Thursday 12 April 2012
Wednesday 11 April 2012
Lunatics running the asylum
During the 2010 FIFA World Cup, The French National Team, made up of some of the finest footballing talent in the world, many of whom had been world cup winners in 2000, crashed out of the competition in a spectacular act of self destruction.
Some claim that the (astrologically obsessed) Raymond Domenach, Team Coach, had "lost the respect of the dressing room". Others claim that all the team decisions were being made by a cabal of senior players. The quote that best summed it up came from one of the junior members of the coaching staff, who said that "the lunatics were running the asylum".
Recently, I heard the exact same phrase used by a partner (former partner, to be fair) of a large firm spiralling towards oblivion - "the lunatics were running the asylum".
Domenach's team had some of the most talented individuals in world football - the problem was that they were neither a team nor where they Domenach's.
Partnership is, itself, a strange beast. The concept of the professional partnership was formed back in the annuls of history, when small numbers of like minded professionals sought to co-operate to advance their mutual interests.
Going back to my football analogy, a bit like a group of friends or colleague, all of who want to play football, setting up a local team. The formation of the team creates a body to which they may belong.
The model of partnership fostered a collegiate atmosphere with equity aforethought. Partnership worked as the number of constituents was small, their shared a common endeavour and were happy to be both individuals but equal.
Local team, jumpers for goalposts, playing for the joy of playing.
Even today, small or niche firms or local teams exist perfectly happily within this model. Co-operating to advance a mutual interest.
Whilst Domenach's team still only had 11 players on the pitch at anyone time, it's stakeholder constituency is exponentially larger than that of a local team. Supporters, government, sponsors and a whole football federation all had expectations, investments and were answerable to.
Unlike the local team, Domenach's squad we're more transient members of the team - coming in and out though performance or, often, their own wont. There was no longer a nucleus of shared interest. Players competed not just for places but for profile. Without a nucleus, a team needs leadership. Management with a clear and well communicated objective which put the team ahead of any one individual. Such as Alex Ferguson at Manchester United - no player, no matter how good, no matter how big their profile, comes ahead of the team or the club.
Otherwise, behaviours become less social, individuals compete for dominance within the team rather than for the team.
This also happens at some larger law firms. Top legal/client relationship talent has a premium and is transient. The mutual co-operation becomes less important but the owner/manager/player nature of partnership not only protects those who exhibit bad behaviours but, in some cases encourage it. The way in which profits are distributed can encourage individual advancement over the firm progress. Two excellent pieces this week by TheNakedLawyer and The Law Society Gazette demonstrate how this can manifest itself.
So how forward? We, you could become a full corporate, crystallise ownership and separate ownership and management. However, does this really still foster Individual creativity that a partnership encouraged? Some, at organisations that have undergone the change, would argue that it doesn't. Creativity gets lost in process and layers of governance.
The Big 4 Professional Services businesses are still partnerships. They encourage and foster individuals to advance and innovate. However, when I asked a Big4 partner how it worked he responded "The only time I really get to exercise my power is when I vote for the new managing partner. Once elected he is the boss". Clear leadership, providing direction.
Recently, at the Young Vic, Michael Sheen played Hamlet. It was set within an asylum. Characters being patients, staff or doctors. The patients took over - it didn't end well.
Each organisation has to find its own structure but to survive needs clear leadership. If not then we may have "...variable service, two dishes, but to one table: that's the end" (Hamlet IV ii)
Tuesday 10 April 2012
The illusion of competition...
This blog is deliberately provocative. I am not suggesting that law firms use "slight of hand" but seek to draw on an analogy that a lack of buyer control that comes from not focussing on what should drive buying decisions:
_________________________________________________________________________
Cry of the Market Seller:
"Oranges, £2 per pound".
I can inspect the oranges and compare the price offered with that of the stall down the road.
Cry of the Fairground Worker:
"Roll up, roll up. Ladies and gentlemen, a fair and open contest for those eagle eyed amongst you. Three cards turned over, which one is the lady?"
They all look the same. There is no transparency. We try to follow the dealers hand, but he always manages to fool. Why? His trick relies on the similarity of what we are comparing and his ability to manipulate our lack of focus.
In a market, the consumer is in control. In a fairground, the consumer is prey to other influences and chance.
Law firms, essentially, all look the same - partnerships, charging for time and materials. The model offers little in the way of transparency and the buyer always bears the cost of reinventing solutions or over engineering.
You can negotiate the hourly rate but not so the number of hours or seniority of resource that may be used. Leaving aside certain well commoditised retail offerings (conveyancing, for example), fixed price is never fixed price - based always, essentially, on a guesstimate of time and materials.
In fact, as hard as you negotiate rates - the total spend year on year goes up.
Law firms have thrived on the similarity of models, the lack of real transparency, and the lack of focus of the buyer on value.
Proof of this is that, even today, some firms are able to leverage super-profits (top 10 law firms margins are between 30-50%) that their customers can only dream of.
A natural oligopoly has been allowed to develop. Whilst there are over 15,000 law firms in the UK, there is only the "illusion of competition" - there is a limit to what the current model can deliver in terms of market led price pressure.
Let's compare this to the airline industry. Let's imagine I need to get from London to Edinburgh by tomorrow noon. According to facelesstravelagent.co.uk, I can fly with UKBRUMMYInternational or Das Germaner for £158 or £177, respectively. If I fly cheesyJet, I am initially intrigued by a fare of £92 but with "extras", included in the other fares, I pay £162. The mean of the other two.
Professional services are, of course, a more complex model and with ABSs on their way, the challenge for buyers of legal services will be how they compare what "legal value" they get for every £1 spent on "legal cost" across a multitude of models, offering the same thing.
Legal value may be risk mitigated, contract rights protected or the operational effectiveness of a project. It will change for and be pertinent to each buyer. However, in true economic terms "value" can be measured.
Buyers who learn to compare these measurements will shatter the "illusion" and enjoy a transparent market where they can assess value and make informed buying decisions.
So, in the future, where would you prefer to buy your legal services. In a market or in a fairground?
_________________________________________________________________________
Cry of the Market Seller:
"Oranges, £2 per pound".
I can inspect the oranges and compare the price offered with that of the stall down the road.
