Lawyers, Bookstores and Online Threats

It’s the weekend.

I don’t typically blog at weekends but Jordan Furlong posted about bookstores, it got me thinking and here I am.

Jordan’s post was to recommend that people read this article, about the demise of bookstores and then to substitute “bookstore” for law firm  to find yourself reading the debate about law firms that is coming fast down the road.

Ever client-focussed, and to stop you clicking away from this blog(!), the article Jordan references makes the following points:

• The US booksellers are claiming that Wal Mart etc putting small bookstores out of business will lead to a raising of prices ultimately and limit the wide availability of ideas in society
• Such a claim is arrant nonsense (I agree)
• The internet is here to stay and the world has changed – traditional bookstores can’t compete
• Trying to save local bookstores from competition is crazy

So if you follow that logic through, the rise of Amazon will lead to the demise of physical bookstores.  Apply that then to the legal sector and it follows that online legal service providers will put traditional law firms out of business.,

But here’s the thought that brought me to my PC….

• What if Amazon has in fact increased demand for books
• What if the real impact of Amazon has been on the “long tail” of books that physical bookstores can’t stock rather than the mainstream guides
• What is people actually like flicking through books before buying them, if they like sinking into a comfy chair for 15 minutes to flick through a book before buying
• What if iTunes hasn’t destroyed the market for music but made it bigger?

Now I did just write a few follow-up paragraphs but then decided that it was a bit dull repeating the same old stuff and also that if you can’t see a cut across to the legal profession from that then well….. 

Anyway, I want to post this and get on with my weekend.

So instead I’ll keep it short…

noise noise noise market changing noise noise noise ABS noise noise noise Legal Services Act….noise noise more noise THE MARKET IS GOING TO GET BIGGER noise noise noise BIGGER I SAID noise noise noise referral fees noise noise won’t be easy but BIGGER noise noise Law Society missing the point maybe noise noise THAT’S RIGHT BIGGER…THE MARKET’S GETTING BIGGER noise noise

Duck and die or get excited and go for it I say.

Right, where’s my newspaper…

James

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Referral Fees and the Legal Profession

Alongside a fairly intense discussion on LinkedIn, there have been two strongly voiced comments on the payment of referral fees in the Law Society Gazette recently.

First up, under the heading “Fee abomination”, John Hawks has written:

“The payment of referral fees is an abomination which is destroying our profession. I am so pleased the Law Society’s Council has decided to call for their abolition.

The whole concept of buying in work destroys the traditional values upon which our profession is based, such as client loyalty, local reputation and respect in the community.

We will soon cease to be a profession at all. Legal services will simply become another commodity like electricity, gas or broadband, to be purchased online, over the phone or from the supermarket at the cheapest price, regardless of quality and supplied by faceless corporations with call centres.”

To which, in the blue corner, Michael Moore has replied:

“We are no longer a profession in the sense my father knew. We have squandered the respect in which we were held by the public on the altars of budgets, targets and timesheets, in honour of the god Profit. We have devalued our services. We have abrogated responsibility for leadership to a few stalwarts who do their best in impossible circumstances.

Whatever exclusive preserves of practice we once had have been given or taken away.

Will writers, claims handlers, independent advisers – all have chipped away at our ‘professional’ preserves so that they really do not exist any more. Why would your average punter choose to buy legal services from a high street solicitor at a price born of stratospheric insurance, professional and other costs when he will be able to buy it from a trusted brand – also on the high street – for less? Because we are ‘independent’? Don’t make me laugh. This is the real world, not some rose-tinted yesteryear.

Now I have to be a businessman first, a lawyer second, and a solicitor by happenstance. So, if business demands that I pay a referral fee then that is what I will do – to compete and to survive. Removing the ability for a solicitor to pay a referral fee in controlled circumstances, in whatever sphere of practice, is only going to limit our ability to compete in a market where others do not fight with one hand tied behind their back.”

As you will see, both hold similar views of where the profession is but draw opposite conclusions.  Who is right?

