues that helped cause the recession?

Don't Panic!

2009-11-12T16:28:00.000Z

I've spent the last few months speaking with law firms who seemed almost oblivious to the need for a new model for law firms. Yes, they have noticed a downturn and believe they have reacted to it - but in response to my asking about strategic change and a leaner business model, the response has usually been "Oh we're fine now - busier than ever..."

We - result are out now and suddenly, in the last few days, I'm starting to sense a bit of panic. "Revenues are down!", "Partner profits are down!" are the cries - now taken up by the legal press (see "The Lawyer" for example).

Now is not the time to panic. It is, as I have been saying for some time, important to examine any result in context. Let's look at the short report from "The Lawyer" referenced above. Pinset Masons revenues for the half year are down 7% (year on year). Sounds bad? Well last year in the same period there was a year on year growth of 6%. On average, most top 50 firms have experienced nearly a decade of double digit annual growth in revenues. Is 7% therefore that bad? Note too that the firm stated that it was "broadly what we were expecting". Not a reason to panic then.

How about "The Times" this morning? I quote "Partners at the firms ranked 11th to 25th by revenue saw earnings drop to an average of £444,000" (see here for the reference). The article goes on to suggest doom and gloom for mid-tier firms - and goes so far as to say "...profits could fall again if work does not pick up dramatically in the second half of the financial year. Many are likely to seek a merger to survive...". Oh dear.

A report from PWC quoted in the article states that mid-tier firms have been slow to react. I agree - they have. Many, however, have also reacted badly - they have concentrated on the cost side of the profit calculation and have, in many cases, dropped the ball with regard to the revenue side. I quoted this site in my last post, but have no problem with repeating it here - "MANAGING IN A DOWNTURN: BEWARE OF COST-CUTTING CAMPAIGNS". Partners in particular need to be focussing on their own areas of expertise. I do not suggest that costs should not be cut - merely that it should not be done (operationally) by legal staff, in most cases, but by professionals trained in management. Partners can help by increasing revenue - or, more importantly, increasing profit by engaging with clients and securing new, profitable, work.

The firms that panic now will be the first in the M&A queue (and they won't be "buying"). Specialise - get the partners concentrating on the revenue and profit side and get professional support management controlling costs and adding efficiencies.

Growth in a Downturn - Revenue or Cost Driven?

2009-11-10T11:49:00.003Z

It's results time again, when the legal press focus in minute detail on short-term results - thereby increasing lawyers' focus on results in the last 3 months, 6 months or 12 months, all of which are too short term.

The news this time round is continuing revenue falls in some of the big players, headed up by Simmons who posted a 16% fall in revenues (see the full story here). A&O also show a fall - Norton Rose and Lovells are expecting flat results. All of these firms have been cost cutting, and it will be interesting to read the results of the mid tier firms where cost cutting has been the most savage. The evidence would seem to suggest that cost cutting hasn't helped enough - or perhaps they will suggest that it was going to be much worse. By focussing on cost cutting, some firms will have dropped the ball with regard to business development, which, I suggest, is the real way out of the downturn.

It's not been all bad news. Dentons posted a 3.5% rise in revenue in the same period (see here) - for which they thanked not savage cost cutting, but rises in international revenues.

The message has always been - the best way out of a downturn is a focus on revenues not on const-cutting. This article gives an interesting take, and sums up by saying "...do not sacrifice the future [by one-shot cost reducing savagery]" and encouraging firms to concentrate on cash efficiency and revenue growth. In another part of the same article, the author tells firms not to retreat - no matter the temptation, do not hide from the storm, but instead aim to work hard to grow your revenues. The author quotes a Harvard Business Review article which states:

Of the firms that made major gains in revenue or profitability during the last recession, more than 70% sustained those gains through the next boom cycle. The corollary was also true: fewer than 30% of those that lost ground were able to regain their positions.

Growth in a downturn is driven by revenue, not by cost cutting. I am not suggesting that any firm should ignore costs. Have a sensible policy to manage costs sensibly - but have the lawyers doing what they do best which is to provide high quality business advice, manage their clients, find new clients and find new work. Costs are important, and client & matter partners must have a very good understanding of their costs in order to be sure that their work is profitable - but their responsibility is to drive forward the revenue side of profit, while letting the managers of the business manage the cost side of profit.

Manage the costs, but work for the revenue - it's the only way forward.

When is a Law Firm like a Football Club?

2009-11-04T09:43:00.002Z

Any regular readers will know that I am passionate about moving law firms (well actually any firm) away from too much short term thinking.

Listening to the news today, it occurred to me that managing a law firm must be a little like managing a football club. Only a very few football managers are given much time to produce results and almost every manager is judged over an incredibly short period. This morning's news item was in connection with Liverpool FC who, apparently, have lost 6 of their last 7 games. They play again this evening and the report stated that a poor result might cost the manager his job. Notwithstanding the media's need for catastrophe, it does underline the "results now" nature of football management. The six matches from 29th August were all won and included a 6-1 win against Hull. The one win in the last 7 matches was against Manchester United. So is this really the sort of performance that should require the termination of the manager's contract?

This sort of attitude reminds me of law firms. Performance is (rightly) reported monthly to the partners - but this can mean that time frame for decisions is much much shorter than it should be. One month of bad results, and partners can be demanding that "something must be done" and ordering management to turn around the firm's performance.

