Adopting recognisable business best practice is essential to realising international growth in legal, says Andy Sparkes.
Commercial pressures of recent years have forced UK law firms to revisit and change their approach to business operation. International expansion has become a priority for many firms – either as a means of survival or as a strategy for growth. According to the latest PwC survey of law firms, 83 per cent of the top 25 firms believe a merger is a likely event by 2016 and with a non-UK based firm. 42 per cent of the top 26-50 firms also think a merger is very likely.
Issues such as optimal pricing, cost reduction, effective utilisation of resources, risk and financial management and regulatory compliance are challenges that firms must tackle as they transform themselves into mainstream, international enterprises. This requires a joined-up capability for law firm management – cross function, department and jurisdiction. Also, one that ties the back-end and front-end, enabling centralised monitoring and measurement of the firm’s vitals – as a by-product of standard day-to-day operation.
No holistic approach
Many firms have a wealth of management information residing in disparate tools that they employ, but the ability to look at the data holistically and leverage it to work smarter is lacking. Good quality business information provides insight that can be used for competitive advantage, resulting in improved client-win rates and profitability. More importantly, it can help enhance client experience through better transparency and delivery of added value to customers.
All this is facilitated by a business management-led approach to operation, a discipline that is the norm in the financial and private equity professional services sectors. It has helped such firms optimise internal and external resources, comply with multiple regulatory regimes and draw out business information for strategic decision making. They have also been able to establish a common methodology to measuring profitability across regional operations.
Forward thinking law firms are beginning to appreciate the rationale for adopting this mainstream industry best practice for business operation. Channel Islands law firm, Collas Crill, is a case in point. The firm has recently deployed an enterprise-grade business management system as the underpinning platform upon which to execute its business strategy for international expansion.
Take the example of pricing of legal services. How can a firm price with certainty if it is not aware of its cost structure? And pricing on an international scale is much trickier – the price must be appropriate for customers across geographies and yet commensurate locally. A firm must consider factors such as typical duration of matters and efficiency of processes. The capability to undertake staffing on an international scale is critical too. Level of personnel, professional qualifications, optimal mix of international/local expertise and geographic location of teams are all essential pricing considerations. This requires access to data on completed comparable work, which in turn feeds into how best to deliver services.
Furthermore, on an international level, talent management has to be a business priority. The capability to identify talent gaps and align staffing requirements with corporate goals is an imperative. It must be integrated alongside all the other firm-wide IT elements.
L:aw fiirms must adapt
The future of law firms centres on their ability to adapt, and be flexible and scalable. Clients’ needs and behaviours are constantly changing. This, coupled with an insecure economic environment, growing regulation and ever-increasing competition; technology presents the best solution for devising innovative ways of working, reducing costs and building a trustworthy reputation.
A robust technology platform that facilitates a structured approach to business based on globally recognised practices while delivering the agility to respond to new market developments is essential. Such firm-wide technology exists, but its adoption requires a leap in mind-set on the part of law firms. However, it is a matter of time. Economic pressures will trump resistance to change, it’s inevitable.