During meetings with Law Firms, one of the phrases I’ve found myself using more and more is “The New Economy” (TNE) and more specifically, how things will be different in the New Economy (TNE). This difference will require different thinking, a different approach and different tactics; but done properly, it can result in different profits. Different bigger profits.
I’m not just talking about the new “Legal” Economy, there is also that to consider, but the whole Economy has changed and that has to be reflected in the way The Firm of The Future will do business.
To do business in TNE a business has to be relevant and being relevant requires constant change. At the moment many firms have a serious problem with any change never mind constant change but TNE will not tolerate you being irrelevant. And an old style law firm is increasingly becoming irrelevant to the needs of TNE consumers.
A decision to change should be followed by action. The marketplace won’t tolerate inaction. Nor will it accept lame excuses for inaction. Most old style law firms are defined by their list of excuses as to why they don’t need a ( add in your favourite) website, 24hr human answering service, twitter account, LinkedIn profiles, e-books, VOIP, legal docs, integrated cashroom, cms, files accessed through the cloud, customer lists, fixed price agreements and so on .
A resilience to constant change and an acceptance of it will be the difference between the successful and the unsuccessful firms, because in this New Economy, the internet, mobile devices and a demand for instant gratification (for a thing or knowledge) will cause more challenges, more disruption and more crisis to occur more often and quicker than ever before.
So if you’re in a firm that can make decisions (or makes them too slowly) or comes up with excuses instead of action, then be prepared for a shock because you aint seen nothing yet!
In the early stages of working with Law Firms, one of the things we always do is talk with the existing staff and ask them to list three things they love about working for the firm and three things they dislike.
We do this because most of the gripes tend to be small things that can be fixed quite quickly and cheaply and when staff see that “things are happening” they tend to come forward with other, bigger suggestions and before you know it, a lot of the problems are fixed. But no matter the size of the Firm or where they are located, the things that staff like or dislike tend to be the same, or very similar things. The list they create can be anonymous by handing in notes on a bit of paper or made in an open forum, such as a small group. But no matter which way we use, the outcomes are nearly always the same. The results are that they nearly always like who they work with. They like the social events, such as last year’s Christmas party and they might also like being located in town. However, when it comes to the “dislike” list they nearly always put down the first dislike as; “underappreciated”. In a recent Gallup Poll 71% of workers are “not engaged” or “actively disengaged” in their work, meaning that only a third contribute to their work in a positive manner. I would say that from our anecdotal surveys it’s probably higher than that. But let’s take that one step further and see what it really means for the Firm or business these disgruntled people work in. By asking the people who listed “underappreciated” exactly what they mean, we discovered that the knock-on effect of this was enormous and had a big impact on the whole business. For example, when we hear comments such as “ The partners don’t appreciate me and don’t really value the work I do” we ask how that makes them feel and how does it manifest itself on a daily basis. It means they arrive as late as possible and leave exactly on time. They don’t go the extra mile on anything. They make no real effort to help others. They don’t provide the kind of service they would if they felt appreciated. This ripples through and affects overall productivity, leading to negativity and low morale which inevitably leads to increased staff turnover; all at a time when many firms are struggling to survive. And yet, the remedy is easy to implement. Why? Well, when we ask the partners if they appreciate their staff, guess what? They do. They just don’t tell them. So the simple solution is to tell them. Telling them can be done in a variety of ways but often the simplest solution is the best one such as saying “Thank you. Your contribution makes a difference” or better still, writing to them, emailing them or by creating some service awards or as many of the staff say…by giving us a pay rise! The partners do actually want to give a pay rise, but until some things change, that might not be possible. So what else can be done? Well, the army is not the place you would ordinarily look to in matters of staff appreciation. They also have other names for it such as man-management and its counterparts, motivation and leadership. You might think that an army has nothing much to do with a law firm, but let me give you some examples of their thinking and see if any of it could apply to a law firm. Field Marshal The Viscount Montgomery