Merry-Time Law (The Legal Bourse)

By Professor Michael Mainelli and Robert Pay
Published by Professional Marketing, Professional Marketing International, pages 16-17.

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:

  • a jolly day out and a record of informal discussion;
  • a serious set of presentations and debates;
  • an innovative approach combining gravitas with fun.

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.

The ten participants were put into five team along with a participant from one of the organisers, i.e. five teams of three players. The ten participants were not lawyers for the day; they were investment managers of the top five investment management teams in the UK. Their objective was clear - make the most money over four rounds of investment. There were five legal shares in which to invest or they could keep their money in cash. During the game runners helped the five teams get their investments into the trading systems.

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. - 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. 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:

  • genesis round – an introduction to the five legal companies and an opportunity to set their performance parameters;
  • green round – technology;
  • yellow round – people issues (plus poaching from other teams);
  • purple round – new competitors;
  • red round – client changes.

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 in the past year alone while running a firm with some of the slackest quality control systems. The SEC promised a full inquiry on how such slack controls passed 10K requirements.

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, 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:

  • leading legal players were not keen on investing in traditional legal firms. While some of this reticence may be seen as due to the game, the competitive nature of the teams should have corrected this. Effectively, leading legal players do not see the point in investing more capital in current structures;
  • radically different alternatives to current legal service provision, e.g. franchising or automation, are seen as credible investments;
  • globalisation is an enormous threat which most participants felt the UK firms were not addressing effectively;
  • the full impact of technology was only hazily understood by senior individuals.

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 (, the UK’s leading risk/reward management firm and non-executive Chairman of Jaffe Associates.

Robert Pay is Managing Director of Jaffe Associates (, which provides sales, marketing and business improvement services to professional firms.

S.B. Lady Daphne is available for charter ( and the Legal Bourse is available for up to 100 people from Z/Yen and Jaffe (

[A version of this article originally appeared as “Merry-time law (the legal bourse)”, Professional Marketing International (Winter 2000) page 16-17.]