In business blog

Viv Williams and Steve Billot
Thursday, 28 March 2013

There are many challenges facing the legal profession and access to working capital is becoming even more of a major issue.

This will be increasingly so as up to £300m is removed from the legal aid budget from March 2013 and as the effects of Jackson ripple their way through the profession. If firms face an uncontrolled failure then the Solicitors Regulation Authority will have to intervene to protect the clients whose affairs would otherwise be at real risk.

The recent event at Blakemores where the SRA intervened raises many practical issues for the sector. Stephensons, for whom we have the greatest respect, are more than capable of handling such an intervention and will do their utmost to ensure the principles of intervention are maintained. The real question will be the dilemma between intervention itself and the overall interests of the creditors.

There are a number of fundamental differences between an intervention by the SRA, where the intervention agent is seeking to protect the clients’ interests, and that of an insolvency process which protects the interest of creditors and employees. Whilst the circumstances of the demise of Blakemores have been well documented, what happens next will be paramount in the future lending policies particularly when a charge is placed over the assets of the practice, including debtors and work in progress to secure the working-capital needs of the firm.

In a formal insolvency, an insolvency practitioner is appointed and a process is followed, often over several years, establishing the true and realisable value of the debtors and work in progress resulting in a percentage pay-out to the creditors in due course. It depends on the extent of the insolvency as to how much that percentage in the pound is recovered and distributed.

In the case of a firm such as Blakemores there are literally thousands of files that all need urgent attention to protect the clients’ best interests: Stephensons can only do so much under its brief and the normal process of events would be to distribute these files to willing practices who could effectively continue each file to its logical conclusion. In an insolvency it is normal practice for these files to be heavily discounted to encourage firms to take on the work – why would they if there wasn’t an incentive to do so? Often the WIP on personal injury cases is only realised when the file is concluded at a percentage of the value recovered.

The immediate challenge in Blakemores is that there is no formal insolvency, at this time, of the practice which operated as a legal disciplinary practice (effectively a partnership with non-solicitor members). Therefore we know employees cannot claim on the government redundancy fund and firms interested in taking over files will have no party to negotiate with in order to agree a discount or earn-out basis for the files. They will have to give the usual solicitor undertakings on conduct of the files but how will an eventual liquidator react to their transfer?

Any lenders having security over the WIP and book debts will expect to realise the value for these specific cases yet if these are discounted to, for example, 30p in the pound to protect the clients’ interests then who will be expected to make up the difference? In addition to whom are the realisations allocated. Do they go to the intervention agent to cover costs or to the secured lenders? This is, as yet, untested territory.

The result could end up in litigation and the banks and specialist lenders will question the value of their security in such cases. If the SRA wins the profession may have fewer costs on these cases but the dilemma will them move to firms facing the need for funding, particularly on personal injury and clinical negligence work, where the banks and specialist lenders will surely question their policy regarding such cases.

This further exacerbates the challenges law firms are facing with the referral fee ban and the reduced fees through the portal.

It is more essential than ever that law firms are operated and run as businesses – the traditional access to working capital particularly for firms in the personal injury sector is about to change. The banks and specialist lenders will watch very carefully the outcome of this intervention and the future attitude of lenders could well be significantly changed by the outcome.

The impact of failures at Cobbetts, Atteys and now Blakemores is huge in their respective specialist and geographical areas: these are the early casualties in a fundamental shift in law firm survival and we suspect just the beginning of a very turbulent year ahead.

Viv Williams, (pictured) is chief executive of 360 Legal Group and Steve Billot is a director at RSM Tenon

Jeanette Lucy
Wednesday, 20 March 2013

Complaints allowed before we’ve even signed up the client? This can’t be true, you may cry. Well, I’m afraid it is, but behind every threat is an opportunity waiting to be seized.

The news that even potential clients can now complain about you, following the changes to the Legal Ombudsman scheme rules, as reported on the SRA website, is likely to have been met with a cry of ‘not more pointless regulation!’.

The changes mean it is now possible for someone to complain that you unreasonably refused to act for them or that you unreasonably and persistently offered to them a service which they did not want.

But before you grumble, maybe take a look at the ombudsman’s guidance, which reasonably says that it is accepted that there will be little evidence for the alleged refusal to accept instructions and that there are valid grounds to refuse instructions such as lack of expertise, business reasons and money laundering.

