A RADICAL APPROACH TO CHANGE

Now that covid-19 vaccines have been developed and distribution to the most vulnerable in our community has begun, will we see a return to pre-covid-19 days in the way law firms operate during 2021? Most firms dealt remarkably well in both the first and second lockdown; many taking advantage of the government funding schemes and furloughing staff; and finding that fee earners could actually work effectively from home. There were, of course, some negatives: higher professional indemnity (PI) premiums for most firms and a wave of redundancies for good quality non-fee-earners, as well as for some in senior positions such as chief executive officers (CEOs), marketing and business development managers. We are still facing uncertain times and although, for many firms, the turnover has dropped – so have the overheads and costs, making many firms more profitable than before the pandemic.

The end of 2020 could not have arrived sooner for most people, but the changing face of the way legal services will be delivered in the next few years should not come as a shock to firms and their clients.

DOWNSIZING

Firms who embraced technology and home working do not intend to return to a fully functioning city or town centre office. Breaks in leasehold premises are being examined with many firms considering the need for such space. The downsizing of office accommodation should be high on your agenda when considering your future strategy. Fee-earners have proved that they can work effectively from home. Despite the need for social interaction around the office coffee machine and water cooler for peoples’ mental health, working from home does not have to be every day. Many firms tell me a return to the office will be two to three days per week for partners and fee-earners with shared facilities, therefore reducing the physical size of the office space required. We have all accepted the world of Zoom,Teams and Skype, as have our clients. The need for travel and face-to-face meetings will not return to pre-covid-19 levels. While we all need human interaction (and this will return in due course with meetings, conferences and events starting again this year), there is a change in attitude towards travelling and the insistence that fee-earners must be in the office each weekday from 9am to 5pm and beyond. Partners and fee-earners have proved to be highly effective using these new adapted communication methods; and I suggest they will become part of our world in the future.

OUTSOURCING BOOM

Firms that have adapted well to reducing overheads and costs should consider what this next stage could mean to the profits of the business and what they should be thinking about now. For many of the above reasons, there has been a resurgence in outsourcing services during 2020. For example, human resources (HR) and employment issues, some secretarial functions and finding new ways to market the legal services offered by the practice. Firms have recognised that the fulltime HR director who still uses an employment specialist for the more complex issues. can be easily outsourced on a retainer basis – and at a much lower monthly cost. Receptionists and support staff have become virtual in many firms. There has been a corresponding growth in smaller businesses offering a virtual assistant to firms. Again, if used only when necessary this can reduce the monthly overhead considerably – further developing the argument against expensive office space. I am aware of some firms that have introduced sector-specific virtual marketing using their email databases to invite clients to virtual meetings on a specific topic. In fact, one particular firm has maintained the same turnover as it had in 2019 by using this method. Driving traffic to your website is also a way to utilise search engine optimisation. By looking carefully at the trends nationally and in your own local area, you can target both existing clients and new clients. For example, once the housing market was released from its shackles last summer and the stamp duty reduced, there was going to be a spike in conveyancing. Also, lockdown has put an enormous strain on families and relationships and there has been a steady increase in marriage breakdowns. These are just two areas that if targeted correctly would bring in additional work.

CHALLENGES AHEAD

This year will have other challenges, for instance, the deferred payment on VAT and tax will have to be paid back; and the repayment of coronavirus business interruption loan scheme (CBILS) and the bounce back loan scheme (BBLS) will begin in the second quarter of this year. There is no doubt that we will have a recession at some point and controlling costs and overheads will be an essential part of your future strategy. However, as the recovery begins, is it time to consider a more radical approach to driving down the overheads in your practice? We know that conveyancing has had a resurgence since last summer which is due to continue until at least March 2021. However, conveyancers are overworked and what better way to assist them than to take the administrative functions away? File opening, searches and post completion and all elements of the work which, although essential to the transaction, can be offshored to professional organisations. I am aware of one full-service law firm that has doubled both its turnover and profitability in conveyancing alone during the pandemic by offshoring these functions. It has allowed the firm to take on considerably larger amounts of work because these administrative functions are being removed from the individual conveyancer. The cost saving in offshoring is considerable, with an average 40 per cent cost reduction in the above functions.

DATA MANAGEMENT

The data you hold has become an increasingly valuable commodity and – as firms must realise – in its true value. This does not just mean the information you hold on existing clients, but also the will bank that has been sitting there unused for years. I would argue that this data needs to be analysed regularly and each firm should have a digital strategy. Let’s look closer at the will bank – this most underutilised part of a law firm’s data. Many well-established firms hold several thousand wills on behalf of their clients. Yet because this data has been left in storage either physically or in a database for several years, it is not usable. The number of conversations I have had with solicitors’ firms which have good intentions of writing to these clients and updating the wills and generate new business, but it’s never been achieved because the day job got in the way.