07/10/2016

1

Two Questions:1) Why Should Clients Use Your

Firm?

2) What Is Good Client Service?Law Society, Small Firms Division

Annual Conference

A talk by

Paul Bennett & Tony Roe

Agenda

1. Why should clients use your firm?

2. What is good client service?

“The golden rule for every business man is this: „Put yourself in your customer‟s place‟.”

Orison Swett Marden, American author

and founder of SUCCESS Magazine

07/10/2016

2

Why Should Clients

Use Your Firm?

Selection of Firms

• What is a potential client looking for when deciding

which firm to instruct?

Address their initial wants;

Address client needs;

What do they expect?; and

What do they want to achieve?

Research

• IFF Research prepared a report for the Competition and

Markets Authority (CMA) entitled, „Market study into

the supply of legal services in England and Wales –

consumer findings‟, 7 July 2016.

• Report explores how clients select their firm.

07/10/2016

3

“I‟d just like to be treated like a

regular customer.”

Elvis Presley, The King

Research: Comparison v Non-

Comparison

• 77% of clients had not compared firms before choosing

a provider.

• Reasons;

they had received a trusted recommendation;

they had previous experience with the firm; and

to compare firms would be too difficult and time

consuming.

• Only 22% did make comparisons before making a

decision.

Clients‟ Deciding Factors

• Most common deciding factor was a recommendation

from family and/ or friends - 30%.

• Use of internet to identify firms surprisingly

uncommon. Only 11% reported using the internet to

help them.

• 44% of clients stated that they took up to one hour to

identify a firm.

07/10/2016

4

Clients‟ Deciding Factors (2)

• The most important factors when choosing a firm were:

qualifications/ experience (79%); and

reputation (77%).

• Those who made a comparison of firms reported cost

being an important factor (81%), however, of those who

did not compare, only 57% considered cost to be an

important factor.

• 60% of those who did not compare firms considered

brand to be an important factor compared with 47%

who did compare.

Information Used To Find a Firm

• Factors cited by clients:

location (49%);

feedback/ recommendations (42%);

their experience using a firm previously (38%); and

information about the firm‟s reputation (38%).

• 69% of those who compared firms considered costs in

contrast with 25% of those who did not compare.

“ It is not the employer who pays the

wages. Employers only handle the

money. It is the customer who pays

the wages.”

Henry Ford, Founder of Ford Motor Company

07/10/2016

5

Other Factors

• A smaller amount of clients also listed the following as

other factors that were important:

The firm appeared understanding and personable;

Appearance of good communication;

Professionalism;

Availability;

Ease of using;

Specialist knowledge; and

Efficiency.

Importance Of Understanding

Costs

• Reported that there was a strong preference to have

cost information upfront, on first contact with the firm.

• Want cost information to be precise and clear (aka

fixed fees).

• Legal Ombudsman complaints:

Costs excessive – 8.80%

Costs information – 8.10%

Judging Quality Prior to

Instruction

• Customer reviews but evidence of reluctance to use

reviews on the firm‟s website as these are considered

more promotional.

• Recommendations were considered an indication of

quality.

07/10/2016

6

Judging Quality Prior to

Instruction (2)

• Clients considered brand and reputation as well as

experience and qualifications.

• Very few clients had heard of quality mark schemes for

legal services.

• Clients judged the firm‟s likely quality based on

customer service where possible (when they had been

in contact via email and/ or telephone).

• Most tended to judge the quality by using their „gut

feeling‟.

Legal Services Consumer Tracker 2016

• The Legal Services Consumer Panel together with

YouGov produced an insight report.

• The results were similar to that of the IFF Research:

Reputation was the most important factor;

Price, convenience and speed were also important; and

Previous use of a firm by an individual or family member

was the most commonly mentioned reason for choosing

the firm although not stated to be the most important

factor.

Customer Satisfaction Score

Peppermint Graph

70

72

74

76

78

80

82

84

Retail (food) Retail (non-food)

Banks & Building Societies

Insurance Companies

Legal Service

2014

2015

07/10/2016

7

Legal Marketing

• Marketing should be aimed at identifying and satisfying clients wants and needs.

