Leadership, organisation and funding in a fast-changing market were the themes of our recent law firm management event
Never before have law firms faced so much disruption. With mergers and ABSs, outsourcing and disaggregation, private practice business models are in the spotlight. But how to manage change successfully?
In the past two years The Lawyer has broken new ground in covering the business challenges facing law firms and barristers’ chambers. We now have an explicit focus on the support side of the legal market, a shift designed to reflect the increasingly pivotal role played by non-lawyers as law firms become law businesses.
That focus includes a weekly interview with a senior business professional and a fortnightly The Lawyer Management email featuring latest news, vendor news and relevant opinion articles from prominent industry leaders.
In June a major new supplement titled The Lawyer Management was also published, underlining the role played by the core support disciplines underpinning the modern law firm.
All this coverage culminated last month in The Lawyer Management Conference and Awards – a day and evening focused on the issues and challenges facing law firms, barristers’ chambers and the senior support professionals within them.
Click below to find out who won the awards on the night:
Professor Laura Empson of Cass Business School kicked off the conference. Her keynote address revolved around management cultures in professional services firms. Her findings were based on a recent empirical study which explored the leadership constellation within private practice, or the existence of informal as well as formal power structures.
Empson explained in an article for The Lawyer in July this year: “The partners of professional services firms (PSFs) like to present themselves as apolitical. Politics is associated with ‘climbing the greasy pole’ of the corporate world. Partners are supposed to act collectively in the interests of the firm, not in their own interests. They will not elect leaders who they think are politically motivated.
“Yet PSFs would grind to a halt without the deployment of political skills. PSFs are led by consensus. Building consensus involves negotiation, trade-offs and politically expedient compromises. Political action is rife in PSFs, but leaders need to maintain the illusion that they are apolitical – the act of a highly skilled politician.”
Empson’s keynote speech detailed four key areas of her research:
– Ambiguous authority and hidden hierarchy, whereby the roles of senior and managing partner are not defined;
– When everyone and no one is a leader;
– Leadership meltdown and the potential for partnership to heal rifts; and
– Leading without seeming to do so.
New structures, new technology, new talent
Christina Blacklaws of Co-Operative Legal Services presented a session on the rise of the ABS. She noted that most investments are into process-driven areas such as personal injury and conveyancing, but that they will be moving up the food chain to private client and SMEs.
Janet Day, IT director of Berwin Leighton Paisner (BLP), spoke about the impact of social media on the firm’s technology strategy. BLP’s key platforms are LinkedIn, Twitter and the use of blogs and video. LinkedIn is treated as a professional tool. The issue of return on investment has not yet arisen, she noted, since the firm does not invest a disproportionate amount of time or money in social media; any business generated is a bonus. Twitter has brought in some leads, as has the firm’s recruitment site.
The heaviest users of social media in the workplace are not the Generation Y employees, but the 40- to 55-year-olds – an observation that surprised some delegates.
Eversheds HR director Angus Day’s session on talent management covered active management and networking. Lateral hires are not always the answer to a firm’s needs, he noted. Like many other major law firms, female retention and progression has come to dominate HR strategy.
One of the ways the legal market in the UK is changing is the new ability for law firms to accept external funding. This was the focus of a discussion featuring Irwin Mitchell CEO John Pickering and Burford Capital CEO Andrew Langhoff, looking at both macro and micro aspects of the funding market.
Pickering spoke of the challenges associated with seeking external capital, outlining the options available for firms that want to look at moving away from the traditional funding model of debt plus retained partner capital. The vast majority of audience members said they had not even considered alternative funding.
The options Pickering mentioned included private equity funding, which, to date, has not proved especially popular, and listing. He noted that Australia’s Slater & Gordon, the world’s first listed firm, has been a stock market success and is now seeking to use that as a tool to expand in the UK. Another Australian firm, Shine Lawyers, is pursuing a similar strategy.
Indeed, strategy was the key point Pickering wanted his audience to take away: that while firms now have a much greater choice in the way they raise capital, it is essential to have a clear strategy with regard to how they use it. It is no good, he said, deciding you want to explore alternative funding options without knowing what you want to do with the money.
Langhoff focused on one particular external funding option – third-party litigation finance. While this has been on the table for several years and is gaining traction, once again the majority of the audience said their firms had not really explored it. Langhoff’s description of the possibilities raised several questions among delegates.
He warned that litigation funding involves risks and challenges, but said it can be a good way of making sure lawyers and their clients both get paid, particularly in long-running and complex disputes.
Langhoff described a case in the US where a client risked losing their legal adviser because they were unable to pay the pre-trial bills. The solution was litigation funding, which meant the case could be fought on, resulting in a sizeable win for the client, the firm and Burford.
Another option, said Langhoff, was to fund a firm instead of a case – for example, in situations where a firm has taken on a contingency fee arrangement and is unsure when the case might complete.
But he warned that there are many players in the nascent litigation funding market and, just as when firms are looking at options for external funding for other reasons, proper due diligence is essential.
The client view
Ernst & Young’s global general counsel Trevor Faure closed the conference with an in-depth look at how in-house teams should be looking at their efficiency. He touched on issues such as legal process outsourcing (LPO) and gave several graphic examples of situations in which a team was overlawyered yet under-delivering for its corporate client.
Faure “triangulated” his argument, saying that providing quality advice and satisfying clients remains the pinnacle of what departments should be offering, but these depend on headcount utilisation and operational cost.
He said that firms and in-house teams alike should embrace the future, rather than sit back and let modernisation happen. That can include technology, which Faure described as being in some cases “measurably superior” to human review.
Faure said firms should take a lead in this respect, aligning their interests with those of their clients and becoming much more innovative. He pointed out that the Big Four accountancy firms are ahead of their legal counterparts in operational sophistication and integration, particularly when it comes to client marketing.
Raising knowing laughs in the audience, Faure gave examples of bad client marketing strategies. His descriptions of being bombarded with emails inviting him to seminars, events and to eat canapés clearly struck a nerve with his private practice listeners. As an alternative, he called on firms to engage in a “profitable partnership” with their clients, using innovation and technology where necessary.
All-star management speakers
Keynote: Leadership in law firms, Professor Laura Empson, Cass Business School. Sponsored by Totum Partners
Assessing the impact of ABS: Christina Blacklaws, Co-operative Legal Services
Pricing pressure: Richard Burcher, Validatum; Siddhartha Mankad and Richard Kemp, Kemp Little
Exploiting the impact of digital technology on legal services provision: Janet Day, Berwin Leighton Paisner
The Lawyer Management Research results on evolving technology: Rob Martin, Thomson Reuters; Phil McMullan, The Lawyer. Sponsored by Thomson Reuters
Improving lawyer performance in turbulent times: Angus McGregor, Eversheds
Innovative strategies for accessing capital: Andrew Langhoff, Burford Capital UK; John Pickering, Irwin Mitchell Sponsored by Burford Capital
Closing keynote – Profitable alignment with client imperatives in the modern economy: Trevor Faure, Ernst & Young
How do employee benefits help increase employee engagement levels? Sponsored by Portus
The use of technology to drive efficiency and how best to succeed with user adoption. Sponsored by Thomson Reuters
Facilities: value, cost and the integrated FM model. Sponsored by Shepherd FM
Marketing and business development: strategies for 2014 and beyond. Sponsored by Vuture