One of the benefits of being involved in a network that serves more than 370 Scottish legal practices is that you get a sense of the trends that are emerging in the market. A feeling, if you will, of the direction things are moving in, and of some of the issues that firms are encountering. In this piece I’d like to look at some of these trends, particularly in relation to extracting value from legal businesses, and to look at something I’ve touched on before, the importance of leadership and culture in the changes that we are facing.
To set the scene, most high street practices appear to be enjoying strong demand for services and good profitability. There is no immediate evidence that the future of high street firms is at risk. On the other hand, the burden of regulation continues to grow and remains an issue for many (particularly older practitioners), as do the increasing challenges of managing a firm. As such, exit and succession remain high on most business owners’ minds. As there is no open market for legal firms, it makes hard data difficult to find but there is a very evident spike, from my own experiences and research, in activity, particularly at high street level, in mergers, exits and sales, or at least attempts by firms to achieve these.
Sell up, or buy in
There appears to be an ever-growing acceptance that legal businesses have limited sales value, notwithstanding that many continue to provide a good standard of living for their owners with no real sign of that altering in the foreseeable future. Accordingly, we are seeing a growing move towards practice owners looking to extend their working lives to maximise the value from the business that they have built. This tends to happen in two ways. First, we are seeing firms being subsumed by larger organisations, relieving the owners of the regulatory burdens and providing a better environment for them to move away from the coalface of fee earning and management to the more relaxed areas of business development and consulting. This though is not without its issues, most of which I addressed in a previous article, “That is not how we do it here” (Journal, October 2016, 18). In summary, the biggest challenge to success is invariably the clash of cultures that can arise.
I want to focus this time, however, on those in the second category: the ones seeking to build and develop their own teams and the next generation of fee earners, who will continue to develop the firm and who will, in time, provide the consultancy income and exit routes to the current business owners. Austin Lafferty summed it up well when I asked him about it. He said: “Finding someone to pay a large sum for a legal practice is a little like winning the lottery. Developing home-grown talent is far more likely to lead to a more secure exit route.”
If you look through the websites of the various legal employment agencies, including that of this venerable publication (www.lawscotjobs.co.uk), you will see a message repeated in the adverts placed there: “Progression opportunities for the right candidate”. Likewise, my own conversations with high street firms often revolve around attracting, training and retaining key staff. Whether considering trainees or PQs, the issues are the same: how do we attract and develop staff who will perform as we require, and once we have done so, how do we retain them?
The residual effects of the 2008-09 recession with its subsequent low trainee numbers still continue today, and combined with the increased activity in the legal market mean that the availability of qualified staff is low. Attracting them, particularly to outlying areas, remains challenging, although not impossible.
Leona Murphy, of Morison & Smith in Lanarkshire, believes that “You will always get people, but will they be the right people?” Billy Smith, of Complete Clarity in Glasgow, has likewise found it challenging; his experience is that “There are few qualified solicitors who have developed the management and business development skills we are seeking for the future.” Austin Lafferty had a positive slant on the issue: “While it is harder for high street firms to attract young solicitors, with the right culture and approach it is not as challenging to retain them.”
The wrong message?
Money is of course a tool in attracting staff, but it is at best a blunt one and potentially creates issues both with profitability and with unsettling existing staff. On the other hand, quality of life, quality of work, work-life balance and being involved in a well run business are high on the list for younger solicitors.
Firms are of course sensitive to this, but are they getting their messaging right? The simple answer is, for many, no.
I recently trawled through the Lawscotjobs and RFPG websites and job sections. The adverts ranged from a few brief lines to longer, more detailed specifications of the role. None indicated that flexible or remote working was an option, nor indeed did any give the salary on offer. I might be cynical, but phrases like “small friendly team” or “salary commensurate with experience” would do little to tempt me from my current role unless I was already committed to a move.
Frasia Wright, of Frasia Wright Associates, had some interesting points to add: “Flexible and remote working are no longer seen by PQs as something special: many have become used to it in their current roles.” She went on: “There are trends also to note. Recently qualifieds look for city-based firms, ideally of a certain size; those in the three to five years’ PQ will start to consider prospects and location; and those at more senior levels, if tempted to move, are much more discerning and are looking to be satisfied that you are a well run and profitable firm.”
