Merry-time Law
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Merry-time Law
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Knowledge
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© The Z/Yen Group of Companies 2008
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Michael
Mainelli, Z/Yen Limited
[A
version of this article originally appeared in “Merry-time law (the legal
bourse)”, Professional Marketing, page 16-17, Professional Marketing
International (Winter 2000)] Beating
Boredom Strategic planning can be a bore. Boredom threatened a plan last year to have some of the leading players in the legal world assess the opportunities and threats facing the profession at the transition from one millennium to another. Jaffe Associates, Z/Yen Limited and Horwath Clark Whitehill were organising a day last September where Managing Partners from ten thoughtful practices, from one of the Top 5 City firms to a local firm, were going to discuss the key strategic issues facing them. The
organisers had agreed to hold the event while sailing on the Thames Sailing
Barge, S.B. Lady Daphne, down to the
Millennium Dome and back up through Tower Bridge. While the organisers were definite about the venue, they were
very unsure about the format. They
had three choices:
The
“jolly day out” format was rejected as the organisers all believed that the
profession’s structural problems required serious debate, not quick
sound-bites. The serious set of
presentations and debates might well have worked, but risked allowing senior
participants’ views to be overly shaped by the presenters, i.e. forced to
confirm or reject only the models put forward by speakers.
The innovative approach chosen was to combine some corporate hospitality
with a business game, but a business game which was well-founded in sound
economic and management principles. Water
Games The
business game was developed on the premise that outsiders could invest capital
in legal firms. The business game
became the “Legal Bourse”, a stock exchange of competing legal practices
where each legal practice had a radically different business model. As it was reported on the Daphne News Network (the hot
tipsheet which held the game together: Major changes which were enacted in the Government’s Provision of Professional Services (Lawyers Limitations & Solicitations) Act 1999 came into force last month. Key among the provisions was the ability of law firms to limit their liability through incorporation. The junior DTI Minister, Mr I C Truit declared, "even lawyers have the right to lose less in court". Five firms have just sought listings, one on the Neue Markt, one on NASDAQ and three at the London Stock Exchange. Each is initially offering 25% of their equity. I
Bought the Law and the Law Won The
five possible investments were designed to show the wide range of competitive
threats facing firms and the wide range of possible responses.
Again, as reported in the Daphne News Network, the five firms were: National
Legal - A Partner in Every Office National
Legal has 35 offices throughout the country and provides a full spectrum of
professional services to both private individuals and corporates, although it is
probably fair to say that National Legal does not have a strong position in the
City of London’s M&A market. National
Legal has recently developed a strategic partnership with a major
building-society-turned-bank under the brand name “Black Legal” which is
attempting to standardise the conveyancing market.
Funds are sought to establish a major call centre to handle 1 million
telephone conveyancing calls annually. South
& West - Point to Point, the Biggest Local Law Firm This
small practice has expanded rapidly in recent years, now with 10 offices and 35
partners. While clearly focused on
small branches in key Devon, Dorset, Cornwall and Avon towns, South & West
has launched some innovative schemes, most notably an investment management
service for wealthy landowners with inheritance problems.
Although the investment management service is handling only £150 million
it has produced substantial spin-off assignments such as wills and probate work.
South & West's prospectus talks about exciting opportunities gained
by providing legal with automated investment advice. Glied
Spaeter & Schmerz - No Client Willingly Undersold Long-established
and well-known to the financial community, Glied Spaeter & Schmerz has a
pedigree to match its arrogance, or vice versa. Consistently attracting the cream of graduates, Glied Spaeter
& Schmerz has offered moderate starting salaries, but the attraction of some
of the juiciest partnership rewards. Lately
Glied Spaeter & Schmerz has found the rough and tumble of corporate finance
a bit more rough than tumble and seeks to capitalise a portion of the firm in
order secure its position against the larger accountancy practices.
