Small and medium sized law firms need to be innovative

September 1st, 2018
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Law Firm Strategy Consultant and former Senior Partner at Webber Wentzel, David Lancaster, spoke at the boot camp for small and medium sized law firms hosted on 20 July by LexisNexis together with the Gauteng Law Council, at the CSIR Convention Centre in Pretoria.

By Kgomotso Ramotsho

LexisNexis together with the Gauteng Law Council held a Boot Camp for small and medium sized law firms on 20 July at the CSIR Convention Centre in Pretoria. Law Firm Strategy Consultant and former Senior Partner at Webber Wentzel, David Lancaster said 2017 was a rough year for the legal profession in South Africa (SA) and as a result some law firms have struggled. He added that for legal practitioners to run a successful firm a business plan was needed to set out where the legal practitioner would like the firm to be within five years. He pointed out that the plans should include –

  • the services the legal practitioner wants to offer;
  • the clients the legal practitioner would like to represent; and
  • which technology to use in the running of the law firm.

He noted, however, that small and medium sized law firms have advantages such as, where to house the law firm, because small and medium sized law firms are more flexible than big law firms. He advised that small and medium sized law firms should be situated in areas where there is more work for them.

Mr Lancaster added that another advantage small and medium sized law firms can use to their benefit was costs. He said clients focus on a need to get ‘more for less’ and that small law firms could position themselves to provide the right legal services at the right cost. He pointed out that the key to the future of the legal profession is to develop distinctive specialisation areas. Mr Lancaster said the days when one legal practitioner did everything in the firm was long gone. He noted that legal practitioners and small law firms needed to better position themselves and have a website to state what services they offer.

Mr Lancaster further said that small law firms could enter into alliances and partnerships with other law firms, particularly when specialising in areas of work different from the other firms. He pointed out that small law firms could specialise in more than one field. He added that small law firms should set a goal of employing the best people – from the support staff to the professional staff – for the firm to flourish. He mentioned that there was an increase in competition in the legal markets in SA and that the ‘buyers’ of legal services are in control of the markets. He said there was a push back on legal fees and on the delivery of services. He added that the clients are in the driver’s seat.

Mr Lancaster added that there was an increased focus by clients on cost effectiveness, predictability, efficiency and added value. He said clients want to know how long their matter will take and how much it is going to cost. He pointed out that there was also a war of talents in law firms, that law firms are fighting to get the best legal practitioners to work at their firms. He added that legal practitioners must find ways on how to rework the economic model, because the old way of running law firms are over.

Mr Lancaster said it was important for legal practitioners to understand the complexity of legal landscapes in SA and added that statistics show that 80 to 90% of legal practitioners in SA, practice either for themselves or in small or medium sized law firm. He added that legal practitioners tend to forget about the competitive landscape and suggested that legal practitioners take a look at two points of view. First legal practitioners must look at the client’s point of view. He said when a client is looking for a legal practitioner, they look at their options and who they can give work to. Secondly, legal practitioners must look at talent, who might be looking for a job and which platforms they use when looking for a job.

Mr Lancaster touched on what South African markets looked like. He mentioned the big six legal firms, medium sized law firms, boutique law firms, specialist intellectual property firms, legal service providers, global firms (who are opening a whole new world of competition) and networks such as Lex Africa. He added that there was also growth in the in-house legal teams and that more work that used to be done by external legal practitioners, was now being done in-house.

Advocate John Mullins SC, discussed medical malpractice at the boot camp for small and medium sized law firms in July.

Medical malpractice

Advocate John Mullins SC said there is no dark cloud hanging over medical malpractice and it will continue as it is. He said that the time for motor vehicle accident claims, which was major source of income for the legal profession, might have come to an end, but added that there was nothing wrong with legal practitioners saying that medical malpractice might be the way out. He pointed out that legal practitioners did not hold innocent people liable, but instead held guilty people liable. He said there was nothing shameful or wrong about legal practitioners helping the innocent get compensation.