Trainee pros and cons
While there is no silver bullet to the problem of attracting qualified staff, in a challenging market do we need to raise our game? Some firms have decided that “growing their own” is a better course to pursue. Taking on trainees and developing them will, in time, create fee earners who are very much part of the business and who share its culture and values. Billy Smith had an interesting take on this: “When I employ a PQ, I don’t know what they don’t know and that can cause issues. With a trainee I start with the proposition that they don’t know and I can train them from there.” However, both Smith and Norman Geddes, of Frazer Coogans in Ayr, agreed that one of the biggest challenges for smaller firms looking to develop multiple trainees was the time that they are required to be away from the office for CPD and TCPD, and that the training was often not particularly well tailored for the specific needs of their firm. A real cost for the practice with, at times, little benefit. Leona Murphy added that the loss of a trainee once qualified, or a PQ, is a big blow to smaller firms, considering the investment in time and effort that is put in.
So, whether we attempt to attract qualified staff or bring through our own trainees, we know that there are risks that we need to address. Generally, all of the firms I spoke with were positive about the benefits that a trainee adds to the business. Norman Geddes’ experience was that trainees were “cost-effective and create a valuable future resource of trained staff for the firm”. Austin Lafferty added that “trainees learn the professional skills quickly and bring with them a range of skills and energy”.
Retaining and developing them in the business are perhaps then the most pressing issues. All too often I hear: “We had a trainee once and it didn’t work out. We’ll never do that again.” Yet if that was our response to problems generally, we would all still be living in caves. The cost of attracting and integrating staff is high. Losing them creates many challenges, potentially including reputational ones. It is worth, then, perhaps asking ourselves why do staff leave, and what can we do to minimise the likelihood of this happening? Much of that is down, I believe, to how we manage our people.
Across many businesses I hear a similar theme: great practitioners do not make great managers. Top salesmen, for example, seldom flourish when they are promoted to running sales teams. The skills that make them good at selling are not the skills required to manage, inspire or teach.
Almost every article I read on good managers states that they evidence the following skills:
- A good coach
- Does not micromanage
- Team first
- Results orientated
- Communicates a clear vision for the team
- Not afraid to admit when they are wrong
- Leads by example
- Is fair
Few legal practitioners, however, exhibit all of these skills. Most of us have picked up such management tools as we have through life experience or from previous employers (who themselves had even less training in the area). Most of my interviewees were modest about their own management skills; and when asked what their “main skill” was, the answers ranged from “empathy”, “working collaboratively” and “caring”, to “leadership” and “patience”.
Failure to retain staff invariably lies within at least one of the key areas above. Most high street legal firms don’t employ large numbers of staff, so identifying trends and corresponding weaknesses can be difficult. It is however essential to obtain honest information on how staff are feeling about their roles on a regular basis and, in the event of the worst case scenario, why they have decided to leave. A once a year review is unlikely to address these points. There are also very few firms where staff will feel comfortable enough to raise the issues that are really troubling them, particularly if they stem from the management points above. “That’s what the staff partner is there for,” I hear you say. Possibly, but is that role being proactively carried out? Are there regular staff meetings, not just to hear what is wrong, but to consider what can be improved and done better? Leona Murphy reminded me that when things don’t work out is when you really notice “the time, effort and expense that you have put in”.
Billy Smith believed that “creating real opportunities” was key to retaining staff. Vincent Hilland and Kathleen McNulty, from Hilland McNulty, suggested that “rewarding them well and ensuring that they feel valued and included” was essential. Frasia Wright focused on “communication, and creating opportunities to be involved in how the business develops”. A focus on the needs of the employee does need to be at the centre of our thinking if we are looking to retain the good ones.
Perhaps the review next time should be from the team on how well the managers are carrying out their roles?
I retain a very positive view from what I see at the moment, and what I’ve heard, with thanks, from the various contributors. More though does require to be done to promote the high street as the fabulous opportunity that it is to younger solicitors. I, along with others, have been involved with providing talks to Diploma students on the benefits of life at a high street practice. Perhaps as a profession, though, we do need to raise our game when considering how we attract and retain our staff. Time spent on management, staff and even our own personal development can at times feel unproductive. Who knows, though, your retirement might just depend on it.
HM Connect takes a stand at several university law fairs on behalf of high street firms. If you would like to be involved or if you have a position within your firm that you would like to promote, please email email@example.com.
In this issue
- The Judicial Disappointments Board
- Hiding in plain sight
- Food for thought on the drug front
- Salmon farming law must change
- People on the move
- Managing compliance to drive legal practice success
- New practice area: financial services – asset management
- Resilience: your flexible friend
- Appreciation: William Denys Cathcart Andrews