of Alamein defined leadership as “The will to dominate together with the character which inspires confidence.” He went on to say that “…a leader has got to learn to dominate the events which surround him; he must never allow these events to get the better of him; he must always be on top of his job and be prepared to accept responsibility.” Wouldn’t it be good if a few partners demonstrated these abilities? General Sir John Hackett said “…when speaking of leadership I do so in the context of a leader in battle; in battle, pressures are high and the problems of leadership stand out. But while battle may be unique but the problems it exposes are not. Leadership is concerned with getting people to do things willingly when it is most keenly needed, when difficulties, doubts and dangers are at their greatest. Successful leadership is impossible without the leader’s commitment to the group in his care.” There is no doubt that the Legal Services Act, ABS’s, the recession (it IS actually a depression but won’t be called that for at least 5 years) all combine to make it feel as if we are in a battle. Difficulties, doubts and dangers are at their greatest. So are you as “leaders” committed to your group? You almost certainly appreciate them, but do you tell them? If not, what’s stopping you? (Oh, and the other two dislikes on the list? IT systems and pay…nearly always those two)
One of the great things about working with Law firms who “get it” is seeing the day when everything comes together; because there is usually one day when the collective firm has taken in enough information and all the bits suddenly fit together nicely.
One such day happened last Friday.
But before we talk about Friday, let me briefly explain how they got there.
The firm in question had “merged” in late 2008 with a similar sized firm because they could see that the many external forces that had eroded their income were simply not going to go away and merging could at least reduce some of their costs.
But even since that merger, they had been butting against their overdraft; the partners had already had to put more money into the firm and they had made redundancies and taken pay cuts…and they had almost run out of ideas. I say “almost” because one of the partners suggested getting some outside help.
That decision was taken about a year ago.
Following an initial consultation and a Strategy day, the firm decided to implement some changes; nothing major, just some basic business changes to make fee earners accountable and make their billing slicker and cash collection more systematised.
That eight month process culminated yesterday in an event attended by everyone in the firm. And I mean everyone.
The purpose of the event was to outline to everyone in the firm what had happened and more importantly, what was going to happen in the future; but it was also an opportunity for peace and reconciliation and a chance for all staff to not only vent their feelings but to make suggestions.
Although the whole day was uplifting, the best part for me was the Managing Partner’s opening talk.
I only wish we had recorded it because I would be proud to send a copy to every partner in every struggling law firm with the message that “…it can be done”. You can rescue your firm, grow it and have a positive future.
The opening talk set the scene for the day, but it also set the scene for future of their firm. The Managing Partner drew a line under the events of the past; fully explained to everyone how all the partners had felt about the redundancies they had been forced to make and apologised for getting many things wrong.
And it was a genuine apology; not the sort of apology you see politicians making but a real “from the heart” message that they were sorry that they had let things get as bad as they did and sorry that they had handled some things badly but they had now taken action and it was working.
The apology also carried forward in that they suggested that they may make some mistakes in the future, but at least everyone in the firm could see that they had their best interests at heart; the whole of the firm and not just the partners.
During the coffee break I not only spoke to some of the staff but I also hovered near to clusters of conversations and I never heard one cynical word about the “speech” but I did hear lots of positive ones.
From then on, the positive tone carried forward onto the next group of speakers. Each departmental partner spoke for 5 minutes on what they did and what they were looking for; not in a dull monotone way, but chatty, humorous and engaging.
The day was also peppered with inspirational videos clips, short talks, suggestions on improvements as well as short tasks where everyone came up with marketing suggestions and ways to improve the firm. And it wasn’t all about the big stuff. Suggested improvements included better access to stationery, keeping the free tea and coffee and getting cleaners in more often!
Finally, (and this was only about 2.30pm) they had an awards ceremony.
The awards went out to staff who had “gone the extra mile” or “who showed a positive attitude” and each one was met with rapturous applause as well as tears from some of the recipients.
