Blog Archives

How Change Happens

14/9/2010

As Clay Shirky says in Here Comes Everybody, 'Revolution doesn't happen when society adopts new technologies but when it adopts new behaviours.'

There is a "revolution" happening in the legal sector ( it's just that a lot of people don't know about it yet)...but there is revolutionary change slowly but surely happening.

One of the ways is through new (as Susskind calls it) "disruptive" technologies.

But the new technologies that are being incorporated into law firms will come to nothing unless and until new behaviours are adopted as well.

People like change...but they don't like change being imposed upon them.

So where are the new behaviours going to come from?

My guess is that the people who want to adopt the new behaviours will get frustrated by the lack of change in their existing firms and leave to either join together with others of a similar mind in networks, or they will gravitate to new firms that offer it.

Of course staying put is an option; just not a very nice one.

0 Comments

Profits Up! Is it all over?

3/9/2010

0 Comments

Year-end accounts are out for a number of law firms and there's a lot of back-patting going on for the increases in profit per equity partner (PEP)

This is just one article, Birmingham Post, but there are many others. Just search under "profit per equity partner" and you'll see what I mean.

Here's what the papers and legal websites are saying:

"Equity law partners are earning more than ever and the indicator of success is the PEP which rose sharply against decllines in revenue"

Some commentators are even stating that the recession is over, things are back to where they were and let's crack open the Bolly. ( ok, not that last bit)

If you happen to be an equity partner...great...but before we all start getting carried away, can we maybe look behind these figures for a second?

Look at the words used.

I'm a great fan of "Freakonomics" and the hidden side of everything and I know
from experience that nothing is ever as it seems.

First of all, "...the PEP rose sharply ..." I like that word "sharply".

It indicates a sudden, massive spike. Not a long, slow gradual, organic growth, but a shooting upwards trajectory.

A hockey-stick movement as some would say.

From the journalists point of view, "sharply" is a great and well-used word. The fact that they probably got it from a press-release is neither here nor there; it's a word of meaning, it's a positive word when talking about accounts or at least the profitable side of things. It's liked.

Next " ...against declines in revenues...". So when measured against a decline in revenue, PEP rose sharply.

Turnover down, profits per equity partner up. Hooray!

So the owners of the firms are rewared.

Rewarded for what exactly?

Was it providing a better service? No, because revenues would have been up if that was the case.

Was it for working harder? No, because a drop in revenues usually indicates not as much work as before and therefore a bit more time to spare.

The way that profit was increased was as a result of lower costs.

So how were costs reduced so dramatically?

In the UK top 200 firms, the total number of law firm redundancies to April 2010 was 4,263 or an average of 70 per firm

According to Work Hound, the average salary for a UK lawyer in Sept 2009
was £70,000

That means that the average law firm in the top 200 saved £4.9m in salaries plus a further £630,000 in employer NI contributions or a total of £5.53m plus whatever other perks and associated payments they would have made.

So when a firm states that they are handing out bonuses (an average of £1,000 BTW - very big of them) it's not so much a bonus as a survivors premium.

The bonuses may make the equity partners feel good, because they need something to balance out the pain of the redundancies....but that's not the main issue nor the purpose of this blawg posting.

(It's not? - Ed)

No. My question is, what happens next year?

Most of the financial year ends have been April, June and July. But the fall in revenues is still happening.

Will PEP still be regarded as an indicator of success this time next year?

What about a true indicator of success? What about what the customers think?

Rather than PEP lets measure other things that directly affect the customers
such as turnaround time, satisfaction levels and the value gap.

That seems to me to be more sustainable than PEP.

0 Comments

The Big Mistake Most new Self-employed Lawyers Make

1/9/2010

1 Comment

I recently spoke at an event for "young" lawyers.

It was put together by a the Law Society and the invited delegates were all going through a process of starting up their new business.

I'm afraid that I threw the cat among the pigeons by telling them to stop "setting up" their business and to get on with selling their services.

The compare threw me a look as if to say "what the hell are you doing?" and I found out later why. He had spent all his time (and the last few weeks) on teaching them how to set up their business and here was I, an invited speaker with years of experience, telling them the opposite.

He wasn't too pleased and neither were some of the delegates. I know that because they came up to me at the end and told me so.

So what was the big deal...what did I say that was so wrong.

Before going into that, let me ask you a question. Have you read the Book "Freakonomics"? If not, get yourself a copy.

The tag line to the book is, "The Hidden Side of Everything" and basically the writer(s) go on to explain (and show with statistics) why things and activities that we thought were normal are not actually normal at all.

Some examples they give are that children are safer playing in a friends house if the parents have a gun rather than playing in a house with a swimming pool. Sports cars are safer than SUV's. You are safer driving home drunk that leaving the car and walking.

So far so controversial...so what's that got to do with setting up a business?

Here's the "so what"...every business that you start is really two businesses.

There is the business that you set up to do, the service you provide or the products that you make. That could be adjusting spines as a Chiropractor, cleaning cars or writing legal contracts.

It's too easy to say that "I'm a lawyer, so I need to spend my time doing the law"

The reality is that you need to spend time selling your services or products. In fact you need to spend a lot more time selling than anything else...80% of your time to be exact. The old Pareto principle of 80/20. The majority of time in selling and the balance in setting up the business.

But most people do the opposite.

They spend nearly all of their time, effort and money on things such as setting up the office, getting a website, getting a logo, getting headed paper and business cards, software for the computer, a fax number and so on and so forth. Trying to get it right before they sell anything.

Wrong, wrong, wrong.

You don't need to get it right, you need to get it going!

And the only way to get it going is to get some sales. In fact do nothing else until you get those first sales.

No matter what line of business you are in you need to get sales.

As a lawyer you need some clients, they need contracts, wills, shareholders agreements, new companies set up, intellectual property licences, whatever.

Selling should not be beneath you. If it is, get a job.

How do you know if your business or product is any good? The only way to find out is to find out what the customer thinks. Are you giving value? Value is only determined by the customer, not you.

If your product or servcie is any good they will buy and then refer you to friends or colleagues and they will buy from you.

When the money comes in you can rest assured that you are doing something right and then you can start getting and paying for all the websites and logos that you think you need.

But customers don't care about the "changes and improvements" they don't want to hear the childbirth, they just want to see the baby.

Your priorities are therefore:

1. Sell
2. Push to make more sales
3. Improve your products or services and sales
4. Organise yourself

Then start back at number 1.

1 Comment

Author

After many years paying lawyers,I became one in 2005 Just in time for the largest upheaval in the law since records began. Brilliant. Exiting times ahead.

Disclaimer. The thoughts, ideas and comments on this Blawg ("Blawg - a legal Blog) are my own and not to be confused (unless otherwise stated) with anyone else and certainly not of anyone in the Firm where I used to work and they are not the views of the firm where I used to work.

Tweets by @ray_mclennan

How Change Happens

Profits Up! Is it all over?

The Big Mistake Most new Self-employed Lawyers Make

Author

Archives

Categories