Preparing for Clementi - are you ready to compete?

Peter ScottPETER 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

Client

Perceived

Added

Value

Client Perceived CostBowman and Faulkner 1994 Long Range Planning

High

HighLow

Low

Ave

Ave

X

Suicide Zone

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?