Cry of the Fairground Worker:
"Roll up, roll up. Ladies and gentlemen, a fair and open contest for those eagle eyed amongst you. Three cards turned over, which one is the lady?"
They all look the same. There is no transparency. We try to follow the dealers hand, but he always manages to fool. Why? His trick relies on the similarity of what we are comparing and his ability to manipulate our lack of focus.
In a market, the consumer is in control. In a fairground, the consumer is prey to other influences and chance.
Law firms, essentially, all look the same - partnerships, charging for time and materials. The model offers little in the way of transparency and the buyer always bears the cost of reinventing solutions or over engineering.
You can negotiate the hourly rate but not so the number of hours or seniority of resource that may be used. Leaving aside certain well commoditised retail offerings (conveyancing, for example), fixed price is never fixed price - based always, essentially, on a guesstimate of time and materials.
In fact, as hard as you negotiate rates - the total spend year on year goes up.
Law firms have thrived on the similarity of models, the lack of real transparency, and the lack of focus of the buyer on value.
Proof of this is that, even today, some firms are able to leverage super-profits (top 10 law firms margins are between 30-50%) that their customers can only dream of.
A natural oligopoly has been allowed to develop. Whilst there are over 15,000 law firms in the UK, there is only the "illusion of competition" - there is a limit to what the current model can deliver in terms of market led price pressure.
Let's compare this to the airline industry. Let's imagine I need to get from London to Edinburgh by tomorrow noon. According to facelesstravelagent.co.uk, I can fly with UKBRUMMYInternational or Das Germaner for £158 or £177, respectively. If I fly cheesyJet, I am initially intrigued by a fare of £92 but with "extras", included in the other fares, I pay £162. The mean of the other two.
Professional services are, of course, a more complex model and with ABSs on their way, the challenge for buyers of legal services will be how they compare what "legal value" they get for every £1 spent on "legal cost" across a multitude of models, offering the same thing.
Legal value may be risk mitigated, contract rights protected or the operational effectiveness of a project. It will change for and be pertinent to each buyer. However, in true economic terms "value" can be measured.
Buyers who learn to compare these measurements will shatter the "illusion" and enjoy a transparent market where they can assess value and make informed buying decisions.
So, in the future, where would you prefer to buy your legal services. In a market or in a fairground?
Monday 9 April 2012
Reasons to be Cheerful, Part 2
"Some of Buddy Holly, the working folly, Good Golly Miss Molly and boats, Hammersmith Palais, the Bolshoi Ballet, Jump back in the alley, add nanny goats"
Reasons to be Cheerful, Part 3 - Ian Dury and the Blockheads
Last week, I wrote a blog entitled 'In the pursuit of "happiness"...', inspired by the socia-economic measurement of 'well-being', first dreamt up by King Wangchuck of Bhutan in 1972, as the start of a number of further blogs which would look at alternative ways of 'assessing value' of legal services.
This blog had a bigger reaction that any of my others. Further reading this weekend and reflecting on one of my favourite songs of all time (as above) has inspired me to write a follow up.
Before I get to this, let's remember that 'cost' and 'value' are not the same things, at all. I could give you countless arguments put forward by Smith, Marx or Ruskin. I think Oscar Wilde says it plainest when he describes a cynic as a man who "knows the price of everything and the value of nothing".
I did, try to, make it clear in that blog that I was talking really about measuring 'client satisfaction' as a metric to assess value rather than happiness. Yet nonetheless, some cynical elements of the legal profession kindly informed me:
> "If clients have paid on an hourly rate until now, why should we change";
> "Some clients will never be happy"; or, my absolute favourite,
> "It is not a lawyer's job to make his client happy".
I have just read a fantastic report this weekend, prepared by CXINLAW. As the foreword by Professor Stephen Mayson explains, this is not another attempt to bash lawyers but a well researched and presented report, the overriding message of which is that lawyers should not "...give up on the content or quality of advice but (should) work much harder on the 'customer experience'.
Too often the rebuttal of the cynical lawyer to change, is that those calling for it are looking to 'dumb down quality'. Mayson's foreword speaks for all of us seeking genuine change: retain quality and ethics (in my view the qualified professional's USP) but compete on the experience of your customer.
Carl White, one of the report's authors, when asked what he hoped the report would achieve, replied rather modestly, but quite validly, "to add the phrase 'customer experience' to the lawyer's lexicon". Not an inconsiderable aim.
I repeat, satisfaction/happiness is just one metric which may be used to supplement or, even, replace measurement of value by hourly rates. But can it really be measured?
Yes, according to an increasing number of economists. Last week, a blog published on The Economist website, entitled "No longer the dismal science?" looked at the growth of the 'Happiness Industry' and a number of works, including a UN commissioned report. The blog's conclusion is that "it is not clear whether it really would be such a good idea for the government to decide it knows better than individuals do what constitutes their happiness".
In macro-economic terms, this is probably a very valid point.
In the micro-economic environs of a lawyer and their customer - not so. CXINLAW's report is a good start, we need more reports like this. We also need consumers to drive this behaviour, to stop the cynicism of price comparison and look to value.
Rather than quoting Jerry Maguire (a sports lawyer/agent, I think) asking to be shown the money, they should, perhaps, take a leaf from another branch of the law (crime fiction, in this case) and ask their lawyer to "Make my day".
Reasons to be Cheerful, Part 3 - Ian Dury and the Blockheads
Last week, I wrote a blog entitled 'In the pursuit of "happiness"...', inspired by the socia-economic measurement of 'well-being', first dreamt up by King Wangchuck of Bhutan in 1972, as the start of a number of further blogs which would look at alternative ways of 'assessing value' of legal services.
This blog had a bigger reaction that any of my others. Further reading this weekend and reflecting on one of my favourite songs of all time (as above) has inspired me to write a follow up.
Before I get to this, let's remember that 'cost' and 'value' are not the same things, at all. I could give you countless arguments put forward by Smith, Marx or Ruskin. I think Oscar Wilde says it plainest when he describes a cynic as a man who "knows the price of everything and the value of nothing".
I did, try to, make it clear in that blog that I was talking really about measuring 'client satisfaction' as a metric to assess value rather than happiness. Yet nonetheless, some cynical elements of the legal profession kindly informed me:
> "If clients have paid on an hourly rate until now, why should we change";
> "Some clients will never be happy"; or, my absolute favourite,
> "It is not a lawyer's job to make his client happy".
