All change please...

If any readers had previously been sceptical of the value of an effective ‘change management’ strategy embedded in their organisations, I’d be very surprised if they needed convincing as we entered the closing chapters of 2008. Far from being another management buzzword or fodder for ever-multiplying meetings, in recent months this piece of the strategic jigsaw has clearly been critical to keeping people – and perhaps even countries – in business.

As politicians and commentators seem to remind us on a more or less daily basis now, the latter half of 2008 has been “extraordinary”; at once making history and – with comparisons to the Great Depression – coming perilously close to revisiting it.

In fact, it occurs to me that change management is possibly a synonym for strategy itself. Most businesses probably see some changes on a weekly – if not daily – basis, regardless of the wider economy. Some of these will be more business-critical than others certainly, but wise companies will ensure helpful procedures and channels are in place.

Of course some changes are also harder to predict – the loss of key personnel for example, or significant changes elsewhere in an industry subtly affecting the competitive landscape. For the potentially devastating effect the former can have, we need only look at the recent demise of Heller Ehrman – a business it took over a century to build up finally disabled by a loss of confidence and inability to find a merger partner.

Amid the chaos and political manoeuvring, one of the issues to keep surfacing throughout this year’s financial crisis has been just this – whether it was, in fact, predictable? And if not, why not? Was the extent of the damage foreseen? Again, why not? Could more have been done sooner, before routine risk management became crisis management? Regulations are now being reviewed in markets across the world, but what was it about the existing frameworks that failed?

2009 will now see the world’s governments, regulators, banks and other businesses embarking on further substantial change management – adapting to a business landscape, yet to emerge, in which calculated risk looks set to be less tolerated as risk management itself rises as a priority. The Solicitors Code of Conduct 2007 made basic business-continuity provisions mandatory for law firms, but to be really prepared a full risk profile should be drawn up, regularly updated as the bigger picture changes.

Meanwhile, whether or not demand for ‘diversity’ did play a part in politics, received wisdom claims November’s election of Barrack Obama as America’s first black President indicates the US was calling for substantial change of some form at the top. Successful succession planning in the run up to his January inauguration will prove critical given the country’s particular vulnerability on entering a period of potentially painful recession.

Now just after the half-year point, financials released by law firms show signs of strain. For many growth figures are significantly flatter than in recent years. Magic-circle giant Linklaters, for example, saw fee income rise just three per cent in the six months to October – £653m, compared to £633m in 2007. At least one firm has postponed quarterly partner payments, and focus will now be firmly on efficient cash management as the year end approaches in 2009. Other firms are observed shifting their practice focuses in terms of sectors and markets, reconsidering where, and even for whom, they will work.

The team here (modestly) hopes to be some small help to those charting their course through these troubled waters until stability returns. Our regular case studies and advice from practices of all sizes and specialisms should continue to see all benefit from sharing how they are preparing for the challenges undoubtedly still in store.

I look forward to discussing these issues with many of you in 2009 – but after what I hope will prove a pleasant, and importantly peaceful, Christmas break.

Richard Brent

Editor

Features

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The economic downturn has prompted some firms to take a critical look, not just at their various costs, but also the clients they will accept work from. As the UK legal market continues to consolidate, segment and specialise, all firms need to consider just what it is they want to be known for.

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How can professional-services networks offer concrete value in today’s hardening climate?

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The financial model for most law firms is vulnerable to changes in the fiscal and economic landscape. It is a model based on solicitors working for their clients but being reluctant to connect their service with the natural right to ask for money in return.

Merging and emerging markets This article is for subscribers only
The successful pairing of LeBoeuf, Lamb, Greene & MacRae LLP and Dewey Ballantine LLP in October 2007 was a landmark merger of the year. Just over a year later, the combined firm’s chairman reflects on the reasoning and ramifications of the decision.

Going for Gulf Free
The oil-rich Middle East has long been identified by the business world as a region ripe with opportunities to be tapped. Construction in the United Arab Emirates continues apace, while sovereign wealth funds show increasing interest in investing in the West. As law firms take the lead from their clients, many are either making the move for the first time or expanding their footprints further.