Management/agent contracts. Making tracks over Woolf's legal landscape

There is little doubt that Lord Woolf's proposals will be implemented in full, probably at the beginning of the 1998 legal year. And to survive in the new civil justice landscape partners responsible for litigation management must start the re-engineering now.

Many will argue that Woolf's reforms are a threat to their livelihood. But for those with the management skills, the recommendations are a huge opportunity to implement practice changes, develop competitive advantage and ultimately generate bigger profits.

Woolf's fast-track is perhaps the most practically significant proposal set out in Access to Justice. With its impact on claims worth £3,000-£10,000, the fast-track will lead to major changes to working practices in the solicitor's office and in litigation departments. A key issue will be how to manage cases profitably in the £2,500 fixed recoverable costs threshold.

Firms need to start addressing the following issues now:

Who are the appropriate litigation managers in the firm? Delegation will be critical to ensure work is done at the right level and in the most cost effective way. Firms should also look at the involvement of paralegals. In other service industries – insurance, financial services and banking, for example – 'delayering' tasks and 'deskilling' by increased use of technology have helped create a more cost-effective, flexible workforce which relies more on IT and less on the know-how of its individuals.

File review, management and effective training will be key to prevent service standards falling and a potential rise in negligence claims. The Law Society's Practice Management Standards, particularly Standard F, provide a framework within which firms should be working. Precise steps must be taken to adhere to these standards in the conduct of all litigation files, including fast-track work.

Re-engineering the role of partners and solicitors will lead to departments and entire firms being restructured. This throws up a number of points. How will litigation managers handle their own caseload and the files of those they are responsible for? What will be the partners' effective role? Will assistant solicitors be involved in middle management, like their counter-parts in the accountancy profession? How should paralegals manage a high-volume, low-profit margin caseload?

Inevitably, perhaps, Woolf's reforms will force law firms to come into line with other service sector businesses in the way they tackle work. Smaller practices will argue that the changes only increase their burden; unlike their larger peers they do not have the resources to cope with the recommendations. However, the majority will recognise that the strength of a well-managed practice of any size is its flexibility. Unlike the largest firms, smaller practices can change tack swiftly and re-deploy resources easily. The practice with high overheads, such as premium office space, highly waged solicitors and salaried partners, is like a super-tanker – difficult to steer, slow to respond and potentially unstable in stormy waters.

How should firms manage their clients in the new epoch? Some clients, such as insurers, will need to make decisions as soon as they receive claims. The first steps they take will affect later proceedings. The importance of informed decision-making by institutional clients raises the need to train managers of such client organisations on to how to handle fast-track cases.

A closer relationship between client and litigation manager and constructive dialogue will also be essential. Banks and building societies and any client which regularly instructs solicitor in large-scale debt collection worth over £3,000 per claim will need to be managed by those whom they instruct to ensure efficient processing of matters through the fast-track.

For many reasons, lawyers will tactically try to get out of the fast-track regime. Doing so will be possible only after successful cases, where the key to success was good management of the litigation process. Litigators will need to rethink their litigation tactics and be clear about the outcome they are seeking to achieve.

The forward thinking will recognise the need to address these and other issues now and acknowledge the inevitable change in legal culture. Woolf provides an unprecedented opportunity for firms to take the initiative on practice management. And those who do this sooner will benefit.