Back to Basics — a Business Briefing for Lawyers: Productivity

Welcome to the latest edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on Productivity. The Oxford Dictionary defines Productivity as “the effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input:” and in this month’s Briefing we will look at getting more out from the effort you’re putting in. Much of this means working with the resources you have and applying them properly to make sure that you can improve the productivity of the firm. If you’re not getting the best out of your resources then you are harming the productivity and, inevitably, the profitability of your firm. Take some time out to consider how you work on a daily basis and whether there are some things you might think about doing differently that will give you a productivity boost. If you need any help in creating systems or tools to assist you in your productivity efforts please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

Productivity

Every business must be conscious of the need to continuously improve its productivity and to apply its resources as effectively as it possibly can. Unfortunately, due to established working practices and inertia, many businesses fail to take advantage of the tools available to them and instigate the changes needed to achieve those aims. The resources of any business are precious, not least in the legal profession, where fee earner time is probably the most valuable resource. There are only 24 hours in every day—and, despite what the more young and energetic amongst us might think, we still need to sleep. After that, we’re left with somewhere between 16—18 hours every day to carry out a whole host of activities—washing, eating, drinking, getting dressed, relaxing—oh, and working!

To get the best out of the time you spend working it is absolutely essential that you are organised. You need to consider the other resources at your disposal—money is usually pretty high on the agenda as are the people who work with you. As with time, it’s highly likely that your money resource is not limitless. In the course of the last few years, money has been very “tight” for many, many legal practices and this has resulted in redundancies and short time working. As the recovery, such as it is, continues, it is important to consider all options to aid productivity rather than simply engaging more people. You are likely to have some form of office that you use—even if it’s a home office—and tools with which to do your work—a PC will probably feature in the mix somewhere as will, potentially, a Practice Manager system. Do you use these resources wisely…. properly…. at all? Finally you need to look at the processes you employ to carry out your day to day work. People say it’s hard to change and think about doing things differently.

If time is your most valuable resource and if you don’t use it properly you will lose it then it makes perfect sense to look at the ways you and those in your firms do things and work out the ways you could do things differently to employ your resources more effectively and improve not only your personal productivity but that of the firm as a whole. Improved productivity inevitably leads to improved profitability—after all, that’s what being in business is all about —isn’t it?

What are you going to do today?

In a previous issue of Back to Basics we looked at Objective Setting—and the need to write down your clearly defined objectives. This helps you to keep focused on what’s important to you and what you want to achieve in your business. Last month we looked at the Importance/Urgency Matrix that you can use to help you decide what parts of your work are top priority and which parts are unimportant. Another tool that many successful people employ is the To Do List—and not simply a list of all the things you need to do, but a To Do List that’s prioritised. To start off you need to list everything that you have to do—yes, everything. Then assign a priority to each item on the list, starting with A items and ending with F items. A items are the most impactful on your business and should be the things that will do most to help you achieve the objectives you’ve set. They might not always be the most urgent (but many are) but they will certainly be the most important to you. B items are not as important as A items but tend to support them whilst being more important than C Items. C Items are the third priority items which are less critical than A or B items. When it comes to D items, you really need to consider whether you should be doing these items at all.

By prioritising your A, B and C items you’re deciding that only you can do these things—and if, when reviewing your list you feel that there are some things on it that might be best dealt with by others, then demote them to Ds and delegate it to others. The E and F items on your list tend to be the “like to do” items and you need to consider whether you need to do these things at all! Once you’ve assigned each item a category you should then group all your A items together and prioritise the most important item in that group as A1. Decide on the next most important and assign it A2. You go thought your A list and assign a priority to each item. Then start to work on your highest priority item—your A1 item—and you don’t move on to any other item till your A1 item has been completed. Then move on to your A2 item and do the same thing. If something comes in during the day that you need to deal with (as it inevitably will), add it to your To Do List and determine its priority rather than just starting the task without thinking about it. Try to avoid distractions—particularly email distractions.

People tend to work with Outlook open, with prompts telling them a new email message has arrived. This is probably one of the biggest “attention thieves” that you are likely to come across. You should ring-fence some time each day to deal with email—and close down Outlook outwith those times—and if you can’t bear to be without Outlook being open, at least turn off the new message prompt! Solicitors work hard—it’s just sometimes they don’t work smart. Have a go at creating and using your very own Prioritised To Do List. Do this every day and watch your productivity soar!

Simon says…..

‘Performance’ is one of those often thought about aspects of running a law firm but one that is rarely attributed to any individual’s job description. Which is odd really because it can be easily measured, compared, analysed and then improved or worsened; by just a single decision. When I meet Partners of law firms to talk about IT, we often stray into other areas and a favourite question of mine is this – ‘in order to improve efficiency would you foresee doing more tasks yourself or delegating more tasks to others?’ By the way, there is no right or wrong answer – all 3 possible answers are perfectly acceptable (the 4th one involving not changing is obviously not acceptable). There are some common aspects of achieving an increase in the performance of all law firm staff. The quality of your Style Template Library is a vital component. I don’t mean simply having one. I mean having it in electronic form, having it available immediately to anyone that needs it, having all the common fields in-filled automatically from your client and case file information, storing the resultant letter or form automatically and distributing it electronically to the recipient – this would seem to me to be a utopia of performance. I rarely find it.

Even if you fell short in the final stage it would still be a tremendous leap up the performance ladder for the vast majority of law firms. A common failing of some Partners is the failure to agree on common styles for the firm itself to use, preferring instead to adopt individualistic forms of standard correspondence that fails to grasp any form of economy of scale that a basic Document Management system can provide. Some firms will be unwilling to invest any time or effort to produce a style library – fortunately there is an organisation called The Styles Bank that can supply ready-to-run Style Libraries that are kept up to date for you. I strongly suggest that you check them out. As I have suggested above having an automatic store of electronic documents – often referred to as a case management system – can make it easier for colleagues to retrieve files when you are out of the office and they are trying to cover for you.

This is doubly useful if you have also filed your emails in it as well (both Sent and Received). This means that there is a phenomenal reduction in staff time spent printing and filing (always a challenge in itself) and then locating the appropriate file (a lost file is a real daytime nightmare). These simple gains in productivity will convert directly into improved performance – and clients will notice. No Fee Earner is an island – there is always a team. People are change resistant, so there is often a proving stage to be negotiated, but if your improvement programme is sound, implemented well and people can see the benefits, they never want to go back afterwards. Your role is to keep them moving forward and to praise them when they achieve good results. By the way the 3 possible answers are:- 1 – Doing more myself. 2 – Delegating more. 3 – Both.

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

Get organised

Keep your workspace clear, clean and tidy and try as hard as you can to have only 1 file on your desk at any one time. This will help you to focus on the matter at hand. Keep other files that you intend to work on nearby on a shelf or table so you can move on to them after you’ve dealt with your current file. When you deal with a case, do everything that can possibly be done at the one sitting—don’t do a little bit and then ask for the file back to do another little bit and then repeat the process. Do as much as you can in one sitting—”single-hand” everything you possibly can. Put a reminder in your Diary or Task List or, better still, your Practice Management system, and after that put the file back in the filing cabinet—then, at least, you’ll have half a chance of finding it when you need it.

Do you know that you can spend up to 30% of your working time looking for something that has been misplaced in some way? That’s a huge waste of one of your key resources and should not be viewed lightly. It can get worse, of course, when you engage the assistance of others to help you find the file. Just think of all of the productive things that you and they could be doing instead of trying to put your hand on a missing file—and if everything you do is in your Practice Management system, you might not need the file at all! It pays to be organised—don’t let that thought ever leave your mind.

Review your processes

We all take the way we do things for granted. Stop for a minute and think about all of the things that are done in your firm on a daily basis and why they’re done in that way. Is this just because “that’s the way it’s always been done” or has someone actually determined that it’s the most efficient and effective way to do the task? Make sure that the right person is assigned to do the right task—don’t have high cost people doing low cost work! Think very carefully about every process in your office. If you find any that are inefficient or ineffective—change them.

Lawyers love documents!

I’ll bet every lawyer who receives this Briefing generates several hundred letters and documents every week. Unfortunately, many of these documents are created from scratch when they don’t need to be—with the same thing being dictated over and over again. That means something that could easily be incorporated into a standard Work Template taking a few seconds to produce takes minutes to dictate or type (or have a secretary type). All of these minutes add up to weeks of wasted time. Do yourself a favour, consider having as many of your documents as possible created using Word Templates that can be easily accessed. It will take less time to produce your documents and letters and give you half a chance of enhancing your risk management processes.

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

Back to Basics – a Business Briefing for Lawyers: Checking out the Competition

Welcome to the July edition of Back to Basics — a Business Briefing for Lawyers.  This month the focus is on checking out the competition—in management speak it’s called Competitor Analysis.

It’s not often that I dedicate a large part of the briefing to a graphic, but if you have any aspirations to compete it’s essential that you know how to check out the competition and what you may find when you do.

Michael Porter’s 5 Forces Analysis is an ideal tool to help you think about your competitors—and not just those who are in the same business.

There are competitive forces coming at you from all angles and to be aware of these is the first step towards shaping your offering to address the ever-changing competitive world.