Both types of organisation would do better to expand their view so that they can properly analyse short term performance in a longer context. I remember talking with a law partner who spent the first 10 minutes telling me how worried he was that the recently released figures for the preceding month were poor. He was very concerned and had asked the Managing Partner what new cost-cutting measures could be implemented. I asked what the results were for that month in the previous years, and he did not know. I called him the day after our meeting, however, and he had found out that the month in question was a bad month every year - and in fact that this year had been less bad than usual. He had to admit, however, that he had not gone back to the Managing Partner to say that further cost cuts were not necessary...

One other similarity between law firms and football clubs struck me. Both are organisations built around highly trained specialists. Both have a fair number of prima-donnas. And in case of poor performance it is often the second-string team, management, and support team who suffer the consequences. Have you ever heard of a football club sacking first team players because of a string of 6 losses - I certainly never have.

My point? Short term results must be viewed in context. Medium and longer term results are usually better indications of the true performance of the organisation. Make sure that you performance manage everyone - "stars" included. Poor results are as likely to be the result of poor performance as they are poor management.

To Bonus Or Not, That Is The Question

2009-10-30T11:54:00.000Z

It must be that time of year again. Following on from my comments in my last blog, and from an excellent posting by Peninsulawyer (see here for the post in question - I do recommend that you read it), there is a prominent news item today in 'The Lawyer" in connection with a bonus payment from Slaughter & May to its staff (not, apparently, its partners). The web site reports that S&M will be paying fee earners a bonus in the amount of 5% of earnings while support staff will get 2.5%.

The last lines of the reports state that the firm made an estimated £504m in the 08/09 financial year (yet again promoting an obsession with turnover - but that's a completely different rant) with average PEP thought to be about £2.25m. The suggestion is that S&M have had a bumper year and are being a little mean. "Roll on Friday" goes further. In a story marked "Exclusive" (which must be some sort of new meaning of the word since the story is in general circulation), RoF reports the "Some of the firm's lawyers are pretty hacked off... its associates are all flat to the boards".

I never thought that I would be an apologist for Slaughter and May, but I think that the firm might be displaying a little good sense here and that reports are choosing to ignore a few important facts.

As "Roll on Friday" does acknowledge that "...the firm didn't make any redundancies" - an important thing to note in the context of most other firms chopping posts with rather gay abandon.
A 5% bonus in a difficult economy is still pretty good - over £4,500 for a 3PQE lawyer
The firm is acknowledging support staff with a 2.5% bonus - perhaps less than they would like, but it's still a bonus payment.
Yes, S&M have announced a pay freeze for 2010 - but how many clients do you think would be happy to read about their lawyers profiting excessively in difficult times?

In my opinion, Slaughters seem to be trying to walk a narrow line between acknowledging the hard work of the staff, while remaining prudent with their cash - i.e. investing the future.

The sort of short-term thinking that sees a good 6 months and demands immediate bonuses is exactly the sort of thing that helped the economy into a mess. In an ideal world all bonus payments would be linked to productivity (both personal and firm) over a medium term period of time and would not simply look at a few good months or deals.

I think Slaughter & May staff should consider that they may be some of the lucky ones this year - they are in a sold firm, provisions seem to be in place for future investment and development, and they are getting a bonus when many lawyers in other firms will not.

Belt Tightening or Investment

2009-10-27T12:40:00.003Z

There have been a number of news items over the last week concerning firms withholding profit sharing - see this summary from the blogger "Solicitr" (I'd like to point out that the news was covered in the more mainstream legal press - I just enjoy Solicitr's take).

The point of the story was that a number of firms - including Pinsent Masons, DLA Piper, and CMS Cameron McKenna - are apparently holding back or reducing profit distributions. This seems to be causing a little shock amongst partners, but I'm a little surprised why. In any other industry this might be considered investment. After all, as partners seem to repeatedly point out, they are the owners of the business. Times are difficult and profit is down and this requires investment in the business - for lawyers just as for any other firm.

The fact that this appears to be a shock is, in my opinion, indicative of the short term nature of most thought in this industry. Bumper years lead to bumper payouts and tough times immediately lead to pay cuts - for the staff as well as the partners (Shoosmiths have apparently convinced 90% of staff paid over £25,000 to take a 2.5% pay cut). Never mind the planning difficulties of this way of working - it is basically unfair. While £25,000 is a good salary in any other industry, it is a very poor salary in a law firm. Withholding profits from the partners is an investment - the partners will receive larger payouts some time in the future. The staff, however, seem to be asked to reduce their salary - it is not being invested in the firm and there will, apparently, be no return of this 2.5% of salary.

Here's an idea. Move to a longer term cash planning cycle. Retain more profit in the firm (yes, I know there are tax issues - but the firm and the partners can afford it) in good times and use it to invest in the future. Bring a culture of investment to the firm. If pay cuts are necessary (and I'm not convinced that they will be) then invest that money on behalf of the staff and return it when the good times return.

Above all, ensure that the partners understand that they have a responsibility to the firm. As the owners, they must ensure that sufficient investment is made in the firm and if this requires retaining profit for a few quarters then so be it. The partners should realise the sense of this action and be proud of their contribution.

Marketing Success vs. Business Success

2009-10-22T14:47:00.006+01:00

I seem to have been talking a lot over the last few weeks about marketing and social media.

As someone who has fairly recently started a new business, I knew that I would be spending a great deal of time marketing and developing the business. What I hadn't really thought about too much was the difference between marketing success and business success - or perhaps I simply hadn't considered the measurement of marketing in any depth before.

I the time that I have been "trading", both solo and with James Dunning at Geotrupes, we have gained reasonable press exposure, spoken at two conferences, gained followers on Twitter and for our blogs, and undoubtedly raised awareness of our business. These can all be considered marketing successes.

