Transcript ABSs – the way forward for accountants – or a pipe dream?

ABSs – the way forward for accountants – or a
pipe dream?
Peter Scott Consulting
www.peterscottconsult.co.uk
The Clementi report
“in the areas of consumer debt, inheritance planning or personal taxation, a
combination of both legal and accounting skills could be a valuable asset for the client.
Research carried out by MORI suggests that there is some consumer interest in the
convenience and accessibility of one stop shopping”
Sir David Clementi
Final Report, December 2004
What is an MDP ABS?
The Clementi report described MDP ABSs as
‘practices which bring together lawyers and other professionals
to provide legal and other services to third parties’
MDP ABSs should be about developing competitive strategies
for both accountants and lawyers
Strategy before Structure
With ABSs in mind - how can accountants and law firms
become more competitive?
“Competition is a process by which …
- services that people are not prepared to
pay for;
- high cost methods of production; and
- inefficient organisations
are weeded out and opportunity is given for
new…services, methods and organisations to be tried” *
Could accountants joining forces with lawyers in
an ABS help each to achieve greater competitive advantage?
*Everyman’s Dictionary of Economics
PETER SCOTT CONSULTING
Competitive challenges for lawyers
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The economy
Legal Services Act implications
Greater regulation and compliance
PI insurers’ attitudes
Technology
Client needs are changing
Greater need for resource
A fragmented profession
A need to become more competitive
With those challenges in mind, if accountants came together
with lawyers in an integrated MDP ABS…
Would 2 + 2 = 5?
Fifteen years ago, some accountants certainly thought so…
Klegal (KPMG)
Tite & Lewis (Ernst & Young)
Garrett & Co (Anderson)
What were those accountants at that time seeking to
achieve?
They saw that the client bases and client services of law firms
were
- under developed
- under resourced
- under provided for
and could be better exploited
They saw that by bringing their skills to the one stop shop
concept with lawyers was a way to build greater competitive
advantage for themselves
In the terminology of the time, they saw the practice of law as
another of their ‘lines of business’ (LOBs)
Strategically, could the MDP ABS now provide some accountants
with the opportunity to build greater competitive advantage?
…and what could MDP ABSs do for law firms?
Your objectives?
• To build competitive advantage by:
- better servicing clients
- access to better market knowledge
- access to larger markets
- a means to better exploit opportunities
- a means to obtain referrals
• The successful MDP ABS is likely to be the one that adds client added
value - the WOW factor!
PETER SCOTT CONSULTING
Research your market
Only make decisions based upon sound knowledge derived from, for example,
speaking to your clients and prospective clients.
Will there be a need in your market for the one stop shop?
What will clients want?
• Will they want to buy professional services from a one stop shop?
• Will they care?
• How will the MDP ABS gain competitive advantage over rivals (both law
firms and accountants)?
What will be the USP of the MDP ABS?
How will your clients want to do business in the future?
Analyse
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your client base
how clients are currently doing business
How this may change in the future
inward / outward referrals
NB - it is good CRM to talk to your clients about
their businesses
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An MDP ABS?
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Will it meet your client’s needs?
Will it meet your needs?
What does your law firm partner seek from the tie up?
Culture?
Do you have a PLAN?
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To better service your clients?
• How will you add value to your client?
• Identify your focus/market positioning
- what are to be the “drivers” of your MDP ABS?
- what will your MDP ABS become known for?
- selected/restricted work areas/sectors?
- “ad hoc” based project work
Will the MDP ABS make you more competitive?
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Your fears?
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Quality/reputation
Loss of referrals
Loss of clients
Liability?
Other concerns?
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Culture
Culture is about the way we behave
Are we like them?
Is there a cultural fit?
Think compatible cultures, not necessarily the same culture
If you are going to do this …
• Will need a clear strategy
• Will need to manage the implementation
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Some key issues to be determined
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Branding?
Exclusivity?
The entire businesses of each party or just a part?
Performance:
- levels of service/quality?
- pricing/fee sharing?
- know how?
- regulatory?
PETER SCOTT CONSULTING
Regulation?
The Clementi report considered that the most fundamental issue with MDPs
was that of regulatory reach.
“how could a legal services regulator exercise power over people who were
not lawyers, were offering clients a different professional service and might
have different codes of practice in areas such as client handling?”
Alternatives to the ABS structure?
If there is significant regulatory overlap, the attraction of running an
integrated MDP is negligible.
However, if your clients want the one stop shop, are there alternative
structures whereby accountants and lawyers can achieve their objectives?
We all become accountants!
If a law firm does not provide reserved activities and its solicitors do not need
to call themselves solicitors then they could give up their practising
certificates and join an accounting firm
A strategic alliance?
However see
- the Outcomes in Chapter 9 of the new SRA Code on fee sharing and referrals
relating to
“where there are arrangements with third parties who introduce business to
you or with whom you share fees”
- and the Outcomes in Chapter 12 dealing with separate businesses
Tread carefully
Will a regulatory impasse mean that the opportunity to create a
new and effective alternative business structure for the benefit
of both consumers and professionals be lost and Sir David
Clementi’s vision fail to become a reality?
Any questions?