Square Mile

Want more profit? For many, cost-cutting is the favourite route. Is it easy? Yes. Sustainable? No, apart from an initial one-off benefit. Leverage is the fastest route. Firms that pride themselves on a partner-led work culture will become poor firms (relatively speaking). But leverage is expensive to maintain and if under-used is also the quickest road to ruin.

The difference lies in having a successful "quality" strategy. No, that's the wrong word – too virtuous for its own good. I should use "profitability". "Quality" is one of the most overworked and therefore meaningless terms in the management lexicon, but rare is the strategy that does not include it as an aspiration.

I sense many are not ready for the much-stalled, but still inevitable, threat from accounting US law firms. The real threat lies in their culture, systems and processes, which make delegation and leverage the cornerstone of their profitability. Whether a firm can compete depends on whether its culture allows for effective delegation. Quality should be all about making leverage work for you, not against you. Under-delegation is the worst form of inefficiency. The first mistake is not taking the enormity of the challenge seriously, because it's all about changing that most stubborn of things: culture. A quality, or should I say profitability, strategy needs to have five fundamentals in place before it has a decent chance of success:

There needs to be a strong lead from the top. This is the one area where under-delegation is a pre-requisite.

With modern software, every firm can – and should – see the key financial indicator of partner performance as the profit, not the fees, produced from each case or client.

You need sufficient flexibility in the profit sharing system. Reduce the importance of personal billable hours and reward profitability and other suitable behaviour instead. Consider a ban on partners' personal performance statistics.

Have partners appraised by their assistants. Tempt them to take the development and morale of juniors seriously. Low turnover is good for profits too.

Provide management training for partners. Lawyers are notoriously bad at passing on their know-how to others.

All these will help create a cultural atmosphere where partners are happy to be managed. Cosy firms acting as a loose federation of sole practitioners confuse clients and mean quality programmes are doomed from the start.

Only when the cultural change has occurred will it be safe to go on and develop methodologies to avoid duplication of effort, whether by capturing best practice and standardising it or introducing competency based training programmes to speed up skill development. For firms wishing to globalise, the challenge is even greater – and even more essential.