Your COFA should live, sleep, eat and breathe financial management. This isn’t optional; rule 1 of the Accounts Rules demands compliance with the SRA principles and Code of Conduct in relation to effective financial management of the firm. So what is effective financial management? Outcomes-focused regulation usually means you have to guess what the SRA expects; however, in a rare moment of clarity, the SRA has explained exactly what good and bad financial management looks like.
According to Professor Gillian Hadfield of the University of Southern California, we live in a world that is “flooded with law”. Surely lawyers, with their training, experience and understanding of legal issues, should be overwhelmed with demand for their help in navigating a safe route through our daily existence? Yet all the evidence suggests otherwise.
The pricing function in most law firms is something of an orphan. No-one knows who it belongs to, so it ends up belonging to no-one. Individual department heads and fee-earners make decisions on the fly with little regard to the firm’s pricing policies, processes and protocols. Oh, that’s right, we don’t have any firm-wide pricing policies, processes and protocols to speak of. If I had to isolate a single factor that contributes most to the failure of a firm’s pricing strategy, it is a lack of pricing leadership. Yes, senior partners, managing partners and CEOs, I am speaking directly to you.
There will be plenty of lawyers crowing over the failure of In-Deed Online. Expect a lot of “I told you so-ing”. It will be used as evidence that alternative business structures (ABSs) are flawed and that the much-heralded change in the legal market will prove to be a bust. But I wouldn’t be so quick to jump to those conclusions.
Here’s a question that’s been bothering me of late – what, exactly, is a quality legal service? You’ll have noticed that this phrase has become so common that it no longer requires an adjective (unless it’s poor quality). Many seem to think that if you say often enough that you provide one, it must be true. It has come to the fore with the debate over criminal legal aid. First there is the Quality Assurance Scheme for Advocates (QASA). This elides ‘quality’ with competence. “The aim of QASA,” says the application to the Legal Services Board for approval of the scheme, “is to assess and assure the competence of all advocates conducting criminal advocacy in courts in England and Wales.”
Cracking the non-PI consumer legal market could be the biggest prize yet. So why, asks Simon Goldhill of Legal Futures Associate Simon Goldhill Consultancy, is everyone looking the other way?
Law is big business. According to the latest government figures, the UK market generates over £26bn per annum. Recent analyses suggest that just under half of that comes from the business and commercial sector. Of the rest, £3.5bn relates to personal injury (PI) and £1.5bn to crime. That means that the non-PI consumer legal market in the UK is worth around £8bn per annum. This is equivalent to the entire 2012 turnover of the UK’s creative, arts and entertainment services industry.
Yesterday’s announcement that Lord Chancellor Chris Grayling had rejected the Legal Services Board’s (LSB) recommendation that will-writing become a reserved legal activity was not a total shock. I reported in February that the LSB was nervous given Mr Grayling’s anti-regulation agenda and it was encouraging supporters to lobby the Ministry of Justice (MoJ). If nothing else, those (mainly abroad) who fear that the LSB is too close to the government can rest easy – this is the second significant slap in the face for the LSB after the MoJ in 2011 disregarded its conclusion that the case to ban referral fees was not made out.
Was Tuesday the day we began to see the future a bit more clearly? Capital-infused alternative business structures (ABSs) with clear, market-dominating ambitions, using their financial clout to consolidate their markets? Is this the nightmare scenario for those being dragged into the ABS era? Slater & Gordon revealed it is to swallow up three practices in one go, while the Parabis Group has sated itself (for now) with ‘just’ acquiring Greenwoods. Quindell Portfolio, which has already bought three law firms itself in its well-documented acquisition frenzy, announced some big numbers in its 2012 results.
The various attempts by the Coalition government to reform the delivery of legally aided criminal defence services have encouraged the legal profession to embrace two novelties: the extensive use of social media as a form of activism and a unity of purpose. Barristers and solicitors have been blogging and tweeting extensively on the proposed legal aid cuts, the introduction of the Quality Assurance Scheme for Adovcates, and the consultation on price-competitive tendering in recent months. The online medium has been embraced not only by representative groups like the Criminal Law Solicitors Association and the Criminal Bar Association but also by individual lawyers, for commentary, analysis and active dissent.
The most expensive and valuable purchase that the majority of people make in their lifetime is their home and yet law firms compete increasingly for conveyancing work by lowering their price. Competing on price is a race to the bottom. There will always be providers wanting to undercut you, albeit that the service offered may well be inferior to your offering and standards. The difficulty is that the client cannot see your service levels from the outside unless, that is, you can find ways to show clearly your commitment to the client, spell out clearly what is involved and how you will work in their best interests at a price that is fair value. Clients need to be able to understand ‘value’.