What has been interesting, however, is the link to business success. No matter how many followers we have, and no matter how wonderful our websites are (and I think they are of course), none of this matters if it doesn't lead to business - i.e. to income.

I spoke with a good friend of mine who has had (and is having) a long a glorious career in international media and marketing. I asked him about the link between marketing and business success. Only after I agreed to his anonymity did he admit that he (and apparently his industry) goes to huge lengths to avoid that link and to stop clients measuring business success by business success. It would appear to be, if not all smoke and mirrors, then at least most smoke and mirrors.

My point is this - don't get caught up in marketing for marketing's sake. Always measure your marketing in business terms. Enforce the link and make sure your marketing is paying off in real terms.

Social Media for Cost Effective Marketing

2009-10-18T19:51:00.019+01:00

In my role working with James Dunning of Geotrupes, I presented (if somewhat briefly) at the NetLaw Media conference on Tuesday 20th October in Manchester ("Key Strategies for Law Firms during a Downturn"). I'd been asked (at slightly shorter notice than I'd prefer!) on the subject of "Social Media for Cost Effective marketing".

Rather than run through my whole presentation, you may be pleased that I'm planning to summarise my thoughts here.

The first thing to consider is why anyone should be concerned about the use of social media. We will all know lawyers who tell us that they are currently busier than ever and think that social media is a fad. These might be the same people who agreed with a famous study in the 80s which concluded that there was no mass market for the mobile phone...

So why bother? Well how about:

36.9 million UK internet users in May 2009
Of whom, 29.4 million visited at least one social networking site
90% of 25-34 year olds use social media - use not just visit
3,226 % increase in use of Twitter in UK between May 2008 and May 2009

It's the third point above that is the reason that every law firm needs to sit up and take notice. This 25-34 year old group will be starting businesses, becoming managers, engaging in M&A activity, buying commercial and residential property, getting married and getting divorced - and, statistically, engaging in criminal and fraudulent activities. They use the web - use soicial networking - and will expect law firms to do the same. They do not believe conventional advertising - they have grown up with it and have learnt to ignore most of it and to despise a great deal of it. Over the next 2 to 5 to 10 years, these are the people who will be our clients.

So - what now. Well you can't engage with every form of social media out there so have a look around at what is available. For business, one of the best is LinkedIn (currently with 50 million users). Registration is free, so it is easy to step in and have a look around. Engage with the groups - that is one of the most powerful aspects of the site. Read before you write - by which I mean spend some time looking at the site and at the way that people communicate on it. That way you can learn the conventions before your start to say anything - and possibly avoid the embarrassing "dad dancing" syndrome of using inappropriate language.

There are some rules, however:

Trust your users. You don't have time to censor what is said so - just as you do with any other client interaction - trust your people to communicate
Use a personal voice. Clients deal with people and not firms - so have identified members of he firm writing blogs and Tweets.
Read before you write - see above. Make sure that you are using the appropriate voice.
Would you like this read out in court…? If you cannot answer "yes" to this, then don't press "send". This should not be a new rule - you should be saying exactly the same before sending an email.
Listen to feedback and interaction - that's the whole point of new media
Plan your engagement - don't let it take over your time. Regular is much better than frequent. So a weekly blog is better than ten blog entries one week and then nothing for a month. The same with Tweets - daily is good, twenty messages in a day quickly becomes a nuisance for your followers.

Many of these sites are currently free - although most are developing "premium services". Remember that you get what you pay for, and in this new media world, the technology is free while service is expensive - so many of these services have poor, or even no, individual customer service. Be aware of the hidden costs, too. Measure the time that you, or your staff, spend using these sites. Remember, as well, the cost of not getting involved (Carter-Ruck don't entirely seem to have got the hang of it yet...) or getting involved badly (as Habitat found to their cost).

It's a new world - step right in and get involved.

Post Strike? So What?

2009-10-17T12:56:00.003+01:00

So we now know that we are to face what is likely to become a long postal strike. Papers today report the Communication Workers Union as feeling stronger and more confident than Arthur Scargill before the miners' strike. This could herald a long difficult period for law firms who still, in general, prefer to deal in hard-copy.

Fortunately you saw this one coming. A post strike was one of the risks you identified as part of your standard risk planning. You analysed how much mail you send and receive, you've identified the clients who are very "paper heavy" and you've talked with them about arrangements during the strike period. You've setup an email confirmation system so that you know when post has been received. You also set up accounts with couriers - local, national and international.

You did do that, didn't you? Oh dear... I'd suggest that you get on with all of that as soon as possible. Whilst your clients will know there is a post strike, they will probably assume that, as a professional organisation, you will be ready.

If you have doubted the need for risk management and contingency planning, this is a concrete example of its benefits. If you find yourself in the unhappy position of scrambling about over the next few days sorting things out (to the detriment of your real business) then please set plans in place to consider other risks. An hour in advance saves three hours in a panic.

If you are feeling a little smug because you do have a risk system in place and you do have a suitable contingency plan then (a) you probably should - congratulation, but (b) make sure you "debrief" in a few weeks to see if there is anything to learn or anything you could have done better.

Finally on the subject of risk management - have you considered Reputational risk. The recent mess surrounding Trafigura and Carter-Ruck shows two things. Firstly the need to have a plan in place to deal with bad publicity (or even a plan to review clients before you act for them?). Secondly this affair shows the power of the new or social media. While Carter-Ruck seemed to successfully gag the Guardian and (second hand) the BBC, they were incapable of doing anything about public discussion, fascilitated by Twitter. Food for thought for us all - and something to be considered the next time you are reviewing risk.

