While law firms are increasingly comfortable with bringing in external advisers, some partners still believe such a move is a sign of weak management. Frances Ivens reports

As the saying goes, a consultant is someone who borrows your watch to tell you the time and then keeps the watch, a view that was shared by many City partners who answered Legal Week's Big Question survey on the topic in 2009.

Fast forward five years and the outlook has changed somewhat among the legal elite. Results from Legal Week's most recent survey show that, if told their firm was hiring external consultants, the first thoughts of 46% of partners would be that it was 'a prudent move to hold the firm up to independent scrutiny'.

The fear such news might provoke in other industries is clearly not felt by law firm partners: just 2% feel their automatic response to the news would be 'panic: we're heading for restructuring'.

This shift in attitude has also been felt by those within the consultancy industry itself, where firms are increasingly viewed as taking a more considered approach to seeking external advisers.

"I think law firms have got better at instructing consultants and they are clearer as to what they want out of the project," says Jomati Consultants principal Tony Williams (pictured). "It is a more sensible relationship now in terms of what we do; in recent years people want us to be a friendly challenger."

There is also a growing awareness of the often negative attitudes firms have previously had to consultants, with 41% of respondents agreeing with the statement that 'law firms are not yet willing enough to take proper external advice'. However, others took the opposite view, with 24% of respondents saying they thought law firms may use consultants too much.

"The problem is not about whether a consultant should not be used. It is about finding one who understands the sector and can apply their knowledge within the firm and engage the firm in the process," comments one respondent.

While overall acceptance has increased, it is fair to say that there is still some stigma surrounding any management decision to bring in consultants, with some partners viewing it as an option taken by senior figures when they have run out of their own ideas. One fifth of respondents to the survey say their initial thought on hearing that their firm had hired consultants to review strategy would be that 'management lacks conviction and vision'.

However, the survey also shows that 45% think that consultants can bring 'some' insight to law firms, and 33% believe they can bring a 'great deal of insight' as law firms can learn a lot from a consultant's experience with other industries.
 
The rise of the corporate approach
"With the market becoming more complex and more challenging partners are accepting that bringing in consultants is not a failure of the leadership of the firm, but a sensible thing to do," explains Williams.

Furthermore, as law firms continue to grow in size and reach there is a sense that they are, in some respects, beginning to operate as corporate entities. As a result a more business-centric approach to management is increasingly being adopted alongside the traditional partnership model.

"Lawyers are expert in the matters they deal with. But, in general, lawyers aren't expert in commercial understanding and strategising," argues Paul Heugh, chief executive of Skarbek Associates, a strategy implementation group that advises the legal sector. "Many law firms have come up with good strategic plans that they have implemented and gained advantage from, but they vary enormously in their ability to implement strategy, and lawyers aren't immune to the sorts of pressures and factors that affect that."

However, the view from partners is mixed, with some Big Question respondents suggesting that there are other ways for management to bring fresh ideas into the firm besides consultants.

For one partner, "a constant dialogue among managing partners of similarly situated law firms usually provides more meaningful insight than speaking to consultants who are often simply selling their last assignment to the next client." Another suggests management figures are too eager to take consultant advice as verbatim while dismissing the ideas of their own partners.

"You have got to bear in mind that law firm managers generally have no experience or training in management because they are lawyers," says Wragge Lawrence Graham & Co's senior partner, Quentin Poole (pictured, below). "So from the right people strategy consultancy can be very useful."

For partners, cost appears to be a key factor in their perception of the value consultants can offer a law firm. More than half of respondents say they would pay up to £100,000 for external consultants, the lowest figure featured in the survey. Only 7% would be willing to pay a top price of more than £1m, while 24% say they would pay between £100,000 and £249,999.

"What is needed – and largely absent except for institutionally backed consultancies like Moller PSFG – are advisory firms that really understand the legal market but are affordable yet rigorous enough with their analysis and the consulting processes to be able to deliver real value," explains one survey respondent.

Broader knowledge
Partners remain sceptical of the level of understanding consultants have of law firms' needs and the challenges of the sector, with many feeling that value for a firm may lie in a consultant's wider knowledge of professional services businesses.

Herbert Smith Freehills disputes partner and former executive partner Tim Parkes says: "It's rare to engage a consultant who knows more about your firm than you do but they may have a broader knowledge, which is of some value."

For both lawyers and consultants, the key to a successful relationship between a firm and its chosen external adviser is a clear mandate of what the firm wants to achieve from the consultation process.

"You need to be really sure what you are asking the consultant to advise on, and what you want the output to be," comments one in-house strategist.

"Used properly, consultants can add real value," says one partner. "They are best used when the firm is clear about its strategic objectives but unclear about the best ways of achieving them. Consultants can help firms frame the correct questions and help to articulate the results in a constructive way."

Respondents were most in favour of outside consultants being used to look at 'all aspects of strategy', with 40% supporting the idea of the broader mandate. Slightly fewer respondents, 35%, were in favour of consultants being used only to address 'specific issues such as a merger'. 

"We use consultants from time to time for specific projects," explains Baker & McKenzie's London managing partner, Paul Rawlinson. "Consultants can provide a useful third-party perspective but it helps if you are clear at the outset about why you're using them and what the outcomes should be."

Despite some mixed attitudes towards consultants, the results of the survey show that 47% of respondents have already employed consultants and would do so again. Only 4% say they would 'definitely not' employ a consultant, with the more uncertain responses that it is 'something we would consider in the future' and 'maybe' receiving 28% and 21% of replies, respectively.

"Lawyers are smart people so they do not have a problem articulating things, but they are a bit prone to not see the wood for the trees and a consultant can press them to be clear about what they are trying to achieve in a process," says Parkes.

Fresh ideas
When news emerged this summer that Ashurst had hired Bain & Company to conduct an internal strategic review, the move was met with some scepticism in the market, but partners at the firm have since told Legal Week that they felt the exercise was worthwhile.

"I believe that there are strengths to both bringing in strategists or consultants and developing this internally," adds Heugh. "One of the benefits of external consultation is it can bring fresh thinking. If Ashurst hired a company like Bain, then I think it's a good thing; it shows the firm is taking ideas from elsewhere."

With the legal market becoming more competitive and law firms getting larger, the use of external consultants seems set to continue as top firms seek to differentiate themselves from the crowd with effectively implemented strategy.

"I use consultancy firms," says Poole. "Any firm that thinks it is the fountain of all knowledge and wisdom is foolish – there is a strong case for bringing in experts."

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