A Major North West Initiative

The challenges that lawyers currently face have been created not just by the changes being introduced under the Legal Services Act, but also from the lasting impact of the recession and the continuously changing expectations of clients, who are seen to be increasingly demanding.  But then, we all probably expect more for less these days … because it is often possible.

Inpractice UK is just about to launch a research project (working in partnership with Greater Manchester Chamber of Commerce, Manchester Law Society, the North West Regional office of the Law Society and the North West Development Agency), which aims to help small(er) legal practices with up to 50 people operating within the 10 Greater Manchester Local Authority Areas (for starters).  It will help lawyers who currently feel that the survival of their business is under threat, want to do something about it and see potential to collaborate with other legal practices as a possible way forwards. 

Getting to Grips with the Challenges

The conventional way in which many small firms currently operate, with limited resources and investment that limit innovation cannot be sustained as margins continue to get tighter.

Examples:  Innovation is needed, for example, to make effective use of reliable technology, which is now critical, but not exploited to anything like its full potential.  There is also a need now to be proactive with clients, business partners, referrers and prospects beyond just handling the matter in hand to bring in more business. Clients will increasingly be actively targeted by others like Cooperative Legal Services and direct by Counsel in the future due to fundamental changes in the legal services sector.

Few small firms on their own have the resources to address these issues. 

This project is based on a fundamental reappraisal of what smaller legal practices can do differently to compete. It aims to create workable frameworks for small firms to collaborate (rather than merge or be acquired) to develop successful and competitive businesses that can provide a livelihood for current practitioners who are willing to adapt.

Attitudes towards collaboration within the legal profession have changed in recent years and there is an increasing array of business management options that are more attractive now than even just 2 years ago.  These include innovations in IT,  radical improvements in online communicationsa and increasing acceptance of outsourcing many aspects of any business. 

There are potential obstacles that need to be evaluated and addressed in any proposition that results from this exercise, which could inhibit new initiatives; compliance, the need to protect confidentiality, avoidance of conflicts of interest, professional indemnity, security and the strong desire for independence are all included on that list, so this is quite a challenge.

How can small legal practices respond? 

Small firms cannot on their own afford to invest in the management infrastructure and support available to larger practices.  However, access to these resources is increasingly vital to streamline and fine tune how any practice works.  Many small firms are suffering because they don’t have these resources, so are there ways in which management of supporting resources can be shared to improve each legal business involved?

The project will explore and help to define what lawyers in small firms can do to reorganise the structure of their business to reduce costs and improve perceptions of the value of what they produce; operate differently to be able to survive and compete effectively; manage what transition it is feasible for small firms to make that will enable members to run an independent legal business and to provide a decent living.

We intend that this work will make it easier for lawyers in smaller firms – who have to spend time handling the legal work – to be able to consider all the options available, to make sound plans and decisions in difficult and unfamiliar territory; then to put changes into practice – perhaps getting actively involved with other legal practices to establish the new kind of collaborative business envisaged at the outset of this project.

The Approach

The starting assumption on this project is that there is potential for appropriate groups of small firms to collaborate and share resources as an alternative to merger or being acquired; and that this model can be replicated. The project is designed to how best to make this work.

It is intended to: a) Explore the opportunities that are opening up to enable a smaller legal practice to operate quite differently in the future, involving some practitioners and a variety of parties with an involvement or interest in the legal sector that can potentially contribute to making a collaborative model of this kind work. b) Examine initiatives that are already up and running inside and outside the legal sector, to learn the lessons that can be applied or avoided in the models we propose.  These initiatives include existing law firm and other networks, affiliate groups, virtual practices, ABS’, joint ventures, franchises, incorporates, hosted IT services, outsourced back and front office services and more – all or any of which might have a part to play. Also funding, investment and financial implications of the options; c) Identify realistic, workable new business structure options alongside the benefits and opportunities that a collaborative approach can bring to justify making a change from the conventional operation of a small legal practice; also exploring how this kind of organisation can be structured and managed effectively for the benefit of all involved.

Involvement in the Project

The project team wants solicitors in smaller firms who have an interest in developing a collaborative business model to get involved.  It is an opportunity to provide feedback, test thinking and network with other potential participants in the types of business model that flow from this exercise.

If you want to be involved in this project, please contact any of the following for a confidential discussion: Allan Carton at Inpractice  UK (07779 653105 or at acarton@inpractice.co.uk), Fran Eccles-Bech at Manchester Law Society (on 0161 831 7337 or at fran@manchesterlawsociety.org.uk) or Jo McLeod at the North West Regional office of the Law Society (on 0161 763 6821 or at joanne.mcleod@lawsociety.org.uk).