Category Archives: Legal System

Pricing and Profit

I have recently come across a debate running on LinkedIn about the relationship of cost to price to profit.

In a heavily commoditised market (competing products seen by consumers as completely interchangeable) where there are lots of suppliers and lots of purchasers market economics in the long run will force profit margins to be set at a rate where the average supplier makes a modest profit. In that environment, control of the cost base is everything as you cannot move the price you charge. It is a market price. Charge more and sell nothing, charge less and increase volume.

Is the law market really such a market? Well there are lots of suppliers (around 10,000 firms in the UK). There are also lots of purchasers with millions of instructions each year. However is the legal advice offered by one firm really a perfect substitute in the mind of the client for legal advice offered by another firm? I doubt that very much.

If your firm is good at understanding what is important to the client and delivers that precisely, the conversation on rate will not be based around your cost base. It will be based around value to the customer.

Going back to that LinkedIn discussion some fellow debaters seem to have assumed that BMW charge more for their cars because they are more expensive to produce. The reality is that consumers care little for your cost of production. They care a whole lot about the perceived quality and how a BMW makes them “look”.

By all means ensure your cost base is carefully managed and is flexible but do not think it informs your charge rate.

Innovation: Do you initiate or are you dragged?

Marketers would have us believe that ever year every new product is an “innovation”. Consequently, it is an overused word, but when I talk about it I am referring to the changes in the way products and services are delivered to customers to better meet their actual needs.

In this sense of the word, every market has a degree of innovation present at all times. However, what marks some markets out is the rate of innovation. This rate is often driven by external forces rather than internal. Hoover did not start making bag-less cleaners after 70 years of a tried and trusted formula for fun, but because an inventor new to the cleaner industry, James Dyson, threatened their supremacy.

However, the greatest changes usually occur because of government intervention, a change in law or a government initiative. The success of the AT&T breakup initiated by the US Govt is controversial, but it created a very competitive market, at least initially. Ferrari (and the rest of the car industry) is very reluctantly currently working on clean technologies because of pending EU regulations, rather than some deep-seated environmental belief. The sale by the US Govt of old media airwaves will facilitate an explosion in wireless communications although it was heavily opposed by the old media.

It is inevitable that industries which have invested heavily in the status quo will not look to innovate unless pushed to do so.

So how is innovation in the legal market?

There has been change in the market in terms of attitudes and the introduction of some technology, but at the moment the rate of innovation is generally low. In a profession that places weight on precedent there seems little reason for change. However, legal precedent has little to do with law firms. The law does not belong to the firms and arguably is not the product of the firms either.

Should a new external force come into play in the legal market, innovation will result. The intended Legal Services Board deregulation, inspired by the Clementi Report, looks like that external force.

Are you ready for the resulting innovation?

BigWig will explore the likely challenges this will create and look at the potential solutions.

Liam Wall
Founder
BigWig Legal Network
www.bigwignetwork.co.uk

What is BigWig Legal Network?
The deregulation of UK legal structures will have a huge impact on how Law is practised and new legal services are offered. BigWig Legal Network is the UK’s first membership development organisation for fee earners in legal practices, priced for membership affordability, which will offer what legal professionals desire most of all: Accurate, dependable new insights and techniques for developing the legal services of the future.

Find out more at our monthly meetings.

An alternative take on “Tesco Law”

While not a new phrase for someone like me to bandy around, I wonder what you think Clementi meant by it?

Well, some suggest he meant the work of existing law firms being commoditised and sold off the shelf at Tesco, as Tesco do with banking, insurance and mobile phone services.

But what if he simply meant no change to the service itself, but a lot of change to the availability of the service?

Time-wise, Tesco open from early till late, certainly 7 days a week. Some stores open 24 hours at certain times of the year. When I worked for two large, successful, entrepreneurial, corporate companies, as Head of Finance, I was on the job from early till late, 7 days a week and on certain deals nearly 24 hours at a stretch. Now, with my corporate days behind me, my life revolves around clients during usual business hours and around usual pre-school and post-school hours with my family. In both situations, f I were looking for legal advice, 9pm in the evening would be ideal.

And with regard to location, in most conurbations in the UK, you are probably never more than 15 to 20 minutes away from a Tesco store, many of which have parking and a bus service.

