More on the C word

In today’s FT Michael Peel reports on the very recent Smith & Williamson survey,

The legal industry is heading for a big shake-up as firms merge in an attempt to protect profits threatened by the credit crunch, according to a survey published on Monday.

The annual survey of leading lawyers commissioned by Smith & Williamson, the financial services group, said three-quarters of big firms expected to see more emergency deals as confidence fell, despite the industry’s supposed resilience.

This is not news to us in the profession. It has already started and the current economic mayhem is simply accelerating the inevitable. In last week’s Law Society Gazette Lord Hunt, about to embark upon his profession-wide review of regulation, is reported as saying,

I will be listening to the views of the whole profession, and that includes the smaller high street firms as much as the global firms. I have a completely open mind about the best way forward. My message is – tell me what you think.

Let’s hope that there will still be some to tell him.

Time to go?

Generational change is an ever-present issue for most law firms: not just how to manage a new generation of lawyers, but how to deal with succession. You cannot do better than read Luke Johnson in his Entrepreneur column in the FT, Learn to tame the beast, ambition, and in particular his conclusion,

. . . we must each know our limit, and resist the urge to overreach. Ambition is a ravening beast that must be kept in check, because even if we do not all formally retire, one day every one of us has to surrender. Better to go with dignity and grace than have the booty snatched from our enfeebled grip because we clung on too long.

I may not hang this in poker work above my desk, but perhaps I should.

Strategy, Conflict and Leadership

An excellent column by Stefan Stern in today’s FT, The challenge of straight talking. What is true for business is also true for law firms. Two quotes from the column to whet the appetite,

The first from Robert McHenry, chief executive of OPP, the Oxford-based business psychology consultancy,

Indeed, we should probably brace ourselves for more not less conflict at work as the world slides into recession. “Der Dalles schlägt sich,” as they used to say in Vienna. “Those who are struggling beat each other up.”

The second from Richard Brown, managing partner at London-based consultancy Cognosis,

One of the defining characteristics of strategically effective leaders is their commitment to challenge, and their ability to both challenge others and be challenged themselves in a positive and constructive way.

Some downturn risks

Chasing debt and effective cash flow management are critical in a downturn (see Rob Millard’s Heads of Pigs and Golden Rules, posted yesterday) but also consider:

client take on: not following the necessary risk management procedures when taking on new clients may be disastrous. I hope you aren’t replying to the email scams from the widows and orphans of third world dictators, but the next worst thing is not doing the appropriate DD on the new client.

working outside your competence: it is all too easy to say you will do something that you simply don’t have the expertise to do. At the best of times clients are not impressed by your learning on the job; taking on work because you cannot face turning it away (all too easy when you’re sitting at your desk trying to look busy) is a surefire recipe for an indemnity claim.

soft terms: winning work sometimes requires you to take a view on fees ~ discounting for the future. It is also important to be realistic over cost. But agreeing terms that devalues the work not only sets a precedent that in better times it may be hard not to follow but it also demoralises the team.

Partner ego: in many firms power and politics is intrinsically linked to partner performance. Maintaining this in a downturn may mean that work is kept, not delegated. It all comes back to Spending time wisely.

Batten down the hatches?

Another excellent article, Taking Advantage of a Recession in Kerma Partners Quarterly: a lot of sense and not just about weathering the storm but more how to make the weather.

One further thought is that in the UK the danger is that concentrating on getting through the downturn may mean that we ignore the impending changes in the legal services market. I am not sure that I would have used the expression ‘Big Bang’ (given that some commentors see the beginnings of the current economic crisis in the heady days of City deregulation 22 years ago), but see Peter Williamson’s Rehearsing for the Big Bang in this week’s Law Society Gazette.

And while looking at the Gazette, a stunning lead article Review of Regulation that nails once and for all the myth that we are one profession (for those of us at the coal face, we know we are not).