The opportunities presented by regulatory upheaval

The Cash RoomFrom Legal Futures’ Associate Alex Holt, Director of Business Development of The Cashroom.

Having agreed to play 5 a-side with a number of work colleagues, I’ve come to the upsetting realisation that I’m an old man. The fact that my 23 year old son will also be playing should be proof enough I suppose.

If further evidence of my long-in-the-toothness is required, I can point to the involuntary noises I make when getting up from a low seat. Or the fact that my Apple Music favourites list seems to be dominated by the early 90s indie era.

I can also point to the horrifying fact that I started my articles (training contract for those youngsters among you) with Slater Heelis 27 years ago.

Bear with me…there is relevance to this Victor Meldrew outpouring.

The thing is, that in that last quarter of a century anyone who became a lawyer has had to deal with the greatest amount of regulatory change since quill pens and parchment were the norm. But I’ll aim to explain why this incredibly challenging environment has also created a new and exciting legal landscape- fraught with difficulty at times, but also rich in opportunity.

In the time since I qualified as a lawyer we have seen in no particular order- Woolf reforms, Clementi, Jackson, employment law being carried out by non-lawyers, Legal Aid regulation changes, a full overhaul of the Solicitors Regulations (and soon to be another), GDPR and many others. Some have been procedural in nature. Some have had a huge impact on margin, or methods of winning work. The common theme however is that firms always need to be able to react, firstly to remain compliant and secondly to ensure that their businesses are still viable in the new regime.

Employment law is a great example of the rollercoaster ride that businesses can face. For many years, employment law was seen as a key element of any corporate/commercial legal offering, particularly when acting for companies. When the rules changed to allow non-lawyers to deal with employment matters, it was entities such as Citation and Peninsula who reacted quickest, stealing the march on the more traditional law firms and offering companies innovative pricing arrangements and holistic services such as HR. Law firms slowly reacted and learnt from such examples, and began to take back some market share. The next issue followed fast though, with the introduction of Tribunal fees. This led to a huge drop off in claims numbers, and a commensurate drop in the related legal work available. Firms laid staff off and reduced focus on the employment sector. For years the sector dwindled.

Then in July 2017, tribunal fees were abolished in a further twist of regulatory fate. Since then there has been a significant increase in employment law leaving firms facing the new challenge of resourcing the work when there are fewer lawyers available with that specialist knowledge.

The point is, that even in such a turbulent sector there have been entities, some of them law firms, some of them not, who have taken advantage of and responded to regulatory change and have benefited as a result. The key is a combination of agility and market awareness. Looking at it from the other angle, if you are slow moving and not savvy about your market conditions you are in real danger should there be a shift in the rules.

Consider the proliferation of ABS entities. We carry out the cashiering function for a number of businesses which are the law firm arm of a business which previously would pass its work out to a panel of solicitors. If that was your firm on a panel, that work has just disappeared. How will you respond?

What can you do then in this era of continuous change? Here are a few pearls of wisdom from an old man which may help-

  • Stay knowledgeable- keep abreast of regulatory change, as well as other shifts which effect your market, your staff, your clients etc
  • Embrace change- don’t hide your head in the sand. The reaction may have to be a defensive manoeuvre but equally there could be opportunities. What is certain is that staying as you are is not an option.
  • Get expert outside assistance- this could be in the form of a regulatory or compliance specialist, or it could be a business consultant. Using outside agencies may involve initial up front cost, but the benefits should far outweigh that expense
  • Cultivate an agile culture within your business- encourage people to come forward with suggestions and innovations.

This is not an exhaustive list, of course, but if you adopt these approaches then the ever-changing world will be a far less scary and negative place. And in 25 years you’ll be able to pass on your own pearls of wisdom….now excuse me, it’s time for my nap…

Associate News is provided by Legal Futures Associates.
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