Preparing for Clementi - are you ready to compete? Peter Scott PETER SCOTT CONSULTING www.peterscottconsult.co.uk Challenges now facing law firms The economy Government cuts New competitors in the market The P I insurance market Increasing regulation and compliance Technology The changing needs of clients A fragmented profession Given these challenges, never has the need to be more competitive been so great The need to be more competitive “Competition is a process by which … services that people are not prepared to pay for high cost methods of production and inefficient organisations are weeded out and opportunity is given for new…services methods and organisations to be tried” * Could this apply to the legal profession today? *Everyman’s Dictionary of Economics – A. Seldon and F. G. Pennance 1964 Your future market competitors? ABS - owned wholly / partly by non-lawyers with deep pockets? MDP - owned by lawyers and other professionals? Highly developed ‘traditional’ law firms? - national / regional - branded - strong sector focus - franchised / federal models - heavy investment in IT, management and infrastructure Combinations / variants of any of the above Others? Which kind of law firm do you want to be? The greatest danger? - complacency! “Our strategy is to keep a lid on expenditure and weather the storm. We cannot reinvent ourselves as something we are not” Managing Partner of a major London law firm – Autumn 2008 An alternative view… “there seems to be a disturbing strategy of hunkering down, cutting some fat and hoping that business will return to normal. That is not good. The terrain will look very different when this is over. This is not a minor blip, but a discontinuity” “the problem is that most senior lawyers think only two months ahead. They have no coherent picture of the future. The planning is not being done. And it is senior lawyers who need to be driving change” Professor Richard Susskind – May 2009 Forward planning - focus on the fundamentals of your business Your clients Your people How you can achieve your goals The fundamentals of your business – are you making the most of them? Your clients Do you know what your clients want? Will your people deliver what your clients want? What do clients want? Client feedback on one law firm “They always try to sell to us on price – but what we really want is to have a good job done at a reasonable price” How will you be able to deliver this – and still make your margin? Core issue is to add value You will add value that clients care about if… You provide clients with what they need At prices they perceive to be value for money; and You do this better than your competition Position your firm to compete High Client Perceived Ave X Added Value Suicide Zone Low Low Ave High Client Perceived Cost Bowman and Faulkner 1994 Long Range Planning Your people Your people? Are you presently unable to add value to your clients because of: Gaps in your skills base? Under performance? internal attitudes and behaviour? What should your people be doing: better? more of? less of? differently? In particular, how should your people be using technology more effectively? Making technology effective Technology without people does nothing Law firms are people businesses People use technology Are your people helping you to get the most benefit out of technology? Your IT IT is a tool to be used by you in your business to help you be competitive Is it doing so? Do you analyse the cost / benefits of the IT you use? Could you use it better to achieve your business objectives? Your business objectives Client service delivery Financial management Business development Knowledge management Risk and compliance management Others? Encourage your people to think creatively about how to use technology to: Provide better service Improve productivity Build competitive advantage Build profitability How to achieve your goals? You have developed a realistic plan, but… This will require RESOURCE - resource which many firms cannot realistically and at an economic and acceptable cost provide themselves Is lack of resource making you uncompetitive? Often a lack of resource of expertise (client perception surveys will show if this is the case) Often a lack of financial resource (inability to invest in your people and in the business) Resource to enable you to… attract and retain the best talent Resource to enable you to… provide clients with the depth and breadth of expertise they will require when they need it where they need it Resource to enable you to… build the quality management which will be required to successfully compete in the future Resource to enable you to… provide the necessary infrastructure to underpin the effective provision of high quality professional services Resource to enable you to… provide the necessary technology to make you more efficient and profitable Building resource to compete Will you be able to build sufficient resource on your own to achieve your goals? The profession is too fragmented Over 11,000 law firms Over 85% have 4 or fewer partners Most will not be able to compete and survive if they remain as they are Size does matter Competitive growth models? Organic growth alone? Some form of consolidation? How can consolidation enable tomorrow’s law firms to compete? Not about size for the sake of size A means to develop resource at an acceptable economic cost to each constituent firm which individual firms cannot on their own provide A better platform on which to build a more competitive law firm capable of succeeding in tomorrow’s legal market A Vision To build a law firm which over a given period of time will become “greater” than the sum of the individual firms which comprise it. This will involve building a BRAND which can begin to compete with larger, more developed firms for better quality, higher value work leading to greater competitiveness and profitability. Is that a Vision you share? How are you planning to compete to win? Any questions?
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