Murray Mathieson thinks he knows, so much so that he’s been operating his own company for over a year in order to train lawyers how to be more effective.
“Having dealt with all kinds of lawyers worldwide, both as a lawyer myself and a client, it irritated me as to why some firms and lawyers are effective and others not so.
“In fact, it’s not usually for the reasons most think – the quality of their technical expertise – but all sorts of other issues such as communication, price management and general lack of client awareness.”
His own private practice career included a spell in the corporate department at Brodies and a firm in the British West Indies before positions in-house at organisations including British Aerospace, the Scottish Football Association where he set up their legal department from scratch, and the Barr Group, where he had a similar remit.
The aim of his business awareness consultancy, Positively Legal Ltd, is to focus on client awareness, and get lawyers to put themselves, “behaviourally as well as culturally” in the shoes of the client. Clients include law firms, in-house legal departments and business people who deal with lawyers, to give them an enhanced understanding of how to instruct and communicate with lawyers.
“The principle for law firms, and indeed in house legal departments, is being able to deal with their clients effectively and if they can do that and start to develop an enhanced client awareness, including the environments in which clients operate and their perception of the lawyer’s role, it will all add up to better service delivery.”
From his experience, in-house lawyers generally get it right more often than their peers in private practice.
“They live in the business environment and can adapt and adopt the principles of the commercial environment in which they’re working.”
Mathieson’s perception is that expectation management is one of the most difficult jobs lawyers have in dealing with clients.
“In their corporate literature firms talk about how they are the best, how they understand the business needs of clients, are commercially pragmatic, innovative and communicate effectively. You can see these same messages in virtually every firm website.
“But all firms have good client relationship lawyers and others who aren’t so good. For clients, practical application of these principles, consistently across the firm, is the key. Most law firms are improving - they know there are issues regarding client communication and many of the bigger firms have been reorganising along corporate lines with chief executives and finance directors in place. However the problem remains that most firms are benchmarking their services and service delivery against other law firms rather than the corporate world.”
As will be the case for many in-house lawyers, at BAe Mathieson was able to get a good idea of the complete business structure and he says many firms would do well to look at commercial and industrial organisations and learn from their practices – for example, in management sub contracting.
“In the normal commercial world, generally if a customer retains a supplier to do something for him then any sub-contractors are the responsibility of the supplier. If the architect or whoever goes out of business or doesn’t perform and as a result the supplier’s cost goes up, then that’s just tough luck on the supplier and does not affect the customer’s price.
“When legal firms are the supplier, they might say we need a QC for this and may or may not say how much it will be. They might give an estimate of £5,000, which then turns out to be £15,000. Very few lawyers take responsibility for managing the sub contractor – they merely expect the client to make the extra payment.”
Another area of commercial operation that legal firms generally don’t adopt relates to supply contracts – according to Mathieson that’s an opportunity lost.
“A typical example is if a client comes to a firm and says ‘we’re doing a PFI, how much will it be to provide legal services for the next two years, and the firm gives an estimate of, say, £150,000 from initial bid to completion, then the law firm turn round and say here’s a terms of engagement letter, will you sign it please. Yet the law firm will encourage the client to have a £75,000 supply contract between the client and his IT supplier legally reviewed and negotiated before signature.
“To me the terms of engagement is actually a supply contract and the sophisticated lawyer will actually sit down and, instead of it being a unilateral document, it will become a negotiated document and won’t be called terms of engagement.
“Instead it would form a supply contract and be used as an opportunity to negotiate terms, give the client a feeling of control and influence and a feeling that their needs are being catered for in terms of communication and protocols and the way in which advice will be given and perhaps the opportunity to control who will be in the team.”
Murray Mathieson acknowledges he has met a number of firms who are improving their terms of engagement, but has yet to meet any who view it as a supply or two-way contract in the manner he describes.
Part of that stems from a reluctance to enter into early communication about fees, with many firms and individuals opting to retain an air of mystique, often subconsciously because of lack of confidence and awareness, or embarrassment.
“What is frequently underestimated from the client’s perspective is the cost of time. The legal profession tends to emphasise what the legal fees are. To those running companies the cost of time is critical and firms which have an edge are those that can minimise the cost of time factor. That again will come down to the way they communicate with the client. The only way to learn whether they need or want a ten-page letter is to ask.
“When solicitors start quoting long tracts of law in their letters, the client usually isn’t interested. Normally all they want is the solution and preferably on one page.
“If you go to an accountant you assume he can count. Similarly clients assume the lawyer knows the law, and are not impressed by costly demonstrations of this knowledge.”
From Mathieson’s experience, the management of pricing often causes clients more grief than the actual amount they have to pay. It seems obvious – but businesses like certainty or at least as close to certainty as possible.
“In-house lawyers will recognise the situation where the MD comes and asks what’s your budget for next year and you say ‘I’ll guess at x but there might be unexpected litigation we can’t forecast’. All you can do is forecast on what has been done previously, what your current workload is, your company’s business plan for the next year, and build in a contingency.
“But lawyers must take into account that what businesses don’t want is a big surprise. For that reason, lawyers should try to move away from hourly rates as far as possible.”
He recognises that’s difficult to do in many circumstances, but insists that where there’s a three hour meeting to discuss a detailed transaction from which the lawyer emerges with ten action points, nine of which are substantive legal issues and one is a request for the current fee amount, the lawyer should give priority to the cost issue.
“The most critical thing coming out that room for the client is to know what the price is at that time. The lawyer’s bottom priority is acknowledging that and telling the client.
“There will always be factors outwith the lawyer’s control that makes it difficult to give a fixed cost, but there’s usually no reason not to give a cost on the basis that it might change if other things happen.
“The challenge for lawyers is getting out the mindset of estimates and hourly rates and the notion that the longer it takes, the more there is to be made.”
Mathieson takes the view that firms will naturally find the most efficient way of completing a project if doing it for a fixed price by adopting a project management approach.
“There’s still a negative feeling about the flow of information. But on any big deal in an industry environment, project teams will sit for maybe an hour or two on a daily basis to discuss issues. Lawyers are inherently uncomfortable with doing that – primarily because of the hourly rate syndrome which makes them think that time spent chatting with each other isn’t really ‘work’ because it’s not producing any discernible product.”
One suspects widespread adoption of that philosophy could be a long time coming.
In this issue
- The future of conveyancing
- Don’t underestimate the value of people skills
- Lawseal promises secure electronic communication
- Pragmatic approach in going to proof
- Creating the most positive relationships
- Website reviews
- Nothing but the net
- Technology to the rescue?
- In practice
- Plain speaking
- Book reviews