Confident Guessing

2009-10-12T11:11:00.008+01:00

I read a story in "Legal Week" today which said that "Law firm business confidence has recovered for the second quarter in a row with more than half of partners now expecting revenue growth at their own firms over the next 12 months" - see the full story here.

Hmm. I would love the economy to recover and would be delighted to hear that the majority of partners were expecting growth - if I really thought that some analysis and research had gone into the partners' statements. Sadly I suspect that the same level of care will have gone into these announcements as went into planning for this year's budget in most firms.

I spoke with a number of firms, large and small, as they developed and then started to work on new budgets. The development process in law firms is not the same, boring, routine used in most commercial organisations. Analysis of past expenditure together with a detailed study of the requirements for the next period are undertaken, but are generally overtaken by "gut feel". I was astonished to watch large companies set a budgeted revenue figure based on "assessments" by the department heads - assessments which had no scientific basis and which had often been arrived at following an evening's worth of discussion between the partner leading the department and his team (occasionally I saw the team discussion phase ignored as unnecessary). The accounting staff were not called on for input and it was rare for the marketing or business development team to be asked for their help. I saw firms forecast 25%, 30% and 40% drops in revenue based on a personal assessment of "difficult times".

I would have been less concerned with this had it not led to a desire to see a similar drop on the expenditure side of the budget. "My goodness" the partners would say, "our revenue is dreadful - we will have to cut, cut, cut!", and expenditure budgets would be savaged - capital projects cut, staff cut and day-to-day expenditure on small items cut "to show willing."

Now, less that 12 months on, "confidence is high" apparently. That's fine for the revenue side of the equation - the firm will just exceed budget. What about all the people who have been removed, however? What about the hiatus in capital projects? My perception is that the same partners who made short-term, knee-jerk, decisions for this budget year have now got bored with the whole "downturn thing" and, finding that their own forecasts have been hopelessly pessimistic have decided that everything will now be fine and are confident that their revenue, and so their profit, will soon recover.

They were wrong before and they may be wrong now. Some forecasters will undoubtedly be speaking from a position of strength - they will have done the analysis required to be confident that their assessments are sensible. Most partners, sadly, will not. At the very least, the economy will be different and the "playing field" changed. If partners believe that, having weathered the downturn they now need only weather the recovery (for a maximum of another 12 months) before returning to business as before, they will be sadly mistaken. Clients have been given power and will be reluctant to give it back. Hourly rates are under attack as never before, and few firms have a sensible defence for them. More importantly, those running law firms have been exposed as never before. It is becoming apparent that few law firms are run in a business-like manner and clients are starting to ask why they should pay for this inefficiency.

I'm glad that confidence is returning to the sector - but will be more glad when that confidence has a sound basis. I'll wait to hear from those members of the profession that I know and trust before I too relax into confidence.

Too Busy to Manage your Time?

2009-10-08T13:49:00.012+01:00

I met up with a Executive in a busy law firm the other day and we spoke about stress and time management. He looked tired and complained of being so busy that he couldn't see how busy he was! "All this stuff!" was a refrain. We spoke for a while about a few methods that he might adopt to try to retake control of his life and he left, I hope, a little more positive.

There are many time management resources out there (Catrin Mills has some great suggestions on her site "The Lawyer Coach"), but as my stressed executive pointed out, he was far too busy to spend time looking at a bunch of web sites. "Getting Things Done" or GTD, made most famous by David Allen, is a whole process which has lots of associated tools and techniques, but which can seem to be too complex for most lawyers I've spoken with.

I suggest just two techniques to begin with - both of which, however, will require a little practice and - yes - some investment of time. The first thing to do is to consider that there are two useful ways of measuring any task - is it important and is it urgent:

Every task that you will be faced with can be thought of in these ways. The extremes are easy to deal with. If a task is important and urgent - you've got to do it, and probably got to do it before most other tasks. If a task is neither important or urgent, you probably shouldn't waste another second on it (unless it's a task for the Managing Partner, in which case you will probably take a moment or two to explain why you'll be passing the task onto someone else (see below).

The complexity comes in dealing with things that are either important but not very urgent or urgent but not very important (boxes two and three above). It can, however, be quite simple - important trumps urgent. One of the most important things you can do is to make sure that the urgent doesn't always get in the way of the important. It's very easy for this to happen and the consequences are that you put off important tasks because urgent matters get in the way, and then the important task suddenly becomes urgent too - and suddenly you're running out of time again, and spending long evenings in the office. If a task is urgent but not that important, try to delegate it to someone else. If something is important but not (yet) urgent, allocate some time each day or every couple of days to work on it so that you complete important tasks in good time, and so are not faced with a number of important tasks "going urgent" at the same time.

Try to get into the habit of considering every task in this way. It becomes easier and easier with repetition and will soon become second nature.

This leads to my second technique. This is by no means an original idea, but one arrived at after consideration of the many experts in the field. I call it the "Law of Ds". Look at every task you have on your list (and please don't tell me you don't have a list of your tasks - no list = no chance!) and look at every email you get and do one of the following:

Do - if it's an easy email to deal with or an important and urgent task, then do it right now.
Delegate - if at all possible you should delegate a task, or dealing with an email to a member of your team. Don't just dump the dross on them either - let your team deal with urgent matters (see above) and let them gain experience with the important things too. Excellence in your team will reflect well on you.
Delete - not urgent or important. You can probably delete it. This especially applies to emails. Don't get drawn in to answering mass emails that don't really need a reply. When you are searching around for things to do, yes, but I'm working on the assumption that you are not in this position at the moment.
Design - a plan or timetable for the task. This is how you deal with the important but not urgent tasks. Slot them into your day over the time available and then stick to your plan.
Defer - if you have to. I'm not a big fan of deferred tasks, but if a task doesn't need to be dealt with yet but will become important next month, for example, then put it in the Deferred folder and take it out when it's time comes.