But there was an award for everyone as they left. As they filed out into the sunshine, there were business cards on the table for everyone in the firm. Every single person got business cards ....and Easter Eggs for them or their kids.
As one exited lady opened her pack up she had tears in her eyes. “I’ve never, ever had anything like this in my life” she said to me. I asked her for her card. She laughed and remembered our talk earlier on stage. She wiped the back of her hand across her face and apologised for being silly, then she gently handed me the card with both hands.
The card had her name and all the details of the firm but no title (I knew that was deliberate…but that she didn’t) so I asked her “And what do you do?”
“I work for the best law firm in the North East” she replied.
Enough said.
I’ve recently been reading Simon Sinek’s book “Start with Why” and the theme running through it is that nowadays, in 2012, in business it doesn’t matter what you do, it matters why you do it.
So let me ask you a question?
Why do you go to work? When I ask this question…and I’ve been asking lots of people in the last month including a seminar of 56 small business owners four days ago….most people think the answer is simple. You go to work to earn money to pay bills and provide for your family. Simple answer, but not true. You go to work because that’s what’s expected of you. Everyone you know expects you to go to work. Society expects it. Your family expect it. Everyone knows that you get a job and go to work. Which, in theory sounds great? You work hard at school to get into University. You work hard to get a degree, then a diploma place then a traineeship. You land a good job, keep your head down, get promotion, climb the ladder to partnership and live happily ever after. Well, that used to be the theory. The reality in 2012 means working longer and longer hours just to make ends meet, there’s too much month left at the end of the money; not only could you begin to get blighted financially, but your mind and spirit have started to go as well and you exist to work. The unfortunate thing is that this is so ingrained in us as a way to exist, that if things start to go wrong – as it’s starting to for many people working in law firms – we start to blame ourselves. We blame ourselves for our inadequacies and try to make amends by working longer, harder and faster. And people would rather suffer a heart attack, sleepless nights and unnecessary stress than stop working, because work is what we do. Others I know are running up massive debts so that they can maintain a standard of living that their salaries cannot sustain. Is this the way it should be? If this way of living is not delivering the goods financially and spiritually then it could be time to consider an alternative way of living. Rather than simply “ earning a living” why not “ create a life of quality”? If society pushes you into “ going to work” as the only game in town; why play a game with rules where you cannot win? One of the things that I think modern lawyers should abandon with immediate effect is hourly billing. Customers hate it, legal employees spend too much time working out who to charge for what and senior partners have their egos boosted by declaring how much per hour they charge. But imagine for a moment that you could buy time rather than charge for it? How much would you be willing to pay? Let’s imagine you are on your death bed about to breathe your last and an angel gives you a chance to buy some extra time. How much would you pay to turn the clock back to when your children were young so that you could spend a few extra hours playing with them? How much would you pay to go back in time so that you could tell your mother, father, partner, brother, sister or friends just how much you loved them, at times in their lives when they needed to hear you say those words the most. How much would you be willing to pay to be ten years old again playing in the late evening warmth of a summers day? And what would you pay to have your time over again to pursue that dream that has eluded you your entire life? No, time is not money because you can’t put a value on time and those who try to value their time only in terms of money will always undersell it. My time, your time, everyone’s time is precious and priceless. Once that hour or day has gone it’s gone forever and all the money in the world can’t change that.
The great boxing coach Angelo Dundee died this week age 90. He was the man who coached a young Cassius Clay to an Olympic Gold Medal and then coached him all through his professional career. And what a career that was. In fact, Muhammad Ali was voted Sportsman of the Century.
Ali credited Angelo Dundee as the man who made him.
One particular turning point was when Ali fought Sonny Liston for the first time. Ali wanted to throw in the towel after several rounds as his eyes were stinging. Dundee told him that he was on the verge of greatness and needed to go into the ring for one more round. And the rest is history.
