Life in the ABS lane

While my reaction to the Legal Services Act wasn't as extreme as jumping around the office and firing my stapler into the air, I couldn't hide my excitement when it wasfirst announced. Three years later, and I'm delighted to be the third non-solicitor to be promoted to the partnership of our firm.

The introduction of alternative business structures (ABSs) was designed to increase competition, flexibility and choice within the legal sector. The seemingly client-focused nature of the decision has of course had its proponents and opponents, with the economic downturn exacerbating that debate greatly. As Robert Heslett declared in his May 2010 speech to Oxford Law School during his final months as Law Society president, the legal market of today looks very different to the state it was in when alternative business structures were first envisioned.

While debate on whether clients actually benefit from ABSs continues, the reason for my delight at its introduction wasn't limited to the prospect of a seat at the top table. Unshackling firms from their traditional structure addresses what many commentators have long identified as the inherent commercial weaknesses of the pre-ABS law firm model.

Indeed, the large number of staples still to be removed from my ceiling are there because I quickly realised that I was part of a firm that was keen to embrace the benefits of the new regime and avoid the dangers of being left behind.

A topic that regularly reared its head in my conversations with other legal marketing professionals was one of personal career versus firm career. The notion of partnership has always been something for solicitors to strive for within a firm's internal structure. This incentive accounts for a great deal of loyalty and motivation within fee-earning staff '“ a clear sense that investing long-term effort has a prosperous reward.

Exclusion from that reward path means that many non-fee earners see their career paths as unconnected to any one firm. The last few years of economic difficulty aside, I believe most firms will recognise that their turnover of non-fee earning staff is significantly higher than that of their fee earners. And, while recruitment agency commissions on legal salaries are naturally higher, some firms may still find that their non-fee earning staff turnover costs far exceed the equivalent figure for lawyers. Theoretically, the new regime promotes greater firm loyalty from both camps.

Unfortunately, as Robert Heslett points out, the economic downturn has temporarily compromised the measurability of many things, including whether an ABS firm truly benefits from reduced legal recruitment costs. The next few years should help formulate an answer.

In our firm there is now a greater sense of united opportunity since the director of finance and myself were appointed to the partnership '“ an attitude that I believe proved itself invaluable when the full force of the recession hit. Having lived through two economic downturns in my legal marketing career, I am aware of the non-fee earner concern that they will be first against the wall when it comes to reducing headcount. While the severity of the most recent recession affected both camps, I still feel that adopting ABS straight away gave a greater sense of a level playing field. And, as a result, we have worked well as a team to remain buoyant throughout a difficult period.

Increasing diversity

A firm's commercial strategy is the other big winner from ABS as it encourages firms to improve their decision making through 'aligned diversity': a management team with aligned objectives but composed of individuals from varying fields of relevant expertise.

This next statement may ruffle a few feathers, so I apologise in advance. Lawyers from different practice areas are lawyers nevertheless, and a board composed entirely of lawyers can lack the diversity of a board composed of a broader spectrum of professional disciplines. For those who aren't angrily forcing Solicitors Journal through the nearest shredder, I'll continue.

You could counter this argument by saying that non-legal departments exist to advise solicitor board members. Yet final decisions about strategy are still being made by individuals from a single profession. Decision making can be greatly enhanced by an equally weighted board of legal and non-legal specialists. Inherent in that structure is the ability to approach problems from multiple perspectives, as well as challenge each other into making the most considered decision possible.

The recent recession provides a good example of this kind of benefit in action. A board composed entirely of fee earners can be compromised by each member's individual concerns about how to maintain the income of their own department. Allowing marketing, business development, HR or finance professionals an equal input at board level injects significantly greater objectivity. It is largely accepted that non-fee earners are more capable of presenting an objective strategy that focuses on the commercial health of the firm overall. Some firms have even embraced this concept to the extent that their chairman or chief executive is a non-legal professional.