Again, I need to be brief—Michael Porter dedicated a whole book to Competitive Strategy and this model appears in the first chapter— but I hope to cover the essentials

If you need any help in carrying out your analysis of the competition or using Porter’s 5 Forces Model please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

e.   brian@drakemyre.co.uk

 

Existing Competitors

Like it or not, you are continuously in competition with other legal firms that do the same things as you, are in the same locality as you and trying to attract and service the same client base as you. This has been the traditional position of the legal profession in Scotland for years (although that is beginning to change). There are two aspects to this part of the analysis– the first part is to establish your own competitive strategy (and we looked at strategy in Back to Basics in July 2011) and once you’ve done that be aware of what other firms are doing to win and keep their clients. You need to consider whether your competitors are competing with you on price—and if they are and you don’t want to compete on price, then you might need to think about trying to attract a client base that is not as price sensitive as your competitors. Are your competitors’ differentiation strategies suitably robust that there is a clear difference in what they provide when compared to your services—or are yours suitably different from theirs? If not, then what can you do to change that? Please take some time to consider how you challenge to win and keep your clients and what other firms do to try to win them from you—and develop your strategy to meet that challenge.

Client Power

Clients are not, in the main, silly people. They are getting more and more savvy as time goes on and have realised for some time that their business is something that they can bargain with. This means that they  can choose to “sell” their business to whoever will provide a service for the lowest cost. Yes, I hear you say, this has been going on for years—remember the “any conveyance for £250” of the early 1990s?

We’re in a double dip recession. Inflation is coming back to the expected levels after a bit of a high where wages were pegged back. People (your clients—be they individuals or businesses) are cost conscious and, as a result, many will want to know exactly what you will charge and, if the figures don’t suit them, may take their business elsewhere.

So, you need to consider what value you can provide to the client—your own reputational value will not be sufficient unless it is backed up by excellent service to the client at a price that the client is prepared to pay. Remember, a client will tell 10 people about a bad experience he or she has had but may not tell anyone about a good experience—and the same goes for the service you provide.

The threat of substitutes

The final threat you need to consider is what alternatives are out there that can do what you do? These exist already. A simple example of this is the Link2Law offering that is available to the public at large—essentially a document assembly web application that allows you, through a series of questions to create a range of documents that might otherwise traditionally be provided by a solicitor—but without a solicitor being involved (and this web offering is owned and operated by a large firm of solicitors in the north east of Scotland). This is the tip of a very large iceberg and over time we will see more “self service” web offerings without any solicitor being involved in the delivery.

Supplier Power

We’ve already seen lenders flex their muscles. They’ve thrown solicitors off their panels, restricted their panels to a very small number of solicitors and then suggest that the purchaser of property should use that small panel of solicitors to act on their behalf in the purchase transaction. I think this type of behaviour is anti-competitive and could be subject to challenge. Just think, you have a client who wants you to act but is told by their lender that it would be cheaper if they used the lender’s panel solicitor to deal with the purchase than their own solicitor. This is a very simple example of a supplier of services influencing the marketplace and introducing practices which put pressure on your clients to switch to a new solicitor—and once they’re gone, they might never come back.

Do you have other suppliers of business to your firm who are beginning to dictate the fee levels you can charge if you want to be passed business by them?

Do some of these suppliers actually provide part of the service you would normally provide and only leave you with a much smaller involvement—for which you can only charge a small fee?

Review your relationships with your suppliers and find out where the pressure points are—or where and when they are likely to come.

New Entrants

Yes, we’re back to that old chestnut—ABS, something that’s caused a lot of trouble within the legal profession in the course of the last couple of years and which is coming ever closer to reality. An ABS organisation will be part owned by non-solicitors and we have already seen a raft of licenses granted by the Solicitors Regulatory Authority in England to organisations ranging from the Co-op to Eddie Stobart (yes, that’s right, the haulage company). If you don’t believe me, have a look at this. Don’t be so naïve to think that the 51% ownership by qualified solicitors will be here to stay for ever—remember there is provision in the legislation for approved professionals being allowed to own that 51% share (in other words, the whole organisation) without there being the requirement for a solicitor to be involved in the ownership. We’ve already seen that Chartered Accountants being granted that status and it will not be too long before others follow. It’s not only ABS organisations that solicitors should worry about—the Legal Services (Scotland) Act  2010 also makes provision for the introduction of Registered Will Writers and Confirmation Practitioners who, along with ABS organisations, will be challenging for your business. Remember too that there are organisations that are looking at introducing services in non-reserved areas and these too will be competing with you for your clients. Prior to being authorised as a provider of legal services by the Solicitors Regulatory Authority in England, the Co-op last year turned over THIRTY MILLION POUNDS in revenue generated from the provision of legal services in non-regulated areas of business—and lest you think that you have time to spare before they get up to speed, I can tell you that I’ve already had a mailshot from the Co-op offering their funeral planning service coupled with their Wills and Executry services.

Think about it this way—you have many, many clients that you should be in touch with on a regular basis. The Co-op has many, many members that it is in touch with on a regular basis. Now, if the Co-op is in touch with its members who are also your clients and is offering them the kind of services that you provide and you haven’t been in touch with your clients to offer them these services then you will certainly be challenged to retain those clients for very much longer.

Simon says…..

What are you saying?

I’ve said it before – it’s an interesting time to be a law firm.

I think most lawyers have now realised that the recession has ended. It actually ended shortly after it began, there is no sign of any further recovery therefore it is safe to assume that this is it. So where are we? We find ourselves competing in a market that is smaller than it used to be and the results of firm’s not adapting to this are very evident. However, the question remains – how can you attract more of the active clients that are out there (than your competitors can)?

I am amazed that some firms still rely on a singular source of business particularly if its ‘word of mouth’! I can’t really count listing type adverts in Yellow Pages – if you are simply in a list with loads of other solicitors then I don’t see the point. Unless your advert really stands out; has a powerful message and strong call to action.

And there’s the first point of my piece – what is your message to your market place? How are you getting that message through? Is it working? Once you start doing that then your competitors have something to worry about. Until then, they don’t.

You will need to keep an eye on what they are doing. Those firms that are more focussed on winning new business will be easy to find – that’s the point. They have sorted out what they want to say and who they want to say it to.

Put yourselves in the shoes of different types of buyer – and imagine how they would go about finding you. There are different types of active clients and you may find your competitors are targeting particular types e.g. the cost conscious, the distraught, the elderly, the young, family owned businesses, sole proprietors, plc.’s, etc, etc. Notice that I haven’t said what type of work is involved – that is because I am targeting a type of person or type of business. This is how marketing works.

is my second point. Promoting yourself is a very necessary and vital aspect of business nowadays. You have survived the recession – congratulations; many firms haven’t. Now is the time to build your business. It’s up to you but if you should assume that your competitors are because everyone is in the same boat and those that take proactive steps will have a better chance of progressing into the future than those that stand still. That’s what promoting yourself does – it improves your chances. It is a competitive world for the majority of law firms and it’s only going to get worse. Whilst the number of mid and large firms contract, the number of small firms emerging is growing and then we will have new entrants coming next year. And there will be new entrants. The competition is increasing and will increase further despite the smaller number of active clients! They must be confident that they can attract a decent share.

Now is the time to position yourself in your market place.

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

Back to Basics — a Business Briefing for Lawyers: Managing

Welcome to the latest edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on Managing. Each edition of Back to Basics addresses a single management item and on this occasion I felt that it would be sensible to consider some of the processes that go into managing. It’s made up of many, many components and we can only scratch the surface in the limited space we have available in this publication—but we’ll touch on some of the essential elements you need to consider. Effective management is something you need to work hard to achieve—and you need to use a very wide range of skills and tools. It can take years to develop as an effective manager and you have to start somewhere—and where better than with the basics! If you need any help in creating systems or tools to assist you in your management efforts please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

e.   brian@drakemyre.co.uk

Managing

Running your own business can be a bit like fitting together a jigsaw puzzle— you know all of the pieces are there, but it’s not always easy to find the right pieces in the right order and fitting them together. Management in a legal firm has always been viewed as something you learn on the job—or not, as the case may be. This leads to many, many difficulties, not least of which is having to make decisions without enough information to support them. Ad hoc management decisions inevitably produce results that are unexpected and generally poor. These lead to further ad hoc decisions being made which simply compound the problems. I’m not suggesting for a minute that management is an easy thing to do or that it is a panacea for everything that goes on in a legal firm.

If management is simply a case of “doing it by the numbers” then everyone could do it and become a success. There are, however, some fundamentals that need to be put in place for the smooth operation of any firm. There should be a clear purpose—where is the firm going? There should be some sort of “plan” to get there—and a written plan with specific objectives or milestones is critical. This is an essential tool to help you assess how you are performing. You need to ensure that your financial information is current and that you can see how your monthly results impact on your overall annual projections—and what that will mean to you in cash terms. You also need to make sure that you let your clients and the public know what you can do for them. These are just some of the pieces of the puzzle and your challenge is to fit them together in the right way to create a business that is effective and successful.

A view from the High Street

I’m delighted to welcome Austin Lafferty as my guest contributor in this edition. In his firm, Austin has developed his managing role over the years and now operates a distributed practice across 3 branches. In addition to managing his firm, Austin is Vice-president elect of The Law Society of Scotland and takes up office at the end of this month.

Here’s what Austin has to say on the subject:

Like so many solicitors with a relatively small firm, I started out with little idea of management, and, frankly/sadly, something not much more than contempt for that function, which was regarded as a minor function that sat in a backroom role around the edges of running a law practice. In other words, it was assumed that clients would come in, the solicitor and staff would do the work, get paid, and move on to the next case/transaction. I learned over a few years that if this philosophy had any traction, it would have been many years ago in a different world. The reality was and is that structured, planned management can either increase your profits while reducing your risks, or, in rough times, can secure your survival. I remember watching an episode of LA Law (it dates me, I know) and the story was that the managing partner (Douglas Brackman – bald but handsome…) was ridiculed by the glamorous litigators and real estate whizzkids for creating no fees and being a boring and almost worthless functionary who was only holding them back from bigger and better things. He went on strike. Within 3 days the whole firm ground to a fractious halt with mayhem and loss everywhere. Message received. No lawyer is an island.