Also, I believe there is a real business benefit to be gained in how firms face up to the change.

At first sight, you may see only the negatives to this rule change – such as more record-keeping to show why instructions are rejected or that marketing is reasonable and proportionate; reviewing client acceptance procedures; making sure everyone knows what the reasonable grounds are for refusing instructions and ensuring everyone is up to date with the firm’s equality and diversity policy.

However, these are all things that a good quality risk-management system should deal with in any event, so many of you will already have the compliance and regulation issues nailed down, but do your procedures really tell you why a client has been rejected?

Behind most (not all!) compliance initiatives lies a good business reason for acting in a particular way and let’s look at the positives behind having procedures for handling potential new clients reasonably and well.

Every new enquiry to your firm is a potential piece of business and given the difficult financial times, increasing revenue must be a good thing. Leaving aside for a moment any issue of compliance and recording how decisions are reached to reject clients, just take a bit of time to think about how well your firm handles potential new clients – and that includes everyone from the receptionists and support staff through to fee-earners and partners.

Here at LawNet, our member firms are just starting on a programme of mystery shopping, delivered independently and impartially by Shopper Anonymous, which will give firms information about how well potential clients are handled, thus allowing business owners to hear for themselves how good (or not so good) the experience is for potential clients.

You may be surprised to know that it’s quite common for potential clients to call law firms, leave a message or even speak to a fee-earner, but then never hear anything further – either because the fee-earner doesn’t take any contact details or the enquirer’s message left on a voicemail, is never followed up.

So what do you now about your process? Do your reception staff turn business away by simply telling an enquirer you don’t do that type of work? It may be the enquirer simply used the wrong terminology and you could have lost a piece of valuable business, or at the very least referred to a ‘preferred competitor’.

Having effective processes in place for handling and monitoring new business enquiries can address many of these issues of poor business development, as well as telling you why you’ve rejected a client.

So don’t look on these new rules as a burden, but as an opportunity to develop your business.

Jeanette Lucy is the director for compliance, quality and learning with law firm network LawNet

David Pickup
Friday, 15 March 2013

Despite not wishing to be thought a grumpy old lawyer I decided to look at the Legal Ombudsman’s recent report, The price of separation: Divorce-related legal complaints and their causes.

This report made the news as it features lots of stories about wicked lawyers. The press revel in bad stories about us. We are told that 13% of divorce clients are dissatisfied with their lawyer as against 7% of clients overall. As a glass half-full person that means to me that a very high proportion of clients are satisfied with our services.

Or perhaps I am being simplistic. My firm has, on average, a certain number of complaints per year. I am told the level is high and I always respond that our clients are vulnerable, challenging and often unwell. But I suppose that goes for all of us. We all act for clients who by their nature are often difficult.

What I wonder is how the satisfaction rate compares with other professions or services. This is not a reason for complacency even though it is obvious that divorce clients are not the easiest; litigation is often driven by high emotions and as someone once said, litigation always ends in failure for one party.

The report itself is sensible and fair. It led me to look at An ombudsman’s view of good costs service. It is a well-produced booklet, easily digestible and worth a look. Show it around the office. It makes the point that the legal market is changing. People can get divorce kits, fixed-price deals, and online advice. What does the high street lawyer offer that the online divorce-kit seller cannot? We can offer easy access and plain old-fashioned face-to-face advice.

Obviously the best way to deal with a complaint is to avoid it in the first place. The booklet goes a long way to help. I will drink to that.

David Pickup is a partner at Aylesbury-based Pickup & Scott

Eduardo Reyes
Wednesday, 13 March 2013

Monday’s news that midlands firm Blakemores, with a headcount of 250-plus, is the subject of an SRA intervention – effectively confirming that the SRA believes that the firm’s finances mean it cannot safely continue to trade – may leave principals of smaller traditionally run firms, who are staring at diminishing returns, struggling to plan for the future, wondering what on earth they should be doing.

Blakemores, and its consumer-facing brand Lawyers2you, ticks pretty much all the boxes that a firm planning for a viable future would want to tick.

It could take advantage of economies of scale.

It left its 14 high streets - with their Poundlands, charity shops, pawnbrokers and betting shops - behind to concentrate on a presence in the shopping centres that all those shoppers who actually had money moved to shopping in.

