Adapting structures: Preparing for the onset of alternative business structures

Managing partner Simon Gibson reveals how Kirwans has adapted to meet the challenges of alternative business structures

 

Key takeaway points:

1. Secure and maintain the buy-in of all staff to your vision.

2. Understand fully how the vision will be capitalised – by who, how and when.

3. Take decisions quickly and avoid paralysis by committee.

4. Invest in IT and marketing and ensure they demonstrably improve the bottom line.

5. Stick to your guns – once the strategy is set, do not deviate.

6. Accept that frustration is inevitable.

7. Constantly measure the success of plans.

8. Keep talking to your staff and clients – good communication is key to the success of any business.

 

The imminent arrival of alternative business structures (ABSs) under the Legal Services Act has certainly focused the minds of UK law firms such as our own.

When I became managing partner, we were a successful, growing firm with a good profile in our target market of the northwest. Fee income and profitability was increasing year on year and the Kirwans brand was well respected within our region.

However, the Legal Services Act is a game-changer for firms such as our own. If, as we expect, some of the biggest brands on the retail high street enter the legal market, law firms of all shapes and sizes will have move to another level or risk withering on the vine.

I therefore considered it a top priority to assess the challenges that lay ahead and to review our strategy for the future.

 

Challenges we faced

We began preparing for the onset of ABSs two years ago.

The starting point was to agree a vision and mission statement for the firm to ensure that everyone – from office junior to equity partners – was 100 per cent clear as to what the firm stood for, its values and its business objectives.

A key component of the strategy we devised relates to the importance of cutting-edge technology, the excellence of service provided to clients and, crucially, all areas of our business returning the maximum possible profit.

A key issue in the progress and delivery of strategy is funding. It was very clear to us that unless the fundamental matter of the capitalisation of the business was agreed from day one, the possibility of the successful implementation of our strategy would be reduced.

Having agreed upon the issue of funding, for us there were three key areas which needed to be focused upon, all of which were critical in positioning the firm for the future:

1.     IT;

2.     marketing and client services; and

3.     rebranding.

I will talk more about these areas in further detail later in this article.

Perhaps the biggest challenge in the establishment of an ambitious vision and strategy is to get your people to believe and buy into it – from equity partner down. We were making a lot of changes quickly within the business and we needed to be able to carry everyone with us.

Creating and sharing a vision and mission statement (including the financial aspirations of the firm) with all members of staff was a crucial first step in securing buy-in.

As part of this process, it became apparent that certain members of the team, including some at partner level, did not share the same vision. Consequently, some tough but vital decisions had to be made around personnel.

 

Big steps we took

Having recognised that we faced a number of challenges within the business, we equally realised that we had to take some big steps – and quickly – to move forward in the way that we wanted.

The identification of key individuals within the business who fully supported the agreed strategy and shared all of the core values was crucial. We took the decision, having identified such individuals, that they should be fast-tracked to appropriate positions.

This ability and willingness to spot and nurture talent is critical in making progress swiftly. If key individuals around the top table do not share the vision and values of the business (even if they say they do), the going can be hard.

We decided that playing to strengths of key individuals was crucial. This was perhaps best highlighted by our decision to move two partners away from day-to-day fee earning and establish them as strategic leaders of IT and business processes. The decision to do this was based upon the recognition that the individuals concerned could add far more value in these roles than they could by earning fees.

We also hired a business coach –a former managing partner of a successful law firm – to work closely with all of the partners and heads of department to help them with their personal development and business planning. We recognised that investment in a firm’s leaders is pivotal.

 

IT

For a lot of firms, IT is seen as a technical area and not one which is central to the growth of their business. The reality, as other sectors discovered long ago, is that IT and cutting-edge business processes can push a business from mediocrity to excellence. The bottom line can be drastically improved at breakneck speed.

We have invested significantly in our IT infrastructure, including introducing the next-generation Norwel practice management system. Fee earners connect to the system at home and while travelling, armed with iPads and BlackBerry phones.

This combined technology has virtually overnight enabled us to improve productivity, enhance client care and increase fee income and profitability.

 

Marketing and client services

Another area traditionally seen as a poor relation was marketing. But, along with IT, we now see these two disciplines as the most important parts of our business.

