PM+M partner Helen Clayton takes a look at how the legal sector can look towards the future to ensure more productivity.
Springtime is a period of growth – new shoots, bulbs showing off their colour and beauty, baby lambs finding their feet.
What does this period look like in a law firm though? Is there appetite for new life and a spring clean or are will it be a case of “let’s do things like we did last year plus a bit more effort here and there (maybe)”?
The financial picture and the out turn for the remainder of the financial year will hopefully have more certainty and firms will be looking to set next year’s budgets. Discussions around recruitment and overheads might be taking place alongside more strategic discussions. Questions may be being raised such as:
- where is this firm heading?
- who and where is our target market?
- who and where is our succession?
- are we structured appropriately for the future?
- should we venture into new services?
- do we want to grow or do we want to refocus our efforts?
- what does Brexit mean to us and our clients?
A snapshot of the legal industry
Despite several firms closing their doors in recent years, a perhaps surprising number of new firms are being opened. Last year, there were still almost 10,500 firms in England and Wales, and as a result the industry continues to witness fierce competition.
A significant number of these law firms are sole practitioners. To get in to the heady heights of the top 200 firms, a turnover of more than £10 million is required.
The generational gaps are widening; no longer is partnership or ownership seen as the end goal. Priorities have changed with lives outside of work having more focus for many.
And of course, regulation continues to increase for legal practices, placing a stronger and more intense focus on compliance than ever before.
So how does a law firm survive and thrive with all this being thrown at them?
Being prepared for change and being adaptable must be a high priority for firms to survive.
Opportunities should be grabbed with both hands to get ahead of competitors. To take advantage of opportunities at the right time means that firms should have the following:
- robust financial management and working capital
- a strong and open relationship with funders, with regular dialogue
- systems that provide certainty around quality, minimising risk and being able to support an upturn in workload
- support teams providing administrative tasks that, again, can cope with an upturn in workload as well as teams in IT, HR and marketing that are up to speed and understand the direction of the firm
- an understanding of the marketplace and the client base
- a strong culture
- a purpose
If a leadership team is not looking at all of these aspects on a regular basis, I don’t perceive the firm can be fit for purpose for the long term. It certainly won’t look attractive to potential succession from outside of the firm, lenders will be nervous about the lack of leadership and mixed messages will be being received internally.
The leadership should be challenging themselves to be accountable. Tone from the top is critical and that tone has to be consistent.
A spring in the leadership’s step (in the right direction) can never be a bad thing.