What's the matter?

Research carried out in February among 170 solicitors in firms with an average of six or seven partners claimed to have identified a “successful new breed of entrepreneur”, suggesting
that smaller firms “may turn out to be the stars of the legal services revolution”. The ingredients of success, according to the interviewees, were “smarter use of technology, networking and marketing”.

Aside from using technology to
make basic legal documents available online, the more important application relates to collecting and using client data.

It is the ability to analyse data and “segment” clients by reference, for example, to their value to the firm, their buying habits, their age, wealth and location, which gives the new non-lawyer entrants to the legal market their major advantage, enabling them to regard the Legal Services Act as providing an opportunity to cross-sell complementary services.

Solicitors, by contrast, have tended
to regard the Act more as a threat than an opportunity, preferring consolidation to diversification.

But as the Legal Ombudsman said in November 2013: “Professional services are being increasingly bundled together and there are overlaps between, for example, legal, financial, property and claims management companies.”

In line with this thinking, the Legal Services Board has stated its intention to move towards activities-based regulation.

If solicitors are to capitalise on the opportunity offered by bundled advice, they will need to embrace the requirement laid down on chapter 7 of the SRA code of conduct for management systems and controls.

The prerequisite to the establishment of an effective client database is a disciplined and consistent approach to the collection and recording of client data on a centralised basis and a common commitment to sharing this information with colleagues.

The initial stumbling block is solicitors’ pre-occupation with ‘the matter’ and their reluctance to look beyond the brief to the potential wider needs of the client.

The SRA, and the Law Society before it, have compounded the problem with repeated references to ‘the matter’ in the practice rules and code of conduct.

However, not only does it make good economic sense to enquire about clients’ wider needs, but it is increasingly becoming regarded as a legal duty.

There are two class actions that have been mounted against solicitors for failing to look beyond the narrow confines of their brief: one by 900 female divorce client and the other by Right to Buy clients, both complaining that the financial aspects of their cases had not been addressed.

Networking and marketing were the two other components of success suggested in the report from Lexis Nexis. The former comes reasonably naturally to most solicitors, but marketing can often be a blind spot. The basic marketing opportunity that is neglected by many law firms is what retailers refer to as ‘point of sale’.

Solicitors’ reception areas are often bereft of material promoting the firm and its services, and client newsletters tend to be uniformly boring, because most clients are not interested in the workings of the law and simply want a positive outcome at a known and affordable price.

Advertising can also be problematical because, unless a firm has a different story to tell from its competitors, there is a risk of falling into the same trap as Quality Solicitors, by succeeding in promoting the generic rather than the specific, i.e. legal services in general rather than the particular offering of the individual
firm or group of firms.

Differentiation is key, and as the general practitioner model declines, firms will need to decide how their particular strengths can be aligned with the available market opportunities.

The likely positioning of prospective competitors will also need to be
taken into account. And in this respect, accountants will be well placed to target the personal needs of the business proprietors with whom they already enjoy the benefit of ongoing relationships.

One option is to seriously consider combining legal and financial advice to provide a holistic private client service.

Ian Muirhead is director of SIFA

He writes a regular blog for Private Client Adviser

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