You can set up email folders to match these "Ds" so that you have easy ways of dealing with items as they arrive. Be brutal. Your team will probably cope with more than you think they will, and will generally be pleased to be trusted with work. Get your colleagues used to the fact that you will not reply to jokey or "send to all" emails - delete any email that is remotely junk immediately.

These two simple measures can help you get control of your time again. It will take a little though and practice to begin with, but this investment will payback almost immediately and you will be able to do your job again, rather than dealing with the task of finding your job in the mess.

Give it a try - claim your time back!

Risk Management for Small Law Firms

2009-10-07T20:55:00.002+01:00

Having looked at Risk Management Systems in large law firms, I was asked to see how a sensible and pragmatic system could be built into a smaller law firm.

Large firms have the resources to install large systems to manage, address and mitigate all the risks facing the firm. There will often be a number of people responsible within the firm for various types of risk, and it is likely that there will be various consultant used - especially in the field of business continuity. Smaller firms do not have this luxury and so need to find a way to address risk without this task getting in the way of the main business.

Firstly, however, why bother at all? Surely risk management is just common sense, isn't it? Well most things are a matter of common sense, but having a systemic approach can ensure that all aspects are considered and that the firm can demonstrate its commitment to risk management both to the regulator and to prospective clients, who are becoming more and more concerned about risk. It is worth noting SRA rule 5.01(1)(i) which says "...you must make arrangements for the management of risk". While this is a marvellously vague phrase, it is worth considering how your firm would be able to demonstrate that it has made such arrangements.

So - what to do? I will not suggest that your firm goes down the Lexcel route - not unless you have some spare time and might like to employ a couple of new members of staff. There are some simple steps which can be taken that will not have too great an impact on the running of the firm:

Appoint one person to have responsibility for risk (the "Risk Manager" or "Risk Partner"). Sensibly this will be the Managing Partner - who might want to delegate some tasks to more junior staff;
Make sure that everyone in the firm knows who the Risk Partner is;
Write some policies with regard to Conflicts, AML and other risks - and make sure that legals staff in particular are in no way confused about contact details and protocols. Writing the policies will be a good investment of a comparatively short period of work. Some standard policies may be available online;
Have a Risk Register - a central list of all risks facing the firm. This can be a complex database or an Excel spreadsheet - personally I prefer the spreadsheet approach;
Consider all kinds of risk - Professional, Regulatory, Reputational and Operational - and spend a little time thinking about the risks facing the firm in each area;
Score each risk for the possibility of it happening and the impact should it happen - this will give a "score" to each risk. Don't spend too long on this step - all risks will be dealt with, the score simply gives the priority;
Think about each identified risk in the priority already agreed. Think about what your firm would do if it happened and what it could do to reduce the possibility of it happening.
Write this down! Do the tasks identified in the previous step to reduce risks happening!
It sounds like a lot of work - but the eight steps above could be spread over a good period of time. The important thing is to address risk in your firm in a systematic manner, and examine the Register annually for new risks.

One of the easiest ways to start is though scenario planning. Think of an incident - or select one of your high priority risks from the Register - and spend a couple of hours (possibly over a glass of wine at the end of a day) talking through the scenario. Imagine there is a fire in the building, or that a former client has posted a blog full of (false) claims about the firm's mistakes. What would you do; who would take decisions; can everyone contact the people they need to; can the firm contact those outside agencies and suppliers necessary?

Small law firms face almost all the same risks faced by "Big Law". By addressing risk before an incident occurs, your firm can be sure of survival, be more likely to come out of the incident well, and be able to demonstrate a professional approach to regulators and clients alike. In this difficult PII climate - a solid risk system is likely to help with negotiations.

Outsourcing Revisited

2009-10-05T10:02:00.008+01:00

With the announcement from Slaughter & May that they are "in talks with an LPO [LegalProcess Outsourcing] supplier", the legal world is again aflame on the subject of outsourcing.

I have already written once on this subject (here) and James Dunning had more to say on the subject (here), but I remain concerned that the notion is not always going to be thought through by some firms. The implication from some of the press coverage is that "if Slaughters are doing it then it's mainstream and so we should all be doing it...". Let me just set down some of my concerns:

Slaughter & May are not yet outsourcing anything. They are "in talks" with a supplier. That can mean anything, or nothing.
I wrote before about client concerns. How will a client feel about work being outsourced? What safeguards will be retained? Consider a medical example. A routine piece of surgery can, one might argue, be carried out anywhere since its simple and so should be carried out as efficiently as possible - which might mean in a small local hospital, or a private clinic. That's fine unless something goes wrong. I'd prefer to pay a little more to have a procedure done in a large teaching hospital so that, if the less that 1% chance of failure occurs, I will be surrounded by highly trained (and so expensive) people who can step in and take over. The same is true for a "simple" client matter. 99 times in 100 there will be no problems - but what will happen in those 1% cases? Who will be there to step in and sort things? How quickly will the lead lawyers find out that there is a problem.
Consider this too - how often has a client told you that a piece of work will be simple - only for you to find that it's not? How commoditised can legal work - especially that of the largest firms handling the more complex tasks - be?
How will the data protection act apply. My (somewhat limited) understanding is that special measures will be required if private or personal data is to be processed outside the EU (or EEAA). Will outsourced "partners" have full access to the matter files? Can they perform adequately if they do not? I know of firms where the partners (that's the partners in the law firm - sorry for the confusion) have concerned about secretaries from other departments having access to files - never mind employees of different companies.
How will outsourced work be fitted into staff reviews and bonus considerations? How will departments react to not being able to pad hours on "grunt work"? At what point will the law firm's "value added" come into the process? I'm not sure how happy I would be to receive a bill from a partner briefly reviewing outsourced work and stating "it's fine".
How will the law firm control the outsourcing third party. What skills will be required to manage the relationship. I'm sure that legal knowledge and training will not help much - so who will manage the liaison?

