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Interview: Kimbells LLP

Many law firms, aware of their status as client-driven businesses, are looking for ways to restructure their management to improve profitability and reflect the needs of their clients. Caroline Poynton talks to Jonathan Hambleton, head of corporate at Kimbells LLP about their recent conversion and how they believe that it was much more than just a question of risk management.

20 August 2002

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There is still a great deal of reticence among law firms considering a possible conversion to LLP status with many adopting a ‘wait and see’ strategy before taking the plunge. Not only is Kimbells one of the first law firms to convert, it is in particular, among the first of the smaller firms to have made the move.

1. What have been the driving factors behind your decision to convert and how do you feel about being one of the first to take the lead?

Kimbells acknowledges that the security offered by conversion to LLP status was an advantage, but not the primary reason for change.

The firm was driven by desire to become more corporate in style. It has long taken a commercial outlook and approach to advising clients and it was appropriate therefore to run the firm in a way that mirrors their organisational structure, as well as providing greater operational efficiencies.

In terms of taking the lead – we have striven to be innovative in our approach to service delivery. Flexibility due to size has enabled us to adapt our practices to meet clients’ needs, and this flexibility has been key to the way we operate. We took the step because it was right for our organisation and, we believe, for our clients. To be honest, we have been somewhat surprised to find that few firms have done the same.

2. How did you find the process of conversion? Did you come across any particular challenges?

Conversion was fairly straight forward, because it was not a sudden cultural change for the practice. The process commenced some time ago when the decision was taken to recruit an FD with a background in business to start the process of introducing new practices and structures. There was therefore a gradual transition that prevented major obstacles suddenly arising and standing in the way.

There was however a surprising amount of forward planning to achieve target conversion date. Many practical issues had to be addressed – such as having stationery amended to meet legal requirements, informing clients, reissuing employment contracts to staff. It did need a systematic approach and the co-operation of the management team to ensure all steps were completed on time, but these were largely procedural.

3. What does becoming an LLP mean to you? To some it seems to be little more than a risk management process to protect individual partners, to others it seems to signify a deeper cultural change in the practice of law. Where do your views fit within the whole debate?

For us it was very much a cultural change. Our feeling was that the traditional partnership format was an outdated structure for running a modern business. Decision making process is slow and unwieldy when all stakeholders in the business are involved at every stage. Modernising the way the firm was managed tied in with introducing new business practices to improve efficiency. This included investment in staff through Investors in People accreditation with its requirements for greater personal direction and development for employees. Re-registration for new ISO standard (9001/2000) will introduce further structures to ensure consistent service quality. Changing practices for service delivery are constantly under review, utilising developments in technology.

4. You have mentioned a hope that the LLP structure will bring benefits to clients in freeing-up partners to concentrate on client servicing. Can you elaborate on this a bit more? In particular, what will be the role and responsibilities of your chief operating officer?

Our COO joined the practice as FD from a commercial background with a fashion retailer and has introduced new financial and reporting systems reflecting those used in a corporate business. Better financial analysis, performance monitoring and budgeting has influenced a change in management practice. The COO takes responsibility for these areas and is also the central focus for co-ordinating decision making processes – in terms of moving the business forward, as well as day-to-day practicalities that need to be addressed.

While the partners still get together regularly and are consulted on key issues, the firm is now run by a management committee chaired by the COO and with representation from partners and relevant management. This small committee has delegated responsibility for decision making, which means decisions are made more quickly, there is a shorter consultation period, less administration and less time for partners spent in meetings discussing issues which can be dealt with quite adequately by relevant members of the management committee. This clearly means more time when partners are available to respond to clients. It has given them more time to consider other practical issues such as the firm’s client care ethos and best practice for service delivery.

5. Has conversion met with any resistance from your partners? How do they feel about leaving the business operation of the firm to the COO?

The key to the new structure working is communication – the COO is responsible for keeping everyone informed and reporting back to partners on developments. The process of conversion reached easy acceptance because there was a period of gradual transition following the COO’s arrival as FD, with a move to devolved decision-making – which quickly demonstrated an advantage in terms of time saving for partners.

6. How do you feel about the financial disclosure element of becoming an LLP? Particularly as a law firm converting before most other firms, do you have any fears that it could put you at a disadvantage in comparison to your competitors?

Demonstrating our transparency to clients is a positive point in our view, and possibly makes a contribution towards competitive advantage. We feel we have nothing to hide in financial terms - we are doing no more than our clients are required to do by filing accounts, of course. We take the view that real advantage in terms of competitiveness comes from very high levels of service delivery and meeting clients’ identified needs, which is what we are striving towards.

7. You have now been an LLP since 1 May 2002. How has the conversion proved so far and what impact do you think it will continue to have on the firm?

Because the transition to the new structure started quite gradually and some time ago, the formal conversion went virtually unnoticed by all members of the firm. The decision to adopt a more corporate style has definitely benefited the firm in terms of faster decision-making leading to greater efficiency with increased flexibility.

Having established this format we can only assume that this enhanced efficiency will continue to have an impact on service delivery and therefore the bottom line.

8. What do you predict for the future of other law firms facing potential conversion? Do you think it will become the ‘norm’ of legal practice or will Kimbells remain one of the few?

It is hard to comment on the way other firms conduct business, but it is our experience that clients are looking for commercial understanding, and where better to start than one’s own organisation. Perhaps there is a degree of complacency that the traditional structure has worked adequately for many years. Possibly inertia or a perception of conversion being more burdensome than it really is means there is a lack of motivation to change.

However if the number of firms considering conversion reaches a critical mass, on the basis of seeing that LLP structure can offer a greater return than mere financial security, then this could open the floodgates to large numbers of firms following suit so they are not left at a competitive disadvantage.

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Risk & Compliance