And its lawyers got out from behind their desks to meet the public – accessible people, accessibly branded. In an age when intermediaries have weakened the link between lawyer and client, driving down fee margins, they looked to face-to-face contact to re-establish that link.

In 2011 Gazette blogger Viv Williams wrote in praise of these forward-looking steps: ‘The lack of imaginative marketing and client care shown by many law firms is precisely why Lawyers2you is a good idea.’

It wasn’t just the outward-facing marketing (branded ‘undignified’ by some) that Williams referred to. The firm was serious about using its market data properly – recording and following up leads, looking for the links that could lead to cross-referrals, then making sure that the approach was leading to actual instructions.

Blakemores was consciously trying to pre-empt the challenge from ‘Tesco law’.

Put simply, the nihilistic question hanging in the air is this: with the sums of many old-style firms failing to add up, if the future isn’t this sort of thing, then what on earth is it?

Details are only gradually emerging of what went wrong here. It’s easy to deride the cheesy ‘Lawyers2you’ tag – it might be on the gravestone, but it’s unlikely to feature in the autopsy.

Instead, the failure of a firm like this should lead us all to dissect some incredibly difficult questions facing the parts of the consumer-facing market Blakemores drew its clients from.

Among them…

If a firm does do a big marketing initiative, in the minds of target consumers is it competing with rival law firms, or with all other big brands? If it’s the latter, you burn a lot of cash in the attempt to establish the ‘brand’.

Does diligent work on cross-referrals and capturing client data deliver a margin that is worth the effort in this market?

Blakemores grew by 20-30% over several years – should a law firm ever look to a fast-growth model?

No one in their right mind will be feeling smug and ‘I told you so’-ish about this news. The alternative to the sorts of things Blakemores tried to do is carry on in a world where margins are falling, the hard core of bank debt is rising, clients buy on price alone, and where a good piece of advice fails to lead to follow-on instructions.

Whether you like the Lawyers2you branding or not (I don’t), and whether you think you should have to stand in a shopping centre or not (I sympathise with the widespread hesitancy here), news like this is terrible news for the legal profession.

And that’s because the question really might be - not, ‘which business model is viable?’, and more ‘is this part of the legal market commercially possible, however you do it?’.

Eduardo Reyes is Gazette features editor

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  • The Law Society and Birmingham Law Society today issued a joint statement on Blakemores, stating that they have implemented an action plan to support all those affected by the recent collapse. It added: ‘A dedicated online information hub has been set up for the Blakemores’ 250 solicitors and employees based in Leamington and Birmingham. The Law Society and Birmingham Law Society are also working closely with the SRA to help orchestrate a smooth transfer of client files in partnership with the administrator. A further note will be issued shortly with the intention of offering a speedy process for Blakemores’ clients to transfer their files to other solicitors in the Birmingham area.’
Nick Kehoe
Friday, 8 March 2013

The subject of Facebook has cropped up quite a lot recently in enquiries I’ve had from law firms.

I don’t know why, Facebook has been running for many years so it’s hardly new. Maybe Spring is in the air and firms feel they need to do more on their marketing, especially on the social media side.

The question is: should Facebook be part of their marketing mix and how do they go about it? This is an awkward question for me because my instinctive response is to say, unless you’re really committed, don’t bother. Facebook isn’t like Twitter, or LinkedIn... or even Pinterest.

For marketing purposes, Facebook is difficult... it’s time-consuming, involves lots of work yet the rewards are very uncertain. To make matters worse, you can’t be sure that Facebook won’t cut the ground from under you just as you’re on the verge of success.

I should point out that I’m not talking about Facebook advertising... the stuff you pay for. I have my doubts about that but that isn’t the subject of this article. I’m talking about the organic social interaction side of Facebook; the kind of marketing that’s free in theory but which in practice may turn out to be very expensive.

Let me explain. The basic premise of Facebook is that you set up a page and put interesting posts about your firm and its services, legal developments, news stories... anything that will catch the attention of the public so you can build up an army of followers.

So far, so good... but there are problems.

Facebook is far from straightforward. Its system is set up so that your posts are only seen by a small proportion of your followers, currently about 10%. This means that if you have 1,000 followers, only about 100 will see any particular post.

