General business development issues

Is the end of the ‘full service’ law firm nigh?

Quoting from a recently published ‘UK Business Legal Services Market’ report, last week (10 April) the Law Society Gazette (England and Wales) published an interesting article re ‘Demand for business law rising but top-200 go niche as competition intensifies’.

The article reports that:

IRN surveyed the websites of the top 200 law firms to guage how many have created vertical sector teams to advise different industries. Thirteen vertical sectors are listed by over 50 firms, led by real estate (101), financial services and insurance (97), and hospitality, leisure and sport (91). Another 10 sectors reach double figures.

Interestingly going on to state that:

Some vertical sectors are already becoming crowded, the report warns, with the next emergent trend a move to more niche expertise. In health, for example, niche specialties include GPs, independent hospitals and social care.

With the likes of Tim Williams having advocated for a number of years that ‘niche expertise’ is one of the principal ways law firms can survive the future, with the publication and public discussion of this report maybe the time has one again come to ask:

  • what do we mean by the term ‘full service’ law firm?, and
  • is there any negativity moving away from this term.

In response to the first point, personally I have never truly understood what law firms were trying to achieve by claiming to be ‘full service’. Indeed, I’m not sure I can cite a single honest example of a big law firm being ‘full service’ (in Australia, most don’t do Wills & Estates and syndicated bank lending under the same roof).

On the support services side, ‘full service’ always seemed to be something Marketing had come up with in the early 2000s to ensure we had ‘cross selling’ collaboration and were not missing out on any opportunity with the rise of Globalisation.

On the lawyer-side, the term ‘full service’ law firm over the last 20 years seems to have meant that the lawyer could put their hand up to do bankruptcy as well as your latest employment contract (especially when there is little incentive within the firm to refer the work to the ‘true’ expert) – i.e., Jack of all trades, Master of none.

In response to the second point, I believe the article itself clearly answers this question – clients would prefer to deal with subject matter experts.

And therein lies the most interesting twist to this issue today:- it has been the case since I first started out in this business over 20 years ago that if you were considered a ’subject matter expert’, you would do well.

So, taking this all on board my take-out from this post is this:-

moving forward, if you want to be taken seriously, stop promotion your firm as ‘full service’ and start promoting both the firm and its lawyers as the subject matter experts.

Because that’s how we survived the future in the past.

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The Three Noble Horsemen of private practice: ‘Finders, Minders and Grinders’

When I first started working in private practice there what were then commonly known as the Three Noble Horsemen of private practice law firms:- The Finders, The Minders and The Grinders.

The Finders‘ were what we today call ‘rainmakers‘. They went to all the conferences. They were members of the most exclusive golf clubs. They spent hours at some of the finest gyms and clubs. Indeed, there isn’t anywhere they wouldn’t go – often at short notice – if they thought their next big deal was there. On the flip-side, they had also forgotten most of the law they studied at university and hadn’t spent a day on the tools in years.

The Minders‘ were charged with looking after the client once the Finders had brought the client in. They were good lawyers and they had some good/great networking skills, but they weren’t very good at sourcing greenfield opportunities. To that end, they went to conferences and played golf so long as their prized client was at the conference or playing golf that day. Today this group are more commonly known as ‘Client Relationship Partners‘.

The Grinders‘ were academically brilliant lawyers who gave spot on advice. They were the product that the Finders could sell and the bedrock that the Minders could rely on. Mostly introverted and shy however, they neither liked the idea of ‘selling’ themselves nor the thought that they would have to network with clients. The just wanted to be on the tools – lawyers as a profession, not a business.

And, in those days, most firms knew, accepted, and encouraged, that if the firm was going to succeed it needed all of these partner skill-sets. To have Finders without Minders and Grinders was a quick route to failure. As was having Grinders, without Minders and Finders.

They were all interwoven.

Introducing the balance scorecard

And then we introduced the ‘balance scorecard’.

Under the balanced scorecard, in order to maximise your revenue (100 point partner), you needed to be a little of everything – but expert at nothing.

Finders needed to do some minding and, heaven forbid, grinding.

Minders now needed to do some finding and grinding.

And, worst of all, those introverted Grinders now needed to do some finding and minding.

Unsurprisingly, after a short period of time, the Grinders were on their way out. It was just too hard for them to find work and even if they did fluke a new matter, they simply couldn’t keep the client past one or two deals. So, on the basis that “if you cannot beat them, join them” many of the Grinders decided to join the growing ranks of in-house counsel.

More surprisingly, the Finders found themselves in a spot of trouble. They were a heavy cost, and under the new performance structure, they weren’t making any money/profit. Sure they may get the odd referral credit, but they weren’t really doing any of the work and so – in truth – anyone could do what they were doing.

Out of all of them, the Minders were doing the best. But without the Finders to help them find the work and the Grinders to actually do the work, the Minders soon become what we like to call ‘entrepreneurial‘ partners.

And so that is where we are today.

