Final countdown

There has probably never been a time when practitioners, particularly in small and medium sized firms reliant for income on consumer-led legal services, have faced such major regulatory change in those services and the resulting potential competitive pressures.

This degree of change emphases the importance of strategic planning to review the services to be provided by the practice, the ability to maintain its profitable growth, as well as clarity and a unity of purpose in determining the way forward.

But for many practitioners, these changes will be seen as a further threat to the traditional professional values they may already feel have been eroded by a general commoditising and commercialising of professional services.

However, demand for legal services, as for any other service, is dependent on the market for them and the value attributed to them by clients. Where the value proposition does not require personal and highly skilled professional advice, but rather cost-effective delivery processes, in volumes that can be supervised by a relatively few professionally qualified lawyers, fee levels will reflect this accordingly and not support extensive and expensive partner time. (The expression partner is used to include directors or other principals involved in the ownership of a law firm.)

In these circumstances, it is difficult to see how partners practising in areas likely to be affected can avoid the impact of change and the need to examine alternative development and delivery strategies to maintain revenues.

The most important thing is to invest the time as a partnership group in a competitive analysis of the practice and assessing the market for its services, their future potential and the ability to grow them and make profits, together with the firm's overall corporate objectives, including fee turnover levels and profitability.

In any well-run firm, this aspect of strategic planning should be ongoing, and in a partner-led organisation, it is very much the business of all the partners as owners. While those appointed to manage the firm will play a key role in recommending strategies and putting forward business development proposals, the practice's values are a matter for all the partners, as are its succession, management and profit-sharing philosophies, as well as its constitution, capital structure and appointment of the partnership's executive and senior management.

It is this aspect of governance that can determine whether or not partners remain comfortable with the way their firm is being run and enables them to influence the professional values which underpin it.

The development of the business plans, budgets and cash flows is a matter for those delegated with the executive responsibility for managing the firm and should be presented as a (say) three-year rolling business plan, with annual budgets to the partner group which, when approved, become a mandate for the management to action, subject to regular monitoring of the practice's performance at partners' meetings.

Partner time unnecessarily spent on management is expensive, but, more importantly, the involvement of too many partners is likely to create confusion and inaction: when the exact opposite in a more competitive world is required.

This highlights the importance of creating a basis of trust and confidence, built around transparency and good communication, throughout the firm.

One important issue here is to ensure ownership by all partners of not just the strategic direction of the firm, but also its professional delivery, management and administrative policies and these should be clearly defined in the business plans approved by the partner group. Any unwillingness by partners to implement such policies consistently can hold back a firm's progress, and undermine the credibility of the partners as a group.

This said, it is equally important to make sure that in putting forward such policies for endorsement, they are reasonable and necessary. Part of the success of any firm should be the flair and richness that comes from a group of strong-minded professionals working together and it should not be stifled by badly thought-through and inflexible procedures.

Management models will vary from firm to firm according to size, philosophy, services etc but while it is generally a fairly straightforward decision to appoint a practice manager to oversee the administrative functions that partners find a distraction from their client activities, the professional management involving partners' performance can be more difficult. Where it is delegated to a senior or managing partner, it becomes his or her job to win the confidence of the partners and work with them to achieve the agreed level of performance. However, where a practice manager has responsibility for the administration only, the responsibility may rest with an executive committee.

A partner appointed to be an independent chairman or chairwoman, can be very helpful in unblocking the inevitable differences that will occur in a dynamic peer group, as well as being the public face of the firm, when appropriate, and chairing partnership meetings.

There is no one answer, although it is critical that an effective governance and management structure is agreed with the ability, in a fast-moving environment, to achieve decisive action, supported by all the partners.

Change invariably creates fear, but it is also a time of opportunity. A well-organised firm that invests the time to understand and plan its future and creates an operating structure which suits the values and philosophies of its owners stands a much better chance of delivering the professional satisfaction, enjoyment and rewards that its owners want.