Legal Services plc - firm of the future
29 August 1995
Financial pressures on all conveyancers are caused by too many competitors providing the same services. And the market place is simply not big enough to support this growing number of suppliers, a fact that holds true even in the City.
The Law Society is not to blame for our current financial difficulties and despite pleas by some, the introduction of a minimum charging rate is not the solution. The answer is to reduce the number of competing suppliers. Just imagine the possibilities if your area, which has, say, 12 firms of two-partner size suddenly had one firm, Legal Services plc, run by a business administration group from one building housing 24 solicitors plus paralegals.
All our buyers are aware we are fighting for their business and it is simply a question of supply and demand. Who can blame any purchaser for taking advantage of the system we have created. The Council of Mortgage Lenders will point out there exists a Law Society-agreed scale of fees payable by the borrower when we act for its members on mortgage legal work. So why don't we charge this agreed scale? The market won't stand it, that's why.
My firm invested in BS5750 (now ISO 9001) two years ago. It was costly to obtain, probably in excess of £50,000, and expensive to keep. We hope next month to have our full Investors in People Award. Again, that is expensive to obtain and retain; staff training will exceed £30,000 this year.
This is not a boast but an indication of how hard it is for a small firm to make the investment for survival. And while it is not essential for today's quality standards to be displayed who can say about tomorrow? Small firms will not be able to make the commitment. They simply do not have the money.
Keeping the previous example of 12 firms, that is 12 sets of overheads; 12 accounts departments, 12 insurance premiums and so on. Think of the saving - income is increased without more work. And consider two other possibilities. Legal Services plc could afford a good training scheme. It would be able to obtain the quality standards or may already have them through one of the member firms. And most lawyers are qualified to practise law, not run a business. Consequently, many lawyers make poor businessmen. Nor can small firms afford to buy in necessary business advice.
Legal Services plc would be a sizeable company where the lawyers could practise law. Technology would be affordable and because of its buying power, Legal Services plc's deals would be more economic than those available to individual practices. And local commercial work would stay local rather than move on; the bigger practice is on their doorstep. In a short time this organisation would be a marketing force.
Legal Services plc offers more to the community in the same way health centres are replacing the GP in his kitchen; for some things size is essential, and big is often beautiful.
Tax changes are about to hit us making the whole concept of incorporation much more viable. Being taxed on a current year basis loses us the current advantage of practising in partnership. In any event partnership is an outmoded and potentially dangerous way of doing business with each other. So many problems stem from the relationship and many middle-size practices collapse over squabbles as to who provides the income. Legal Services plc would run on the basis that a direct portion of personal income is retained without regard to any other income provider in the company. If you are capable of billing high sums you retain high sums and if you choose to practise law in an area where the income was not so good it's your choice and your take-home pay would be adjusted accordingly.
There is a price to pay for Legal Services plc, but it is cheap with the potential that is available. The price is the surrender of so-called independence; no senior partner and
no one to claim to be Mr Bloggs of Bloggs & Co, with whatever that may infer.
We must stop letting the market control us and start to control the market.
Brian Marson is a partner at Marsons, Bromley.