I have just read a fantastic report this weekend, prepared by CXINLAW. As the foreword by Professor Stephen Mayson explains, this is not another attempt to bash lawyers but a well researched and presented report, the overriding message of which is that lawyers should not "...give up on the content or quality of advice but (should) work much harder on the 'customer experience'.
Too often the rebuttal of the cynical lawyer to change, is that those calling for it are looking to 'dumb down quality'. Mayson's foreword speaks for all of us seeking genuine change: retain quality and ethics (in my view the qualified professional's USP) but compete on the experience of your customer.
Carl White, one of the report's authors, when asked what he hoped the report would achieve, replied rather modestly, but quite validly, "to add the phrase 'customer experience' to the lawyer's lexicon". Not an inconsiderable aim.
I repeat, satisfaction/happiness is just one metric which may be used to supplement or, even, replace measurement of value by hourly rates. But can it really be measured?
Yes, according to an increasing number of economists. Last week, a blog published on The Economist website, entitled "No longer the dismal science?" looked at the growth of the 'Happiness Industry' and a number of works, including a UN commissioned report. The blog's conclusion is that "it is not clear whether it really would be such a good idea for the government to decide it knows better than individuals do what constitutes their happiness".
In macro-economic terms, this is probably a very valid point.
In the micro-economic environs of a lawyer and their customer - not so. CXINLAW's report is a good start, we need more reports like this. We also need consumers to drive this behaviour, to stop the cynicism of price comparison and look to value.
Rather than quoting Jerry Maguire (a sports lawyer/agent, I think) asking to be shown the money, they should, perhaps, take a leaf from another branch of the law (crime fiction, in this case) and ask their lawyer to "Make my day".
Wednesday 4 April 2012
Brick-in' it!
"Mirror, mirror on the wall is Samantha Brick the fairest of them all?".
Not if you believe the 10,000 comments on the Daily Mail website in reaction to her piece “why woman hate me for being beautiful”.
Ms Brick's response to the public outcry is that it proves she is right and is the subject of spiteful scorn for her beauty.
You have to ask yourself how can a seemingly educated journalist can get it all so wrong. The public abhorrence of her piece is not a reaction to a beautiful woman speaking out against a society which judges her for her looks, as she claims is the case. Nope, the public are appalled at the unashamed arrogance of the piece and at her for saying it.
It is clear that Ms Brick has little or no comprehension of the social mores that most of us seem to understand: boastfulness, swagger, cockiness, bumptiousness or, lets face it, conceit is a turn off rather than a turn on. Whilst the Daily Mail will delight in the level of coverage this piece has got, and Ms Brick may even profit as an anti-heroine, most of us would not want to be seen in this way.
I am sure that, when not writing for the Daily Mail, Ms Brick is nothing like the public persona she has created. However, her complete lack of judgement and seeming focus on what and who she is, rather than how she fits in with others is a failing.
So, what has this to do with lawyers?
Lawyers are often seen as Society's pariahs. We all have heard jokes about how greedy or distrustful Lawyers are. Whilst funny (we all need to be able to laugh at ourselves) they do not reflect the majority of people I come across on a day-to-day basis.
It is, however, a question of perception. True or not, lawyers have a reputation that reputation has stuck.
There is a fabulous web tool called wordle (I am sure most of you know it). If you drop in a body of text, it creates a word cloud which gives greater prominence to the most frequently featured words. It can be an invaluable tool when assessing client feed back to enable you to identify themes, for example.
It is also useful to demonstrate the subliminal message contained in websites and marketing collateral. A few years back, I used to have law firm clients undertake this exercise with their website text and marketing literature.
The most frequently used word, in almost every case...? "We".
And who hasn't been at those lunches where partners have insisted on telling a relentless chain of "war stories" detailing their legal prowess and cunning, failing completely to judge the mood or ask their client "what are you focusing on at the moment?" or "what keeps you awake at night?".
Most law firm website sites, still, focus on what they are about, what they are good at and what they offer. Marketing literature and tender documents tend to be no better and sometimes worse. Mercifully, however, the war stories seem to be dying out.
What we all need to remember and ensure we project is not, who and what we are, but what we can do for our clients. Less "We" and more "You".
Clients want to know how lawyers will help them, put their needs at the centre of consideration and deliver the right advice in a service-centric way. Its not about the law or how clever the lawyer is but about solving their issue or challenge as efficiently and effectively as possible.
Lawyers can learn from Ms Brick's (appalling) example. People rarely judge us for who we are but for the who we project ourselves to be.
Not if you believe the 10,000 comments on the Daily Mail website in reaction to her piece “why woman hate me for being beautiful”.
Ms Brick's response to the public outcry is that it proves she is right and is the subject of spiteful scorn for her beauty.
You have to ask yourself how can a seemingly educated journalist can get it all so wrong. The public abhorrence of her piece is not a reaction to a beautiful woman speaking out against a society which judges her for her looks, as she claims is the case. Nope, the public are appalled at the unashamed arrogance of the piece and at her for saying it.
It is clear that Ms Brick has little or no comprehension of the social mores that most of us seem to understand: boastfulness, swagger, cockiness, bumptiousness or, lets face it, conceit is a turn off rather than a turn on. Whilst the Daily Mail will delight in the level of coverage this piece has got, and Ms Brick may even profit as an anti-heroine, most of us would not want to be seen in this way.
I am sure that, when not writing for the Daily Mail, Ms Brick is nothing like the public persona she has created. However, her complete lack of judgement and seeming focus on what and who she is, rather than how she fits in with others is a failing.
So, what has this to do with lawyers?
Lawyers are often seen as Society's pariahs. We all have heard jokes about how greedy or distrustful Lawyers are. Whilst funny (we all need to be able to laugh at ourselves) they do not reflect the majority of people I come across on a day-to-day basis.
It is, however, a question of perception. True or not, lawyers have a reputation that reputation has stuck.
There is a fabulous web tool called wordle (I am sure most of you know it). If you drop in a body of text, it creates a word cloud which gives greater prominence to the most frequently featured words. It can be an invaluable tool when assessing client feed back to enable you to identify themes, for example.
