Resolve to change inertia and take control

We all make them and very few are kept for more than a few weeks, but this year partners and owners of law firms need to make resolutions that will stick if their practices are to develop.

Perhaps the storms that ravaged the UK over Christmas were an analogy for the legal profession’s plight: the winds of change sweeping through the profession, the flooding of the commoditised legal market, and the devastation caused by legal aid reforms and the referral fee ban. These are only part of the issues facing law firms.

So what new year’s resolutions should we make to survive this potential catastrophe?

n Organise a strategic review of your practice – the partners/owners have to assess the risks and rewards they are facing
in the years ahead. Do we
have the correct number of partners/owners? Do we have the correct products and services for our clients and customers at a price they can afford? Taking the initial step
of doing something rather than doing nothing or just waiting for events to happen should be your first and foremost resolution.

n Undertake a compliance review of your current procedures and identify
any gaps between what
you are currently doing and what is expected of you under outcomes-focused regulation. Do not wait for the SRA to decide you are not fully compliant; get in control and identify these gaps yourselves.

n Conduct a review of how financially stable your practice actually is and resolve to put measures in place to reduce any gaps or risks you identify. The banks are now not the
only parties interested in how well you run your practice: your professional indemnity insurers are also taking a
keen interest. It could be
that the lack of financial stability results in you
not obtaining PI cover in
2014. And do not forget the interest shown in financial stability by your regulator
– the SRA will insist you deal
with these issues – so make financial stability one of your key priorities. Reducing bank borrowings, layering debts
and controlling lock-up are some of the fundamental
areas to consider.

n Look at your corporate structure, corporate governance and tax position. The traditional partnership and limited liability partnerships are, in many cases, not fit for purpose for many firms, so decide on the best outcome for your firm. On the other hand, reviewing your structure may tell you that you should stay as you are. We now have more limited companies operating as law firms than all the other models, so why would you not review the best model for your firm? Do not consider incorporation purely
for tax reasons alone but rather the other benefits it may bring, such as succession and exit planning and the opportunity
for external investment.

n Invest in marketing and
have a plan. Realising the
value of your brand in your geographic area or within a niche service should be both recognised and developed. Ensuring your firm has a targeted marketing approach specific to your products
and services will result
in firm-wide buy-in. It
will also guarantee your investment and efforts
will be coordinated correctly and the results measured.

n Review your merger strategy and your suitability to either acquire or be acquired – resolve to agree a merger strategy, whichever direction you choose. If you resolve to consider growing by merging, ensure you are able to identify suitable targets and make
due diligence a priority. Do remember that the courtship is the (relatively) easy part; the real work begins post-merger. If, on the other hand, you decide to be acquired, ensure that you are merger-ready before speaking to potential suitors. This means getting your own house to maximise potential returns and reduce any possible risks.

So, 2014 will probably be a tougher year than we have experienced so far and the
false dawn that many have enjoyed with the increase in conveyancing income may
not be sustainable.

If we are seeing the first
signs of recovery in the economy, do remember that more firms fail coming out of a recession than when entering
a downturn. SJ

Viv Williams is chief executive officer at 360 Legal Group

www.360legalgroup.co.uk