The aftermath of the global financial crisis has been a game changer for many law firms, who now recognise that clients, are more prepared than ever to challenge legal bills and query charge out rates. The application of basic consumer principles to the purchase of legal services is in marked contrast to how many clients operated in the past. Previously, clients were more accepting that legal costs “whatever they were” simply had to be factored into deals and transactions. This change in client behaviour has had a very real impact on the support functions within law firms. The trend to create cost efficiencies amongst law firm support functions which started as a trickle in 2011 and 2012 has now become a tidal wave.
Legal Business (20 June 2018) highlighted recently the escalating trend to reduce and relocate support functions from the City, with firms such as Ince & Co, Pinsent Masons and Ashursts all entering into consultations with their staff to “slash” business service roles. This is of course nothing new in the wider corporate world and has been going on for many years in response to changes in economic conditions. With the cost of London office rentals being so much higher than other regional hubs, the argument for relocating staff to places such as Birmingham or Manchester is on the face of it a strong one providing access to talent at a lower cost base. A number of Magic Circle firms e.g. Allen & Overy and Linklaters lay the groundwork some time ago having moved support functions to Belfast and Colchester respectively capitalising on lower rental as well as salary costs.
In the past observers have noted that there is often a strong demarcation between fee earners and business services staff in law firms characterised by the moniker “Fee earners and Fee burners”. I know from my own experience in the legal sector that it can be an uphill battle to prove that non fee earning activities add value. The times when I was most successful invariably linked to the personal relationships I built up on a face to face basis with lawyers. The trend towards removing support staff from offices where they are often co-located with fee earners, will only serve to fuel the disconnect between fee earners and non-fee earners. This disconnect is also not without a cost. Whilst there are some transactional activities where co-location is less critical, the trend towards centralised HR, Finance and even secretarial hubs places a premium on communication and remote management skills which is not always fully understood. Aside from accentuating divisions between fee earners and non-fee earners, it also sends a mixed message to clients about the degree to which the firm provides an integrated business service.
Although some law firms have toyed with the idea of outsourcing elements of their legal service delivery or sourcing legal services from some of their lower cost jurisdictions, the Law Society has understandably issued a number of edicts to ensure strict professional governance and client confidentiality are maintained. For business services activities, the same disciplines should hold true although I believe that there is still a view that the support activities are not an integrated part of overall legal service delivery which of course they are.
If direct Secretarial support is removed from a lawyer and replaced by access to a centralised typing support in a remote location or shared resource, is this really more efficient for a fee earner? An article in Law Technology Today (January 7 2016) by Michelle Spencer argues persuasively that:
“When an attorney is spending time running document comparisons, tracking down versions, and making needed edits to a document versus delegating those tasks to a legal secretary, then I would argue that is a bad value proposition for the firm and the client as well.”
Having an effective Legal Secretary who is co-located with their fee earner and can focus on the low value activities helps free up lawyers to do more legal work rather than less. This argument is typically ignored when looking at the economics of pooled Secretarial resources etc.
Managing Partners have a difficult job and part of their remit is to make sure that their firm runs as profitably and effectively as it can for the benefit of its Partners as well as its clients. Reducing the number of support roles or consolidating activities always seems like a good option with potentially “low hanging fruit”. In reality though, I believe that one needs to have a clearer understanding of how this really impacts on fee earners and the business process flow with clients.
Outside of the legal sector, some businesses have already recognised that running extended process supply chains creates its own problems. Training and communications suddenly becomes of paramount importance as we have ourselves noted at Blue Pencil from talking to senior lawyers. It is also interesting to hear how lawyers feel more over-burdened than ever before as they increasingly have to juggle their own support work with legal advisory work. Perhaps it is time for Managing Partner to revisit how their fee earners spend their time and where applicable, to determine whether the fragmentation of business services is always achieving its aim. Research has shown time and time again that the most successful businesses are characterised by effective team working. Fragmentation of support activities may save money in the short term but it can create functional walls where none previously existed and undermine the team spirit that maximises business success.
There is no shame in looking at things differently as most management practices end up going around in a circle – eventually!
Chris Lipscomb is a Director at Blue Pencil Legal and the former HR Director of Al Tamimi, the largest regional law firm in the Middle East. Aside from advising clients on suitable candidates for their opportunities, Blue Pencil provides interview skills training and coaching/development for lawyers in the UK and globally.