Mr Mullins said it was important for legal practitioners to note that medical malpractice is different and, by nature, far more complex. He pointed out that doctors do not operate on patients unless necessary and that there had to have been a problem before a doctor could operate on a patient. He added the mere fact that things go wrong during an operation did not mean that the somebody did something wrong. He said in the practice of medicine things often go wrong. He added that medical malpractice claims required more preparation than motor vehicle accident claims. It required thought and expert reviews.

Mr Mullins pointed out that the saying ‘facts speak for themselves’ cannot work in medical malpractice. He added that medical malpractice was a fascinating and rewarding field. He said it was fascinating because legal practitioners deal with the medical field, and in the process get to learn about it. They also learn to measure doctor’s situations and what things are like at provincial hospitals and how nurses can neglect patients. He mentioned the State Liability Amendment Bill B16 of 2018 (the Bill). He noted that a few months ago the state introduced the Bill and said the Bill was a complicated piece of legislation.

Mr Mullins discussed the possibility of periodic payments in the Bill, such as, the future loss of income, medical expenditure and perhaps an instalment payment, particularly if the award is over a Million Rand and added it could be for any medical negligence award. However, he pointed out that the Bill did not specify what or how periodic payments would be determined. He said there were two components to the Bill, namely, periodic payments and provisional treatments. Mr Mullins added that the provisional treatment provisions were unconstitutional and that he could not see the provisions ever being passed by the Constitutional Court. He noted that periodic payments could be a problem and whatever the structure of the periodic payments would be, it has to accommodate the need of the legal practitioners to be rewarded to act for people.

Director in Sales at AJS, Chris Pearson, spoke at the boot camp for small and medium sized law firms at the CSIR Convection Centre in Pretoria.

Practical business advice to legal practitioners

Director in Sales at AJS, Chris Pearson, said the legal profession was facing challenges because it is changing, probably more so in the first world countries than it is in SA. He pointed out that clients in first world countries are driving the pricing model and demanding fixed fee arrangements. He added that as a result there is pressure for legal firms to work efficiently. He said the whole change was being fuelled by technology and that technology was making a difference in a big way in how law firms work.

Mr Pearson said in 2027, 10% of things produced will be 3D printable. He pointed out that the legal profession was changing faster than ever before and that it was never going to slow down. He added that innovation was not just about technology and that there are many ways law firms can be innovative. He gave an example that small law firms can be innovative by working from home and by attracting quality but less costly staff members who can work from home. He further said law firms can also give their younger staff a voice, because young people know how to be innovative.

Mr Pearson said legal firms can also be innovative by listening to their clients, as clients can tell them exactly what they want. He added that another way to be innovative is to realise the potential of the existing technology that the law firm already has and added that 90% of the legal profession do not use the tools available to them. He pointed out that law firms must give their staff members the right tools and train them to use those tools. He noted that legal practitioners can work from anywhere as there is existing technology that allows one to work through a remote browser.

Director of the Members Affairs at the Law Society of the Northern Provinces, Johan van Staden, discussed the Financial Intelligence Centre Amendment Act at the boot camp for small and medium sized law firms.

The Financial Intelligence Centre Amendment Act

Director of the Members Affairs Department at the Law Society of the Northern Provinces, Johan van Staden, said the saying ‘one size fits all’ in legal practices is wrong. He added that legal firms needed to develop risk management programmes, as there is increased scrutiny as legal practitioners are exposed in the country. Discussing the Financial Intelligence Centre Amendment Act 1 of 2017 (the Act), Mr van Staden went through some of the provisions in the Act and said legal practitioners needed to take a look at the Act and apply it as part of their business management practice and strategy.

Mr van Staden said provisions in the Act – that came into effect in October 2017 – deal with the changes in money laundering, risk-based approaches in business and provides for risk management and compliance programmes, including the obligation to keep identity and verification and transaction records safe.

Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

This article was first published in De Rebus in 2018 (September) DR 8.

 

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