Building resilience - What clients want from their law firm

Building resilience What clients want from their law firm

About this report To gain the insights detailed in Building resilience: what clients want from their law firm, 88 clients, multipliers and non-clients of Mills & Reeve were interviewed in-depth in accordance with ISO 20252:2012 (Market Research) using a structured qualitative questionnaire and open-ended discussion. These responses were then analysed by independent market research agency, Acuigen.

To provide a diversity in views and opinions, interviewees were from: • A wide group of legal buyers including procurement, in-house legal, chief execs, finance and management and HR professionals • A multitude of sectors including charities, education, food and agribusiness, government, health and care, insurance, private wealth, real estate investment, sports and technology • Across the UK The research was carried out to form the basis of Mills & Reeve’s 2025 strategy and covered topics including market changes, legal functions and future technology and innovation.

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Foreword by our senior partner We are nothing without satisfied clients who trust us. That’s why we regularly ask for feedback on how we can improve and ensure we provide the service that our clients need, every day. But today is one thing, tomorrow is a whole different ball game. It is vital to look ahead so we can be the law firm that supports the complex and varied future aspirations of the people and businesses we work with.

Never has this been truer. Recent events have exacerbated the trends we were already seeing and have given us first-hand experience that the world is unpredictable and changing. Successful clients and law firms will be able to adapt to these changes.

The research that forms the basis of this report was carried out before the world had really begun to grapple with Covid-19 and its far reaching implications. However, the research findings have never been more relevant.

Relationships really are fundamental. Having that strategic partner or critical friend in your corner when you are making the toughest decisions in your working life is essential. Tech and innovation were coming over the horizon but have now had to be embraced head on. We’ve also had to look at how we streamline and improve processes.

Resilience is the key to survival. The ability to adapt and learn quickly, agility, leadership, and access to smart advice and strategic understanding in a form you need it has never been more important.

Justin Ripman Senior Partner, Mills & Reeve

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Why this research is important for both our clients and us Thank you to all the clients, legal buyers and multipliers who took part; it was no simple, quick survey but an indepth, face-to-face, hour-long conversation, so we truly appreciate your time and insights. They are invaluable as we develop our strategy for 2025 and beyond.

Our aim over that time is to become a leader in client experience, going well beyond measuring satisfaction levels to really understanding the aims, issues and motivations of our clients. This will enable us to truly step into their shoes at every stage of their journey with us and not just meet but exceed their expectations. Our firm has exceptionally high levels of staff engagement with 97% saying they would recommend the firm as a good place to work. Our ambition is to achieve and match this with our clients, so that 95% of them would recommend us as the firm to work with.

To meet this ambition, we have developed a strategy that places our clients at the heart of our business, bringing them into every part of the firm. This requires us to have a deeper understanding of their motivations and challenges so we can make sure we meet their needs.

Our strategy is underpinned by the desire to continue to be a leader in our chosen sectors and markets, a leader in talent development and a leader in innovation within the legal sector. We will achieve this through a leadership mindset, agility and collaboration.

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While carrying out the research, we were told time and again that, while the findings are invaluable for us, they are also useful for our clients and the wider industry. So, we have developed this report to share what we have learnt, help others plan for the next five years and decide what working with a law firm means to their organisation.

First we look at the evolution of both in-house legal teams and law firms before shining a spotlight on how market and regulatory changes are impacting clients. Finally we investigate the impact of innovation and technology.

We look forward to closely supporting our clients to keep pace with the constant change we all face today so that we can achieve more, together.

Claire Clarke Managing Partner, Mills & Reeve

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Chapter 1 Internal innovation As in-house teams evolve, expertise is everything Applying strategic thinking to business scenarios and finding innovative solutions to complex problems are essential skills in responding to unexpected and unpredictable events, such as the coronavirus pandemic.

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These skills are already on the rise in motivated and talented in-house lawyers in response to growth opportunities and the rapidly changing landscape. These skills are not taught in law schools, but there are a growing number of lawyers attracted to new opportunities and challenges as a means of learning and developing into commercial, agile business people.

In-house lawyers are adjusting to this change and are responsible for upskilling their teams as well. But they are finding that knowing the letter of the law is one thing, understanding how to apply it commercially and adapt it to specific situations is quite another. That’s where law firms have the opportunity to come into their own – horizon scanning, offering peer-to-peer networking, interpreting market changes and working collaboratively to move in the right strategic direction.

60%

More than half of legal buyers who currently have panels expect the firms on them to change in the next five years

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“It’s about taking a practical, commercial approach outside of just the legal sphere and being a trusted advisor who can give sensible views.”