It was the rise of computers that really got me into a full appreciation of management values. From the early 80’s I was involved in media work, and although this was the birth of commercial IT for law firms, I had to learn to type and use a PC (or Amstrad) to write scripts for TV and radio shows, and for newspaper columns. Having worked in these environments, I could quickly see how the techniques could be adapted to a small law practice. As I began to apply them, that led to other ideas, rationalizations, developments, changes. And as these played through, it became apparent to me through chatting to clients, friends, colleagues in other professions and trades that what I thought of as innovation was either standard procedure or even best practice in the wider business world. And that realization was the tin lid on it – management is not a lesser exercise or something that happens to other people, it is a universal tool of organization, and in effect essential to the profitable and safe practice of the law.

It is a sad fact that still, well into the second decade of the 21st century that so many law firms don’t yet appreciate this. I was involved in a number of seminars and conferences in my Law Society of Scotland role, aimed at helping the high street general practice division of the solicitor profession in Scotland in the light of the general economic downturn. Although I used as much of my ability, experience and understanding of management to suggest a wealth of ideas for firms to use to help themselves (not my personal ideas, just general tactics known to be useful). Some listeners got it, but a fair few looked blank, and some, even in the questionnaires completed by attendees, treated the ideas with naked contempt (makes you wonder what they were doing there). Let me leave you with this thought. Management is a never-ending story. You cannot rest on your laurels, there is always a better mousetrap, a new challenge to face, a risk or an opportunity arising. It is never enough to be a good lawyer. You need to have a business brain, and treat your practice as an organic enterprise that is capable of being grown, harvested and pruned when necessary. Profit is the crop, and the fertilizer? Constant vigilance and hard work – with always an open mind.

Simon says…..

There is a great deal written about this subject. A Google search for the specific term ‘law firm management’ will list millions of hits (over 43 million – I checked!). A lot of people appear to know a lot about it! So why is it something that features so little in many Scottish law firms? I know this is generally true from personal experience. I do think you have to be of a certain size before ‘management’ becomes a definable aspect, which can probably be summarised as the point at which it regularly encroaches too much on client work time. Then it becomes time to get an Office Manager and the problem goes away. Ironically it is at this point that Management disappears and get replaced by Containment, when Management gets associated with Staff and this ‘problem’ is delegated to the new Office Manager or promoted secretary.

The issue I have with this is that Staff is the single most important resource any firm has and if responsibility is delegated to someone with no interest in how effectively this resource is utilised then it won’t develop, it won’t improve – it will be contained. Yes, I know! – lots of ‘management speak’ in that statement. You’ll know if this has happened in your firm as you will have heard this phrase – ‘We have always done it this way’ – numerous times. This is not to say that Staff is Management. Management is a multi-disciplinary facet. There are 4 areas in a law firm that should be constantly changing and evolving and thus require managing:-

1. Case Load Performance 3. Business Development
2. Financial Performance 4. Staff Development

And these need to be proactively managed by setting a target, actioning a plan and reviewing the results.

Simply reviewing performance is not Management, anyone can review performance. Managers set targets and think about how to achieve them. I personally describe this level of activity as tactical because there is always something going on with each of these, a bit like plate spinning, and each contributes to the overall success of the firm. As I’ve just hinted, each of these has a supporting role in something bigger and more overarching – Strategy. A firm of any size should have a Strategic Plan, encompassing the 2 vital ingredients that all successful law firms have – Vision and Direction. Ask yourself two questions – Where are we going? [Jot the answers down]. And then – How can we get there? [Jot the answers down]. Now you have started your Strategic Plan; keep at it!

Prioritisation

Deciding what is or is not important is a key part of the management function— whether it relates to managing your cases or managing your business. By creating a grid like this you will be able to separate out and prioritise your tasks. Write down all the tasks you need to do on a separate piece of paper. Once you’ve done that, think about them in terms of importance and urgency and then list them in the quadrant that best matches the priority of that item—the most urgent and most important go into the top right hand quadrant and the least urgent and least important go into the bottom left hand quadrant. You should then work your way through the most urgent and important before anything else—then move to important, but not urgent. You then need to consider whether things that are in the bottom half of the grid—the urgent but not important—or non urgent and unimportant items need to be done at all. You must always remember that if you don’t manage your work—and that includes all the various management tasks—your work will manage you. You must make it your priority to ensure that it’s the former and not the latter methodology that you practice!

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

Back to basics – a Business Briefing for Lawyers: Managing Performance

Welcome to the latest edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on Managing Performance. It is essential that every firm has a range of Performance Management tools—not only of a financial nature (although those are very important) – but more wide ranging.

Armed with these tools, firms will be able to make decisions based on factual foundations rather than on “gut feelings” or “instinct” which, sadly, can prove disastrous. We will touch on just some of those tools in this month’s Briefing. You should not only check your performance for the current month but also over a period of time to help you gain an understanding of the way your business is working and what trends there are that are affecting it. If you need any help in creating systems or tools to assess your performance, please get in touch with me—I’d be delighted to help.

Performance Managing

You see them vying for victory every week during the F1 season – trying to improve their performance week on week. They try things to see if they work, and if they do, they keep them and if they don’t they discard them and try something different. The whole team knows what it’s trying to achieve and they all have a part to play. They measure everything that goes on because they know that by doing that they will find ways of improving that will help them win the race. In your business, there is no difference between what they do in Formula 1 to what you need to do.

Every business needs to have a range of Performance Measurements against which it can test its progress. There are the obvious financial measurements in the form on budgets and projections which you can compare to actual results. You can measure the number of new cases that you opened this week, month or year against the same period last year. You can count the number of new clients that you’ve taken on— and where they came from. Are your Sources of Business continuing to perform as you expected them to? You must identify the information that is important to you and once you to that you must check your progress against that. Are you going to make the effort to improve week on week or are you just in the race to make up the numbers?

If you can’t measure it you can’t manage it!

It’s well known in the world of management that you can’t manage something if you can’t see it—and if you don’t set any performance measurements then there’s nothing to see. It is an essential element of running any business to set performance measurements. Without these you will have no accurate idea of how your business is doing. Simply relying on the bottom line in your bank balance will not give you a very good idea of which parts of your business are performing well and which are performing badly. To do this you need to introduce a range of performance measurements. There need not be a huge range of measurements—but you do need some. As I mentioned earlier, it is prudent to have a range of financial measurements. You really should set out a budget for your financial year (and if you’re part of the way through the financial year and haven’t set a budget—set one for the remainder of the year). Every month you should compare how you’ve done against your budget. You should look at which areas performed well and which areas performed badly—and, in each case, work out why. You should also benchmark your results against the Cost of Time Survey conducted by The Law Society. You will find a range of Financial Ratios in that Report against which you can test your own results.

If you are intent on growing your business profitably, you will be interested in where your new clients are coming from and to compare how many new cases are created by new clients against the number of new cases generated by existing clients. A monthly Source of Business report is a good barometer as to whether you have solid connections that supply you with new cases month after month—and whether a once successful Source of Business is now in decline.

Reading rows and rows of numbers can be difficult and don’t necessarily help you to spot trends. Try putting the resulting into a Chart to compare your projections against your actual results or, in the case of Source of Business Reports consider establishing trends over a period of time to see if there is an improvement or decline from your various sources of business. As can be seen from this chart, existing clients and client referrals are performing well, referrals from the firm’s Web site are increasing month on month, Yellow Pages produces a very small number of cases and might not be worth the money and there is a declining trend in IFA Referral work. This assists you in making decision about which areas you should focus on for growth.

Simon says…..

If I was a budding Olympian (I wish!) then the term performance management would be an oft used phrase. If I was CEO of an FTSE company it would be part of the furniture. So is it something only associated with participants that are at the peak of their chosen field, or, is it something to do with how you attain the heights of capability. The above have teams of dedicated people to measure, analyse and report, which of course isn’t the case for your average law firm in Scotland. Having said that, I reckon you only need the teams of experts if you are trying to win a medal or keep investors happy. The average law firm in Scotland can be informed about its performance much more easily – simply use modern Practice Management software that takes a holistic approach to the firm rather than just the Cashroom.

The most common tool to measure a law firm’s performance is probably the cash accounting system. Unfortunately far too many cash accounting systems were designed for cashiers to use, which means they pander to the needs of the few rather than the needs of the many. Compliance isn’t difficult to achieve and it’s certainly not an aspect to be feared or shrouded in ignorance. Any decent Practice Management System (PMS) will make Compliance transparent to all and automatically alert Partners as to how Anti –Money Laundering and Cash is performing – and, it will show you how your Fees Rendered and Fees Recovered are performing – although don’t be one of those people that think Fees Rendered is the goal; it isn’t – only Fees Recovered (i.e. cash in your bank account) is of practical use to today’s law firms. A good PMS will reveal how quickly you fee (by Work Type, by Partner, by Department) and how quickly you get paid; by revealing the number of days it takes to be paid – then starts you thinking about how you can reduce it. It will also show you any clients with a £500+ credit balance — and show you any clients with a Credit Balance and Fees Outstanding if your Terms of Business says you can take a fee if sufficient client’s funds are available, then call client and let them know you are taking it. If your Terms of Business doesn’t say this – change it. If you are currently using the Bank Statement as your primary performance management tool, then have a look at a modern Practice Management System; you will get a very pleasant surprise if you do. You may be one of those that waits for the accountant to tell you what’s what after the financial year end. The difficulty with this is that by the time you find out there’s a problem; it’s too late to do anything to improve things in the relevant financial year.