• Being client focused and every aspect of marketing should reflect this.

• Aaron & Partners own slogan is, „making it happen‟, focusing on the clients wants and needs. Previously it was, „ everything we do has the client in mind‟, again, remaining client centric.

• Easier to establish brand/ reputation in niche geographical location (Tony Roe, Family Lawyers in Berkshire for example).

Marketing: Brand

• When marketing your brand you must ensure the

following is reflected:

what it is;

who;

what it is associated with;

its way of doing things; and

its values are understood and reflected.

Peppermint Technology:

Statistics

• 34% of law firm enquirers who left a message did not receive

a call back within 24 hours.

• Almost ¼ of people calling a law firm would not contact the

firm again.

• 44% of those calling a law firm felt that they would not be

encouraged to contact the business again.

• On a walk in enquiry, 65% of solicitors, having spent time on

it, take the contact details of the potential customer.

• On just 16.5% of occasions did firms follow up that enquiry.

07/10/2016

8

Legal Futures, “Still Hanging on

the Telephone”

• Evidence that client enquiries not valued (based on 3 calls made to leading consumer law firms by Shoppers Anonymous):

Average hold time is 47 seconds (increase of 5 seconds from last year);

Caller becomes frustrated at 20 seconds;

By 47 seconds around ½ will hang up;

All but three firms had caller on hold for over a minute; and

On 52% of calls, the firm did not ask for caller‟s phone number or e-mail address.

“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful”.

Jeff Bezos, CEO Amazon.com

Why Your Firm?

• Set yourself apart.

• Our niches are family law and professional disciplinary/

practice.

• 77% in IFF Research reported reputation as being an

important deciding factor.

• Unless you work in a niche market think of leadership

within a submarket rather than a national one: „largest

employment practice in Liverpool‟.

07/10/2016

9

Good

Client Service

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else”.

Sam Walton, founder of Walmart

Client Service

• Service is increasingly important to attract clients (IFF Research and the Legal Services Consumer Tracker demonstrated that recommendations were still the most common reason for selecting a firm).

• LawNet revealed in their 2015 poll that just 3% of people were influenced in their choice of firm primarily by advertising.

• Existing relationships and recommendations were favoured by 50% of the public.

• This means the service delivered to existing clients is crucial in terms of gaining new clients and having returning clients.

• Commercial clients more so than consumers but the research is consumer focused.

07/10/2016

10

What is Good Client Service?

• IFF Research revealed what clients believed to be indicators of good customer service:

Friendly and efficient service;

Regular communication, preferably by telephone;

Availability of service provider and speed of their response to queries;

Feeling that the firm cared about the legal outcome;

Listening to the client;

Communication being understandable and free from legal jargon;

Feeling comfortable with the firm and that they are genuine and personable; and

Some clients also mentioned appearance of staff members and the offices.

Good Client Service: Costs

• Clients felt that they had received good service when

they felt that the cost of a service is reasonable or fair.

• Clients were more likely to associate very low costs

with poor quality and vice versa.

• Important that costs changes communicated regularly

and final costs not substantially more than the initial

cost information.

• Those whose service had cost more than the initial cost

information still felt they had received value for money

if they felt that they had received good client service.

How Are We Doing As A Sector?

• IFF Research:

majority of clients satisfied with the quality of advice

(87%); and

with the outcome of their legal matter (88%).

07/10/2016

11

How Are We Doing As A Sector? (2)

• The satisfactory performance was commonly linked

to:

The legal experience being easy, straightforward and

simple;

The cost of legal service being as expected, reasonable or

on occasion, free;

The firm appearing efficient and professional;

A feeling that the firm had gone the extra mile for them;

The outcome of the matter meeting expectations; and

The firm and its staff being personable and friendly.

Trends As A Sector?

• The 2016 Legal Services Tracker reported that the two

most satisfactory aspects of service delivery were:

Explaining things in a way that were easily understood

(75%); and

The clarity of information on the service to be provided

(74%).

