Law: Managing to set standards: Sharon Wallach looks at the research behind the Law Society's new practice methods

Sharon Wallach
Thursday 13 May 1993 23:02

LATER this month, the Law Society is to publish practice management standards for solicitors' firms. The standards were developed with the help of research carried out by John Jenkins of the society's research and policy planning unit, examining the practice management methods used by firms with 10 or fewer partners.

The research, described as descriptive rather than evaluative, is the first stage of a project that aims to produce models of effective methods of managing different-size practices. It examines three groups: sole practitioners, two-to-four-partner firms, and five-to-10-partner practices.

There was some debate over the decision to include sole practitioners, Mr Jenkins says, many of whom feel that they are already the subject of too much scrutiny and criticism. But, says Mr Jenkins, any formal system of practice management standards must take into account the special requirements of all types of practice.

Many of the findings fulfil expectations. The large firms within the survey, for instance, are shown to be more likely to plan than smaller firms, with the highest incidence of planning revealed in firms with more than 50 staff or in those with managing partners.

Half of sole practitices and small partnerships, and nearly 80 per cent of the larger partnerships, prepare income and expenditure budgets. Relatively few firms prepare annual budgets for capital expenditure, although there is a high incidence of preparing lists of debtors.

The smaller firms tend to think that forecasting fees and expenditure further than a year ahead is impossible. Those firms that have grown in the past five years are more likely to ascribe this to special skills, good client relationships or luck, than to careful planning. This may be the explanation for the finding that firms that believe themselves to be highly efficient are the least likely to prepare plans, budgets or forecasts.

Half the sole practitioners and more than two-thirds of partnerships rate their firms as fairly efficient. A third of sole practitioners believe their firm is as efficient as they and their staff can make it - only 9 per cent of the two-to-four-partner firms, and 4 per cent of the larger firms, believe this.

Expectation of a future increase in fee income rises with the size of firm. Respondents who place their firm in the category 'as efficient as we can make it' tend to be more pessimistic about future prospects.

Asked which changes have contributed most to improved efficiency, the most frequently mentioned are the introduction of new technology and better management systems. Obstacles to this are cited as fee earning pressures, lack of time and the recession. A third of firms with more than 50 staff regard the appointment of a practice manager as important.

In 1991, the Law Society introduced a new practice rule (Rule 15) to deal with client care and complaints procedures. However, the research study reveals that only 41 per cent of sole practitioners have introduced an in- house procedure, compared to 70 per cent of two-to-four-partner firms and 79 per cent of the five-to-10-partner firms.

Even those firms with in-house procedures do not always explain them to clients. The number of firms that do varies from 17 per cent for sole practitioners to 47 per cent in the largest firms sampled. The annual number of complaints per partner received by firms with complaints systems is marginally higher for sole practitioners - 1.1 as against 0.9 in the other two samples.

The study also reveals an apparent reluctance to explain the firm's fee structure to clients. A quarter of sole practitioners and the smaller partnerships say they discuss costs only in response to questions from clients.

The smaller the firm, the more likely is the expectation of continuing with the same kind of work in the future. The services for which a significant number of firms expect an increase are litigation and commercial work. Fall-offs are expected in residential conveyancing, criminal, and legal aid work.

Needless to say, the recession has had a marked influence on priorities for future improvement. Top priority is given to systems enabling prompt collection of debts. Better communications with clients ranks second in the case of sole practitioners, while partnerships place measuring the income and profitability of fee-earners second in importance. All firms rank a better knowledge of the profitable mix of the business third. Interestingly, partnerships tend to give all suggested improvements a higher priority rating than do the sole practitioners.

Firms were asked how much advice they needed. The highest proportion of respondents who say they needed none is to be found among sole practitioners. Those who do admit to needing help seek it for installing computer technology and for targetting specific groups of clients. In general, specialist consultants are the preferred source of advice on computing, while the Law Society receives higher preference scores for training, marketing and general advice.

The next stage of the project will take place in the autumn. 'We are looking to do case studies to find out how the recommendations stand up in practice,' Mr Jenkins says. The project will be dependent on volunteers, and he would like to hear from firms prepared to take part. However, smaller practices only need apply. 'At this stage we have no plans to examine the larger firms,' he says. Future research will also test the views of clients.

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