Practice management | The dispersed law firm

It’s being seen as a perfect storm: rising overheads, falling income, low morale and the prevalence of the partnership model which often gives equity stakeholders a veto on major changes. The solution continually cited by commentators and survey results is to harness the power of modern information technology and embrace a shift in business culture towards the work/life blend, but evidence of this in the legal marketplace is thin on the ground. One notable exception is the steady rise of the dispersed law firm. Could this be the future for smart firms?

With a current solicitor complement of 120, Keystone Law operates nationally and has enticed both clients and lawyers from top-ranked firms. This year Keystone announced its plans to grow by 40 per cent year-on-year on the back of solicitor acquisition, wider brand recognition and increased acceptance of the dispersed ?law firm business model. The benefits to clients of the dispersed model are clear: ?a more agile, efficient and personal service from an all-senior team of solicitors at competitive rates.

Perhaps more surprising, are the benefits offered by dispersed firms to solicitors, such as greater autonomy, control of their careers and freedom from commuting, office politics and billing targets.

One step ahead ?

With technology more prevalent than ever, it’s easy to forget that most partners qualified before computers were widespread, and most associates qualified before broadband was widespread. It’s this challenge that faces today’s managing partners: how to build the law firm of the future when the future changes so quickly. The answer may be counterintuitive. Successful firms of the future should not be built to last, but built to change. This plays to the strengths of dispersed law firms. In contrast to traditional firms, their light and flexible structure means they do not require continuous commitment to purchasing and integrating the latest management tools and the attendant legacy issues.

But how to avoid legacy issues in a changing world? In truth, all firms need hard assets, and today’s hard assets are tomorrow’s legacy issues. However, traditional and dispersed firms arrange their balance sheets very differently. Traditional firms prefer the certainty of hard assets, while dispersed firms prefer soft assets and have a natural affinity for a bring-your-own-device (BYOD) model.

Typically soft assets are intangible and appear off balance sheet. At their more definable level, they include brand, IP and services received, such as software as a service (SAAS) and infrastructure as a service (IAAS). Many smart firms (both traditional and dispersed) are already seeing a return on their investment through the likes of private cloud technology and hosted desktop. However, at the other end of the scale sit a series of soft assets such as culture, collegiality, unity of purpose and empowerment. Investment here is vital to future-proof a firm. Only these assets, or more properly characteristics, ensure a firm is able to adapt to a changing environment; indeed, they ensure that the firm grows stronger by changing.

In the traditional model, those at the top set the firm’s goals and then dictate to the rest of the firm how they are to be achieved. Management information is fed back to the executive by a series of compulsory tools (such as CRM and billing systems), and solicitors are pushed to achieve the desired levels of profitability and to work in the way the executive requires. This culture of compulsion is epitomised in billing targets, continual appraisals and an up-or-out culture.

This stands in stark contrast to the culture of collaboration of the dispersed law firm model, where solicitors are not driven by management to hit targets. Instead the business model empowers solicitors to act in the best interests of clients and the firm naturally. This is achieved on account of a number of factors. Recruitment is aimed at personable and entrepreneurial lawyers with active client followings. Priority is given to those with a deep-rooted desire to practise their profession and to look after and grow their client base. The firm’s role is to support its solicitors and to ensure that all the latest tools are at their disposal when advising clients. The firm’s rewards structure is fair and transparent, with lawyers receiving a proportion of the fees charged and a further reward for cross-selling work to colleagues. In this way, solicitors in the dispersed firm work in joint venture with their firm to serve a common purpose: profitably advising clients. This is entirely sustainable and future-proof, removing the need to apply continual top-down pressure to perform.

The dispersed law firm model is collaborative at every level. It divides the roles of legal adviser and back office – with specialists in each doing what they do best. The tasks of back office need either to be automated to ensure they are undertaken as efficiently as possible, and intuitive tools need to be made available to solicitors so they can accomplish the most common tasks such as issuing a bill, opening a file or sending client money with just a few clicks of their mouse. Any such system needs to be: accessible from anywhere, yet secure; able to undertake complex tasks (such as file opening) without complication; and compatible with all commonly used systems. A web-based intranet is therefore ideal for this purpose.

Bespoke IT?

To be future-proof, firms need to choose their IT carefully. Off-the-shelf options are cheaper and will benefit from any updates that the provider releases, but are designed for the average firm and today’s problems. Further, all off-the-shelf offerings are proprietary (they do not integrate well with competitors’ products) and are eventually withdrawn in favour of a new (more expensive) version. As a result, a law firm looking to future-proof itself by changing the way it works and looking to anticipate tomorrow’s problems may struggle to
find a package that fits their every need, which in turn may mean some bespoke work is inevitable.

The success of bespoke IT is determined at the planning stage. It is vital that the problem to be solved is well understood, that the architecture of the platform is cleverly and logically thought out and, most importantly, that it is designed from the users’ perspective and for their benefit. The processes of designing, building and managing IT are very different and require separate skill sets: good coders make bad designers. As a result, the vision of what the end product will look like and how it will be used needs to be set by the firm. Time should be allocated to seeking feedback from potential users, but it is never possible to please everyone. A winning and future-proof system will be simple, universally compatible and true to the firm’s vision.

If it is accepted that soft assets can play a vital role in future-proofing a law firm, then this should not be forgotten when structuring the firm’s IT, especially in a dispersed model where the IT systems comprise the firm’s digital workspace. Get it right and the digital workspace will be an environment which solicitors visit regularly, interact with naturally and even come to love.

Future-proofing a firm in part entails a move from a physical to a digital workplace, though never at the expense of regular, and ideally face-to-face, contact with the client. An efficient, modern, digital workplace can, as discussed, deliver a competitive advantage by ensuring business operations are efficient, compliant and simple for solicitors and clients alike.
However, the real secret to its success is to ensure that the digital environment is the easiest, simplest and most satisfactory way of undertaking the relevant task. This returns right to the heart of the dispersed firm and is what makes the business model scalable. The provision of a custom-built environment to serve the needs of lawyers and their clients will always be well received – and solicitors will independently choose to make full use of it.

All firms can benefit from the smart use of well-designed IT, but how a firm responds to the challenges the future brings is not determined by IT but by the culture of its people.

Hiring the right people into a supportive, transparent and agile structure will not just withstand change, it will be strengthened by it.