Its prospectus indicates a potential continental link-up with Maillon
Tard et Douleur. e-law.com
- The First Legal Services Company with an Excellent Burn Rate This internet start-up has no offices and no partners, but generates over 300,000 site hits per day in the UK and USA. With the slogan "bits n’bytes stop legal fights", it has rocketed to the top of consumer recognition. Begun as a site for providing legal templates and referrals to legal practices, it has developed links with leading law publications and textbooks to automate much of the pain of drawing up contracts for housing and divorce (the two main consumer areas). Users are referred to a professional for quality assurance of text they have composed. e-law.com seeks expansion through franchising high street practices. Litigation-R-US
- Law Management with Attitude Already
a successful US franchise chain with over 700 offices, Litigation-R-US bears a
striking similarity to H&R Block, a tax advisory chain for IRS filing
(similar to self-assessment). Litigation-R-US's
formula includes fixed price lists for particular types of work combined with a
ruthlessly efficient marketing, advertising, telephone response and referral
network. Its increasing
standardisation has allowed its franchisees to use enormous numbers of part-time
and para-legal staff. Litigation-R-US
seeks funds to expand in all English-speaking countries over the next three
years, having just opened its first nine overseas offices in the UK last year
with the famous "tell ’em Sid sued you" advertising campaign. Rules
and Regulations The
whole bourse concept would probably have made a fun game, but it was important
to register how leading figures in the legal world rated the threats and
opportunities facing them rather than produce ratings randomly.
The game had to be soundly based on participants’ intuitions and
experiences. In the first of the
five rounds, players rated all of the above firms before
they invested. Each of the firms
was rated as more likely or less likely to be vulnerable, broadly speaking, to
socio-economics, to competitive threats or to internal problems.
The categories were political, economic, social, technological, leverage,
margin, rate, utilisation, buyers, suppliers, new entrants, direct competitors
and substitutes. During
each of the four investment rounds, participants were given print-outs of their
standings, the current investment position and the market capitalisation of the
five firms they could invest in. The
five game rounds were:
During
each round the Daphne News Network issued juicy reports, e.g. this item from the
Purple Round:
Blue,
Black, Red, BUST Blue
Smeed & Heinzelmann Inc, formerly an exclusive New York and London corporate
law firm, announced it was moving into Chapter 11 today after having lost a
string of high-profile suits against itself for poor advice.
Following its incorporation just 14 months ago, analysts were shocked at
how rapidly the firm managed to lose the $1.6 billion provided by investors for
a 25% stake in the firm. The senior
partner, Sir I M Knott-Barings, said, at the firm's press conference today,
"this once proud firm has been brought down by greedy capitalists seeking a
return on their money." An
analyst, who declined to be named, pointed out that the partners had taken away
over $5 million each Learning
from Past Success Over
the four rounds, the winning team turned its original £120,000 into over £7,000,000
- not bad for an afternoon’s work. The
losing team managed a still credible £4,000,000. Naturally, prizes were awarded to the winning team (as well
as some wooden spoons), but this was preceded by a post-mortem where the inputs
and results of the day were analysed. As
investments, e-law.com was the most favoured firm, rocketing to be worth more
than the combined value of all the other firms, with four times the value of the
second firm, Litigation-R-US. With
current internet share values, perhaps the game was more realistic than the
organisers planned. The best
performing traditional firm was National Legal, doing better than the City firm
and the regional practice. National
Legal was a close runner to Litigation-R-US. The
post mortem identified some worrying items:
The game was a huge success. The participants rated the day as excellent and the entertainment during the voyage down and up the Thames proved delightful. While investing in traditional legal firms may be fraught with difficulty, a day of strategic gaming was seen to be a good investment in learning.
Michael Mainelli is a Director of Z/Yen Limited (www.zyen.com), the UK’s leading risk/reward management firm and non-executive Chairman of Jaffe Associates.
Robert Pay is Managing Director of Jaffe Associates (www.get-serious.com), which provides sales, marketing and business improvement services to professional firms.
S.B. Lady Daphne is available for charter (www.lady-daphne.co.uk) and the Legal Bourse is available for up to 100 people from Z/Yen and Jaffe (michael_mainelli@zyen.com). |
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