Feature

posted 7 Sep 2006 in Volume 9 Issue 4

Small but perfectly formed

High street law firms have faced a particularly tough market in recent years, but as the experience at Robinsons demonstrates, revising business objectives and implementing change may be key to success in difficult times. By Neil Barnes, managing partner, Robinsons Solicitors

It is a common mistake to assume businesses that have enjoyed a strong market position in the past will continue to enjoy similar success in the future. In recent years, we have witnessed the spectacular collapse of some of the UK’s best known companies; Queensway, C&A and more recently Alders are just a handful of companies that have vanished from the high street, largely due to changing market conditions. The legal profession is no exception and a growing number of traditional high-street law firms are finding themselves facing an uncertain future.

Today’s fast-paced business climate, coupled with the well documented changes currently facing the profession, has forced more firms than ever before to reconsider their position. While some have evolved rapidly, others have either consolidated through mergers or simply disappeared. Creating an environment geared towards embracing change can help to foster an effective business culture, and for some law firms this has resulted in a dramatic transformation of the business.

Why change?

Amid the day-to-day pressures of running a law firm, it can be easy to forget that it is first and foremost a business. By drawing a parallel between the legal profession and the retail sector it is easy to see that while companies such as supermarkets are continually reinventing themselves, the legal profession as a whole has remained largely static.

Although it is perhaps fair to say that clients may not necessarily visit a solicitor as often as they may shop at a supermarket, law firms need to recognise that clients have many options when it comes to choosing a solicitor. They are not confined to the high-street firm in their local town, but can shop around to find a firm that suits their needs. Understanding the market and recognising opportunities to attract clients to use the legal services offered by your firm, rather than those of a competitor, can play a key role in the success of the business.

For any firm considering change, it is important to clarify the reasons for doing so. Understanding the ethos and objectives of the business can help to identify what action, if any, is needed to strengthen the firm’s position in the current marketplace. The first step is to consider every aspect of the functioning of the firm as a business; of each element, the question should be asked: ‘Is this being carried out in a particular way simply because it has always been done like that?’ If so, then it should be considered whether that is indeed the best way of operating, or at least the most appropriate way for the firm. If not, then it should be changed to a method fully approved by the current partnership. From this exercise, the underlying culture or ethos of the practice will emerge.

Through background research, such as understanding competitors, identifying potential threats to the market as well as asking clients for their views, it is possible not only to establish the firm’s current position, but also to identify any required course of action.

Many factors can contribute to the running and management of an effective business. Creating an infrastructure designed to embrace rather than reject change can often give smaller, leaner high-street practices a considerable market advantage over their larger, corporate counterparts. The business objectives of a law firm, like any other type of organisation, cannot be set in stone and should not be regarded as such.

Although the profit margin of a firm can provide an indication of the performance of the business, a firm’s success should not be purely based on the firm’s end-of-year results. The firm’s ability to attract and retain staff, morale within the practice and even the number of sick days taken by each employee or partner can all provide an insight into the effectiveness of the business.

By identifying and addressing these issues, some firms have recognised that harnessing the enthusiasm and determination that originally inspired its employees to enter the legal profession can play a significant role in the growth and development of the business. Creating a positive working environment, and encouraging individuals working at all levels within the business, can help to create a greater sense of openness, camaraderie and success.

Role of the partnership

The role played by partners when it comes to overseeing change is a critical one. If all partners share a common, or at least similar, vision of the future of the firm, then implementing change can be a relatively straightforward process. However, it should not be assumed that every partner shares similar ambitions and aspirations. Even in a relatively small partnership, it is highly likely that each partner has a different view of how the business should be managed and developed.

Historically, appointment of partners was based on little more than the number of years in service. This could often result in dysfunctional partnerships, lacking the vital management skills to help achieve success. Thankfully, this trend has rapidly declined and today most partners are appointed not only for their ability to handle legal matters, but also because they possess the drive and motivation to own and manage their own business, which happens to be a law firm.

Understanding the position of the firm, and the challenges it is likely to face, is a responsibility that should be shared among the partners. Having a team of individuals, equally motivated and determined to make the business succeed can help to ensure that any changes undertaken by the practice take place effectively.

Role of the managing partner

Running a law firm requires a different set of skills to simply performing the duties of a solicitor. The managing partner is responsible for extrapolating the vision shared by each partner and using this to form the essence of the firm’s business strategy. This can help to encourage proactivity when it comes to agreeing direction for the business, as well as fostering a culture of sharing ideas.

Typically, the managing partner enjoys a unique position. He or she benefits from a ‘helicopter view’ of the practice, and from this position should be able to harness the views of the partners and translate them into quantifiable business objectives. It can be easy, however, for the managing partner to fall into the trap of dictating rather than debating the future of the business.

Failing to consult the partnership over decisions likely to have an impact upon the work undertaken by the business can create tension in the partnership, as well as preventing the full potential of the business from being realised. If a managing partner debates a particular course of action with the partnership, but then opts to go in a completely different direction, not only is this likely to cause resentment, but it can also mean that partners are likely to take passive roles on future management decisions.

Although managing partners have an influential role when it comes to formulating the business strategy, they should not be regarded as the sole decision makers in the firm, but as the person responsible for giving focus to the views of the partnership.

For some, particularly in small and medium-sized firms where resources are limited, the position of managing partner is regarded as a poisoned chalice, especially when the individual is forced to balance the day-to-day responsibilities of providing direction, practice management and fee earning. Each partner should be encouraged to take an active interest in the management of the firm by having a specific area of responsibility within the practice, for which he or she has a particular aptitude.

