Law firms face time of unprecedented regulatory change

Law firms face time of unprecedented regulatory change

Alex Holt of The Cashroom and Legal Eye’s Jody Evans discuss the key issues facing the COLPs, COFAs, business owners, partners and directors attending the 2018 Legal Eye conference.

Q: A lot seems to have happened since last year’s Legal Eye conference. What’s the backdrop to this year’s event?

Alex: It’s a time of unprecedented change in the legal market. The reforms that we’ll be looking at in detail at the Legal Eye conference could fundamentally change the ways in which legal services are delivered in any number of ways. However I think it’s fair to say that many firms would prefer to wait and see what happens, and are not necessarily sure how to use the opportunities to their advantage. This means that firms could be losing a competitive advantage through a lack of proactive engagement with the issues at hand.

There are quite clear threats and opportunities arising and it’s important that lawyers and law firm managers look up from the day job and fully appreciate the potential impact that the changing landscape could have on their businesses. Conferences such as this one which The Cashroom is sponsoring, provide the perfect opportunity to take time out of the hectic day-to-day environment and absorb the significance of the massive changes currently taking place in the legal sector.

Jody: I absolutely agree that the possibilities for delivering legal services in different ways are opening up as never before. Firms that have the foresight and imagination to take note and to prepare their businesses to operate in an increasingly competitive marketplace will be the ones that thrive.
The theme of this year’s conference around ‘the weakest link’ highlights that all firms inevitably do have areas of strengths and weaknesses and that the weak link/s will be different for each firm. That could be staff, how technology is being employed, how a firms’ services are marketed or simply a lack of knowledge about what’s happening, the potential impact on the business, and a sufficient understanding of where they may be exposed. We’re looking forward to exploring the complexity of the current legal landscape with our delegates and to hearing pertinent insight and discussion from our speakers and panellists.

Q: Legal Eye is a risk and compliance advisory business. Why have you organised this conference which deals with wider industry issues?

Jody: Our experience of working with a range of law firms over the last decade shows that firms who place a strategic importance on good risk and compliance practices, and who support it with thorough practical processes at every level, and embed a culture of good risk management practice throughout their organisations, inevitably seek a more in-depth understanding of the bigger picture.

The best firms don’t just consider compliance to be a necessary evil but rather understand that continuously assessing the risk environment, how firms can improve efficiencies and drive innovation, can mean the difference between average performance and stellar results.

Alex: The very fact that over 100 busy fee earners, directors and managers are taking a day out of their busy working lives to attend the conference is encouraging. Time pressure, revenue targets and demands of workload mean that it can be hard for practitioners to take time out to attend events such as this.

By embracing the opportunity to listen to peers and experts who are external to their firms, delegates will be able to return to their firms better equipped to take an objective view of the status of the firm at this time and to bring back ideas on what may need to be done in order to address the threats and embrace the opportunities that exist at the moment.

Making a dispassionate examination of the risk position in critical areas such as staff, technology, systems and processes will enable firms to build stronger more robust businesses which are also more efficient and profitable in the long run. Ultimately staff have finite time, energy and money and it’s important to invest it in the right areas where it will have the most impact.

Q:Q: How real is the threat of organisations coming in to the market? ABSs have been around a while and nothing’s really changed so far for most law firms?

Alex: Arguably it’s true that that the current reforms are just a continuation of a trend that we’re already aware of for supermarkets, banks, motor recovery companies, insurers, accountants and others to explore the legal market for commercial opportunities. However these alternative models pan out it’s fair to say that the traditional partnership model, which has its origins way back in time when a few lawyers on Chancery Lane clubbed together to cover the cost of services such as cleaning, is arguably not the most effective model in today’s business environment where an agile approach to managing your business is a necessity in order to cope with the emerging complexity of the industry.

Jody: What has changed is the pace at which the regulatory landscape is changing. We’re writing to our firms on a regular basis – in the last few weeks sometimes several times in a week – with updates about key changes that will impact law firms. There’s just so much happening all the time. Firms need a trusted external expert who can keep abreast of all the changes, and offer advice and support on meeting and implementing the requirements of those changes.

Q: From what you see of your law firm clients, how well do you think lawyers are responding to the challenges that lie ahead?

Jody: Most people seem to be primarily concerned about how they can best represent the value they offer to clients within the framework of the price and transparency requirements which come in to force on 6 December. We’re keen to advise clients how they can avoid a ‘race to the bottom’ which can happen when firms try to compete purely on price. The Legal Eye team has looked in detail at the website of all of the firms attending the conference and produced a bespoke review of their current position and will offer advice on how firms can best meet the requirements – and, importantly, how they can do so in a way which truly demonstrates the value of the service being offered.

Alex: There are most definitely challenges ahead in knowing what practical steps to take to achieve that. However in the light of this week’s research showing that solicitors deal well with prospective clients when doing so in person – but perform decidedly less well over the phone or by email – there’s also a huge opportunity for solicitors to be more open. Those that are willing to adapt and who accept that clients expect a certain level of service will find ways to apply these requirements that actually results in benefits for their firms.

Q: What advice would you have for conference delegates to help them make the most of the day?

Alex: Take the opportunity to talk to people – especially people from organisations that are very different to yours – and to people with different skill sets to yours. It may be that by outsourcing some of your firm’s functions and engaging with experts in areas which may not be at the heart of your firm you could easily access relevant expertise which can save you money, provide reassurance and help you to compete in a crowded marketplace.

Jody: Being external-facing is key. By taking the time to attend this event delegates will get focused on key issues such as really understanding in detail what it is that your clients want from you. Firms that are committed to delivering excellent customer service – and are open minded to using external resources to achieve this – will ultimately succeed.

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