In January, the Law Society published its 64-page report into The Future of Legal Services.
This report covers the macro – globalisation, impact of technology on behaviours and changing buyer behaviours – to the competition that solicitors are facing – from the Bar, DIY and accountants to unregulated providers – and then the opportunities for solicitors.
While it is essential that industry bodies should help their members understand the changing face of any sector and help them through changes that are needed, there is a danger that this all becomes very superficial – and firms don’t actually take the simple steps that they should be doing today and tomorrow, rather than talking about 2020 as the report does.
When you see that the Law Society itself says it can ‘make a real difference’ to law firms and then cites this by ‘upholding professional values and ethics’ and ‘increasing the CPD offering and relevant training’ you start to wonder just how much impact this report will actually make. The detail behind all this is entirely missing.
We have more than 50 law firm clients – typically with up to 100 lawyers per firm. And I know that in every firm there is more profit to be had, today, just from understanding more about where and how the firm is making money and managing some of the internal processes better.
So as most firms are finalising their budgets and business plans for 2016/17, here are my thoughts on the more immediate future for both the Law Society and law firms. And in future blogs I want to look at the medium term impact and then the long term future.
1. Where is the profitability in law firms?
There is a lot of talk about artificial intelligence and the changing nature of law firms and the type of work that lawyers will do. Technology is already making significant changes in the top 30 law firms but for most, not a lot will change in the next few years.
Where there is still enormous potential is for most law firms to drill down into what their management information is telling them and start using this information more effectively. I looked at this in more detail in an earlier blog Which part of your law firm is the most profitable?
For many firms, the biggest potential comes from the costs associated with cash tied up (lockup). And there is also basic profitability review of all work completed. Just how much did it really cost to deliver that particular piece of work?
2. Benchmarking services
The Law Society, in its report, talks about ‘raising awareness of innovative ways of operating that are more effective’.
Getting to the detail, I think what would help law firms is far more benchmarking and sharing of information. We are thinking of doing this from the information we now have from our clients and then helping them to interpret and identify ways to improve.
I would love to know which areas firms would like to benchmark themselves against – whether that is something we can do or for the Law Society.
3. The impact of marketing in law firms
I want to look at marketing in law firms in a future blog and the ways to measure its impact better. This is such a rapidly changing landscape for law firms – particularly with social media now more widespread.
In the end, all firms want to relate marketing to new clients but how valid are measures such as the number of followers, or the level of engagement from blogs or on Twitter?
4. Billing work in progress!
This is very much about the now. Most law firms have their year-end around now – end March or end April.
And from experience, most reporting falls short in terms of making it easy for partners to understand where the firm is at and what can be done now and next year. Data could be more elegant, better presented so it will result in more action.
What action? The most obvious is billing WIP (work in progress). Firms will be taxed on this, so they might as well ensure it is billed and that they actually receive the cash that they are taxed on.
So that is my rather pragmatic list of how I see the future of legal services in terms of most law firms and what they need to do now!
I have already given thoughts on the whole discussion around artificial intelligence and whether it will kill law firms. But there is plenty of technology around that law firms can use now to make them more efficient and profitable that they are not using – surely we need to focus on these opportunities long before we need artificial intelligence?
For the longer term, how do you see the findings in the Law Society report? Is there more that we should be focusing on now?