Feature

posted 13 Apr 2006 in Volume 8 Issue 10

The Bar rises to the challenge

Big changes are afoot at the Bar, with implications for the way legal services as a whole develop in the UK.

By Tina Lofthouse

The legal landscape is evolving, and it’s not just law firms that must deal with increased competition and a changing market. The UK Bar must also make huge adjustments to the way it works, with recent reviews of the legal industry, the growing size of some sets, and the changing nature of competition at the Bar forcing chambers to think strategically.

Some chambers are rising to the challenge and, paralleling changes taking place in law firms, are bringing in outside management professionals to drive strategy. They have a hard-nosed business approach and realise that to succeed, investing in areas such as client development, IT and training is crucial.

They see opportunities in the proposals arising from recent government reviews, while they perceive growing market competition as a stimulus to drive better business development.

The results of these changes will have far-reaching implications for how law firms and chambers work together and, ultimately, the way legal services are delivered.

The changing landscape

Chambers are facing an unprecedented number of challenges thrown up by the Carter review, which proposes legal-aid reforms, and the Clementi report, which raises the prospect of legal disciplinary practices and opens up the possibility of legal practices owned by companies outside of the traditional legal industry.

The expected reduction in payments for publicly-funded work, in particular, is a cause for concern. Tom Handley, chambers director for north-west set Exchange Chambers, says such changes will have a huge impact on the revenues of some criminal sets: “We’re a big chambers so there is comfort in that we do lots of different work, but for those who focus purely on crime, I believe their earnings will be reduced by 30 to 40 per cent.” Chambers will have to diversify to offset this reduction in earnings, but there are sure to be some casualties along the way.

Changing working practices, too, are impacting the Bar. Martin Griffiths, former business development director of the recently dissolved 199 Strand, says: “We’ve seen more solicitors pleading and drafting work to themselves. We’ve seen changes in personal-injury work – the courts don’t want it litigated greatly – and it has become very commoditised, so the work providers (the insurance companies, for example) all look at cheaper ways of dealing with the process; solicitors are looking at ways of that. Their business model then has an impact on the work and the money that is available to the Bar.”

To address such challenges, some chambers are looking for inspiration from the corporate world.

Adopting a business model

Hardwicke Building, for instance, has adopted a more corporate business model. Ann Buxton, its chief executive, was appointed in the summer of 2001 and oversaw the de-merger of the chambers into a civil set and a criminal set. She is not from a legal background and came to Hardwicke from the recruitment industry where she was director of marketing.

“Hardwicke recognised that the modern organisation has needs that are not necessarily best filled by someone who has come up through the clerking environment,” says Buxton. “Clerks have a very important role to play and are expert at their craft but it doesn’t necessarily suit them to do human resources, finance, facilities management and marketing, which are all critical to success at the Bar today.”

Recognising that IT has a critical role to play in a modern business, Hardwicke has recently invested in a large IT upgrade to meet client demand: “Our clients are expecting almost 24/7 cover and when a big case is running you have to be accessible. We have far better remote working – we support BlackBerrys, for instance. But this isn’t technology for the sake of it; we’re creating value for the client.”

Client development is also going to become increasingly important in chambers as competition increases. Sets will need ways to differentiate themselves, to offer over and above what their rivals offer, much as any business would. This will lead sets to become more client-focused. “A more corporate approach is needed and senior clerks and chambers directors need to be out there talking to people to see what opportunities there are,” says Handley.

Knowledge sharing for the self-employed?

Another lesson from the business world is in the area of knowledge management, says Griffiths, who, following the demise of 199 Strand, is joining Sherwood PSF Consulting.

Being self-employed, barristers have traditionally resisted knowledge sharing, believing that it will dilute the work they get. Griffiths disagrees – by sharing knowledge, a set becomes known as having expertise in a certain area, making it easier for clients to recognise a set’s capabilities. He also points out that sharing knowledge about clients generally is essential to maximise the work that sets can offer a client as a group.

