SCOTTISH legal firms are far less receptive to change than their English counterparts and risk being left behind unless they “wake up and smell the roses”.
That’s the view of former lawyers Raymond McLennan and Pete Yetton, whose new venture Remarkable aims to help firms face the challenges posed by alternative business structures (ABS) and outside competition.
Remarkable is Edinburgh-based, but works with firms south of the border, where ABS kicked in last autumn. “We work in England because firms get it; they understand law is being deregulated and that this means a move to market forces,” says McLennan. “It is about efficiency and who is best.
“Deregulation is real in England; people see the Co-op making £20m from legal services – more than it makes on food – and understand the challenge. Scotland is still trying to protect an outdated position: ‘We’re fine, we’ll get round the regulation somehow’. The mindset is the problem – lawyers think the change is legislation-driven; it’s not – it’s market-driven. They are missing the point.”
The pair argue Scottish law shot itself in the foot with the 51 per cent rule: “It’s protectionism,” says McLennan. “I speak to lawyers who want it to be like it was in 2005; they must wake up and smell the roses.
“Through our involvement with Angels Den, we deal with firms wanting to invest – but in Scotland, you can only take a 49 per cent stake. Some investors won’t bother with Scotland; it’s a small market, investment is limited. English law will take over.”
Remarkable offers to go into a firm to shake it up. This might involve anything from identifying ‘easy wins’ to suggesting a wider group of lawyers to have a say in how a firm is run.
“You can make huge changes in a short time,” says Yetton. “One firm spent £26,000 to advertise in Yellow Pages because it always had. How many referrals did they get from the ad? They had no idea.”
Another firm, says McLennan, “was spending £28,000 doing its website in a very awkward way; we found a perfectly good site for £4,500. We brought another firm’s rent down from £150,000 to £75,000. By showing early wins, firms are more likely to engage in wider change. It is not rocket science, but when you show law firms some very small things, they act as if it is.”
McLennan says one of the central drivers of a traditional law firm – the hourly rate – must be challenged: “Customers want to know when their problem will be fixed. Lawyers are poor at that; they are great at saying ‘It will cost £150 an hour’, but we want to measure them on deliverability. A firm’s internal overheads should have nothing to do with how much they charge a client.”
The pair believe lawyers are worse at embracing change than other professions – “They give advice, they don’t take it” – and must be more open to fresh ideas.
“Mid-sized firms are made up of lawyers who have been at other mid-sized firms, with little outside DNA,” says McLennan. “This creates a narrow gene pool, and if it becomes contaminated, you get stagnation and a lack of new thinking.”
Yetton adds: “Young lawyers have huge skill sets, but firms very rarely tap into that. Unless you have a way in with a partner, it’s hard to get anything done.”
He says of his own experience: “Internal politics can make or break a firm; my three firms were very different, but none dealt with it effectively.
“I was passionate about law, but the balance was totally wrong. I was working very long hours under great pressure to meet targets in a toxic environment. The quality of law was diluted by the peripheral activity. Many good young lawyers are suffocated by their businesses.”
Yetton is also blunt about the quality of client service: “Lawyers have to start liking people. I knew a few lawyers who were technically very good but hated clients; I couldn’t get my head round that.”
McLennan adds: “Referrals are not dealt with properly. A traditional law firm partnership works in silos, and is poor at cross-referencing – or even knowing what other partners are capable of. So they’ll say they cannot do it, or respond too slowly; there is often no mechanism for dealing with issues out of normal hours.”
Remarkable’s strategy is based on 12 ‘core competencies’, including strategy v tactics, getting clients and hiring & motivating: “If you take 20 brilliant law firms and 20 poor ones, the brilliant ones will have many of the 12 in place,” says McLennan. “It’s just about walking them around the mines in the minefield.
“We want to help create remarkable law firms; not good ones, not better ones, but remarkable ones. What is different about your firm, what makes it stand out, what is its USP? Find out, sing it from highest rooftop and make it front and centre of your web page.”
Of course, there is scepticism – legal firms are always split when told they need to change: “Partners will not support radical change in front of other partners unless they know someone else is with them,” says McLennan. “There is a great reluctance to step out. Privately, they say ‘I get this’, so you look for an ally – but a hardcore will say no, and we just lay down options. The firm itself has to sort things out.
“But when you point out small things they need to be doing, they get it and ask ‘Why did we not do it earlier?’”