Well my take is simple.  Law is a business, we live in a competitive economy and Michael has hit the nail on the head.  If the profession renders itself uneconomic through regulation focussed on preserving a role for the profession that the market does not value, the profession will render itself extinct in those instances when cost-effective alternatives exist.

I’ll go further…If customers want it, it is nonsense to believe that the market will not provide, through unregulated competitors, competing services capable of at least matching solicitors for quality of delivery.  Sure the market may not have got it right yet.  Sure there are reputational issues with some unregulated suppliers for the moment.  But that’s what the market does you see.  It shakes the tree, experiments a bit, and, if you’re not ready, then steals your dinner. Just watch.

So, dear profession, feel free to regulate yourself as you see fit. 

Feel free to distance yourself from referral fees. 

Why, feel free to turn yourself into a bastion of excellence, professionalism and expertise. 

But if Jo(e) Public doesn’t think the price of  your doing so, that you are trying to pass on to them (oh suddenly being a business is OK is it?), is worth paying, then you have no-one to blame but yourself when you have to let your staff go and turn the “closed” sign outwards.

So how confident are you that customers will value that extra bit of excellence you’re seeking to protect? 

Wait…before you answer, go make a cup of coffee and talk to a few of your staff on the way.  You may be near retirement but many of them won’t be.  They’re looking to you to get this one right.  Just don’t mess it up by confusing wistful desires to revisit past splendours with the reality of today’s marketplace.

Over to you.

James

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“Tesco Law” in a wig and a gown…

The solicitor/barrister distinction has been a feature of the UK legal profession for a very long time.  Indeed, it wouldn’t be an exaggeration to describe some of the rules and working practices governing the distinction as archaic.

Change is in the air though.

Sure it’s not exactly change out of the blue.  From the barristers side of the fence, rights of audience before the Courts have been changing for a while and, as for dress code, well don’t get me started.  From the solicitors’ side meanwhile, the pending introduction of Alternative Business Structures has rendered the predicted demise of 3000 law firms pretty much official policy.

Last week though, in my humble opinion, the earth moved as the Bar Standards Board voted to allow barristers

• to work in partnership with other barristers
• to work in partnership with lawyers
• to invest in law firms
• to practice in more than one capacity
• to investigate and collect evidence, take witness statements in civil and criminal case, advise suspects at the police station and conduct correspondence

The Law Society is busy considering the relative merits and demerits of referral fees.  Meanwhile the Bar Council has just voted to allow barristers to steal a sizeable proportion of law firms’ daily sustenance.

So let me summarise…the solicitors, as a breed, are subject to onerous regulation whilst only a very small number of their actual activities are reserved exclusively to them as a profession i.e. whilst their competitors can compete performing many of the same tasks without that regulatory burden. And now barristers, who are themselves regulated and so at least match solicitors in terms of “consumer protection”, are gearing up to compete too.

The recent Law Society “Help!” campaign, promoting solicitors as a “quality profession" in an attempt to divorce the profession from price-based competition, has been a pretty rare example of the profession gearing up for change.  In the meantime, many firms appear to be relying on their being “solicitors” and the competition being low quality as their primary defence.  Certainly solicitor after solicitor has bragged to me of the amount of work they have taken from clients who have had problems with will shops, or unregulated employment law advisers.

But here’s the problem:

• What happens when some of those law quality providers become high quality but more client-focussed and probably cheaper too?  How will law firms defend themselves then?
• Barristers are, in my experience, typically bright and able.  For sure, not all will be effective in an expanded role but, undoubtedly, some will.

In the short, and perhaps even medium, term, I can understand law firms being confident of the durability of their place in the consumer pantheon as a relatively high end profession.  At the same time though, people used to cut ice from frozen lakes and rub salt on food to preserve it.  Why, more recently I even had to use the phone to buy my insurance and leave my front door to buy a trolley load of groceries, some books or some printer cartridges.

The world is changing.  It hasn’t changed yet but it is changing.  When will more law firms put their response to that change at the heart of their business?

James

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Performance Measurement – the sequel

I have blogged previously on the importance of using performance indicators that look forward as well as backwards (“Law FIrm Performance Measurement”).  In short, there is no point in driving your firm solely looking in your rear view mirror – which is what looking at financial performance is.  Instead you’ve got to think about what indicators will give you a heads-up about problems coming down the road.

