1. Resources – Key to survival and competitiveness as a sole practitioner Peter Scott PETER SCOTT CONSULTING www.peterscottconsult.co.uk

2. PETER SCOTT CONSULTING In a fast changing world all law firms need to constantly adapt to meet the challenges they face The economy Client needs are changing Greater regulation and compliance New competitors with deep pockets PI insurers’ attitudes Technology Succession issues Others? A need to become more competitive

3. PETER SCOTT CONSULTING The need to be more competitive “Competition is a process by which … services that people are not prepared to pay for; high cost methods of production; and inefficient organisations are weeded out; and opportunity is given for new…services methods and organisations to be tried” * Is this a process which applies to sole practitioners (and other law firms) today? * Everyman’s Dictionary of Economics

4. If you can do that then you can gain a competitive advantage over your rivals It is what places you ahead of your competitors, allowing you to generate greater sales and profits and retain more clients than your competitors. But it means you have to do things differently and keep innovating to stay ahead “Worryingly, with almost a third of law firms outside the top ten recording disappointing net profit margins, our view is that unless these firms can radically restructure their business, their short to medium – term survival must be in doubt” PWC – 2013 Report on the UK legal market

5. PETER SCOTT CONSULTING Challenges facing law firms today The economy Client needs are changing Greater regulation and compliance New competitors with deep pockets PI insurers’ attitudes Technology Succession issues Others? A need to become more competitive Greater need for resource

6. Resource(s) ‘Something to which one can turn for help or support or to achieve one’s purpose’ ‘Available assets’ (e.g. we pooled our resources) Resourceful ‘Clever at finding ways of doing things’ What resources do you need as a law firm to be competitive?

7. Why clients choose one law firm over another - most important factors (recent law firm example)

8. PETER SCOTT CONSULTING Resources needed? People – to provide expertise Financial to provide for people and infrastructure to underpin provision of high quality legal services: - service standards - financial management - compliance and risk management - business development - Technology - KM - other? Time

9. PETER SCOTT CONSULTING How can sole practitioners realistically and cost effectively provide for these resources? How do you currently do so? Some possibilities – -Outsourcing? -In-house? -Collaboration? -Others?

10. Outsourcing What services do you outsource? Back office? Risk and compliance? KM IT? Financial management advice? Premises? Marketing? Reprographics? Secretarial? Others? NB – compliance requirements in relation to outsourcing

11. SRA Code of Conduct – chapter 7 O(7.10) ……. where you outsource …….. any operational functions that are critical to the delivery of any legal activities, you ensure such outsourcing: (a)does not adversely affect your ability to comply with, or the SRA’s ability to monitor your compliance with, your obligations in the Handbook; (b) is subject to contractual arrangements that enable the SRA or its agent to obtain information from, inspect the records (including electronic records) of, or enter the premises of, the third party, in relation to the outsourced activities or functions; (c) does not alter your obligations towards your clients; and (d) does not cause you to breach the conditions with which you must comply in order to be authorised and to remain so.

12. In-house Zero based budgeting (ZBB) - Do we need this overhead? - If we need it, what is the most cost effective way to provide it? Carry out a cost / benefit analysis Outsourcing Vs in-house?

13. “Collaboration” association cooperation working together coming together for mutual benefit How many of you are ‘collaborating’ with other sole practitioners?

14. Collaborative strategies 1. Networks Who is a member of a ‘network’? The term includes franchises, alliances, groupings which can be as tight or as loose as required – examples? At the heart of a good network is the ability to provide its members access to resources which no individual member can provide on its own – examples? Membership of a network is merely a means to an end – to enable its members to gain a competitive edge

15. Networks – some issues to consider Objectives in joining? What benefits will you get out of it? What will it cost? Ultimate destination? How tight or loose? Compatible ambitions with other members? Are priorities the same? Will there be client added value? Branding?

16. www.keystonelaw.co.uk Frequently Asked Questions What is Keystone Law? In what way is Keystone innovative? How does this improve the service provided by Keystone? What is the pedigree of a Keystone lawyer? Who are Keystone’s clients?. Collaborative strategies 2. Virtual firms

17. Collaborative strategies 3. Cost sharing / pooling resources Who does this? Examples? - premises costs - bulk buying - office infrastructure - people and services - IT - knowledge - others?

18. PETER SCOTT CONSULTING Challenges facing law firms today The economy Client needs are changing Greater regulation and compliance New competitors with deep pockets PI insurers’ attitudes Technology Succession issues Others? A need to become more competitive How are you managing these?

19. Why clients choose one law firm over another - most important factors (recent law firm example)

20. Are there alternatives if you conclude that you are unable to adequately resource your business on your own? Consolidation between firms in a fragmented profession can help build resource and competitive advantage consolidation is not a strategy – it is a means to an end – to gain competitive advantage NB – consolidation is not a panacea - often just a better platform on which to build a more competitive law firm - not about size for the sake of size

21. PETER SCOTT CONSULTING However size is important in that the scale of a firm may help a firm to develop and to provide the resources needed at an acceptable economic cost to each constituent firm which the individual firms could not on their own provide. Examples?

22. PETER SCOTT CONSULTING Consolidation might help you to Attract and retain better talent to fill skills gaps Better service (and retain) clients by providing greater depth and breadth of expertise and service delivery Build your management and infrastructure

23. PETER SCOTT CONSULTING Is consolidation a vision of the future for some?

24. PETER SCOTT CONSULTING How are you now planning to …. provide the critical resources your practice now needs? to compete with larger, more developed firms? To survive and prosper

25. Any questions?