The upcoming challenges for managing partners in 2015

The core challenge for UK law firms in 2015 is how to be and remain competitive in a rapidly-changing market. The pace of change since the implementation of the Legal Service Act was initially slower than many had anticipated. I am sure that this was partly due to the recession, but also to the natural conservatism inherent in our training.

However, there are now more 300 authorised alternative business structures, and it is widely thought that, with a better economic outlook for the UK and the rest of the world, the pace of change will only accelerate.

In 2015 and beyond, managers of traditional law firms will need to figure out what's needed to remain the firm of choice for their clients. This will be a world in which more of the same will not be enough. Clients will no longer accept having to wait days for a written update on their case; they will also increasingly expect us to demonstrate that our charges represent good value.

Upcoming trends

I believe the following trends will begin to have a significant impact on the legal market in the coming year.

• External investment. The Legal Services Act made it possible for non-lawyers to invest in law firms. Big new legal service providers with deep pockets will be making major advances in areas such as IT and marketing, radically changing the competitive landscape. Some firms will continue to surprise with innovative (and expensive) national TV and print advertisements or by introducing a new, more responsive service for clients.

• Market consolidation. Traditional law firms will continue to merge. The little
  firm up the road that didn't cause you
  too many problems may suddenly look like a much more formidable force after
  it teams up with others in a way you
  did not expect.

• New entrants. We will increasingly see new international, not just national, firms competing for work on our patches.

• Tighter regulation. Anti- money laundering rules are set to be enhanced in 2015. Meanwhile, under changes to the Solicitors Regulation Authority's Code of Conduct, firms will need to
  have more robust procedures in place and be able to demonstrate prudent
  risk management.

Business mindset

With the profession now fully opened up to market forces, the real challenge for 2015 and beyond will be for firms to decide on what unique offering they have which will enable them to keep and maintain a competitive advantage. In responding to what clients want, they need to know why clients chose them ahead of their competitors.

This means that, on top of their day job of working for clients, lawyers need to think as businesspeople. Now more than ever before, they will need to:

• know what's going on outside of their immediate firm;

• make decisions based on what needs to be done for their firm to remain competitive; and

• take action.

This might sound pretty obvious, but the legacy of law firm structures and ownership can make things very difficult.

A good example is in the field of technology. We took the decision to outsource the provision of our IT services back in 2009, but I have heard of a firm that took almost a decade to consider this same issue. Do firms need a 'burning platform' before they can take the necessary action to effect even the changes that partners are agreed on?

One of the problems for many firms stems from the way in which they are governed, with essentially too many people involved in the decision-making process.
Very often, different stakeholders have differing interests.

In many firms, partners close to retirement age have not accrued any 'value' in the firm's goodwill, so may not perceive long-term investment as being in their own personal interest. Concerns over personal liability, property leases, or funding working capital can conflict with clear thinking about what is best to sustain the firm's competitive advantage over time.

However, from my discussions with peers and colleagues, I suspect that the single biggest challenge is not making a decision about what to do, but implementing that decision. In a 21st-century law firm, there can be simply too many demands on everyone's time, and managing partners must look to tackle this issue in the coming year.

Valerie Toon is managing partner
at Mundays (www.mundays.co.uk)