Survival of the fittest?

I’m old. I don’t just mean old in the way that our kids always think of us as old. I mean I’m old in a ‘seen it all before’ type of way. I was a teenager when the first Live Aid happened for heaven’s sake!

I’ve lived through a few recessions and worked both as a lawyer within law firms, and as an external supplier to law firms during recessions.

One phrase is always repeated. The perceived wisdom in every such crisis. It’s a phrase we are hearing a lot at the moment.

“The profession will be healthier afterwards.”

The theory is that the harsh realities of a recession will effectively weed out those firms which were already in a poor state. It’s a fairly brutal view and while it does have some truth to it, I’d suggest that in fact it doesn’t tell the whole story.

It’s not the whole story

There’s no doubt that inefficiency and old fashioned methods can be risky, and those risks are realised when times become truly tough for businesses. If the firm has too many support staff for what it really needs. If the premises are more expensive than necessary. If credit control is a verboten phrase because ‘we don’t want to upset the clients ‘. (Even the ones who aren’t paying?!)

All of these things can and will cause problems during recessionary times. They may indeed in extreme cases bring down firms.

However, every single post-recession review features comments like “We will never go back to those inefficient ways”. But weirdly, people don’t seem to truly learn. If they did then the same issues wouldn’t crop up every time. They might be slightly different in their make up, however, they will absolutely relate to inefficiency.

Good times breed lazy thinking. It becomes easy to relax back into the old ways. Why expend time and money on new fangled systems, or more efficient resourcing models when ‘things are on the up’?

There’s no longer a burning platform, so difficult decisions get put off, the pain of recession recedes into the distance, and things move on. Until the next time. And the next time. And….you get the point.

A definition of insanity is doing the same thing over and over and expecting a different outcome.

I’d say that these bizarre and awful times are the ideal moment to try something different. To change.

If you had to design a law firm from scratch, I suspect many firms would not design the model they in fact operate at the moment. They’d use up to date technology. They’d outsource key operational functions. They may now facilitate home working.

While they do not of course have the luxury of starting from a blank sheet of paper, that thought process can help firms to spot areas where their present model differs fundamentally from what optimal would look like. Maybe there are small shifts which are possible. Maybe a plan for change can be put in place.

One of the most telling changes we have seen as a business is an increased demand for our Process Review team.

Firms of all shapes and sizes, and increasingly bigger firms, have approached us to help them design their operating model for their finance function. It may or may not involve outsourcing the function in whole or in part, but it will always result in an improved way of working. Improved efficiency. Cost savings. Better, more accurate data with which to manage the business.

It’s a relatively small step, but at least they are looking to do things differently. To change. To evolve.

I’d say that more than ever, with on and off lockdowns and restrictions likely for quite some time to come, the ability to change and adapt will become a defining factor in the likelihood of a firm’s survival.

Alex Holt, The Cashroom

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The Cashroom Ltd

We exist to deal with the day to day administration of a law firm’s finance function, ensure compliance with the Solicitor’s Accounts Rules, and provide firms with management information and Management Accounts. Our legal cashiering service, for almost 180 clients in the UK, is delivered remotely by a team of qualified cashiers, working in our offices using the client’s own practice management system.