For those that are now looking at performance measurement, you might also want to read Andrew Likierman’s recent article in the Harvard Business Review “The Five Traps of Performance Measurement”. 

Again by way of summary, Andrew highlights the following as “red flags” to watch out for in implementing and relying upon a performance measurement system:

• only measuring against yourself rather than your competitors as well (try asking your staff, they’ll have a pretty good idea how your competitors are doing)
• only looking backwards (as discussed!)
• trying to put numbers against everthing (try as you might, it’s not always possible and tends to drive you away from critical measures just because they’re not easily measurable numerically)
• gaming the metrics – stop press: billable hours aren’t the be all and end all (see below)
• sticking to the numbers too long – keep what you track under review as relevance can change over time

Andrew also has a couple of tales from the frontline of interest to lawyers…

Clifford Chance no longer evaluates staff just on billable hours but on seven criteria including respect and mentoring, quality of work, integrity, contribution to the community and contribution to the firm as an institution.

Addleshaw Goddard meanwhile found that clients like responsiveness but then dug deeper and found vastly different expectations of what responsiveness actually meant between clients (and so moved away from a “one size fits all” approach).

In reality I suspect many firms, through lack of time, systems or inclination, do not track anything other than key financials on a consequently retrospective basis.  Call me boring (though not to my face please as my lawyer ego might struggle with that…) but given the changes ahead, if there’s one piece of advice you do take from this blog, please make it the introduction of at least one prospective indicator – and my favourite? Unique visitors to your website.

James

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That Ol’ Fave….Work-LIfe Balance

In my experience lawyers work hard.  Maybe not always efficiently.  Dare I say maybe not always effectively.  But, as a rule (to which there are doubtless exceptions), they do work hard.

With the acceleration of internet-based business, and the prevalence of Blackberries et al, a further truism is that lawyers, and many others, increasingly view themselves as being effectively on call 24/7.  Indeed, rumour has it that some even track out of hours email response times.

When I worked in the City myself the deal was simple.  You got paid well.  Very well in fact.  But that was only 1 side of the deal.  The other was that you were available pretty much excepting nothing and, if that didn’t suit you, well then it was adios time.

For sure, many firms have made considerable efforts to retain talent notwithstanding the varying requirements of individuals.  Boston Consulting Group has gone even further though.  They have (on major, important. time-consuming projects):

• insisted on projects based at clients’ sites that everyone on the teams there take 1 day per week away from the client site
• required consultants to take 1 weekday evening per week completely off – no phone calls, no emails, nothing…

As lawyers, we can doubtless immediately see all the problems with that and in many instances would likely stop there.  Heres’s what BCG found though:

• people felt more respected for setting boundaries
• communication (key to the approach’s success) became more open and effective
• employees reported greater job satisfaction and higher prospects of staying with the firm
• on multiple metrics, including value delivery, reported enhanced performance on applying this approach

Such experiments do not work without considerable thought and planning.  Imposing the approach strictly, with much more intra-team communication and experimentation with different approaches is no doubt key.  Absolutely fundamental though is leadership support.

Full details of BCG’s findings are documented in the HBR article “Making Time Off Predictable & Required” which I strongly recommend your reading in the context of your own business.  In the meantime, the final paragraph of the article summarises the findings excellently:

“Responsiveness breeds the need for more responsiveness….responsiveness become ingrained…even institutionalised.  There is no impetus to explore whether the work actually requires 24/7 responsiveness; to the contrary people just work harder and longer without considering how they could work better.  Yet, what we discovered is that the cycle of 24/7 responsiveness can be broken if people collectively challenge the mind-set.  Further, new ways of working can be found that benefit not just individuals but the organisation which gains in quality and efficiency – and in the long time experiences higher retention of more of its best people”

Two more quick things to note before the naysayers step up.  First BCG is well regarded and successful worldwide.  Secondly, they persisted with this experiment despite the explosions of the credit crunch going off all around – this was not a top of the boom approach at all.

