An opportunity to rethink the firm
Director, Jon has worked for a huge range of businesses, both public and private, across diverse sectors. Recent appointments include finance director roles for a manufacturing business and for a major regional law firm in Yorkshire.
Jon believes that although the coronavirus crisis and subsequent lockdown changed the commercial landscape overnight, it could actually be a catalyst for some much-needed changes in the legal sector.
In the short term, this is likely to require a fundamental review of the firm’s strategy, both to manage the current crisis, but also in terms of what it means in the longer term.
“I can’t imagine many businesses where the strategy they were working to in March 2020 will still be valid in August 2020. You need to re-do your budget, your cash-flow forecasts, your business plan. Not just from a financial perspective, but also from a growth perspective. Where is growth going to come from in future?”
Law firms can be bottom-heavy, he notes, with many administrative and junior staff supporting relatively few partners. It is a model that was increasingly being questioned anyway. This crisis gives FDs further evidence to support the drive towards a leaner, more efficient approach. He cites the example of secretaries:
“Most partners feel the need to have a secretary. But in most businesses, the idea of all managers having their own secretaries and support staff went out 20 years ago. Law firm leaders should look at how they’ve operated over the past 12 weeks and ask, ‘What does my firm look like going forward?’ And that’s likely to mean fewer heads and more focus on what’s important: cash and profit.”
He suggests that if it’s done well, working in this new way, with pared back admin, shared resources, greater use of digital technology, for example, demonstrates that law firms can still provide great service, meet their clients’ requirements, hit their targets in terms of income, billing, etc, but in a more cost-efficient manner.
The way the crisis is forcing firms to prioritise cash could also help FDs introduce long overdue changes in the approach to billing and debt chasing, says Jon. Contrary to some lawyers’ concerns, it could actually strengthen relationships with clients.
He knows of one law firm that had £5m languishing in work in progress and debt. Lawyers didn’t like to invoice for the work they were doing, and didn’t want to be seen to be chasing payment, because they thought it might harm the client relationship. But by insisting on a firmer, more proactive approach to billing, the new procedure helped to improve the firm’s cash position by over £3m.
“As far as I’m aware, not one client complained. In fact, I’d argue that in some cases clients respected the firm more, because they could see it was a modern, commercially-focused law firm,” he says.
Technology is an essential enabler to help firms achieve these types of changes. Historically, investing in new IT tools was rarely at the top of the priority list, particularly if it would necessitate changes in processes and procedures that partners were comfortable with. But not any longer. Jon believes that if lockdown has taught us anything, it is that digitally enabled agile working is not a choice, but a necessity.
“Technology has to be at the forefront of your thinking. Is it good enough? Is there more we could do? How good does it need to be for the next three years to deliver our strategy? I wouldn’t believe any law firm that tells me there is no change required there,” says Jon.
One area where technology is vital is in managing remote and agile working, which has quickly become the new norm. With more and more people working from home, firms will require a different approach to managing productivity.
Law firm leaders need to ensure teams are being productive and that individuals are contributing profitably. Investment in technology will help improve communication and deliver accurate management information to allow managers to make informed business decisions.
“The power of Zoom and Microsoft Teams over the last three months has shown virtual meetings work well. Trust is a big factor. For most organisations, a greater reliance on remote working demands a positive cultural change,” says Jon.
Actively working on relationships with clients is a key strategy that firms should be prioritising at the moment, too, believes Jon. Firms need to show they care, whether that’s through communication, regular phone calls, extending payment terms in the short term. Clients need to see that you’ve gone the extra mile.
“When we come out of this, law firms will be fighting hard for business. If you haven’t shown your clients how much you value their business, they will go elsewhere. If you do, they are more likely to stay loyal,” he says.
Jon’s 3 Key Takeaways
Everything is up for grabs
This is an opportunity to start again from scratch. Start with the services you need to deliver and work back – what is the best way to deliver them? And what changes are required to make that happen?
Know your risks
To survive a crisis like this, you need to identify your risks very early, mitigate them in the short term and understand what they look like for the medium to long term.
Focus on the future
Done well, the tough decisions and changes you make now will provide a solid foundation for future growth, greater efficiency and higher profits in the longer term.
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