It is also useful to demonstrate the subliminal message contained in websites and marketing collateral. A few years back, I used to have law firm clients undertake this exercise with their website text and marketing literature.
The most frequently used word, in almost every case...? "We".
And who hasn't been at those lunches where partners have insisted on telling a relentless chain of "war stories" detailing their legal prowess and cunning, failing completely to judge the mood or ask their client "what are you focusing on at the moment?" or "what keeps you awake at night?".
Most law firm website sites, still, focus on what they are about, what they are good at and what they offer. Marketing literature and tender documents tend to be no better and sometimes worse. Mercifully, however, the war stories seem to be dying out.
What we all need to remember and ensure we project is not, who and what we are, but what we can do for our clients. Less "We" and more "You".
Clients want to know how lawyers will help them, put their needs at the centre of consideration and deliver the right advice in a service-centric way. Its not about the law or how clever the lawyer is but about solving their issue or challenge as efficiently and effectively as possible.
Lawyers can learn from Ms Brick's (appalling) example. People rarely judge us for who we are but for the who we project ourselves to be.
Tuesday 3 April 2012
In pursuit of "happiness"....
In 1972, King Wangchuck of Bhutan made a commitment to building an economy which would best serve his country's Buddhist values. He commissioned the Centre for Bhutan Studies to develop a survey to assess the country's general well being. Gross Domestic Product (GDP) was replaced with the concept of Gross Domestic Happiness (GDH).
Beyond what was seen by some as a totally left-of-field metric, we now have second generation GNH and the first ever global happiness survey was launched in 2006 to measure 'happiness' as a socioeconomic development metric. The survey was undertaken by the International Institute of Management and assessed:
> economic wellness
> environmental wellness
> physical wellness
> mental wellness
> workplace wellness
> social wellness
> political wellness
For those who want to know more please click on results here.
"OK, so what has this got to do with legal services?"
In legal services, the only universal metric is the much (and deservedly) maligned 'hourly rate'. This, in my opinion, is a totally flawed metric.
This blog is the first of what I hope will be a (sporadic and non sequential) series looking at how other metrics from other fields may be applied to legal services.
So what's wrong with the 'hourly rate'. Firstly, it doesn't even accurately indicate potential cost (which is actually the net result of a triumvirate of inputs which create the 'volume of cost'). So, you can set the rate but not the number of hours or the level of resource utilised.
Secondly, and more importantly, the hourly rate doesn't measure 'value'. What does taking legal advice contribute to the balance sheet in terms of income realised or liabilities protected against? 'Value' will always be, after all, greater than 'cost' by a good number of multiples.
So, what can measuring 'happiness' do to help assess 'value' in legal services. Perhaps 'happiness' is too much of a stretch, after all legal services are, at best, a necessary evil.
But how about 'satisfaction'? Is making sure a client is genuinely satisfied something that should be measured and can have a 'value'? In short yes. I have direct knowledge of a service which is measured, against other things, against an agreed benchmark satisfaction value. Hit the benchmark, great. Fail to meet it and their are financial consequences for the supplier. Exceed, and there is a premium payable.
Why is this important? Let's imagine that there are two identical cars in a show room. One is priced at £20,000 more than the other simply because it took longer to build. Hands up who would pay that premium for the input effort, regardless of the resulting product (they are identical, remember)? No one, right.
Now let's imagine one comes with a client care package that promises roadside assistance, servicing and replacement cars in emergencies. The value here is protection for the customer, piece of mind and enhanced service delivery. If the premium was right, you'd pay for this? Probably.
Yet legal services still, in the main, based on the input effort.
The question taking GNH as an example is, should lawyers be remunerated on how long something takes or how happy they make their clients? I'll let you decide.
Beyond what was seen by some as a totally left-of-field metric, we now have second generation GNH and the first ever global happiness survey was launched in 2006 to measure 'happiness' as a socioeconomic development metric. The survey was undertaken by the International Institute of Management and assessed:
> economic wellness
> environmental wellness
> physical wellness
> mental wellness
> workplace wellness
> social wellness
> political wellness
For those who want to know more please click on results here.
"OK, so what has this got to do with legal services?"
In legal services, the only universal metric is the much (and deservedly) maligned 'hourly rate'. This, in my opinion, is a totally flawed metric.
This blog is the first of what I hope will be a (sporadic and non sequential) series looking at how other metrics from other fields may be applied to legal services.
So what's wrong with the 'hourly rate'. Firstly, it doesn't even accurately indicate potential cost (which is actually the net result of a triumvirate of inputs which create the 'volume of cost'). So, you can set the rate but not the number of hours or the level of resource utilised.
Secondly, and more importantly, the hourly rate doesn't measure 'value'. What does taking legal advice contribute to the balance sheet in terms of income realised or liabilities protected against? 'Value' will always be, after all, greater than 'cost' by a good number of multiples.
So, what can measuring 'happiness' do to help assess 'value' in legal services. Perhaps 'happiness' is too much of a stretch, after all legal services are, at best, a necessary evil.
But how about 'satisfaction'? Is making sure a client is genuinely satisfied something that should be measured and can have a 'value'? In short yes. I have direct knowledge of a service which is measured, against other things, against an agreed benchmark satisfaction value. Hit the benchmark, great. Fail to meet it and their are financial consequences for the supplier. Exceed, and there is a premium payable.
Why is this important? Let's imagine that there are two identical cars in a show room. One is priced at £20,000 more than the other simply because it took longer to build. Hands up who would pay that premium for the input effort, regardless of the resulting product (they are identical, remember)? No one, right.
Now let's imagine one comes with a client care package that promises roadside assistance, servicing and replacement cars in emergencies. The value here is protection for the customer, piece of mind and enhanced service delivery. If the premium was right, you'd pay for this? Probably.
Yet legal services still, in the main, based on the input effort.
The question taking GNH as an example is, should lawyers be remunerated on how long something takes or how happy they make their clients? I'll let you decide.
Monday 2 April 2012
A bar walks into a market....
Yesterday, The Bar Council of England and Wales published its response to The Government's Triennial Review of the Legal Services Board.
In short, the response:
> accepted that there remained a light touch supervisory role for the LSB to ensure parity and consistency across all legal "Authorised Regulators";
> called for the LSB's remit to be confined now that the objectives of the Legal Services Act 2007 had been put in place; and
> cautioned that the LSB be prohibited from unnecessary and burdensome interference in the operations of the "Authorised Regulators".
