Amanda Butters suggests that a strong reputation is an asset all firms will need if they wish to thrive in a rapidly changing market in light of the Legal Services Act.
PM March 2011, Amanda Butters (Byfield Consultancy)

The Legal Services Act (LSA) came into force in 2007 and has been dubbed as the ‘Big Bang’ for the legal profession. Previously a profession known for being resistant to change, the legal profession is now one in transition. Last year non-lawyers were allowed to work in partnership with solicitors for the first time through legal disciplinary practices. By October this year alternative business structures (ABSs) are to be introduced that will ‘blow apart the established conventions of the law’ (The Times, 2009). The implementation of ABSs will permit the external ownership of law firms and allow firms to potentially seek investment through private equity and floating on the stock exchange. The LSA also provides the opportunity for non-lawyers, such as marketing professionals and accountants, to enter the upper echelons of law firms. These changes will completely alter the traditional structure and hierarchy of the legal market.

The threat of so called ‘Tesco Law’ in particular has got the legal profession up in arms. For many lawyers the prospect of the commoditisation of volume legal services, such as will writing, and the entry into the industry of retailers such as Tesco and the Co-Op as well as high street banks such as Halifax, threatens to undermine the profession and what it means to be a lawyer. However, for consumers the prospect of being able to purchase legal services from high-street brands that they know and trust promises to remove some of the mystery around lawyers and associated suspicion about ethics and fees.

The creation of the LSA was prompted by a review of the regulation of legal services in England and Wales by the Secretary of State for Constitutional Affairs. The purpose of the review was ‘To consider what regulatory framework would best promote competition, innovation and the public and consumer interest in an efficient, effective and independent legal sector’ (Legal Services Review, 2004). Competition in the market is about to increase dramatically making now, more than ever, a crucial time for law firms to be able to differentiate themselves not only from fellow firms, but high street retailers, banks, and consumer organisations, many of which will have significant marketing budgets at their disposal. Whether the LSA will bring about positive change for law firms has already been the subject of much debate and only time will tell. However, a strong reputation is an asset all firms will need if they wish to thrive in a rapidly changing market.

What is reputation?

In order to understand the extent to which reputation is crucial to law firms a good starting point is to define what reputation actually means. The Oxford English Dictionary defines reputation as ‘the beliefs or opinions that are generally held about someone or something’ (2010). From a corporate standpoint these beliefs and opinions are formed by the many stakeholders and publics of an organisation, e.g. its employees, shareholders, clients, local community, and the media, and are shaped as a result of many actions.

In the last two years we have faced a global economic downturn that will take decades to remedy. The importance of corporate reputation has been illustrated on a grand scale during the banking crisis and subsequent recession, and has been further compounded by incidents such as the recent BP oil spill in the Gulf of Mexico.

The role of PR in reputation management

The Chartered Institute of Public Relations’ (CIPR) definition of public relations positions the profession as central to managing reputation: ‘About reputation – the result of what you do, what you say and what others say about you. Public relations is the discipline which looks after reputation’. Communications academics consider PR to be a management function responsible for establishing and maintaining mutually beneficial relationships between an organisation and the publics on whom its success or failure depends. When working harmoniously with the marketing strategy of a firm, PR plays an important role in establishing reputation and differentiating a firm from its from competitors.

The “ideal” model of PR as devised by noted public relations theorist James Grunig is a mutually reciprocating form of communication that operates an open two-way dialogue between a company and its stakeholders. At a time when the legal market is on the brink of significant change and increase in competition is imminent law firms must continue to develop a strong reputation through an open dialogue with their publics.

Why is reputation important to a modern law firm?

The legal industry is one that has traditionally struggled with its reputation. Part of the initial findings by Sir David Clementi, then Chairman of Prudential plc, when appointed to undertake the review of legal services that instigated the implementation of the LSA was a ‘considerable concern’ regarding the way in which consumer complaints were handled. As noted by The Times, for years ‘there has been a feeling that the legal profession operates a closed shop that deters real competition and provides a cloak of mystification, not least about fees, under which tardiness and obscurity can flourish’. For commentators outside the legal sector ‘Tesco Law’is a positive prospect for consumers: ‘Competition delivers in ways that government bureaucrats cannot anticipate…Consumers can expect more choice, innovative services and lower prices.’ (FT, 2006).

