Attitudes to providers of legal services have changed radically over the past decade. Many SME managers shop around for services, go online or even opt to handle requirements in house – despite the clear business risk. Why? Somewhere along the line a fundamental misunderstanding of the value of professional advice has occurred. Simon Deans, partner and practice group leader, corporate and commercial, B P Collins, insists, it is time for law firms to turn off the clock and actively build strong relationships with SME managers that deliver measureable commercial value
Today more than half of businesses are handling their own legal matters amid widespread concern about the value for money offered by law firms, according to a major Legal Services Board research project. And a significant number are shopping around looking for cut-price legal services. This approach to legal risk management can be incredibly damaging. A new set of terms and conditions may seem a pretty generic request. But, without the right guidance, a ‘standard’ set may not either fit the business need or be used correctly. How many SMEs, for example, add the terms and conditions to the invoice where they will not be enforceable – an approach that completely negates their value, since the contract has already been undertaken?
Failure to take legal advice before embarking upon significant business change can have dire results. But how many business managers have the necessary depth of knowledge to understand when they might be making a decision that introduces or exacerbates risk to the business?
And businesses need more than a legal response when they seek advice. Lawyers should be sharing not only a depth of legal expertise but also commercial experience.
Rather than respond to the clear commercial needs of UK businesses, some law firms have taken a different tack, with the consequence that services have become if not commoditised, then certainly packaged into a neat, one size fits all model.
This is unlikely to meet the needs of clients, as there are many different ways to approach business issues and potential problems. Legal advice is about far more than the law; it is about ensuring the commercial requirements of a business are met within the most effective and appropriate legal framework.
Where there's an on-going, trusted relationship, business managers will receive tailored advice that can help them achieve appropriate answers to problems specific to them.
For example, does an off the shelf shareholders' agreement meet business needs? A minor tweak to the company Articles or a fully thought-through succession plan might instead be needed.
So how should managers of SMEs approach their relationship with a legal advisor? Speak to a lawyer who is interested in you and your business. One who is willing to put time and effort into understanding your needs and issues and then invests his/her time in you without the clock running. Such a lawyer will enable you to build confidence in the quality, relevance and, critically, the value of on-going legal advice to you and your business.
At the most basic level, see your law firm regularly for lunch or coffee. Expect a regular call to discuss the state of your business and its strategic direction, or to update senior managers on legislative changes that may be relevant to business operations. Invite your lawyer to attend or review board meetings.
More importantly, reject a transaction-based relationship where every interaction is billable.
Regardless of the cause, few SME’s are actively embracing the commercial knowledge and know-how of law firms. Yet leveraging a close relationship with a commercial law firm can minimise risk, increase your understanding of the consequences of your decisions and ensure that key business changes are undertaken in the most effective manner. Furthermore it will ultimately provide greater value for money.
The law market is offering a choice. For organisations that want to minimise commercial risk, reinforce flexibility or simply gain quick reassurance, an on-going relationship with a legal partner should be an essential part of the business strategy.