1. Building for the future Peter Scott PETER SCOTT CONSULTING

2. PETER SCOTT CONSULTING Where are we now? The economy Legal Services Act implications Greater regulation and compliance PI insurers’ attitudes Technology Client needs are changing Greater need for resource A fragmented profession A need to become more competitive

3. PETER SCOTT CONSULTING The need to be more competitive “Competition is a process by which … services that people are not prepared to pay for, high cost methods of production and inefficient organisations are weeded out and opportunity is given for new…services methods and organisations to be tried” * Could this apply to the legal profession today? * Everyman’s Dictionary of Economics

4. PETER SCOTT CONSULTING Four management rules for tough economic times Partner performance Delivering business development Build loyal teams Make good use of downtime See attached article

5. PETER SCOTT CONSULTING Where are you now? What are the most important lessons you have learnt from this recession?

6. PETER SCOTT CONSULTING A chance to make a new start Which of those lessons will you use to build success for the future? Name one change which would make a greater difference to your firm than any other

7. PETER SCOTT CONSULTING Financial results are just the tip of the iceberg Hyperlinks Slick Graphics Nice Pictures Cool GUI Stuff financial results

8. PETER SCOTT CONSULTING There may never be a better time to face up to your sacred cows

9. PETER SCOTT CONSULTING Forward planning - focus on the fundamentals The kind of firm you want to be Your clients Your people How you can achieve your goals

10. PETER SCOTT CONSULTING How to develop a realistic vision of the kind of law firm you want to be

11. PETER SCOTT CONSULTING Strategy? ‘A realistic plan or course of action to gain competitive advantage; Which has clear and achievable objectives; and Uses available (but scarce) resources (existing or to be generated)

12. PETER SCOTT CONSULTING Differentiate strategy from… An unrealistic and unachievable wish list Implementation – the ‘making it happen’

13. PETER SCOTT CONSULTING ENTER ZONE OF UNCOMFORTABLE DEBATE MAKE DECISIONS FACE UP TO REALITY FOCUS ON BIG ISSUES MAKE IT HAPPEN Strategy is a continuous journey…

14. PETER SCOTT CONSULTING is a process of finding out: What your (current and prospective) clients value What your partners value Identify key skills and behaviours which enable the consistent delivery of your value proposition Developing a strategic vision in a partnership …

15. PETER SCOTT CONSULTING This will require leadership Thinking and visionary Challenging Inspirational A determination to implement change

16. Your clients

17. PETER SCOTT CONSULTING What does a law firm need to do to be successful? Gain competitive advantage

18. PETER SCOTT CONSULTING Competitive advantage “Competition is a process by which … services that people are not prepared to pay for, high cost methods of production and inefficient organisations are weeded out and opportunity is given for new…services methods and organisations to be tried” * How well do you know what your clients value? * Everyman’s Dictionary of Economics

19. PETER SCOTT CONSULTING Core issue to add value More than the competitors In a way which is regarded as valuable by clients Needs to be value clients care about - clients’ perspective - not yours

20. PETER SCOTT CONSULTING An integrated strategy is required External perceptions Internal attitudes

21. PETER SCOTT CONSULTING What do client’s want? “They always try to sell to us on price – but what we really want is to have a good job done at a reasonable price” Client feedback from a perception survey commissioned by a law firm

22. PETER SCOTT CONSULTING You will add value if… You provide clients with what they want – and more At prices they perceive to be value for money; and You do this better than the competition BUT for smaller firms to do this….?

23. PETER SCOTT CONSULTING How to compete with the best? Being small is not about being second rate - not a mirror image of larger firms - but must be able to compete with best of large and small in chosen markets But depth of resource may be crucial in some markets

24. PETER SCOTT CONSULTING Smaller firms need strategic focus They cannot be ‘all things to all men’ To be competitive requires focus on a client- type / work type mix Sharper focus on client/work types than larger firms wider focus than niche firms

25. PETER SCOTT CONSULTING Position your firm to provide value for money Client Perceived Added Value Client Perceived Cost High Low Ave X Suicide Zone

26. PETER SCOTT CONSULTING How can you find out what clients need? Ask them Commission a survey of clients and referrers Do your clients say you are adding value?

