There’s never been a more exciting time to be a Managing Partner. The industry is moving faster than ever and the rewards for those that keep up are limitless. However, all this change can make for a bumpy ride, and no doubt many Managing Partners and CEOs are struggling to get a good night’s sleep as they wrestle with the challenges looming on the horizon.
The legal industry used to be one where people would join firms for the long term, often a lifetime. That loyalty has been eroded in recent years, which is great news for hiring managers and recruitment specialists, but presents a real challenge for Managing Partners seeking to develop a stable team of experts.
To some degree, this increased mobility is representative of a broader change in the world, but that’s not to say that leaders are powerless, and contrary to what many believe this is not just about money. In fact studies have repeatedly shown that the majority of employees are not really driven by money at all. They want to receive what they believe is fair and proportionate for their contribution, but beyond that salary is a terrible indicator of loyalty. Ultimately it is those firms that provide a rewarding and flexible working environment along with a greater sense of purpose and strong cultural values that will find their best talent sticks around through thick and thin.
Does your firm:
GDPR made sure that data privacy and information security were top of the management agenda. Everyone knew that come May 25th, 2018, their firm would either be compliant or face huge potential risk. That deadline was a line in the sand that triggered great urgency from all concerned. The question now this – how do you maintain that urgency?
Data privacy and cyber security are not a one-off problem to be fixed. They are an ongoing and unrelenting source of infinite risk and if managed effectively, an opportunity for huge competitive advantage.
Does your firm:
The last 20 years have seen a seismic shift in how consumers and businesses buy things. The legal market as a whole has been slow to respond but in the last few years, the rate of change has accelerated. The early adopters have of course been those to reap the greatest rewards.
A tipping point is now being approached where this change is less about opportunity and more about survival. Those firms that continue to market themselves as if it’s 1995 will simply not stay in business.
Does your firm:
Customer demand for legal services is nearly flat. If you want to grow your revenue, you have to take market share from your competition – and they are evolving. You are no longer competing against another multi-practice firm who runs their partnership much as you do. New competitors are taking market share from both simple (transactional) and complex services, such as consumer savvy businesses operating as Alternative Business Structure and low-cost alternatives, such as Axiom & Lawbites.
You are also facing competition for complex, high-value work. The world’s biggest auditors have acquired law firms, such as Riverview, and are leveraging their established board-level relationships to sell bundled professional services. Foreign law firms are opening UK practices, and specialist practices, often created by departments disposed of by larger firms, are operating with very low overheads. Top UK law firms operating at mid-sized firm rates, using AI & Robotics to substantially the effort their staff spend on matters.
To survive in this highly competitive market you need to differentiate, retain repeat business customers and operate efficiently. You need to do this while ensuring you have the financial security to invest or diversify.
How are you preparing for the evolving market?
Ageing and silo technology affects both quality of service and costs. It also impacts your ability to attract the best talent. In order to survive, firms need to digitally transform their operations to focus on the customer experience, while maximising efficiency from their people, processes and technology. This is a challenge, as partnership structures often inhibit long term investment decisions. Managing change into a partnership can have its own unique challenges, too.
Most firms find it is too difficult to gain agreement for significant investment and long-term technology programmes. They are also working with suppliers who specialise in the legal market and haven’t learned the lessons that telecoms and banks learned when their markets were deregulated. These firms are often not experienced with new technologies, which can provide a faster return on investment, at substantially lower risks. Law firms are falling further behind in the technology race and are often not sure what they should do next.
Clients are more conscious of cost and value. They increasingly want ‘more’ and ‘better’ for ‘less’. They have become accustomed to buying what they want, when they want it online. They expect the same for transactional legal services.
Customers seldom seek all of their legal needs from a single firm, giving you limited opportunities to build the deep relationships that lead to repeat business.
Solicitors are trained to solve problems and may not always actively listen, connect and empathise with customers. Customers might be getting appropriate legal advice but do they feel respected and valued?
How do you maintain the quality of client service, while continually striving to do more for less?
This is a hugely exciting time to be managing a law firm, but it’s certainly not for the faint of heart. In our subsequent articles, we will explore some of the ways that the most innovative leaders in law are driving change in order to turn these challenges into a competitive advantage, and get a good night’s sleep in the process!
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