Now that covid-19 vaccines have been developed and distributed in our community, will we see a return to pre-covid-19 days in the way law firms operate during 2021?
Most firms dealt remarkably well in both the first and second lockdown, many taking advantage of the government funding schemes and furloughing staff; and found that fee earners could actually work effectively from home.
There were, of course, some negatives: higher professional indemnity (PI) premiums for most firms and a wave of redundancies for good quality non-fee-earners, as well as for some in senior positions such as chief executive officers (CEOs), marketing and business development managers.
We are still facing uncertain times and although, for many firms, the turnover has dropped - so have the overheads and costs, making many firms more profitable than before the pandemic. The end of 2020 could not have arrived sooner for most people, but the changing face of the way legal services will be delivered in the next few years should not come as a shock to firms and their clients.
Firms who embraced technology and home working do not intend to return to a fully functioning city or town centre office. Breaks in leasehold premises are being examined with many firms considering the need for such space. The downsizing of office accommodation should be high on your agenda when considering your future strategy.
Fee-earners have proved that they can work effectively from home. Despite the need for social interaction around the office coffee machine and water cooler for peoples' mental health, working from home does not have to be every day.
Many firms tell me a return to the office will be two to three days per week for partners and fee earners with shared facilities, therefore reducing the physical size of the office space required.
We have all accepted the world of Zoom, Teams and Skype, as have our clients. The need for travel and face-to-face meetings will not return to pre-covid-19 levels. While we all need human interaction (and this will return in due course with meetings, conferences and events starting again this year), there is a change in attitude towards travelling and the insistence that fee-earners must be in the office each weekday from 9am to 5pm and beyond.
Partners and fee-earners have proved to be highly effective using these new adapted communication methods; and I suggest they will become part of our world in the future.
Firms that have adapted well to reducing overheads and costs should consider what this next stage could mean to the profits of the business and what they should be thinking about now.
For many of the above reasons, there was a resurgence in outsourcing services during 2020. For example, human resources (HR) and employment issues, some secretarial functions and finding new ways to market the legal services offered by the practice.
Firms have recognised that the full time HR director who still uses an employment specialist for the more complex issues. can be easily outsourced on a retainer basis - and at a much lower monthly cost.
Receptionists and support staff have become virtual in many firms. There has been a corresponding growth in smaller businesses offering a virtual assistant to firms. Again, if used only when necessary this can reduce the monthly overhead considerably - further developing the argument against expensive office space.
I am aware of some firms that have introduced sector-specific virtual marketing using their email databases to invite clients to virtual meetings on a specific topic. In fact, one particular firm has maintained the same turnover as it had in 2019 by using this method.
Driving traffic to your website is also a way to utilise search engine optimisation. By looking carefully at the trends nationally and in your own local area, you can target both existing clients and new clients. For example, once the housing market was released from its shackles last summer and the stamp duty reduced, there was going to be a spike in conveyancing.
Also, lockdown has put an enormous strain on families and relationships and there has been a steady increase in marriage breakdowns. These are just two areas that if targeted correctly would bring in additional work.
This year will have other challenges, for instance, the deferred payment on VAT and tax will have to be paid back and the repayment of coronavirus business interruption loan scheme (CBILS) and the bounce back loan scheme (BBLS) will begin. There is no doubt that we will have a recession at some point and controlling costs and overheads will be an essential part of your future strategy.
However, as the recovery begins is it time to consider a more radical approach to driving down the overheads in your practice?
We know that conveyancing has had a resurgence since last summer. However, conveyancers have been overworked, so what better way to assist them than to take the administrative functions away?
File opening, searches and post completion and all elements of the work which, although essential to the transaction, can be offshored to professional organisations. I am aware of one full-service law firm that has doubled both its turnover and profitability in conveyancing alone during the pandemic by offshoring these functions.
It has allowed the firm to take on considerably larger amounts of work because these administrative functions are being removed from the individual conveyancer. The cost saving in offshoring is considerable, with an average 40 per cent cost reduction in the above functions.