27. PETER SCOTT CONSULTING Some clients’ perceptions ‘I don’t think they show adequate interest in our business’ ‘They are not proactive with their own clients’ ‘They don’t think laterally’ ‘They never visit, and they should if they want to increase the quality of the relationship’

28. PETER SCOTT CONSULTING Some more client comments… We never see the partners Their response times leave much to be desired Their quality is patchy I don’t believe they have the resources They lack depth – if a partner is away, there is no one else

29. PETER SCOTT CONSULTING Lack of communication with clients can be the problem ‘Out of sight, out of mind. They must ensure regular communication’ ‘I am not convinced I have their message or why they are different’ ‘Their profile is very low – they need to create more noise in the market’ ‘They must not assume that people know what they do’

30. PETER SCOTT CONSULTING Lack of resource may make a firm uncompetitive ‘I don’t believe they have the resources’ ‘Sometimes they lack polish and quality in depth’ ‘Depth of expertise – I have only one partner to contact on a day to day basis, which is a little limiting…’

31. PETER SCOTT CONSULTING What can a law firm learn from such comments? Highlight issues that need to be addressed Partners should not go into ‘denial’ ‘they are not talking about us’! or ‘its not true’!

32. PETER SCOTT CONSULTING Finding out what your clients value… will identify the key skills and behaviours which will enable the consistent delivery of your value proposition But – are your partners prepared to adopt the values and behaviours necessary to enable the firm to do so? There may be a need to carry out an internal consultation

33. PETER SCOTT CONSULTING To add value in this way will require an integrated strategy External perceptions Internal attitudes

34. Your people

35. PETER SCOTT CONSULTING Your people Their values Why high performance has never mattered more

36. What do your partners really value?

37. PETER SCOTT CONSULTING Your values? What is valued in your firm? Do you reward what you value? Do you invest in what you value? What does it take to succeed at your firm?

38. PETER SCOTT CONSULTING The views of partners in one firm… We are not a united firm, but merely a collection of individuals We are too “gentlemanly” in internal operating style Is everyone prepared to put in the extra effort to make the difference? If not we should reward more those who are prepared to work harder Accountability needs to be spelt out and formally accepted by every partner

39. PETER SCOTT CONSULTING And some more from partners in the same firm… Some partners are seen as blocks to our making progress Some partners are too comfortable and not prepared to stretch themselves We should be a bottom line driven firm where every part of the firm should make its required margin There should be zero tolerance financial management

40. PETER SCOTT CONSULTING Is this a block on business development? “The only thing this firm values is personal billing!”

41. PETER SCOTT CONSULTING Why should I? Share my clients with my partners? What good will it do me? I will not earn any more whatever good things I do

42. PETER SCOTT CONSULTING Sharing clients Is it valued in your firm? Is it measured? Is it rewarded? (What gets rewarded gets repeated)

43. PETER SCOTT CONSULTING Internal attitudes - but why should I? To do this may require a shift in culture There will be a need to build a culture of sharing

44. PETER SCOTT CONSULTING Some useful questions to ask internally to gauge where partners stand on important issues Why do you come to work? What does this firm really value? What do you most like about this firm? What needs to be changed in this firm? Are we really happy only earning £[ ]? Are you prepared to let [Senior / Managing Partner] visit your clients to talk to them about the service we provide? List [six] things which would really make a difference to this firm

45. PETER SCOTT CONSULTING Are internal attitudes in your firm holding you back? Are you presently unable to add value to your clients because of internal attitudes and behaviour?

46. PETER SCOTT CONSULTING Is a lack of internal skills holding you back? Do your people all have the skills necessary to enable your firm to achieve its vision?

