Managing law firm profits is often about more than just the financial aspects of management – managing people can be just as important to long term profitability.
Supply and Demand in the Legal Market
Just as the market for legal services has undergone a transformation over the past couple of years, so the market for lawyers has changed almost beyond recognition. Where previously demand for skilled solicitors drove a huge supply of highly capable young people into the sector, that demand is now greatly outweighed by supply.
With competition for training contracts and newly qualified positions more intense than ever, it may be concluded that power lies overwhelmingly with the buyer (i.e. the firm). This does not, however, mean that firms can afford to underestimate the importance of their people and the culture of the firm.
The Attraction of Small Business Law Firms
Indeed, small and medium sized law firms have a unique opportunity to recruit and retain outstanding people, and this should not be wasted. With huge competition for positions at larger firms, smaller and regional firms are also seeing a significant rise in applications. This is a chance for these firms to emphasise their unique selling points, and to offer a rewarding career and lifestyle that will help them build a profitable and successful partnership for the future.
Although such SME law firms cannot offer the same financial rewards as the big city players, they will often enjoy advantages that the culture in the city cannot match. Swifter progression to partnership, greater choice of cases and clients, and more responsibility and client interaction earlier in their career are all significant differentiators.
Developing a Successful Partnership
Moreover, small and medium sized firms can hold on to more of the talent they recruit with a focus on involvement, training and support. The firm’s rewards system is often a good place to start, and rewards should not be focused purely on hours billed. Rather, credit should be given for business development, such as bringing in new clients and cases, to underline the firm’s common goal.
Training, not just in technical areas, but also in management and business development, should be a priority. All staff need to feel that they have the support they need to perform their role to the best of their ability. The management team should also take opportunities to gain feedback from across the firm, and everyone should celebrate the firm’s successes together.
Life will not get any easier for small and medium sized law firms, but those with a focus on law firm business management and with a culture of engagement will be the profitable and successful partnerships of the future.
For more detailed analysis, please see our article Solicitor Training and Support: Your Most Valuable Asset
