denotes premium content | May 21 2012 Current issue
Volume 4 Issue 3
Editor’s letter
The New Year blues has gently ebbed away and the outlook is looking good for the legal services market. Sure, the recession is not quite over yet but we have survived this far and it can’t be long before business starts picking up and the order books begin to look healthy again. Or maybe not. The wobbles of the money markets in the past few days following the announcement that Greece’s economy was about to collapse has all but dispelled this warm feeling that the economy was on the road to recovery. Life on the high street is still looking bleak and professional services are hardly faring any better. Legal services are no exception, and if there is one role in law firms that the liquidity crisis has brought to the fore, it is that of finance director.
Financial discipline, once a dirty word, has suddenly become a major objective in law firms’ boardrooms and it is likely to be the new mantra for 2010. But what exactly does that mean? Surely all responsible lawyers are already careful with the money, aren’t they? That may be so, and the words ‘battening down the hatches’ crop up with austere regularity in conversations with senior lawyers.
But in many cases, the way of doing business has not changed. Take pricing, for instance: in most firms, service is still regarded as a factor of quality. With their eyes on profit margins, most lawyers continue to defend the traditional billing model and hourly rate approach saying that clients get the advice they pay for. More innovative firms however have already recognised that the hourly rate will become an internal measurement tool.
This will be just one of the ways in which clients will drive further changes to the way in which law firms sell and bill for their services. As Michael Roch highlights in this issue’s cover story (see page 6), this is already a major step, but for firms to get the upper hand in adverse market conditions, FDs and senior lawyers will need to take a more holistic attitude to client service and to how they provide value to their clients. Working with clients on cost control will be a key element; Eversheds offers one example of how this can be achieved (see page 10), but medium size and smaller firms too will need to embrace the partnership approach if they want to survive in their own market segment. In fact, the recession seems to have transferred so much power in the hands of clients that the 2010s could, according to Louise Verrill, become “the decade of the client” (see page 18). Finally, internally, as Barry and Anthony Wilkinson point out, this will almost certainly involve a thorough reassessment of the function of the finance department in your firm (see page 16).
But don’t let this put you off. By all accounts, there is plenty of talent in the market and some firms are already reporting a slow rise in instructions. Those green shoots must be there somewhere, and FDs should be the first to reap the rewards.
One final word because closing off this letter. Joanna Lee, who has been editor of FD Legal for nearly two years, has decided to leave the company. She has been a tremendous asset to the magazine and we wish her the best of luck with her new career.
Jean-Yves Gilg
Group editor
Features
2010: how will your reputation fare?
Richard Elsen looks at the year ahead and the importance of securing your reputation in the marketplace, especially in view of the LSA.
The merging risk
For at least the past two decades, pundits have been predicting law firm consolidation on a large scale, and have been anticipating frequent mergers in all tiers of the profession.
What has the global crisis taught us about risk management?
Expect the unexpected. While most foresaw a recession coming, it had been talked about for months in the press and elsewhere, there are very few that would have predicted the depth and severity of the recession.
Supervision (again)
Practice standards unit visits and forensic investigations by the Solicitors Regulation Authority (SRA) cover, among other things, how firms discharge their duties to supervise their staff.
The role of the law firm finance function
Recent times have brought the role of the law firm FD and their team under close scrutiny, and no one would deny that this issue is only going to become more important over the next couple of years. The impact of the recession and the predicted consequences of the Legal Services Act 2007 are highlighting the crucial role of the finance function in law firm management.
The tip of the iceberg
Derk Kropholler explains how cost savings aren’t the only benefit that legal process outsourcing providers bring to the legal industry.
The pricing is right?
Michael Roch examines service-based rather than partner-based pricing, and looks beyond just ‘alternative billing’.
Post-recession innovative billing structures
As clients demand more value and efficiency from their law firms, Stephen Hopkins discusses Eversheds’ approach.