When I first read the headline that The Bar Council were calling for the LSB's remit to be confined, my immediate reaction was to say "yeah, of course they are".
However, having read their (refreshingly succinct) response - I have to say that their stance is entirely right but, maybe, not for the reasons that The Bar Council had intended.
Whilst a healthy and robust regulatory framework is essential to ensure public interest in a professional and ethical legal services market, having a multi-tiered regulatory model is unnecessary and adds to the ultimate cost of service for the consumer.
The LSB's remit is and should be to ensure that the spirit of Clementi, as enshrined in the Act, delivers a new competitive landscape for legal services. The LSB needs to set and then monitor the criteria and de minimis standards for all legal regulation and then leave it up to the "Authorised Regulators" to decide how they regulate.
The Bar Council (BSB), the Law Society (SRA), CILEX and the Council of Licenced Conveyancers et al must be accoutantable to the LSB and demonstrate they are encouraging competition and ensuring that the minimum standards are met.
So, to this point both me and The Bar Council are as one.
However it is at this point where myself and The Bar Council go our separate ways.
What is the point of having a number of Authorised Regulators if they themselves don't compete with each other?
Each Authorised Regulators should seek to establish what they stand for and then build a quality mark for their regulated members to operate to. Consumers will then be able to choose, and understand the basis of their choice, between legal service providers including who they are regulated by.
So bravo for The Bar Council - less over-regulation please but, for me, more clarity about what each regulator stands for and greater competition in the market.
I hope that the Government heed The Bar's counsel, even though the Bar should be careful what they wish for as it may just come true.
Sunday 1 April 2012
Heedless Chickens?
Yesterday, I was driving along Jamaica Road in South East London. In the space of one mile, I counted no less than twelve fried chicken takeaways. No major brands and nothing to distinguish between them. Every single place had the words "tasty" and "hot" displayed on their signage or in their windows.
Anyone in "need" of fried chicken has no reason to choose one place over another.
This weekend, Brian Inkster (@TheTimeBlawg) tweeted that a search on Google had revealed 8,310,000 mentions of the exact phrase "leading law firm". Words such as "professional", "expert" and "commercial" all are similarly sprinkled with liberal abandon across the websites of most law firms. Like the purveyors of buffalo wings in South East London, the legal profession do little to distuinguish themselves from their competitors.
The custom of sticking to tried and tested formulas and the fear of stepping out from the crowd means that those legal service providers who have a genuinely differentiated offering fail to advise their customers of this.
Porter's Five Forces analysis, assesses the competitive intensity of a market through analysing:
> competitive rivalry within an industry;
> bargaining powers of suppliers;
> bargaining powers of customers;
> threat of new entrants; and
> threat of substitute products.
Looking at these, why would anyone open up another fried chicken business south of the Thames?
Similarly, why would anyone start up a law firm? Competitive rivalry is high, RBS tell us that there are at least 6,000 too many solicitors in the market. This directly impacts the bargaining powers of suppliers, supply outstripping demand. Setting up a law firm is relatively simple, and therefore new entrants are always being established further oversupplying the market.
Customers, however, hold the upper hand in terms of bargaining powers. The market is oversupplied and the cost of switching from one supplier to another is minimal (when compared to IT suppliers or financiers).
Last week we saw ABS day, the first three Alternative Business Structures were authorised by the Solicitors Regulation Authority. Now, law firms have to deal with the threat of substitute products too.
Law firms can no longer avoid changing what they do. Maintaining the status quo is no longer an option. Strategies and offerings need rethinking. Lawyers need to move themselves into a market space that has fewer suppliers and where the opportunity for new entrants is much tougher.
They need to invest in creating intellectual property and new products and services that customers will value. Lastly lawyers need to tell their customers why they are different from the rest of their market (rather than why they are the same as the rest of it).
So, as ABSs join the market and we see the fusion of new businesses from different industries combining to offer clients a more integrated service, I have one question - who's for Fried Chicken Street Law?
Friday 30 March 2012
Can law firms go near shore? Oh, to be sure.
How long do you think it took the pump house at the H&W shipyard to drain the dry dock in which the Titanic (and her less famous but perfectly successful sister, the Olympic) was fitted out, from full to dry?
Remember it was 100 years ago and we are talking about 21 million gallons of water, enough to fill 172 Olympic size swimming pools or the equivalent of 168 million pints of Guinness (other Celtic stouts are available).
So, what was your guess? A week, three days, two days, 24 hours?
No, those innovative Belfast
My guide, Gail, told me not to be surprised as Belfast
In legal services, Belfast Belfast
There have been rumours that these high profile moves are little more than window dressing. This is not true. I have seen them, they are very real and they are growing.
InvestNI inform me that there are more in the pipeline and whilst some will question the potential saturation point, each job currently advertised in one of these centres has in excess of 200 highly capable applicants.
The cost differential is huge. One (non legal) international company, with its back office operations now based in Belfast
The overhead that burdens many law firms can be greatly reduced and those whom are truly innovative will reinvest this saving to reengineer their services, to transform their delivery models and utilise technology. The key ingredients to deliver better, cheaper and simpler legal services.
Those firms now here have made a bold step and all the evidence suggests it is paying off.
If this is the case, then it looks like Belfast
Thursday 29 March 2012
Don't look back in anger
Who knows what tomorrow brings? Even Albert Einstein said "I never think of the future - it comes soon enough".
For most in-house lawyers, thinking about the future is a luxury they can only dream of. Burgeoning demand, ever changing regulation and a drive to cut external expenditure all contrive to make the present far too pressing to even remember there is a future.
It is not really a luxury though, it is a necessity. Fail to plan and plan to fail. The challenges are only going to be greater tomorrow than they are today and without investment in thinking about what tomorrow may hold- most in-house teams current model won't be able to cope.
There exists today technology that can add control, minimise risk, manage documents and capture knowledge - the choice can be bewildering. Many in-house teams have made such an investment but have not also made the most precious investment - time to ensure that it does today and will do tomorrow what they need it to.
Ultimately planning for the future is time well spent. Technology will get faster, smarter and more powerful. It is important to ensure that beyond all the bells and whistles it does the job you want it to, what you need it to and what you will need it to.
