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There is no doubt that the legal sector has recently undergone a period of extensive change and reform. The effects of those reforms are only just beginning to be seen now, and where some firms have prospered, others have not, particularly those with exposure to legal aid and personal injury work.
It has become increasingly difficult to maintain profitability and generate cashflow, even for those firms which are prospering. Management must understand the drivers of profitability, and the key tools to unlock cash.
A strategic review is a key first step to understanding your business as it stands now. It highlights what is working well, and key areas for improvement. A business which does not have the flexibility to change and adapt to current market conditions is unlikely to succeed. More and more law firms are beginning to undertake strategic reviews in some form in order to unlock cashflow and to develop their business for the long term future.
A strategic review examines all areas of the law firm including:
A review assesses the current procedures and what is happening in practice (often two different things), and then makes detailed suggestions, department by department, on specific improvements that need to be made.
Realistic and measurable targets and KPIs are suggested that if met will have a direct correlation to the cashflow and profitability of the firm.
Communication throughout a review is vital to ensure that staff feel valued and involved. The process requires their honesty and input. It is their day to day activities and decisions which can have a direct financial impact on the firm. Without their understanding and involvement, many of the recommendations will not succeed, and suggested targets will not be met.
Speaking in general terms, it’s a process which sounds very simple in practice, but all too often, every day business life gets in the way of conducting a process such as this internally.
Even the most successful of law firms benefit from a strategic review of some description. The markets in which firms operate are fluid and changing and there is always room for improvement and to learn and develop new ideas and processes.
If you would like to discuss how such a review would benefit your practice, please contact Rosy Ware at firstname.lastname@example.org.
Rosy is a Legal Sector Manager at Armstrong Watson, specialising exclusively in acting for lawyers. The legal sector team advises law firms throughout the UK on strategic, structural and other business improvement issues as well as providing efficient accounting, tax and SRA accounts rules services. Further information can be found at www.armstrongwatson.co.uk/legalsector.
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