Skip to main content

Culture: An obstacle to success for law firms?

Reda Bennani : Consultant

The global financial crisis that truly impacted every economy, made a lot of radical changes in the way businesses operate and generate revenue. Those that anticipated ever-demanding customer needs thrived despite competing in very tough industries. Others however lagged far behind in terms of structuring a business model that understands the realities of the global economy and corporate clients’ behaviour.

There is a consensus that many big corporate law firms aren’t built to run like modern businesses. The tough reality is that modern corporations are allocating fewer resources to legal work, and establishing more strict measures to verify the efficiency and productivity of the law firm engaged. This changing environment has penalized law firms, which are already punished by their culture and structure. The Partnership structure aims to look after the partners as the ultimate financial goal. They have adopted complex corporate finance techniques to generate revenue in multiple ways to support the income stream.

In a law firm environment super stars’ pay checks are tied to profits, this creates a level of financial volatility within the decision makers and is in conflict with the desired longevity within the firm’s management. A fractured structure and culture can be deadly for a law firm once a group leaves and run with some cash…which we have witnessed in the last couple of years. Law firms then need, to think short term for rebuilding their financial structure, and anticipate long term trends by starting right now on internal changes.  A danger is the practice of attending several peer conferences, where few of the subjects discussed are really translated to the law firm practice survival. The difficulty with chasing averages is that is the best that can be hoped for.
There is not a magic formula to fix the partnership model. The reality is compensation must be less generous than it previously was for associates and mid-level attorneys. The barrier to partnership must get harder. We are In an efficiency era, one where VC backed IT companies are thriving to automate pretty much EVERYTHING! Is your firm waiting for the inevitable or trying to get ahead of the curve?

Popular

Billing quick wins

Billing quick wins
How you bill your clients makes a big difference to cash flow. The way you bill has everything to do with how payment will be made. Are you giving your clients an easy excuse to not pay you?


1. State the payment terms
Firms traditionally offer credit easily. Whilst new clients are accepted through a risk analysis process the voice of the Credit Controller is not heard enough. These processes should identify potential risks through references to available searches and past history including the firm’s own records.

Before you offer credit make sure you agree and negotiate the terms of payment. You do not have to accept the 30 days from the end of the month the invoice was received. You are allowed to ask for a shorter term. What is important is that the client understands the terms and agrees to these terms before you start the matter. As a reminder, always ensure that the payment terms are listed on every bill. State the actual due date which is more effective than just…

The importance of Trust

The importance of TrustData breaches, corporate re-structuring and collapses have alerted business to the value of an intangible ... trust.

We are big advocates for the use of email as a communication medium rather than the paper documents of the past. Working in law firms and accounting firms though has always been at odds with "Paperless" and environmentally responsible communication.

I believe that as a profession it is no longer possible to ignore paperless processing. The time has come to embrace the challenges and implement features like electronic payments WITH the requisite controls.

Unfortunately we see a focus on the problem and not the solution. Electronic control systems can close fraud options that are available now.

A recent article in New Zealand is a case in point. OpenEFT would have prevented this fraud.

The conclusion that Lawyers and clients should be careful with emailed instructions could have been ensure you have systems and policies in place that address k…