You then hope that some of those 100 will find your post interesting enough to share with their friends or followers. This way you will reach a bigger audience. If one post goes down very well and gets lots of shares, Facebook may slightly increase the number of people who see your next post. If that gets lots of shares, you may get a virtuous circle going.

However, it can go the other way as well. If your post doesn’t create much interest you’ll be back where you started.

This means that how many people you reach on Facebook is determined by how popular your posts are and how many people share them. It’s not enough to have large numbers of followers; you also need to produce lots of interesting posts.

This presents difficulties for law firms. The law is a serious matter yet Facebook is a medium designed to allow friends to interact socially in a light-hearted way. As people put up pictures of their boozy Friday night out, how many of them are going to share your law posts?

The question of what material works best on Facebook is another concern. The most popular posts involve pictures, jokes, amusing or inspirational quotes... none of these are all that high on the law agenda.

The other problem with Facebook involves something we can’t predict: what will Facebook do next?

Its practices aren’t set in stone. For example, until early last year, Facebook used to automatically show your posts to somewhere between 20% and 30% of your followers. Then its share price fell, so it cut the figure down to something like 10% - presumably to persuade firms to pay for advertising instead of trying to reach people organically.

Who’s to say Facebook won’t reduce the percentage even further? It raises the question: who wants to put a lot of time and effort into a marketing platform they don’t control and which may change for the worse at any moment?

So, should your firm get involved in Facebook? Well, maybe... but only if you’ve already got more certain and reliable marketing strategies in place. Facebook should be one of your last marketing platforms, not one of your first. And if you are going to do it, you need to go into it wholeheartedly with a lot of resources behind you.

As we’ve seen, it’s full of challenges and is not for the faint-hearted.

As for that social media platform Twitter, well now that’s a different matter altogether. I’m much more positive about Twitter... but more about that in another post.

Nick Kehoe is a former television and newspaper journalist. He is now managing director at law marketing firm Media Coverage

Sue Bramall
Thursday, 7 March 2013

Whatever your marketing budget, it is important to ensure that every enquiry is handled efficiently and effectively in order to maximise the proportion which are converted to an instruction.

An enquiry can pass through many parts of your firm (website, reception, secretaries and other lawyers) before reaching the appropriate person. It will also pass through the phases of an explanation of circumstances and needs, discussion of a solution, outlining costs and benefits, confirmation of proposals, follow-up, acceptance or decline.

At each of these points, your team has an opportunity to impress. A team member may convey empathy and build confidence, or they may not. They may appear enthusiastic and capable, or they may not. How can you monitor this important performance indicator without an efficient centralised system for capturing and monitoring the conversion of enquiries to instructions?

This uncertainty can present a problem for senior management, who may have a hunch or anecdotal evidence that one department is better at conversion that another, but they may not be clear exactly where in the process the weaknesses are.

Ideally you need to know, for each department:

  • how many enquiries they receive;
  • where these come from;
  • how many become an instruction; and
  • if the firm is not instructed, why?

This is fairly basic management information, but given that enquiries enter a firm at so many points, it can be hard to capture and track this vital information. In a recent mystery shopping exercise with one law firm, an alarming seven out of 10 enquiries were lost along the way, for a variety of reasons.

This reminded me of the Swiss cheese model of accident causation – it likens human systems to multiple slices of Emmental cheese. The holes in the cheese represent individual weaknesses in the system, but a system failure (such as the loss of a potentially valuable client) occurs when all the holes in the cheese align, allowing the hazard to pass through unfettered.

Exploring your client experience from enquiry through to potential instruction can be a useful exercise to ensure that there are no holes in your firm’s approach to client care.

Sue Bramall is managing director of Berners Marketing and advises law firms in the UK and overseas

David Pickup
Friday, 1 March 2013

My comments on complaints and the pressures of regulation seem to have hit the mark. Thank you for your responses. Strangely no one has written to say ‘let's have more regulation, audits, and KPIs’ or ‘let's make the complaints regime more onerous for us’. I don’t think that is because solicitors want to lower standards but simply because we are struggling. For years those of us on the high street have had to do better and better work for less and less money.