This is not to say that I think outsourcing is a bad thing. It is probably a good thing - but care must be taken before jumping onto the bandwagon. It needs to be the right thing for your law firm and you need to be absolutely sure that you fully understand what benefit the firm and its clients will receive.

The Importance of Eating and Drinking

2009-10-02T10:12:00.005+01:00

I spoke with a partner in a mid-sized law firm in London the other day. Amongst other worries (every lawyer I speak with at the moment seems to be worried - see here too), he mentioned that he felt more isolated than before and that he had not seen some of his fellow partners for months. What I found interesting is that he hadn't placed any of the "blame" for this at the two-building setup the firm has in London. Staff are split almost 50/50 between two offices separated by about 300m. Neither office has a restaurant or a canteen, and there had recently been a decision to stop partner lunches to save money.

With the clarity of thought I have started to become used to in many law firms, the knee-jerk decision to save almost £10,000 a year by stopping a monthly lunch for all partners has removed one of the few opportunities the firm had for cross-selling. This lunch represented less than 0.01% of the firm's turnover (roughly). One cross-selling opportunity in the year - just one - would have paid for the whole thing. Not only that, but it was a great opportunity for partners to meet up, to spend an hour in each other's company, to hear a short presentation about or from a new partner or about a topic of interest. This is where informal coaching and mentoring would take place - a safe venue for a junior partner to receive some wisdom from a more senior colleague, where partners could share stories about motivating staff in crisis and where partners could simply agree that it "was all quite difficult at the moment".

Where possible every firm should have a restaurant or a canteen. These are one of the best places to gauge the mood of a firm and an opportunity for senior management - whether legal staff or support - to sit with "strangers" within the firm and to see what they think. Yes, of course staff will be careful what they say to senior managers at first - but it is vital that the senior members of the firm give other staff the "while you're here" moment to talk about something which is bothering them, but which they would not go to the trouble of raising formally. It is too easy for partners and senior managers to get caught up in their own work. Canteens are the best opportunity to mix and for the firm to gain a personality for itself.

We all need to eat and drink - but the next time you need a latte fix or to munch a sandwich, do it in the canteen and join in the life of the firm. No canteen - well start to arrange firm, department and partner lunches. In the summer you can find a garden to meet in (the are hundreds of gardens and open spaces in the City alone) and in the winter use a meeting or conference room. The more informal the room, the more informal the chat, so don't worry if it looks as if everyone will be a little crammed-in.

Of course, it is equally important to eat properly from a nutritional point of view (as Catrin Mills points out in her blog), but with a little work, you can feed the soul as well as the body - the soul of the firm, as well as your own.

Coaching not Training

2009-10-02T09:33:00.003+01:00

I read today an interesting article from the CIPD entitled "Most firms still using coaching despite recession". It reported survey results which found that 90% of respondents were using coaching in their organisation. The survey also found that there was a shift away from using coaching for development to using it for performance.

I have to admit that I was astonished that 90% of firms were coaching and, in my cynical way, wondered how formal this coaching was since it includes coaching by line managers. Perhaps it is my background in legal sector management which has driven this cynicism. I'd also be surprised to find that UK law firms matched the survey in that only 20% of firms surveyed reported a reduction in their coaching budget. In my very unscientific survey of law firms (otherwise known as ringing some contacts) I didn't find a firm that either properly separated their coaching and training budgets or that had not seen a significant reduction in their training (and so coaching) budgets.

In my opinion, coaching is probably more important than ever and should be at least preserved in every firm - if necessary at the expense of training. Coaching deals, generally, with the softer aspects of work - relationship issues, conflict issues, performance appraisal and management, motivation, for example. In difficult times, and in an industry savaged by redundancies, coaching is vital to keep performance high.

So - if you are a partner or an executive in a law firm, please have a look at the article from the CIPD and look at some of the other resources that the CIPD offer (someone in your HR department, at least, will have a membership and so be able to get hold of the information). Examine the coaching your firm is already doing. Formalise the process if necessary and look to expand it. Done well, everyone benefits from coaching - the firm, partners and staff.

I know that this is my second blog about the CIPD - no I don't work for them and no, I'm not currently pitching for work their either...

Plumbers' Houses...

2009-09-25T10:20:00.004+01:00

When I was about 13, we moved to a new family home in Glasgow. It was a typical Victorian mid terraced house which was wonderful except for one thing. The plumbing was dreadful. There had been a series of botched and hurried jobs done over the years and so a complete overhaul was required. Fortunately we knew a very good plumber - the man who had sold his house to us. It seemed that the myth of "plumbers' houses" wasn't a myth after all. He was embarrassed that his own house had not been given the same level of service he applied to his work for other people - and so it was a matter of pride as much as a commercial piece of work, when he returned in the weeks after the sale, to restore the plumbing in the house to a high standard. He did very good work - he was a very good plumber. It had been too easy for him, however, to focus on the work he did outside his own house and to thing that it was not so important to perform his own work to the same standard.