The data you hold has become an increasingly valuable commodity and - as firms must realise - in its true value. This does not just mean the information you hold on existing clients, but also the will bank that has been sitting there unused for years.
I would argue that this data needs to be analysed regularly and each firm should have a digital strategy. Let's look closer at this most underutilised part of a law firm's data: the will bank.
Many well-established firms hold several thousand wills on behalf of their clients. Yet because this data has been left in storage either physically or in a database for several years, it is not usable.
The number of conversations I have had with solicitors' firms which have good intentions of writing to these clients and updating the wills and generate new business, but it's never been achieved because the day job got in the way.
This data cleansing of a will bank can be outsourced, and the data delivered back will be individuals who can be marketed to. Such examples of sector specific marketing can only be achieved with cleansed data and it is simple: if you are holding client wills, then because of this pandemic we know that circumstances have changed. This means the increase in upgraded wills, lasting powers of attorney (LPAs) and trusts have grown exponentially.
But the fact is, this increase has largely been driven by the client and not the firm itself.
We have also seen a rise in the numbers of financial services businesses involving themselves in law firms, either purchasing them in an alternative business structure (ABS) or in a joint venture - or merely acquiring the will bank. This data is cleansed remotely and then marketed to generate substantial fee income.
Larger firms invested their time during 2020 to look for ways to improve the way they operate using the core values of the firm and asking all fee-earners to develop curiosity around the traditional ways of practicing.
The best ideas seem to come from the bottom up rather than the partners/owners forcing change from the top. Encouraging your fee-earners to come up with ideas needs to be rewarded in some way. This recognition could come in the form of promotion.
This is not the time to think things will go back to the way they were before covid19, you have to innovate and develop new ways of working.
The solicitor was once considered an expert and charged for their time. In this new era, the client will dictate what they want: it's no longer a matter of charging time at an hourly rate, but rather, what value does the client place on the outcome?
There has been a lot written about AI, with most firms thinking it's only for the large practices. However, we are now seeing new entrants into this space who have algorithms written for most legal processes.
AI has developed significantly in the past few years and we have seen prices fall to manageable levels for anything that can be processed. Look at the traditional services you offer and think: what could give you an affordable cutting edge over other firms?
There are algorithms already written for fast track road traffic accident work, personal injury, conveyancing and probate. The use of robots to perform standard functions will speed up the process and reduce the risk. I have recently seen with my own eyes a functioning robot dealing with the conveyancing process.
As an aside, I've also seen an algorithm writing a play. You begin the process with simple data such as names and places and the outline plot, and the algorithm does the rest.
AI has arrived for all and will change the way legal process is delivered.
A radical approach to change
What covid-19 has given us is the desire to change the way traditional legal services have been delivered. The investment in robust IT systems, the success of home working and the reduction in the need for city and town centre office accommodation are the beginning of a radical approach to law firm management.
I know numerous firms who have used their CIBLS loan to pay for their increased PI premiums. But assuming the hard insurance market continues, how are these firms going to pay for their renewals in October with no government support?
The major banks are all looking sceptically at law firms and the banks' exposure to traditional overdrafts and loans. I'm aware of one bank which has already taken the decision to withdraw from the legal sector making their head of professionals and 400 staff redundant. What message does that send to their solicitor clients?
We have seen new innovative funding for solicitors in a form of discounting invoices, where the invoice is funded at a rate to 80% up front and when the payment is received a small charge is deducted from the remaining 20%. We will have to think carefully how we fund our firms in the future.
If the firms' partners and leaders lack the appetite for these sweeping changes, they must consider now what their options are.
This radical approach to change must consider the cost savings obtained in business process outsourcing (BPO) and Legal Process outsourcing (LPO) for all the firms' processed services.
Firms must recognise the value of the data they hold; cleanse that data so it can be used; and think of the new ways of marketing. Remember that your clients will demand a different service standard.
Covid-19 has accelerated change that should have happened many years ago - it's never going to go back to how it was.
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