I have, though, thought of an idea to make money. Fine everyone £1 every time they say the words ‘pro bono’. If you think that is fanciful - my first idea was that everyone who says the words ‘pro bono’ should be boiled in their own juices and have a notice attached to them. I have no problems about large firms that can afford it having pro bono departments, and I genuinely admire people who give up time to help others. I have nothing against it in principle. All firms do work for nothing and have always done so and long may it continue.

It is the idea that it is regulated and forced on us that concerns me. Presumably we will all have to keep logs of what pro bono we have done, why, who for, the backgrounds of the recipients and provide examples, and have a written policy which is reviewed every six months. Even worse is the idea that it is the saviour. All that it really does is perpetuate the notion that we are all rich.

There, I owe myself £4 (£5 including the headline).

David Pickup is a partner at Aylesbury-based Pickup & Scott

Eduardo Reyes
Tuesday, 26 February 2013

In the past week the Liberal Democrats, for whom I once worked, have started to investigate and confront the way that complaints of sexual harassment by party figures were dealt with in the past – announcing two independent inquiries, one QC-led, and co-operating with the Metropolitan police.

We also know the new additions to the Supreme Court, formally announced today, are all men, making Lady Hale the court’s only woman judge.

The Lib Dem subject of these allegations denies the story, and I’m concerned here with the issue of workplace harassment and its link to gender equality.

For surely workplace harassment of the kind alleged and the evident imbalance in senior appointments are, at one level, part of the same story – and there are lessons for any workplace, be it law firms, chambers, political party, bank or supermarket.

We shouldn’t think that just because we know women who can ‘handle themselves’ and, who while being disgusted by an unpleasant experience, get past it, that one might as well put up with a culture where complaints are ignored or not looked at, and serial sleazeballs are seen as ‘characters’.

The impact on fair outcomes in politics, or any world of work, of such toleration is serious – and I think it’s a problem.

The problem with even ‘low-level’ boorish, leering, groping, propositioning, persistent, harassing behaviour is not just the unpleasantness. It invariably goes hand in hand with a lack of respect for those harassed.

And it is hardly an environment where mentoring and collegiality flower.

I’m sure the three judges appointed to the court this week are very good. I also suspect they’ve had long careers marked by the respect of those around them – respect for their brains, their legal skills and their good judgement.

But I also believe those are positive things that everyone should have, and that the absence of respect that goes with the lewd persistence we’re talking about excludes and crowds out such good things.

That doesn’t mean making work a sex/romance-free zone. Going back to the Lib Dems, a lot of my then-colleagues, like me, married someone we knew through politics – MPs in three cases.

I find the difference easy to spot, and I think most people do. But for those who don’t – isn’t it also better for them to know what is, and is not, alright at a point before it makes the national news?

Eduardo Reyes is Gazette features editor

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Melissa Davis
Wednesday, 27 February 2013

A selection of the world’s fashion designers descending on London in order to show their latest collections may not seem to be the natural focus for the legal world, but this bi-annual event is worthy of some study. Whilst you may have little or no interest in the resurgence of the 1960s trend, or the fact that stripes are huge this season, you will no doubt have seen some coverage of London Fashion Week, even if only images of the catwalk shows or gossipy headlines.

Whilst all the glitz and glamour around fashion week courts a very different kind of publicity to the legal sector, at the heart of all the gossip is a highly oiled marketing machine that consistently gets its event onto all of the front pages – at least once a day – and is all over the internet for a five-day period. Given the carnivorous nature of the front pages of our press and the enormity of the internet that’s really no mean feat. But how do the powers that be at LFW make this happen year on year with such consistency?

Embracing technology – people like new technology and they like to use new technology and if you give them the opportunity to engage with that, whilst inadvertently promoting your brand, it’s a much more enticing offer. This year fashion week used almost every type of new media out there to engage with people, from live streaming some of its shows, to posting clips using the hottest new social networking site Vine and getting models to use ‘model cam’ to provide backstage glimpses. The result was that this content was used and reused all over the web, each time driving people back to the fashion week website.

Lesson for lawyers: consider incorporating new technology to showcase achievements, results, in-house expertise and knowledge. Create a YouTube channel and post a series of video ‘how to’ guides, live-stream lectures or client training sessions, or incorporate live coverage of breaking legal news into a website feed.