47. Building higher performance

48. PETER SCOTT CONSULTING Values Skills & Behaviours Performance Metrics–Quality/Quantum Performance Review Closing the Performance Gap Learning & Development Strategy Building higher performance

49. PETER SCOTT CONSULTING Where to start? Developing a strategy for driving up performance should not be a piecemeal exercise Every aspect of a firm should be looked at Needs to take priority because it is a barrier to your becoming competitive

50. PETER SCOTT CONSULTING Building higher performance The market place and your competitors set the standards Do you want to be a player in your market? If you really want to compete - need to build a CULTURE OF HIGHER PERFORMANCE - Need to examine WHAT KIND OF FIRM YOU WANT TO BE

51. PETER SCOTT CONSULTING The views of partners in one firm… We are not a united firm, but merely a collection of individuals We are too “gentlemanly” in internal operating style Is everyone prepared to put in the extra effort to make the difference? If not we should reward more those who are prepared to work harder Accountability needs to be spelt out and formally accepted by every partner

52. PETER SCOTT CONSULTING And some more from partners in the same firm… Some partners are seen as blocks to our making progress Some partners are too comfortable and not prepared to stretch themselves We should be a bottom line driven firm where every part of the firm should make its required margin There should be zero tolerance financial management

53. PETER SCOTT CONSULTING How many of you do not have any partners who… Are underperforming Have attitude / behavioural problems

54. PETER SCOTT CONSULTING How many firms have partners who… Are underperforming but could improve? Have attitude / behavioural problems and are unlikely to improve? If you identify the problem, the solution may identify itself

55. PETER SCOTT CONSULTING Why high performance has never mattered more Direct financial loss? Lost clients? Lost opportunities? Poor partner recruitment / retention? Poor staff morale / high staff turnover?

56. PETER SCOTT CONSULTING What do you do about the partner who is under performing or has an attitude problem? To do nothing should not be an option

57. PETER SCOTT CONSULTING Need to distinguish from… Contribution / reward mismatch (which may be the result of under performance) Reward mechanisms aim to fairly match reward to contribution NOT the way to deal with under performance

58. PETER SCOTT CONSULTING Distinguish under-performance from non- performance Under-performance Partner performance can in many ways be improved Reward can be matched to contribution Non-Performance Performance that consistently falls short of MINIMUM agreed levels? How should this be dealt with?

59. PETER SCOTT CONSULTING How to approach the problem How have you decided that a partner is under performing? What criteria and standards have you applied? What should partners be doing more of, less of or differently?

60. PETER SCOTT CONSULTING Building higher performance What criteria and standards will you apply in agreeing performance levels with partners?

61. PETER SCOTT CONSULTING Performance standards Your market place sets the standards Align your performance standards with your firm’s objectives - to enable the firm to COMPETE - to help the firm achieve its VISION

62. PETER SCOTT CONSULTING Do your partners know what is required of them? Are they clear as to their ROLES as partners? Do you agree business plans and targets with them every year? “but nobody told me I should be doing that”

63. PETER SCOTT CONSULTING Standards? Need to be communicated to and understood by partners Help needs to be given where necessary - coaching/mentoring - putting training in (its) place Communicate, Communicate, Communicate

64. PETER SCOTT CONSULTING Building higher performance – some of the challenges… How do you achieve buy-in to a higher performance culture? How do you break down the barriers to change? How do you build performance into the behaviour of partners?

65. PETER SCOTT CONSULTING The role of management in building higher performance Does your management have a clear brief? Is the style and structure of your management organisation appropriate? Does your management have the necessary skills? Is your management providing the LEADERSHIP required? Sanctions on partners may be required

66. PETER SCOTT CONSULTING How to get the best out of your people? Help them maximise their full potential – This requires investment in your people

67. PETER SCOTT CONSULTING Investment in your people requires? - Leadership and vision - Values - Training - Mentoring - Coaching - Empowering - Supporting

68. PETER SCOTT CONSULTING Investment in your people? For example Who has a ‘New Partner Programme’ designed - to bring people through to partnership? - and which continues throughout partnership?

69. PETER SCOTT CONSULTING Do you have transparent partner admission / progression processes? Do you have an associate / partner development programme in place? Do you ask your people about their career ambitions? Do you focus your investment in people to advance your and their objectives, rather than sheep- dipping people through training courses?