Let's remember that your phone has more computing power today than the whole of NASA had with the Apollo programme. In 1969, they managed to launch a man to the moon. In 2011 many use the superior technology to launch birds at pigs!
For most in-house lawyers, thinking about the future is a luxury they can only dream of. Burgeoning demand, ever changing regulation and a drive to cut external expenditure all contrive to make the present far too pressing to even remember there is a future.
It is not really a luxury though, it is a necessity. Fail to plan and plan to fail. The challenges are only going to be greater tomorrow than they are today and without investment in thinking about what tomorrow may hold- most in-house teams current model won't be able to cope.
There exists today technology that can add control, minimise risk, manage documents and capture knowledge - the choice can be bewildering. Many in-house teams have made such an investment but have not also made the most precious investment - time to ensure that it does today and will do tomorrow what they need it to.
Ultimately planning for the future is time well spent. Technology will get faster, smarter and more powerful. It is important to ensure that beyond all the bells and whistles it does the job you want it to, what you need it to and what you will need it to.
Let's remember that your phone has more computing power today than the whole of NASA had with the Apollo programme. In 1969, they managed to launch a man to the moon. In 2011 many use the superior technology to launch birds at pigs!
Wednesday 28 March 2012
Let them eat (cold) cake!
This is not a satrical poke at the brioche-chomping UK Chancellor for his insipid responses to questions from the Treasury Committee yesterday, re: "pasty-gate". However, as the title suggests, there are parallels to be drawn with Marie Antoinette's failure to see the big picture (in MA's defence, she was only 9 when Rousseau attributed the infamous phrase to her).
No, my issue is more fundemental and addresses the impact of poorly thought out policy on business. In this case, what is "hot", what temperature represents "hot" and if prepared "hot" -what if the pasty is sold once it has cooled down. This will undoubtedly spawn litigation-a-plenty with a tax authority already famous for the "cake or biscuit" case (my personal favourite case of all time).
Poor policy, makes bad law. Bad law is difficult to interperet and even harder to safe guard against. It adds cost to every business in terms of compliance and, inevitably, when dealing with failure to comply.
The problem with bad law is that it is a modern day epidemic. Regulation burgeons and in-house legal departments find themselves increasingly stretched just to cope with the relentless onslaught of bills, acts, regulations, clarification and direction notes not to mention case law.
In-house counsel have to cope with this, cuts to their budgets, reduction to their headcount, and the rethinking of their priorities at the eye of a perfect storm. Ask any GC or Head of Legal what keeps them awake at night, and it is generally worry about what they don't know or haven't thought of.
The current model of in-house teams working on a "per event" basis with a large panel of law firms can not cope with this epidemic. The unitary cost of legal has to come down to cope with what business needs (more for less).
An "on-demand" market can not deliver this and, even worse, it creates the false assumption that buyers can "shop around" for the best price. It necessitates the re-invention of the wheel and leaks institutional knowledge - all adding to future cost.
Buyers and suppliers (and even suppliers and suppliers) have to "partner" to create a model that can cope with the increasing flurry of bad (and good) law. This means that buyers have to select their partners on a longer term basis and, therefore, more carefully. Suppliers have to be willing to co-operate with each other and be transparent around their pricing.
Like any revolution, it is important to understand what side you are on. For too long there has been the misapprehension that buyers and suppliers are on opposing side. They are not, they should join forces to battle against the growing leviathan of regulation. Vive le revolution!
No, my issue is more fundemental and addresses the impact of poorly thought out policy on business. In this case, what is "hot", what temperature represents "hot" and if prepared "hot" -what if the pasty is sold once it has cooled down. This will undoubtedly spawn litigation-a-plenty with a tax authority already famous for the "cake or biscuit" case (my personal favourite case of all time).
Poor policy, makes bad law. Bad law is difficult to interperet and even harder to safe guard against. It adds cost to every business in terms of compliance and, inevitably, when dealing with failure to comply.
The problem with bad law is that it is a modern day epidemic. Regulation burgeons and in-house legal departments find themselves increasingly stretched just to cope with the relentless onslaught of bills, acts, regulations, clarification and direction notes not to mention case law.
In-house counsel have to cope with this, cuts to their budgets, reduction to their headcount, and the rethinking of their priorities at the eye of a perfect storm. Ask any GC or Head of Legal what keeps them awake at night, and it is generally worry about what they don't know or haven't thought of.
The current model of in-house teams working on a "per event" basis with a large panel of law firms can not cope with this epidemic. The unitary cost of legal has to come down to cope with what business needs (more for less).
An "on-demand" market can not deliver this and, even worse, it creates the false assumption that buyers can "shop around" for the best price. It necessitates the re-invention of the wheel and leaks institutional knowledge - all adding to future cost.
Buyers and suppliers (and even suppliers and suppliers) have to "partner" to create a model that can cope with the increasing flurry of bad (and good) law. This means that buyers have to select their partners on a longer term basis and, therefore, more carefully. Suppliers have to be willing to co-operate with each other and be transparent around their pricing.
Like any revolution, it is important to understand what side you are on. For too long there has been the misapprehension that buyers and suppliers are on opposing side. They are not, they should join forces to battle against the growing leviathan of regulation. Vive le revolution!
Tuesday 27 March 2012
Buyer be-wary!
The warnings are age-old but still ring with truth today:
~ "beware of Greeks bearing gifts" (no, not Merkel but Virgil)
~ "all that glitters is not gold" (Shakespeare)
In a depressed market, buyers will offer gifts and gold galore to win the prize - or, as far as us lot are concerned the next instruction or that oh so important spot on the panel.
Law is, currently, a depressed market. Corporate activity is at a minimum and there is an over subscription of solicitors (it has to be more than the 6,000 RBS claimed?). Buyers can push panel rates harder than ever and many firms will readily agree: the "yes-men-firms".
This will not serve buyers well in the long run. By way of example - yesterday, I was discussing this with Proxima a outsouring, sourcing business. They aim to give clients an honest assessment of the value they will deliver and are prepared to back this up with a measurable commitment. However, they face competition from those who "low-ball" to win the deal and then ratchet up the costs or ratchet down the service to deliver.