Using the power of social media – LFW is the master of the hashtag. Not only was the #LFW hashtag trending throughout the duration of the event, but on many occasions the individual designers were too. LFW uses its Twitter all year round and pitches itself as a newsy magazine during the event itself, commenting on collections and linking in the designers to ensure retweets and favouriting. It maximises the fact that it often has an inside scoop to produce tweets and status updates that are informative and frequent, as well as coveted by other users for their own Twitter pages – resulting in numerous retweets. LFW also gets creative with its own unique hashtags, using more than one to cover different elements of the event, such as the #LFWTimeline tag which was used to post updates on show times.

Lesson for lawyers: don’t neglect your social media accounts – a dormant social media account is more damaging than no social media account. Keep your content fresh, relevant, interesting and retweetable and develop a ‘voice’ that you can use to engage with followers. Create your own hashtags or make use of others trending in your sector – this is a great way to gain followers.

Thinking outside the box – LFW is really just an organisation behind a fashion show, but the way it interacts with the public makes it much more than that. During fashion week itself it staged interviews with designers via its Twitter page where Twitter users could put their questions directly and see immediate answers by using the relevant hashtag (again another way to get that hashtag trending). Its website acts almost like a fashion library, providing information on all the designers and their previous collections, as well as those just shown – and the website is updated almost immediately. The site also has a section that caters to visiting editors and fashionistas, providing something of a concierge service, with pages dedicated to the best bars and restaurants in London, where to stay in the capital, as well as where to shop.

Lesson for lawyers: how can you tie together the services that you offer? Try cross selling your services by structuring your website so that clients visiting one practice area are linked to a related one in a logical ‘next steps’ kind of way.

Try to imagine what else clients would appreciate that will set your service apart from others – anticipate queries and questions with information on the website, offer a similar Twitter interview scenario for an hour a week with experienced partners – it might take up an hour of that partner’s time but the attention that this ‘free’ legal advice gets could give your profile an enormous boost. Don’t forget the importance of keeping your web content up to date – leaving out-of-date pages up will immediately put people off, whereas a regularly updated site becomes a ‘go to’ for those in the sector.

There are many ways in which these lessons can be incorporated into the legal world, whatever the context. Social media – from Twitter and Facebook to YouTube and Instagram – are key to digital marketing across all sectors now, and will continue to be in the next few years. As is always the case in our contemporary fast-moving world (even the legal world), those who are first on the bandwagon tend to see the most benefit. Whilst you don’t have to introduce a ‘partner cam’ or go as far as to get clients to provide video testimonials, subtly looking to reach ahead of the competition can reap huge rewards.

Melissa Davis, director of MD Communications

Sue Bramall
Friday, 22 February 2013

With a growing percentage of new enquiries arriving via solicitors’ websites these days, online is undoubtedly a law firm’s most valuable marketing tool.

Whether you are starting a new practice and planning your first website, or contemplating an upgrade to your current site, it can be easy to underestimate the amount of time involved. Most parties involved (solicitors and designers) expect the design phase to take a long time. Solicitors tend not to work visually and so may find it difficult to brief a designer, but they know what they like when they see it, so this can involve a lot of trial and error.

The design process is ALSO complicated if a number of people need to be involved. How do you balance so many personal and subjective design choices without reaching a bland compromise? But this is not the hardest bit!

Once the design is signed off, programming begins and this can usually be accomplished in a matter of weeks. This is the period when the law firm needs to be working on the content, ready to be dropped into the beta site when it is delivered.

And this is where the project timetable can really fall apart. The reason is that because a website is such an all-encompassing representation of your firm, it forces you to think through big strategic questions, such as:

  • Who are we and how do we want to be perceived?
  • Who are our target clients and what do they need from the site?
  • What is our range of services and how might this develop in the next few years?

In the current challenging economic environment, these questions are even more challenging than before.

There is little point in populating a newly designed website with out-of-date material which, if written a few years ago, probably did not have search engines in mind. Therefore there is often a substantial amount of content needed for new services sectors and new team members.

For anyone starting a new law firm, you need to convey your vision whilst giving the website room for your practice to grow.

Whilst partners often comment that it was helpful and useful to go through this thought process again when building a new website, it was rarely planned for as part of the process and it always takes longer than you think it will!

Sue Bramall is managing director of Berners Marketing and advises law firms in the UK and overseas