Dominic Will, Group General Counsel, Cambridge Education Group Limited

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Law firms will lose their panel places if they don’t support in these areas: more than half (60%) who currently have panels expect the firms on them to change in the next five years. In many cases, these likely panel substitutions are not due to relationship breakdowns, cost concerns or inefficiency but a move towards working with more specialist firms who can offer the best strategic advice as the business matures.

Dominic Will, Group General Counsel, Cambridge Education Group Limited, comments “The legal market needs to assist with strategy and business. It’s about taking a practical, commercial approach outside of just the legal sphere and being a trusted advisor who can give sensible views.”

Strategic meets specialist Organisations are dealing with uncharted challenges and opportunities. It’s therefore no surprise that the legal buyers we spoke to expected in-house legal teams to adapt to meet demands on the business.

The focus of these teams is on helping interpret and achieve the strategic direction of the business, moving away from as much of the administrative element as possible. They plan to use technology to free up their time to develop skills and expertise in the areas that matter most to the business. They will look to their legal panel for the specialist expertise they do not have in-house. Rather than expecting legal panel members to run a project from beginning to end, they want to collaborate more fluidly, receiving advice as and when it is most valuable.

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Top 3 ways legal teams’ contributions to strategic direction will change in the next 5 years: 1. Legal functions will increase involvement 2. Lawyers should help to advise on business strategy 3. Advice will be reflective of client needs

What this means for the relationship between clients and law firms Legal panel members need to collaborate with in-house lawyers to help them make the right commercial decisions for their business for now and the future. In-house teams will need to help their legal panel to really get to grips with the business and build a long-term bond. This is more than a partnership; it is a mutually beneficial, symbiotic relationship.

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Chapter 2 Perfect understanding The evolution of external legal firms As we have seen, in an environment that is becoming more complex and where legal work is more integrated into strategy, relationships are fundamental. In-house lawyers want to work with law firms that really and truly understand them, that do everything they can to get to grips with the nuances of their individual organisation – their markets, structure, objectives and strategy.

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But many firms are not there yet: nearly three quarters (69%) of legal buyers believe lawyers need to become more holistic so that they are able to effectively support with commercial strategy. Being able to provide accurate legal advice is a given: what clients are looking for now is to find a law firm that they feel they can collaborate and grow a long-term bond with. They also need to be steadfastly available to offer bespoke advice and dialogue, not just at pivotal moments but every day.

“You need to have someone who is constantly up to date on the business and is aware of where extra support might be…”

Suzannah Lucas, Senior Legal Counsel, The Binding Site Group Limited

Evolution is needed and there is a strong belief that it will happen. 91% of legal buyers we spoke to during this research think there will be consolidation in the legal sector over the next five years as firms look for ways to grow their ability to offer the in-depth, specialist advice required.

Suzannah Lucas, Senior Legal Counsel, The Binding Site Group Limited, feels there will be a move towards building better partnerships between lawyers and clients: “I would like to think that it would be more of a partnership, rather than the traditional them-and-us situation. You need to have someone who is constantly up to date on the business and is aware of where extra support might be…You will need to be more closely connected with your lawyers.”

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Offering true value Despite procurement generally being less involved in the appointment of law firms, levels of evaluation will actually increase over the next few years, based on quality, value and team performance. Particularly in the public sector, firms need to be able to provide objective ways to evaluate their work.

Business people know that legal advice is a necessary cost but we have found that lawyers need to improve how they articulate the value of their offering. Stakeholders want to understand how advice is helping the organisation achieve its goals and so constitutes value for money.

Demonstrating value-add also continues to be a requirement, with additional training, webinars and ongoing knowledge sharing all highly appreciated.

Tim Butler, Managing Director, South Kensington Estates, says “If our lawyers are creating value then the fee is irrelevant. Adding value is critical, as well as knowing that your lawyer is truly on your side of the table. Lawyers need to be innovative, understand the business and bring solutions that add value.�

How law firms can offer better value for money: 1. Work collaboratively with clients to achieve goals and build relationships 2. Offer alternative, innovative pricing options and delivery platforms to keep costs down by driving efficiency 3. Offer training/webinars and or regular insight/ knowledge in markets appropriate to the client

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Keeping in-house lawyers awake When it comes to choosing a law firm, there are a number of factors that clients base their decisions on, including both societal and technological matters. They are keen to see diversity and inclusion as well as a record of social responsibility, while on the other hand look for a high level of information security and cyber essentials accreditations.

Ewan Montgomery, Portfolio Manager, UK Real Estate, Fidelity Internatonal sees “IT security and sustainability as really key”, whereas Victoria Yates, Head of Finance and Operations, Contact Manchester told us: “Diversity and inclusion is vital to how we run our organisation, if I could give it an 11/10, I would.”