Ultimately Proxima will win out. They have to be selective of potential client pitches to ensure that their message will be understood by the buyer.
Some call for "sacking your clients" (Economist-27.3.12) and this can appeal to the macho-billy-big-biscuits element of the legal industry. This is not what Proxima do, they try to educate using real metrics and, only if having tried to do this and their clients persist with "cheapest is best" do Proxima withdraw.
In legal services today, we have one universal metric - the hourly rate. It is flawed, totally flawed and should be never spoken of again! There are alternative metrics that really measure quality and service. Law firms who promise their clients rich pickings in terms of discounts on hourly rates whilst agreeing to service improvement should be eschewed (the result will be cost up or service down, ultimately).
Those of us who want to deliver genuine innovation need to carry on giving clients an honest response to what they are asking. More for less is possible, "more of the same for less" is not.
It's not a case of law firms "sacking clients" but it is a case of good firms saying "no, that's not possible but this is". Caveat emptor, buyers be-wary of the yes-men as all that glitters is not gold.
~ "beware of Greeks bearing gifts" (no, not Merkel but Virgil)
~ "all that glitters is not gold" (Shakespeare)
In a depressed market, buyers will offer gifts and gold galore to win the prize - or, as far as us lot are concerned the next instruction or that oh so important spot on the panel.
Law is, currently, a depressed market. Corporate activity is at a minimum and there is an over subscription of solicitors (it has to be more than the 6,000 RBS claimed?). Buyers can push panel rates harder than ever and many firms will readily agree: the "yes-men-firms".
This will not serve buyers well in the long run. By way of example - yesterday, I was discussing this with Proxima a outsouring, sourcing business. They aim to give clients an honest assessment of the value they will deliver and are prepared to back this up with a measurable commitment. However, they face competition from those who "low-ball" to win the deal and then ratchet up the costs or ratchet down the service to deliver.
Ultimately Proxima will win out. They have to be selective of potential client pitches to ensure that their message will be understood by the buyer.
Some call for "sacking your clients" (Economist-27.3.12) and this can appeal to the macho-billy-big-biscuits element of the legal industry. This is not what Proxima do, they try to educate using real metrics and, only if having tried to do this and their clients persist with "cheapest is best" do Proxima withdraw.
In legal services today, we have one universal metric - the hourly rate. It is flawed, totally flawed and should be never spoken of again! There are alternative metrics that really measure quality and service. Law firms who promise their clients rich pickings in terms of discounts on hourly rates whilst agreeing to service improvement should be eschewed (the result will be cost up or service down, ultimately).
Those of us who want to deliver genuine innovation need to carry on giving clients an honest response to what they are asking. More for less is possible, "more of the same for less" is not.
It's not a case of law firms "sacking clients" but it is a case of good firms saying "no, that's not possible but this is". Caveat emptor, buyers be-wary of the yes-men as all that glitters is not gold.
Monday 26 March 2012
Ringing the ch-ch-ch-changes on the High Street?
In the past fortnight, QualitySolicitors have launched their private equity backed TV campaign to drive business to their members. Regulated ABSs are just, well maybe just, around the corner which may see "Tesco" (other quality supermarkets are available) dabble in the consumer legal market.
It is predicted that we will see the 'death of the High Street solicitor' with consumers preferring to buy from brands.
The High Street Solicitor was on their knees anyway. The Woolf reforms set about, in 1995, a catastrophic turn of events by creating the opportunity for claims management companies to prospect for personal injury claims in return for a referral fee. The dreaded referral fee took root for conveyancing matters and will writing. High Street firms found themselves unable to compete on price for referral or scale of operation and thus three stalwarts of their business disappeared.
Whilst some have diversified, become niche or have become effective with social media. The vast majority, however have struggled on, much down to legacy goodwill and a rather benign banking industry.
The Jackson reforms could have gone some way to turn this around but, I fear, they will be too late. By the time the take effect, the new entrant ABSs will have delivered the final blow.
Let's mark in history today, however, that ABSs focussed at the consumer market will not succeed solely on the basis that they deliver an alternative.
The truth is, that there isn't an alternative - the Woolf Reforms "infected" the market almost twenty years ago and we are only seeing the fatalities from this today.
Talking about kicking a man when he is down!
It is predicted that we will see the 'death of the High Street solicitor' with consumers preferring to buy from brands.
The High Street Solicitor was on their knees anyway. The Woolf reforms set about, in 1995, a catastrophic turn of events by creating the opportunity for claims management companies to prospect for personal injury claims in return for a referral fee. The dreaded referral fee took root for conveyancing matters and will writing. High Street firms found themselves unable to compete on price for referral or scale of operation and thus three stalwarts of their business disappeared.
Whilst some have diversified, become niche or have become effective with social media. The vast majority, however have struggled on, much down to legacy goodwill and a rather benign banking industry.
The Jackson reforms could have gone some way to turn this around but, I fear, they will be too late. By the time the take effect, the new entrant ABSs will have delivered the final blow.
Let's mark in history today, however, that ABSs focussed at the consumer market will not succeed solely on the basis that they deliver an alternative.
The truth is, that there isn't an alternative - the Woolf Reforms "infected" the market almost twenty years ago and we are only seeing the fatalities from this today.
Talking about kicking a man when he is down!
Sunday 25 March 2012
Bottled at source?
Henry Ford famously claimed that had he asked his customers what they wanted, they would have asked for faster horses. Innovation, it is claimed, must come from the supplier.
Certainly, it is true that, none the iPod, iPhone or iPad would have been invented had customers been asked what they wanted, myself included. However, I would not be without any of them now and in some cases am on my third iteration. Apple, having proved to me the art of the possible created new markets for products, I myself didn't know at that time I had a need for.
In legal services too, it will be necessary for innovation to come from suppliers. The very essence of Clementi's Report and the resulting legislation was to encourage new thinking on the supplier side and therefore improve the service offering to consumers.
Simple then? No.
Unlike Apple products, legal services are bought on an "on-demand basis", usually as a distressed purchase, and necessitate an urgent and bespoke response. Law firms, being partnerships, do not have the corporate structure to invest speculatively in what it guesses a client may want should they be called up when the need arises.