Many firms are trading on an overdraft, in which case the bank has probably taken a proactive role as far as reporting is concerned – in many cases this was because the firm itself wasn’t proactive. However, don’t simply be feeding the bank with what it wants to know; understand how good your business development is – report on new clients introduced and new instructions received as these are the things that will feed through into your cash figures in due course. Understand the dynamics of your business: what number of cases lead to what level of income, what are the overheads and expenses that underpin which levels of work type; How are they performing? Is a good question. How can they perform better? I would suggest is the goal.

Fee Earner Performance

Because of the nature of legal firms, it is very important that Fee Earners have their performance measured. In many instances Solicitors are not only the owners and managers of the business, they are also the prime producers of the firm’s income through the work they carry out to generate fee revenue. You should consider measuring the number of cases a fee earner is dealing with at any given time, when it is likely that these cases will generate an income—and how much. You will be interested in the number of fees the Fee Earner renders each month and, most importantly, the number of fees the Fee Earner recovers each month. You can look at the averages of both the number of fees raised each month as well as the average value of fees rendered and recovered and by doing do make a reasonable projection of how much a Fee Earner is likely to generate over a future period.

You can also test what the effect would be of either increasing the average number of fees raised or the average value per fee (or both) or, more worrying, what the impact of a decrease in either of these figures would lead to. To follow this process to its logical conclusion, you will be able to set costs against the Fee Earner—not just the Fee Earner’s salary but also Employers NI and the share or overhead that is attached to the Fee Earner for use of the office space and systems –and the cost of any secretarial or administrative support. By doing this exercise you will be able to calculate Fee Earner profitability. This is a very useful measurement to help you with your decision making. It may seem from taking a “top line” approach based on the value of Fees Rendered that a particular area of work is valuable to the firm but when you analyse out the cost of that work you may well discover that when the cost of carrying out the work is applied that the profitability is simply not there. This may help you to determine how that can be dealt with or whether the firm should continue to do that particular type of work.

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

Back to Basics — a Business Briefing for Lawyers: Managing Change

Welcome to the latest edition of Back to Basics — a Business Briefing for Lawyers.

This month the focus is on Change and Change Management. What a topic to try to cover in a couple of pages! There’s a school of thought that says all the best companies are in a constant state of change—and that’s not wrong. I should make clear, though, that it’s not always wholesale change. Incremental change can be extremely effective. Be careful to make sure that you can justify the reasons for change—there’s no point in introducing change for change’s sake. Make changes that will support your objectives, improve your services and increase your profitability— that’s what you’re in business for, after all. If you need any assistance to introduce and/or manage change, please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

e.   brian@drakemyre.co.uk

If it’s so hard to change—why bother?

I’ve lost count of the number of times I’ve heard the phrase “but this is how we’ve always done ……”. (add your own ending). There is no doubt that many people in most businesses are change resistant—they would rather do anything other than change the way they do things. They are emotionally attached to internal processes that can be shown to be outdated, obsolete, time consuming and no longer fit for purpose—but suggest that they change the way they do something and many people behave as if you’ve just suggested that they should jump off a very high cliff! I’ve mentioned this before in this Briefing, and I believe it’s worth repeating. If you want to change the results you’re getting then you need to do things in a different way—or to put it in a much less charitable way—the definition of insanity is doing the same thing over and over again and expecting a different result. Change is a challenge and many employers shy away from that challenge, sometimes because they fear change themselves! In the last few years change has been forced on many legal firms. External pressure caused by the recession meant firms had no choice but to review the ways that they structure their staffing requirements and be selective in the work they do.

Some firms moved away from doing what they believe to be unprofitable work whilst others diversified into areas where, in the past, they did not provide services. These changes have been forced on the profession by external circumstances and it is clear that there has been a great deal of pain. Change forced by external pressures will inevitably result in unpalatable decisions being made and changes implemented that would not be the first choice of the partners in the firm—I know many partners who had to make the very painful decision to make staff redundant or put people on short time in order to cut the cost base just so the firm would survive. It will come as no surprise, then, to learn that change driven from within and implemented through choice can have a much more significant impact on the future of the firm. This is change that’s introduced not for survival but for a positive purpose. Finally, there must be a reason for change—and what better reason than to achieve the objectives that the firm has set –Oh!, you did set those back in January when we discussed them…….didn’t you?

Back to Basics – a business briefing for lawyers: Marketing made simple

Welcome to the latest edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on marketing—and it’s not just advertising that we’ll be talking about. Marketing touches every aspect of your firm. It starts with your ability to deliver to your clients what you say you’re going to deliver and ends with winning new business through a process of designing systems and methodologies that allow you to provide services that are fit for purpose and then telling the world at large about them.

Gone are the days when a solicitor could depend on having a “client for life”. There are very strong competitive forces out there—and the worrying thing for lawyers is that their competition is no longer just other lawyers, but other more commercially minded enterprises— and that’s before we even have to consider the impact of ABS! This edition will look at marketing as a tool to help you improve your business performance by ensuring that you’ve done the ground work and then proclaimed your capabilities to the world at large.

Marketing is not a “One-off” activity

The are many anecdotal stories of solicitors conducting a “Wills Campaign” and then declaring “It didn’t work for me”. Well, there’s a very clear difference between sending out a mass mailshot to a whole bunch of people who you believe are still clients and conducting a well thought out, structured and continuous campaign to ensure that those of your clients who might not have a Will think about making one—and those of your clients who do have a Will, review it on a regular basis.

Whatever else Marketing is, it is an activity that must be undertaken on a continuous basis—and that means that there is a need to ensure that it is properly resourced. I don’t mean by this spending a lot of money on expensive advertising. What I mean is that someone in the firm needs to take responsibility to ensure that whatever the firm does to design and promote its services , it is done, properly, professionally and, most importantly, continuously.

The four Ps of marketing—Product, Price, Place and Promotion apply just as much to the legal profession as they do to any other commercial organisation—with the P of Products being replaced with the S for Service. So, try this for a very quick exercise: Review the Services your firm provides, determine the Price at which you will provide those Services, decide where you want to Place your Services and then Promote them sensibly and continuously. You need to plan this carefully and engage with others in the firm to do this. And once you have your plan it’s not always necessary that a lawyer has to actually run it—some would say that it would be best if the lawyers weren’t involved in the aspect of running it at all!!

Don’t keep your services a secret

How often have you heard one of your clients say “I didn’t know you did that”. This is not unusual in the legal profession because lawyers are not particularly good at promoting their services to their clients. This also raises the question of who are your actual clients and who should you be promoting your services to.

The legal profession has a tendency to count as its clients those people for whom they’ve carried out a piece of work. So, if you bought or sold a house for someone, say, 5 years ago, it is likely that you still count that person as a client. As a result of some accident, rather than anything else, your “client” contacts you at the end of that 5 year period to say that he’d like to use you to sell his house—and that he’s using “Such and Such Estate Agent” to do the marketing. While you’re on the phone to the client taking his instructions he tells you that since the last time you met he’s made a Will through another solicitor (or, even worse, through a “Will Writer”), arranged the winding up of his mother’s estate through her solicitor even though he was the Executor, used a “no win, no fee” company to help him claim compensation for the accident he had 3 years ago and, then, remortgaged his home last year on the expiry of the fixed term mortgage that he had when you bought the house for him in the original transaction. When you tell him you also provide estate agency services the now infamous words “I didn’t know you do all of that!” are uttered! In this case, just think about the amount of business (and money) you’ve lost by failing to keep in touch with this client.

If your client was aware that you provided all of the services he needed over the years there is every likelihood that he would have used your services rather than going elsewhere. Don’t keep what you do a secret. Let your clients know the range of services your firm provides. Keep in touch with your clients on a regular basis. Don’t fall into the category of the “can’t be bothered”. It costs you far more to win a new client than to keep and continue to provide services to an existing client. Do this: work out what services your firm provides (yes, this is a good idea—some firms are not entirely clear what services they do actually provide), set them out in an easy to read format (either electronically or on paper) and devise a means of communicating them to your clients. It is absolutely essential that you are in touch with your clients on at least 2 occasions every year—3 is better but as a minimum you need to be in touch more than once. Make the effort—if you don’t, someone else will. If you can’t allocate the time to this, outsource it—but make sure that you do it in such a way that you retain control of the activity AND the cost—marketing has a tendency to run away with the budget if you let it. Finally, use whatever means possible at your disposal to market to your clients—electronic as well as paper—and best of all, a combination of the two. Solicitors have a “lead list” that commercial organisations would give their eye teeth for—you should use this to this maximum extent possible.

Simon says…..

I wrote an article for the LawWare Newsletter (Winter 2011) which took a cursory look at the current state of legal marketing in England, as they are further down the ABS line than we are, and noted the influx of professional marketing organisations entering the market using TV advertising to communicate with the target market and the Internet as a delivery base for the service, highlighting QualitySolicitors and Wigster as examples.

