denotes premium content | Sep 5 2008 Managing Partner archive
Volume 8 Issue 2
Financial management for law firms
Today’s news has been full of the salutary tale of the senior associate at Baker & McKenzie who tried to get his secretary to pay the £4 dry-cleaning bill for his ketchup-stained trousers. She decided to respond by e-mail, sarcastically suggesting that as a senior associate, he clearly needed the money more than she did as a mere secretary. She also included the whole third floor of the firm in her response, which consequently led to the e-mail appearing in in-boxes all over the world.
Amusing though this story may be, it has serious implications. I had been under the impression that law firms were working hard to engender team work and respect among lawyers and support staff, where lawyers and non-lawyers work happily alongside one another, with the joint purpose of making a more profitable business.
On the contrary, the internal conflict underlined by the reporting of this story suggests that law firms are far from enjoying harmonious cultures (unless, of course, a love for financial management has just gone way too far). With lawyers unlikely to ever have a great passion for figures, I am weighting my opinion on the former and will assume from henceforth that there are at least pockets of tension in law-firm teams against which, profitable progress will fall short.
There is some good news though. Financial management does indeed seem to have taken centre stage as firms increasingly move from a partnership to corporate culture and, with it, more business-centric management structures. As part of that, partners have agreed to give up certain privileges, allowing management to get on with decision making without having to constantly consult with ever-growing numbers of partners. That has also meant that finance directors and managing partners have more power than ever before to revolutionise the financial-management process, overhauling internal efficiencies and creating a firm-wide accountability that drives businesses to produce better results. And from all the evidence, it seems that management is doing just that. In the roundtable (page 10), financial directors and managing partners describe their financial strategies, revealing comprehensive tactics for improving profitability, from budgeting and forecasting to partner remuneration and client development. Most of all, however, their approaches to financial management demonstrate the extent to which legal businesses are being transformed.
Significant though these steps might be, firms may still not be quite ready for the overhaul that the Clementi reforms promise, especially if firms are still plagued by cultural throwbacks to a profession of a by-gone era. As Stephen Mayson argues in his article (page 14), implementation may not impact firms until 2008 or later, but firms have to prepare now for the changes that Clementi’s findings will create. In particular, the DCA’s response to the Clementi Review is to envisage a legal profession where the consumer is put first. To describe a law-firm client as a consumer is the most simple but startling demonstration of just how far the legal business may alter in future years. In this brave new world that Sacha Romanovitch and Roger Zair also describe in this month’s thought leader, let’s just hope that change keeps the good, gets rid of the bad and provides a spirit of inovation from which both lawyers and their clients can truly prosper.
Caroline Poynton
Editor
Features
From laggard to leader? How the legal sector is finally embracing KM
The legal profession stands accused of being slow in its adoption of knowledge management practices, a particularly damning charge considering its reliance on expert knowledge and know-how. But is the industry as behind as people say it is? By Sandra Higgison
Thought leader
Following the Lord Chancellor’s announcement of government support for Sir David Clementi’s proposals, and his promise that parliamentary time will be made available for legislation on legal services, now is a good time to revisit some scenarios for this brave new world for law firms.
Fantastic finance: Assessing law’s new love of financial management
Financial management was never a subject to excite lawyers, with the thought of budgets and figures sending many a law-firm partner running for cover. But, with consolidation and growth, things have changed, including law firms’ approach to this crucial area. Caroline Poynton talks to Kay-Uwe Bartels (Mayer, Brown, Rowe & Maw LLP), Maynard Burton (mfg solicitors), Jim Cummings (Pilgrim), David Furst (Horwath Clark Whitehill LLP), Rosemary Kind (Shoosmiths), Duncan Murray (Morton Fraser) and Patrick Synnott (Matheson Ormsby Prentice) about their views and strategies for financial-management success.
Peak performance: DMH Stallard’s strategy for financial success
DMH Stallard has enjoyed some impressive financial results in recent times, with significant growth paralleled by profit hikes. Managing partner Tim Aspinall assesses the firm’s approach to financial management and cultural change, explaining the strategies used to drive better performance.
The procurement paradox: The role for procurement professionals in law firms
Just when you thought general counsel were getting into bed with their procurement-director colleagues, some law firms have embraced the concept themselves, recruiting either full-time senior procurement managers or bringing them in on an interim basis. Simon Slater, managing director at First Counsel Consulting, reports on what is likely to prove a growing trend.
Limiting loss: Managing the insolvency of an LLP
In the April issue of Managing Partner, Peter Ashford touched on some of the dangers of converting to limited-liability partnership as a risk-management strategy. In this issue, Fergus Payne, partner and joint head of partnerships and LLPs group at Lewis Silkin, tackles the issue head on, with an examination of what happens when an LLP gets into financial difficulties. For all those firms that have or will convert, it makes essential reading.
Strategies for success: A practical guide to strategic-client-service planning
For all the talk of improving internal efficiencies and financial procedures, nothing matters to a firm more than servicing its clients well. And where so many firms can now compete favourably on technical expertise, differentiation comes down to delivering a service that does not just meet, but exceeds a client’s expectations. With this in mind, Byron Sabol, CEO of Sabol International, provides a workshop on strategic-client-service planning, guiding firms through the steps needed to make a real success of this key area.
