Could more struggling law firms be saved if the sector had a stronger ‘turnaround’ culture?
A trawl through some recent Gazette headlines does not make for encouraging reading – ‘46 job losses as Challinors finally goes under’ and ‘Co-op Legal Services plunges into the red’, to mention two in just the past week.
Of course interest in such stories is huge – and over the past the year, going by our web stats, these are the stories that Gazette readers are most likely to read. Anyone who is well-connected with the market though will tell you that the impression of a lot of firms are struggling is accurate, not hyperbole.
Hence the Solicitors Regulation Authority’s constant focus on financial stability – not least through various questionnaires.
Of course the overriding objective of making sure client money is safe and that clients are protected underpins faith in much of the profession.
But I wonder if enough has been done to show law firms how a financial situation might be turned around.
Such knowledge would not save all legal businesses by a long shot. The accounts of interventions show in fairly graphic detail how far some principals knowingly let a firm slide.
But more might be saved if the legal sector had a stronger ‘turnaround’ culture. That should surely start with much wider knowledge among law firm owners of what turnaround looks like – the timescale over which the hard core of an unsustainable debt can be lowered, and on what terms. The systems and different working methods that help with costs – even knowing what it’s like to reach the, presumably satisfying, point where a firm that ‘engaged with the SRA early’ gets a congratulatory call (or do they just send chocolates and a nice card?).
Insolvency practitioners – whose ranks include some of the most highly skilled members of the legal profession – long ago set out to rebrand themselves as ‘turnaround’ professionals.
Rebrands can seem shallow – and the rebrand may be entirely irrelevant to the way insolvency practitioners are perceived.
But what I do know is that for businesses outside of legal services, there are many more known examples of what rescue and turnaround looked and felt like when it succeeded.
Surely that sort of knowledge would be a timely import for legal services? It would certainly give the legal trade press’s headline-writers more variety in their work.
Eduardo Reyes is Gazette features editor