Taking the middle ground

The mid-sized law firms at this roundtable are a good representative sample. They include full-service firms with a range of private client and business-focused practice areas; well-established firms with legacy systems; and recent start-ups with a niche offering. In no particular order, these firms have offices in London’s West End and Islington, Brighton, Manchester, Sheffield, Birmingham, Leeds, St Albans, Reading, Horsham, Bury St Edmunds, Cambridge, Ipswich and Norwich.

What they share is the knowledge that a poor investment decision, or a business strategy based on the wrong assumptions, can turn into an existential threat for a mid-sized firm. For many, top of mind is the purchase and adoption of technology, the main topic on today’s agenda. Those present know their use of technology must not lag competitors.

Tech adoption

Tony Roe, partner at Reading firm Dexter Montague, sets the scene: ‘In June last year, the Legal Services Board did a survey of 1,300 legal services organisations, which included barristers’ chambers as well as law firms. It found that 61%... had introduced at least one of 13 technologies, making it easier for people to access legal services. When it defined “technologies”, it said that they included video-conferencing, electronic signatures, identification-checking tools, websites with interactive features, live chat and virtual assistants, and custom-built smart apps.’

Video-conferencing, accessible for most, tops the adoption list. This has made it possible to secure clients from ‘further afield’. Roe says his firm is reviewing its use of technology in the round. ‘Ultimately, it is about growth,’ he says, ‘growth of the bottom line, as well as the growth of the top line.’

‘Technology’s one of the biggest focuses for us at the moment,’ says Tracy Lacey-Smith, joint head of commercial litigation at St Albans-based SA Law. She explains this is ‘not just from a client perspective and making our services more accessible to them, with simple things like being able to pay online or [chat to] virtual assistants’. The firm is also changing what happens behind the scenes. Environmentally sustainable ways of working are a priority, driven by the firm’s ‘green group’.

Most mid-sized firms do not have mandatory reporting requirements with regard to environmental practices, but Lacey-Smith says potential clients do ask about this. And, as for the younger cohort of potential recruits, ‘it’s a big issue for them’.

‘I would describe us as a digital business,’ James Temple, chief operating officer of West End firm Seddons, says. ‘We have invested a huge amount in ensuring that everything we do can be done without paper from anywhere in the world. The impact of that on the business is huge. It’s enabled us to move office and reduce the space we have by half, so commercially it’s now starting to repay us. Our printing’s significantly reduced and we’re now a pretty hybrid business.’

For some more specialised firms, use of technology is also about aligning themselves with the way their clients work. For Briffa partner Éamon Chawke, whose firm has offices in Islington, London, and Cork, Ireland, technology is used to facilitate the response times that the firm’s intellectual property clients expect. ‘What tech-savvy clients expect of us now is that level of speed,’ he says. ‘They will not wait two or three days for you to come back to them.’

The firm therefore moved away from a ‘physical server’, which enabled secure remote working. ‘By the time December 2019 hit, we had moved to Clio,’ Chawke says. ‘We moved to laptops and people being able to access Teams… We extended it into Microsoft, on the advice that this was one of the big technology companies in the world where your data was going to be safe.’ When pandemic restrictions hit in March 2020, ‘we could actually send everyone home’.

‘Covid was a massive catalyst for tech adoption and also for dramatically shifted client expectations,’ legal software provider Clio’s founder and CEO Jack Newton says. ‘Four or five years ago, it would have been a pretty innovative client demanding e-signature for their legal documents. Whereas today, that’s very much “table stakes” and the client would be surprised if you’re not making those capabilities available to them.’

Newton notes that the LSB’s approach, identifying 13 different types of technology used by firms, does not fully reflect the way firms themselves address the use of tech. That is because some of the key functions are part of integrated systems. ‘You may have, for example, a practice management system that has integrated video-conferencing, integrated e-signature, integrated client portal,’ he explains. ‘It’s one system delivering a wide array of capabilities to a law firm and to clients.’

James Tarling, CEO of Ashtons Legal, based in its Norwich office, highlights the challenge of adopting new technology for a well-established firm. ‘I’m actually quite envious of a firm that started just a few years ago,’ he says. ‘Because one of the big challenges is all the legacy systems… moving, migrating to new systems and  maintaining the data security and the accessibility… Going through that process can be quite a challenge.’

