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Law firms of all sizes will have to prepare their lawyers to meet the challenge of new business structures, says Paul Hutchinson
As alternative business structures (ABSs) loom on the horizon, many lawyers have been speculating on what effect this development will have on their daily business and how they should prepare.
The basic principle of ABSs is to open up competition within the legal sector to ensure that consumers have the widest choice available when it comes to deciding who they buy their legal services from.
In an age when people are more in tune with their consumer rights, many shop around for what they want. It is not necessary to mention singing bank clerks to recall that the way consumers manage their financial services is vastly different from the way it was five years ago. This shift has been brought about by allowing more choice in the financial sector - and the same change is coming to legal services.
A few large City firms claim this will not have any effect on them, saying that their biggest and richest customers will still use them for their legal services, as they would rather have a well-known legal brand than a household name looking after their interests. Maybe so, but it is not necessarily entrepreneurs or corporations that ABSs are designed to cater for.
So what of the high street lawyer or student who may be questioning how the market will look once their studies are complete?
First, small firms must embrace technology and modern business methods. Clients are already starting to search for their will-writing, conveyancing or family law advice online. High street firms can easily mirror their shop fronts on the internet, so if a client is looking for local legal services they need to be able to find you online as easily as they can by walking into town.
NatWest Bank recently stated that some of its clients’ modest investments in websites resulted in business worth four times the investment. The price of services is going to play a big part in consumer choice, but it is not the only factor in a consumer’s decision-making process. A recent survey carried out by Peppermint Technology showed, when purchasing legal advice, 35 per cent of consumers would choose a lawyer recommended by a friend, with cost coming second at 30 per cent.
As the market opens up consumers will not be won over on cost alone. Each legal provider, be it a magic circle firm, a high street lawyer or a well-known call centre, must identify what it does well and position itself accordingly. It must also continue to deliver on that promise.
It sounds like common sense, but how many lawyers can put their hands on their hearts and claim to do this already? As consumers become less forgiving and potentially less loyal, law firms need to start acting like modern businesses. Modern business methods need to be adopted - and modern training methods to match.
There are already examples of this happening. At the Legal Futures conference this year Guy Barnett, chief executive of Lawyers2you, spoke of how his site is taking legal services to the consumer’s living room as opposed to clients visiting a high street firm. But it is not only about how you engage with your own clients. Law firms should also be identifying other services their clients might need and creating joint ventures with providers.
Already law students are no doubt wondering how this will affect them. Clever ones will adapt and fit in where the jobs are; and it may be that working for those big brands is going to be where most openings are.
Who’s up to the job?
Is there a type of lawyer better equipped to cope with an ABS? Only time will tell, but legal executive lawyers will be well set to cope in the new environment. Their training enables them to become specialised in their chosen areas, and by taking additional units during their career they can move to other departments more easily than most.
On the face of it ABSs sound daunting, but they need not be. Forewarned is forearmed and we have known they have been coming for some time. Lawyers must research how their competitors are engaging with their clients, how branding can help bring new clients and how client care can retain them.
Small law firms must focus on their business models. Business managers can partner with firms to manage the business side while lawyers do what they do best. Meanwhile, marketing and PR agencies can assist with branding and online presence - essentially you must not limit your firm’s skill to law.
ABSs offer a brave new world and lawyers need to open their minds, become creative and embrace the opportunities of this evolution in the legal sector. As evolution has always shown, you must adapt or die.
Paul Hutchinson is public relations and press officer for the Institute of Legal Executives