But this is a legal blog, what’s this got to do with the law?
It’s not about the law, it’s about coaching and how coaching can help business and more specifically, the business of running a law firm.
Coaching is not the best opening line in the world when it comes to talking to lawyers about improving their business model, so the short story about Angelo Dundee serves as an opener to show how valuable a good coach can be.
Note that I said “a good coach” and not just a coach; there is a BIG difference in the quality of business coaching. (There is also a massive difference in the quality of life coaches…but let’s not go there!)
In public, no one wants to buy business coaching…especially not lawyers. Why would they…they know everything so they don’t need a coach.
That is until it is explained what business coaching can achieve for a law firm. And the answer is, more time, more money and less stress.
Law firms know that they need to change and that they need to start implementing systems and altering the way they do business with their customers. They know that if they keep on doing what they’ve always done, their income (which is dropping) will continue to drop and their profit (which is dropping) will continue to drop.
They know….but they suffer from FTI disease. A Failure to Implement.
A lot of firms that I talk to have understood that they need to change, they’ve even had a committee approve it. It might be on their “To Do” list. Someone may have even been tasked to see it through, but there is still inertia. And that’s where they need someone like a coach.
Angelo Dundee didn’t get into the ring and fight. He had done it in the past and he knew not only what worked, but the best time to use the things that work.
So if you, or anyone you work for, could do with more money, more time and less stress, then it wouldn’t be a bad idea to look at business coaching.
Richard is the managing partner of a medium sized law firm. He’s also the largest equity partner and when the accounts are published and they show the largest pay out, it’s Richard who gets that money. Now I know Richard reasonably well, we never walk past each other in the street without stopping to chat and we’ve had a few coffees together and a discussion about the whole legal services situation. I always ask how he is getting on and how his firm is getting on and he always exudes positivity. Things are great, they have merged ( err...taken over) a few other firms and are “ well placed to meet the challenges that the coming changes might bring”. Or so he says. The firm Richard manages is a Limited Liability Partnership (an LLP) so the accounts are available online. I’ve looked. In fact the last few years accounts are available online. I have them. From what I can see, Richard is taking home nearly 40% less now than he was 5 years ago. Turnover is £2m down on what it was and I know for a fact that his staff have taken pay cuts, some have left and as a firm they’re not hiring. I’ve also done a bit of secret customer work on them (as on a few other firms) and called up posing as a customer looking for legal services. They never called me back. But then again, neither did 7 of the 12 firms I called, so nothing unusual there. But what’s odd is not only does Richard say everything is alright, I think he actually believes it’s alright. There is even a psychological term for this called confirmation bias. It’s where we look for evidence that we are right; or that things are the way we believe they should be. Bias is stronger for emotionally charged issues and deeply entrenched beliefs and I know from my conversations with Richard that the issue of Alternative Business Structures is an emotionally charged issue for him. The unfortunate thing is that although this makes Richard feel better it means that his behaviour is worse. Like a rabbit caught in the headlamps, he is looking at the wrong thing and worse still, he’s not moving out of the way because he’s only focussing on evidence that confirms his position. He tells me that social media is a fad, twitter is a waste of time ( “I don’t want to know what you had for breakfast!”) blogging is ridiculous, online documents will never work, we don’t need to spend money on marketing, we don’t need to take credit cards and so on. He looks around his office and sees busy employees, the court department is buzzing (it has to its holding up the rest of the firm!) and all the clients they inherited from the “ mergers” has boosted their list of customers, WIP remains strong. What’s the problem? I asked Richard how he could sustain a 40% drop in income. He denied any such thing despite my logging in to Companies House to show him how I knew. Then he went on to tell me that he no longer had any school fees to pay, so his disposable income had actually gone up. Well, that’s ok then.
I met John an old friend of mine early last month and we went for a coffee and got chatting about a variety of things.
