If small and mid-sized law firms embrace the opportunities in the Legal Services Bill, they will not only survive but thrive. And, actually, it is easier to run a legal practice than a supermarket, says Simon Slater




'Outraged of Guildford' here, responding to the partner of a provincial firm with his head in the sand.



Lawyers are often accused of being arrogant. A piece written by the partner in question in a national newspaper recently is a good example of why this is the case.



The article was a cynical take on a post-Legal Services Bill world focused on a high street practice called 'Lawco's Color It Is'. Get it? The last three words are an anagram of the word solicitor.



The author suggested that the answer to the threats posed by the Bill is 'simple: start our own supermarket. Despite the public perception, there is greater skill in running a legal practice than a supermarket'. It is not the arrogance of this as much as its ignorance that worries me most.



I have news for anyone who holds this view. Speaking as someone who has worked in the retail sector and has also spent more than a decade in legal practice management, I am unshakeable in my belief that, by comparison, law firms are very simple businesses.



The skills required to run a successful supermarket business are many and varied. One only has to consider the words and phrases never uttered in the corridors of a law firm to understand the relative complexity involved: demographics, demand forecasting, customer trends, footfall, supply chain, logistics, procurement, category management, merchandising, and market share. I could go on, but you get the picture.



What this illustrates is that most of the skill in running a successful supermarket is harnessed behind the scenes. The point of purchase - filling one's trolley with products and parting with cash at the till - is the tip of a large iceberg. Much of what happens before the cashier takes your money defines the quality of the shopping experience. It is this experience that keeps one coming back. A law firm's iceberg is tiny by comparison.



The only area in which perhaps the skill required to run a law firm is on a par with a supermarket business is in people management and development. It is, of course, relative since the bigger supermarket businesses employ many tens of thousands of people.



But I would contend that the challenge faced by even modest-sized law firms in sourcing the right people, training them, and maximising their potential is a match for the Sainsbury's of this world. Getting this right determines both the quality of the product (advice) and the quality of the service. In all other respects, structuring and organising the firm to deliver its services is easy.



Yes, easy.



Managing partners of progressive small and medium-sized law firms are already taking action to embrace the competitive challenges ahead. This is borne out by research recently undertaken by the Legal Practice Group (LPG), which is chaired by Professor Stephen Mayson, a respected academic and lawyer. The group spoke to numerous small firms (five to 20 partners) around the country for whom the Bill represents both an opportunity and a threat. Such firms employ around 35% of all solicitors in the UK (another 35% of lawyers are employed by the largest firms, 20% are employed in-house, and about 10% are employed by micro-practices or trade as sole practitioners).



It is estimated by the LPG and other commentators that between 500 and 1,000 of the smallest legal practices could disappear in the near future. This is in large part because of the recommendations of the Carter review into legal aid. Therefore, it is in the small and medium-sized part of the market where perhaps the biggest opportunities lie. For a start, while many redundant lawyers could well find themselves being employed by other high street organisations - banks, retailers, insurance companies and estate agents (Countrywide Property already employs 500 lawyers) - many others could join the more ambitious small and medium-sized law firms.



There is set to be mass consolidation in this part of the market and this is where firms begin to get a little more difficult to manage. Some of the more enlightened firms have shared their concerns with the LPG. Their research reveals that the issues keeping the managing partners of these firms awake at night (and the concerns about which they are now seeking professional help) are mergers and acquisitions, business planning, commoditisation, change management, investment and funding, and brand development.



The challenge many of them stress the most is that of how to build a leading brand within their immediate region. However, while becoming one of the law firm brands of choice in their home town is important, it cannot be achieved in isolation from the other issues. It is encouraging, however, that managing partners of such practices are beginning to recognise they need help. According to the LPG, they want to know what to do now and how to do it.



My message, therefore, to anyone who agrees with the views expressed by the author of that national newspaper article is this: take your head out of the sand before it is too late. Listen to what is already going on and take control of your own destiny before you become a statistic.



The future looks different. It also looks bright for those small firms that are prepared to think differently. In five years' time, there will be proportionately fewer partners in firms and many more employed solicitors and legal executives. In some practices, lawyers will have receded into the back office, leaving client service managers to own the outward-facing relationship. In others, partners will have become directors, responsible perhaps for little or no personal advisory work.



Either way, the opportunities for firms with courage (rather than arrogance) to thrive in the new legal landscape will be considerable.



Simon Slater is managing director of First Counsel Consulting and a founding member of the Legal Practice Group