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

Cloud computing simply isn’t that scary anymore…

Following a recent survey published by Forbes, it is clear that “Cloud Computing simply isn’t that scary any more”.

The survey refers to claims that “a meagre 3% of companies considering Cloud consider it to be too risky.”

It goes on to say “The bottom line is cloud is now just considered the normal way to implement software solutions.”

LawCloud supports this and has seen a consistent rise in the number of law firms in the UK adopting Cloud. It has added a live counter widget to the homepage of its web site showing that it now hosts 83 law firms on its Cloud platform (as at June 2012) and this figure is growing by the week. This is proof that Cloud is a natural way forward for both new starts and existing law firms looking to be Smart and make better use of technology.

The launch of Windows 8 is just around the corner and Microsoft has taken the decision to launch its own tablet device. Whilst the decision from Microsoft to deliver its own hardware for the Windows 8 platform is seen as controversial (in terms of alienating its hardware business partners such as Dell, Acer, HP etc), Microsoft sees this as the way forward and as real a rival to the iPad. You can find out more about their new Microsoft Surface Table here Microsoft Surface Table here or Google Microsoft Surface Tablet to find many up to date news stories relating to its specifications and launch.

Alongside its Security white paper and Law Society Cloud Guidelines response document, LawCloud has now published its Statement of responsibility for security and resilience.

This is supported by 3 new Client Case Studies demonstrating the success of the Cloud and its impact on 3 small law firms.

If you would like to find out more about best practice for law firms adopting Cloud, please do not hesitate to contact me directly at warren@lawware.co.uk

We have gained a wealth of experience over the years and LawCloud is now recognised as one of the foremost suppliers of Cloud based legal software in the UK.

Launch of a UK based compliant online storage system for lawyers

We are pleased to announce the launch of LawSecure, a secure UK based online storage facility, certified and managed by our team at LawCloud.

It is a compliant online storage facility for lawyers in the UK, which works in a similar way to other online storage vehicles such as Dropbox.” It is designed for lawyers who need to comply with the Data Protection Act 1998 for storing data and is a fast, secure and reliable way of storing key data off-site.

For further information on LawSecure, please visit our LawCloud website here.

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

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

LawCloud: Helping to create more agile and responsive Law firms

LawCloud is a new generation in Practice Management Software for law firms in the UK and is brought to you from the developers at  LawWare Ltd. Established in 1998 and now serving more than 200 law firms from its HQ in Edinburgh, LawWare has established a strong reputation for an innovative and forward looking approach to the business of running a Law Firm

Since its launch in March 2010, LawCloud now hosts over 65 law firms on its platform representing almost a third of the LawWare user base. Many small law firms lack the IT infrastructure to support the latest systems and find the upfront costs of new IT prohibitive.  LawWare now rarely installs its on premise system and over the last 18 months, 95% of its new systems have been LawCloud.

Depending on who you are talking to, you may hear this kind of technology referred to as hosting, SaaS, Outsourcing, Cloud and more. At the heart of the offering, they refer to a very similar thing and the terminology is simply stylistic. Our preference is Cloud. In our experience, any perceived risks associated with the Cloud clearly outweigh its benefits. Law firms appreciate peace of mind. Their confidential information is backed up and protected with a level of security that is often out of reach for smaller organisations. All data is stored in one of the foremost data centres in the UK which falls under data protection laws.”

LawWare has enhanced relationships with its customers by simplifying their IT and as a business is more agile and responsive. This flexibility is a hallmark of LawCloud. Users can access it from anywhere they have an internet connection”. This new future technology has levelled the playing field, allowing smaller organisations to compete with bigger firms in new ways. The legal technology market has seen a great deal of consolidation over the last few years and the legal services industry is also consolidating and fragmenting. This presents an opportunity for lawyers and smaller technology suppliers to offer a real value added personal service to their clients that some of the bigger firms find may have lost sight of.

 

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

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

Back to Basics for Lawyers: Finance and Financial Management

Welcome to the February edition of Back to Basics — a Business Briefing for Lawyers. In this edition I focus on Finance and Financial Management — an absolutely crucial area that every fee earner needs to be involved in.

Financial management starts from a simple premise — if you can win and keep clients profitably then you will succeed. The question is how do you assess the profit?

Consider what reports you need to work with every month—and how to analyse these. Think about looking forward and doing some predictive calculations to show you how you can manage financial projections over the course of your financial year.

