If ABS’s are the answer, what’s the question?

In his keynote speech at the English Law Society’s conference, Stephen Mayson, Professor of Strategy and Director of the Legal Services Institute, highlighted a number of issues around the introduction of Alternative Business Structures (ABS’s). England is obviously further forward than Scotland, but the issues are the same. He asked: “If ABS’s are the answer, what’s the question?”

The legal profession in Scotland still seems split as to the benefits or not of this legislation, even at its advanced stages of implementation. Mr Mayson’s view:

“If I’m going to lay any fault truly and only at the feet of the legal professions, it is this: they have not been truly businesslike. Most firms have moved some way to be more businesslike, but they haven’t gone far enough, and law firms do not generally regard themselves as truly businesses. Well, there’s a great line in Sir David Clementi’s report, which basically is that if you don’t think you’re in business, it doesn’t really matter because you’ll soon be out of business anyway.

Lawyers are in the business of law. Private schools are in the business of education. Marks & Spencer are in the business of retailing. They all have to supply goods and services which are appealing to their target audience, and which bring in more money than they cost to provide. If this goes wrong, as in the recent Halliwells and St Margaret’s school failures, all the lofty ideals and principles in the world won’t ensure survival.

We all need to attract and retain business from people who understand what we offer and who believe we can match their needs better than anyone else out there. We are all sales and marketing organisations, whether we like it or not.

Stephen Mayson again:

“Where you have an oversupply of lawyers, who expect to earn a lot of money, who expect to progress to a certain level in their businesses, who expect a certain status and the rewards that go with it, and they’re fragmented in small businesses which, around the world, still typically is the case that has to be an inefficient market.

“I don’t really care how it happens, but we have to sort that problem out if we are going to be able to sustain legal services as a healthy, profitable business. If lawyers don’t do it for themselves, Government, or financiers, or other people who look at business differently, will do it in a way that’s going to make lawyers feel uncomfortable. If you want a decent outcome to this question, grab the issues and sort them out for yourselves.”

There is a real opportunity here to take the lead and enhance your law firm. Become a lawyer who can run a business as well as provide great technical advice. I’ve spoken to many law firms who almost always confirm that promotion depends on being a top-billing lawyer. Obviously if you are “top-billing”, you must be providing a service that somebody is willing to pay for. However, I get the impression that, most often, it’s the technical brilliance that is valued within firms, rather than the ability to generate and sustain ongoing business. You might not even be conscious of what it is you are doing, beyond a great technical job, that keeps people coming back. Until that business development competence is understood and developed, there is a chance that external pressures can seriously impact the amount of business coming in, despite your technical brilliance.

It’s actually not difficult to take a step back, and think about the “business of law”. Professionals are guilty of over-complicating it, because they are paid to be clever and analytical.

You need to:

  • decide who your ideal client base is against intelligent criteria (e.g. sector, type of work, profitability and size);
  • market yourself with laser-beam focus to that client base and in a way that demonstrates value to your potential clients;
  • bring into conscious awareness the skills of consultative selling-questioning, listening and building relationships;
  • make sure that when you win a client, they have an amazing experience of your firm (not just good), so that they want to come back to you again;
  • focus efforts on winning and retaining high quality business for your firm-however you define it. If you have clients that don’t fit, “prune” them.

Stephen Mayson again:

“Imagine a local community any relatively well-defined geographical area. If within that area you could put together the best lawyer, the best accountant, the best real estate people, the best wealth advisers, and so on, you could have a very attractive proposition. If such a package were offered by a high street retail brand (and that’s quite likely), an alternative local offering based on well-known, quality professionals could be a perfect antidote to buying a brand. But of course, unless lawyers offer it, they’re not even in the market.

“I think Multi-Disciplinary Practices (MDPs) are going to be a supply-driven change, not demand-driven: the clients probably don’t know what they want until they see it.”

This proposition is a new way of thinking for law firms, it relies on telling people about the offering and why they should want it. It will take time to build credibility in the proposed market place, and firms would have to recognise the following points.

There is a time-lag between business development activities and results.

That time-lag is defined by the clients.

You would have to identify the “so what?” factors for potential clients. What will they get after taking your advice? How quickly will they get better after taking your pill?

Stephen Mayson’s view on alternative providers:

“Most of the resistance offered by lawyers to this development is: ‘There is no doubt, if we let these non-lawyers in, quality will fall.’ As if lawyers are the only arbiters of what good quality legal services look like! Lawyers would have the moral high ground on this if there were no complaints against them. But there are claims in the thousands against lawyers that require an expensive system because law firms won’t deal with complaints themselves.

“There’s a difference between technical quality (getting the law right) and service quality (being available, speaking the client’s language, doing the work quickly, doing it when you say you will, sending a bill that has some connection to their expectation). And other people are pretty good at doing those things: they understand customer service. But it’s also about utility: giving clients advice they can use. Value for money is going to be found in that complete package.

“What we seem to forget is that when brands come in, they are passionate about their reputation: they’re not just going to lose a legal reputation if they get this wrong.”

I have now spoken to some lawyers, and Managing Partners in particular, who are candid about their lack of business acumen, and in particular about how to bring more business in. This is refreshing. It feels like some law firms are now recognising the need to see themselves as being in the business of law. These are the ones that will thrive.

So what can you do:

Change your mind-set to see business and service as good things! Ditch the “they should come to me because I’m an expert” attitude. They may or they may not.

Continue to deliver excellent technical advice that is the minimum you must do.

Look after your current key clients. Do you know who they are? What are you doing to nurture and sustain those relationships?

Stephen Mayson’s final thoughts:

“So what is the question?

“Why are lawyers so slow to change, so slow to take up best business practice and so slow to adopt innovation? And what is it we can do to forestall them from using the professional principles they hold dear (quite rightly) as a justification for resistance?

“The answer is a new regulatory framework. The truth is, lawyers have been rumbled! They’ve had it good for a long time, but they’re not quite performing as they should. And if it takes something from outside to shake them up, then that’s probably what needs to happen.

“I say to the lawyers: think about and seize the opportunities.”

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