26 March 2001
Paul Gilbert makes some good points in his article "Resolve to Evolve" (The Lawyer, 26 February), describing an industry whose structure and practices increasingly do not reflect its clients' demands. Gilbert focuses his attack narrowly on the industry's charging practices. He contends that the abolition of hourly rates, and with them a charging system based on billable hours, together with the commoditisation of legal services through a range of media, will transform the legal profession into a creative, client-focused industry.
While clients would doubtless be delighted to see an end to open-ended billing, such a move in isolation would neither address the full range of client needs, nor provide the legal profession with a sustainable business model. To cap it all, restyling legal advice as a commodity might well be to throw the baby out with the bath water, as clients are demanding more bespoke solutions rather than commoditised services.
The unfortunate client in the scenario painted by Gilbert is after more than just controlled costs - it wants its problem solved at a fair price. Moreover, in meeting this need, legal firms also have to contend with greater competition for work and for the best resources.
The firms best placed to meet these client needs and thrive will be those which continue to recognise that sustainable and profitable relationships are key. And the way to develop them is both to build the firm on practices that deliver benefits, and to create value for the firm itself.
Lessons learnt in other industries that have been through comparable changes, such as accountancy, finance and consultancy, give us a proven way forward. Each of these industries has invested considerable time and effort, reshaping their working practices to enable them to build the long-term client relationships which are critical for success in professional services industries.
The idea of the client relationship at the heart of things appears simple. However, to deliver it in practice requires the whole legal firm to be underpinned by some key structures and practices, such as the following:
Business model Common business management processes should be used throughout, so that global clients will recognise invoicing procedures and charging structures wherever they access services. Internally, the business model must focus on building the firm's profit.
Knowledge The right IT infrastructure will provide a platform for knowledge-sharing. This will promote consistency across the firm and enable it to gain the maximum benefit from its knowledge and capability.
Rewards model Thriving in this increasingly competitive market will only be possible with the best staff. To attract and retain them, a radical reward model is required. This must reward staff at all levels for their contribution to the firm's success and provide fast growth opportunities for the most able staff.
Commercial engagement management This is built on the principle that the legal firm is responsible for delivering the clients' needs, which are based on the value that they require from the firm's professional services. Professional services business model The key elements of this are a new business framework, systems to underpin performance and knowledge management and project-based working as a core competence.
Gilbert is right to suggest that law firms will need to look again at how they can respond to client needs. However, the remedies he suggests are off the mark.
The professional services business model described above shows a way forward that can not only deliver enhanced value to clients, but also to the firm, and can provide the basis for long-term profitable growth.
Nick Chaffey is a member of PA Global Business Transformation Group
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