John McNeill, Business Restructuring Director at BDO LLP considers the premise “Cash is King” – and it is! Without positive cashflow every business will struggle to survive, never mind progress. Rendering Fees is one thing — recovery of fees is an essential part of every fee earner’s duties.

It’s not about the money…..or is it?

There’s an old adage that says “It’s not about the money….” but, at the end of the day, it almost always is! It is true that if you win and retain clients in a cost effective way — that means that you make a profit out of every bit of business you do for a client — then the money will take care of itself, but it’s nice to be sure. This means that you need to check your financial performance on a regular basis.

It is simply not good enough to look at your Bank balance every so often — it might be good — or, on the other hand, in times of a downturn it might be very bad indeed. There is a range of reports that you should consider at least once a month. These include monthly Profit & Loss Reports, Fees Rendered and Recovered Reports (by fee earner, if possible), Outlays and Expenses Report (if your system provides you with one), Client Credit Balances over £500 (although it’s better to run this Report every week) and client Debit Balance Reports. If your Practice Management system provides it, you should look at an Aged Fees Report — and then you can consider what Credit Control steps the firm needs to take to manage this position. Get into the habit of looking at the figures monthly and speaking with your fellow fee earners about their performance.

On an annual basis, review your results and compare them to results in previous years using a range of Ratio Analyses—this will allow you to compare performance without having to try to compare actual figures. This will also tell you if your are performing better or worse than in previous years. Consider your Net Profit Percentage – how much of every £1.00 you generate in revenue do you get to keep?

What about your Debtor Days Ratio — are clients taking longer to pay you than they’ve done in previous years? What percentage of Revenue is your total Salary Bill – and is it a higher or lower percentage than previous years? These measurement will give you some clues as to the firm’s financial fitness.

Financial Management

It’s all very well reviewing your figures after the event, but “how can I manage forward”? This is a question I’m frequently asked by clients. My answer is always, set a budget for the full year, lay it out on a month to month basis and then overwrite the figures with the actual results each month. When you do that you will find that over the course of the financial year, as the actual figures replace your projected figures you will be able to gain an insight into how your firm is likely to perform by the end of your financial year.

The first stage in the process is to set a budget. For whatever reasons best known to themselves, many firms don’t normally set revenue and expenditure budgets. As a result, they have no real basis to determine their performance. You will need to use a spreadsheet for this. It’s a simple and straightforward task to prepare a set of Revenue and Expenditure Projections. Set out the spreadsheet showing the Revenue and Expenditure Items in the left hand column and along the top of the spreadsheet put the months—starting from the first month of your new Financial Year. Think carefully about what the firm is likely to generate by way of Revenue and what it is likely to spend on each item in the coming year — and in a worst case scenario, take the total of each Revenue and Expenditure from the previous financial year, divide it by 12 and then put that figure in each of the months over the year — Revenue at the top of the columns and Expenditure below it. Then add up your different revenue streams and deduct the total expenditure. This will give you your net profit or loss each month. You should also show a column for Totals at the right hand side of the spreadsheet so you can add up each row and that will show you your annual totals for each Revenue and Expenditure item.

At the end of each month, overwrite the figures for that month with your actual figures. If the spreadsheet is structured properly, it will recalculate your figures for the year.

By building in a few additional pages to your spreadsheet you can extend its functionality and look at revenue per fee earner, fee earner averaging and revenue comparisons (where you can set your budgeted figures for the month against the actual result for the month). This means that you can see on a consistent basis which areas of the firm are generating more or less than you had projected. From an expenditure perspective, you can again carry out a comparison against your budget and very quickly you will see any items where there has been an overspend or an underspend. This gives you a “heads up” on something that might be going on that you had not expected or budgeted for – and at least gives you a chance to do something about it before it gets out of hand!

There is no magic in the numbers, but if you use a tool like this you will give yourself a chance to head off problems at the pass — or in the case of revenue, work out why fees in certain areas are not performing as you predicted and do something about it — and where certain work types are performing better than expected, work out why that is and THEN DO MORE OF IT.

Simon says…..