The approach of these professional marketeers is very different from that of legal firms themselves. The approach of Legal firms both north and south of the border is similar – either they know what they do and can communicate it, or, they don’t and don’t. I went on to develop a few points – Once the English marketing model is established – the marketing machine won’t stop; it learns, it develops, it gets better. Other suppliers come into the market, offering slightly different services, but at a better price point. And so the marketing machine gathers momentum and pace. Scotland will be regarded as just another target audience and the numbers will be crunched, the strategies written and executed. And remember – your ‘Client’ is someone else’s ‘Prospective Client’. The two examples of change I highlight are both Internet based.

The Internet is the medium of choice for demographics A1-3, B1-3 and C1’s to find potential new suppliers and services – these are the people that have any kind of disposable income. The sort of people firms should be trying to attract! Change is often powered by IT. It is usually delivered by IT. But it is rarely because of IT. Change occurs when someone wants to achieve an objective, understands how to achieve it and can convince others to back the objective.

None of these characteristics are ‘Legal’ – they are ‘Entrepreneurial’. So as well as being good legal analysts and good business managers; Partners of Law firms have to be Entrepreneurial too. So YOU might have to change, maybe develop new skills, maybe hone existing ones. This is not a bad thing; to develop oneself is an admirable personal aim. There are many books and courses that can help. Perhaps look at the CPD requirement in a slightly different shade of light – the personal development requirement is there for good reason and I think it is time that we all got better at this side of our roles.

We are here to; provide a service; different clients require a range of services to suit their needs, and so we must develop and adapt those services as our clients’ needs change or are changed, and, we must attract new clients. It’s up to us to secure the future of our organisations, especially so when the future changes faster than it ever did before. So for this new year I resolved to be a bit more entrepreneurial and I encourage you to be too, for your own good and your clients. Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

It’s the little things that matter

Just saying “Thank you” to a client can reap huge rewards. As an absolute minimum, you should thank your client on your engagement and on completion of the transaction—and for goodness sake, don’t say “thank you” at the end of a case and at the same time try to ram further services down his throat! Leave a decent space between completion and the offer of any new services you can provide to the client—and always remember—if the client should happen refer someone else to you, you must thank the client for that referral.

Is social media the answer?

The Internet offers a fantastic opportunity for lawyers to communicate with their clients, no more so than through the use of social media. The Facebook and Twitter phenomena means that people are in touch with each other on a daily basis and by using blogs you can get your opinion out to the masses. Professional media sites like LinkedIn give business people the ability to make contacts and the old words like “networking” and “making friends” seem to have gone by the board. This is all very well—and it is good to use social media, blogging and other online tools to promote your business—but it pays to make sure that you are able to capitalise on the opportunities that this medium offers—and that you don’t ignore more traditional marketing routes. If you do engage with social media, please make sure that you do so professionally, respond to enquiries promptly and that your online presence is managed. Doing this will ensure that your services are being promoted continuously and in the right way. Stephen Moore of Moore Technology Limited is an expert in this field and his advice is that before embarking on any online strategy it pays to decide what you want to achieve, how you want to achieve it, how you keep it current and how you manage the resulting enquiries. Visit Stephen’s web site on www.moorelegaltechnology.co.uk

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

Back to Basics — a Business Briefing for Lawyers: Succession and Retirement.

Welcome to our most recent edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on Succession, Succession Planning and Retirement.

I’m delighted to include in this edition, an article by Douglas Mill, former Chief Executive of The Law Society of Scotland and currently Director of Professional Legal Practice of the Diploma in Legal Practice at the University of Glasgow. Douglas has a special interest in this field and has advised many firms on their succession strategy.

No matter how far you’re into your legal career, you need to think about and make plans for your succession—and review these on a regular basis. Whilst your retiral may not be imminent, it will come at some stage and it’s best to be ready for it when it does.

If you need any help in this area, please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA

Business Consultant

40c Drakemyre

Dalry

North Ayrshire

KA24 5JE

t.  07855 838395

e. brian@drakemyre.co.uk

We all need to go sometime—how will you go?

This month saw the disappearance of two formerly prominent Scottish Legal Firms—and for very different reasons. McGrigors merged with Pinsent Mason—and became….Pinsent Mason. The Judicial Factor who had been appointed to manage the affairs of Ross Harper decided, on 30th April, that the business could no longer continue to trade and closed it down. Two names that have been most prominent in the legal profession for many years are no more.

We all need to consider the “end game” at some point. For myself, if was a change of career and leaving private practice as a solicitor to seek out new challenges. For some solicitors in recent times, their exit from practice has not been through choice but through the process of cost cutting and redundancy.

We are going through (and arguably, at last, beginning to come out of) the recessionary cycle—although the last two quarters of shrinking GDP would not have us believe that!! It continues to be incredibly tough for solicitors in firms of all sizes and the focus needs to be on managing the costs whilst striving to increase the revenue.

As market conditions slowly begin to improve, there is a need to reset horizons and start to concentrate on the strategic development of the business and a review of the business objectives. Part of this process should also be to consider the options you have for succession and how you might plan for that day when you take your foot off the gas and start to take more of a back seat.

Those of you who are partners need to consider how best to exit the business when the time comes—in fact, it’s a very good idea to have some sort of idea of when that time might be. My colleague, Stephen Vallance, made a decision some years ago that he would leave private practice before he was 50—and just a couple of years ago, at the age of 46, he negotiated a successful exit after having built a very successful and profitable firm.

So, when you’re revisiting your objectives and setting out the strategy that will take you forward as the economic cycle turns, don’t forget to look at the structure of your firm and take the time to consider what you need to do to ensure that you have choices as you head towards your chosen exit date. It’s simply no use to wake up on your 60th or your 65th or, heaven forbid, your 70th birthday and think “This is the day I’m supposed to retire….but I can’t do that because there’s nobody who can take over from me”.

Whether you wish your exit to be phased or come to a quick end, if you have some idea of how you can secure a return on your investment at an early stage you will at least have something to strive for.

Simon says…..

Are you making a success of your succession planning?

There is a definite issue with succession planning nowadays and I know a fair few senior partners that have already recognised it themselves. I appreciate that this is a multi-layered issue and Brian can only touch on it in the space available; I will target my comments on just a few areas in summary.

The traditional succession model where a senior partner is bought out of firm by a junior partner has failed. The banks will not lend the kinds of sums required by senior partners, so unless the money is in the firm to buy out a capital account – it cannot be bought out. Very few firms have these sums readily available and therefore it is my view that this model has failed, it just doesn’t work anymore and needs to be changed.

I understand why the banks won’t lend to junior partners and its nothing to do with the junior partners, it’s all to do with the banks perceived value in what the junior partners are buying – they perceive very little value. That is not to say there is no value in law firms – clearly there is – but the traditional partnership structure is perhaps out of sync with today’s economics. If a partner works 30 years building up his practice – this is recognised in the firm’s accounts; but from the banks perspective once that partner walks away the earnings power walks away too therefore, they argue, the potential earnings are dramatically diminished and the loan to return ratio is too short (and risky) and they will decline to loan. I understand the underlying problem too. The partner hasn’t created any self sustaining value in his business that enables the business to continue when he is absent from it. If you can demonstrate that your business is self sustaining then it can be the subject of a business loan rather than a personal loan; then that’s a whole different category of ‘investment’ that a lender can look at in a different light. If you haven’t developed this kind of business model, you need to take action now and be prepared to work until it takes effect; however long it takes.

There is a further challenge that ought to be recognised – if senior partners are working longer then there aren’t the opportunities for junior partners to move on up as quickly as they intend. These junior partners have more choice then to simply wait around for senior guys to get their act together. It has never been easier to start up yourself or with a group of like minded colleagues (LawWare’s LawCloud is experiencing huge growth in this segment) – in this scenario the senior partner is potentially left isolated with an asset that cannot be fully realised.

Another thing to be aware of – banks won’t support ailing firms for long nowadays. If firms are waiting for the recession to end before returning to better times – stop living in the past. The current business environment is the one you must live in and prosper within. There have already been major changes enforced on well known law firms as a result of not changing quickly enough; the resulting rapid mergers, or worse judicial factor appointments, are happening much more frequently nowadays. This is symptomatic of a ‘head in the sand’ culture. Don’t be like them. Law firms are businesses, if they are run on any other basis other than a sound commercial one, then I truly fear for them.

I was talking recently to a senior figure in the industry and I mentioned to him my greatest fear – the impending cull of senior partners that could potentially find themselves out on a limb because they wouldn’t change the business structure away from being all about them. He was shocked that I put it in such harsh words but he didn’t disagree. There is no safety in numbers in this regard; it is literally every man/woman for him/herself when it comes down to leveraging your capital account. If you don’t protect it – no one else will and as it has a direct impact on the quality of your life after work you need to be proactive – if you ever want to stop working that is!

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

It’s never too early…….to plan your exit strategy!

By Douglas Mill

The recession didn’t come at the right time for the legal profession in Scotland. Over-expansion over the last 15-20 years, allied to the ‘bulge’ of the Baby Boomers still 5-10 years short of retiral, created a sad situation—for this first time in the profession’s history retirement was not a given.

Much media focus has been on the big commercial firms whose structures and client work were such that they were most vulnerable when commercial work fell off a cliff. This quicklyon trainees and law students. Things became tough almost overnight. It takes 7 years generally to produce a solicitor, but the economy can crash almost instantly. People realised that getting into the profession was problematic. What has not yet been highlighted is that getting out is almost as difficult.

