The legal profession is facing challenging market conditions on multiple fronts. That was the key takeaway from the recent London Law Expo event, held on 11 October. The event, which saw more than 1,500 delegates from the world of legal practice management and technology descend on the Old Billingsgate, played host to more than 50 expert speakers across four stages, together with more than 55 exhibitors who serve the legal sector.
The day’s proceedings kicked off with a downbeat assessment of the UK’s trading relationship with the rest of the world following Brexit, offered by Global Counsel Chief Economist Dr Gregor Irwin.
Dr Irwin observed that the EU’s Article 218 meant it was legally impossible for the Union to agree a post-Brexit relationship with the UK until after Brexit had occurred. On the wider world stage, he suggested the UK may also experience difficulties within the WTO, due to the country’s problematic relationships with some other WTO states – notably, Russia. Finally, the UK may also experience challenges in re-establishing more than 50 free trade agreements (FTAs) with third party states, which were previously overseen by the EU. Those third party states may require their own parliamentary approval before any UK-specific replacement FTA deal could be ratified, he said.
In some countries, notably South Korea, FTAs have been instrumental in enabling Western law firms to establish local branch offices.
Closer to home, a panel discussion on the future of legal services regulation also signaled challenging times ahead for traditional law firms, as several key stakeholders spoke of their desire to make life easier for the unregulated legal sector. Looking forward, Legal Services Board CEO Neil Buckley advocated moving towards a broadly liberal regime of legal services regulation, in which only those legal activities which had a risk attached to them should be regulated. Meanwhile, SRA CEO Paul Philip discussed the SRA’s plans to allow solicitors to undertake unreserved legal work while working for unregulated legal services providers. This method of working for solicitors is not currently permitted under the existing SRA regulatory regime. The Law Society is opposed to the SRA’s proposed reform, which it argues will erode consumer protections.
With law firms facing the prospect of challenging times abroad and greater competition from unregulated providers at home, numerous speaker offered useful insights regarding how firms might improve the profitability of their practices, based on their own real-world experiences. For Richard Grove, Global Marketing, Business Development and Communications Director at Allen & Overy, his own firm’s path to improved profitability had been achieved by targeting legal work which spanned five jurisdictions or more. This market was targeted by the Allen & Overy, he explained, because research had discovered that it was 27 per cent more profitable than working for clients on single jurisdiction matters.
Further down the client journey, Stuart J T Dodds, Global Pricing and Legal Project Management Director at Baker & McKenzie, discussed the importance of avoiding excessive client discounting. Mr Dodd’s rationale for this position was that even a one per cent discount could hit a matter’s profit margin by a disproportionately larger amount, which future work for the client was unlikely to mitigate against.
Elsewhere in the conference hall David Freedman, Associate Director at Huthwaite International, offered a more straightforward explanations for why many law firms missed out on revenue opportunities which presented themselves: lawyer were “terrible” at selling, he said. Either lawyer did not sell at all, he observed – even when invited to by in-house counsel. Alternatively, lawyers confused selling with “features dumping” or law lectures, he said. Instead, what they should be doing, he suggested, was to try to establish what problems potential clients were trying to solve.
Not all of the presentations at the London Law Expo were delivered by law firm personnel, or suppliers to the legal sector – the in-house legal community was also well represented. Three of the presentations on the Crown Stage featured contributions from general counsels, including Don Hughes from Hitachi Data Systems, Thomas Russo from AIG and Jeremy Barton from KPMG. In this latter presentation, Mr Barton discussed how KPMG had joined forces with the McLaren Formula One racing team, in order capture big data analytics. In fact, Mr Barton’s presentation was not the only Formula One-themed speech of the day: Christian Horner OBE, Principal at Red Bull Racing, later delivered the event’s final keynote address. This presentation was standing room only, as hundreds of senior law firm personnel packed into the main auditorium.
During his presentation, Horner explained how Redbull Racing’s approach to Formula One was based around continuous improvement. The team’s overall objective, he explained, was to increase the car’s speed around the track by up to two seconds per season. In order to achieve that objective, up to 30,000 design changes would be made to the team’s racing cars during a typical year – despite each vehicle only having 7,500 unique parts. After every single race, he said, race data was analysed, prototypes of potentially more efficient components were built and tested, driver feedback obtained, and those prototypes found to boost the car’s performance were manufactured and fitted – all within a two-week time period. The amount of work involved was “completely mad,” Horner admitted – but all this effort was needed, in order to stay competitive.
Reflecting on the day’s proceedings, NetLaw Media Managing Director Frances Armstrong said that law firms could learn valuable lessons from many of the presentations delivered throughout the day. “Law firm leaders can’t change the uncertainties of Brexit, or prevent growing competition from unregulated providers, “ she said. “However, they can ensure they understand which markets are most profitable for their firm, that their lawyers know how to sell effectively, and that they don’t erode margins unnecessarily by offering excessive discounts.”
“As Christian Horner’s speech demonstrated, performance improvement doesn’t have to involve changing the entire way in which you operate in a single step. Often, making a series of targeted, small-scale, changes can yield significant improvements, over a relatively short period of time.”