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Driving for Growth

My Editorial Advisory Board blog for Managing Partner magazine

http://www.managingpartner.com/blog/driving-your-law-firm-towards-more-aggressive-growth

Activity levels are on the increase in the UK legal market. Has the corner been turned? Can we now be more confident that the much-vaunted green shoots of economic growth have finally taken hold?

For the past twelve months, a growing swell of firms have reported increased activity levels; the challenge has been coping with enduring downward pressure on prices and implementing operational efficiencies in order to convert these increases into profits. Now we are seeing growth which suggests that some of these price pressures are easing too.  Read more

Changed Expectations

“It may be hard for an egg to turn into a bird: it would be a jolly sight harder for it to learn to fly while remaining an egg. We are like eggs at present. And you cannot go on indefinitely being just an ordinary, decent egg. We must be hatched or go bad.” 
C. S. Lewis

The legal sector is full of decent eggs; firms which are technically competent, deliver good service, price their work the way they always have and are structured along historic lines. They are operating a cottage industry model and are woefully ill-equipped to deal with the fundamental and far reaching change which is sweeping the market.

There are two dimensions to the challenges which firms must address. The first is external, dealing with a new set of client expectations and fast-emerging competitive forces. The second faces internally and is concerned with operational efficiency, new ways of working, structure and governance.

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Fingers Crossed?

The last year has seen saw numerous “big plays” by firms, both nationally and internationally, as they set about positioning themselves to take advantage of market opportunities or dealing decisively with challenging market conditions. Early indications are that 2013 will paint a similar picture with mergers, restructurings, redundancies and strategic repositioning dominating the headlines in the opening few weeks. It is also fair to say that the numbers of headline grabbing firms are small when viewed in the context of the whole market, but their influence in shaping that market and the thinking of other law firm leaders is huge.

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Where did all the fun go?

In the brave new world of Six Sigma, LPO and BPR it is all too easy to forget that, for the vast majority, this approach to legal service delivery isn’t what was signed-up to when entering the profession.

However, with pricing under pressure and a fixed-fee basis increasingly the norm, better management is needed.  But modern business practices, information technology, knowledge management and the rise of artificial intelligence are widely viewed as the enemies.  They are seen as disruptive forces altering a comfortable status quo forever.

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Keep Running Faster – You Might Win the Race to the Bottom!

“We can’t solve problems by using the same kind of thinking we used when we created them.”  Albert Einstein

Operational efficiency is necessary but not sufficient. Simply being better at doing things the way that they have always been done may provide some respite, a way to carve profit from a market in which downwards pressure on price is unrelenting, but it is not a long-term solution to the structural changes which are affecting the industry. By running faster, you might win the price-cutting race to the bottom but the real issue is whether you will have a sustainable business when you get there.

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Leading by Example

“Time is neutral and does not change things. With courage and initiative, leaders change things.” Jesse Jackson

Leading a professional services firm can be an unenviable task but strong leadership, setting a clear sense of purpose and direction for the business, has never been more important. What is also crucial is that leaders, by their actions rather than their rhetoric, create an agenda for change and demonstrate the high levels of energy and resilience needed to alter the direction of their businesses. They need to walk the talk and be seen to do so!

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The Themes for 2008

At this time of year I’m often asked for my views on the key themes that will affect firms over the next twelve months. Change will continue at an ever quickening pace with structural reforms and the consolidation of clients, firms and panels adding to the pressures on the leadership team. Also high on the agenda will be the need to build an aligned external / internal brand and the changing nature of the psychological contract between the firm and the Generation Y professional.

The need for clear direction, strong leadership, coherent strategy and a focus on excellent execution has never been greater. These are the key dimensions that will mark out the winners and losers in 2008.