70. PETER SCOTT CONSULTING Do you have mechanisms to prevent the attrition of high quality performers?

71. Are you investing sufficient in your people to realise their financial value to your business?

72. How to achieve your goals

73. PETER SCOTT CONSULTING You have developed a realistic plan, but… will you have the resources on your own to achieve your goals? If not, then consider merger

74. PETER SCOTT CONSULTING It is a fast changing world and law firms need to constantly adapt The economy Legal Services Act implications Greater regulation and compliance PI insurers’ attitudes Technology Client needs are changing A fragmented profession A need to become more competitive Greater need for resource

75. Is merger the Answer?

76. PETER SCOTT CONSULTING How consolidation between firms in a fragmented profession can help build competitive advantage

77. PETER SCOTT CONSULTING You will add value that clients care about if… You provide clients with what they need At prices they perceive to be value for money; and You do this better than the competition ‘They always try to sell to us on price – but what we are really looking for is a good job to be done at a reasonable price’

78. PETER SCOTT CONSULTING This will require RESOURCE Resource which individual firms cannot realistically and at an economic and acceptable cost provide themselves

79. PETER SCOTT CONSULTING Is lack of resource making you uncompetitive? This is what clients said about one firm – ‘I don’t believe they have the resources’ ‘Sometimes they lack polish and quality in depth’ ‘Depth of expertise – I have only one partner to contact on a day to day basis, which is a little limiting…’

80. PETER SCOTT CONSULTING The need for resource Often a lack of resource of expertise (client perception surveys will show if this is the case) Often a lack of financial resource (inability to invest in your people and in the business)

81. PETER SCOTT CONSULTING How can merger help to provide us with the necessary resource? NB – merger is not a panacea - often just a better platform on which to build a more competitive law firm - not about size for the sake of size

82. PETER SCOTT CONSULTING Merge for the right reasons Merger is not a strategy – it is a means to an end – to gain competitive advantage Merger can help build RESOURCE – to enable a firm to provide its clients with what they want Firms need to ask themselves: “Will we be able to achieve our objectives on our own” If not, then merger may need to be considered

83. PETER SCOTT CONSULTING Breadth and depth of expertise Actual – to provide clients with the added value they require Perceived – by clients compared to competitors = a greater ability to win and service work – which neither legacy firm could have done

84. PETER SCOTT CONSULTING Financial resource Access to greater financial resource can help to: - Provide for quality leadership and management - Provide for necessary infrastructure to underpin provision of high quality legal services: - KM - risk management - HR (a people business!) - Technology - Build market share and profile to attract - better quality people - better clients

85. PETER SCOTT CONSULTING Greater expertise and finance can help to provide greater reach / access to new and larger markets: - Geographic - Sectors - More ‘quality’ client types - More premium work types

86. PETER SCOTT CONSULTING A catalyst for change A consequence of a merger is that it can provide the opportunity for firms to implement changes which could not have been made otherwise.

87. PETER SCOTT CONSULTING But something else is also needed… A Vision

88. PETER SCOTT CONSULTING A Vision To build a BRAND which can begin to compete with larger, more developed firms for better quality, higher value work leading to greater competitiveness and profitability

89. PETER SCOTT CONSULTING The BRAND must reflect the substance of the new firm in terms of … QUALITY of its people and clients How it ADDS VALUE Satisfied clients are the only measure of success and are key to building a profitable professional firm

90. PETER SCOTT CONSULTING The scale of a new firm may help to enable… the new firm to be developed at an acceptable economic cost to each constituent firm - which the individual firms could not on their own provide

91. PETER SCOTT CONSULTING Quality Resource to enable the new firm to… Attract and retain the best talent

92. PETER SCOTT CONSULTING Quality Resource to enable the new firm to… Provide clients with the depth and breadth of expertise they now require, where and when they need it

93. PETER SCOTT CONSULTING Quality Resource to enable the new firm to… Build the quality management which will be required to successfully compete in the future

94. PETER SCOTT CONSULTING Quality Resource to enable the new firm to… Provide the necessary infrastructure to underpin the effective provision of high quality professional services demanded by clients

95. PETER SCOTT CONSULTING A Vision To build a BRAND which can begin to compete with larger, more developed firms for better quality, higher value work leading to greater competitiveness and profitability

96. PETER SCOTT CONSULTING Is this a Vision you share?

97. Any questions?