Monthly Archives: June 2012

Good to know the big boys have to work hard at it too

Clifford Chance want to do more to get closer to clients, creating opportunities to cross-refer business – just like everyone else and they clearly don’t find it easy either.  High on their agenda … with strategic cost reduction too.

There are a lot of blindingly obvious initiaitives that lawyers don’t do in practice and some of the biggest culprits are the more mature partners and the largest firms who can ignore and resist the need to change. So no harm in going back to basics and re-stating the obvious now and then. In fact, there should be a lot more of it.

Courtesy of the Lawyer

Did you know that by promoting a referral culture among your partners, a prized banking client can become an equally valuable corporate client?

Well, that was the message at Clifford Chance’s most recent partner conference in Barcelona. Global managing partner David Childs waxed lyrical about the need to stop partners working in silos and to start leveraging the firm’s banking clients to provide work to other areas (see The Lawyer story), while senior partner Malcolm Sweeting spoke about making the most of the firm’s offices across the globe.

This isn’t the first time this year that Clifford Chance has emphasised utilising resources to maximum effect. The firm appears to be on a bit of a cost-saving drive of late.  In May, The Lawyer reported that the firm was shifting its London corporate team to the same floor of its Canary Wharf building and trialling open-plan for its lawyers.

Allan Carton

James Caan helping Knights to gear up for the future

Interesting to see this happen – not just because of the money, but for the added expertise and objective commercial perspective on the management board.  All part of the trend and good for us (and our clients) as we are seeing more legal practices recognise that working this closely with people like us can help open up new opportunities.  It helps hugely to get the balance of priorities and focus right and to keep the business on track.

DRAGONS’ DEN star James Caan has invested in a North Staffordshire law firm.

The entrepreneur’s private equity company Hamilton Bradshaw has injected an undeclared amount of cash into the Newcastle Under Lyme firm Knights which focuses on corporate, commercial and real estate work.  Caan, who was one of the Dragons on BBC 2’s Dragons’ Den until he quit in 2011, will now sit on the firm’s board.

Knights, which draws much of its business from work outsourced by City firms, claims the deal is the UK’s first private investment into a commercial law firm. The firm says it will use the cash injection to invest in IT and to help to fulfil its ambition of breaking into the top 100 UK firms within three years.  Knights – which has been led by managing partner David Beech since 2011 – was established in1759 and has 23 partners and 150 staff operating from offices in Staffordshire, Cheshire and Gloucestershire.

Caan said: “This is a very exciting business for HB to invest in. HB backs talented management and I am confident David will execute his strategy for growth.  “The legal sector is undergoing significant change and consolidation. Knights is an excellent firm which has proven management and financial backing to scale its business and position itself in the top 100 UK law firms.

“I am very focused on people-based businesses and Knights stood out as a business with a highly talented team.”  Beech said: “We met with several investors to work with us on our future expansion. “What stood out about HB was the fact that they don’t just bring capital, they also bring an incredibly talented team on board who will support our business to achieve its ambition to become a leading regional law firm and cost solution to London.”

Courtesy of  TheBusinessDesk.com

Deal with financial stress before it’s too late

Be honest – you’re worried about your firm’s financial position. You are likely to be managing a small firm of solicitors in the UK. Your firm probably provides a range of different services to clients, which may include some long-tail personal injury or similar work. Your firm is well established in your area and considered solid and dependable.

Like everyone else, your firm has struggled in the current economic climate and had to make cost savings in 2010. And of course you are aware of the current changes to the legal services environment – but the Co-op and Saga seem pretty removed from the world you inhabit (although QualitySolicitors’ recent funding announcement sounds a bit worrying).

So what’s the problem?  One of your partners is quite commercially minded and understands numbers better than the rest. He keeps a handle on the figures every month or so.  There is no senior financial input from within your firm as you can’t afford (and feel you don’t need) a full-time finance director or someone with that level of financial expertise. You have some idea of the overall billing each month  and you know that cash has been tight on occasions (remember two months ago when your drawings had to be deferred by a fortnight so the VAT payment could go out?).

That was a couple of months ago. Things seem to be even tighter now and your senior cashier is becoming more anxious as she tries to balance payments to receipts. What are you doing about those overdue receipts?  You know that your partners should be speaking to clients to resolve these issues, but they are all heads down in their work at the moment, so you’re hoping the clients pay up soon (they won’t).  Thinking about this, you realise there are other symptoms too.  It seems that, for the past couple of months, there has been a big panic whenever significant payments need to be made.

First it was the VAT, then last month … the payroll and the PAYE payments.

Perhaps it’s time to push your drawings payments back so that these other payments can go out first?  There was also the firm’s professional indemnity insurance: you’ve never had a problem borrowing funds for this, to be repaid over ten or 12 months, but this time the lenders insisted on you all providing personal guarantees before they would lend your firm the money. You recall that they weren’t impressed about the lack of detail in your management accounts and the lack of any real cash forecasting at all.

Then there’s your drawings. These haven’t gone up for three years now and you’ve already noted that they are not always paid on time. It never used to be like this. You wonder what the problem is. You simply don’t have the information available to be able to work out that, for example, your business is now simply not profitable enough for you to continue drawing at the level you have been used to.

You reduced overhead and support costs in 2010, but you have not seriously looked at your fee earners yet. It seems that the ‘new normal’ fee income level simply is not as much as it was and keeping the current fee earners fed is proving increasingly difficult.  You could really do with analysingthe true value of everyone, but it’s not easy to know where to start. And it’s probably sensible to take another look at overheads too.

The bank doesn’t seem to be as supportive as it used to be. It’s made it pretty clear that it won’t countenance any increase in your overdraft facility and, at the previous renewal, it even mentioned the possibility of putting in place a formalised reduction in your borrowings.  The next review date is now looming and, to be honest, you haven’t a clue what its stance might be. Ideally you would want to prepare a business summary to support your renewal submission, so you could demonstrate your plans for the business and how you would want the bank to support you. But again you are struggling to get your thoughts together coherently and you are struggling to know how to model the financial implications of your plans.

If any of this sounds a bit like you, you are undoubtedly not on your own. Many medium-sized and small UK law firms are facing similar issues and it is those who recognise the symptoms early and do something about them that will stand the best chance of turning their businesses around quickly and successfully. These firms will take their heads out of the sand and appraise their businesses honestly and openly, because standing still is not an option.

To discuss your finances, call me in confidence and with no obligation on 07766 137759

This article was first published in Managing Partner on 27th March 2012 and is reproduced by kind permission. See www.managingpartner.com