We have had quite a bit of demand recently for more information on our bespoke services. This post is a case study illustrating how we would tailor our consultancy services to our clients’ specific requirements. And how the “obvious” answer is not always the right answer!
The client is a high street firm, with the old three-legged stool mix of Conveyancing, Legal Aid and General Private Client work. We were asked to help following a difficult period of more than two years. One of the founders had retired and not been adequately replaced. The Legal Aid departments in particular, had become very busy but had not been managed.
Matter starts were plentiful – but not all matters were being progressed satisfactorily to completion – and the Legal Services Commission had inadvertently overpaid the firm and wanted its money back – which was not available.
At the time we became involved, the firm was not profitable, not generating cash, was losing good people and, in some areas, was losing its reputation.
We did our initial analysis, but in this case extended it and interviewed around far more people than usual – not just partners and fee earners. We had to find out WHY things were so awry. We identified over 50 action points, grouped under key headings, including:
Financial management
Management of the partnership
People issues
IT
Negotiations with creditors
Our ratio analysis showed that the most important underlying issue was people performance – too many people producing not enough output.
The obvious remedy was to cut back and institute immediate staff cost savings. However, we had identified that previous cutbacks had caused much of the problem. Low profitability had led to low salary reviews and non-replacement of good people who understandably left.
So we did the exact opposite of the obvious. We put in place a very, very focused programme of file completion, billing and collection. This not only generated the cash to satisfy the lenders but also meant that the remaining good staff could be paid more. Those staff not up to scratch were replaced with better, albeit in some cases more expensive, staff.
What we did was to turn a vicious cycle of decline into a virtuous cycle of recovery.
We persuaded the individual partners to take responsibility for specific aspects of the recovery programme. One of the partners, despite a lack of accountancy training, successfully took responsibility (with our help) for hands-on management of the finances.
Within a relatively short period of time, all the creditors had been paid in full and the firm’s overdraft is well within manageable levels. Its reputation has been recovered, and in some areas the firm is continuing to grow and take on significant new clients.
If you would like to see more case study examples, please click here.
