Over the past few years, our research into independent law firms continues to reveal a disrupted and changing legal landscape. An increasing group of innovators, entrepreneurial minded individual lawyers and independent firms, who no longer are content with working conventional hours for conventional firms, are redefining the traditional legal firm model and experiencing growth accordingly.
We spoke to a variety of fee earners and founders of independent firms and asked them about their thoughts on growth, as well as listened to a plethora of client complaints. Here are some of the discussion points and top tips distilled from those conversations.
Tip 1: Understand how you (or your firm) works currently and what you offer - consider asking a third party for impartial assistance.
It is increasingly clear that lawyers and law firms need to be more than purveyors of legal advice. Lawyers cannot just sit back and wait for work. Whilst all firms need to assess mindset, culture and progress, not just independent firms, as our previous research has pointed out, it is crucial for independent firms to find time and space to evaluate, assess and identify niches and core business strengths.
Tip 2: Run your law firm as a business (value added not time taken)
“You won’t attract work unless you’re on the same page as your client” Jonathan Silverman, Commercial Lawyer and Consultant.
Now running Silverman Advisory after decades running his own law firm, Jonathan’s business is helping small law firms with a turnover up to £7m to deal with change. He emphasised heavily that the small law firms have always needed to be close to the front of business practices to keep economic advantages, but few are able to fully step back and analyse how to properly run their business.
Understanding your own place in the marketplace, taking time to stand back and assess your core business and analyse both your strengths and weaknesses is something few firms do, but all would benefit from. Silverman supported a continued move to valuing work - not on time taken but as a value-added proposition, allowing space to build time for client and technology review and analysis into the daily work.
Nick Benson, who founded Ortolan Legal in 2009, and built a “new model” law firm leveraging technology to be able to benefit from the pool of capable and experienced lawyers who wanted to work more flexibly, echoed this. Benson suggests that firms “be open-minded about fee structures; that said, we always ensure there is a sensible balance of risk versus reward where we are agreeing a fee structure which isn’t time based. We’ve never felt the need to offer loss-leaders.”
Tip 3: Be confident in the work (and value) you offer...
“Specialising in niche work is an important mechanism for growth” a fee earner in a small Cornwall based firm told us. In her firm, all staff work part time and remotely and they are clear and confident in their specialties. There is plenty of space in the market place, but it is hard to be a generalist. Silverman referenced the retail industry as a comparable example; Zara is doing well whilst House of Fraser is struggling.
Nick Benson, told us that his firm “decline instructions if we are not going to be able to do a good job or if they involve an area of law in which we don’t specialise. Better to do that than fall flat on our faces and undermine our credibility”.
Remember your value is not just in the transaction and getting the work delivered but in the peace of mind, the indemnity insurance, the protection of a regulated industry and how you explain that value to the client.
Tip 4: Know your client...
The topic of client loyalty comes up time and time again; “client loyalty is a thing of the past” said Silverman, echoed by the fee earner in a small Cornwall firm, who told us “we’re always endeavouring to provide a better quality service for value but it is increasingly difficult to do in a small firm environment”.
It is clear in listening to clients who seek conveyancing, divorce or probate work that they view the provision of legal services in a different way to the past. Today’s clients expect: instant work; no paper communication; to be able to get hold of someone at any time of the day; measuring a successful outcome in terms of lack of stress; speed and efficiency of service, rather than paying for legal work. Whilst these clients think that they are driven by cost, it seems they are actually motivated by service, and firms could do to keep this in mind when assessing the work they offer and to whom.
Tip 5: Create your brand
Adam Morallee, founder of niche independent firm Brandsmiths, emphasised the investment he poured into creating a brand rather than a traditional law firm. Working with start up brands and entrepreneurs in Manchester and London, he recommended that firms “focus on your brand and be clear who potential clients are”, adding that previously it was often an individual person that clients remembered, instructed and recommended, when to create longevity for a firm or business, the brand and with that perceived value to the client is crucial.
Tip 6: Invest in technology
All the lawyers we spoke to were clear that the right, up-to-date, technology was crucial, both in running a successful independent firm and in continuing to keep up with and attract clients. If you slip behind, revenue drops and it is a quick descent to offering a second rate service and then becoming irrelevant.
Silverman recalled how his business had moved away from secretarial support by the end of the 1990s and continued to invest in new technology as new innovations became available; he cited technology as an important area for knowledge and investment to prevent falling behind. Clients want and expect all communication now to be by email and to receive advice in a timely fashion.
Silverman suggested at the very least, document management systems should be properly integrated with accounts, that firms should be capable of remote working, using Microsoft 365, cloud storage and disaster recovery, VOIP calls, online tools/searches and depending on area of the business should be giving real thought to AI advances. He also mentioned clients appreciating lawyers marking up PDFs on their iPad to avoid delays, and reporting matter progress by text message.
Tip 7: Move away from a traditional partnership / profit expectation
Obviously, running a law firm as a business means that money is key; it goes without saying that if you don’t charge, you won’t have a business. “Finances will always be relevant, if you don’t make money, you’ll be finished” Adam Morallee told us, but the traditional partnership model is flawed; it creates a “them and us” culture, where partnership profits are put above the best interests of the business and cracks begin to show...
Whilst profit being a driver is not an issue per se, it’s what you do with it that matters. Nick Benson of Ortolan Legal was clear that “we don’t chase fee income (turnover) for the sake of it. Profitability and growth in profits are the key measure of success. Strong financial management, sensible business practices and good credit/cash controls are all important.”
This is echoed by Morallee, whose own business has profit targets which everyone works towards, but there are no personal targets and annually 10% of firm’s profits are divided between the staff equally, but there are no individual bonuses; if they perform well they get a better salary. Meanwhile, the rest of the profits are invested with a strong focus on technology; they are very mobile centric and Morallee was clear this was the priority rather than a high salary for him.
Nick Benson went on to suggest that firms should not be greedy: “On many occasions we could have charged or asked for higher fees than we do. There’s no need to do that if your pricing allows you to achieve a sensible profit margin. Clients are aware of this and they appreciate it. They also tell people which adds to your credibility when you are referred by them to others.”
Tip 8: Understand your competitors
Traditionally other firms engaged by clients would have been seen as competitors, but this is not necessarily the case. Competition may come from accountants or consultants offering asset or wealth management which subsumes probate work, for example, rather than the firm down the road.
Nick Benson cited collaboration as a tip for growth. “We often find ourselves working alongside other law firms engaged by our clients for other aspects of law we don’t cover. We’ve learnt to become perfectly comfortable with this and I think all firms will see more of it in the future”. Knowledge sharing can also be helpful understanding what technology is available and working for others that might benefit you.
Tip 9: Cost Reduction Running a conventional commercial law firm brings with it considerable overheads.
By stripping away the overheads firms can pass on that cost saving to clients without adversely impacting the service given to them. For the firm in Cornwall, this means all staff are part time. For Ortolan Legal, there is no office; all staff work remotely: “Because we promote agile working, there is no concept of presenteeism. Provided client deadlines are met, our lawyers can choose how and where they work.”