Responding to the market

A recent trend in the profession has seen the creation of specialist firms dealing in only one discipline, for example, personal injury, conveyancing, crime or divorce.

Simply because the market moves in one way, this should not mean that a firm should automatically respond by adopting a similar route. It is worth considering the potential implications for the business, and taking time to debate the pros and cons of a particular course of action within the partnership. After all, different firms do, and should, have differing priorities: it can be easy to get drawn into simply reacting to the actions of rival businesses – in effect, following the pack.

Some firms have turned to the business world for inspiration. The appointment of chief executives
without a formal legal background can offer an alternative perspective, and for some, this has proved to be an effective way of challenging the historical way in which a firm deals with its own management.

Although this can be beneficial in terms of presenting new concepts to the business, in my view, it is essential that the overriding direction of the firm is led by the partnership itself. Not only does a solicitor/partner possess a working knowledge and understanding of the profession, they are also aware of the issues likely to impact upon the business.

Balancing the workload

For managing partners, clear distinctions must be drawn between the often competing priorities of handling client matters, managing the practice and administering the firm. Effective management can result in a successful practice, but only if the workload is shared.

It is easy to confuse managing the practice with practice administration, and it is one of the biggest mistakes partners can make. Delegating the day-to-day running of the firm to an experienced practice manager, or alternatively, if the firm has limited resources, to an able employee, can help to ensure that the practice runs effectively.

Many practice-management issues do not require the input of partners, for example, day-to-day dealing with office supplies, property and even some personnel issues. Creating an infrastructure that enables the practice manager, or equivalent, to perform administrative duties associated with the running of the business can help to clarify the roles and responsibilities of the partners themselves, to whom they are of
course accountable.

However, accountability should not simply be to the partnership, as this can result in the practice manager having several bosses, each with different views and requirements. Creating a single point of contact – usually the managing partner or an executive committee – can enable the partners to devote their time and resources to dealing with legal and management matters, and allow the practice manager to administrate.

Creating an executive committee is a popular way of managing the day-to-day operational responsibilities of the business. It is usually directly accountable to the partners. Unlike regular partnership meetings, which consider the future direction of the business, the executive committee is responsible for implementing policy decisions determined by the partners, helping to make the process effective and practical.

The experience at Robinsons

We recognised that in order to remain competitive in the strong legal market of the East Midlands, the firm needed to reinvent, or rather rediscover, its identity. For Robinsons, the opportunity to achieve this was created when our former senior partner of many years’ standing announced his retirement earlier than expected. Although the firm was performing reasonably well, it provided us with a golden opportunity to revitalise the 100-year-old business and question the direction of the firm.

Historically, the senior partner was regarded as the figurehead of the practice. With no natural successor, however, the merits of retaining this position were questioned by the partnership. At this time, all management decisions relating to the direction of the firm were undertaken by a committee comprising several partners and the practice manager.

We recognised that the high number of individuals involved with the committee were encouraged to operate as little more than an extension to the monthly partner meetings. From experience we found that it was not a particularly effective way of running the practice, especially considering that for many of the day-to-day matters, decisions rather than debates were required.

The committee was streamlined to provide a more effective way of dealing with the day-to-day operational matters of running the practice. Comprising the managing partner and practice manager, weekly progress meetings were created, with the executive committee reporting directly to the partnership on a monthly basis. As part of the restructure, the practice manager effectively became responsible for overseeing the day-to-day administration of the practice, and was directly accountable to me as managing partner, rather than to the partnership itself.

With many of the day-to-day responsibilities allocated to the practice manager and managing partner, each partner is able to devote more time to running the individual departments, as well as freeing up additional time to deal with specific aspects of practice development.

Restructuring the roles and responsibilities of each partner enabled the monthly partners meeting to fulfil the purpose for which it was originally intended – to determine the direction, strategy and progress of the business. By implementing an effective management structure, the firm has been able to take best advantage of the business opportunities that have arisen. Historically, Robinsons operated from three offices. Two of the offices were based in the Derbyshire towns of Heanor and Ilkeston; an office devoted to commercial work was also established in Derby.

One of the first decisions made by the new business was to merge the Heanor and Ilkeston offices. Despite their close proximity, traditionally the two communities had remained somewhat insular. A changing environment, however, meant the practice was able to adjust its business structure accordingly.

Initially, all commercial work emanating from Heanor was switched to Ilkeston, with Heanor used to service ‘retail’-type work. After a couple of years, the two offices merged and Heanor closed.

The result of the closure enabled the firm to enjoy considerable growth within its Ilkeston office. Once the commercial and private-client divisions of the two offices merged, it created larger departments and a larger client base, enabling the firm to enjoy steady expansion.

When an opportunity arose to acquire new premises at St James Court, Derby, we were able to increase the firm’s presence within the East Midlands, using the relocation as a catalyst for further development of the business.

A proactive approach

It is worth noting that over the past decade Robinsons has not been alone in recognising that to achieve success it needed to question and revise its business objectives. For those firms that have responded to the changing market, the rewards have been significant and satisfying. The legal profession as a whole has a reputation for resisting, rather than embracing, change. Creating a dynamic within the partnership that encourages a proactive approach towards identifying opportunities as they arise can be critical to a firm’s success, and it can be highly beneficial to ensure the specific direction of the business reflects a shared culture and vision understood not just by the partners, but by all members of staff.

Neil Barnes is managing partner at Robinsons Solicitors. He can be contacted on 01159 324 101.