All Change

Q&A Stephen Mayson

Now that the Legal Services Act’s wheels are in motion, what processes will be implemented to drive the legislation forward?
At the moment nobody quite knows exactly what the Ministry of Justice intends to do but my guess is that the first hit on the ‘go button’, as it were, will be the appointment of the chairperson of the Legal Services Board. That appointment, I think, will shape what happens, how it happens, and how quickly. Clearly, the personality, experience and views of the chosen individual will be very influential in how the legislation progresses.
As for the rest of the processes, if you look at the Act there is a timetable built into it, in the sense that once the Legal Services Board is in place and operational will come the really interesting element – alternative business structures. These require a licensing regime and there are processes set out in the Act to create this. Once this stage is complete, interested parties will be able to apply for a licence. However, I would guess that we’re not likely to see the full alternative business structures on the street until around 2011, maybe even 2012.

What kind of individual do you think is likely to take on the role of chairman of the Legal Services Board?
The government seems to be very keen that the first chairman of the Board should not be a lawyer. That might translate into someone who has absolutely no experience of the legal profession and the regulation of legal services, or it might mean that it is someone who has that experience but is not necessarily a qualified lawyer. There is potentially a huge difference between these two types of appointment.
The board itself will have a certain combination of lawyer and non-lawyer backgrounds. The type of influence that we get from the board is bound to be heavily determined by that background and experience.

Along with overseeing all regulations within the Act, what will be the main responsibilities of the Legal Services Board?
The Board’s main role will be to oversee the regulations set out by the Act. However, a really important part of how it does that is what overarching policy is put in place for the regulation of legal services, plus how it sets the framework and the priorities within which the frontline regulators are going to work. Everyone is expressing that, in terms of ‘light touch’ or ‘heavy touch’ regulation, there is still a big question mark over how far into the detail of day-to-day, frontline regulation the Board will want to go.
My feeling is that there is going to be a lot of pressure on the Board to get alternative business structures into the marketplace as soon as possible. That in itself is a huge project and, if you put it alongside establishing a general regulatory framework and the Office for Complaints, there is an awful lot of work to be done. If these things are going to happen quickly it would almost, by definition, be a light touch as the Board wouldn’t get through such an agenda in a timely way by drilling down into a lot of detail.

To what extent do you think that there will still be some resistance to the changes from certain law firms, despite the legal and regulatory requirements?
From some firms there will be huge resistance. There will be denial and some people will still say that the changes are fundamentally wrong and should never be allowed to happen. But that debate is over. The question is no longer ‘will it happen?’ – it is happening. The question now is do you want to be part of it and do you want to take advantages of opportunities the act will bring to companies and law firms? Or, do you want to separate yourself and run the risk of, not necessarily going out of business, but certainly serving a declining market?

What would you say are the main opportunities for law firms?
The opportunities to bring different types of people into ownership, whether qualified lawyers from numerous practice areas or individuals who are not qualified at all, and also to increase the value that those people can deliver to law firm clients. Think of a healthcare professional in a personal injury practice, or counsellors working in a matrimonial practice. There is much value that can be added if firms think laterally about bringing that value within the business, rather than running it in a consulting relationship alongside it.
Additionally, the opportunity to finance the business by using different forms of equity or debt is another potential opportunity.

Most larger firms have been formulating their marketing strategies with the Act in mind for some time already, but what should firms really be doing now?
The first thing they need to work out is which market they are in. One of the things that is increasingly clear and will become more so as the new market evolves, is that it is not a single market for legal services. Firms need to distinguish which market they are in and the extent to which they can combine being in different markets. For example, you could get away with running a commodity retail practice that does volume convenyancing and wills, and so on, and you could run that alongside a legal aid contract that requires the same processes and techniques. However, it would be very difficult to run either of those alongside something that is also targeting small businesses or mid-sized corporates, because the way you obtain those clients and service them in the new market will be fundamentally different. You will need different people, different technology, different pricing and different systems. Trying to do all of that within the same business is a target that very few law firms will be able to meet.

Which factors will influence how firms select which markets in which to position themselves?
The starting point is to ask ‘which markets are we strong in already?’ as that will determine the credibility you have to be in any market and will predetermine the resources you need to be successful. It will also dictate whether or not you have got the right type of culture in place. If you get any of these assessments wrong, you run the risk of either staying in a market you’re not suitable for or trying to get into one where you don’t have enough credibility.

This is where marketing and business development professionals come in – they will have an important role to play in steering firms through change.
Absolutely, in principle they have a role to play. My question, based on history, is whether the firms that need them to play this role will enable them to do so. If they’re allowed to, which they should be, they’ll have a significant responsibility in making the firms stand out in their chosen markets.

Marketing is recognised as a much more strategic function now. However, do you think that impeding cultural issues are still prevalent?
I think they are, although there may be an element of challenge on both sides. I think there are certain types of business where marketing will be much more important in the future. These are in the retail market where, frankly, not enough law firms are thinking like retailers. They are the ones who need the inside experience that marketing professionals can bring. There are other types of work, typically more based on either personal knowledge or relationships, where marketing is different and it is much more about profile raising than it is about branding or selling. In those types of business and markets, marketing people need to understand these differences and not try to force, or even encourage lawyers, to do things that are inappropriate for those markets.

What are the main marketing skill sets firms should be exploiting?
It all comes back to which market you’re in – if you’re in retail you need retail marketers and that ability to get into a market at scale, while being able to influence a large number of people in a short space of time.
If you’re working more in the bespoke and relationship areas, the skill set is more in client relationship management expertise than branding and promotion.
Another point to emphasise, and it is an area in which marketers can have a disproportionate influence, is that whichever market a firm is in, it has to work out how it can add value to its clients and what they do. I’m not convinced that enough law firms are thinking about what is of value, what is of benefit to the client and what is going to sway their decision in their favour rather than another firm’s. I think marketing people can help the firm spend time in the marketplace with the potential client working out where that value is, what the benefit is and how to deliver it to the client. It doesn’t matter which market you’re in. Without this – if you’re not adding value or providing benefit – clients are not going to buy your services, or they won’t buy them a second time. ?

Stephen Mayson is director at The Legal Services Policy Institute.