Commercial Awareness for the 21st Century Lawyer by @ValiBG

By Valya Georgieva, StretLaw Associate

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‘One thing that becomes obvious when talking to lawyers is that most of them really enjoy their legal work […] the nitty-gritty of working through problems and finding solutions […] the complexity, the history and the mystique associated with the law […]’[1]

What is it that they do not like? Marketing: promoting themselves and their firms services; relating to their clients.[2]

These are some of the observations made by LBC Wise Counsel’s CEO, Paul Gilbert, writing in 2002. At the end of his first book, Head2Head,[3] he comments on the progress made over recent years by lawyers who have realised that service is about more than knowing the answer. ‘It’s […] about realising value; value for the lawyers and value for their clients.’[4]

Ten years after his first book, Gilbert’s message remains the same: ‘The essence of becoming a great lawyer is realising that it isn’t about you’ – it is about being able to work inside your client’s head.[5]

This represents one of the key elements of ‘commercial awareness’ for today’s lawyer. It means understanding the business needs of clients and tailoring your advice to those needs. It means understanding how the current economic and financial climate affects your client. It means understanding what motivates your client; the pressures that drive them and the issues they face.

Achieving this goes well beyond keeping up to date with current affairs. Above all, it means listening to the client’s needs; being aware of their need for efficiency, cost-effectiveness, and knowledge of the market place in which their business operates.

Another element of ‘commercial awareness’ which is essential for lawyers’ success in the legal profession involves understanding the business environment in which the law firm operates. This means having a good grasp of what drives the firm as a business forward. It involves, above all, understanding the pressures facing the legal profession, realising the importance of client relationship management, and being able to reduce cost whilst preserving or increasing profitability.

The legal profession is going through a radical transformation and only those with a business acumen and entrepreneurial spirit will be able to survive and thrive in the new legal world. There are a number of factors which are driving the transformation forward and every lawyer needs to be able to adapt and seize the opportunities that are opening up.  These factors include, but are not limited to: (i) the economic recession which has affected the client’s perception of cost and value; (ii) the de-regulation of the legal services which has increased competition; and (iii) the increasing impact of information technology on the way that the legal industry operates.

(i) Clients’ perception of cost and value: the More-for-Less challenge

Despite the recent easing in market concerns over the debt crisis, businesses are still facing the pressures of recession. The economic downturn has considerably changed the attitude of clients who are now shopping around for better quality at a lower cost.

This has created a new challenge for law firms which now have to endeavour driving down the cost of their services, whilst driving up their value.[6] This is what Susskind identifies as the ‘More-for-Less’ challenge.[7]

What this means is that today’s lawyers must be more aware of their clients’ business needs than they have ever been. This is a great challenge for the traditional lawyer who is under an increased pressure to move away from charging on an hourly basis and to offer alternative fee arrangements to their clients.

(ii) De-regulation of legal services

The second biggest challenge facing the legal profession, as identified by the Law Society,[8] is competition for businesses.

This is unsurprising in light of the radical reform the legal profession is undergoing following the Clementi Report 2005 and the subsequent Legal Services Act 2007. This reform was intended, in Lord Neuberger’s words, ‘to disrupt the status quo: to advance the cause of consumerism, and to breed innovation and radical change’.[9]

Some of the key competitors of today’s traditional law firms include Alternative Business Structures (ABS), non-solicitor legal service providers and in-house lawyers.

If the legal profession is to continue to exist, it must evolve and embrace the opportunities created by this radical reform.[10]

What this means is that lawyers of today and tomorrow need to be, above all, entrepreneurs. They need to start thinking about new ways to make themselves more attractive to potential clients as well as potential investors. They need to rise to the challenge and catch up with their competitors whose services would often be a lot cheaper and more accessible. This would inevitably entail being commercially aware and having a genuine understanding of the clients’ business needs.

(iii) Information Technology

The final key driving force of change within the legal market is the growth of the Internet, which is, in Professor Christensen’s words, a truly disruptive technology, with the power to transform a market and the way it works fundamentally.[11]

Information technology, if used properly, has a significant potential to render the systems used by law firms more efficient by reducing both time and cost required for a task to be complete.[12] One example of the increased use of technology can be seen in the growth of legal outsourcing and off-shoring. Such developments have the potential to benefit both law firms and their clients.

In addition, the growth of social media, not only as a communication channel but also as a powerful business tool, provides new opportunities for lawyers to promote themselves and their firms. With every new tweet, retweet and blog post, clients and consumers are becoming even more empowered to make a choice about their legal service provider in today’s client and consumer centred world. At the same time, lawyers are given the unique opportunity to reach out to their clients and relate to their needs by listening to what they have to say on social media.

In this era of unprecedented technological change, lawyers need to be more open-minded than ever in order to embrace the opportunities offered by the Internet to the benefit of themselves and their clients.

Conclusion

In his most recent thought-provoking guide for young and aspiring lawyers, Richard Susskind endeavours to predict what the legal industry of the future will look like. The key message throughout his book is that tomorrow’s legal world bears little resemblance to that of the past and that ‘tomorrow’s lawyers will need to be more in tune with tomorrow’s clients.’[13]

Today, more than ever, lawyers need to display entrepreneurial spirit by embracing change and adapting quickly. Above all, this means having a genuine interest in the commercial world and understanding its effect both on their firms’ businesses and the ones of their clients.

The above change drivers are only a few examples of the radical transformation lawyers are currently facing. Awareness and understanding of these issues is essential for ensuring that the legal sector survives and continues to thrive.

Being commercially aware is not something that can be achieved over the course of days, or weeks, or even months. It is something that lawyers need to start developing at a very early stage, even before they enter the legal market. Only then would they be in a position to succeed and do well in the new brave legal worlds. Only then would they be able to ‘tune in’ to the business needs of their clients.

Note by Editor-in-Chief: ULS offer certified training to law students looking to expand their knowledge on commercial awareness via StretLaw Ltdask us for more information.


[1] P Gilbert, Head2Head. Client relationship management: The client’s view (Lightning Source 2002).

[2] ibid.

[3] ibid.

[4] ibid.

[5] P Gilbert, The tale of the old badger, the young fox and the wise owl (Braiswick 2012).

[6] Gilbert (n 5).

[7] R Susskind, Tomorrow’s lawyers. An introduction to your future (Oxford University Press 2013).

[8] The Law Society, The Legal Services Industry – Part 1 – Overview (Law Society Publishing 2013).

[9] Lord Neuberger, Tomorrow’s Lawyers Today – Today’s Lawyers Tomorrow (80 Club Lecture, Association of Liberal Lawyers 2013) http://www.supremecourt.gov.uk/docs/speech-130219.pdf accessed February 20, 2013.

[10] Legal Services Board, The future of the legal services: emerging thinking (Conference paper 2010) < http://www.legalservicesboard.org.uk/news_publications/publications/pdf/14_june_conference_papers.pdf> accessed February 18, 2013.

[11] C Christensen, The Innovator’s Dilemma (Harvard Business School Press 1997).

[12] Lord Neuberger (n 9).

[13] Susskind (n 7).

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