To be competitive, chambers must also attract and retain the best talent. Although the numbers applying to chambers always outweigh the places available, sets will still have to work hard to ensure they remain an attractive proposition.

Hardwicke Building has recently focused on training initiatives for its barristers and staff. “They’re not critical legal issues but they are helping barristers to be as effective as possible,” says Buxton. She believes inroads are being made generally: “I think that the Bar has become much more alive to the fact that it needs to develop their people once they have arrived.”

But Griffiths sees the problem as lying further down the line: “Initially, there is a good amount of work. It gets harder after ten or so years of court as there is a pyramid in terms of work – there are few £1m cases but a lot of £1,000 cases, for example. It’s difficult –

I don’t know whether there would be a benefit if the Bar had partnerships and we paid salaries.”

Competition or collaboration?

While Griffiths thinks it unlikely that chambers will see much advantage at present in forming outside partnerships, there is the potential for much closer working relationships between solicitors and barristers. Clementi’s support for legal disciplinary practices, in particular, is likely to lead to more barristers going into business with solicitors, but this in itself raises questions. “Why shouldn’t barristers working in law firms be allowed to become partners? Why should they be forced to change their qualification [to become a partner]?” says Griffiths.

Griffiths sees a benefit in combining the very different skill sets of solicitors and barristers. “Barristers and solicitors often think differently. Barristers tend to be thinking of the outcomes in a dry, legal way, whereas solicitors look at how the outcome can affect a client in a commercial way.” One example of such a benefit would be a law firm that has a lot of advocacy work, which they want to keep within the firm. They could do this with a solicitor advocate with higher rights of audience, but Griffiths believes it makes more sense to bring in a barrister with five to ten years’ specific experience.

Handley also agrees that working with solicitors is crucial – but merging the two skills in-house is not the way forward; rather, the two must be kept separate for the sake of independence.

“If you had a legal problem, you’d want your solicitor to go and find the best barrister for your circumstances. If you had a clot on the brain, you wouldn’t want the doctor to refer you to a specialist in cartilage just because they happen to be in the same hospital. If a barrister is in-house you lose that independence and specialism.”

By the same token, Exchange Chambers is loathe to bring solicitors in-house as it doesn’t want to be seen by other solicitors as being in competition with them.

Although Hardwicke Building has piloted a scheme where the Bar works directly with clients, Buxton also doesn’t want barristers and solicitors to be competing against each other. “Since the Bar Council has relaxed the rules on instructing the Bar direct, we’ve dipped our toe into working directly with clients. But I think it is complementing what the solicitors do. I think there are clear cost benefits in some areas.”

Buxton argues that there are types of work where it makes sense for barristers to court client business directly such as intellectual-property matters – it is advice straight from the expert and doesn’t need an intermediary. Buxton adds: “I certainly don’t think it will be a large part of our instructions but I see it as a niche area that will become well established.”

Equally, Buxton doesn’t see solicitors doing their own advocacy as a threat, especially as it has only become apparent in some areas, such as employment work.

“In complicated commercial cases solicitors very much rely on the sorts of skills that the Bar can bring,” she says.

Achieving critical mass

While many chambers may not feel threatened by the advocacy work of law firms, there is a real sense of rivalry within the Bar, especially as the scale and clout of some chambers increases. Buxton sees that trend continuing with competition coming from fewer highly-placed sets and the ‘mega sets’.

The message seems to be survival of the fittest and the biggest. “I would be very nervous indeed if we were 35 to 40 practitioners as I think it is hard to give the service levels to your barristers, your solicitors or client base if you don’t have critical mass,” says Buxton.

Critical mass is an issue that seems to be cropping up continually at the Bar. Griffiths puts one of the reasons for the dissolution of 199 Strand down to a lack of it. And 199 Strand is not the only one to have called time recently.

