Training for growth

Rumours of the demise of the general practice, middle-sized law firm have long abounded as a series of dynamic niche practices have threatened to outmanoeuvre their more cumbersome counterparts in capturing new and growing markets.

Too small to engage in lucrative Yellow Book work, yet too large to quickly and stealthily position themselves to capture a niche area, for larger middle-sized firms in particular, attempting to operate along the stereotype model of the “full service law firm”, the question has long been where do they fit in, and even, are they an endangered species?

The answer, at least from the small sample of firms the Journal spoke to, appears to be an emphatic “no”. While some have found success in homing in on a narrow marketplace, for others there is no dichotomy in using specialists to underscore a general service firm.

Firms with focus

As a leading example of the specialist approach, the success of Turcan Connell might seem to indicate that “grow on what you know” is the way forward. Founding partner Douglas Connell attests to that approach.

“Looking around Scotland, some particularly successful firms stand out – Dickson Minto in corporate, Simpson & Marwick in litigation, Turcan Connell in private client. The distinctive feature of all of these firms is that they focus on a particular area of the marketplace.

“Since we are not competing with the large corporate firms, we enjoy a very strong relationship with Dundas & Wilson, Burness, McGrigor Donald and others. We are also providing technical advice to an increasing number of smaller law firms throughout Scotland. Referring firms of solicitors can introduce particular pieces of business – for example family law, employment law or technical tax and trust matters – to us and know that we will not be trying to pick up the general corporate or property work which their own firms do and wish to continue to do for these particular clients.”

A spectrum of client needs

Yet others remain unconverted and argue it is possible to offer the depth of specialisation across almost the whole spectrum.

In establishing Harper Macleod as a large middle-sized firm, Professor Lorne Crerar maintains that a focus on being specific about where the firm wants to be and what you want to do is fundamental to the prognosis of the business. Because consumers of commercial legal services are educated in their use of legal firms, it’s often not difficult for firms of their size to develop a strategy to meet the needs of their clients.

Following from that, the key has been to ensure the firm is as near the top as they can be in their defined practice areas. Thereafter, he contends, the culture and personality of the firm can be as important as the specialisms that underpin it.

“Focusing on what I call the internal market is crucial because the option to go to a bigger firm can have its attractions. So you have to keep your staff happy and the fact that we haven’t lost a lawyer for two years has given us that foundation to grow.

“I still strongly believe law is about relationships, and middle-sized firms have the advantage of being able to manage, create and control these relationships.”

Stuck in a niche?

Likewise Alasdair Fleming, managing partner at Bishops in Glasgow, says they too are not minded to narrow themselves right down. He acknowledges that the label of a full service firm is often a misnomer, but insofar as the term ever truly applies, that’s what they aim to be, because that’s what their clients want.

“We all cite that, but it’s true. When the managing director of a company comes to us he also expects us to be available when he’s selling his house. He doesn’t want to have to go and establish relationships with other lawyers and from our point of view there’s always the threat that, unless he goes to a purely niche practice, some other work might drift over there.”

Fleming would also be concerned about focusing on one area in case there was a downturn in the particular market.

“I watch with interest firms that have gone down that route. My feeling is that firms which set out to be specialised don’t stay that way forever. You only have to look at Mackay Simon or Semple Fraser.

“I do think firms which operate in a strict niche run the risk of standing still. Some will say there are certain niche areas that will always be lucrative, but the danger is firms get to a certain size and they have good people knocking at the door and it’s then a question of how do they expand quickly enough to keep these people happy. If you are just doing employment law, you don’t then have cross-selling opportunities. The next stage has to be to market that service to more corporate clients and that’s why you tend to find these firms evolve or are taken over.”

Blending specialisms

Also pivotal to the success of middle-ranking firms is identifying future markets before their competitors. Having a culture that allows partners time to think and innovate is crucial in predicting these new markets and devising the products to suit, says Fleming.

