Within easy commuting distance and a natural connection with the capital, the Thames Valley can feel like an extension of London. So much so that many City firms have opened offshoot offices in the region. And why not: it is a prosperous part of Britain, home to numerous small and large businesses whose owners have ongoing need for sharp legal minds.
For some reason, however, none of the larger City firms have really made it out there. The top end of the legal services market remains occupied by a dozen or so local firms without being dominated by any one of them. Some have national and even international clients but all continue to be community-based mixed practices with a combination of commercial and private client work.
On this basis, it is perhaps not too surprising that most have weathered the downturn reasonably well. Contrast this with firms that focused too heavily on commercial work and have suffered more severely from the dramatic drop in deals as liquidity gradually vanished from the market '“ or those that relied too much on traditional high street work. The demise of Willmett Solicitors, first reported on solicitorsjournal.com on 4 December 2009, is still on everyone's mind. The general understanding in local business circles is that the firm, which had a large conveyancing department, had run into serious difficulties.
The behaviour of one of the partners, who later apologised for 'the mess he had left', compounded the problem and forced Wilmetts' closure.
The lesson has not been as dramatic for other firms but they are already taking on board what the recession has taught them.
Lessons from the recession
This time last year, firms were getting to grips with the first wave of the downturn. Some had already made redundancies. Those that didn't were simply not replacing departing staff. Twelve months on, the general consensus is that staff levels have reached a plateau, although some admit to operating well below capacity. But the expectation is that, even if we are to experience a second dip in the economy, firms must now plan for the future '“ some are already actively recruiting.
The recession has also acted as an economic rite of passage. Fixed fees, for instance, have been around before the liquidity crisis but they are becoming increasingly popular with cash-conscious clients.
'In commercial work clients are asking more and more for fixed or capped fees,' says Nick Burrows, joint managing partner at 14-partner firm Blandy & Blandy. 'It will usually be phrased as an estimate, but realistically it is difficult to go back on your initial figure unless something unexpected has happened.'
This move is likely to be exacerbated by the imminent arrival of 'Tesco law'.
'Far too many people are too complacent about the effect this will have on legal services,' Burrows continues. 'Fixed prices will become more common and in many cases hourly rates will simply be used to calculate costs internally, but not to charge.'
Does this change in charging mechanism put further pressure on fees? Burrows doesn't necessarily think so. The legal services market is a competitive place and already most firms scale their fees depending on the sector and client type. By way of example, Burrows mentions residential conveyancing services targeted at high-net-worth individuals, which are unlikely to tumble down.
His counterpart at 17-partner firm Field Seymour Parkes, managing partner Philip Seymour, is also convinced that there will always be a range of clients who will prefer to pay for the services of experienced solicitors and receive holistic advice on how best to plan their affairs.
His firm is not into the 'pile'em high sell'em cheap' business, he continues, but he also admits that client expectations are changing. Solicitors who want to retain their positions as preferred legal advisers will have to show that they are providing genuinely superior service.
'If we carry on charging higher rates, we've got to be available to clients, work around them when it's convenient to them, not the other way around,' he says.
It's a feeling which is shared in smaller, modern firms too. Malcolm Head, co-founder of The Head Partnership, a nine-partner firm based in Henley, says that the whole client relationship needs to evolve.
According to Head, the current distinction within law firms between cheap volume business and high-value custom business will be exported out of the firms into the wider market. Tesco law, he says, will lead to the creation of a two-tier legal services market with retailers being the no-frills providers, and law firms the high-end providers.
'Historically lawyers expected clients to fit around them. We have to turn things around; we have to talk in client currency,' he says. 'Emotionally and personally we have to show that we care and are flexible. It will be the difference between the basic and the 'couture' service.'.
Over at 20-partner firm BP Collins, chief operating officer Karl Wingfield uses a similar analogy. 'There will be Tesco Value and Tesco Finest,' he says, 'and as law firms we have to be able to develop that approach.'
He too is conscious that the arrival of Tesco, the Co-op or the AA could put pressure on price but queries whether fixed fees will expand into the mid market.
'If you work in a commoditised market you will constantly be seeking to drive prices down. There is a bit of that in the mid market but not that much; what we have to do is offer more for the same price,' he says.
