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If it ain’t broken…

If it ain’t broken…

Almost every day in the legal press there is another commentary or analytical piece about the traditional law firm model being broken. To use the fashion parlance, it is very much ‘on trend’ to suggest that clients will increasingly be driven towards ABSs (even a floated one like Gateley), the big 4 accountants, or even corporates or a private equity house for advice. But most law firms have been around a (very) long time. Who’s to say they still won’t be around in another century (or more)?

They do say actions speak louder than words – so what is happening in practice? More of the changes have been behind-the-scenes in the project or process/knowledge management sphere. Pinsent Masons and DLA Piper have been investing heavily in this space. These are changes designed to increase efficiencies and, thus, reduce costs. Mergers, it seems, are still the most popular way to grow within the industry. Just look at Dentons – a third merger announced just in 2015. Shakespeares and Martineaus, Weightmans and Ford & Warren, the list goes on. Hardly a new strategy.

So why is the partnership model sustaining? A lot comes down to the way clients choose their advisers – through relationships with people. And excellence will always trump efficiency in their decision making, unless cost is a major factor. Many of the firms who are seeing their market share grow are those investing in their client relationship efforts. And, it could be argued that the structure is not the problem; rather the lack of (non-lawyer) professionals in leadership roles in law firms and the lack of permanent capital to allow long term investment and planning. Though, admittedly, this is something ABSs were brought in to rectify. Perhaps, then, that’s why it’s been more evolution than revolution, with the ‘alternative’ structures hardly taking over the industry. Even those converted to ABS status already have hardly made radical changes, often just bringing in a few new faces to the board or taking on but hardly pushing on with capital investment (the likes of Slater & Gordon aside).

A law firm is a complex entity; it is difficult for outsiders – even business people – to understand the model. It’s fundamental to understand the business before you try to devise a structure for it. On the whole, it has sustained well as a relatively stable model within a uniquely conservative professional industry (and has been especially lucrative for partners). It wouldn’t work elsewhere. And who says the corporate model is better? Is it any wonder the appetite for change isn’t always there? If it ain’t broke…

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