Process practicalities

Although I've spoken of level playing fields and united opportunities across our firm, SA Law isn't adopting a 'partnership for all' approach. We're not John Lewis yet.

Partnership remains an exclusive status for those staff members who reach a senior level of contribution to the firm's commercial performance and strategic direction. The application process for non-fee earners is every bit as stringent as it is for fee earners,and we only look to promote one or two people a year at most.

Applicants are assessed rigorously by way of a written submission and interview. Multiple aspects of the individual's current and historic contribution to the firm are included in the assessment, ranging from their strategic aptitude to their ability to mentor others. Personal effectiveness is of course essential. The partnership panel looks at technical expertise, professionalism within the applicant's field, staff leadership, communication skills and workload management. Contribution to client relationship development is also a core factor, as are the applicant's departmental achievements versus financial performance.

Furthermore, the focus is to nurture. Unsuccessful applicants subsequently benefit from a personal development plan and timetable that is agreed between the candidate and their line manager.

Many clients have been strong proponents of our quick adoption of ABS. In fact, their keen appreciation of the commercial benefits has reinforced our belief that many clients have a genuine interest in the wider goings-on of their legal supplier. Further afield, the general feeling from other professions I have spoken to has been one of disbelief that this didn't happen sooner.

Our firm has been called 'modern', 'forward thinking' and 'embracing change', and we have certainly felt the benefit in formal pitch and tender situations. We are seen to value our brand and understand the importance of taking marketing and business development seriously '“ particularly in light of the credit crunch. Indeed, we believe our open-minded approach to legal services has permeated throughout the business, with the launch of a number of new initiatives that would have been considered alien to law firm service offerings just a few years ago.

Early days

Putting my ABS trumpet down for a moment, I feel there is still a long way to go as a sector before firms can fully capitalise on the opportunities now available to them. From conversations with the legal marketing professionals of other firms, attitudes towards ABSs range from strong support to quiet disinterest to a provoker of booming Meldrewian rants that shake corridors.

The introduction of ABSs represents an encouraging first step but much more needs to be done. For example, the Law Society needs to support the industry as a whole by recognising and supporting its non-solicitor members in the same way as solicitors. More should also be done to communicate the benefits and threats of ABSs to the sector as a whole. Otherwise, a competitive unbalancing isn't unfeasible, which could cause significant problems for those firms that are slower to adapt to change.

The greatest challenges to implementation will likely come from within. Senior support from the managing partner and board is essential, but this must be leveraged across the entire firm to optimise engagement at all levels. While it's unlikely that the 'fee earner and support staff divide' (as I have heard some call it) will disappear overnight, a process of clear communications can be a highly effective way of bringing the dissenters around.

Work will also need to be carried out on internal policies, particularly the reworking of appraisal and reward systems to embrace both fee earners and non-fee earners.

Further afield, proactive initiatives can be introduced to help break down barriers. For example, client teams can be built from fee earners and non-fee earners. You may be surprised what the head of accounts knows about a particular client that their client relationship partner wasn't aware of. You can also encourage non-fee earners to undertake qualifications within their particular field to position themselves as professionals in their own right.

Worth the effort

As a relatively small firm, we have been able to capitalise on ABS quickly. Larger firms may have more of an uphill struggle to achieve senior staff buy-in and implement the necessary procedures. However, I'm aware that some firms '“ both large and small '“ have been keen to adapt, but simply haven't had the resources to undertake the necessary work during the economic downturn. I believe these firms will soon discover that the two primary benefits are more than worth the effort.

Accepting partners from across the business can give non-fee earning staff a sense of a career within a firm, rather than another two to three-year chapter before moving on. That could have a significant effect on reducing recruitment costs.

Firms will also benefit from stronger strategic direction. External campaigns and internal initiatives will flow from a balanced decision-making process that benefits from a more objective assessment of the firm's present situation and its future potential.

Copyright & permissions