• The most unsatisfactory elements were:

Communication whilst the matter was progressing (62%);

and

The timely way in which the matter was dealt with (61%).

Client Service: Hints & Tips

• Review current approach from the client‟s perspective.

• What do you expect from others? How can you apply this to your clients?

• Consider using social media as an avenue to communicate with clients and collect feedback.

• If you receive a complaint, use it as an opportunity to open productive dialogue with the client and find out about the client‟s wants and needs.

• Deliver a good service throughout the complaints process to change the client‟s perception.

• Survey clients at the end of matters to ascertain what they liked and disliked about your service.

07/10/2016

12

Sharing Tips

• At Aaron & Partners we use „Q bills‟ to indicate that

this is the last bill on the matter and so a

questionnaire will be sent to the client along with the

final bill.

• Can anyone share any tips that their firm operates or

that they have experienced previously?

“Why are some people and

organisations more inventive,

pioneering and successful than

others? Start with why.”

Simon Sinek,

Leadership Consultant/ Author

Thank you! Any Questions?

Law Society, Small Firms Division Annual Conference

By

Paul Bennett, Partner

Aaron & Partners LLP

@AaronsProLaw

and

Tony Roe, Principal

Tony Roe Solicitors

@TonyRoeDivorce

29/09/2016

1

Profitability, cash and strategy in a smaller law firm

Andrew Otterburn

Profitability, cash and strategy in a smaller

law firm

• The advantages/drawbacks of micro law firms

• To grow or not to grow?

• Improving profitability

• Getting the cash in the bank

Advantages /drawbacks

• Independence

• Freedom to make decisions

• Speed of making changes & responding

• Flexibility

• Can be very niche

• Fun

29/09/2016

2

Advantages /drawbacks

• Independence

• Freedom to make decisions

• Speed of making changes & responding

• Flexibility

• Can be very niche

• Fun

• Stress!

• Regulation

• Vulnerable to shocks (eg: staff maternity)

• Holidays can be tricky…

• Succession

• Profitability

Average small crime firmsUnder £250k £250-500K Over £500k

Fees 114 376 888

Interest - 4 10

WIP movement 2 11 -3

116 391 895

Salaries 10 139 286

Equity partners 83 138 216

Agency staff 3 5 9

Rent 4 13 20

Other overheads 25 82 218

125 377 749

Profit/loss -9 14 146

Per partner -8 7 45

Law Society of Scotland 2016

Profit per equity partner

0

50

100

150

200

250

300

Under £250k £250-500k £500k - £1.5m £1.5 - 5m

£'0

00

Annual fees

Lower quartile

Median

pperquartile

LMS Financial Benchmarking Survey 2016

29/09/2016

3

Fees per equity partner

0

200

400

600

800

1000

1200

Under £250k £250-500k £500k - £1.5m £1.5 - 5m

£'0

00

Annual fees

Lower quartile

Median

pperquartile

LMS Financial Benchmarking Survey 2016

…many small firms are very small…

Firms by fee income

3451

1594

1711

1985

969

939

109

84

67

0 500 1000 1500 2000 2500 3000 3500 4000

Under £100k

£100-200k

£200-400k

£400k - £1m

£1-2m

£2-10m

£10-20m

£20-50m

£50m+

Number of firms

Fee

inco

me

Law Society 2013

29/09/2016

4

Developing strategy

• Many small firms want to be small

• Lifestyle choice or small sustainable business?

…to improve profitability firms need to become

larger…

…stage on: develop a plan…

29/09/2016

5

Some questions…

• Why develop a plan? How to do it?

• Whether/when to employ additional fee earners?

• Whether/when to employ my own cashier?

• How to reduce my stress?

Developing a plan

What is our market?

• geographical

• sectors

Where are we in that

market?

What are our values?

Where are we aiming

to be?

What is our overall

target market

position?

Developing a plan

Structures

Leadership?

Key people?

What is our market?

• geographical

• sectors

Where are we in that

market?

What are our values?

Where are we aiming

to be?

What is our overall

target market

position?