It turned out that he was buying into an established business and was “looking for a lawyer” or as he put it to me “…do you know any decent lawyers I could use who won’t charge the earth?”
He wanted to do a number of things, he needed a shareholders agreement as a starter and a bit of advice on a lease and ultimately a share purchase agreement.
What you should know about John is that he is a seasoned business man. He’s involved in a lot of activity buying and selling into and out of a variety of businesses.
He’s used many lawyers in the past and he’s also not short of money…but as he said to me “I just don’t feel as if any of the lawyers I deal with really care about what I’m doing…and all they’re interested in is their bloody hourly rate”. He went on to say that he never involves lawyers until the very last minute because he’s “…fed up getting charged thousands…” for deals that never take place.
Now I also happen to know some of the lawyers that John has used and I heard from one of them that John can be a real pain to deal with, he’s difficult to get hold of and despite his wealth, he’s not the quickest at paying his bills!
But whose fault is that. Is it John or is it the way legal firms deal with the Johns of this world?
The thing about this tale is that it’s not unusual.
There are lots of “Johns” out there who feel this way. I read that the main reason why people leave one law firm to join another is “perceived indifference” by the firm towards their customers.
Now the things about this short encounter with John is that it highlights the state of the legal industry nicely summed up in the attitude of just one customer.
Is a straw poll of one man enough to pour scorn on an entire industry? Well yes, actually, it is.
Richard Branson has built an entire mega-industry on the straw poll of one.
He reckons that if one person wants it, or feels a particular way about something, then others do too and if no one is delivering the solution, the he will create a company to do exactly that.
Now you might go on to reason that there are lots of people who are very happy thank you very much, with their lawyer. There are. But like the buyers of music albums and CD’s they are getting rarer every day.
But here’s the thing, if 68% of people would leave through perceived indifference then to me that means that almost 70% of the legal market is ripe, low hanging fruit ready to pick off buy either new businesses (ABS anyone?) or by law firms that “get it” and are ready to deliver what customers want.
Of the top 200 law firms in the UK only about a dozen or so “get it”.
But what’s happening to the scores of smaller firms made up of sole practitioner or small partnerships of lawyers?
Lawyers by definition are wise, knowledgeable of the law and are regarded as trustworthy professionals. However they suffer from poor business skills, bad man-management, they have a disproportionate aversion to risk, they have overly exaggerated revenue expectations and a business model that’s now about 15 years out of date.
Small and medium sized Law firms are decentralised partnerships that charge hourly rates, they retain no earnings from year to year, and hope that their intellectual assets will walk back through the same doors they exited the previous night. Essentially a recipe for disaster and not a model you would replicate today.
The new legal market will demand systematisation, collaboration, transparency, alignment, efficiency and cost-effectiveness within and among its providers.
Only a few law firms have already adapted these qualities, and no doubt some more will follow. Some law firms are so dominant and influential that they won’t have to change. The rest are in grave danger.
And it’s all because John is not happy.
Well that's another year over...and unfortunately a few more law firms have gone to the wall.
If you feel that your firm is in a precarious position, please contact me for some guidance on what to do in 2012.
It's there and it's big....and no one is talking about it.
I refer of course to the frightening unacceptence by many practising lawyers that owning and running an average law firm right now is damn hard.Right now, today, for too many lawyers struggling to keep a business together... things are slow, cash flow is a problem and serious business or personal debt issues are either looming or are here, now and frighteningly real. But ask any sole-trader or small partnership firm lawyers and they will tell you that not only is everything " Ok" but that their business is ".. .doing well in the circumstances..." and that " ..things will improve..." or "... there will be a turn around in the economy and we will be ok..." This prolonged economic and cultural shift in the way legal services are delivered versus the way the buying public want them to be delivered is causing many sleepless nights, serious alcohol problems, drug problems and relationship problems with many lawyers and partners and the fear of the future is causing an inability to accept this and act. How do I know this? Because as a result of this blawg, as a result of speaking at seminars and as a result of a simple ability to " do the maths and say it like it is" I speak to a lot of lawyers and I know things are bad because I look into their eyes and ask and they eventually tell me. Either that or they phone to ask to meet me at a neutral location and after a short while they admit that they or their firm has serious problems and they want to talk about what to do about it.
