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How The Most Successful Firms Motivate Themselves

8/1/2013

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Great heading isn't it?


I'm guessing you've come here looking for some tricks, tips and insider secrets that will take you and your firm out of the doldrums and back to the land of milk and honey (known to most lawyers as as Pre 2008)


Well the good news is that there are some tips.


But like anything worth having, they are elusive.

I could suggest to you that the best way to find out exactly how the most successful firms motivate themselves is to go directly to a website with a big list...then simply follow the list.  That would be too easy.

So I'll start with a story and a very short list.

About three years ago I was approached at a legal seminar by a partner of a medium sized firm.  He had read this blawg after someone recommended it to him and he knew I would be at the seminar, so he had done his homework on me and decided that I might be in a position to help him and his firm. (I know that because he told me).

Anyway, we chatted for about half an hour over pre-dinner drinks and it became clear to me that not only could I help him, but I could instantly save him about £100k in "overheads" ( and that was before even letting one member of staff go).  I didn't tell him this in so many words, but I did see a chance to formulate a great offer and a guarantee.  After all, his traditional law firm were very nervous about letting anyone know their true financial position and wanted to be absolutely sure that any spending on "consultants" would be money well spent.

So the offer was this; I will do a free initial consultation on the firm. That takes a whole day and involves most of the staff.  Following that, I will make my offer.

However.

I will only start work with you IF I can save you at least £100k in year one.  You will pay me a monthly fee.  If I cannot save you AT LEAST £100k then I will return any money you have paid me plus interest at 8%.

He admitted that it was a good offer and he would speak to the partners when he got back.

That was three years ago.

I have spoken to the partner about four times in the last three years and he "...still wants to do something..."

Yeah, good luck with that.  My last conversation with him in November 2012 was to say that my offer was withdrawn.

Why?

Obvious really. But I'll spell it out.

I used the guarantee because when it comes to the best way to get started, there is an easy format that states:

1. Identify something you want
2. Accept that there is something that you can actually do about it
3. It is within your means and
4. Taking action is within your level of acceptable loss (i.e the cost is minimal if the action doesn't work out)

Despite all that fitting in to place, they still have not taken action.

So, when it's put that way, there are only four logical explanations for why they are not:

1. Habit.
2. They don't actually have the means at hand
3. The perceived cost is too high. Or
4. They are lying to themselves about what they want.

The fourth is rarely the case. Most people setting goals who say they want to get a new job, or meet someone or lose weight really do want to find new employment, find that person or get thinner. As for habit, in this case, that’s “simply” a matter of getting used to taking action. 

So this means is if you aren’t taking action toward what you want, you either perceive taking action as either being too costly, or too risky.  Or for a room full of law firm partners...both of these!

What’s the solution? 

Reduce the cost and risk to acceptable levels, so that you could get under way.

That was done, but still no decision.  The firm were too busy (or in this case they all convinced each other that they were all too busy) to make any real decisions on their future.  This is commonly known as "...arranging the deck chairs on the Titanic..."

The simple fact is that they were too busy hoping that everything would return to normal and if they could just sit out the storm long enough they would be ok.

Real life is not like that and the sooner decisions are made the better.

And that's how successful businesses motivate themselves.


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How Much Do You Earn?

13/10/2010

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Currently in the legal sector in 2010 there are 145,000 solicitors in the UK working in 10,362 firms. This works out to an average of 14 partners per firm, but of course it's not like that; in reality:-

40% are sole practitioners
45% are in 2 - 4 partner firms
10% are in 5 - 10 partner firms and;
5% are in over 10 partner firms

I predict that the number of solicitors will fall to below 100,000 within 5 years but the number of firms will increase to over 12,000. An average of 8 per firm.

If gravity is the one law we all are forced to comply with, economic law comes a close second. 

The law of supply and demand tells us that in an oversupplied market, prices will drop.  The simple fact of the matter is that there are too many lawyers, so it naturally follows that those that remain in practice will start to earn significantly less in the immediate future than they do now.
 
The average salary of a UK solicitor in 2010 is £70,000 p.a. but of course it's not like that; in reality:-

sole practitioners earn £28,000
2 - 4 partner firms earn £33,000
5 - 10 partner firms earn £53,000
10 + partner firms earn £167,000

Of course, if we strip out the big London firms, then the average salary is much lower.

The question is, how low does it have to go before you decide that it's not worth it?

The answer to that is that at the moment, it's too close to call for a lot of practicing solicitors and there are some events coming up that will tip them over the edge. Such as:-

The Legal Services Act allowing new business models and competition
The Jackson Review (of personal injury lawyers)
Legal Aid Reforms

In addition there are:-

Tax bills due in January 2011 and July 2011
Increased indemnity premiums in England and Wales
Increasing amount of defaulting debtors
Changes in Personal Injury funding
Banks are restricting access to capital or demanding more security

In the last 18 months, numerous small firms have gone to the wall and other larger firms have failed such as:

Bus Merton LLP
Hammonds Direct LLP
Hextails LLP
Orchard Brayton and Graham LLP
Alexander Samuels LLP
Halliwells LLP

The reason for my "cheery" prediction is because this is the tip of the iceberg.

Here are some of the other events that will expose more of the unprepared firms:

Overtrading
Inability to retain key staff
HMRC will harden their attitude to law firms
Banks will remove or restrict overdraft facilities
An increase in interest rates
Stress within the partner model

What can you do about it?

As a sole practitioner, you can start to outsource and go from £28,000 to £60,000+ by making a few changes to the way you run your business.

In a small and mid-sized firm you can also outsource but you can also merge or acquire other firms.

If you're in a 10+ partner firm then you need to look at your partnership model
and prepare for the future as you could be best placed to make the most of the carnage.

But after 4 years at university, a year doing a diploma, two years as a trainee,
£28,000 is a low amount of money...but it's what the market will pay.

If you want to increase it substantially, either join a bigger firm (if you can),
re-train (if you can) or start your own firm giving customers what they want.

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    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.

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