I though of this story this morning when I read through "Roll on Friday" (required reading, I think). It was carrying a story about Allen & Overy being forced to rehire a German associate following a poor redundancy procedure. There is no doubt at all that A&O know the law with regard to redundancy and there is similarly absolutely no doubt that they are capable of preforming an effective redundancy procedure (goodness knows almost every law firm has, by now, had enough practice at it). This seems to be another case of "plumber's house". Whether one department or one partner did something without checking we will probably never know. The point is that even those organisations at the top of their game can have a blind spot. The important thing for any firm is to know that a blind spot can exist and to look for it.

For many firms (and I'm no longer picking on A&O here) the blind spot can be in the administration, management or marketing of their firm. Lawyers are almost never the right people to be doing this work - and yet most lawyers seem to think that they can do it. For example: "The Lawyer" (I don't only read the tabloid internet) reported on Monday that the Magic Circle firms had slashed their client rates to seek work (see here for the story). I'm sure that, in the short term, this will attract some new clients interested in the "big boys" charging £450. There are, however, some problems with this strategy (was it really a strategic decision I wonder...?) which may have been in the blind spot:

Imagine that you are a large corporate client who has been using A&O for some time. As a good client, you have not been paying the headline rates of , say, £700 but have negotiated rates down to £500. You've probably been feeling pretty good about this. Suddenly you see in the press that the same firm are charging £450 to smaller operations who have no history of loyalty. I'm sure you can imagine the telephone call...
Imagine that you are a smaller mid-market business. Suddenly you have two of the magic circle firms offering their services at the same rates you have been paying. This is great, surely? Well not always. Perhaps I'm too cynical, but I would expect that in two years or so, when the market has recovered, that my magic circle firm will dump me as a client since I'll be too small to bother with. That or hike the price straight back above £700 and let me walk. Either way I would not expect this to be a long term relationship.
Speaking of price hikes - it can be difficult to get a price back up. Look at it from the magic circle firm's point of view. You have been charging a client £650. They read the press, shout and scream and you agree to give them the £450 rate "on a temporary basis". Eight months later, you try to get the price back up to £650. "Don't be ridiculous", says the client, "that's a 44% increase!". The firm will be luck to get anywhere close to 10%. Even at at 10% annual increase, it will take four years to return to just over £650. The firm will have to get and keep an awful lot of new business to make up for that.
There is a danger that it sounds like panic measures. I can understand big clients beating their lawyers up at the moment on price - but I'm amazed that the firms did not include a privacy statement in the agreement. They should at least have tried to keep it quiet!

Every firm will have a blind spot - or more than one. The important thing is to know that they exist somewhere and to be aware of the need for careful thought in making decisions that can have a long term impact on the firm.

The point of my earlier story is that the magic circle firms, in particular, and most firms in general know that they need to be careful with their own employment procedures and they know that they shouldn't make snap decisions. Like plumbers' houses, however, sometimes they can be focusses slightly outside their own walls. Take the time and make sure your own plumbing is up to scratch.

Do what you do best

2009-09-21T08:36:00.005+01:00

Regular readers of this blog will know that I have been reading the "UK Annual Report 2009" from "The Lawyer" (available here). I have already commented on a number of things featured in the report (see here and here), but would like to use a quote from the article entitled "Crow Bar". Talking about managing and growing Quadrant Chambers, the new Chief Executive Tim Gerrard is quoted as saying:

"'Why would you give a barrister responsibility for HR or IT?', he queries. He suggests that barristers should be getting on with what they do best and leaving management to others."

To any reader who hasn't worked in management with (or of) lawyers, this will seem blindingly obvious and is something that most commercial enterprises discovered some decades ago. In most law firms, however, this could almost be thought of as heresy. One feature of the downturn - especially in mid-sized firms - has been the reduction in the number of senior support directors with their roles often being taken on (part time) by partners, with the day-to-day tasks given to more junior staff.

Even if the partner in question has an intimate understanding and knowledge of the role, the idea that they should spend time in the administration of the post rather than in acting as a partner in the firm is incredible. It can't end well. If the partner is dedicated to the support job they have taken on, they will inevitably reduce the hours spent working on client matters - and so reduce their revenue to the firm. If they do not reduce their client hours and so maintain their billing levels, they will not be able to dedicate the time required to their support job. There was a reason, after all, that the now-redundant director worked full time.

My impression is that the Bar has been better at this. Barristers have a track record of leaving the administration of their practice to their clerks, and so it is not a difficult step to install a professional management layer in larger chambers. Barristers are, of course, specialists themselves and so perhaps have a better understanding that they cannot be masters of all tasks. Solicitors, who have not had the same separation between the practice and administration of law, tend to find it more difficult to admit that they should leave the administration to a professional.

I shall be paraphrasing and quoting Tim Gerrard to those firms I work with. Engage professional managers and let the partners get on with what they do best - managing their clients, finding new work and cross selling the firm's services.

Why search for growth?

2009-09-17T13:24:00.010+01:00

Growth - most law firms are at it. I have yet to speak with a law firm of more than six partners which was not focussed on growth - ideally in PEP (Profit per Equity Partner) but most often also in revenue, profit, number of partners, number of offices, etc etc.

Why? My light reading over the last day or so has been the "The Lawyer UK 200 Annual Report 2009" (available as an active PDF here). One of the lead articles is entitled "The Power of 10" and examines the top UK firms in 2009 compared to the first year of "The Lawyer Annual Report" in 1999. As the article states:

"But with all these changes during the decade [mergers, european expansion, referring work to cheaper parts of their organisation], the most astonishing thing about the top 100 in May 1999 is how similar the pecking order is to today's leaderboard. Although most firms have doubled or even tripled in size, they have been running to stand still."

