Category Archives: Blog

A people business, right?

images833IJ8SAA people business, right?


The topic for this blog almost literally fell in my lap. I met a friend for post-work drinks when, as is the way with these things, we soon turned to a kind of ‘how was it for you?’ conversation, about the last few months in general, and our respective businesses in particular. It didn’t take me to long to take my friend through the evolution of my consultancy practice over that period – I suspect both of us were more interested in how my friend’s medium sized law firm was faring.

I heard what I expected to hear given market conditions and my knowledge of my friend’s firm’s place in their chosen markets, that is, it had been a record year in terms of turnover and profitability. Some of what I heard had made the regional press, and why not? It may not be of huge interest to clients, but there’s nothing intrinsically wrong with celebrating success. Heck, I’m in favour of it, I’ve been there and done that! But what I was told next stopped me in my tracks, and left me pondering the meaning of ‘success’.

My friend told me that over 25% of the Partners and staff who had been at the firm a year ago were no longer there. Now, some level of attrition is normal, and I’ve always thought that churning 10 to 15% of your staff per annum is what you’d expect in most professional service firms (PSFs).  After all, people retire, move out of the area, leave for a lifestyle change and so on. There is data out there (it won’t take you long to find using your favourite search engine) to suggest that around 8-10% is what law firms should be aiming for, it’s ‘healthy’ at that level, and that 12-15% is towards the very top end (or poorest outcome) that a PSF should achieve. But 25% plus? Something about that didn’t sit right with my understanding of ‘success’, even allowing for record financial results.

For me, success in a PSF is about creating a ‘One-firm’ firm which is able to harness its resources in a way that enables it to compete most advantageously in its chosen markets. Those ‘resources’ are its structural, relational and human capital (together its’ ‘intellectual capital’). And to quote David Maister, a One-firm firm is characterised by “institutional loyalty and group effort” and such firms “rarely lose valued people to competitors”. Given the challenges of recruitment in the legal sector nowadays, you’d have thought that firms would be putting discretionary effort in to talent retention, wouldn’t you, in creating a “sense of cohesion and belonging among the firm’s people”[i]?

Now, I don’t know that my friend’s firm didn’t do everything in their power in 2014/15 to do just that, and were just plain unlucky with the outcome. But I do know that the “starting point in addressing any firm’s strategy for human capital is to place people at the centre of [the firm’s] efforts to gain sustained competitive advantage by developing a workforce that feels it is an integral part of the general needs and aspirations of the firm”[ii]. After all, law is a people business, right?

In short, a firm needs to provide all its Partners and staff with a clear line of sight as to what is required from each of them, each day to help the business achieve its strategic goals. It can be difficult to do this at the best of times, but if strategic objectives are centred on vague goals like being ‘bigger’ or ‘more profitable’ it can be too big an ask. But unless meaningful efforts are made to provide that clear line of sight, people may conclude that they don’t belong in an organization that isn’t clear about where it’s going, and what it wants from its people.


[i] Nick Jarrett-Kerr ‘Strategy for Law Firms’ (2009)

[ii] ditto

Winners and losers

W&LI’ve been enjoying my new life as a consultant in the legal sector for about 6 months now, and I thought now was a good time to pause and reflect on what I’ve seen out in the market. Fairly obviously, the economy is providing a far more benevolent backdrop to activity in the sector than was the case throughout the recession. There is more transactional work about, and many firms are processing as much residential conveyancing work as capacity will allow.

Firms are talking about improving processes, employing smarter pricing and going for growth. But I don’t see enough law firms thinking radically about what the market needs and how they are best going to satisfy that need. I’m not the first commentator to opine that the small to medium sized full service firm has had its day – though current increases in turnover and profitability for such firms rather obscure that message. It reminds me of David Maister’s observation that it’s quite difficult to walk in to a room full of million-dollar a year attorneys and tell them they’re doing it wrong!

All firms need a razor sharp focus on which clients, in which markets, they are aiming to serve. Once clear on that, the firm should then aim to achieve competitive advantage in that market or markets. That means, for the avoidance of doubt, being able to provide its services at a higher price than its competitors, or being able to produce its services at a lower cost. Few can achieve the position of premium priced market leader over a range of services – though see for example the Magic Circle firms – but it is possible to dominate a smaller market providing a smaller range of services or to produce comparable services at a lower cost than others. An example of the former could be a niche media law firm operating out of Manchester’s Media City, while an example of the latter could be a volume conveyancing firm that has invested heavily in its IT infrastructure and processes to enable it to operate profitably charging prices that would seem unfeasible on the high street.

Winners and losers are emerging. The winners are not always the firms that are now trumpeting their rude financial health, and the losers are not always the firms that aren’t currently enjoying newsworthy growth. The winners are those firms that ‘get it’. The winners are those that know which clients, in which markets, they need to focus on, and do so. Firms that genuinely understand their clients and their markets. Firms that invest in the optimisation of their processes. Firms that understand profitability on a granular level and price accordingly. Firms, in short, that understand they are in business in the 21st century, and understand what it is they need to do to compete as effectively as they possibly can.

I’ve enjoyed working with firms who perhaps didn’t ‘get it’, but hopefully now do. There’s no doubt that some firms, by reason of service lines or geography, had an easier recession than others. Some of those, not perhaps having had the ‘burning platform’ to prompt change which so many experienced, may be starting behind the pack. But if a firm is prepared to look afresh at why it is in business, possibly by means of a facilitated strategy review, and to re-examine its target clients and markets, it could yet become one of the winners.