In this series of articles by Yarman J. Vachha, Managing Director of YJV Consulting, he highlights the legal scene in Asia, the changes to the legal industry and the different resources available to law firms for expansion.
Being a lawyer and managing a law firm are two different spectra and requires different sets of skills. 83% of law firms in Singapore are actually not the big law firm names that you might know but are smaller law firms with less than 5 lawyers.
All law firms are in different stages of development and sophistication which results in differing requirements and pressures. However, the common issues tend to be; tight or declining profitability due to, stagnant revenues and increasing costs, increasing competition for work and talent, disruptors coming into the legal market and fee pressures from clients.
In my experience, many law firms, including some large firms, are not efficiently managed and thus, are not maximising their full potential.
The importance of Business Professionals within a law firm
One of the main reasons for not optimising their potential is that many firms see their support functions as a “cost” rather than viewing them as an “investment”. Many firms still refer to the “back office” as “support” as they have a closed mindset and do not recognise these functions as “Business Professionals”.
If these professionals are properly selected and invested in, they will bring much value to the business. As an analogy, would you trust a lawyer to perform heart surgery on you? Highly unlikely! So why is it a good use of a partner’s time to run the finance, human resource or information technology etc. of a legal business? The chances are that this partner does not have the expertise to do so. The key point is that in a very competitive environment, it is important to have skilled professionals to provide advice on operational strategy and expertise in running the business.
Over the last two decades or so, firms that have recognised the need for professionals to assist in running the business have, by and large, excelled and generally play in more sophisticated markets. This does not mean that the partners (who are owners of the business) relinquish power or control – the key is to leverage off the expertise of the business professionals to maximise the potential of their business.
Where to start?
I firmly believe that there is a gap in the market, particularly in Asia and India, for consultants to advise law firms (and professional services firms) on all aspects of financial management, operational efficiency, pricing and pitching strategies, strategic planning, human resource policies, information technology rationalisation and improvement, remuneration structures, succession planning and mentoring of partners and staff.
I would however caution firms considering going down this route to choose wisely. Whilst there are many consultants out there, not many can boast having done, at a grassroots level, what they are advising their clients. Engaging a consultant with the relevant background and hands-on experience will bring much value and can help Firms professionalise their business operations. This will enable them to grow profitably, develop a strategy to sustain that profitability and to mitigate business and reputational risk. This is partly achieved through running a slick and well-managed business services function, having a sound business development strategy, educating lawyers to think about the legal profession as a “business” and establishing a sensible succession plan.
Take some of my recent work for examples. In the last year, I have assisted a major global law firm with the integration of their North Asian and South East Asian business by creating one business with a single, management, operating and remuneration structure. This was a complex project as it required integration between multiple offices and jurisdictions and created a single business with 2,000 staff. The biggest challenge initially was to bring the various parties to the table, and once an agreement was in place, to change mindsets at all levels of the organisation and to mitigate the inevitable post-merger risks. Interestingly, the technical aspects were relatively straightforward compared with the human dynamics. A tough job but very satisfying!
I am currently working on a full operational review of an international law firm with multiple offices in Asia and advising a medium size law firm in Singapore who are in potential merger talks with a foreign firm.
How long does it take to see results?
Based on my experience of the projects that I have worked on internally or externally as a consultant, success and the speed of this success are very dependent on the will of the management and the buy-in from the partners at large. There needs to be a mindset to change and the key is a real focus on the “end game”. Once there is a general buy-in, the change and the results can be quite revolutionary.
The first hurdle Firms need to get over is that to achieve their goals there needs to be an element of investment which, if made wisely, will mitigate future risks and improve the business considerably.
This article is written by Yarman J. Vachha of YJV Consulting Pte Ltd.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to a practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.