This applies to probably about 600 firms in Scotland—and a high percentage of our sole practitioners. It is going to be exacerbated as the effects of the Double-Dip kick in. It is simplistic to say the first wave of recession hurt the big firms and the second hit the High Street, but when people in public service start to lose their jobs the immediate impact will be felt by family lawyers.

It is hard to be over sympathetic to elderly partners who have taken the Lion’s Share for years, keeping good youngsters at bay on the age-old promise that “someday this will all be yours”. What will be? Partnership is now a risky business and banks will find many reasons not to grant practice loans—and forget getting £s for goodwill. This generation are more risk-averse—and for good reason!

Most solicitors haven’t been like that and it really is not hard to feel sorry for them. Most have been hard working stewards for their firm. However, the prudent investments in an Equitable Life pension and RBS shares have made retirement an ever-receding prospect. Reducing fee income makes it harder to earn new partners in and old partners out. Few partnerships talk openly about their plans and expectations. A good, say, 6 partner firm should have partners spaced apart in age, but who was ever that visionary?

Retirement ages are increasing and will continue to do so. The profession will have to adjust to that and start planning accordingly. Firms whose strategy is just to wait and see can expect their partners to die in harness. No one is going to do this for you. If your partners are reluctant to face these realities, prioritise yourself. Remember you have duties also to your family, friends—and yourself. It actually never is too early to plan your exit strategy—but in this climate it could soon be too late!

Douglas Mill is Director of Professional Legal Practice of the Diploma in Legal Practice at the University of Glasgow. Douglas can be contacted on Douglas.Mill@glasgow.ac.uk

Consider your options……

Most solicitors, when considering succession and retiral, look within the firm and, on many occasions, leave it far too late to bring on board Partners who have the right quality to continue the firm and secure a sufficient return to the retiring partner. This assumes that the firm is a Partnership. When considering your succession options, you might want to have a look at your business vehicle and work out, with your accountants and financial and business advisers, which would be the most suitable, tax effective vehicle to be in when you’re looking at building a succession plan—the traditional partnership model may not be the right vehicle for the job and an LLP or Limited Company might be a much better option.

An alternative might be some form of merger or acquisition—a sort of “buy in” of the right kind of talent that will secure the future of the business, enlarge its client base, improve its profitability (if economies of scale lead to reduction in duplication of personnel) and provide a platform from which you can extract sufficient value to get out when you want.

Alternative Business Structures potentially offer a further route for consideration—depending on the eventual percentage ownership interest available to the external investor and, leading up to retiral, could provide an option for disposal of part of the business for “cash”. This is an interesting area that will develop in the next year or so.

Building from within will probably remain the preferred option for most firms and, if this is the route to be followed, the sooner the planning starts, the better. Remember, this is business—and if you want the business to succeed you need to surround yourself with skilled, able people who can support the continuation of the business without you actually being there.

Finally, you must consider what your financial needs will be when you do decide to go. It’s essential to prepare a retiral budget to work out exactly how much you will need on a month to month basis—not only to spend on those essential bills, but to provide for unexpected eventualities. You really need to be as “debt free” as possible and that means you need to start now to plan your financial future and build up your nest egg to ensure that your retiral is as financially comfortable and secure as it possibly can be.

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

LawCloud: Legal Case, Matter and Practice Management for Law Firms UK

How to set and meet targets: A business briefing for lawyers

Welcome to the April edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on setting and meeting targets

If you can’t see it, you’ll never hit is—unless it’s a complete fluke! A target is something that you need to focus on and aim for and have in front of you every day.

You can set targets in many areas of your business. Some might be (arguably, must be) financial targets, some may be targets associated with the types of work you do, some might be set to govern the amount of time you spend on doing certain things—and others may be to cease doing certain things. There are many targets you can set and it’s good to set them, providing they do fit in with your overall objectives.

If you need any help in this area, please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

e.   brian@drakemyre.co.uk

Why bother to set targets?

If you can’t see it, you’ll never hit it. I mentioned this in the leader article and think it’s a phrase worth repeating. Isn’t it amazing how solicitors tend to look on sales as a “dirty” word when really what solicitors do every day is sell their personal services. Clients don’t pay you for the bits of paper you produce—they pay you for your skill in a certain area or field. So, every time you speak to a potential client for the first time, remember that what you’re doing is seeking to do business with them—you are selling yourself and your services.

So, I hear you say, what’s all this about targets. Simple really, do you have any? If you don’t, that suggests that you’re rudderless. Do you go to work every day in the hope that something will happen to keep you in business? Do you wait for the phone to ring and for someone to ask you to do something for them? Believe it or not, many solicitors, even in these austere times, do exactly that and still believe that business will simply turn up at their door without them having to do a thing to attract it. Believe me, these days are numbered and, with the advent of Alternative Business Structures, the non-lawyers who become involved in the provision of legal services will make sure that they get their sales messages across. Sales targets are common in the commercial world—there’s no reason they shouldn’t be employed in the legal profession.

Targets are things that keep you focused on your objectives. Every business needs a set of Objectives to strive for. The targets are the steps along the way that help you achieve them. They help you break down the overall Objectives into smaller steps or parts. They help you monitor your progress and to work out whether you’re moving towards or away from your Objectives.

Targets will help you when you set your priorities and work with your daily task lists. If you have targets to work to then it’s more likely that you’ll do something every day that will help you to achieve them.

So, there you have it. Setting targets helps you to focus on your objectives, determine your daily priories, gives you direction, measure your performance and generally avoid wasting endless hours going round and round in circles.

Any target, properly set, will help you to improve your business performance and increase your financial welfare.

Please don’t forget the targets you can set NOT to do something. Do you have a tendency to take on non-profitable work or work with which you are not familiar and which takes you a long time to complete—and with very little return? You might just want to have a target to stop doing this kind of work—and then you can focus on your positive targets and give yourself a better chance of hitting them.

Simon says…..

Setting targets; that sounds a lot like ‘Sales’ doesn’t it? Which is a bit scary so, just for fun, I thought I would search all my previous articles for Back 2 Basics and count the number of times I have used the word ‘target’. The answer is 8. All of the contexts are related to Marketing – targeting services at targeted clients and prospective clients. So obviously Targets can be applied to a few things and some obvious examples are:-

  • A targeted increase in Fee revenue of X value or percent – for the Firm, for the Department, for each Fee Earner.
  • A targeted decrease in Expenditure of X value or percent – for the Firm, for the Department for each Fee Earner.

What about:-

  • A targeted increase in Active Case Files of X number or percent – across the Firm, Department or Fee Earner.
  • A targeted increase in Average Fee of X value or percent – across the Firm, Department, Fee Earner and Work Type.
  • A targeted reduction in Average Days to be Paid – across Firm, Department, Fee Earner or Work Type.
  • A targeted reduction in the Average Days Cases are Open – across Work Type, Department, Fee Earner.
  • A targeted increase in the number of Enquires received.
  • A targeted increase in the number of Enquiries converted into Instructions.
  • A targeted increase in the number of client Newsletters sent out and Articles published on our website.

On a strategic level a firm could target for growth by organic means and/or target for growth by merger & acquisition.

I’ve just found an article on the Internet entitled ‘Top law firms target universities in diversity push’.

Targets can be associated with all sorts of things.

So what do these all have in common?

Yes – they precipitate action. Yes – they are all part of an aim to achieve something. They are a vital component in strategic and business planning. I would add that knowing where you want to be – should be everyone’s target.

I would summarise that Targets are good; they help focus otherwise fanciful wishes into concrete desires and provide a means of measuring performance.

Incidentally, whilst I was searching previous articles I noticed that it was precisely a year ago that Back 2 Basics was entitled Performance Management (April 2011) – well worth another read.

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

What targets do I need to set?

There are many, many targets that you can set and the important thing is to make sure that whatever targets you set are compatible with the Objectives of the firm.

You will undoubtedly have financial targets—levels of fees per month and profitability targets. How about a target of spending less each month? You could set yourself a target of looking at the expenditure side of your Profit & Loss Account for the month and ask yourself “is there anything I’m spending here that I don’t really need to spend?” Please remember when doing this particular exercise that people have a tendency to spend money on things that they want rather than on things that they actually need—so when you go through your monthly expenditure ask yourself “Do I really need to spend money on this?”. Financial targets should be broken down into measurable chunks—monthly is probably best—but you should have overall annual targets as well so you can track progress as you go through your financial year.

You should have targets for the number of new clients you engage every month, quarter and year. You can do an analysis of where your new clients come from and when you have a successful source of clients, work on increasing the number you are getting from that source.

Look at the types of work you offer to client. Which of your clients engage you to do work in more than one area of law. It is not uncommon for someone for whom you’ve done some residential conveyancing to ask you to prepare a Will—but do you have targets to meet for the number of Wills you prepare where you have a client for whom you’re doing some residential conveyancing work? If you did, it would focus your attention on at least asking the question of the client whether they need to make a Will or want to update one that they already have.

Sit down and think about your business without any interruptions. Do not take any calls—and, for goodness sake, turn Outlook, Instant Messenger, Facebook and whatever other social networking tools you use off so you don’t get distracted by them.

Finally, be realistic, there’s no point in setting targets that are way out of reach. Just as you can with setting Objectives, you should use the SMART principles (Specific, Measurable, Achievable, Realistic and Timebound) when setting targets and by doing so, it’s more likely that you will successfully reach them.

If you knew then what you know now …..