A decision was taken as part of our strategy to move away from conventional advertising. We have created a client services and marketing department, whose remit is far more strategic.

The department is responsible for developing and executing innovative sales campaigns. In addition, it ensures client satisfaction and works closely with our website partner to achieve month-on-month increases in new business conversions and with our PR partner to secure media coverage in key media read by our target audiences.

 

Rebranding

We also took the big decision to rebrand the firm. For those reviewing strategy, this can be seen as a quick win and is perhaps an obvious starting point for a review of market position. However, a rebrand must be about much more than your logo and strapline.

Before taking the plunge, we conducted a listening exercise with our clients and all of our staff to obtain their views on both the look and feel of the brand and the messaging which went with it.

The brand was then developed over a period of three months before being agreed and rolled out with strict brand guidelines across every aspect of our business.

We took the view that all of our staff must understand the values for which the brand stood and deliver those values every day.

 

Introducing change

While we can reflect now on a successful transformation in our business – albeit still a work in progress – we, and I as managing partner in particular, have learned a huge amount along the way.

My promotion to managing partner coincided with the firm’s decision to prepare for ABSs. I had been a partner at the firm for a number of years and understood its strengths and weaknesses.

My natural instinct upon assuming the managing partner role was to move at 200mph. I readily admit to having become easily frustrated in my early months in the job. I wanted to move mountains overnight and expected everyone else to be willing to work at the same pace.

What I perhaps failed to appreciate in those early days was the size of the cultural change I was aiming to introduce across the business and its people. During recent years, a whole industry has grown in change management and what we were attempting to achieve was nothing different. We were looking to transition individuals, teams, systems, planning, financial controls, indeed, an entire organisation.

During this time, I learnt some key lessons which I would advocate to other managing partners (see box: Lessons learnt).

 

Lessons learnt

• Be realistic about deadlines. Yes, you may want to achieve everything yesterday, but you will get far better results from your team if you set targets which are genuinely achievable.

• Listen to the views of other team members. Some of our best ideas have come from more junior members of staff.

• Understand the scale of the project you are undertaking. Tackling one area on its own – be it IT, marketing, training or branding – would be a massive undertaking in its own right. You are trying to tackle all of these areas and more in order to prepare fully for alternative business structures.

• Don’t allow yourself to get frustrated. Frustration is ultimately a negative force; you need to celebrate your successes and learn quickly from any mistakes.

 

Rising to the challenge

I know from talking to other people in the legal sector that many firms – large and small – have not yet assessed or risen to the challenges presented by the Legal Services Act.

There will inevitably be a temptation to consider the possibility of a QualitySolicitors-style rebrand or a merger. I do not dismiss either of these directions. However, the key question is whether such a shift is consistent with the strategy of your business. If it is not, you need to have a rethink.

We decided at an early stage that we were strong enough to remain independent. We based this decision on the fact that we had an established name, a healthy balance sheet and an incredibly talented team.

During the past two years, we have built on these firm foundations in the ways outlined earlier in this article. We have harnessed some of the best technology available in the legal world and we have attracted talented lawyers and non-lawyers from some of the biggest law firms in the country. We have also relocated many of our staff to modern, attractive new offices and refurbished our other offices to provide the best possible environment for our staff and our clients.

We have taken these steps while keeping costs firmly under control and ensuring that each step taken improves the bottom line. Robust strategic planning is at the very heart of our business, with ambitious yet realistic targets being set and continually monitored.

The days when the financial performance of a firm can be kept under wraps by a small band of partners are, in my view, long gone. If you want to get the best out of your staff and expect them to fully engage with your vision, you need to share the financial successes or failures of their departments with them. Successes should be celebrated; failures should be transparent and learned from. For staff to improve, they need to be aware of the need for improvement.

While we have come a long way during the past couple of years, we are under absolutely no illusion that there will be further momentous challenges around the corner. The market entry of some of the UK’s biggest known brands and the ability for existing law firms to acquire significant sums of external investment will undoubtedly bring about the demise of a number of firms.

But we are equally sure that clients will ultimately want the best possible legal services which they can get. That means legal services which are delivered efficiently, innovatively, professionally and at excellent value. These four elements constitute our brand values and I am confident that they are values which all discerning clients look for.

 

sgibson@kirwanssolicitors.co.uk