Put a group of lawyers, accountants and bankers together mix in some good food and drink and with a bit of luck you will generate an evening of lively debate.
This is exactly what happened when I was invited along to a dinner hosted by a high street bank and a nationally known firm of accountants. The purpose of the informal gathering was to debate the future of the legal profession in the light of the never-ending changes and challenges that lie ahead.
Putting to one side the countless opportunity seized by many to self congratulate, and ignoring in the main the sales pitch by the hosts, I was intrigued, and indeed surprised, by the differing views around the table on the changes that will occur once the Legal Services Act is fully implemented in October.
By way of background, many of the lawyer participants were from medium sized firms leaving my firm as the only three-partner firm in attendance. The majority of these firms have in recent times become LLPs and much of the discussion (the dull part) centred on how these firms have put in place corporate structures to provide management. One firm was smitten about its decision a couple of years ago to bring in some high flyer from London to take on the role of Chief Executive.
Listening to these firms it occurred to me that many were so embroiled in trying to emanate the larger City firms they had to a large extent become oblivious to the bigger picture. It may have been professional pride getting in the way but not one of these firms seemed in any way perturb by the inevitable challenges that will arise with the full implementation of the Legal Services Act. One of the representatives actually popped up and announced that there was nothing to worry about! He expanded on this by saying like many of these ‘things’ it will all blow over!
I am not sure whether this reflects arrogance or a reckless disregard of the threats. Perhaps it’s a bit of both. The most worrying aspect was that the view expressed had the support of the majority of the legal attendees. It was clear however that the banks and accountants are not so confident. There was much discussion around the table on how banks are beginning to tighten the screw on legal practices. Firms with working capital deficiencies and succession issues now seem to be regarded as ‘high risk’.
The sudden change of fortune for a certain large Manchester based practice that was forced into liquidation and the ramifications for its bankers, has clearly made banks look more closely at the balance sheets of law firms. Add to this the uncertain future many high street firms face with increased competition and Jackson and the future does not look too good, particularly for the smaller firms.
The time to take ones head out of the sand and to give recognition to the threats posed by national brands with deep pockets to fund marketing is now. It is a sad indictment, and a very worrying one, that there are still a large number of lawyers out there who have yet to take any steps to protect those services that will inevitably become post Legal Services Act commoditised. These will include conveyancing, wills and personal injury. We already know that SAGA, AA and the Co-Operative have plans to market services direct to the public, and more recently Quality Solicitors has agreed a deal with WH Smith to allow representatives to be in store to provide legal advice.
However wonderful we may believe we are, the fact is that those with legal problems who once would come through our doors, will without doubt be lured away with the power of national advertising and the attraction of low fees and perhaps even ‘club points’. We live in a world where money is sparse, where people are looking to make cut backs in spending, to believe as some do that a good quality service will always ensure a client’s return, is, delusional. Client loyalty is about to face its biggest ever test.
So you might ask what are we doing to prepare. We are looking to establish a local co-operative to produce resources to run a campaign to keep work local and to look at ways of sharing services to reduce overheads. The scheme has the backing of local banks and accountants have designed the financial model. I am sure it will work and prove successful, however if it does not at least I can say that we have tried to do something. Doing nothing cannot be an option.
Back to the dinner…. Great food and a fantastic insight into how divided our profession has become.