But I do miss the days of the Three Noble Horsemen of private practice:- The Finders, The Minders and The Grinders, and I think any firm looking at its 2025 strategy could do a  lot worse than get a hell of a lot better at its finding and grinding, even if that comes at the cost of some minding.

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Is it time for ‘ARMs’ to replace the ‘RFT’ process?

Last Friday, 2 March 2018, Alex Berry, in the UK’s Legalweek, published ‘The end of panels? Barclays adviser shake-up provides vision of RFP-free client relationship‘.

Berry’s article outlines reaction to Barclays Bank’s announced shift away from the traditional [and largely, IME, procurement-driven] panel review process – in that, by the end of this panel term, in 2021, Barclays will not be re-tendering its panel.

The good news for the current private practice client relationship partner(s) – but probably not the many tender writers out there (including me) – is the news that:

“When the latest panel appointments come to an end in 2021, Barclays will fully move over to the new model, with lengthy panel reviews – and the laborious RFPs they entail – becoming a thing of the past.”

Which, begs the question – “What new model?”

The answer according to Berry is something termed:

‘active relationship management’.

Think about that for a second: ‘active relationship management‘ – then ask yourself: “How that differ from BAU (business as usual) in your firm?”.

Berry’s answer:

‘active relationship management’  – “will give the bank more flexibility to manage the size and composition of the panel, with law firms added and removed from the line-up on an ad hoc basis.”

But hang on a second – ‘Isn’t that what the whole RFT process is?’

Isn’t that what we have been talking about for years, vis-a-vis the whole rationalisation of panels?

It would appear not.

In Barclays Bank’s case:-

“Barclays argues that this model will help it to develop deeper relationships with its long-term advisers, while the bank is also looking to increase its use of alternative fee arrangements and move towards the “redundancy” of the hourly rate.”

Really?

Replacing a legal panel with an ARM structure, with no end term, with the aim of helping the client “develop deeper relationships with its long-term advisers”. I’d second that.

But, “the bank is also looking to increase its use of alternative fee arrangements and move towards the “redundancy” of the hourly rate” – sorry, but wrong platform to have a constructive discussion on this issue.

End result:- likely to be a churn a burn until the next RFT.

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How much do you love your client?

I read an article last week in which Jeffrey Cashdan, a partner at King & Spalding, who represents Coca-Cola, is quoted as saying he had banned all [Coca-Cola] competitor drinks from his home.

Think about that for a second…

…banned all competitor drinks from his home!

That’s a hell of a range. And a hell of a commitment, especially if you have children under the age of 20 running around!

So I started to think:- how many of the products in my home belong to my clients?

And I was pleasantly surprised by the answer – a fair few.

But I was also surprised how many competitor brands were in the house.

So I got to thinking, if we expect loyalty from our clients (whether that’s expertise or brand), how many of us out there are willing to go as far as Jeffrey Cashdan, who would appear to walk the walk when he says:

“I’m all-in for my client,”

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Pitching: ‘Show me don’t tell me’ – is video tendering the future?

Happy New Year to all and welcome to 2018!

One of the more interesting articles I read over the holiday period profiled a Dutch company called Pitchsome.

Heard of them?

Maybe, but I doubt many have.

But they may just end up being a catalyst for of one of the biggest changes to the legal industry in 2018 – namely, how we tender for work in the future.

Under the tagline, “Show, Don’t Tell,” Pitchsome’s business model is a simple one: Show me how your product works in a video and don’t write reams and reams of marketing bluff and expect me to read it in order for me find out what you can do for me/help me fix my problem.

Supporting this business model, the article states that:

Cisco’s Visual Networking Index says video will account for 80 percent of all consumer internet traffic by 2019.

And that got me thinking:

80% of all consumer internet traffic by 2019 will be Visual Networking + pretty much 100% of Government and 70+% of ASX Top100 companies have legal panels in place

so, how long will it be before these government departments/agencies and companies decide to replace the long and tedious word/excel document tender responses with video tenders that ask law firms to:

  • profile key team members,
  • white-board how the law firm can assist the client,
  • evidence how Legal Project Management can be used,
  • visually explain the steps in the pricing,
  • have client referee testimonials,
  • have video of the pro-bono and community activities the firm is involved in, and
  • have other examples of how the value adds being offered are being implemented by other clients in the tender’s industry sector?

Will never happen I’m hearing many in Australia reading this say. “It’s not professional”. “It’s nothing short an advert”, etc., etc.

But I’m left feeling: what, just what, would have happen to the industry if those of us who started down this path in 2008 (and those of you who were involved know exactly what I’m talking about) continued the journey?

It very well may have been disruptive. And that word is a real catchphrase at the moment.

So maybe, just maybe, we will be seeing video tendering by the end of 2019 – and that leaves me asking: what are you doing now to make sure you can met this need?

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Report: What was the top reason for switching law firms in the last 12 months?

The most recent Altman Weil Chief Legal Officer Survey (2017) asked a question close to many business developers heart:

In the last 12 months, have you shifted a portfolio of work worth $50,000 or more from one law firm to another for any of the following reasons?

