Managing to be competitive

In the years since 1987 there has been a marked change of attitude in the legal profession towards management – at least firms now acknowledge that they have a need for it.

Having said that, the independent mindedness of lawyers still presents an impediment to the adoption of more rational management structures. If management was improved it might suggest a need for increased delegation and for the provision of the means for effective decision-taking, performance monitoring and accountability.

The profession, taken as a whole, is still badly managed compared with many other professions. That is one of the reasons why its image and standing in the community has undoubtedly diminished over the past 10 years.

If one was to single out any one area where has been significant improvement, it would probably have to be that of strategic planning. Many medium-sized and small firms have begun to recognise the need for greater focus both in terms of the markets they wish to service and the areas of practice and range of products they wish to concentrate upon.

There are very few circumstances today in which a lawyer can be all things to all people. A firm's credibility will not withstand the scrutiny of today's more sophisticated marketplace if it tries to pretend it can do everything. Firms that have understood this and have given themselves greater focus are those enjoying the greatest success today. The ramblers are increasingly finding themselves faced with a wilderness in which their fortunes can only continue to flounder.

As to areas in which management has failed, one would have to cite IT and financial management.

Although relevant technology has been available to the profession for over 20 years, it is only in the last five that the profession has really sought to take advantage of it. Back office technology got off to a bad start in the profession largely because the systems did not meet the profession's special needs. However, today's technology is most effective in the front office and the profession has been far too slow to grasp the power that is available to improve productivity in a major way.

As to financial controls, even today far too few firms concern themselves with the critical elements of control, namely productivity and recovery.

Lawyers argue endlessly about the chargeable hours recorded or the total fees billed, while often overlooking the fact that such figures are irrelevant if their value is not being turned into cash in the bank. The profession has a long way to go before its financial management delivers the massive improvement in productivity that is could – and relatively easily.

It is often said that the solicitors profession in particular is really several professions in one: each part is made up of firms of similar size, location and profitability.

In fact, the real distinction in the profession has nothing to do with size or location, but everything to do with management. It either succeeds in running a successful business – or it fails.

The fact of the matter is that virtually all the problems of substance with which the profession is faced are self inflicted. Those firms that take the trouble to define their market, and respond to its needs, tend to enjoy success in today's harsh business climate, whereas those firms that carry on blind to the world around them are the ones finding themselves in decline.

The critical success factor today is to confine and define the market you wish to serve and to develop a range of products and services that will respond to the needs of that market, so providing the service in the manner that it requires. This coupled with well-structured management and effective financial controls will still provide a formula for success. Examples of firms that combine these factors and attitudes abound.

In 10 years there will be fewer very large firms but many more small firms that are truly expert in well-defined areas of practice. This is because today's sophisticated client is looking for real expertise and does not believe that any single firm, however large, can be the best at everything. The small firms that succeed will be tightly managed and highly focussed to take advantage of this.

The lower end of the profession, which seeks to service small businesses and private clients will, of course, always be needed. However, by 2007 it is likely that many services currently provided in the high street will either be bought through multidisciplinary professional supermarkets or by Tesco and Marks & Spencer. Right now, it is difficult to see how the small general practice law firm can remain an independent and economically viable entity.