Change management is crucial to manage fundamental sector issues. Amid the current macro headwinds, lawyers tend to be cautiously optimistic and weathering the volatility well. Learning to adapt and operate in that sort of environment could be key to future-proofing operations.

With many law firms at a crossroads, it’s critical to prepare now to help meet evolving consumer expectations, attract and retain talent, and identify optimal corporate structures for the future.

Are you thinking about how you could adapt and pivot to face today’s challenges? Here are 10 key take-aways from industry specialists: 

The structure you opt for can have wide-ranging implications, from how you operate and how much tax you pay to culture and future flexibility. There could be good commercial reasons for becoming a director/shareholder in a limited company, for example, including a more tax-efficient business structure, improved cash flow, and less risk. But companies and LLPs aren’t bullet-proof.

• Choose the option that best suits your own circumstances in terms of risk and reward.

Do you enjoy a spirit of partnership – collaborative capital, collaborative teams? Can your people generate enough income – are they business builders or ploughing their own furrow? As the role evolves, can lawyers go out and generate business when demand is there?

• A professional services business that’s fit for the future may need to think about how to accommodate lawyers and non-lawyers so they have a capital stake in the business, and how to involve and motivate the next generation.

Passion and strong values within employee-owned firms, where people are indirect shareholders in the business and enjoy some tax benefits, could contribute towards more scalable growth. Employee-owned trusts can be more productive, with more engaged and motivated people who have a stake in the revenue line. 

• As a way of aligning business interests, could employee ownership be an option for you?

Use your job description to communicate what your firm can offer. Take a step back and take a good look at your business and then demonstrate specifically how you can help candidates develop – this is how we can grow, these are the benefits of working for us, this is what we need from you. Then match the skillset that’s required against the skillset that’s offered.

• Have you considered your target candidate? Where and how are you going to find them? Appeal to the individuals you’re trying to attract and then start building a relationship.

Could you scale your admin costs by making processes leaner? This could help with attracting and retaining talent by freeing up cash to offer competitive salaries. You might also consider upskilling your paralegals to take on work a conveyancer traditionally does, to aid business growth and improve cash flow without hiring.

• Build internal relationships and engagement by talking about performance or expanding professional development opportunities, especially for those who feel they’ve hit a ceiling.

Digital resilience, where people can work from anywhere and collaborate easily. Customer experience, which is key in a competitive market like legal. And the drive to increase efficiency, to increase productivity, reduce costs, and potentially improve your cash-flow position.

• Legal tech has shifted from being a large capital expenditure to something that is more easily deployable, intuitive and less costly.

Can technology replace people? It tends to replace or optimise parts of a process, so think about whether automation is an opportunity to find new ways of efficient working and drive profitability. Be open to setting up a user group to test new solutions with your customers and embracing new technologies.

• If your firm holds lots of data you’re an attractive target to cybercriminals. Make sure you have the skills and processes in place to keep on top of cybercrime and educate everyone within the firm about good housekeeping and understanding risks.

Changing how you charge for your service using value pricing means having a conversation with a customer and agreeing a price that is considered fair to both the customer and the law firm. It’s not a time-based measure. Potential benefits include better relationships with customers, payment terms up front, a focus on outcomes and results, not inputs, and hours.

• Consider whether changing to value pricing could help your firm become future fit.

In the battle to attract and retain talent, differentiating your values, governance, flexibility and ESG (environmental, social and governance) credentials could be an opportunity for firms. As the journey towards net zero gathers pace, if you can tangibly demonstrate how you’re reducing emissions, investing in things like sustainable pensions, or supporting your community, you could gain competitive advantage.

• Is your business strong enough to grow and generate enough cash in the future? It’s important to regularly communicate this sort of financial information for all stakeholders.

Bringing together great firms could be an opportunity, but it’s important to consider professional indemnity insurance for protection in terms of succession, exit and consolidation. Ensure plans and preparations are made early on. You can also use marketing strategies to attract, engage and retain clients. Think about what your clients really want and where they want to be and keep them close to you.

• Make sure the funding is there, identify gaps in the market and ensure the management structure is strong.

David Weaver, Head of Professional and Business Services at the bank, says: “I think the challenge for everyone in the current environment is finding the time to focus not just on the immediate now, but also on the longer-term vision. Thinking about sustainability in its widest sense and having a FutureFit mindset, which ultimately helps to build better businesses as a result.”

Viv Williams, Viv Williams Consulting concludes: "This is the plan to follow if you wish to secure your firms future and prepare your practice for any challenges ahead."

With thanks to the speakers:

Viv Williams, Viv Williams Consulting

Neil Parker, NatWest Markets

David Weaver, NatWest

Dave Hodgetts, Talbots Law

Angela Caiger, Shaw Gibbs

Michael Burne, Bamboo

Ian Robinson, Morgan DeVere Recruitment

Prashant Maharaj, Anza Solutions

Tracey Longbottom, Legl

Darren Rowley, M2C

Shaun Jardine, Big Yellow Penguin

Steve Din, Doorway Capital

Rafiq Ahmad, Anthony Gold Solicitors

Neil Pointon, Howden Insurance Brokers

Al Gardiner, Honey Legal

Brian Cullen, MAPD Group

Rachel Tombs, Orion Legal Marketing

Learn more about how professional services firms are future-proofing their operations here.