In Harper Macleod’s case they developed the skills and created the profile in sports and social housing law, and the work followed.

“A firm our size has to do that because the big firms when they see a gap in the market will just go and poach the necessary practitioners. So it’s vital for us to anticipate where the demand will be and get in there first”, Crerar explains.

Yet for middle-ranking firms there is perhaps not the same luxury of having specialists whose workload can really be exclusively in their area of specialism. In a sense, does that require them to be more like generalist lawyers or at least have a business acumen and ability to see problems from a perspective outwith their own area of interest? There must exist the risk of specialists falling into a state of expert hebetude, or indeed that specialist firms try to navigate clients down a path that suits their expertise, rather than providing the best solution to the client.

According to Lorne Crerar: “In truth there are many specialities that are not full time, and it’s important for lawyers to have general commercial skills. There is a possibility you could get bogged down in your own speciality, but I think that is more down to the type of lawyer you are. There are always highly devoted specialists who are very confined to what they do, but in firms of our size that would be the exception. Large firms might have that luxury in that they have more of the work that lends itself to be pigeonholed, but generally it’s down to the senior lawyer involved to recognise the blend of specialisms needed.”

Alasdair Fleming agrees there is always a danger of putting clients in departments to suit the firm. Clients, he says, want a unified solution across disciplines and don’t want to hear about the firm’s various departments.

Business order, client disorder

Ken McCracken offers an alternative perspective. As head of the Family Business Unit at Wright Johnson & Mackenzie, he is in no doubt that specialisation is essential because clients expect access to expertise and they expect a depth of it.

But he sees the separate issue of delivering client service as being quite distinct from loading a firm with the best specialists. While he agrees it does make sense to organise a firm around specialists, in the hope that the specialist lawyer’s understanding and comprehension enables them to reach new planes of creative thinking, he is conscious of a process where “unwittingly the expert immediately interprets the client’s problem to satisfy their expertise”.

“Expertise is absolutely necessary in a practice like ours. It’s inherently risky these days to try and maintain a general interest in a lot of areas. But as a specialist you have to watch you don’t end up with the type of service where if your only tool is a hammer, every problem looks like a nail.”

Expanding on his theory, McCracken observes that experts can be prone to adopt either a “telling and selling” approach, where the client comes up with a problem and the firm delivers a solution, or the “doctor and patient” model, where the expert pathologises the client and a shift in power occurs where in effect the adviser now owns the problem.

Instead, he wants advisers to maintain an equilibrium, probing and exploring with the client and giving them access to expertise and information to enable them to retain control of the solution.

“I don’t know if an expert would see the world like that. They tend to be more into the telling and selling or doctor and patient approaches. So organisations who say we only do this type of work, that’s fine, but it’s very hard to believe that in the majority of cases our clients’ lives can be organised to fit neatly into the specialisms of the lawyer or adviser. That’s fine if you have a sophisticated purchaser, but what if someone has issues across all aspects of their lives and the adviser takes that and narrows it down to their own area of expertise?”

Expertise, argues McCracken, can be relatively easy to acquire, but the application of it is enormously complex, so organising the provision of services around expertise maybe doesn’t fit in with the disorganised and messy lives of clients. Trying to provide clients with the full service firm means experts have to be wary not to fall into “silos” of their own expertise.

McCracken stresses that there is nothing wrong with devoting yourself to one area, but nor should offering a full service firm at a high level of expertise be confused with a lower level of knowhow.

 “Sometimes it is portrayed that there is no space for the middle-sized general firm. Says who? If they want to, let them have a go and see if it works. Celebrate the variety instead of trying to fit firms into a homogenous view that here is the only type of firm that can survive in the next century. I don’t subscribe to the view that there is only one correct path. Any firm that’s well run and has a clear idea of what it’s there to do can make it. Those that might have trouble are those who are trying to follow someone else’s model and don’t focus on their own needs or those of their clients.”