I've done a lot of talking with a lot of lawyers.
I've heard some horror stories including suicide being covered up!
There are solutions to all the issues faced by under-performing firms.
But I'm not out to convince, coach or advise anyone who has failed to accept that the light at the end of the legal tunnel is a train coming.
If you need help...ask.
And I can assure you, you're definitely not alone.
Legal education and training are unfit for their modern day purpose, causing lawyers to fail to meet the needs of clients and leaving the profession exposed to rival market entrants filling the gaps, according to Professor Stephen Mayson who spoke at the UCL Laws debate in London last week. He went on to say that proof of lawyers’ deficiencies could be seen in the success of organisations such as Co-op Legal Services, which “has become in five years from a standing start a £30m legal business… which takes it into the top 100 [law firms] very comfortably”. “I don’t believe the Legal Services Act would have been possible if we were really creating a profession that was fit for its purpose… lawyers who were doing what the marketplace wanted in ways it wanted, at times it wanted, at prices it wanted,” he said. Speaking to an audience that included legal academics, Professor Mayson, (who is also a director of the Legal Services Institute) said: “I am delighted there are so many law teachers, law faculties, law firms and professional regulators who are delighted with the outcomes they create. That, however, is an internal view. It doesn’t take much account… of those who use and pay for those outcomes.” Despite the October 2011 statistics, that 81% of consumers want an out-of-hours service from law firms and 96% of businesses want to communicate online with a law firm, Mayson’s views were challenged by other speaker in the debate and also from the floor. Philippe Sands QC, argued that it was necessary to resist the view that legal education should be “informed by the need to respond to what consumers and the marketplace want”. It was important for society to decide whether lawyers were business people or have a different social function. Professor Sands rejected the notion that law is a business: “When I provide legal advice as a barrister, I don’t think of myself as a business person; I think of myself as a professional person bound by a duty of independence,” he said. Professor Sands went on to say that the number of law graduates had increased from 5,200 a year in 1998 to 13,000 in 2010. The reason, he said, is that “the provision of undergraduate and other graduate legal education is hugely profitable. Universities are turning to it because it provides a massive subsidy to other areas.” And that is the crux of the matter. Law students pay top fees and they only need a classroom, a blackboard and maybe some free wi-fi. Their fees go on to subsidise other academic areas that may need extensive resources such as laboratories as one example. This system churns out too many law students that leads to too many lawyers chasing too few jobs and therefore the existing spend on legal services gets diluted. Combine this with the recession, the Legal Services Act and new entrants such as co-op legal and we start to see market forces at work. There have been recessions before, and legal services have survived them. But this time, it’s different. Lawyers may think they’ve seen it all before but the Legal Services Act is unlike any purported revolution that has come before and come to nothing. As Professor Stephen Mayson went on to say, “Previously there were internal opportunities that lawyers, en masse, decided to ignore. But now change is being driven from outside the profession. It will be impossible to ignore”. While it’s nearly impossible to predict how the new world of alternative business structures (ABSs) will eventually turn out, some developments surely seem unavoidable. Making the process of using a lawyer more customer friendly is one. Every law firm in the land proclaims how client focused it is, but the level of complaints against solicitors * would indicate that they do not all practise what they preach – or at least that there is still a serious disconnection between what customers want and what lawyers think they want. And that should not matter whether you consider yourself as a business person or as a professional person bound by a duty of independence. *1589 complaints a week in England & Wales And for the Scots readers amongst you: http://www.scotsman.com/the-scotsman/legal/number_crunching_most_solicitors_are_bad_business_managers_1_1914251
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