So maybe Clementi was not talking about the devaluing of legal advice into some low-level commodity, but simply about making the existing provision available at a time and place to suit the customer. And even if he wasn’t, why not think about it?!


Liam Wall
Founder
BigWig Legal Network
www.bigwignetwork.co.uk

What is BigWig Legal Network?
The deregulation of UK legal structures will have a huge impact on how Law is practised and new legal services are offered. BigWig Legal Network is the UK’s first membership development organisation for fee earners in legal practices, priced for membership affordability, which will offer what legal professionals desire most of all: Accurate, dependable new insights and techniques for developing the legal services of the future.

Find out more at our monthly meetings.

Rational Analytical Thought!

Professionals spend most of their time advising clients in an analytical and rational manner. Clients are not interested in your feelings on a subject but in your analysis of it. Indeed, I would venture that most professions favour and reward the analytical over the emotional.

Analysis does not always get the right answer, but it is logical and methodical. It identifies areas of risk and areas which are unknown. By this process, the quality of decision-making is generally improved and more often than not will provide a better decision.

When dealing with a client’s problem, this approach serves well in identifying the key decision drivers or unknown or unknowable areas. When a client is closely “involved” with the subject matter of this decision (say buying a house or a company), this analytical rigour allows the professional to operate and is prized by their client.

This perspective contains an interesting irony. Are professionals able to be analytical about their own careers and practices? Do they analyse the state of their own practice, the future of their practice and its strengths and weaknesses? Do they assess the success factors for growth? Do they understand from research rather than anecdote their competiveness in price or quality compared to their competition? Indeed, do they analytically track their competition or, dare I say, even identify their competition?

I think most professionals dealing with their own lives without the detachment provided by advising someone else become very human and lose the ability to be highly objective.

The outcome is that obvious challenges to or problems inherent in their practice are tolerated rather than addressed. In other words, some of the most analytical minds in the country are sleepwalking into the future.

Should the Coalition Government continue the deregulation of law firm ownership, will you have analysed the impact of the change on your practice?


Liam Wall
Founder
BigWig Legal Network
www.bigwignetwork.co.uk

What is BigWig Legal Network?
The deregulation of UK legal structures will have a huge impact on how Law is practised and new legal services are offered. BigWig Legal Network is the UK’s first membership development organisation for fee earners in legal practices, priced for membership affordability, which will offer what legal professionals desire most of all: Accurate, dependable new insights and techniques for developing the legal services of the future.

Find out more at our monthly meetings.

Lord Bl**dy Sugar!

Like many of you I have enjoyed BBC’s The Apprentice complete with the attitude and the unremitting swearing of the main man. I would love to know what Lord Sugar does respect as it is clearly not most of the contestants most of the time. However, I must say that I am happy to let him have his quirks given his level of commercial success and I wish everyone I knew was as honest. Given this is a legal network why do I mention him?

One of the first and largest computer companies in the world was, as you will know, IBM. Given their position in the computer market today the phrase “no one ever got fired for buying IBM” will be irrelevant to most but the larger organisations now but once upon a time this was the case. Indeed when I started work in the mid-1980’s they had a dominant position in the hardware market include the personal computer market (PC).

At that time Alan Sugar Trading or Amstrad for short was making cheap radio’s, record player and other small electrical devices. However Amstrad was about to diversify and take on IBM with a PC. Think about it, a cheap radio manufacturer taking on a worldwide business. I had one of the first to compare to IBM PC and it must be said it had a poorer screen resolution and a less substantial keyboard. The other thing it lacked was about £1000 being half the price of the IBM.

The rest is history as the consumer and business market voted with their feet and bought the Amstrad.

The point of this history lesson is simple. Consumers and businesses want value for money which Law Sugar delivered which according to the critics of the day was very much a win for David over Goliath. Lord Sugar, as far as I know is not interested in the law but if he owned an Alternative Business Structure law firm, would he be preserving the traditions and current working practices?

Sir Alan may not be looking at the Legal Market but there are entrepreneurs out there waiting for the opportunity. Are you ready?