29/09/2016

6

Developing a plan

Structures

Leadership?

Key people?

Department /

team / sector

plans

Merger

possibilities?

Technology /

outsourcing /

processes

Alliances /

networks

What is our market?

• geographical

• sectors

Where are we in that

market?

What are our values?

Where are we aiming

to be?

What is our overall

target market

position?

Developing a plan

Structures

Leadership?

Key people?

Department /

team / sector

plans

Merger

possibilities?

Technology /

outsourcing /

processes

Alliances /

networks

Review quarterly

Along with figures

Involve fee earners

Update the plan

What is our market?

• geographical

• sectors

Where are we in that

market?

What are our values?

Where are we aiming

to be?

What is our overall

target market

position?

Successful firms…

• Have a plan

• Have effective leadership

• Are responsive to change

• Are perceived as different by clients

• Have a good grasp of the figures

• Are open with their staff and good at communications

29/09/2016

7

What gets measured gets done

Key figures to look at?

• Chargeable hours a day?

• Number of completions a week?

• Average hourly fee?

• Average fee per matter?

• Cash collected each week?

• Fees billed each week?

Team profitability

Family Probate Total

Fees 329,456 395,314 724,797

Salaries 102,526 98,745 201,271

Equity partner 70,000 70,000 140,000

172,526 168,745 341,271

Gross profit 156,930 226,569 383,499

% 47% 57%

Hours 2,526 2,312

Ave hourly fee £130.43 £170.98

29/09/2016

8

Getting paid

• Disbursements on account

• Interims

• Clear at outset what it will cost

• Spotting extras

• Making it easy to pay

Owed W/C

16/05/201615.08.16 22.08.16 29.08.16 05.09.16 12.09.16 19.09.16 26.09.16 03.10.16 10.10.16 17.10.16 24.10.16

Brian 18,690 9,505 40,511 54,269 44,250 3,900 9,000 10,443 3,730 - - 27,575

Lorna 2,269 - 15,062 8,604 13,902 2,392 13,456 2,153 24,768 21,771 7,380 6,150

Eoin - - 3,865 10,620 12,530 9,542 - 6,150 615 - 4,305 -

John 4,305 1,400 12,887 5,460

Others 1,584

26,848 10,905 72,325 78,953 70,682 15,834 22,456 18,746 29,113 21,771 11,685 33,725

Outgoings

Creditors 5,298 - 13,000 2,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000

Prac Cert 922 922 922 922

postage 400 400 400 400 400

bank charges 317 148 400 235 235 235 235 235 235 235 235 235

Outlays 337 882 600 600 600 600 600 600 600 600 600 600

wages 1,184 407 25900 25900 25900

loans 2,072 1,450 2072 1450 2072 1450

Insurance 2364 2364 2364

coll gen VAT 18,000 18000 18000

coll gen PAYE 10,800 10800 10800

rates 1,330 1330 1330

rent 6,662 6662 6662

subscriptions

Petty cash 900 600 500 600 600

savings 1,400 1,400 1400 1400

Income tax 20,000 20000 10000 10000

Charity

Misc

drawings 2,925 2,010 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

12,383 6,919 76,464 53,699 6,235 10,229 7,785 81,291 6,435 9,707 8,207 81,891

Net flow 14,465 3,986 -4,139 25,254 64,447 5,605 14,671 -62,545 22,678 12,064 3,478 -48,166

Opening Bank Balances (total) -90,847 -96,220 -92,234 -96,373 -71,119 -6,672 -1,067 13,604 -48,941 -26,263 -14,199 -10,721

Closing bank balances (total) -76,382 -92,234 -96,373 -71,119 -6,672 -1,067 13,604 -48,941 -26,263 -14,199 -10,721 -58,887

29/09/2016

9

Profitability, cash and strategy in a smaller law firm

Andrew Otterburn

07/10/2016

1

Julie Harrison

Managing successful change –

and getting staff buy-in

Why is managing successful

change important?

