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With conveyancing still cut-throat and legal aid cases a less-than-reliable source of profitable fees, commercial work has become the life-saver of many small and medium-sized practices.
Lawyers could learn much from chartered accountants, who over the last decade have become the “advisers of choice” for business while lawyers have been relegated largely to carrying out transactions – the paramedics of the commercial world.
Lawyers For Your Business (LFYB), the Law Society's initiative on the marketing of commercial practices, believes it is becoming essential for solicitors to start reversing this pattern.
“Lawyers who are merely transactors,” says the LFYB's James Kelly, “are constantly vulnerable to price-based judgements on the value of their work, and they are cut off from spotting opportunities to develop the relationship.
“But the lawyers who advise, and who become an integral part of clients' strategic decision-making, are those who get long-lasting relationships and more work.”
Although accountants do have the advantage of statutory annual access to clients for audits, they have also worked hard to increase their value, offering services like tax planning and raising finance. The way services are marketed is also more client friendly: for example, fixed fees, still rare in legal practice, are widely used to price specialist services.
“Solicitors who speak a commercial and financial language, and frame their services in a business context, are definitely more successful,” says Kelly.
This is confirmed by Don Fisher, of accountants Don Fisher & Co, who points out: “Accountants are trained to understand the businesses we are advising, unlike lawyers. But I've lost work to lawyers because they have been sharper to spot opportunities in areas like tax and financial planning.”
An LFYB series of guides repackages legal issues as business problems, and its 1,800 members can give these to clients to sell specialist services. Kelly explains: “We help members find points of engagement, where legal advice can be linked to client needs. The guides also emphasise how involving a solicitor in early planning can prevent future, more costly problems.”
LFYB member Bruce Lendrum of Brignalls, a four-partner firm in Stevenage, says: “We have to be imaginative and well informed.
“We produce a quarterly newsletter, which we know clients read because they phone up if it doesn't arrive, and we use mailshots to remind them to do certain things like review employment contracts.”
Lendrum is about to attend a training seminar on the new Disability Discrimination Act, and will use his new-found knowledge to brief clients on how he can help them avoid prosecution.
Well-focused marketing directed at potential clients is important. “Marketing effort has to be taken out of fee-earning hours,” says Kelly. “Larger firms can employ someone to do the legwork, but it is the professional skill and experience of the lawyers that turns prospects into clients.”
Practices can help themselves by finding ways to differentiate themselves from the competition, for example, through “products” like contract audits, and packaged services such as fixed-fee legal adviser arrangements. They can promote specialist skills in areas in which they have above-average experience.
Lendrum's firm says its local business initiative scheme is a good source of new clients. It encourages prospective clients to make contact by offering a free half-hour initial advice session. He says the fees generated from such clients have exceeded the costs of joining the scheme several times over.
Lawrence Jones, a 12-partner firm in the City, makes a point of looking after start-up clients as an investment for the future. “Small firms are often intimidated by lawyers and their fees,” explains partner Annette Newport.
Part of the service offered by the firm is to help clients budget costs and prioritise their needs. Lawrence Jones therefore offers a comprehensive first meeting for free, reduced fees for three months, and then sometimes flexible payment terms. That way, clients stay with the firm, and many become profitable clients.
“We have put ourselves in the client's shoes, and tried to understand how their business is likely to go, so that we can match up legal help and advice. Although designed for start-up clients, these principles have helped us to sharpen up our practice everywhere,” says Newport.
Kelly says he still comes across firms that are puzzled that business does not simply walk in off the street. He recalls a solicitor who had just received details of the Pathfinder business grants database, an LFYB marketing tool which members can use to attract new clients. The lawyer rang to say that if his clients wanted such advice he would refer them to the local business link.
“Whereas some firms would love to cold-call, and are only prevented by Law Society rules, others are too nervous even to point out legal problems which they could tackle in case it sounds as if they are scaremongering.”
In the long term, it is lawyers who sound like business advisors that secure clients. “Ten per cent of my billable time is now spent giving advice unrelated to transactions,” says Lendrum.
In Lendrum's view, the value of the relationship is that such advice is based on business common sense.
He says: “A client phoned for help on dealing with a lazy worker, asking what the law as on employment rights. I said, 'Just refuse to give him a pay rise.' The employee soon got the message.”