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IMLC 2012: Will the Group Legal Practice featuring small law firms rule the future? 29 Sep 2012 12:00 am

Contibuted by Lee Lyn-Ni and H R Dipendra



The law practice management session was thought-provoking, informative and useful session for all lawyers, not just those in small-law firms. Moderated by George Varughese, the session was titled how small and medium-sized firms can accelerate their profits and how group practice can benefit small-and medium-sized firms.

The first speaker, Mathew Thomas Philip shared frankly on the challenges he faced from his personal experiences. He started his own firm in 1992 with other partners but reconsidered his strategy, starting a sole proprietorship in 2004, which grew from 4 to 13 lawyers at the present moment.  His presentation centred on small law firms, which compose of 90% of Malaysian law firms and defined as between 1 to 5 lawyers. In his first seven years, the challenges he faced were unpredictable cash flow problems, hiring the wrong people, and having a misguided perception of himself and his own law firm, as he had a deep-rooted mindset that people only go to small firms because they want cheap legal work. Only much later, did he realise that the client’s choice of a lawyer is not very objective as it is mostly based on emotions. He bluntly stated that his first seven years was a total failure and he wanted to change his strategies by setting up his sole proprietorship in 2007. The first thing he did to overcome the unpredictable cash flow was to measure his costs through meticulous monitoring of his cash flow on a daily and weekly basis. By doing so, he was able to calculate his daily cost, helping him to gain control over his law firm. That was the reason Mathew started paying his employees on a weekly basis. He proudly stated that after the first 2 years, he achieved positive cash flow. 

His second tactic was to understand Generation Y. Through his research, he found out that Generation Y has to be motivated and inspired before they are willing to commit themselves to an employer. In contrast to his own generation which needed to work for money, he said this generation wants a “life rich with meaningful work that matters and makes a difference.” In contrast to his previous hire-and-fire mode, Mathew adopted a long-term strategy of hiring employees and pupils who he can envision as potential future partners. Training his employees from the pupil stage is therefore, his key strategy in leveraging on their talents. He also made a passing remark that legal education in Malaysia should be improved. The third improvement Mathew put into place was to fix his self-perception of what he and his firm was able to offer and in this line, he promptly took steps to improve his client marketing skills. 

In his final chapter, Mathew shared an excerpt from Michael Gerber, on why most small practices fail.  Most lawyers are unaware that operating small firms actually require a mixture of skill sets of an entrepreneur (10%), technician (70%) and manager (20%). He therefore suggests rating oneself to evaluate one’s strengths and weaknesses. He further recommends small law firms to consider other options for growth such as entering a niche area, merging with like-minded practitioners, among other things. In conclusion, he states that small law firms are the future but one should be driven by a dream and a purpose.

The second speaker, Ian R Homer works as a business coach to help business owners and law firms, among others, to build capacity and increase their profits. Using martial arts analogy, he shared “5 ninja moves to boost your profits”, which are focusing on number of leads (i.e. enquiries about your services), the conversion rate that these enquiries become your clients, the average sale (in RM), number of transactions and profit margins. If the owner manages to improve all 5 of these elements, it would result in greater profits. To improve the number of leads, Ian suggests focusing on marketing oneself and the firm. He also shared that the biggest factor in converting an enquiry into a client is the speed with which the firm returns the phone call after the enquiry was made. On improving the average transaction value, Ian suggests thinking of what services could be offered to improve the average business transaction and as an analogy, he used the example of a McDonald’s server asking, “Do you want fries to that?”, an extra six words that has become the basis of a billion-dollar-increase in profit. Other recommendations given are to continually connect with your existing clients, raising your fees to improve your profit margins, and to continually measure and test each of these 5 elements in order to improve them on a weekly/monthly basis.

The third speaker, Mark Goh owns his own law firm but is part of a group practice called Mosaic Group Law Practice. He shared that law firms are facing a market which is connected, savvy and hyper-regulated. On one hand, while the internet has increased the speed of communication, it has also become a massive free information portal. Law firms must distinguish between legal information (“mere information without taking into account how the information is to be applied in a particular situation or location”) and legal knowledge (“information that is applied”), of which the latter should be provided by the law firm. A savvy world means that law firms have to be more technology-savvy to compete on a more level playing field. Mark shared further on the importance of knowledge management (“KM”), the first kind, explicit KM being the easier method of collecting and storing documents and precedents, and the second kind, tacit KM being the more challenging method of collecting and accessing experience and skills. The group law practice, Mozaic has focused on centralising KM where they get members with special skills to come together and to collaborate. He shared the challenges faced, where central committee members will have to sacrifice their practice time towards group time, the difficulty of reaching a common goal with people of different practices, and big-time lawyers having to give up their ‘king of the hill’ mentality. However, the benefits outweigh those challenges, and Mark shared that they can enjoy economies of scale, sharing and investing in KM together, and attracting talents, among others. Further, it is equally important to put all the shared values and goals down in writing, setting it out in a constitution for the group law practice, to ensure present and future cooperation. 

As this session was very informative, there were many questions, and the audience left the session, piqued and challenged to see the benefits of operating a small firm in a new light. 

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