Liam Wall
Founder
BigWig Legal Network
www.bigwignetwork.co.uk

What is BigWig Legal Network?
The deregulation of UK legal structures will have a huge impact on how Law is practised and new legal services are offered. BigWig Legal Network is the UK’s first membership development organisation for fee earners in legal practices, priced for membership affordability, which will offer what legal professionals desire most of all: Accurate, dependable new insights and techniques for developing the legal services of the future.

Find out more at our Last Wednesday meetings.

“Don’t you want me, baby?”

Seeking a product used by most law firms, I had the pleasure of putting out to tender a significant contract worth around £150k per annum.

The existing supplier was a well-known company in the market and the point of contact was highly credible, trustworthy and pleasant. In fact, he was a thoroughly decent bloke. One of the challenging suppliers was recommended by a friend, but was otherwise completely unknown to me.

The existing supplier knew they were in a competitive situation and telephoned several times to take stock of the situation and to ensure they put the best tender forward that they could. Indeed, the resulting tender was more competitive than the year before: they provided additional features and this justified the tender process if nothing else did.

The challenging supplier came to see me and my colleagues three times. They were well-prepared with colourful charts and other sales tools, and also mentioned other products they provided. Their enhanced product offered slightly better value than that of the existing supplier. They were very attentive and could not do enough for us.

The existing supplier was obviously disappointed, but accepted the inevitable when the challenging supplier won the contract. Since that sale, the new supplier has maintained the initial contact through in-person visits and invitations to evening talks and other events, always providing valuable insights and clear, attractive supporting material.

Clients want to feel their professional advisers are part of the team. Team working is about clear regular communication. The original supplier above did a good job, but had been so busy doing the job that they lost ground to a personal visit from a rival.

It is a tight legal market at the moment with insufficient work for most, but how many have made a point of visiting existing clients in between matters just to keep the relationship and communication going?

The last thing you need right now is your existing clients wondering if you want them!

* The title of this post refers to The Human League’s single from their third album Dare (1981)

Liam Wall
Founder
BigWig Legal Network

www.bigwignetwork.co.uk

What is BigWig Legal Network?
The deregulation of UK legal structures will have a huge impact on how Law is practised and new legal services are offered. BigWig Legal Network is the UK’s first membership development organisation for fee earners in legal practices, priced for membership affordability, which will offer what legal professionals desire most of all: Accurate, dependable new insights and techniques for developing the legal services of the future.

Find out more at our Last Wednesday meetings.

Decision Speed Captain Kirk?

When it comes to evolution, I am no expert, but I am familiar with the simple summary of “Survival of the Fittest”. A key part of survival for an animal is making decisions in response to new opportunities or threats. These decisions must be made in real time and can be imperfect.

Within a commercial organisation, hundreds of major and minor decisions are made every day in just the same way. The outward-facing decisions are made by the Board. Sometimes these decisions are made quickly as events occur rapidly. In the past weeks, the Board at BP and at BA have been making outward-facing decisions. The ability of these organisations to react quickly is crucial to their success and survival. From the outside, they may seem to be the largest and sturdiest starships in their galaxies, but even they are vulnerable to poor or slow decision-making. Indeed, anyone who ever watched Star Trek will not remember Kirk taking long to make life-and-death decisions!

In the world after the Clementi Review and the Legal Services Board deregulation, the question is, how quick will law firm decision-making need to become? Partnerships are not noted for making rapid or radical decisions. This is an observation rather than a criticism. At the moment, law firms evolve at a rate determined by the comfort zone of partners who are all owners and solicitors.

Post the Alternative Business Structure, this rate of change may be determined by Directors appointed by shareholders. Given that Directors are unlikely to be solicitors and will do their job by determining policy rather than following it, they will have little vested interest in maintaining the status quo.

If the Partnership Model is to prosper in this new world, decision-making speed may need to move at the pace determined by non-solicitors!

Liam Wall
Founder
BigWig Legal Network

www.bigwignetwork.co.uk

What is BigWig Legal Network?
The deregulation of UK legal structures will have a huge impact on how Law is practised and new legal services are offered. BigWig Legal Network is the UK’s first membership development organisation for fee earners in legal practices, priced for membership affordability, which will offer what legal professionals desire most of all: Accurate, dependable new insights and techniques for developing the legal services of the future.

Find out more at our Last Wednesday meetings.