'Ch ch ch ch changes' - ahead for law firms
16 October 2017
I don’t watch the X Factor, though that might change if there’s a Bowie week before Christmas. But I happened upon one of my children settling down in front of it last Saturday night, and it got me thinking. There were a number of chairs. As far as I could tell, if you were sitting on one of the chairs by the end of the night you were through to the next round and, therefore, a potentially life changing future. But there were less chairs than the number of contestants and so, in a fiercely fought battle of key changes, only the best and most competitive got through. Some had to entirely change their song and their style and adapt to the demands of a huge, baying audience in Wembley Arena, as well as Sharon Osborne.
Why did it get me thinking? Because the results of our 26th Annual Law Firms’ Survey 2017 show that law firms are really no different from the contestants on X Factor (bear with me on this!). They face fierce competition from each other, ever more challenging demands from their own baying crowd, i.e. their clients, and, most critically, only those willing to react, adapt and change have a chance of succeeding in the future. We have even called the report ‘A time for change’.
As we move beyond 2017, we believe the pace of change will accelerate like never before.
The impact of new competition is growing, and this year’s weakness in Sterling has given US rivals the edge in competing for talent. But perhaps the biggest challenge comes in recognising and preparing for the impact that technology will have. Changes are already underway, and it’s a good job, because technology will impact all aspects of law firm operations, from service delivery, to business support and staff recruitment and retention.
Watch this video where I give a quick 60 second update on this change and how law firms are going to need to adapt in the future.
With change, of course, comes opportunity, and yet our 2017 Law Firms’ Survey reports that in many respects law firm performance has plateaued. UK fee income has increased by only a few percentage points and vital action is needed to future-proof the shape and operation of the sector.
One area that has garnered enormous press coverage over the last year is gender and ethnic diversity, and it is here that the survey holds up a large red flag. It shows that very few firms are significantly improving in this area, with the proportion of female partners still below 20%. The most proactive firms are recognising the need to analyse their data to understand from a diversity perspective how talent flows in, through and out of the firm – this in turn should highlight where more intervention is necessary.
Disappointingly, only 20% of Top 10 and 8% of Top 11-25 firms currently intend to make changes as a result of the new gender pay gap reporting requirement. Firms need to be conscious of the possible reputational impact of having a significant gap and how this will impact future recruitment, as well as influence clients who are increasingly expecting professional advisors to have diverse and balanced teams.
And that brings me on nicely to arguably the most important factor for any law firm’s continued success. Ultimately, we firmly believe that the winners of the future will be those who best respond to the needs of clients, rather than their own internal needs. Above all else, clients want efficiency. They also want an integrated global service, simpler and more digestible output, providers with deeper understanding of their business, and processes to which their in-house teams can actively contribute.