  • Client service
  • Lower fees
  • Legal expertise
  • Managing matter efficiency
  • Conflicts
  • Our key partner(s) changed firms
  • Size or depth of firm resources
  • Inability to handle our geographic scope
  • Predictable fees
  • Data security reasons
  • Technological sophistication

Wow – there’s a lot in there:-

Innovation. Fixed fees. Cyber-security. Critical mass. Lateral hiring. Globalisation. Legal Project Management (LPM). Legal Process Management. Legal Process Outsourcing (LPO). Conflicts. Subject matter expertise. Industry matter expertise. Being cheap. Being expensive.

But the winner is…

reasons for switching firms

client service.

At the foremost – despite all talk of innovation, fixed fees and New Law, we should never lose sight of the fact that this is a P2P (person to person) industry.

Automate the process for sure, but never forget that the people who seek legal help need to trust that their lawyer cares.

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Is putting profit before culture such a bad thing for law firms?

In 2004, while working at Linklaters, Tony Angel – the then recently appointed Managing Partner of the firm – introduced a new strategic direction that was to become known as ‘Clear Blue Water-– A Vision for Linklaters in 2007‘. Much as was being advocated in Renée Mauborgne and W. Chan Kim’s Blue Ocean Strategy, published around the same time, the intention of Angel’s Clear Blue Water strategy was to create a clear space (as opposed to red oceans) between the firm and it rivals.

For many of us who worked in the firm at the time, this represented a high-water mark. It was made very clear to all that Linklaters was now very much a business: profit trumped culture.

Sure culture was nice to have, but not if it had any material impact on profit.

But was this such a bad thing?

As someone who lived through the 2004-2007 era at Linklaters, I can honestly say “no”.

To be clear, there is little doubt in my mind the firm became more “professional”. Many of the business development, marketing and knowledge management work that had traditionally been done by lawyers was taken off them and given to dedicated teams. The firm introduced key account programs around their top clients. Blue Flag (Linklaters online client portal – that included early use of HotDocs) was a flagship program. Precedents and ClauseBank were core strategic projects.

But importantly, financial analysis was undertaken to determine the difference between revenue and profit and how both revenue and profit could be increased (which didn’t necessarily mean a reduction in costs – for example, the business case behind Blue Flag was the first example of an alternative revenue stream I saw in a law firm).

All of this was then extended to sectors when clients started to say they valued, and appreciated, sector specialists (Linklaters was the first place I worked at that had a virtual practice – The Indian Desk, back in 2005-ish which operated from London, New York, Singapore and Dubai).

Despite – or even because of – an overall strategy to significantly increase profit, large amounts of money were invested in putting in place strategic teams that could help implement and execute on this strategy. Professional KM, marketing and business development people came in to the firm from all walks of life and people who had never worked in professional services firms previously were now doing so.

Importantly, my personal experience was that their voices, counselling and advices were being taken onboard. Sure partners may disagree – and ultimately we all knew that the buck stopped with them, but it was also made clear that they appreciated and valued our input.

Another important aspect of Angel’s Clear Blue Water strategy though was transparency.

Everybody in the firm knew what we were trying to achieve. We knew what was required to get us there (including I might add an absolute understanding that this would involve an incredible amount of hard work). We knew how we were tracking and which parts of the business were struggling to achieve their goals. From my memory (and it was 10 years ago now), this wasn’t done with malice but so that we knew who needed help.

In short, the strategy bred a culture. A culture that many who were not in the firm may have considered elitist, but a culture nonetheless: to be at Linklaters at that time was to know you worked among the best (and if you doubt that, track the CVs of many of the leading BD/Pricing/KM people around the world and see who they worked for during that time).

So why, 10 years after I left, have I decided to bring this all up now?

HSF

The answer to that lies in the decision this week by Herbert Smith Freehills (HSF) to open a second office in Sydney.

This second office will be at 66 Talavera Road, Macquarie Park, while the principal office will remain at 161 Castlereagh Street. It is currently being reported that between 200 and 300 support staff (that may not – for now – include BD people) will be moved to this Macquarie Park office.

To my mind, this move eradicates all pretence of a ‘one firm’ culture having anything to do with the running of this firm. Conversely, it cements the ‘us’ and ‘them’ culture. If you are in Castlereigh Street, you’re ‘in’. And if you are in Macquarie Park, well you’re not! Worse, if you get moved from Castlereigh Street to Macquarie Park, you could consider it a demotion (especially given there will be no train line servicing that office for 10 months in the next year or so!).

But again, as someone who has advocated for the outsourcing of support services in law firms (in much the same way as a number of firms in Asia did post the Asian Financial Crisis) for more than 10 years the question should be: is this such a bad thing?

And my answer to that is “no”.

But my answer comes with an important caveat from someone who has been through similar strategic processes, and that is this: everyone at the firm in now on notice – perform, or you’ll be in Macquarie Park – or even out altogether – before you know it!

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