Blog Post

A STAR is born

Crispin Passmore • Nov 24, 2019

New Standards & Regulations = new opportunities

The 25 November 2019 is an exciting day for me: the SRA's new Standards & Regulations (STARs) go live. It was announced that I was leaving the SRA the day after the LSB approved them and go-live is the culmination of a large part of my career. So excited am I to see them come into force that I have flown to the other side of the world – just so that 25 November starts a little sooner.

How much are others excited by these changes? How feasible is it to carry on legal practice without changing anything in response? Almost certainly most solicitors and law firms will do exactly that. Perhaps the majority will not even know that a new set of standards have been issued by their regulator. And it may not even matter: if you continue to act ethically, with integrity and honesty at the core of your practice then when do you really need to know the detail? Why worry now?

The case for worrying is very low. This is a set of changes that creates nuance, offers opportunities, provides flexibility. If you are not bothered by those things, then perhaps it makes sense not to worry too much about the STARs. Law firm owners, COLPs and those that just want to be well informed will want to at least be aware of the STARs and to have checked what the subtleties are, to reduce the risk of slipping up. That may be enough for many firms.

But if there is nothing much to see or worry over, what is the fuss all about? Surely it cannot just be rewriting rules for the sake of it?Whatever your scepticism, these new STARs really do matter. They offer solicitors, law firms and legal business levels of freedom, flexibility and opportunity that are unprecedented in our legal market. In fact, there are very few jurisdictions in the world, and certainly none this large or valuable, that provide the opportunities that now present themselves. What are those opportunities?

      • Individual solicitors will have much greater choice about where and how they practice. They can practise as freelance solicitors delivering reserved or non-reserved services. They can work in unregulated business offering non-reserved services to the public. They can set up their own law firm or work with regulated law firms in ways that have hitherto been difficult or even impossible. 
     • Law firms can operate in different ways. Most notably they can think about the extent that they need to be regulated, what their workforce looks like and how they contract with that workforce.
     • Unregulated businesses can think in less binary terms about their legal services offer. No longer ‘ABS or nothing’, a more staged entry into the legal market has become possible.

So how best to approach this new environment? Most traditional law firms will simply carry on doing what they did before. They will still work in the same structures, employ the same sorts of solicitors on traditional training contracts and pathways to partnership, and offer the same services to the public. It will work for them in many ways and lots of their clients will remain broadly content. But what might their competitors be doing?

     • Will writing companies Farewill
     • Unregulated advisors for small businesses Brighton Legal
     • Online document assembly Legal Zoom 
     • Online legal advice Rocket Lawyer
     • Solicitors in unregulated firms for small business Hybrid Legal
     • Similar for large corporate clients Aria Grace Law 
     • Managed legal services Axiom
     • Flexible lawyering Halebury or LOD
     • Tech driven legal delivery Riverview EY
     • Multi-disciplinary services KPMG
     • High street multi-disciplinary Z Group 
     • Legal business support for law firms Elevate
     • Law firms that work differently Keystone Law
     • Changing risk in law firms ShieldPay
     • Rethinking client acquisition and on-boarding Legl and CrowdJustice

These firms seem to develop their strategy by thinking about their potential customers first. They are trying to solve a problem for customers. They start at the other end of the lens to most lawyers and law firms. It seems to me that many solicitors decide to run a law firm either because it is time to set out alone or because partnership is the next step or reward within their firm. Then it is about the law they know and trying to sell it in traditional ways. There may be all sorts of great ideas about cost control, marketing, geographical expansion and more. But it is a very lawyer centric model. 

One alternative is to understand consumers and build from there: we can scrutinise research and deepen our knowledge. We have access to data and analysis about legal needs, how consumers choose and use legal services and much more besides. Most of that insight was simply not available fifteen years ago and it all points in the same direction: there is a huge untapped market for legal services and a desire for differently priced and delivered services. That is a market opportunity worth pausing to consider.

     • there is evidence that only a third of people with a legal need seek any kind of third-party advice
     • only one in ten people experiencing legal problems instruct a solicitor or barrister  
     • when people handle legal issues without help from a solicitor, it is often because they assume it would be too expensive or offers poor value for money.
     • 63 percent of people do not believe that professional legal advice is affordable for ordinary people.
     • 75 percent of people say cost influences their choice of legal provider
     • the majority of small businesses have little contact with legal providers
     • over half of businesses that experience a problem try to resolve it on their own
     • when advice is sought, accountants were consulted more often than lawyers

All of this tells us that there is a lot of demand for services that help individuals and small business avoid, handle and resolve problems. The current pattern of supply is not meeting these needs and new ideas are needed to reach these potential clients. The size of this untapped market is huge.
  
How does this relate to the STARs? Well, for the first time, lawyers and firms have a regulator that genuinely gives them the freedom to find new ways to meet their clients’ needs, to design and deliver services that are imaginative. Law firms will not all need to look the same. Regulation is shifting to the background rather than driving all law firms towards identikit models. It is the culmination of many years of evolution, but this set of changes is the most radical and likely to have the largest impact on the size and structure of the legal market.

What should law firms do in response? Carrying on, focused on what you do now, is not a bad strategy. Change happens gradually and it may be possible to maintain existing turnover and profits for years to come. But change also happens suddenly and at that point the options become fewer. Managing partners might ask themselves if they are trying to see the partners through to retirement or seeking to build something of value that lasts beyond that. The longer a business wants to be around the more it needs to respond to changing consumer behaviour.

A firm thinking about how to respond to STARs should put the rules to one side for now and start by looking at their clients. Who are they, where do they come from, what do they really want? How do they make choices? What would they value that isn’t currently on offer? The publicly available data and research in this market is a real testament to the Legal Services Board who identified data as key to making the market attractive and responsive. Analysis of this and your own private data should drive the future of your business. It should drive what services and products you design, what they look like, how they are priced and made available to the public. It should underpin your marketing strategy and how your website and offices look and feel.

Many law firms have great lawyers and then work out what they can offer – more like a chambers than a business. Great businesses have workforce strategies that allow them to deliver their compelling offer to the public. A workforce with the right behaviours and values, the right customer service ethos, and of course the technical expertise to back it up is key to delivering any business strategy. 
With great products and services and fabulous people the one thing still to add is often the capital to get this in front of customers. Do you need technology, mass advertising, retail premises, working capital? These financial, capability and capacity issues should be part of the equation when thinking about ownership and business structure – a much better approach than the days of the SRA asking you about your borrowing from the bank as if it knew best.

This is, of course, all business 101. It is the very basics of entrepreneurship. But regulation and culture have got in the way and to many customers all law firms look the same. The whole point of the new STARs is that this puts power back in the hands of lawyers. Your great ideas no longer need be held back, constrained or stopped in their tracks by prescriptive regulation.

Taking a step back from your business to think about where you are and where you are headed is always a good idea, but rarely urgent. That might explain why for many firms it is never quite ‘top priority’. And even if you can get all the partners to focus on this for a day that is no guarantee of follow through or commitment to whatever is agreed. The threats and opportunities from a changing market will still be here tomorrow, but the new STARs give you a hook, a reminder, an additional opportunity to get your strategy right. Your competitors are doing this already: how will you respond?

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