As Brian has noted this month the role of the Partner is a multi-faceted one. Obviously a good legal analyst is the result of training and education – that prepares you for being a lawyer. Then, when you make Associate, you are expected to be able to generate your own clients and revenues and then, when you make Partner, you are expected to contribute to potentially all the senior roles – Staff Partner, Client Relations, MLRO and the “dreaded” Cash Room Partner (or as I heard it described recently as ‘The short straw’). The role of Cash Room Partner can be daunting as it does deal with quite a lot of different things – Law Society inspection, HMRC, VAT returns, PAYE & NIC, cashflow, surplus, accounts, budgets, etc, etc are aspects that Cash Room Partners need to keep under control whilst often being expected to keep up a full-time fee earning role as well. A good cashier is helpful and I know many a Cash Room Partners who operate with a high degree of delegation in this regard— which is fine — but you cannot delegate accountability. Everyone knows where the buck stops.

So, take some time to become conversant with all of the aspects, not in-depth, but a knowledge of the parameters and understanding of the meaning in the numbers. I suggest that if you are not in the habit of ‘presenting’ the management accounts to your Partner colleagues each month , then do that. This is an excellent way of learning on the job. It will also help your colleagues to raise issues and ask questions. Time and again the Clients Trial Balance report, Outstanding Fees report and Bank Statement get circulated each month. Everyone looks at the last couple of pages and because they don’t understand them, simply pass them on. These same firms look forward to the Accountant’s annual report approximately 6 months after the financial year end to see if they made any money by which time it’s far too late to do anything about it! No, nowadays whilst Cash is King in terms of month to month sustainability, it is vital that some effort is made within the firm to understand the current trading position. Take steps to ensure that there are no nasty surprises at Financial Year End because everyone who should know what the position is does know, every month, and are helped by their colleagues to understand and improve this where possible. It’s no use to a older Partner that there is no money in the firm. It’s no use to a younger Partner that there is no money in the firm. It is vital to all that there is demonstrable viability in the firm at all times – and all Partners need to work together to achieve this to the best level possible and keep it there.

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

Cash is King!

As we see some very early signs of green shoots of recovery you may think that an improvement of the economy is just round the corner. However, this does not disguise the fact that what has become the most important factor in running any type of business today is cash flow management. We have all read the horror stories in the press recently of the effect that the adverse weather in December had on many a business cash flow. The sectors that have been particularly badly hit include retail and leisure & hospitality, both of which rely heavily on consumer spending. You can imagine the effect if you have budgeted for a certain amount of income and you are hit by a sudden shortfall in revenue. In days gone by when your local bank manager perhaps had the ability to grant a short term overdraft to tide you over, nowadays that is not so likely to happen. However, you should keep your bank in the loop as they are more likely to respond favourably if you keep them informed. As a rule, your bank does not like surprises!

If you are experiencing cash flow difficulties and are unable to pay your ongoing liability to HMRC in respect of VAT & PAYE then you should approach them to enquire about a time to pay order.They will normally give you a fair hearing and, as long as your proposals are acceptable to them, they could go with it. However, a word of warning. If you default in any arrangement that you have negotiated with them, it is normally all bets off. You should always bear in mind that HMRC have to be paid sometime. In a non cash transaction business where credit is given to customers, collection of cash is of paramount importance. If you operate your own credit management system it is important from the outset to ensure you are dealing with the correct entity and also set realistic monthly credit amounts for customers. Try and spot any potential bad debts before they happen and gather as much data and knowledge about your customers. Of course, many owner operated businesses have difficulty in credit management and more medium to small businesses are turning to Invoice Discounting or Factoring. This is where the firm invoices its customer and the factoring company immediately pay you an advance of up to 75% of the sales value and the balance when collected. This can ease your cash flow position but it can be expensive especially where a bad debt is suffered and the funds already advanced by the factoring company have to be repaid to them. Again, the golden rule is to try and avoid bad debts. This short article only gives you a flavour of the subject and I would be happy to discuss this topic further if you or any of your clients have any specific issues.

John McNeill is the Business Restructuring Director, BDO LLP and can be contacted at 4 Atlantic Quay, 70 York Street, Glasgow G2 8JX, tel: 0141 249 8409, mobile: 07896 114 904, email: john.mcneill@bdo.co.uk

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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

Back to Basics for Lawyers: January 2012

Welcome to the January edition of Back to Basics — a Business Briefing for Lawyers and a belated Happy New Year to all my readers.

This month the focus is on taking action.

Even the best laid plans depend of solid action to make them happen but how many times have those best laid plans come to nothing because of your own inertia.

The best way to get to your objective is to actually do something about it.