Important factors for law firms in 2025 • A record of diversity and inclusion • ISO27001: 2013 information security management accreditation • Record of social responsibility • Cyber essentials accreditations • People accreditation such as listing in The Sunday Times’ Best 100 Companies to Work For Law firms will need to straddle both worlds, offering peace of mind about processes and people.

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“Adding value is critical, as well as knowing that your lawyer is truly on your side of the table.

Lawyers need to be innovative, understand the business and bring solutions that add value.�

Tim Butler, Managing Director, South Kensington Estates

What this means for the relationship between clients and law firms External law firms need to adapt to the pressures being faced in-house. By building genuine, insightful relationships they will be able to assist legal buyers in achieving their goals of being more strategic, skilled, influential and commercial. These skills need to be reflected in their external advisors.

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Chapter 3 Driving change during changing times Keeping pace with ever-evolving regulation There is uncertainty in the air and has been for some time, even before the coronavirus pandemic. Our research finds that business leaders are used to change and ready to adapt, looking for what is next, preparing for the unknown and making headway where they can. For example, regulation came up time and again in our interviews as a front-of-mind concern.

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Regulation is one of the most business-critical areas to quickly respond to, yet it is also often the most complex and prone to change. The pressure is greater now than ever. Restrictions on movement, ability to trade, job retention schemes, funding, through to more long term considerations around new trade deals, technology, government legislation‌ fast-changing times bring everincreasing amounts of regulation and control.

The result is that nearly all (89%) of legal buyers say risk, governance and regulation is affecting them. Two thirds (64%) actively worry about the political landscape and the increasing amount of regulation.

Biggest changes expected in clients’ markets over the next 5 years: 1. New regulation, laws or politics 2. Economic changes 3. Increased competition

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Political and professional pressures For businesses, it feels almost impossible to keep pace, but especially when regulators fail to do so. “Our markets will change depending on the political environment, regulators and how quickly they do or do not react”, states Sam Stevenson, Managing Director, Sequent (Guernsey) Limited. Yet, those same regulators appear to be becoming more punitive, leaving individuals exposed personally and professionally – a heavy burden when there is such uncharted territory to navigate.

This time lag in regulation development means that in some cases organisations are self-regulating. In others, an ethical gap is building, at a time when businesses risk serious reputational damage if they do not do the right thing by people and the environment.

Jagtar Singh, Trust Chair, Coventry and Warwickshire Partnership NHS Trust, advised: “A bit like we’ve seen happen to the auditors recently who have not spotted issues in these big companies that have then gone into liquidation, it’s the same for legal firms. You need to be careful about your reputation and what you agree to work on. We have strong ethics and your reputation will affect whether we work with you… It might be legal, but is it fair?

Will it pass the ‘Daily Mail test’ ethically?”

Damien Oliver, Commercial and Programmes Director, Maritime & Coastguard Agency, told us that advisers need to be strategic and innovative to really help their clients through this maze: “There is a political landscape now which requires us to take more risk, push the boundaries, and stretch the definition of law more. [Lawyers] need to adapt to that and accept that they are going to be under tremendous strain to find legal solutions to aspirations which might just seem impossible.”

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“[Lawyers] need to… accept that they are going to be under tremendous strain to find legal solutions to aspirations which might just seem impossible.”

Damien Oliver, Commercial and Programmes Director, Maritime & Coastguard Agency

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What comes next?

While in many larger companies these times of rapid change are viewed as a potential opportunity to expand, leaders in smaller or publicly-funded organisations tend to be concerned that the uncertainty may restrict their ability to grow or be a costly distraction. Either way, action is being taken. Only 4% of clients told us that there is unlikely to be any change to how they run their business over the next five years. Almost a third, 31%, are planning to make fundamental changes – evolving their business structure, both organically and through mergers and acquisitions.

31%

Almost a third of businesses are planning to make fundamental changes to their business

What this means for the relationship between clients and law firms To succeed, law firms must place themselves at the heart of driving change. Clients see it as their lawyers’ responsibility to react quickly, strategically and practically to new legislation. They want proactive updates on regulation and governance shifts, supported by personalised insights on the likely impact. With greater responsibility comes greater personal liability. With that, comes an increasing reliance on the very best advice and insights.

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Chapter 4 In the balance Enabling people-first tech transformation As you read this report, you will be working very differently to how you were a few months ago.

There has been a huge increase in appetite for legal technology and we have all been forced to innovate in terms of how we work. Previous barriers have been removed in order to move forward with the day-today. High demand for output in certain business areas has expedited the need to find new solutions. The question now is will this become our new normal?

