Collaborative Legal Practices Manchester Forum

1. Collaborative Legal PracticesManchester Forum Facilitated by Allan Carton 17 & 19 August 2010

2. Agenda • Introductions • The initiative • Opportunities to improve business • Level 1 • Level 2 • Issues, options and solutions • Next steps

3. Allan Carton • Director of Inpractice UK and MSC • 10 years – solicitor • 2 years – national network (LawGroup UK – CharterGroup UK) • 18 years - consultancy • MBA (Manchester Business School ‘95) • Specialist Areas • Changing mindsets • Business and IT strategies • Market research for law firms and legal sector • Fee earner technology strategies and technology led legal services • Business process development • Marketing databases and CRM Articles & Publications • Law Soc Gazette, Soc of Computers & Law, Independent Lawyer, Leeds & Yorkshire Lawyer, Venables Online, Lexis Nexis.

4. 10 Consultants

6. Introductions – 17th August • Cecilia O’Donoghue – www.harryboodhoo.co.uk - cecilia@harryboodhoo.co.uk • Dominic Hester - www.dlhsolicitors.co.uk - dlh@dlhsolicitors.co.uk • Jonathan Barham - www.latimerlee.com - jb@latimerlee.com • Peter Carey - www.sedgwick-phelan.co.uk - peter.carey@sedgwick-phelan.co.uk • Tony Carter - www.harrisontownend.co.uk - annmarieravenscroft@harrisontownend.co.uk • Andrew McHale – www.mchaleandco.co.uk - andrew.mchale@mchaleandco.co.uk • Mark Gough - www.jonesgough.com - mark@jonesgough.com • Michelle Garlick – www.weightmans.com - michelle.garlick@weightmans.com Could Not Attend, but have confirmed that they want to be involved: • Heidi Maguire - www.heidimaguire.com - heidi@heidimaguire.com • Ron Pundick - Rothwell & Evans - ronpundick@rothwellandevans.co.uk • Stephen Durham - www.cuttles.co.uk - tas@cuttles.co.uk

7. Introductions – 19th August • Richard Williams - Licensing Legal (Licensing) - row@licensinglegal.co.uk • Rudi Kidd - Gray & Co (Media) - rudi@grayand.co.uk • Sunil Mohindra - Mohindra Maini (Commercial) - s.mohindra@mmsolicitors.co.uk • Hilary Kenway – Motoring Lawyers - hilary@motoringlawyers.com • Andrew Sherwin - www.quill.co.uk - Andrew.Sherwin@quill.co.uk Could Not Attend, but have confirmed that they want to be involved: • Lynda Spiby-Parry - Thomas Mansfield (Employment) - lynda.spiby-parry@thomasmansfield.com • Gary McIndoe - Latitude Law (Immigration) - gary@latitudelaw.com

8. Overall Picture – England & Wales, 2007

9. Project Objectives ... Help to ... • Manage the inevitable transition in the structure of the legal profession - assist the sector to re-shape itself. • Create a system whereby firms can go into a transitional phase which will follow the market trend (as opposed to seeking to distort it). • A feasibility study • To research and develop the potential opportunities from changes in the market place that are affecting the Legal sector now and which will continue to affect it in the future. • Support to pull together the next stage of thinking based on actual meetings with the sector. • Develop further thinking documents (with an action plan), presentation and business proposal. • To create a model (or actual?) structure for the grouping of law firms. • Road test the model • Get potential firms lined up

10. Geography a limitation for now

11. Business Drivers – per Stephen Mayson • The Legal Services Act reforms provide new opportunities for doing things differently, and better – in clients’ interests, in the public interest, but also in your own interests. • The prime directive for organisations is to do more with less — more functionality, more computing power, better security, higher availability and business continuity, better global accessibility, and more storage capacity. And at the same time, there are demands to cut IT expenses and reduce overall total cost of ownership. • The Co-operative Group’s 2009 business review reported that sales from the legal arm grew 45%, from £14 million to £20 million, with operating profits before significant items up £2.1 million, from £1.7 million to £3.8m. • Lawyers are in business, and have to be more business-like. They haven’t been sufficiently responsive to that call to be more cost-effective, to do things in different ways that either bring the cost down or provide better value for money. They haven’t been sufficiently innovative, and the world is catching up and overtaking them.

