Intelligent Office: The lawyer's operational healthcheck report
At the start of this new decade, we consider the trends likely to influence law firm leadership, structure and operating models as we move through the 2020s.
In the last decade, law firms showed remarkable resilience following the impact of 2008/09’s global economic meltdown. The legal sector has shown growth materially ahead of inflation for a number of years.
Tim Adams of Smith & Williamson says, “There is a sense that a continuation of this growth requires increased amount of effort each year.” The years between 2010 and 2019 saw a number of developments in the legal market, all of which we think are here to stay.
Clients have become more discerning and demanding, expecting their legal advisers to go above and beyond delivering technical excellence. Law firms are still wrestling with the opportunities and risks posed by technological advances: protecting the information they hold from cyber-attack, updating software and systems, and introducing AI-enabled tech to automate manual processes.
Employees are also changing. The traditional route to partnership seems to hold fewer attractions, diversity and inclusion are genuine strategic priorities, and employees are more mobile and more likely to leave a firm in search of something better or different.
And then there are the competitors. The past decade has seen new market entrants. The Big Four accountancy firms have finally arrived and are biting into mid-market share, while Alternative Legal Service Providers are starting to make their presence felt.
Partway through the last decade, Gateley made headlines by becoming the first UK headquartered law firm to list on the London Stock Exchange. Since then, a further five firms have floated, including Top 25 firm DWF. There’s no longer one type of legal provider, but a host of business models.
Law firm leaders have all this to deal with and more.
As The Lawyer writes, “No firm is immune to the threat of disruption but there are steps you can take to be prepared and prosper… the market is still fluid and unpredictable. In this context of uncertainty, the ability to build out a long-term strategy will determine who will thrive – and who will miss out.”
That strategy will include a number of strands, including the way in which lawyers are supported to give clients a fast, efficient and relationship-enhancing service. To be effective, it should give equal weight to people, process and technology.
FEE EARNER SUPPORT
Fee earners are technologically savvy, they know how to type quickly and may forgo using a PA or other document production support for the majority of their correspondence. Instead, they do it themselves which often means taking up time and energy which might be better placed elsewhere.
In its Operational Healthcheck, The Lawyer identified a trend we have experienced directly over the past 20 years. When we first started trading, it was common for partners to have their own dedicated secretary or someone supporting them and perhaps one other fee earner. These secretaries would typically handle a range of responsibilities, from diary management, typing, filing and liaising with clients to ordering stationery and fixing the photocopier. Those days have become a distant memory, with fee earners supported in different ways. Nowadays, PAs are more likely to support between five and ten fee earners, depending on the practice team they work in.
Increasingly, firms want to use PAs on tasks best suited to their skill set. For example, project management, maintaining client relationships and providing executive assistant support to their fee earners. And, for long or complex documents, document production specialists often have more expertise in working to their firm’s house style or precedents.
Given this change in emphasis, firms must consider how best to create support for fee earners with document production or administrative tasks, without defaulting to using their PA. Intelligent Office looks at the support required by task and then creates a structure that provides the right support in the right way at the right time.
For those firms we work with, we also monitor the cost of service per fee earner. This metric charts how your support costs are tracking the overall performance of your firm. Tracking the cost of service per fee earner month on month is particularly useful if the firm is growing rapidly and there is a need to scale administrative support functions accordingly.
One qualitative metric we favour is fee earner sentiment. If administrative support functions aren’t running smoothly, then fee earners will feel the repercussions.
PROPERTY AND WORKSPACE
Over the past decade, firms have taken steps to reduce their property costs. Some with a large London presence have opened offices in lower-cost locations or shifted staff within their existing network of offices.
Average space given to each member of staff, fee earner and partner has fallen. In 2012, staff in the UK’s Top 200 law firms enjoyed an average per person of 258 sq ft. By 2019 that figure had dropped by 36% to 165 sq ft.
According to research by The Lawyer, the amount of space per person might be reducing but the cost of space is not. Forty-eight of the UK Top 200 law firms supplied data to The Lawyer; the sampled firms spent an average of £1.99m on property in 2015. This had increased to £2.58m by 2019.
The desire to manage property costs, as well as recognising that people now prefer to work in an increasingly agile way, means that firms are implementing a range of space-saving options. Firms for whom a regional base is not a practical option might instead look at hot-desking, open plan, shared space, or a combination of all three.
One way clients of ours have reduced the amount of space required is by outsourcing certain functions to one of our ISO27001 accredited shared services centres. This approach maximises clients’ use of expensive office space to support fee earner growth and reduces the fixed resourcing costs associated with in-house teams.
Our ability to support our clients using offsite teams, as well as our more traditional onsite offering, means we can offer clients different commercial models and drive cost efficiencies.
We are three quarters of the way through most law firms’ financial year. You’ll have a good idea of how you expect to perform and of your 2020/21 pipeline. As you think about budget setting for the next financial year, outsourcing some or all of your secretarial and back office support services could give you:
- A back office structure that enables fee earners to maximise their time
- Better ways of working
- Motivated individuals and teams
- Centralised processes to reduce cost and improve standardisation