Sometimes you find that you’re doing work that isn’t profitable or for which you’re not fully skilled. There is a principle called “zero based thinking” and it goes like this: “If you knew when you started out what you know now, would you have started doing the thing in the first place?” If the answer to that question is no, set your target at getting out of whatever it is as soon as you possibly can. This will give you the opportunity to focus on the things that you can and should be doing without the distraction of doing things that are not making you money or for which you are not suited.

Ready, Fire, Aim…….!

Analysis paralysis and procrastination are two of the main obstacles you need to overcome when dealing with setting your targets. These are two distinct problems. On the one hand, you might spend lots and lots of time creating your list of targets you are going to achieve—then re-creating them, then subdividing them and re-ordering their priority and by doing so actually avoid starting to do the work that will help you achieve your aims. On the other hand, you might suffer from procrastination—you simply fail to start—because there’s always something else to do instead or the system isn’t perfect yet. People procrastinate for all sorts of reasons and most of the time none of these reasons are valid.

To achieve your targets you need to be doing something. You’ll never reach your destination unless you start to move. So, set down your targets and take action to meet them—and you can refine your aim on the way.

So, let’s say your target is to bring in an extra £1,500 this month from new Wills for clients. The first thing you need to do is work out how many Wills you would need to prepare to achieve this target. Let’s say that you charge £150.00 for each Will. That would mean that you would need to write 10 new Wills for clients to reach your target (yes, you will probably charge different figures for mirror Wills, but why complicate things?).  The next thing you need to do is work out where this new business is going to come from.

Have a look at the source of your last 10 Wills—where did they come from? Can you get some more from the same source or sources? If you can, then go for it. Look for other sources—what about any conveyancing transactions you’ve settled in the last 3 months. Do the clients you’ve acted for have Wills that you hold for them—if not, contact them and recommend that if they don’t have a Will they should make one and you’d be happy to help them do so. What about matrimonial work—are there any opportunities for Wills from that source?

This is a very simple example of setting a target and setting out to achieve it—and adjust your course along the way to meet it. Start again the following month and do the same thing—and the next month after that—and so on and do forth and before you know it, you’ll find that you meet your targets month on month.

Collaborating with other lawyers & legal firms: Back to basics for lawyers

Welcome to the March edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on Collaborating with others.

Unless you are a full service legal firm, it is likely that there will be areas of law where your firm simply does not have the skills, knowledge or experience to deal with client business—and that’s where Collaboration comes into its own.

We will look at recognised routes of collaboration and consider even the simple things—like, what do you do with your conflict cases—and do you have reciprocal arrangements with other legal firms? This is Collaboration in its most basic form and whilst there might not be a direct money exchange, it is likely that the relationship will create new business for your firm.

If you need any help to explore potential areas of Collaboration, please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

e.   brian@drakemyre.co.uk

Can you provide all the services your client needs?

Last month we looked at Business Development and focused on the Boston Matrix—a well known business tool that helps those managing the business work out which services they should continue to provide, which ones to invest in and which ones to stop providing. It is very likely that you will need to take some very serious decisions about what services you do provide and what services you don’t provide—and if you don’t provide them, what you will do with your clients who need these types of services?

This is not an uncommon problem. Whilst many “high street” firms provide a wide range of services, they tend not to provide every service that might be needed by their wide and diverse client base. This can lead to serious problems, not least of which is how to make sure that the client has the work carried out correctly without taking the risk of losing the client because you didn’t do the job properly due to your lack of experience in the field—or worse still, lose the client and get sued for negligence in the process—because of your lack of experience in the field!

The next important step once you’ve discovered the services you do want to provide is to work out a way to provide your clients with services that you don’t provide—and still retain them as clients.

Recently, I’ve been in discussions with clients about this and a recent turn of events immediately springs to mind.

One of my clients is about to commence a structured and managed Wills review process that will be carried out over the course of the next few months, but they were concerned about a gap in their knowledge of how to deal with certain types of Trust  work. They didn’t want to take the risk of providing a service that they did not know enough about. I put them in touch with another of my clients who specialise in this area and they now have arrangements in place where this type of business can be passed from one firm to the other without the fear of the client being lost for other services.

An interesting thing happened at the meeting I attended when the arrangements were being worked out. The firm who didn’t provide the Trust work did provide a PPI Claims service to clients—a service that the firm that does provide the Trust work does not provide—and the discussion was widened to discuss reciprocal work which could be done in the PPI Claims area.

This is a very simple straight forward example of how two legal firms can collaborate to maximise the benefits that they are able to bring to their clients through referral from one to the other for specific types of work.

So, there we have it—not only did we have a collaboration for one type of business to be passed from one firm to the other—we had a reciprocal arrangement for another type of business to flow in the opposite direction. I do like happy endings and this one seems to me to be a perfect ending—a means of providing the client with a service whilst retaining the client as a client………..and new business being generated by each firm into the bargain!

Simon says…..

Collaboration? For what purpose?

I have no problem with collaboration, and I know many firms that have both informal and formal relationships with other solicitors and for that many other types of businesses, for the referral or introduction of clients interested in other services. Many firms are not ‘full service’ and many individuals are asked about a service that they cannot supply. The referral network operates at different levels and you can pick and choose whether to recommend someone or suggest someone depending on the level of risk you want to subject yourself to.

Let me play Devil’s Advocate for a moment and ask – what is the objective? Everyone responds with the answer – “I don’t want to lose the relationship that I have with my client.” Fair enough, in principle, but what does that mean in reality? If you are the type of firm that does nothing in the way of client focussed business development – then what’s the point in pretending to yourself that you want to retain and develop a relationship with a client when in reality you don’t actually do anything? It’s all very well to recognise a potential value but if you then fail to capitalise on it, then you are only kidding yourself.

Isn’t this just a form of cross-selling? I work with new start-up law firms as well as existing practices. It is interesting to note that all the new starts are focussing on just one or two areas of work and in this scenario there is no interest in cross-selling. But I have also noticed that, generally speaking, established practices that do offer a range of work-types don’t have any methods for cross-selling either. If you won’t open up your client base to your partner colleagues, why would you open them up to other businesses?

Conversely, as has often been stated previously in this publication – the easiest people to sell to are existing clients. There is clearly a bit of a dichotomy here. Why is that?

Is it because Partners don’t really want to share? Is it too much bother?

Is it because it’s no one’s job to do this? Is there a perception that ‘selling’ is distasteful?

It’s probably all these things and more.

The first stage is recognising what you can and cannot do as a business in the whole. The second stage is about finding out how much the work you cannot do is worth and deciding if you want to do it yourselves or if it’s better to pass it on. If you pass it on then you need to work out who you can pass it too, assess the basis that you want to do this and the risks involved, and then monitor it yourselves.

Tip – Appoint someone to manage this. Whilst they are at it, get them managing all the client relationships across your whole firm. If it’s done correctly – it will more than pay for itself.

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

Collaboration—the basics

Working together is never easy. Indeed, some say that it’s even difficult for partners to work together in the same firm, so diverse are their interests, focus, methods and habits!

Collaborating with others is a whole new ballgame and there are certain things that need to be done at the very beginning to make sure that the arrangement gets off to the best possible start—it is only by doing so that can you ensure that the enterprise will be a success.

First:         identify the services that you don’t want to or can’t provide but that your clients have told you they need.

Second:    identify a firm that can provide this service (or ask around to find out about firms who may already have arrangements in place). Alternatively, consider joining the Connect2Law Network to access the very wide range of services available from a full service legal firm (more on Connect2Law on page 2)

Third:        open up a dialog with the firm (or firms) you’ve selected and find out if they’re interested in providing a service to your clients and on what basis.

Fourth:     ensure that the “ground rules” are in place and that there is clear understanding on each side that the client being passed on is only the client for the specific type of work.

Fifth:         explore services that you provide that the other firm may nor provide and find out if some form of reciprocal arrangement can be put in place that would benefit both firms.

Sixth:        if there is to be some form of fee sharing, make sure that you agree this at the outset and set in place systems to track which clients are passed so that you can monitor receipt of the share of the fee you are to receive.

Seventh:   meet regularly with the firm you’re collaborating with to work out any issues that may exist in the process and to smooth out rough edges as you move forward—and continue to explore other areas where collaboration would benefit both firms.

How do you deal with conflicts?

It makes no sense from a risk management basis to act on behalf of two clients in a potential conflict situation even though you can do so in those very limited specific areas allowed by The Law Society of Scotland. Why don’t you consider having discussions with those solicitors you respect in another local firm and find out if they’d be interested in a reciprocal arrangement for conflict cases. I know some firms who will never act in a conflict situation and profit through reciprocal work by passing on clients so that the conflict situation is avoided—and it also means that you are likely to be able to charge a full fee for the work you do—as will the solicitor in the other firm……..think about it!

You can always formalise your arrangements….

Last year around this time I heard about Connect2Law from one of my colleagues. I thought that this was an excellent idea and spoke to Anne Macdonald who is the Manager of the Connect2Law Department of Harper Macleod. This is what I found out:

Connect2Law is an innovative referral and support network set up in Scotland by the award-winning Scottish law firm, Harper Macleod, to help smaller legal firms provide clients with a wider range of legal advice. Through Connect2Law member firms are able to extend their firm’s offering by utilising the services of specialists within Harper Macleod, on a non-poaching, fee share, referral basis. The theory behind the approach is that the service helps smaller firms retain their clients in the long term.

