Collapse of PI – time to reinvent your firm

The announcement from George Osborne raising the small-claims limit to £5,000 has left PI firms in a state of shock. The PI cake keeps getting smaller and this latest news has left many firms wondering how they are going to replace a long-standing income stream that they have been able to rely on for decades.

Many of those affected have been considering how to develop their business in the face of declining PI revenues – and some have taken positive and successful steps to protect their firms. However, many will be quietly admitting that they really should have done something by now to make their firms fitter for this more turbulent market. Osborne’s latest plans have a heavy impact, and may be catastrophic for some. Yesterday’s challenge was about considering how to change; today’s challenge is about having no choice but to change!

That is easier said than done. If your firm is affected, it is likely that you will face a number of difficult questions, including:

• How do PI lawyers develop new (or refresh old) skills quickly?
• Do we develop a new income stream or grow existing practices, particularly as in most markets this will mean winning business from competitors?
• How do we choose which market to focus on?
• As many of our lawyers have been avoiding business development for years, how do we create a culture where marketing is embraced?
• As we have been ‘comfortable’ for many years, our routines are very ingrained; how do we get everyone to embrace change?

This is a vicious circle of challenges that law firm leaders have to wrestle with, and a positive and urgent response is vital.  There will be a lot of ‘rabbits in headlights’. There will be some that struggle to get to grips with the issues even if they have good intentions, and there will also be those that see an opportunity, work out their clear new strategy and take the key steps to implement it.

This situation requires a fundamental rethink about where the firm wants to get to, openness to new ideas and a commitment to training and development to get there.  Above all, this is about businesses requiring major change – for many the biggest for decades – and it is inevitable that lawyers may find themselves out of their comfort zones.

So what needs to be done?

• Work out what you want to focus on instead of PI – consider some of the ideas you have had over the years as well as your firm’s strengths and weaknesses. Do not forget to look at what your rivals are doing, because they will not give up their clients without a fight!
• Develop your new strategy, and most importantly, the major steps for implementation. Many lawyers quite openly admit they feel they have good ideas but just do not do a good job in implementation.
• Get your senior colleagues onside at the outset and make sure the whole firm understands the importance of what you are doing.
• Allocate time to training and development so that those changing have time to get familiar (or re-familiar) with their new priority.
• Get some outside help.  Although this is not rocket science, for many firms developing strategy and engaging in new activities is unfamiliar territory.  For some the need for help is about how to launch or relaunch a service area, for some it is business development, marketing training and coaching and for others it’s about basic project management. Even though this is all about the shrinkage of the PI market, for many firms there will be a long period of run-off work – as well as ongoing PI work of course – which will add up to a continuing heavy workload, so an extra pair of hands with experience will inevitably be helpful.

So, bearing in mind the alternatives, now is the time for reinvention.  If not now, when?

Larry Cattle, consultant, Law Society Consulting