For many firms their primary focus for becoming more competitive is to focus on fee generation, which involves marketing, rain making, new hires that bring clients with them, mergers & acquisitions, etc., but without a wider focus on other aspects of business management all this can be a waste of time!
The ideal world
In an ‘ideal world’ law firms would be able to focus on fee generation, client care, regulatory compliance, staff wellbeing, and new business initiatives, and keep everyone happy, for example, clients, regulators, staff, lenders, and insurers, but in a very competitive market with very demanding clients who expect action yesterday, the ideal world seems very far away!
The ‘leaking bucket’
In the ‘real world’, with very demanding clients, some of whom will complain at the drop of a hat, regulators that are carrying out ongoing thematic reviews, insurers who will only cover firms with outstanding risk profiles, lenders that no longer see law firms in the same way they did 20 years ago, and staff that have got to deal with a cost of living crisis and will move to another firm to improve their life choices, it is critical that firms address the costs connected to these.
The ’leaking bucket’ analogy is really appropriate for law firm competitiveness, with the ‘bucket’ being the receptacle that holds a firm’s fees, and the ‘leaks’ being the negative costs a firm has to deduct from its fees.
So what sort of leaks could be draining a firm’s fees?
- Negligence claims (excess payments, increased premiums, lost management/fee earner time dealing with claims, counsel/expert fees, etc.)
- Complaints (lost management/fee earner time dealing with complaints, compensation, fee write-offs, Legal Ombudsman case fees, etc.)
- Regulatory breaches (lost management/fee earner time, regulatory sanctions, increased insurance premiums, loss/suspension of accreditations, etc.)
- Staff turnover (recruitment and training costs, lower morale, etc.)
- Reputational damage (loss of clients and staff, regulatory, insurer and lender focus, etc.)
- Loss of accreditations (removal from lender panel, increased insurance premiums, etc.)
- Ineffective file storage (costs associated with holding more archived files than is required)
Becoming more competitive
A firm that takes a balanced approach to fee generation and leakage mitigation will become more competitive, because:
- Clients, regulators, insurers, lenders and staff will have confidence in its overall culture and abilities
- Its reputation will remain intact
Fees will remain in its ‘bucket’ to be spent on expansion and other productive business initiatives, like new Information technology
Access Legal can help by providing software solutions to help make law firms more competitive, for example, case management, client due diligence, compliance management, online training; it also provides thought leadership from legal sector experts who have had first-hand experience of working in the front line in law firms, for example, monthly webinars, social media articles, and a policy and procedure library.
How we can help
Our Risk & Compliance Service and Helpline can help firms to enhance their existing compliance policies, controls and processes.
Brian Rogers is Access Legal Regulatory Director.