Originally posted on 2 Jan 2014
Last year, the author of Tomorrow’s Lawyer Richard Susskind (@richardsusskind) appeared on an episode of Bloomberg Law with Lee Pacchia (@leepacchia). Lee Pacchia asked: “What is the current state of the legal profession?” Richard Susskind said:
- Massive cost pressures of a kind and dimension we’ve never experienced.
- Especially in England, we’re seeing liberalisation; as in non-lawyers and non-law firms are more heavily involved in the delivery of legal services.
- Globally, we’re seeing there’s an immense opportunity for the use of technology to streamline and sometimes transform the way that legal services are delivered.
It all adds up to a marketplace very much in flux. With new potential competitors to law firms coming into play and clients becoming ever more demanding, lawyers have really got to cut their costs or differentiate themselves much more than they do at present.
These changes and challenges echo the overview of the new professional services landscape provided in a report by the FT in conjunction with Meridian West. See it here.
The Big Four Challenges Facing the Legal Profession are arguably: Overheads, Market Liberalisation, Technology and Client Demands. There are also massive opportunities here as well. In my view, the biggest challenge and the most exciting opportunity for lawyers is in the use of technology. The Law Society Gazette wrote last month that, in comparison with North America, the legal profession in England and Wales has been a late adopter of cloud services. This situation is changing quickly as the advantages of cloud services become clearer and the need for legal practices to improve their efficiency grows.
But, according to research by accountancy body ICAEW, the greatest issues facing accountancy firms in the current climate include “needing more clients”, “late payment of [fee] invoices” and “trouble billing time on ledger to clients in full”. “The main thing that affects us is cashflow,” comments Kara Williams, partner at Welsh firm Ellis Lloyd Jones and a member of ICAEW’s practice committee. “Our clients still have to have the work done so our overall fee income is not necessarily less, but more of our clients are taking longer to pay than previously. We are having to chase debts a lot more than we used to.” The firm is addressing this issue by encouraging new clients to pay by monthly standing order and offering a 10% early payment discount for fees settled within two weeks of issue. – See more here.
The ICAEW are right, particularly about getting paid for the work and the trouble in billing for all the time on the time ledger – and this is the same for lawyers too. I blogged on this (Pay Daze: Do’s and Don’ts of Billing) on 30 December, here. Don’t forget that if you agree fees at the outset of an assignment, bill early (as soon as you’ve done the work) and chase early, and identify extra work as it happens rather than months later, you’ll increase your cash flow and fee income dramatically. See Bizezia’s calculator which shows how much money you could be throwing away by not doing these simple things.
By the way, when was the last time you looked at your firm’s Engagement/Client Care Letters? In today’s business climate, anything less than a full and comprehensive set of Terms and Conditions of Business is professional suicide. Your firm could be much closer than you think to an expensive and embarrassing professional negligence claim. Litigation against lawyers is on the rise. There’s a free evaluator of where your firm stands here. Don’t forget that Professional Indemnity insurers are increasingly acknowledging the effectiveness of firms’ risk management strategies in assessing the premiums payable. See how your firm measures up: Try the Professional Negligence Timebomb Evaluator.
There a useful article I wrote which outlines how having a formal letter of engagement in place can help you avoid getting sued, here. My view is that setting out your terms of business with your clients is the only sensible way of delivering professional services. To do anything else is professional suicide: see another article I wrote here.
What are your thoughts? Email me at email@example.com.