• Changing market structures, increasing client expectations,

changing pricing strategies

• Economic fluctuations, uncertainty, market liberalisation,

regulatory change, consolidation, commoditisation

• Changes in organisational structures/operating models

• Changing people expectations, different stages in career

• New systems and technology

Management challenge remains – to produce and maintain

profitable service, through people, to clients

Remember the fundamentals

THE PRESENT

How things are currently done

Why things need to change

Opportunities for change

THE FUTURE

View of how things need to be

Clear outcomes to be delivered

Measures of success

CHANGE

MANAGEMENT

Plan of how to

get there

07/10/2016

2

Impact of change on people

SHOCK DENIAL

ANGER/BLAME

SELF DOUBT/BLAME

PROBLEMSOLVING

TIME

PE

RF

OR

MA

NC

E

Baby

Boomers

1945 - 1961

Influences Post war

optimism

Family

“Society”

Values Hard work

Loyalty

Rewards

Career

Motivators

Status

Promotion

Generation

X

1962 - 1977

Influences Changing world

order

Powerful

leadership

“Individual”

Values Confident

Self reliant

Career

Motivators

Achievement

Money

Generation

Y

1978 - 1998

Influences 9/11 attacks

Internet

Student debt

“Global”

Values Connected 24/7

Confident

Lifestyle centred

Career

Motivators

Developing skills

Networks

A great place to work

For whom?

A great place to work

For whom?

07/10/2016

3

Impact of change on people

SHOCK DENIAL

ANGER/BLAME

SELF DOUBT/BLAME

PROBLEMSOLVING

TIME

PE

RF

OR

MA

NC

E

Effective change management

• Help individuals or a group understand and face up to change

• Communicate like you have never communicated before

• Set out a clear vision/reason for change

• Work at gaining commitment (involvement)

• Early involvement

• Change perception of change from threat to opportunity

• Avoid over organising

Remember the fundamentals

THE PRESENT

How things are currently done

Why things need to change

Opportunities for change

THE FUTURE

View of how things need to be

Clear outcomes to be delivered

Measures of success

CHANGE

MANAGEMENT

Plan of how to

get there

22/09/2016

1

The Bellwether Report 2016

Jon Whittle

@BusinessofLawB

The Ingredients For a Successful Small Law Firm 2016 Bellwether Report

*

Mood of the moment

* 81%

22/09/2016

2

95%

Crystal Ball

*

73%

95% Agree

Crystal Ball

*

79%

The Change Agenda

*

22/09/2016

3

The Change Agenda continued

*

Harnessing Technology

*

The Perception Paradox

* 77% Agree

22/09/2016

4

Price & Value

*

What is Value for Money?

27%

76%

The riddle of perception again…

*

22/09/2016

5

*

Get your copy of The Bellwether Report 2016

*

Subscribe to the Business of Law Blog today to receive

the full report and a host of supporting resources to help

your firm prepare for the changes occurring within the

legal profession and wider world.

W www.lexisnexis.co.uk/bellwether-report

linkedin.com/in/jonwhittle/

@BusinessofLawB

About LexisNexis

*

07/10/2016

1

The future of regulation for

small firms

Support for small firms

Dedicated small firms section of our website and

Virtual Reference Group

Dedicated team in supervision and option on Ethics

helpline

Ongoing engagement with small firms and sole

practitioners

Dedicated support to help small firms with Looking to

the Future changes

Improving authorisation

Radically reduced length of application and volume of information

we ask for

Introduced deemed approval for COLP/COFAs

Average time to be authorised is now less than 1.5 months

Improvements to the Authorisation section of our website planned

Developing a dedicated resource for newly authorised small firms

so they have a one stop shop for things they will need

07/10/2016

2

SRA Innovate

Provides support to firms that want to develop

innovative approaches

We can provide flexibility in our regulations so that

they don’t hinder new ways of working

Dedicated web pages – www.sra.org.uk/innovate

Revised Principles that set out the fundamental tenets for those we regulate

A new code for individual solicitors -sets standards, behaviours and ethics wherever they practise