A white paper produced by legal research company Jures entitled ‘The Big Bang Report: Opportunities and threats to the new legal services market’ evaluates extensive research into the market and the potential impact of the LSA. The paper begins by examining the public profile of the legal profession in general. Whilst some respondents were positive when asked if lawyers have a good reputation, many were not so optimistic. The report revealed that just 38% of leading lawyers believe the profession is regarded in a positive light by members of the public, and 62% believed the importance of their reputation will significantly increase as a result of the LSA.

The legal profession is often unfairly mistrusted and law firms have a lot to prove to avoid losing work to established household brands. As Co-operative Legal ­Services managing director Eddie Ryan recently told The Lawyer whilst brands like the Co-op aren’t synonymous with the law they are based on ethical values and trust, and that translates easily into legal services. Law firms aren’t in the business of selling “things” it is intangible services that are offered so the reputation of the firm plays a particularly crucial part in the decision to buy. The implementation of the LSA and subsequent shake-up in the market presents an opportunity for forward thinking law firms to utilise their reputations to carve out a place for themselves in the market. Whether to attract external investment or simply to continue to succeed by communicating professionalism and expertise firms have the potential to differentiate themselves from their competitors.

Maximising reputation

Whilst there is no simple solution to differentiating firms from the crowd it is possible to maximise the reputation of individual firms through a combination of marketing, business development, branding and both internal and external communications.

An important acknowledgement for professional services firms to make is that the power of the collective opinion of the general public is such that it can break a company in a way few other business risks can. The reputation of a firm is a signaling device to its publics as to the calibre of its employees, strategies, and services. If such an exercise hasn’t been conducted recently a good place to start, therefore, is with a stakeholder audit. All too often organisations that fail to listen and respond to the concerns of stakeholders find that their reputations have been damaged by failure to change. Through a stakeholder audit firms can address concerns and utilise the strengths identified by stakeholders to spearhead the communications strategy.

Appreciating that employees are one of the most important stakeholders of a firm is also crucial. Employees should be ambassadors of their companies and contribute positively to the reputation of an organisation. It is easy to be so focused on the external perception of a firm that the disenchantment of employees can go unnoticed. Disgruntled employees pose a threat to something as fragile as reputation – a fact many firms have learned the hard way during tough economic times and a spate of redundancies. Implementing a comprehensive internal communications strategy can ensure employees feel valued in the hardest of times, but will additionally encourage them to promote the reputation of the firm in a positive light. 

Crisis PR

Having a crisis management strategy in place should an issue arise can make all the difference when protecting the reputation of a firm.  Being prepared with an established issues management plan saves crucial time when a crisis needs addressing. Communication plans should be devised for all stakeholders that may be affected and a protocol should be agreed upon for handling external queries. Appointing a specialist PR agency to help can ensure a level of subjectivity not always achievable in-house during high pressure circumstances. PR consultants are adept at dealing with the media and can advise on best practice for avoiding a crisis whilst safeguarding a firm’s relationship with the media. Simply looking at coverage in the legal press of redundancies can identify those firms who have exercised good crisis management. The tone of the article, treatment of the topic and response of the law firm are good indicators as to whether the issue has been handled successfully.

Most professional services firms are alive to the fact that modern society expects businesses to have a conscience and implement a corporate social responsibility strategy. A law firm with a good social conscience and a CSR plan they invest and believe in can have the extra edge that could make the difference between gaining a new client and being passed over for a competitor. In an age in which the consumer is accustomed to a freedom of choice, and the consumer of legal services is about to be offered an array of alternative options, careful consideration and attention should be committed unwaveringly to the management of reputation.

As Henry Ford once said “You can’t build a reputation on what you’re going to do” and as far as reputation is concerned there is no time like the present for law firms to take action.

Amanda Butters is an Account Manager at Byfield Consultancy, specialists in reputation management for the professional services sector.