We will see in this edition of Back to Basics that even the smallest of steps are important.

Any journey must start with a single step—don’t let your hopes and ambitions be thwarted by failing to put one foot in front of the other!

If you need any help with your plans or putting them into action, 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

I’ve got the plan……how do I start?

In the December issue of Back to Basics we looked at Forward Planning and made some recommendations of what to do and where to start. You’ve all don’t that….right?

January gives everyone an ideal opportunity to throw off the old and look to the new. It’s a new year with a whole twelve months to look forward to. If you’ve really taken time to think about what you’d like to do in 2012 and how you’d like to achieve it, then taking action is the very first step to achieving your objectives.

It doesn’t matter whether your plan is written on a single sheet of paper or is a professionally bound and presented plan – without taking that first step you will never achieve anything.

All the best plans depend on action. If you’re travelling to your destination, you need to start somewhere. You might not be able to see your destination but you usually know how to get to the end of your street. Start with the end in sight and take those small steps that will lead to achievement of your goal.

January last year saw the first publication of Back to Basics for Lawyers. I had had an ambition for quite a long time to produce such a publication—short sharp management tips and recommendations that take up no more than two sides of an A4 sheet of paper (for those of you who print this off).  I planned out the topics for the first twelve months, I spoke to some colleagues and asked if they would contribute occasionally (and to Simon who I asked to contribute in every edition) and then went about  listing the things in each topic that I wanted to cover—and the list grew and grew and grew……..but I still hadn’t achieved anything. I didn’t actually achieve anything until I typed my first word—then my first paragraph and, finally all the words for the first edition. I then assembled the Briefing into the style of publication you are now reading and incorporated Simon’s piece. At last, Back to Basics for Lawyers was born—and here we are, 12 months and 12 editions later in a brand new year and yet another edition of Back to Basics for Lawyers.

All this couldn’t have happened without those first words. All the planning in the world wouldn’t have achieved anything and it would all still have been a dream.

If you truly have done some work in setting your objectives, start to realise them by taking even the smallest step that will help you on the way—and if you haven’t yet started—don’t you think it’s about time you did? Nobody else is going to do it for you!

Simon says…..

Growing your business – January 2012

In last month’s article my main point was this – it is possible for any business to grow in this economy. It requires thought, it requires knowledge of your clients, it requires the ability to put yourself in the client’s shoes and imagine a better buying opportunity. I asked you to think about why your client is your client. Hopefully you have had some quiet time to contemplate this.

The potential for a law firm to grow is different for each firm. A sole practitioner is different from a chamber practice, which is different from a corporate law firm; so the strategies have to reflect this. But the principles for increasing turnover are the same – these I also talked about last month – attract more clients, or, increase the amount each client spends (ideally both).

Attracting more clients – promote yourself. It’s tremendously effective when carried out well. Doing it well means being clear about the message and the benefits, and, targeting this at the right recipients. Here are a couple of examples – having thought about things over the break you may feel that at this time of the year a good message to target your existing clients with is – the importance of up-to-date Wills and the benefits of Powers of Attorney. An alternative plan could be one that says – we need to remind our clients of the range of services we provide. The former plan is value based; it offers some information and advice up front and persuades the recipient that there is some knowledge and potential advantage to be gained from further investigation – when done correctly it also achieves the second plan’s aim. Embarking on the second example is not necessarily a bad plan, but it is difficult to establish a ‘call to action’ with it, i.e. give a reason for the recipient to contact you. You could put an ‘offer’ into the message, for example a free or discounted will with every purchase, but in my opinion the overall message is weakened by being price led as opposed to quality led. Now that you have spent some time analysing your clients – come up with the best plans that cover all types of clients so that everyone gets at least one message this year.

Increasing the client spend – this often requires some even smarter thinking as there are a few strategies you can examine. There is the discount store scenario – how much can you deliver for a set fee. This is often useful for conveyancers, particularly those that perceive the market is price led. Understand what you can deliver for the market rate and call this the Bronze Standard, then create 2 higher levels of service, the Silver Standard and the Gold Standard and specify what you will provide and a price for these. When someone asks for a quote, offer all 3. The questions that follow tell you all you need to know about the prospect and how to handle them in terms of whether they are truly price driven or if they might appreciate a little more by way of service and fee. These are the clients that you must identify, across the board. Those that appreciate a little more and understand that they need nurturing; they appreciate the concept of value, so mark them out for this because you can provide them with more services. These are your good clients not the ones that buy on price.