Security has to be the first consideration, Tarling notes. With security assurances provided, he says, a firm has to think about new technology from two perspectives: ‘making us more efficient as a business; and making the client experience better’. The two necessarily overlap, Tarling suggests, adding that this is a better starting point than focusing on specific products, such as an app or a portal.

When considering a transition to new ways of working, those present agree, it is wrong to think in terms of the age profile of staff and partners. As Tarling puts it: ‘A lot of our lawyers who have been with us a long time have gone through huge amounts of technological change in their working careers and they’ve normalised [that], but they’re going to have to keep radically changing the way that they work.

‘Sometimes we find that people who haven’t been with us very long have learned one way of working, and bigger changes are more of a shock to the system.’ While ‘there are loads of really exciting, innovative younger lawyers… there are also many senior lawyers that are really driving us to have more innovative technology that does the job, and also delivers’.

Adoption of remote and agile working was, by necessity, rapid during lockdowns, with improvised solutions replaced with more reassuring processes and systems as soon as was practicable.

Artificial intelligence

Attention now turns to the implications of artificial intelligence (AI) for mid-size firms. All present have, to varying degrees, looked at AI, but adoption is limited.

Alun Williams, partner at London West End firm Spector Constant & Williams, looked to the judiciary’s guide on using AI for a steer. He was disappointed. ‘I was expecting [it] to be enlightening,’ he says. ‘It’s literally a page and a half about how you shouldn’t do this, this and this, because you might get into trouble. That was it. That’s what the judiciary are advised as to how AI may assist. What we want to know is how it helps.’

Much attention is paid to generative AI – large language models such as ChatGPT. ‘I did an exercise with ChatGPT,’ Roe relates. ‘I prepared the work that I needed to do [for a mediation] and then I used ChatGPT and requested the number of different references and so on.’ What came back ‘wasn’t bad’ as such, says Roe, but ‘it was well below par’. The experience brought to mind another lawyer’s quote on AI: ‘Generative AI will not replace lawyers, but lawyers who use it will replace those who don’t.’

‘Hallucinations’ abound with large language models. Williams relates one test. ‘One of the associates asked me a question about a fairly technical point regarding local authority sales of land,’ he says. What came back when ChatGPT was asked ‘was law’, he says, but still wrong. It ‘assumed that a local authority was in this case Network Rail and therefore the entire answer was predicated on the wrong parameters’.

James Brown, founder of Manchester, Sheffield and London firm Hall Brown, points out this is just one application for AI. ‘AI is everywhere,’ he says. ‘Most of our security tools are AI because it’s all [about] watching patterns of behaviour and looking for things that happen outside what looks normal.’

Tarling sees challenges for professional firms as technology’s reliability improves. ‘It seems to me that a lot of the technology that we’re getting and developing is removing some of the stuff that junior lawyers did,’ he says. As a result, ‘the way in which we’ve trained people historically is no longer fit for purpose with new technologies, because of some of the activities that are required. There’s quite a big change that I’m not sure as professionals we’ve really got to grips with’.

An experienced lawyer is still required to check the output, spot errors, and ‘sprinkle the fairy dust’ that makes advice sound and appropriate for the client.

For Newton, meanwhile, ‘at least in our lifetimes we’re not talking about AI as a standalone entity replacing lawyers, but really lawyers that will leverage AI to become vastly more productive’.

Newton points to a study published by Boston Consulting Group, where tasks were set for consultants with access to ChatGPT-4 – tasks also completed by consultants who lacked access. ‘It was pretty astonishing,’ Newton says. ‘The consultants that were using AI completed 12% more tasks than the consultants not using AI. They completed those tasks 25% faster and, what’s most interesting, the quality of the work they produced was assessed as being 40% better. I think this is foreshadowing at least some of how we’ll talk about AI in legal.’

Temple says AI can already meet a good standard for some business support tasks. ‘For the business services team it’s hugely beneficial,’ he says. ‘The other day I used ChatGPT to write a [staff] eye care policy. I typed in, “Write me an eye care policy for a UK law firm in London” and it nailed it. It put a dollar sign rather than a pound sign, I think that was the only thing I changed.’