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Our research finds that legal buyers are, on the whole, excited by the prospect of legal innovation and solutions in the lead up to 2025 and recent events, such as the government providing ÂŁ2 million to support new and emerging technologies in the legal sector, have merely accelerated changes that were on the horizon. Many clients see innovation as a way to free up the time of lawyers to focus their energy on what matters: providing actionable, commercial advice to meet the needs of their particular strategic aims. Three in five (61%) of the people we interviewed during our research confirmed that innovation in law firms is important to them.

61%

Three in five of the people we interviewed during our research confirmed that innovation in law firms is important to them

Top reasons innovation and technology are seen as vital for legal services 1. Improve the efficiency of current processes overall 2. Improve cost efficiency by using technology to carry out repetitive and administrative work 3. Improve communication and learning by providing online training and project management 26

“I cannot get the advice I want out of a computer by just talking problems through. However, I see algorithms being developed in discrete areas like disclosure exercises on litigation.�

Louis Ditz, General Counsel, The Hillview Group

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A balancing act Despite this seeming positive, there is a strong sense of uncertainty about technology, particularly its potential to negatively affect valued relationships. Legal buyers are keen to point out that the use of technology should not be to the detriment of building genuine relationships. 90% believe that relationships and people are still the number one most important aspects of the legal landscape.

Many of the legal buyers we spoke to thought technology would have an impact but were worried that it may take away the human element. Louis Ditz, General Counsel, The Hillview Group, sees the advantages of using technology for specific areas of legal work: “I cannot get the advice I want out of a computer by just talking problems through.

However, I see algorithms being developed in discrete areas like disclosure exercises on litigation. That can involve trawling through thousands of documents and historically would have involved lots of people in a room sorting papers.�

90%

of legal buyers believe relationships and people are still the most important aspects of the legal landscape

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Catherine Drennan, Head of Legal, Human Fertilisation and Embryology Authority, also sees that there are opportunities to use artificial intelligence to, “let the machine do some of the work”. However, she believes that this can only be done with the right people behind the scenes: “You should do that knowing that you have always got the experience and the expertise of the human, who understands you and your organisation and how you work.” This chimes with many others we spoke to. A large proportion (40%) are confident that technology can be used to improve efficiency without taking away the human contact.

40%

of legal buyers are confident that technology can improve efficiency without taking away the human contact

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“The tipping point of change is eventually happening so that we are starting to see legal services presented in different ways.

The shift has been driven by technology which is at the core of thinking differently about how legal services can be delivered...”

Dan Fitz, General Counsel and Company Secretary, The Francis Crick Institute Limited

Tactical work versus strategic advice Clients clearly place different value on routine and manual work compared to strategically important legal advice, and lawyers need to adopt an appropriate approach for each.

As Dan Fitz, General Counsel and Company Secretary, The Francis Crick Institute Limited, puts it: “The tipping point of change is eventually happening so that we are starting to see legal services presented in different ways. The shift has been driven by technology which is at the core of thinking differently about how legal services can be delivered, such as self-serve and helpdesks. It’s not just a tweak to the traditional but really innovative thinking.” Jennifer Foote, Company Secretary and General Counsel, LTE Group agrees stating, “The profession needs to move on from ‘pink string and sealing wax’ to look at the transactional and the complex.”

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Areas where legal buyers are keen to see their lawyers embracing technology are: Communication Clients place a great level of importance on visibility. They want to meet frequently face-to-face, although they are also open to using technology like Skype, Zoom, Microsoft Teams and other video call software to ensure regular communication and increased responsiveness.

Clarity Video calling and document sharing software are seen as key to streamlining processes and keeping track of information, including the fee balance.

Collaboration Technology is thought to be a way for clients and advisers to work together more collaboratively, developing documents virtually and communicating more often, from simple status alerts to virtual meeting rooms for strategic conversations. Our interviewees also highlighted that team consistency is highly appreciated and that technology should be used to ensure the core team can be responsive and take on more work when required.

Commercial Legal buyers recognise that as firms adapt to new ways of delivering their service, they can share their learnings and help with their own endeavours.

What this means for the relationship between clients and law firms Clients expect their lawyers to be making the most of the technology available to them, using the time this frees up to develop deeper relationships and specialist expertise.

It’s not a case of the robots taking over but conversely the human-side of law coming to the fore, providing the judgement required to make decisions.

Get in touch If you have any questions about Mills & Reeve’s approach to client satisfaction, please get in touch with: Kirsty Shenton Head of Client Care Kirsty.Shenton@Mills-Reeve.com +44 (0)7483 413 234 For media queries, please contact: Rob Neal Head of Communications Rob.Neal@Mills-Reeve.com +44 (0)7875 374 966

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