12. The Market Place • The Recession • Work Volumes down • Financial Squeeze from banks, shrinkage, margins • Dramatic reductions in firms allowed to handle legal aid • Legal Services Act • New competition – specialists, Co-op, Halifax • Shift in power from lawyer to consumer • Restructure opportunities – LDP, ABS • More options, need for flexibility • Compliance and Risk • Law Society, MLO, Commercial, • Resilience and DR • Compliance, clients • New Purchasing Methodology • Y Generation and www. • Clients more demanding • More knowledge, price competition, value for money • Traditional Competition Changing • More aggressive, bespoke to commodity,

13. Group Insurance Scheme - • 40 to 60 well-managed firms falling within the target categories you outlined during our conversation, could present an attractive proposition for a commercial insurer wishing to underwrite a managed insurance scheme for solicitors.  The attraction to an insurer would be that only firms meeting specified quality benchmarks would be insured and that claims would be handled to a very high standard.  The attraction to firms would be that by pooling their claims experience in a scheme targeted at similar quality firms, over time they would be able to achieve fairer premiums and/or better terms of cover.   • They would also benefit from high service standards from the insurance scheme.  A good model for such an insurance scheme to which you may wish to refer is our scheme for occupational pension fund trustees and administrators, OPDU (www.opdu.co.uk). In OPDU the members use their combined purchasing strength to secure favourable terms from underwriters without mutually carrying the insurance risk.  The members ensure the delivery of strong service standards from the managers through an Advisory Council elected by the members.

14. Initiatives • Minute Box • http://www.vimeo.com/14236362 (iloveminutebox) • Aquarium - eCatcher • Quality Solicitors • Connect2Law • Legally Better • Wigster.com

15. Business Trends – different responses • Restructuring of firms to operate better businesses. Mergers and growth in size of practices to achieve critical mass and to integrate operations with non-legal businesses. • Increasing introduction of performance measures, more pro-active management, more professional managers. • More rigid and demanding service standards and compliance requirements. Pressure to control costs, streamline operations and increase flexibility of operations. Get lean, get focused on the business. • Demand for more flexibility and agility in catering for new relationships. Increasingly complex financial arrangements • Increasing demand for E-communications and electronic data transfer. Introduction of XML and .net initiatives to achieve integration of data and business more easily. • More mobile and flexible working with 24/7 availability • Increasing number of distribution channels for legal services. E.g. “Get” the telephone and online – and do it right

16. The Legal Environment • Lawyers struggle with vision and with innovation. Find it difficult to imagine different and better ways of working. Need to be helped to see it and feel it. • Lawyers (particularly in smaller firms) do not collaborate easily; otherwise they would probably be working in a larger practice already. Although at a high level, partners will say how open they are willing to be with other lawyers, competition inhibits them when it gets to detail. • Any new type of organisation has to be focused on delivering whatever it is that clients value as cost effectively as possible. Lawyers often pay lip service to this, not realising how far off the mark they can be. • Where lawyers now generally understand what practice and case management systems do (even if they are not fully utilised), there is a huge gap in understanding how hosted IT systems work in practice. • Lack of time to commit to any project is a killer. Other urgent, but (probably) less important matters that are easier to handle are the easiest escape route to avoid difficult issues.

17. What can we do better than the Co-Op • Client Relationship • Local connections • Personal connection • Specialist knowledge • ....

18. First-time Client - Client makes first purchase Advocate - Client generates additional referral dollars Majority Client - Client selects your company as supplier of choice Suspect - could the Client fit the target market profile? Relationship Timeline Loyal Client - Client is resistant to switching suppliers; strong positive attitude to your company Repeat Client - Client makes additional purchases Prospect - Client fits the profile and is being approached for the first time Acquisition Role: Finding and winning the right Clients. Marketing & Sales Activity Retention Role: Keeping the right Clients. Client Service/Service Delivery Development Role: Growing the value of the right Clients. Up-selling, Cross-selling & Down-selling Building Client Relationships - Roles

19. Managing Relationships and Referrals • Microsoft Dynamics CRM • CRM4Legal • http://crm.simmans.com:5555/loader.aspx • crmlawa • crmlawb • crmlawx

20. Advantages of Niche • Perception as an expert in the field. • Focus will build genuine specialist knowledge and experience • Charge higher fees • Dominate the local market by focusing the message - not diluted. • Promotion is easier as you will understand your target matter better. • Focus on a targeted audience - easier to know publications, events, what they really value, so you can adapt accordingly. • Networking easier and more effective. Meeting the right contacts relevant to your sector, who will be interested in what you do. Know your niche clients inside and out will also help you understand their needs. • A clear message about what you do, who you do it for and how they benefit, you will be remembered. • Referrers of work will find it easier to recommend your services • The niche area doesn’t have to be the only area of work you handle?

