Pull together

Colleagues or competitors? Two of a kind or poles apart? Scotland’s solicitors and CAs have begun sharing their views of where they each stand as a profession and what the near future may hold.

The initiative, a joint venture between the WS Society and the Institute of Chartered Accountants in Scotland (ICAS), will culminate in a day-long joint seminar on 29 September under the title “Leading Professional Services Firms”. To help set the agenda, the WS Society hosted a dinner last month at which five managing partners of leading legal firms and five of their ICAS counterparts engaged in a free exchange of views.

Robert Pirrie, principal of Metalegal and Director of Education at the WS Society, believes there is every reason for lawyers and accountants to talk and learn from one another, even if the appetite for MDPs has receded for the time being. “Leaving aside the global law firms and the Big Four [accountancy practices], there are common issues around how to create and manage the right business model for professional service firms. At a time of potential change in our own profession (Clementi et al), the WS Society is keen to promote the exchange of ideas. This was very much the spirit of the evening.”

The Chatham House Rule operates to the extent of not attributing opinions to individuals present, but the Journal and its counterpart CA Magazine were invited along to trailer the issues that emerged.

A rose by any other name

MDPs or no MDPs, issues related to servicing clients beyond the confines of a single professional discipline are set to remain with us. Private client firms, for example, regard themselves, and are seen by their clients, as advisers in general – on legal, investment, tax and other matters – multi-service if not multi-discipline practices. But the ownership rules make it difficult to motivate and incentivise non-lawyer managers, such as investment advisers. Would legal disciplinary partnerships as proposed by Clementi be the answer? Is it necessary to have solely legal ownership, or would majority control suffice to preserve independence? The CAs have relaxed their equivalent rule, first so that 75% and now so that only 51% of principals in CA firms need to be chartered. Does that in itself create a competitive threat for solicitors?

Closely related is the question whether partnership has outlived its usefulness as the business model. Some clearly see it as outdated – inappropriate as an investment vehicle for business capital, lacking in tax breaks to encourage new initiatives, and creating major succession problems, especially where partners delay retirement to enhance their pension funds.

But there was recognition too that the partnership model may be a factor in public confidence in the profession, taken with self-regulation. Could a statutory regulator do any better, someone asked. How much faith do the public have in FSA-regulated advisers? In short, is ethics a matter of culture rather than training, and something encouraged by the partnership model?

“We have a partnership structure primarily because clients want to deal with a partner”, was one lawyer’s view, “but that doesn’t mean the firm is run in the most efficient way.”

To market, to market

More common ground emerged when the talk turned to branding and marketing. Someone asked how you can brand solicitors and accountants unless in a common way – should the Law Society and ICAS play a marketing role in the face of the huge power of their potential competitors in the RAC? Accountants already have a branding problem given public confusion between those holding chartered, certified or neither status; and while some hold that “solicitor” is a strong brand, others have their doubts. Debate followed on how much value clients place on labels such as specialist accreditation – something ICAS don’t have. Much business is done through personal relationships, and clients assess their adviser by whether they have done a good job. They put some value on maintaining a relationship on the basis of reliable service.

That said, some do perceive a big threat at the “commodity level”. People don’t trust banks and other providers of financial services, but rightly or wrongly are more likely to trust the supermarket they visit regularly, and can be persuaded to do financial business there. And the same for professional services?

There is a dilemma at the heart of client relationships. The challenge for managers is to build the strength of the firm brand. But however you go about that, you have to invest in people, and people walk. Which brings us back to succession issues.

At that point the reality of inter-firm rivalry shows. Lack of client loyalty is “a huge opportunity” as well as a problem. Competition is fierce and clients more selective, as someone put it succinctly.

Providing for the family

Yes, there is a future. “Even if the professions don’t survive, the roles we provide will survive.” But can the professions continue to attract both the clients and the new entrants? Trainees are asking themselves whether they want to continue in the profession, when they see the commitment expected, the liability issues, the client demands. “I would still recommend law as a career, provided you are very robust”, was one comment. “The pressures are huge.” A partial counter was the observation that life in both professions has changed remarkably in the last 15 years – who knows what the next 15 will bring?

There was some agreement on the need to limit the demands on fee earners, due not least to the high proportion of women entering the professions. Everyone needs to develop family-friendly policies, at all levels, even if it requires investment. “Employment law will catch up with us anyway.” At present for many women the sensible route is to opt out. Flexible working needs a “cushion of resource”, and someone who can pick up a transaction in another’s absence. “Clients are very understanding, more than you expect”, was one view. At the same time, people who seek to work flexibly have to be very open-minded and work creatively. “It’s a management issue again”, as one summed up. “Are you measuring quality or quantity?”

Robert Pirrie expressed himself well satisfied at the outcome. “The quality of the discussion was excellent and I’m sure everyone took away something to think about. ICAS and the WS Society aim to explore some of the key issues in more depth in the forthcoming event.”

“There is always going to be a tension between professional status and business mindset”, he added. “The current model for lawyers is undergoing deconstruction at the hands of the Clementi review. Busy lawyers often do not have much time for reflecting on the collective foundations on which their own firms function. The occasional opportunity to do so is no bad thing. Otherwise, there is a risk of losing the very characteristics clients most value.”

For enquiries about the event on 29 September, contact Gemma Taylor, Assistant to the Director of Education at the WS Society, on 0131 220 3249 (select 5) or e-mail gtaylor@wssociety.co.uk.