Sharing responsibilities

All too often professional practices seem to think about their firms ?as having two separate and distinct areas in which they operate: practice and business. Many of the difficulties being experienced by small and medium-sized practices in development, adapting to change, and survival, stem from an inability to successfully marry the two philosophies.

You could look at the new OFR regime and observe that this state of affairs is being perpetuated by the regulations themselves '“ don't they, after all, require every firm to have separate compliance officers taking responsibility for legal practice and financial administration? In fact there are so many overlaps between the two areas of responsibility that this train of thought could become a quicksand of academic disagreement obfuscating the material issues.

If one looks outside the profession for parallels on how businesses are run, there are countless instances where the roles are separated and co-exist effectively. There will, however, be occasions where conflicts arise through differences in approach.

In manufacturing, for example, if the bean counters want the company to take costs out of the manufacturing process against the wishes of the production team then, while it may be perfectly possible to do so, they must consider how it will affect the quality of the product. Is the product actually perceived to be of high or low quality? Will it remain good value and is value a part of the appeal to the end customer? Will changed production methods mean lower quality?

All solicitors like to think of themselves as suppliers of a legal advice-based product of the highest quality. So the changes brought in by outcomes focused regulation (OFR) '“ and of course the market pressures from new ABS competition '“ in fact give rise to strong parallels with this manufacturing example.

Quality assurance

There is a direct relationship between ?the quality of your product and profit on ?a continuing basis. It follows that to maintain the systems assuring quality, both in a regulatory and good governance sense, at optimum levels the facilities for listening to, and interpreting, messages from all parts of the firm have to be highly developed. Deeply embedded in the firm's culture, they should not only allow people to be wrong but also be part of the process of assimilating problems and dealing ?with them.

For these facilities and systems to work well they not only need to be embedded within these two officers' thinking but in the thinking of the whole firm. It follows that the whole firm needs to believe in the business principles set out in The Principles. Sadly (but understandably), in most firms gaining the confidence of all members of staff when changes are introduced can be a challenge. The staff buy-in gap manifests itself in different ways, none of which operate for the benefit of the practice business.

It occurs if people are left in the dark about why a change is being imposed on them. If this happens, they are highly likely not to adopt the changes (sometimes known as The Mushroom Syndrome). It will be going against what they feel they need to be contributing to the business in order to be seen as a positive influence. This is a very human reaction to enforced change and happens with every new initiative that is brought in either under statute or under the auspices of far-sighted practice management. It can be cured by giving people the right environment within which to assimilate the need for the change.

So, how can new COLPs and COFAs ?put themselves in a position where they ?are confident that they will receive the back-up they deserve? The secret is knowledge; in depth broad-based knowledge that will be trustworthy and '“ even if it throws up unpleasant surprises '“ gives not only a heads up on what needs to be dealt with, but some pointers on how it may be achieved. Knowledge is a two way street. In this context it's just as important that knowledge about the'why?' factor disseminates to non COLP and COFA colleagues, as from them, if a practice is to avoid the buy-in gap referred to above.

Embracing change

So what are the mechanisms that can be marshalled to mine the various seams of information and how can we interrogate the mass of data available?

It depends on whether you want quantitative or qualitative data. Some of this knowledge is readily available from the case and financial management systems that firms will have in place already. However, while the more detailed binary information emanates from monthly financial spreadsheets, the answers COLPs and COFAs may (and should) be seeking range from general firm-wide questions to more specific ones relating to departments and to individuals.

In the context of people needing to be at one on why systems are necessary, there are existing channels and methodologies in place. There are no great surprises here '“ but it may be that these sources have not been recognised for their potential in this field. Regular team meetings with a training aspect to them and the personal development review process are leading examples. Partners and management meetings are often fertile areas as well.

In addition to these tools a more wide-ranging approach may be needed, along the lines of a 360 degree appraisal (not dissimilar to personality profiling, in that there are no wrong answers). Confidential questionnaires may be used to give both a subjective and objective overview on where the firm stands and what are likely to be its priorities. They can be used both internally and as part of an external process to give a clear picture of where the firm's strengths and weaknesses lie, including in the context of other firms.

Do not be afraid of the fact that challenging targets are being imposed on the profession. Once those challenges have been assimilated into the philosophy of the high street practice we may well find it remarkable how far it will take us in new approaches to product delivery. Drawing a motoring industry analogy, if governments and international agreements had not prescribed seemingly impossible drivers for change on safety, average fuel consumptions and target emissions, would we really be driving air-bagged family cars that delivered 50mpg with low-emission figures to boot? Would there have been viable electric cars and hybrids? The fact that these are now realities should be encouraging to those lawyers who regard the future as an opportunity '“ even if it seems challenging.

We have all heard of the 'know your client' principles and operate these as a matter of course, particularly in the context of anti-money laundering rules. We now need to think of them as relating to a partner/shareholder's and director's single most important client '“ the practice in which they hold those shares.

So don't make assumptions on how new thinking is embedding itself in the psyche of your colleagues. Ask the questions '“ and listen to the answers! There will be some pleasantly surprising ones as well as some that are less welcome visitors. Whichever they are you really do need to know them. Without that knowledge COLPs and COFAs are working with at least one hand tied where it shouldn't be; with it they will be helping create a better managed and more profitable firm.

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