Legal service needs of SME’s

Small and Medium Sized Enterprises (SME’s) make up 99.9% of private sector businesses in the U.K, with a combined turnover of £1.6 trillion. Yet there is plenty of evidence to show that they are poorly served by lawyers.

In this post I will suggest a few ways in which lawyers can improve their legal service delivery to the SME sector (and, indeed, to other sectors of the legal market).

 

Legal Services Board research into the SME market

The Legal Services Board (LSB) has conducted some interesting research into the SME legal services market.  An excellent summary of its research can be found in the Law Society’s Gazette.

The LSB report noted that SME’s will often prefer to pursue low cost options, such as downloading templates and fact sheets, in attempts to identify and resolve legal issues themselves.

Moreover, when SME’s do feel they need to seek independent legal advice, only 30% of them choose to contact a solicitor; the remainder contact accountants, unions, HR advisors and barristers.  For solicitors, the most disconcerting statistic should be this: the research survey reported that fewer than 15% of the SME’s thought that solicitors offered cost effective legal solutions.

 

Some personal observations about SME clients of law firms

Recently I have been spending quite a lot of time working alongside entrepreneurs and senior managers in SME’s.  Observing how SME entrepreneurs and senior managers typically react when faced with legal problems has been instructive.

Personal experience confirms one of the key findings of the LSB report: SME’s will indeed often first seek out other sources of legal advice before contacting a solicitor.

When solicitors have been contacted for some legal advice the most common reaction I have observed among SME clients of law firms is a degree of irritation that:

  1. The legal advice and documentation has taken so long to arrive.
  2. The initial advice and documentation is barely comprehensible when it does arrive.
  3. The cost of legal advice appears high and disproportionate.

So what can law firms do to improve services to SME’s and acquire greater market share of a very significant market?

 

Improve Responsiveness

Law firms can improve overall responsiveness, by which I mean the speed of delivery and appropriateness of the advice delivered, by streamlining their production processes.  This is most often best achieved by conducting a process mapping exercise.

Process maps can:

  1. Provide a snapshot overview about what is really going on
  2. Allow for easy further examination of detail, most often by way of annotating directly on the maps
  3. Help generate ideas about where, and how, improvements can be made.

Process mapping is not that hard to do, not in its most basic form.  The key to successful process mapping is consistency.  If the symbols used on the maps remain consistent then everyone reading the maps has a common point of reference.  Once everyone understands the process and can easily ‘see’ (and agree) where problems lie, suggestions for improvements and solutions usually soon follow.

The most successful process mapping exercises incorporate a typical client’s point of view.  In the absence of a client sitting alongside the process mapping team, this can be replicated by asking: ‘would a client be prepared to pay for this activity, done in this way, if it knew about it’?

Process mapping is done best when its facilitated by someone who is objective, impartial, and looks at the processes with a fresh eye.  They should also be capable of asking pertinent questions without fear or favour.

 

Improve Communications

Regular readers will recall that good communications is a well-known trait of high performing project managers.  They start by following methods which have been proven to be successful and then adapt them when required, given the needs of particular projects.

High performing project managers will spend time considering how best to communicate with project stakeholders, especially the client.  Graphical dashboard type summaries of project progress is now common.  Lawyers can easily adopt this approach to help inform clients of matter progress.

I also suggest that a more graphical approach can be applied to the delivery of client advice.  I’m not seeking to dumb-down or trivialise legal documentation itself.  However I really do believe there is plenty of scope for lawyers to improve the presentation of advice and early drafts of legal documentation.  Generally, SME entrepreneurs and managers do  not have the time or inclination to wade through dense legal documentation.  They look for easily digested summaries which highlight the risks and opportunities associated with a particular course of action.

 

Communicate value, not just price

Entrepreneurs and senior managers in SME’s are quick to identify value.  They appreciate there is always a cost associated with delivering valued products and services.  They want to move forward quickly and they most often feel they can do this if they can identify the value of doing something.  That is value to them and their customers.  If the value of doing something – or the means of doing something – is understood, then cost can become a secondary issue.

I suspect that when people hear the phrase ‘value pricing’ they focus on the price rather than the value element.  It is important to grasp that it is not just about price.  ‘Value’ is really about the whole proposition, which for lawyers means speed of delivery, appropriateness of the advice and ongoing ‘after sales’ client care.

That said, it is essential the price of the service is agreed upon before the work starts and not after it has been completed.  After all, it is value pricing, not value billing.  It is when the bill arrives (especially if it is just one bill at the end of the matter) that clients then query ‘how much?’

 

How might this look in practice?

If you have not seen it before, I have created a short video which illustrates how a law firm can apply and combine process improvement, project management and value pricing techniques.

I created this video about 18 months ago and the target client I had in mind was a fictional SME in the manufacturing sector.  I have long thought that law firms have poorly served the SME sector and the LSB research supports this view.

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