A new code for firms – sets standards, systems and controls

Simplified accounts rules

Practice Framework Rules - Greater freedom about where and how solicitors practise

Looking to the Future

Looking to the Future

Uphold standards and core professional values

Enable growth and innovation in legal services

Strike the right balance between reducing regulatory burdens

and ensuring consumer protection

Give solicitors and their employers more flexibility to organise

their businesses in a way that works for them

Help people access competent solicitors and understand the

choices available to them

07/10/2016

3

A changing legal market

Growing alternative legal services market

Changing consumer purchasing behaviour

New delivery models and structures

Unmet need

Our enforcement approach

We are reviewing our enforcement strategy

Using feedback gathered from thousands of

stakeholders as part of a Question of Trust to help

shape and inform a proposed new approach

Where things do go wrong, we will take a proportionate

response

The new strategy will cover who we enforce against as

well as what - e.g. individual -v- firm.

Consultation on Principles, Codes and Account Rules (closed 21 September 2016)

Further consultation on other rules and regulations (including Overseas Rules, Practice Framework Rules, Authorisation Rules, Enforcement Strategy and disciplinary procedures) Spring 2017

Implementation not before early 2018

Next steps?

07/10/2016

1

The future of regulation for small firms

The Law Society

Legal services Sector UK

370,000

Employed in legal services

63% solicitors or employed in

solicitor firms

£25.7 billion

Value of legal services

Small firms: 26,000

solicitors

Regulatory changes

CMA

• Jan 2016: Market study into supply of legal services launched

• 8 July: Interim Report published – no formal market investigation

• Jan 2017: Final Report due

SRA

• 1 June: ‘Looking to the Future: Flexibility and public protection’ and ‘Looking to the Future: Accounts Rules Review’

• 21 September: Consultation closed

LSB

• 12 Sept: ‘Vision for legislative reform of the regulatory framework for legal services in England and Wales’

07/10/2016

2

CMA Interim Report:

“We also see risks with a wholesale change to a

regulatory framework. There is a risk of harming

competition, for example, if such a change results in

extending, rather than reducing, the scope of

regulation beyond the currently reserved activities

without justification. It is likely that wholesale reform

would result in significant design and transition costs

and a period of regulatory uncertainty."

Regulation:

A robust cost-benefit analysis is carried out

on the regulatory

change

Market-driven

solutions explored

A clear problem

is identified

‘Looking to the Future’ Consultation

– what will it mean in practice?

Two Codes of Conduct

Code of Conduct for

solicitors

Code of Conduct for

Firms

Two tiers of solicitors

Regulated entities

Unregulated entities

LPP Conflicts

Consumer Protection

Consumer confusion

Reputational risks

07/10/2016

3

Unmet Legal Need

“Legal need is a contested concept. It has

been used to refer to occasions when people

experience legal problems but fail to obtain the

services of lawyers to assist with resolution.

However, it is generally recognised that legal

mechanisms do not always provide the most

appropriate route to solving problems that

raise legal issues. Attempts to define legal

need have therefore come to place emphasis

on understanding of options and preferences”

*‘How people resolve legal problems’ - Pascoe Pleasence and Nigel Balmer

Consumer survey results

We surveyed over 1600 consumers:

- 97% think their legal advice should be confidential.

- 67% don’t want their solicitor to work in the same business

as the solicitor from the other party.

- 86% said solicitors should have indemnity insurance.

- 87% think the money they pay up-front to a solicitor should

be kept in a separate account.

CMA Market Study

“Information also plays a role in driving competition, as

consumers need to have accurate information on price and

quality in order to make informed purchasing decisions.”

CMA Interim Report, July 2016

“The existence of reserved activities may have an impact on

competition by only allowing providers to practise these

activities if they meet regulatory requirements. However,

they may be justified for consumer protection reasons.”

CMA Interim Report, July 2016

07/10/2016

4

Growth ahead

New legal firms to top

1000 this year

The total number of firms is stable at

about 10,500

78% who chose to seek advice were

satisfied with both the quality of formal legal advice given and the

outcome58% of firms are

planning growth in the next 5 years