All firms must be able to identify and send messages to their good clients. Use your Practice Management System to flag these clients and keep their details up-to-date. Regularly correspond with them, 3 or 4 times a year, without fail. It’s no use just doing this sporadically. It must be regular and reliable, in order to build a relationship and persuade these clients that you are interested in them and that you do have their best interests at heart. Don’t expect massive results immediately, just because you send 1 letter. But by the end of the year you should be able to see the difference, easily.

Have a good 2012 by making it a good 2012.

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

Financial Actions

I make no excuse for revisiting this topic over and over again. You might have the most complex and detailed plan and be desperate to put it into action but you will never ever achieve it unless you have the funding to make it happen.

In any plan, you need to carefully set out your projected revenue and expenditure—what income you calculate you will generate when you carry through with your plan and how much you will need to spend to achieve your objectives. It is incredible the number of legal firms that do not have even the most basic financial projections and yet still expect to be successful year on year.

Why is it that in any business plan, a large portion is taken up with the financial aspects? Simple really. Without the right funding any plan is doomed to failure from the start.

Review your plan in conjunction with your financial projections—your Profit & Loss and, most importantly, your Cashflow Projections. It is surprising how many lawyers still struggle with projections and have difficulty explaining the difference between profit and cashflow only to find out the difference late in the day when they are showing decent profits but have failed to collect the cash due to inadequate credit control policies!

As Mr Micawber in David Copperfield famously said “Annual income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”.

Make sure your plans are properly costed out and if you’ve not yet done that, this is one of the very first things you need to do.

Sit down, work out what you and the other fee earners in the firm are likely to generate in the coming 12 months. If you’re really stuck, have a look at what was generated for each fee earner last year and consider whether there is likely to be an increase or decrease in that level. You should know your business and the challenges in the market, be able to take into account what impact your plans will have and come up with figures that you can support.

From an expenditure point of view, take each of your expenditure headings and really challenge yourself on whether you need to spend this money or not—you might want to spend it on this item or that but you might not need to spend it—know the difference and discipline yourself to spend only what you need to spend. Do not trust your finances to luck—the odds are always stacked against the gambler!

Don’t wait to get it perfect

If you really want your plan to fail, then try to get it perfect. Learn quickly that there is no such thing as the perfect plan—it simply isn’t achievable.

Now, I’m not saying that you shouldn’t aspire for excellence, but if you’re trying to create something that’s perfect, you’ll spend so much time trying to create that perfect plan that you’ll never get round to putting it into action.

Consider what options are available to you. Ask your partners colleagues and staff. Make sure you have a common understanding of the problems and when you gather the information from these sources you will have a list of what’s available to include in your plan (there is a specific workshop that I run that helps you with this part of the process). This will help you develop a plan that is robust and resilient and up to the challenges you are facing.

Every plan has some sort of shortcoming or defect and you’ll usually only find that out when you start to put it into practice. That doesn’t mean that you shouldn’t start until you’re sure or that you need to think through every conceivable option.

You should strive for excellence and part of that exercise is setting down the actions you intend to take—what comes first, what’s next and what’s after that. And so on and so forth. You’ll learn fairly quickly what’s working and what’s not and which of your assumptions (and you will need to make assumptions when putting your plan together) work and which don’t.

Think about it this way:

You need to be in motion before you can change direction. If you don’t like the direction your business has been going or the results you are getting you need to do something about it. You can only do that something if you are in motion—and they way to get into motion is to make a start. Once you’ve build up some momentum it’s likely that you’ll realise that there are opportunities available to you that you might not have thought about and because you’re in motion you may be able to avoid some of the threats that are out there.

If you are standing still when the threat comes along it can be very difficult to avoid it and that can have a disastrous impact on your business.

Make sure your plan is fundamentally sound and not fanciful or over-ambitious—remember the SMART objectives we looked at in January 2011 edition. Get up and running and follow your plan and fine tune things as you go.

LawCloud Publishes Response to Law Society Guidelines on Cloud Computing for Law Firms

The Law Society of Scotland has recently published guidance on cloud computing for law firms.

Law Cloud has prepared an initial response document to the Law Society guidelines highlighting what we think is the most relevant and important information for our clients. To receive your copy of the Law Cloud guidance response, please fill in your name and emaill address on the form provided on the LawCloud guidance page.

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