Transcript Challenges for law firms

Resources – Key to survival and competitiveness as
a sole practitioner
Peter Scott
PETER SCOTT CONSULTING
www.peterscottconsult.co.uk
In a fast changing world all law firms need to constantly adapt
to meet the challenges they face
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The economy
Client needs are changing
Greater regulation and compliance
New competitors with deep pockets
PI insurers’ attitudes
Technology
Succession issues
Others?
A need to become more competitive
PETER SCOTT CONSULTING
The need to be more competitive
“Competition is a process by which …
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services that people are not prepared to
pay for;
high cost methods of production; and
inefficient organisations are weeded out; and
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opportunity is given for new…services methods and organisations to be tried” *
Is this a process which applies to sole practitioners (and other law firms) today?
*Everyman’s Dictionary of Economics
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If you can do that then you can gain a competitive advantage
over your rivals
It is what places you ahead of your competitors, allowing you to generate
greater sales and profits and retain more clients than your competitors.
But it means you have to do things differently and keep innovating to stay
ahead
“Worryingly, with almost a third of law firms outside the top ten recording
disappointing net profit margins, our view is that unless these firms can
radically restructure their business, their short to medium – term survival must
be in doubt”
PWC – 2013 Report on the UK legal market
Challenges facing law firms today
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The economy
Client needs are changing
Greater regulation and compliance
New competitors with deep pockets
PI insurers’ attitudes
Technology
Succession issues
Others?
A need to become more competitive
Greater need for resource
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Resource(s)
• ‘Something to which one can turn for help or support or to
achieve one’s purpose’
• ‘Available assets’ (e.g. we pooled our resources)
Resourceful
• ‘Clever at finding ways of doing things’
What resources do you need as a law firm to be competitive?
Why clients choose one law firm over another most important factors (recent law firm example)
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Meeting deadlines, keeping commitments
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Cumulative knowledge and expertise
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Value for Money
10
Care and Attention given
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Personable and Likeable People
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Ability to Communicate Knowledge
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Ability to offer Advice quickly
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Accessibility and Availability of people
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Keeping you informed of progress
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Quality of People Overall
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Rapport with Team
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Billing as Expected
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Interest in/Knowledge of Association/Authority
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Keeping you informed on issues...
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Resources needed?
• People – to provide expertise
• Financial to provide for people and infrastructure to underpin provision of
high quality legal services:
- service standards
- financial management
- compliance and risk management
- business development
- Technology
- KM
- other?
• Time
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How can sole practitioners realistically and cost effectively
provide for these resources?
• How do you currently do so?
• Some possibilities –
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Outsourcing?
In-house?
Collaboration?
Others?
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Outsourcing
What services do you outsource?
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Back office?
Risk and compliance?
KM
IT?
Financial management advice?
Premises?
Marketing?
Reprographics?
Secretarial?
Others?
NB – compliance requirements in relation to outsourcing
SRA Code of Conduct – chapter 7
O(7.10) ……. where you outsource …….. any operational functions that are critical to
the delivery of any legal activities, you ensure such outsourcing:
(a)does not adversely affect your ability to comply with, or the SRA’s ability to monitor
your compliance with, your obligations in the Handbook;
(b) is subject to contractual arrangements that enable the SRA or its agent to obtain
information from, inspect the records (including electronic records) of, or enter the
premises of, the third party, in relation to the outsourced activities or functions;
(c) does not alter your obligations towards your clients; and
(d) does not cause you to breach the conditions with which you must comply in order
to be authorised and to remain so.
In-house
• Zero based budgeting (ZBB)
- Do we need this overhead?
- If we need it, what is the most cost effective way to provide
it?
• Carry out a cost / benefit analysis
Outsourcing Vs in-house?
“Collaboration”
association
cooperation
working together
coming together for mutual benefit
How many of you are ‘collaborating’ with other sole
practitioners?
Collaborative strategies
1. Networks
• Who is a member of a ‘network’?
• The term includes franchises, alliances, groupings which can
be as tight or as loose as required – examples?
• At the heart of a good network is the ability to provide its
members access to resources which no individual member
can provide on its own – examples?
• Membership of a network is merely a means to an end – to
enable its members to gain a competitive edge
Networks – some issues to consider
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Objectives in joining?
What benefits will you get out of it?
What will it cost?
Ultimate destination?
How tight or loose?
Compatible ambitions with other members?
Are priorities the same?
Will there be client added value?
Branding?
Collaborative strategies
2. Virtual firms
www.keystonelaw.co.uk
Frequently Asked Questions
What is Keystone Law?
In what way is Keystone innovative?
How does this improve the service provided by Keystone?
What is the pedigree of a Keystone lawyer?
Who are Keystone’s clients?
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Collaborative strategies
3. Cost sharing / pooling resources
• Who does this?
• Examples?
- premises costs
- bulk buying
- office infrastructure
- people and services
- IT
- knowledge
- others?
Challenges facing law firms today
•
•
•
•
•
•
•
•
•
The economy
Client needs are changing
Greater regulation and compliance
New competitors with deep pockets
PI insurers’ attitudes
Technology
Succession issues
Others?
A need to become more competitive
How are you managing these?
PETER SCOTT CONSULTING
Why clients choose one law firm over another most important factors (recent law firm example)
0
2
4
6
8
10
12
Meeting deadlines, keeping commitments
14
16
14
Cumulative knowledge and expertise
11
Value for Money
10
Care and Attention given
5
Personable and Likeable People
5
Ability to Communicate Knowledge
3
Ability to offer Advice quickly
3
Accessibility and Availability of people
3
Keeping you informed of progress
3
Quality of People Overall
1
Rapport with Team
1
Billing as Expected
0
Interest in/Knowledge of Association/Authority
0
Keeping you informed on issues...
0
Are there alternatives if you conclude that you are unable to
adequately resource your business on your own?
• Consolidation between firms in a fragmented profession can help build
resource and competitive advantage
• consolidation is not a strategy – it is a means to an end – to gain
competitive advantage
NB – consolidation is not a panacea
- often just a better platform on which to build a more
competitive law firm
- not about size for the sake of size
However size is important in that the scale of a firm
may help a firm to develop and to provide the
resources needed at an acceptable economic cost to
each constituent firm which the individual firms could
not on their own provide.
Examples?
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Consolidation might help you to
• Attract and retain better talent to fill skills gaps
• Better service (and retain) clients by providing greater depth
and breadth of expertise and service delivery
• Build your management and infrastructure
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Is consolidation a vision of the future for some?
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How are you now planning to ….
• provide the critical resources your practice now needs?
• to compete with larger, more developed
firms?
To survive and prosper
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Any questions?