Smaller firms to collaborate in north-west
An innovative project to help smaller law firms work together to become more competitive has been launched in the north-west. The initiative could involve around 10 Greater Manchester firms setting up a single management company to manage shared support services to help them prosper in the post-Legal Services Act environment.
Law firm consultancy Inpractice said it is exploring how firms employing fewer than 50 people can restructure their businesses to reduce costs.
Inpractice director Allan Carton said: ‘The conventional way in which many small firms currently operate, with limited resources and investment, that limit innovation, cannot be sustained as margins get tighter.’
He said that collaboration, involving sharing the cost of support services, would be a viable alternative to merger or acquisition. However, issues ranging from compliance and confidentiality, to avoidance of conflicts, professional indemnity and security, would need to be addressed before any initiative could become reality, he added.
The project was initiated by Manchester Law Society, the north-west regional office of the Law Society, Greater Manchester Chamber of Commerce and the North West Development Agency. Law Society regional manager for the north west Joanne McLeod said: ‘We believe this is the first venture of its kind. Firms, especially smaller firms, are facing challenging times, and we hope this project will identify new ways for them to move forward to a brighter future.’
Comments
“Who moved my cheese?”
Has the UK legal fraternity read this book? It was a management best-seller a while back, with a horribly simple message. In a changing market, you adapt or die.
Watching the endless mergers and acquisitions between law firms, you get the feeling that the future winners are already getting into position.
Likewise the other groupings. LawNet is firmly established and I’m sure will be asked to provide more and more back-up to its 68 members. QualitySolicitors is developing fast. So is our own www.lawdonut.co.uk collaboration with law firms.
What I find fascinating about the Manchester initiative is the timing. High street lawyers have been telling me for years that it is getting harder and harder to make a living, as more parts of the law are opened up to competition. And then suddenly we have an initiative like this.
It seems so sensible (ignoring the whiff of bureaucracy about this particular project). So why wasn’t this suggested a year or two ago? Answer: Probably, lack of interest. So many of the smaller players tend to follow a strategy of “wait and see”…
…until they realise how competitive things are actually going to get. Suddenly it is not just the commercial firms who are devising more and more ways to drive down costs and to win more business. It is everybody.
THIS IS NOT NEW!
The idea of collaboration is not new; when I entered the profession nearly 20 years ago a group of us in Manchester got together to form a Practice Managers' Forum and were able to share information (unless it was a ring fenced topic, salaries, etc) and ideas, negotiate lower costs, etc.
As a group we were able to influence quite a lot of the operations market (recruitment, IT, stationery, etc) and got a name with suppliers as the group to 'be in with' if you wanted to do business with law firms!
The group disbanded when there was a glut of mergers and restructures (DLA, Halliwells, Hammonds, Cobbetts, etc) and the practice managers 'disappeared'!
I can speak from experience that if the collective is well managed and becomes influential it can have great results in driving down costs but increasing quality.
There has always been a reticence with lawyers to share information and ideas but as long as the 'sensitive' areas have been ring-fenced at the start then it should not be a problem.
In terms of creating a management company, I think there are many issues, that have already been identified, that would need to be resolved before it could work effectively and compliantly but this should not stop the idea from progressing.