Anne, a Partner in Harper MacLeod commented at the time “Many smaller High Street firms have an impressive client list and consequently encounter a variety of interesting and complex cases for which they might not have the time, capacity or experience to handle alone. The demand for the Connect2Law service is continuing to grow – the fact that we now have 150 member firms and have recently reached our 1000th referral is proof of that. We would welcome any other firms with similar requirements to get in touch”

I subsequently had the pleasure of attending the Connect2Law Annual Conference and had the opportunity to speak to solicitors who had signed up to the Connect2Law network. Those who I spoke to said that they felt that Connect2Law was a valuable resource they could call on whenever necessary in the knowledge that their client would receive the correct advice when they could not provide it themselves. They would still retain that client for the services they did provide—and make some money out of it at the same time. What a comfort  it is to know that you are not placing yourself at risk by doing things you know little about and making sure your client receives a service whilst still retaining the client as a client—nothing could be better!

You can find out more here.

Anne Macdonald can be contacted on 0141 227 9280 or email at

Anne.macdonald@harpermacleod.co.uk

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

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Business Development for Lawyers: Back to Basics

Welcome to the latest edition of Back to Basics — a Business Briefing for Lawyers. This month the focus is on Business Development.

To help you with your business development, we take some time to work with a recognised business modelling tool—the Boston Matrix. This is a tool that helps you assess the strength of your services in terms of market share and market growth. Used properly, it will help you work out which services to build and grow, which services that you might consider ceasing to provide and which services that are currently marginal and could go either way.

If you need any help to review your business development, please get in touch with me—I’d be delighted to help.

Brian O’Neill LL.B MBA
Business Consultant
40c Drakemyre
Dalry
North Ayrshire
KA24 5JE
t. 07855 838395

e.   brian@drakemyre.co.uk

Is this the “new reality”?

It is a real benefit being able to talk to someone like Simon Greig of LawWare, who, whilst working within the legal profession as I do, is not and has never been a lawyer. I met Simon the other day when he was in Ayr and we had a chat about how things were and what we were each busy doing. Simon repeated something to me that he had first said a few months ago when we had last met and it was this: “You know, it’s about time everyone stopped talking about coming out of the recession or whether we’re going to go into a double dip and started to accept that what we now have is a new reality. We are where we are and businesses need to look at what they’re doing right now and whether that behaviour is going to help or hinder their future growth” Wise words, indeed.

In recent editions of Back to Basics, we’ve looked at Forward Planning and Taking Action but it seems that many legal firms are still waiting in the forlorn hope that some volume will return to the residential conveyancing and estate agency market. Alas, that doesn’t look like happening any time soon. Banks are still facing liquidity problems and, until they resolve these, mortgages (particularly the higher loan-to-value mortgages) will remain difficult to come by and mostly out of reach of first time buyers.

By now, you’re probably running a pretty lean ship, having stripped out costs as the recession bit—but by now also, there’s probably very little else that you can strip out without damaging the fundamental capabilities of the business beyond repair!

So, if this is the new reality, what are you going to do about developing your business? Do you know where to start? Have you started already? What are the things you need to do first?

These are all sensible questions (and questions that you should continuously ask as you develop your business) and the answers are reasonably simple.

Do a quick SWOT analysis. Look at the Strengths you have in your business (but also be aware of the Weaknesses). Look at the Opportunities that are available to you (but also be conscious of the Threats). Look at the services you provide—which ones have capacity for growth? Which ones generate decent profits? Which ones are you not entirely certain about?

Again, these are all fundamental questions that you need to ask yourself—and once you have the answers, why not do a bit of forward planning to put them into context and then take action and implement those plans?

You won’t be able to change your current direction without getting into motion—so make the decisions you need to make and off you go!

Simon says…..

Developing your Business for professionals

When Brian posed the subject for this month and mentioned the Boston Matrix, I thought ‘what the heck is that? However 15 minutes on the internet and I have now learned about Dogs, Cash Cows, Problem Children and Stars in completely new contexts! I don’t know everything and I’m happy to learn about new ideas and develop new skills; mostly because I spark off them and they tend to lead somewhere – a change in perception, understanding or attitude. Whenever I type the word ‘change’ I’m reminded of the lawyer I know that said to me a year or so ago “you know Simon, the only constant nowadays is Change”.

If you want things to change, then you have to make it happen, which means changing something you do. I would suggest if you want significant change – then significantly change something you do. This business development malarkey doesn’t happen by wishing or just thinking or even just planning – it needs action. This publication is aimed at educating, informing and encouraging. I know how much effort Brian puts into it and, as we all know, he then gives it away! Why is that? Well it’s a business development technique called Give to Get.

The Give to Get idea is simple enough – give something to a potential client and they will remember it and give you some business in return. In the context of legal services it is a bit more sophisticated than that – give something of value to a potential client that will impress them enough to engage you as their representative. The value aspect here is measured in terms of the potential client and not the lawyer, it is easy for a lawyer to give away their time (which is in many ways the lawyer’s most valuable resource) but that on its own is only of value to the lawyer – the trick here is to think in terms of the potential client and what is of value to them. It might be time—but it’s more likely to be an outline of the approach you would take toward dealing with their issue, identifying the risks involved and how you would mitigate these, whilst demonstrating a clear understanding of the aims and benefits that your client would derive from instructing you. Anything written/emailed must be in terms that the client can understand (which might be different client to client). Use your imagination to put yourself in your client’s shoes. Remember, if you say the same thing as everyone else then you are inviting a price comparison scenario. Even if it is a standard procedure there are always nuances that the client brings; you need to find them and bring them to the fore in order to distinguish yourself from the rest. I would call this being Professional. Of course, you don’t have to Give to Get to operate in this Professional manner as it is a good technique in itself—the more techniques you employ the better you enhance your business proposition and the more clients that you will win.

There will always be clients that buy on price and there may be times when your cash flow position necessitates a quick win – but only where it’s a quick delivery too (otherwise it’s a false economy). But if you build yourself a professional reputation, then people will hear about it and they will gravitate toward you.

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon at simon@lawware.co.uk

Look to develop your services

There is no point providing services that nobody wants and that don’t make any profit for your business. One of the ways of working out which services you need to stick with, which ones you need to develop and which ones you need to ditch is by using a tool called the Boston Matrix.

This is a tool developed a number of years ago by the Boston Consulting Group and it’s designed to consider the produces and services that a business provides in terms of Market Share and Market Growth. The graphic opposite shows you the type of chart you will need to lay out your services in the different categories to aid you in your decision-making efforts. The Boston Consulting Group divided services into 4 categories: Cash Cows, Rising Stars, Question Marks (called Problem Children in some versions) and Dogs. These groupings can be explained as follows:

Dogs: Low Market Share / Low Market Growth—In these areas, your market presence is weak, so it’s going to take a lot of hard work to get noticed. Also, you won’t enjoy the scale economies of the larger players, so it’s going to be difficult to make a profit.

Cash Cows: High Market Share / Low Market Growth—Here, you’re well-established, so it’s easy to get attention and exploit new opportunities. However it’s only worth expending a certain amount of effort, because the market isn’t growing and your opportunities are limited.

Stars: High Market Share / High Market Growth—Here you’re well-established, and growth is exciting! These are fantastic opportunities for the services that fall into this sector and you should work hard to realise them.

Question Marks (Problem Children): Low Market Share / High Market Growth—These are the opportunities no one knows what to do with. They aren’t generating much revenue right now because you don’t have a large market share. But, they are in high growth markets so the potential to make money is there. Question Marks might become Stars and eventual Cash Cows, but they could just as easily absorb effort with little return. These services need serious thought as to whether increased investment in them is warranted.

Now that we know what the categories mean, on the following page, we’ll look at how we can use this tool.

So, how do you use the Boston Matrix?

Step One: Plot your services in terms of their relative market presence, and market growth on a blank matrix.

Step Two: Classify them into one of the four categories. If a service seems to fall right on an intersection between two categories, take a real hard look at the situation and rely on past performance to help you decide into which category you will place it.

Note: Be careful about these categories – there’s nothing magical about them or their position. There may be very little real difference between a Question Mark with a market share of 49%, and a Star with a market share of 51%. It’s also not necessarily true that there is a line that should run through the 50% position. As ever, use your common sense.

Step Three: Determine what you will do with each service. There are typically four different strategies to apply:

Build Market Share: Make further investments (for example, to maintain Star status, or turn a Question Mark into a Star)

Hold: Maintain the status quo (do nothing)

Harvest: Reduce the investment (enjoy positive cash flow and maximise profits from a Star or Cash Cow)

Divest: For example, get rid of the Dogs, and use the capital to invest in Stars and some Question Marks.

Key Points

The Boston Matrix is an effective tool for quickly assessing the options open to you, both on a corporate and personal basis.

With its easily understood classification of Dogs, Cash Cows, Question Marks and Stars, it helps you quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them.

Play to your Strengths

I briefly (and perhaps a little bit glibly) mentioned on the previous pace that you might want to carry out a quick SWOT Analysis. I don’t intend to cover this item in any detail in the short amount of space I have here, but simply want to clear up some confusion I frequently hear when people are talking about carrying out a SWOT analysis.

You need to be aware that Strengths and Weaknesses are things that are internal to your firm or business whilst Opportunities and Threats are in the external environment. Armed with that information, why don’t you spend half an hour with a piece of paper and a pencil and do your own quick SWOT analysis—and then see how you can build on your Strengths to take advantage of the Opportunities out there as well as to counter the Threats.

Contact us

Brian O’Neill LL.B MBA, Business Consultant, t. 01294 833220, m. 07855 838395, e. brian@drakemyre.co.uk

Simon Greig is Sales Manager of LawWare Limited, Edinburgh. Contact Simon on simon@lawware.co.uk

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