Makes ya think doesn’t it…

James

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Lawyers and Referral Fees

As readers of this blog will know, I am an avowed supporter of competition and an enthusiastic supporter of law firms reaching out and grabbing the copious opportunities being presented by pending changes in the profession and the majority of the profession’s inertia in responding to that change.

Against that background, you can judge my reaction to the following:

“The Law Society will lobby the government and Legal Services Board to ban the use of referral fees by all providers of legal services.”

My short response is “you couldn’t make it up…profession approaches huge tumult spurred on by the statutory-based and economic-driven introduction of greater competition and the Law Society is seeking to cut off a source of business for firms”.

My somewhat longer response, which I posted on LinkedIn, was as follows:

“Stephen Mayson highlighted at a recent lecture that whilst solicitors face a weighty burden of regulation in their pursuit of protected matters, a large number of competitors do not and will not. Solicitors are therefore at a disadvantage cost-wise unless their being "solicitors" means customers will be prepared to pay a higher margin for their services.

In support of that, I wholeheartedly support the profession seeking to build upon the brand/quality value of being a "solicitor" yet such a move as this on referral fees goes much further . Dress it up in quality all you like but the reality is that is as much a statement of the following:
- competition is coming
- we are in an increasingly networked and hence competitive world that will exert downward pressure on margins
- in response we, the leaders of the profession, will extract lawyers from that networked/referral world
- we will do so in expectation of our being able to hold back market forces and preserve a margin that would otherwise disappear

That, in my view at any rate, is not sustainable.

David states that a hairdresser giving a referral is a "horror story" but why? Why not have confidence in the customer to complain or the market to respond to such practices. Most other (often bigger and more successful) industries must rely on reputation and brand so why not lawyers too?

I can think of few (none in fact) industries or sectors where protectionism benefits anyone but those who are protected - and then to the detriment of customers. I fear this being another example.

Surely the Law Society should instead take the lead on law firms grabbing competition, and the networking that can be so effective, and help firms strive to take advantage of the opportunities the evolving regulatory landscape presents?

Such moves as are instead proposed will impact those undertaking standardised work hardest (conveyancers, will writing etc) rendering them less able to compete whilst the unregulated steal their margin.

How about helping them become competitive, support their leveraging referral routes to market effectively and encouraging them not to preserve but to review their cost models now before the call centre warehouse becomes not their competitor but their place of work.”

James

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Lawyers and the Not So Friendly Skies

Flicking through the Times this morning, an article on the recently announced BA-Iberia merger started with:

“British Airways staff have been urged to contact employment solicitors hired by Unite, their union, as new working practices come into force…”

Now that sentence could well have just read “contact employment solicitors” or, better yet, “contact their own employment solicitors with which they have an on-going relationship built up over a number of years during which said respective lawyers have also provided bespoke wills and conveyancing support as well as some initial advice for little Tommy when he fell over at that store last week…”.

Not as catchy I admit but you get my drift.

So let’s look at the facts:

• Unite is one of the largest trade unions in the UK with nearly 2 million lawyers
• British Airways has approximately 14,000 cabin crew
• when you type “employment law Slough UK” into Google, Slough being the main conurbation next to Heathrow, you get 20,000 hits
• when you type “employment law Crawley UK” into Google, Crawley being the main conurbation next to Gatwick (BA’s second hub) you get 16,800 hits
• of those 36,800 hits, potentially not a single one will be relevant to any of those 14,000 cabin crew who are also Unite members
• for the firm(s) fortunate to be used by Unite (i.e. who have developed a relationship with Unite and proven themselves willing and able to meet Unite’s desires for its members), each meeting with a member of BA cabin crew provides an opportunity to capture that individual’s details and, over time, cross-sell everything else they provide to that individual and his/her family, friends and contacts

Another example… A chum of mine had a potential contract dispute for his small business based in the East of England.  Where did he go for legal advice?  Bristol, diametrically on the opposite side of the country, as that is where his business’s legal expenses insurers took him.

Anyway, you’re probably very busy on that urgent client work so I shouldn’t worry even if your firm is one of the 36,800.  Tomorrow is tomorrow after all…

James

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