Visibility and accessibility
For Wingfield, the main challenge is to move lawyers away from the billable hours syndrome. 'It's hard to take them away from this psychology, to get their minds focused on spending time to build relationships and with clients,' he continues. 'They must see non-billable time as just as important to the future of the business as billable hours.'
Of course the need to attract new clients while retaining old ones isn't exactly a new concept. What lawyers are learning the hard way during the recession is that working 9-to-5 and sitting in the office waiting for clients to call is a straight route to administration.
For Philip Seymour, holding your ground in the market starts with making sure you are visible and accessible. His firm revamped its website last year, including lawyers' direct dials and regular news about the firm's successes and about the law. This may not seem so extraordinary but there are still remarkably few firms that bother updating their websites, even though, according to Seymour, this is an obvious way of marketing your services and showing off your skills. 'Before, people came to you through contacts, now you have to make people know who you are and you have to sing your own praises,' he says.
Importantly, Seymour says that this investment is paying off, with clients making specific reference to the website when making contact by phone.
Visibility is also high on the agenda at The Head Partnership, with a new advertising campaign on local radio and the launch of monthly video newsletters for clients. Such efforts are part of a broader initiative to develop a relationship culture. Teaching his lawyers soft skills is an essential part of the training, according to Malcolm Head, and he is also looking into a new CRM pack '“ not a piece of software, but a behavioural and cultural set of values and steps to ensure lawyers personally remain in close contact with clients and maintain an intimate knowledge of their needs.
BP Collins is already rolling out a new ethos across the private client department, including flags for key dates corresponding to points in a client's life where he is likely to be considering issues requiring legal assistance. These range from buying a house and making a will to considering arrangements for the time when the children will be leaving education and long-term tax planning ahead of retirement. In addition, clients become members of the firm's virtual club, a micro-site only accessible to them, with information about all areas of private client with an option to receive information feeds by email or RSS.
The longer-term plan is to extend a similar process for business clients. Wingfield says that this will take more time but that the objective is to make sure that commercial lawyers understand their clients' business, their relative position in the market and the respective interests so they can deliver the best advice possible and become the provider of choice.
But however proactive these law firms are, there is no denying that market conditions are still tough.
Strength in numbers
Blandy & Blandy's Nick Burrows says that highly geared firms are experiencing particular difficulty, though firms most at risk are smaller ones that just ticked over before the downturn. For these firms, failure to invest in IT and staff training and lack of succession planning could be fatal.
In such troubled times, seeking strength in numbers through mergers has been an obvious move which many are contemplating.
Philip Seymour comments that life on the high street is likely to become ever more difficult as lawyers are 'mercilessly squeezed' and that many smaller local firms are looking to merge.
According to Malcolm Head, about 20 per cent of the local firms are considering or involved in merger talks. 'We get a call a month about that, from firms where the lawyers and partners are still doing a mixture of, say, wills, probate and family work each,' he says. 'The problem is that when they realise the work would have to be split into corresponding specialist departments and that they would have to choose a specialisation, the conversations stop.'
Nick Burrows also says his firm is regularly approached by other firms interested in merging but that talks usually end when these firms realise they would have to adjust the way in which they work.
The courting can also come from outside the region. Karl Wingfield says BP Collins was, until recently, in talks with a large north west firm. Size is obviously a relevant factor for firms looking to merge, he says, but these days the risks involved are weighed much more carefully.
'Before, you merged because you liked the other firm,' he comments. 'The recession has shown that law firms are much riskier investments than they used to be and law firms will be much more wary of the risk they may be taking on '“ for many, it will be too much.'
Field Seymour Parkes has had several approaches from City firms, all of which it rejected. 'The firm was set up in 1987 as a result of a merger and we've acquired a few niche practices since, but we're not actively looking to combine with anybody at the moment,' says Philip Seymour. 'More money would be good but we value our independence too much.'
This primal attachment to independence has allowed law firms to flourish in the days before the recession and before the Legal Services Act. 'But too often this just means doing things their way and no other,' comments Malcolm Head.
The trouble is that the new Tesconomics will kick a hole into the old-fashioned values, and, if firms cannot adapt, the future could be quite bleak indeed.
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