1. LEGAL INNOVATION Steve Carter Head of Professional Practice Group Northern Region

2. New developments in an old profession

3. “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten,” “Don’t let yourself be lulled into inaction.”

4. http://www.bakertilly.co.uk/sectors/professionalpractices/professional-practices.aspx

5. New developments in an old profession Structures Funding Delivery channels An environment for innovation

7. Consumer brands

9. Entrepreneurs

11. MDP’s

12. Expect the unexpected

13. Getting used to the new structures Some initial problems Shared premises – client confidentiality? Outsourcing – quality of service Conflicts of interest Governance – dominance by one person Nominee ownership – who is really in control

14. Structure – predictions 2020 The increasing complexity of law firm structures will challenge the regulatory framework. A fundamental review of what legal activities are regulated will reshape the market. Law firms and ABSs will adopt marketing strategies much more reminiscent of retail operations. Consolidation in the market will be driven by demand from big brands to have white-labelled legal offerings.

15. People – predictions 2020 Who a ‘lawyer’ is will change significantly as a range of roles develop within legal businesses that do not involve directly providing legal advice; non-lawyer owners in particular will look at what a person brings to the business, not their qualification. Skills such as project and process management will be critical to the future success of firms. Regulation will focus on the entity’s activity, rather than the various individual legal professionals. The idea of partnership bestowing ownership rights in the same way as it does currently will die out.

16. Funding

18. New focus on underlying performance What does a law firm make What are they worth and why What are the real maintainable earnings? Not all firms are the same even though on the outside they might look it What makes the more profitable ones do better is thinking like a business. Internal management is an anathema to many partnerships

19. Funding – predictions 2020 As both investors and law firms better understand each other’s requirements, investment will flow more readily. A process of natural selection will thin out those without the backing to compete. A ‘trade’ in law firms will emerge as investors look to exit – with few law firms business planning more than three years ahead, fears over the regular three-to-five-year investment cycle will recede. Law firms will adopt proper performance metrics

20. DELIVERY “Multi – channel” “Multi – dimensional” - Affiliations by supporting other brands Move away from hourly rates

21. Delivery Are the old ways the best? Separation of process from value Non contentious services – access the library? On-line help as needed? Unbundling the service Pay as you go Scope of the retainer – nothing is insurmountable

23. Building Brands The key to brand is consistency of service If Co-op can deliver in legal services what they do in, say, funeral services, they will win.

24. Brilliant Law Bert Black - £82m fortune Why is he different? Run as a business Brilliant law – based on peoples search habits Fixed fees

25. New models Riverview law approach to commercial customers Start from scratch – what do clients actually want – then designed a service around it. Top customer support people Operating and customer service model End to end technology Low overheads

26. Challenges to traditional ways How much is an hour of your time really worth? Anyone know how charge out rates are set? Why is your rate for an hour what it is?

27. Starting from scratch What do customers want Where are the customers How do you get them What profit does the service deliver? What is the business risk? Is the return worth the risk? How much capital does it need? Who will provide the capital?

28. Survey of non ABS firms

40. FINAL THOUGHTS

41. Conclusions Most adaptable will survive Others will not Law firms will continue to fail in increasing numbers for a variety of reasons Scottish market is in a similar state to south Anglo- Scottish mergers is a trend LSA (Scotland) 2010 – identical logic to LSA 2007 49% rule – will it matter?

43. What of the future for the legal profession? In 2020 many current partners will be long past retirement age. What is “opportunity” for the next generation? Pay for their retirement? Buy their practice – what are you buying?

44. What of the future for the legal profession? “The legal sector has not had to change for hundreds of years as it has been a closed shop with high barriers to entry. Those have now changed. Innovators can come into the sector and do it in a different way.” And do it they will.

45. Contact details Steve Carter Tel: +44 (0) 161 830 4000 E-mail: steve.carter@bakertilly.co.uk While every effort has been made to ensure the accuracy of these notes, the information contained in them cannot, by its nature, be comprehensive. No action should therefore be taken without first seeking specific professional advice.

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