Recruitment and retention

The discussion moves on to recruitment and retention – a challenge for mid-market law firms that have neither the big brand, nor the big salaries, of larger rivals. So what do those present offer?

Tarling cites ‘flexibility and diversity’ within ‘a fully hybrid’ business. ‘There is much more flexibility in our practice,’ he says. ‘Increasingly, with the access to technology, access to tools, access to clients… we’re a regionally based firm but our client base is a national and international client base.’

Roe finds being close to London to be a double-edged sword. ‘We’re 25 minutes from Paddington to Reading, door to door, and we have this concern that an individual can actually go to London and get a job there at much more than we would be able to pay them,’ he says. ‘But I think a lot of it is about the nature of the business, good-quality work, international clients, national clients. A lot of it is about the ethos of the firm as well.’ Hands-on experience with clients can come sooner in a smaller firm, he notes, which develops careers and is personally satisfying.

‘We tell people directly in the interview “we’re not going to be able to compete with other London firms on salary, so if that’s what you’re here for go to Clifford Chance, go to Allen & Overy”,’ Chawke says. ‘But what we say is, while we can’t compete on salary we can compete on pretty much everything else.’ He cites sustainability, diversity and inclusion. The firm has also removed the cap on annual leave. Staff can enjoy such flexibility so long as they can ‘be reasonable, be responsible, be respectful’, he adds.

‘I think we are starting to see a generation of people coming into our businesses that have completely different needs and requirements from [us] than they did 10 or 20 years ago,’ Temple reflects.

Does an approach that stresses culture, autonomy and flexibility, work? ‘Our retention is fantastic,’ Lacey-Smith relates. ‘People generally don’t leave once they’re settled in a really nice part of the country in a firm that provides excellent work with a great work-life balance, hybrid and flexible working... If we can get them to that point, then generally people will stay.’

Paul Britton, managing director of London West End and Brighton firm Britton & Time, speaks up for the benefits of a more traditional set-up. The firm opened three months before the first pandemic lockdown, he recalls, but with that period over, ‘my lawyers work nine until six’, he says. ‘They get a full hour lunch break. There is zero working from home for paralegals. There is no working from home for trainees. If they have a hospital or a dental appointment, then, of course, they can work from home that day.’

He continues: ‘All of our lawyers work Monday to Friday. When a client wants access to a lawyer they want certainty that when they email they are going to be working. Not working between a set number of hours. It’s just no good for clients. And, in fact, what you mustn’t all do is delude yourselves that you are acquiring clients by offering this flexibility to your staff. Because a lot of clients that I acquire are not happy with their lawyers if they don’t work when they want them to be working. If they email them at the weekend, they do want a response.’

Of course, it is also acknowledged that junior professionals miss the benefits of office life, including the opportunities for learning day to day from working alongside senior colleagues. Flexibility has, in many firms, been most highly valued by senior people who are confident and experienced. Britton says his firm has an excellent retention rate.

Brown says paying close attention to staff wellbeing is important. The firm’s focus on family law means, ‘because of the nature of [what] we do, it can be incredibly distressing at times. We have a psychotherapist who’s available 24 hours a day, completely confidentially’.

Newton points to the results of a survey Clio conducted of over 1,000 lawyers on the factors motivating them to change firms. ‘We found that for most lawyers, the flexibility and values of the firm they were considering mattered just as much, if not more, than compensation,’ he says. ‘This marks a significant shift from the past, where compensation was often the primary consideration.’

‘If you want autonomy, we encourage it. But you need to be accountable for what you do,’ Horsham-based Lewis Denley’s managing partner, Colin Secomb, says. ‘We lay it out nice and clearly. If you’re accountable and you achieve that, then you have the autonomy that you want.’

Williams relates that his 70-strong firm has lost one person in five years. ‘I think young people need something to believe in,’ he concludes. ‘We try and focus on that, without virtue signalling.’

 

• This roundtable discussion was kindly sponsored by Clio. To download the report ‘2024 Legal Trends for Mid-Sized Law Firms’. Click here for more >>