Increasingly, corporates and the public sector are 'procurement techniques' to source panel law firms and agree fixed pricing. Many "legal consultants" charge on the basis of the % saved on hourly rates, the only metric that any one relies on at present, albeit that it is entirely flawed being only one of a number of components of the total cost.
New metrics are needed to provide consumers with a benchmark as to what good looks like. However in a market that has no reliable data published, it will require respected experts (like the Big 4 accounting firms) to collate this over the coming few years.
Until then, it will require courage from consumers to commission suppliers off legal services to deliver and price in a different way, with measured and specified outputs driving savings and service improvement today.
Buyers will need guidance from properly 'qualified' consultancies and should have the courage to invest in this to buy better and cheaper. Failure to do so, or running the sort of tick box exercise that lead to the Applied Language Solutions deal with Ministry of Justice and you will buy less for more.
I have worked on at least 10 RFPs for legal panels from major UK companies which, in each case, they have openly declared war on the hourly rate and sought 'innovative thinking'. I know that a number of suppliers offered such thinking yet those companies still opted to source based on the hourly rate claiming that suppliers had failed to innovate!
They didn't get what they set out to, why - in short, they bottled it.
Certainly, it is true that, none the iPod, iPhone or iPad would have been invented had customers been asked what they wanted, myself included. However, I would not be without any of them now and in some cases am on my third iteration. Apple, having proved to me the art of the possible created new markets for products, I myself didn't know at that time I had a need for.
In legal services too, it will be necessary for innovation to come from suppliers. The very essence of Clementi's Report and the resulting legislation was to encourage new thinking on the supplier side and therefore improve the service offering to consumers.
Simple then? No.
Unlike Apple products, legal services are bought on an "on-demand basis", usually as a distressed purchase, and necessitate an urgent and bespoke response. Law firms, being partnerships, do not have the corporate structure to invest speculatively in what it guesses a client may want should they be called up when the need arises.
Increasingly, corporates and the public sector are 'procurement techniques' to source panel law firms and agree fixed pricing. Many "legal consultants" charge on the basis of the % saved on hourly rates, the only metric that any one relies on at present, albeit that it is entirely flawed being only one of a number of components of the total cost.
New metrics are needed to provide consumers with a benchmark as to what good looks like. However in a market that has no reliable data published, it will require respected experts (like the Big 4 accounting firms) to collate this over the coming few years.
Until then, it will require courage from consumers to commission suppliers off legal services to deliver and price in a different way, with measured and specified outputs driving savings and service improvement today.
Buyers will need guidance from properly 'qualified' consultancies and should have the courage to invest in this to buy better and cheaper. Failure to do so, or running the sort of tick box exercise that lead to the Applied Language Solutions deal with Ministry of Justice and you will buy less for more.
I have worked on at least 10 RFPs for legal panels from major UK companies which, in each case, they have openly declared war on the hourly rate and sought 'innovative thinking'. I know that a number of suppliers offered such thinking yet those companies still opted to source based on the hourly rate claiming that suppliers had failed to innovate!
They didn't get what they set out to, why - in short, they bottled it.
Friday 23 March 2012
A state of independence?
And so, The New York State Bar's Committee on Professional Ethics has decided that a member, a NY lawyer, working in NY, cannot practice for an out-of-state or foreign firm owned or managed by Non-Lawyers.
NYSB claims to be concerned for clients that non-lawyer ownership may lead to the independence of lawyers not being sufficiently protected.
This is at odds with the current American Bar Association's Commission on Ethics which is considering limited scope for non-lawyer ownership. Something akin to Legal Disciplinary Practices (LDPs) here in England and Wales. LDPs have been regulated by the Solicitors Regulatory Authority since March 2009 and there has not been an instance of the question of independence being raised.
Whilst progress for those of us eager for the long awaited Brave New World remains painfully slow, the UK has lead the way in opening up the closed shop of legal services and inviting in new thinking and new approaches.
I am the first to demand that new entrants need to be regulated with the same degree of rigor that lawyers are and this has to be an irreducible minimum. However, the reality is that regulation continues to heap burden on persons and companies alike and the current economic downturn (emanating from a US regulated mortgage industry) demands that new approaches to efficiency be brought to bear.
Lawyer managers and lawyer owners, whilst professionally and ethically sound, have not the experience nor training to drive these changes alone. Those that embrace change, bring in outside help and/or money will thrive delivering better, cheaper and simpler legal solutions whilst maintaining or, maybe even, enhancing margins.
Those who don't admit the need for such help from other professions or maybe fear that margins of 30-50% (unheard of in the industries of a vast majority of their clients) may be eroded will seek to rail against such change.
So, are the NYSB really worried about independence of the profession and the potential erosion of ethics or, perhaps, is this a case of the members of the NYSB "ethics committee" looking after their own?
After all, are the turkeys that vote against Thanksgiving every year truly independent?
NYSB claims to be concerned for clients that non-lawyer ownership may lead to the independence of lawyers not being sufficiently protected.
This is at odds with the current American Bar Association's Commission on Ethics which is considering limited scope for non-lawyer ownership. Something akin to Legal Disciplinary Practices (LDPs) here in England and Wales. LDPs have been regulated by the Solicitors Regulatory Authority since March 2009 and there has not been an instance of the question of independence being raised.
Whilst progress for those of us eager for the long awaited Brave New World remains painfully slow, the UK has lead the way in opening up the closed shop of legal services and inviting in new thinking and new approaches.
I am the first to demand that new entrants need to be regulated with the same degree of rigor that lawyers are and this has to be an irreducible minimum. However, the reality is that regulation continues to heap burden on persons and companies alike and the current economic downturn (emanating from a US regulated mortgage industry) demands that new approaches to efficiency be brought to bear.
Lawyer managers and lawyer owners, whilst professionally and ethically sound, have not the experience nor training to drive these changes alone. Those that embrace change, bring in outside help and/or money will thrive delivering better, cheaper and simpler legal solutions whilst maintaining or, maybe even, enhancing margins.
Those who don't admit the need for such help from other professions or maybe fear that margins of 30-50% (unheard of in the industries of a vast majority of their clients) may be eroded will seek to rail against such change.
So, are the NYSB really worried about independence of the profession and the potential erosion of ethics or, perhaps, is this a case of the members of the NYSB "ethics committee" looking after their own?
After all, are the turkeys that vote against Thanksgiving every year truly independent?
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