All that trouble, all that expensive growth, and all that has happened is that, so far as this particular ranking is concerned (and see here for some other thoughts about rankings), most firms have stayed still. "The Lawyer" holds Linklaters out as a success story since it managed to claw its way from the bottom of the "Magic Circle" - that it, from the bottom of a group of four. The article does admit to "difficulties" at Linklaters over the decade - with two major restructurings.

What would have happened a firm had decided in 1999 that it was large enough, or that the partners earned enough, or that they saw no need to expand into Germany? It would have fallen down the rankings - that's what. My point here is - so what? I would argue that a group of partners who had agreed on a strategy that did not include growth might well have been more profitable (on a percentage basis) and are likely to have had more contented staff and partners. It's likely too, I think, that clients might well be more content. They will not have lived through a decade in which their legal advisers grew more quickly than they did and so in which they became a smaller and smaller client.

The last decade for law firms has been a little like the decade before for commercial companies - one of expansion followed by contraction. This was matched - as it is now for law firms - by swift hiring and firing of staff, outsourcing followed by insourcing followed by outsourcing. Management along the lines of "if it's done in-house, let's outsource it. If it's done externally, let's bring it in-house...". I can see these cycles repeating themselves now.

Growth for growth's sake is a strange idea - I'm not sure who it benefits. It tends to drive an aggressive culture in a firm and in an industry. I do not pretend that any large firm will read this blog entry and think "he's right, you know, we should be happy as we are...". Partners in smaller firms - this appeal is for you. Think carefully about the strategy you want and consider whether you need to add growth to it. Perhaps a strategy which includes excellence in service to clients, and a fair reward for effort is good enough?

It is more important to be sure of a strategy that all the partners are comfortable with rather than to automatically assume that everyone wants growth.

Outsourcing - the way forward?

2009-09-16T19:34:00.007+01:00

Outsourcing is big news at the moment. A key new phrase I've recently had to get used to is "Legal Processing Outsourcing" or LPO. I read a very interesting article on the subject which asked "Is it worth the effort?". The article gave an example of a firm having three legal teams spread around the world at 8 hours intervals who were able to devote 24 hours a day to servicing a client.

The article raises a number of questions about the LPO system but seems to miss one or two issues. Intra-firm trust can be a serious issue in many firms - why else do so many spend so much time persuading partners to be open with information. If lawyers can have difficulty assuming that anyone else in the firm can do the work "properly" then I'd suspect that the chance of them using people outside the firm are very low. Larger firms are presumably already in a position to do this. The "big boys" can logistically offer 24 hour service (without simply demanding longer hours from the lawyers working on the deal or case) - but how many of them will work in this way at a matter level? So why will it be any different for smaller firms? Why should they choose to outsource to offer this service?

One vital things is required. The quality of service. Any outsourcing firm must be able to offer at least the quality of service provided by the "host" firm. The "host" firm must be absolutely sure that the work provided will be good enough every single time. The firm must also be absolutely sure that the client will be happy that the matter is being dealt with in this way. It is one thing to explain that the firm's Hong Kong office will be dealing with the matter out-of-hours - it is quite another to explain that a completely different firm will be working on the client's matter.

The issues above are very serious - so serious, in fact, that I doubt about the practicality of outsourcing a client matter in the way described in the article. Efficiency in processing is absolutely vital - but outsourcing it is a much more complex thing altogether. It will come - and possibly come soon - to law firms. It will, however, be in simple, transactional issues rather than in any complex litigation, I am sure.

Update: James has an interesting take on this item - see here.

Questions for new Partners

2009-09-16T18:54:00.001+01:00

Congratulations. You've been offered a Partnership in your firm - or in another firm - and you're about to sign on the dotted line. You will, of course, have given the matter a great deal of thought and will have considered carefully the business you will bring in, and will be doing, as a Partner. You know your points level and your bonus requirements (if any).

There are some other questions that you might like to ask in your role as a new Partner - questions related to the way that the firm operates, rather than with the legal work you do in it. I'd like to suggest the following:

What risk management systems are in place in the Firm. You will know your Risk Partner (surely!), but does your Firm have an up to date risk register? Are there contingency plans in place? Are these plans tested?
What insurance cover does the Firm hold? Is it good enough? Will you be content that "someone else deals with that"? I don't think I would be.
Is the Firm up to date with its requirements for the SRA?
Do you know exactly how the Firm is governed? Have you met, or are you due to meet, Heads of Department - both legal and support? Will you be taking part in any part of the running of the firm - what committees are there that you might be able to contribute to?
What's your business development plan for the Firm? I assume that you will have discussed your own development plans before moving on, and will possibly have discussed a plan for your department. What, however, about the business development work you will be doing for the Firm as a whole?
What Partner meetings are held regularly? It is your duty as a Partner to get involved in the Firm and to take part in Partner-wide meetings. Sadly most such meetings tend to be attended by only a core of the Partnership. These are meetings that are worth attending - take the time!
Finally - how is financial and operational planning done? Who decides about cost-cutting measures? Who makes decisions about budgets? Are the qualified to do so (ok - this is a tricky question for a new Partner - but you will have had to ask more difficult questions in the past and will, I'm sure, find a delicate way to ask it)? What is the involvement of experts in these decisions?

Remember - as a new Partner, you are now an owner of the Firm and, as such, responsible for the way that it works. Don't just undertake extensive, in-depth, reviews for your clients. Ask the difficult questions in your own Firm. You can then be assured of sleeping better - and possibly help your Firm to become more efficient.