The effects of the Legal Services Act continue to permeate through the legal profession and for barristers, perhaps, the potential changes they face are in many respects the most dramatic. The attached article from 'the barrister' (issue 43) highlights a number of issues, but certainly barrister only partnerships appear to be in the offing and chambers need to look at not only how they are organised for the 21st century, but also whether amongst their number they have people with the commercial and business skills to lead them through the necessary changes.
Wake Up, Wake Up
As far as the Bar in England & Wales is concerned the very structure, from the foundations up, within which business is done is changing but, to all outward appearances, the Bar and its constituent chambers do not seem to be responding to these changes.
By Ian Dodd, Director, Bar Futures Chambers
The Legal Services Act has laid out the landscape for the legal profession and allows ingenuity and entrepreneurial adventure wide scope. A few chambers are rising to the challenge and new initiatives and markets, some overseas, are being explored with commendable vigour. Most, though, seem to have missed the advent of the LSA, failed to realise its potential and consequences and have slipped back into a light torpor hoping that it will all just go away.
The bad news is that it won’t and those who think it will could be lost as other providers of advocacy and services hitherto associated with the Bar are planning to take over. The good news is that there are tremendous opportunities for the Bar to forge new and durable links with clients, find new markets and income streams and create a profitable future.
Well before the current economic problems commercial financial pressures were growing but some businesses chose to disregard them. Those in charge of publicly funded work did react quickly, though, and the reduction in fees for family and crime work began long before Lehman Brothers catapulted world economies into free-fall
Even the slightest acquaintance with the Bar’s client base reveals systemic and significant problems and they are all to do with the lack of money. There may be rearguard actions by the Bar which might make the cuts in fees more palatable but the plain fact is that cuts are here to stay and will deepen. Whichever government is in charge the pleas of the Bar will go largely unheard as the gaping chasm in the nation’s finances and the ever-growing National Debt cannot be ignored. With the prospects of a 20% VAT rate, more and more taxpayer’s money required to improve basic services and all the other more urgent calls on the public purse the chances for improvements in fees looks bleak. Any utterances from the Conservative party to right the wrongs need to be regarded as election promises and treated with care and suspicion.
The Bar’s main client base, solicitors, have gone through a bad time and the survivors will emerge leaner, meaner and determined to get more value for money. The growth of some solicitor’s firms in the past few years has seemed unstoppable and even the smaller players were taking on the expensive trappings and staff levels of some of the Magic Circle. As hard times bit many seemed not to appreciate the possible depth and length of the recession and planned only for the near future and failed to take the opportunity to redesign their businesses for the aftermath. Consequently, some are suffering death by a thousand cuts and, having taken the easy savings, cutting support staff, marketing, training and bonuses and putting pressure on suppliers’ prices, then had to move into losing fee-earners in areas where worked had collapsed, conveyancing, property etc, then into making savings in core areas like salaries, paying commission only, losing good fee-earners etc. When all that proved not to have worked those partners who had, for good corporate reason, left their own client base behind and couldn’t support themselves on their own fee income came in for a culling. The legal press has carefully catalogued all of this and also the demise of those solicitors’s firms for whom it was all too late. This may not be the deepest recession the UK has suffered but it’s been the best reported.
All these pressures will, if they haven’t already, work through to barristers’ fees and, unless fees are set or capped, clients will be looking to save money from their work with the Bar.
Additionally, many major solicitors’ firms are refining their money-saving general business process outsourcing (BPO) activity to more specific legal process outsourcing (LPO) solutions. Whilst these are, currently, restricted to things like secretarial, research, file preparation tasks etc more solicitors will sign up and begin to move their LPO search up the complexity/value chain. How long might it be before advocacy work becomes an outsourced activity as solicitors’ fee earners relinquish jobs that aren’t core to bringing cash into the firm? The Bar needs to be alongside its clients as this happens and contribute positively and constructively.
The regulatory regime for the Bar looks set to be overhauled and there needs to be some determination and urgency about the considerable reforms required to the way the Bar is regulated if barristers are to be empowered to compete with those who would do their work for them. A modern code of conduct and more flexible approach to the way chambers are structured and how they can best deal with clients are needed to allow forward-looking chambers to take advantage of the opportunities presented by the LSA. The BSB recently announced that they had accepted the recommendations of their ABS Working Group concerning barristers and partnerships. Welcome, even though they were delayed, as these are, they go nowhere near the fundamental reforms which are required to enable The Bar to compete with and work alongside its solicitor clients. Barrister only partnerships (BoPs) are restrictive and discriminatory and the signal failure to address the management training and experience needs required to ensure that barristers are fit to be managers of LDPs is staggering. The recently published Bar Training Regulations comprehensively and definitively covers all the professional requirements but there is, as yet, no companion publication on commercial and business matters.
The LSA allows for a Head of Legal Practice (HoLP) and a Head of Finance and Administration (HoFA) to run chambers in a professional and business like way. It is significant that the BSB have not addressed this fully yet and that no chambers has installed this useful arrangement. Whilst many chambers have recruited experienced
business managers with backgrounds other than the Bar there is the risk that these will be a wasted asset unless they are given the authority to go with their responsibilities.
Seemingly, one such recruit recently resigned after a short period as a chambers CEO saying, “I didn’t get an MBA to be a janitor”.
Ian Dodd, Director,
Bar Futures Chambers 3rd Floor
5 New York Street
Manchester
M1 4JB
DX:709046 Manchester 7