Some believe that the smaller chambers, in particular, will be hit the hardest, especially those that do publicly-funded work. Handley says that chambers will look to expand and diversify to protect their incomes.

Paul Wilson, who recently joined Olswang from St Philips, believes it is the chambers who occupy the middle ground that will have to work the hardest: “The Bar has been protected from competition for the past 20 to 30 years. For very talented barristers and well-organised chambers, competition is a good thing. For those that sell their services at high value or those that do lots of work at a lower value, it will be easier. Those in the middle who don’t do either will find it tough.”

Virtual chambers

Conversely, rather than chambers merging into large business-oriented organisations, the other extreme is stripping back the bricks and mortar chamber into a ‘virtual’ set, which goes back to supporting the original model of barristers as self-employed individuals.

Clerksroom is such a service, and administers the practices of over 60 barristers. Members work from home – there is no permanent desk; it does not take pupils any more (it was overwhelmed with applications last time); nor does it have committee meetings. There is, however, a London and Taunton base, an online library and the usual clerking services.

The advantages of this may become clear with the proposed reduction in legal-aid fees, which will put the squeeze on how much barristers can or are willing to pay for their overheads. “It will lead barristers to think about how chambers are structured financially and I suspect it will lead to other business models, with barristers saying that they don’t need buildings in the centre of London to operate,” says Griffiths.

This is where chambers will have to ensure they remain an attractive option for the barrister. Griffiths says chambers will need to look at how they integrate people into the organisation and consider what is it about a set that attracts a barrister – namely, competitive overheads, a solid reputation and the opportunity to generate good fees.

Having to prove their worth

Although outside professional management teams are already proving invaluable in areas such as recruitment and training, and developing core strategy, there has still been some cynicism within the Bar as to what they can offer.

Some sets have not hesitated to bring in outside help, whereas others are still testing the water: “The Bar has lagged behind and is starting to play catch up. Chambers are appointing management personnel in various roles and experimenting with the level of power they’re given, from heading up the marketing side to the chief executive role,” says Olswang’s Wilson.

Buxton adds: “There are chambers where there is an administrative manager at the same level of clerks. However, at Hardwicke, I’m head of staff and that includes clerks. I report to the management committee, which is led by the head of chambers.”

She believes that they have a good model, and says she is very much supported by the head of chambers.

Buxton has the influence she needs to carry out her role but also recognises that she is ultimately reporting to the board and they must have the final say on their organisation.

Generally, though, the initial problem has been convincing barristers that outside professional management is good value for money. Says Buxton: “At Hardwicke, they recognised that they didn’t want to be doing the day-to-day management, and that it is poor value for money for them to be doing the technology, marketing, and so on. What has won barristers over is providing these services in a cost-effective manner and demonstrating that it contributes to the growth of an organisation.”

So, what exactly is the appropriate number of barristers to require management from outside? Hardwicke Building currently has 70 practitioners. St Philips decided to appoint a management team when they reached the 80 mark.

“There is a tipping point – I think a set of 20 couldn’t afford more than a senior clerk but when you get up to 60 you would have to start devolving some of the responsibilities,” says Buxton.

Griffiths is quick to point out there is no one answer – that although every set needs a management team, the nature of people in that team will vary depending on the culture of the set and people available. In some chambers you might have a long-standing senior clerk who is in all but name the chief executive – you don’t need to bring in outside manager; for other chambers, an outside chief executive would be more appropriate.

More important is that chambers recognise the need for change: “The challenge is being at least up to speed with what is proposed and the ‘what ifs?’.

The Bar has to look at what threats are coming and what opportunities exist to do things differently – no one can afford to bury their head in the sand,” says Griffiths.

The future lies in treating a chamber as a business and learning what the corporate model can offer. Buxton concludes: “There is now recognition that these organisations are actually businesses and business skills are being applied to them. Like in business, no organisation succeeds by accident. It requires a great deal of planning, implementation and teamwork.”