22. Geographic Exclusivity, business in common • The benefits almost exclusively about sharing one way or another to improve “operations” – where a geographic spread of similar practices can bring operational benefits where they operate in geographically exclusive areas and there is no need to go out find new business as it is queuing at the door. Here we envisage solutions for: • High street specialist criminal practices with the right geographic spread enabling them to band together to bid for contracts and perhaps associate with barristers and to cover courts efficiently. These may operate within their own “exclusive” geographic territory • Legal aid / publicly funded practices servicing the needs of less well off people with a small high street practices each handling a range of similar legal issues. These may be more broadly based practices operating within their own “exclusive” geographic territory.

23. Worktype Exclusivity, clients in common • Groups of niche firms, complementary services • Add shared marketing and business development capability to the operational improvements, where one firm can introduce their clients (subject to compliance) to other practices who handle areas of the clients needs (perhaps not just legal) that they do not cater for. • Niche firms targeting • Higher value individuals • SME’s – small and medium sized enterprises.

24. Outsourcing • Reception • Cashiering • IT – hosted? • Compliance • Promotion • Transcription • Law Costs • Legal Work (peaks and troughs?)

25. Collaboration • Compliance – forward looking • Training • Improve business development • Lexcel • Document Storage • Greater Manchester Chamber bulk buying – 17% savings • Legal aid contracts • Banking arrangements • Conveyancing • Other online services

26. Joint Ventures • Barristers on criminal contracts • Financial Services • Lead Generation

27. Services focused on client needs

28. SME’s - perceptions

29. SME Issues

30. SME’s – Need Lawyers?

31. SME’s – where they go (multiple options)

32. SME’s – Informal Advice

33. Online Services

34. CollabCo Questions & Issues • How collaborative – how integrated? • Who leads – is there a dominant player • Growth – start small, few, local – expand? • Agree to share client data (need evidence of client consent) • Limitations on “Creep” into other areas • Consistent compliance and standards (Supervisory?) • Finances - revenue, costs, savings • Ownership – relative voting rights • Company limited by guarantee (internally focused), Recognised body(externally focused)

35. QuestionsAllan Carton www.inpractice.co.ukblog.inpractice.co.uksolutions@inpractice.co.ukTel: +44 (0) 161 929 8355

36. Why Do Law Firms Want Hosted? • Compliance • Need to demonstrate business continuity and DR • High availability needs because of system dependence • Capital cost v Revenue spend • High demands on limited budgets • SaaS culture • Latest versions • Start ups • Extended working hours and mobility • Enhance networks and support hours • Expertise requirement v employment challenges • Moving on from managed service – still a demand (cost perception) • Work prioritisation • Added value for profitability and clients v Keeping system going

37. Reserved Legal Services • The exercise of rights of audience - appearing as an advocate before a court; • The conduct of litigation - managing a case through its court processes; • Reserved instrument activities - dealing with the transfer of land or property under specific legal provisions; • Probate activities - handling probate matters for clients; • Notarial activities - work governed by the Public Notaries Act 1801 • The administration of oaths - taking oaths, swearing affidavits etc.

38. Solicitors in practice, 2007 • 15,694 separate organisations employing solicitors • 10,114 solicitors’ firms in England and Wales (1.1% increase, 2006) • 85.9% of solicitors’ firms have four or fewer partners. • 42.6% of private practice firms located in London and SE. • 27.6% located in London in 2007. • London firms employed 42.5% of all private practitioners. • The 1.9% of firms with 26 or more partners employed 29.8% of all principals and 40.2% of all solicitors in private practice. • Sole practices account for 44.0% of firms, but employed only 8.0% of all private practitioners. • The largest firms, with 81 or more partners, had 2.1 assistant solicitors per partner compared with between 0.4 and 1.6 in the smaller and medium-sized firms.

39. CollabCo – Legal Documents • Memorandum and articles of association of management company; • Management agreement between management company and participants; • Agreement between participants for referral fees (insofar as not dealt with in (ii)); • Agreements for hosted IT services.