Music, Books and Law

It is remarkable, sometime, to watch a person, a group, or even an industry talking about a situation - and discovering that they simply don't seem to understand what is going on. If you don't understand the situation then its not very likely that you will be able to discover, never mind implement, a solution. Sounds familiar..?

This statement of the bleeding obvious was brought to my mind when listening to "The Bottom Line" on Radio 4 on which the subject of book sales was discussed. There was a publisher, a literary agent and an electronic book retailer. I was amazed to hear them talking about the problem of the electronic medium, of 'illegal' file sharing and of DRM (digital rights management - a way of blocking access to a file to only the 'owner'). As I grow older, I do find myself shouting at the radio sometimes (I say radio, but the only times I listen to synchronous broadcast non-digital output - what my wife refers to as 'proper radio' - is in the car) and on this occasion I found myself asking the participants if they had never bought any music. All of these issues have been faced by the music industry. They have tried DRM and all it did was to annoy the largest section of the music-buying market who were paying for the output. Music buyers wanted to do things differently and, no matter that the industry wanted to stop them, change is what they got. I always thought that DRM was stupid. If I bought a CD I could listen to it and then lend it to a friend. If I borrowed a CD I liked I usually then bought a copy. If someone sends me a music file (I was going to write MP3 there - how very quaint) I will listen to it and may well keep it - I will, however, find other music by the artist and am likely to buy that. Surely this is a good thing. By blocking my ability to share the music I had bought, the industry was stopping that preview facility - and annoying me, the customer, at the same time.

I couldn't believe that the panel were looking at the direction of their industry and, essentially, asking how to either disrupt that change, how to stop it, or, if change really was inevitable, how to preserve their profit margins. They were in favour of the old Net Price Agreement - an arrangement that kept book prices high to, as they assured us, 'preserve the independent book shop'. How kind of them. They weren't keeping prices high to create profit - oh no...

I appreciate that the new music industry - and ebooks for 20p - make it more difficult for the writer to make a living. As the father of a musician, I really do. The new industry, however, is likely to me made up of more people making less. There will be fewer millionaires but more writers on £30k. Is that a bad thing? If I were a writer on £150k I suspect I would thinks so. If I were a struggling musician scraping a living on £12k I suspect I might like it. As a consumer I rather like the new shape of the industry and my ability to find and try new and cheap music.

All of this sounds very like the legal industry at the moment. Change is horrible - I don't work with anyone who really enjoys change. It is, however, either necessary or simply the state of the world. We are in a period of change. I think every person working in any capacity in a legal enterprise should have this as part of the morning song.

I look at the Criminal Bar at the moment and find myself very concerned for its future and for the future of criminal justice. There is a real danger of returning to the days of more justice for the rich than for the poor (assuming that we ever left those days). The organisations representing the Criminal Bar seemed to have had a strategy to address the changes of 'ignore it and it will go away', swiftly replaced by 'someone else will do something' and 'everyone will notice that we are wonderful'. In the last year, the various bodies seem to have suddenly taken things more serious - almost as if they are saying 'You people were serious about all of this? Really?', before beginning a media campaign which, sadly, still seems to portray the average working barrister as a remote and aloof legal academic who is convinced that the general public is too stupid to understand what they really do, but who the public should simply trust. How's that working out for you so far?

I am not a barrister - and I have worked (and still do) with some very difficult barrister clients. Most, however, are well meaning. Most have worked hard to gain a return that is good, or are working very hard to do so. Most firmly believe in the judicial system and in fairness. Most, sadly, have no interest in the operation of the industry in which they work. I say sadly because this will not be acceptable in the new legal industry. Barristers will not be able to work in glorious isolation from their solicitors and clients. They will have to be open and honest about what they do, how long it takes and what their return is from that work. They will have to - big breath - engage with clients and the general public.

Like booksellers and the music industry before them, shouting about the change and trying to protect an older position is not the answer. The public - the customers - want something different. They want to be able to download music and share it with friends. They like the idea of buying an ebook for £3. They want to be told what a legal case is going to cost and to be part of the management of that case. They want to have some choices and to be presented with value for money. Change is inevitable - evolve or die.

I continue to believe that the bar is in a potentially better position than solicitors. They have a naturally lower cost base and have no particular love for the hourly rate. As self employed people they have a work ethic that is strong (and I know that most partners are self employed - but that is a tax mechanism rather than a statement of being). They have nothing like the performance requirements of solicitors - they are able to more easily evolve their practice.

And finally... It's not just criminal law. Family law is under tremendous stress and others will follow. The issues facing the industry face every part of it. Look to the changes in the industry and change with them. Those that will evolve may well thrive.

New Year, New Start?

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"
• etc

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.

Not Change, but the Consideration of Change

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.

Times of Change

Beginnings are such delicate times - as, of course, are endings.

As jobs, or career stages, end, there is often a great focus on very operational things - especially money (see the UK Government's advice on redundancy). In the end, however, it isn't these "hard" aspects of personal change that are so difficult. It is the softer things - those more difficult to define.

I have been speaking with some very wise people (you know who you are) over the last week or so as I prepare my own fundamental change from employment (where I have been since I was about 19) to self-employment. Almost exclusively they have had positive things to say. Now that may simply be because they are all good people and so might be saying anything to make me feel better - and there may well be a part of that - but I believe them when they say that it will be a good move.

More importantly, more than one of my advisers/mentors (and, by the way, everyone should have at least one mentor) has suggested that, after a short holiday, I should sit down and examine my life, my goals, my aspirations - and decide what it is I actually want. With that in place it will be possible to design a structure to give the (now famous) work-life balance that I 'm looking for. All rather blindingly obvious - but I still needed both to be told it by someone else and then to ponder at length until it became my own. A good metaphor, perhaps, for a life in consulting.

So change is good. Expect it to be difficult (because there will be difficulties) but remember why we all made the decisions we made. Focus on the strategy and your goals and life will be great.

I'm looking forward to it.