Expertise from outside the profession is becoming a vital part of the success of law firms and clients are increasingly dictating the pace of change in the legal services market, a panel of senior non-lawyer industry experts has said.
Speaking at last week’s Legal Futures conference in London, they identified business growth in an improving economy and a failure to heed changing consumer demands as particular danger points for law firms.
The panel included law firm investor and entrepreneur Adrian Fawcett, Eddie Ross, chief executive of QualitySolicitors, George Bull, national chair of Baker Tilly’s professional practices group, and Chris Marston, the chief executive of LawNet.
Debate centred on the contribution made by non-lawyers and the absence so far of a ‘Dyson moment’ in legal services almost three years after alternative business structure (ABS) licences were first granted.
Mr Bull observed that the world of legal services had changed “very dramatically” and warned that management needs were also changing. He explained: “The great financial crisis has reminded us that the skills you need on your board to manage successfully going into a downturn are very different to the skills that you need to manage growth coming out of the downturn.”
Mr Fawcett agreed, saying: “This is a very tough industry compared with some others that I deal with, for two reasons: in a downturn you actually end up being fooled that things are okay for a lot longer than they look, partially because people need your services. Secondly, as you contract you are receiving your revenue from when it was higher – you are being paid for last year’s activity today.
“When you are growing, things are very tough in this marketplace because you need working capital effectively in order to fund the growth. To some extent, the board structure you require and the leadership that you need… [will involve] not just lawyers… but also support around finance [and] organisational management.”
Mr Bull said lawyers were increasingly giving non-lawyers senior roles in the management of their firms. “What I see now among law firms is a far greater preparedness to embrace non-lawyers as equals, because of what they can bring to the firm.”
However, Mr Marston said that among LawNet’s member firms, the picture was mixed. “In our membership there are those who benefit from exemplary leadership from lawyers and firms which benefit from exemplary leadership from non-lawyers.
“I think the key thing is that there is certainly value to be had from non-lawyers being in business. [But] they don’t need to be running the show and are certainly not the only people capable of grasping the need for change.”
Firms ignored clients – who currently displayed confusion about legal services – at their peril, said Mr Ross. “What’s happening in the legal market is an incremental change in the way that people view what they receive in terms of their satisfaction… Once somebody works out how we to provide those services in a way people can understand what they are getting, I think we will be moving towards Dyson territory…”
“In my opinion there is absolutely no doubt that customers are changing, and will change, the market.
Mr Marston agreed: “It’s all about the client experience. It’s clients that will drive change, and lessons must always be taken from other sectors whenever they can be. Adaptations can be made to the business, but clients will determine whether law firms will be successful or not.”
Mr Bull observed that debate about legal services had moved on. “It’s not any more about regulation, external capital or ABSs. I think the driver now is what clients want… the firms that will succeed will be the ones which can respond fastest to identifying client needs and meeting them.”
Mr Fawcett argued that customer service was not discussed enough. “The concern I have in all of this conversation is quality, outcomes, and relative performance for the customer is not the thing that is being talked about in this industry anywhere near enough.
“Usually when you are talking consumer industries, you are expecting the consumer to vote with their feet. I think they are going to do so more and more.”
Mr Ross said QS firms were members of the network in part because they wanted help to evolve. “My message to them is that you are going to have to change the way you work. We are not about, shall we say, helping people to continue to do what they do.”