Michael Napier

The views 21Delivering an InvestmentReady entityIn recent years I have readnumerous articles suggestingthat there was a long queueof Private Equity (PE) Housescarrying large wallets with anoverwhelming desire to investin legal firms. Whilst it is stillearly days in the evolution of theAlternative Business Structures(ABS), initial statistics would suggest that it may bemore challenging for PE Houses to achieve positiveinvestment decisions than originally anticipated.Having worked with many businesses over the last20 years, I have seen all too many fail in their pursuitof external investment. In terms of vision, strategy,product and delivery channel, many of those businessesthat failed were light years ahead of your standardtraditional legal practice. That is not to say that legalfirms can’t be attractive investment opportunities butmany simply don’t know how to present themselvesas an attractive proposition, for that is what they are –simply another proposition.If legal firms are truly serious about achievingambition through external investment then they needto present themselves in a way that makes them lookdifferent and attractive to the investor. Potentially thereare 4 key things for a firm to consider:Investors are attracted to capital value uplifts.Accordingly firms seeking investment must have avision, a strategy and a plan that will deliver short termimprovement in capital value. Capital values do not need tobe based on the here and now, they can be linked to futureopportunity and those firms who are exploring innovation,new markets, efficient delivery and profit maximisation arelikely to carry the highest level of attraction for investors.The business world is full of good people who haveshaped businesses to secure external investment.So why do lawyers think that they need to performthis task as well as delivering legal services? Thosefirms who employ relevant people with appropriateexperience and capability to secure external investmentwill stand a much better chance of being successful.Consider how external investors like to place theirinvestment. PE’s are far more comfortable working withLtd’s and PLC’s so in all probability conversion to thistype of business structure will give the firm a greaterchance of winning investment.Run your financial affairs as an investor would expectyou to run them. Look to develop Balance Sheet valueby retaining profits. Measure profitability in terms ofEarnings Before Interest Tax and Depreciation andAmortisation (EBITDA), and have a clear understandingas to how you deliver a return on equity.PE Houses and other external investors areaccustomed to investing in corporate style businesses.To carry maximum appeal legal firms need to lookcorporate, behave corporate and think corporate.By Steve Arundale, Head of Professionals Sectors,Commercial Banking RBS & NatWestQ: Will the ‘List of shame’ andforced powers by the LegalOmbudsman (LeO) raisestandards of customer servicework and focus their efforts toeffectively deal with complaintsin-house?After many years of waiting,A: delays, deliberations andconsternation the LeO has finallypublished a list of firms aboutwhom complaints have beenmade. Dubbed the ‘List of Shame’the names of 772 law firms thathave been the subject of a formaldecision by the LeO have been putinto the public domain. Rightly or wrongly it seems is adebate that will run for a while yet.Worth noting is that of 992 decisions made, remedieswere ordered in less than half, meaning the LeO wasactually satisfied with the law firms’ actions, customerservice and remedy offered in the majority of cases.I wonder whether Joe Public will be able to easilydiscern that being on the ‘List of Shame’ is notnecessarily a bad thing and whether those firms whowere deemed to have done no wrong yet still appear onthe list will have the marketing nous to turn the negativespin into a positive.A recent report by YouGov found that the mostcrucial part of the complaints process was the solicitors’initial response. A simple apology in plain English wasfound to do wonders in diffusing the situation and couldturn a negative consumer experience into a positiveone, making them far more likely to recommend thesolicitor.There are many things law firms can do to ensurethey provide a good customer experience. Robustcustomer service processes are essential and are madeeasier to implement if one person (or a team of people)own this responsibility. Most B2C organisations have acustomer services dept. Why not law firms?As we’ve seen above, the ability to deal withcomplaints efficiently and effectively has a huge impacton the outcome of the matter and the clients’ lastingimpression. There are numerous customer service andcomplaint handling courses available online, is it nottime solicitors were required to spend some of theirprofessional development quota learning to keep theirclients happy?A good case management system will reduce thenumber of complaints by ensuring matters are carriedout in a consistent, compliant manner. Initiativessuch as Lexcel and CQS also go a long way to givingconsumers the confidence that they are choosing areliable, trustworthy, quality solicitor. Better still; choosea case management solution that is Lexcel compliant!By Jo Hodges, Redbrick SolutionsML // November 2012