Last Friday I added this comment as a post script to my article about the EU vote on 24 May:
We now know that neither side of the vote, win or loose, had or currently have a plan – well not one that they are telling us about. Some interesting months / years ahead then as we seem to be flying by the seat of our pants on this one.
Can we all learn from our leadership’s seemingly obvious error of not having a sketched plan on the back of a House of Commons complements slip?
This post is about the process of getting your business in shape for Brexit through a EU Management Plan. I aim to identify some of the business issues that may be affected by the uncertainty ahead and share how you can address them. Lets put the management speak to one side for this – it’s time to roll up the sleeves, be realistic and go forward.
Things Are Going To Change
Before the vote took place you will have had ideas, aspirations, plans and strategies, formal or informal, an element of certainty and comfort, about how your practice was operating and how you were wanting to move it forward. Then the vote took place and changed everything for everyone in the Country.
Now managers at law firms will be looking forward with feelings of outright anger, fear, excitement, hopelessness, concern, anxiety and optimism.
Such feelings are natural. Whichever feeling, or combination of, you have however is not going to help with the cool calm environment needed for you to plan your practice’s response to the current and, what is going to be, uncertainty of the next 24 months and more likely years beyond.
Consider Where You Are Now
If I was invited to draft your EU management plan, aside from dealing with any critical circumstances particular to your practice that require immediate and urgent attention, together we would need to:
- understand where your practice is now through reviewing the current business and marketing plan.
- what the ideas, aspirations, plans and strategies were before the EU vote.
- what the outcome of the vote will likely mean to your practice.
- how your ideas, aspirations, plans and strategies have been impacted upon by the EU vote.
- think how you are going to turn any risks and negative aspects to a positive opportunity.
Start With Keeping It Simple
Keeping it very simple to start with, review under broad headings each management operation of your law practice. For example:
- Finance – including accountant and bank relationships, condition of your accounts.
- Structure – what and who do you need around you for support.
- Stakeholders – staff, clients, business partners.
- Market – what is the current position of the market.
- Service and supply providers – how are that coping with the uncertainty.
- Compliance and regulation – are there areas of weakness.
- Infrastructure – IT, software backup and support.
- Risks – what are they likely to be for you.
- The list is not definitive – it needs to suit your individual situation.
Specific operations are managed within different cycles – monthly, quarterly, every six months or once a year and will depend on your own circumstances – size, structure, resources for example.
There will be some operations that have a set time to action, for example professional indemnity and practising certificate renewals. Others will be more frequent and are likely supported by staff, for example practice accounts, monthly reports, budgets, cast flow etc, etc.
I would suggest that in addition to your electronic or paper diary, you have a “to do” list with a date for action that is kept in a prominent and obvious place for you and your staff to see and be prompted by. As such it might encourage staff to pick up issues and take the initiative with the action needed.
As a very basic concept you therefore can look at where you presently are in your own cycle, and work from there as a starting point. You should take into account any potential problems you see as needing to be considered sooner rather than later, flag these up and bring these forward in the cycle.
I appreciate that these management operations seem obvious and every day issues but in a time of uncertainty they can become unstable and critical if the failure of even one operation occurs.
Waiting Is A Risky Option
A critical issue is not to wait or delay because there is apparently 24 months before the UK exits its relationship with the EU. Why so? Because businesses in both the UK and the EU will right now be working through a version of their own management operation if they have not already done so.
Large international organisation will certainly have done so – HSBC is an example of a business which has already undertaken such a review. Businesses and individuals need to start reviewing, considering and implementing change to take advantage of opportunities and avoid damaging risk as the environment they are operating in changes.
The EU Relationship
Sadly with the unknown consequences of how the UK and EU will arrange its future trading relationship, some business partners and services providers will be considering exiting the UK market sooner rather than later.
Many of us are only now becoming acquainted with what the EU is, after nearly five decades of EU membership. Until the 23 June 2016 the key certainties of membership for businesses were:
1. Free movement of goods, persons, services and capital between member states
2. The approximation of relevant laws, regulations and administrative provisions between member states
3. EU-wide competition policy, administered by the commission
4. A system of common external tariffs (CET – also known as the common customs tariff)
Therefore when reviewing your management operation I would suggest you take detailed account of arrangements and contracts that you have with the business partners to your practice, for example, is the business partner and service provider:
- wholly UK based.
- part or wholly EU based (are they part of an EU business, for example Amazon).
- needing to rely on the above EU arrangements to provide part or the whole service to your practice?
- able to continue with or renew the business arrangement with your practice?
Just one important example that comes to mind is whether professional indemnity insurance provided or underwritten by an EU based provider. Though a Solicitors Regulation Authority approved provider, has the UK / EU “passport” arrangement been relied upon to provide such service in the UK? Due to the uncertainly, will the Insurer want to or be able to remain in the UK market? The decisions being made by such an Insurer toward remaining in the UK market might not become clear until renewal is due – which for most practices is on or about 30 September each year.
Obviously, having looked at the EU business partner and service provider, it is as critically important, if your practice is a business partner and service provider to EU businesses, that you maintain an ongoing robust risk analysis and assessment of the viability of your practice continuing to work with and rely on them.
The Immediate Environment Relationship
For most practices this will be the relationship that you will be most familiar with. It will impact on your management operation in areas such as; banking services, finance, recruitment, market, clients, IT, HR, compliance, law and regulation as a few examples.
Again, keeping things simple, the purpose of looking at these management operations now is to keep the practice working, in business and profitable. We will therefore, in broad terms, need to consider the practice’s resources and their limitations as follows:
- Finance – e.g. reserves, cash flow, borrowing capacity, reporting and control systems, profitability and liquidity.
- Operations – e.g. physical facilities, quality systems, service level achievements, effectiveness of systems general management levels and capacity.
- Risk – e.g. taking on greater risk, compliance and regulatory failure.
- Marketing – e.g. image, reputation, position on price and value, services offered, effectiveness of promoting and retention of clients.
- Human Resources – e.g. employee profile, staffing levels, employee relations, employee turnover and effectiveness of HRM systems.
As before you should take into account any potential problems you see as needing to be considered sooner rather than later, flag these up and bring these forward in the cycle.
It is certain that investment and spending will slow, as this is what occurs in times of uncertainty. People and business go into survival mode – they cut back to their core operations and services, spending on vanity projects and luxury is put on hold or written off altogether.
The knock-on for your practice cannot be accurately measured but we can use past experience to help us gain some insight and confidence of what we can do to help ourselves in this situation. For businesses, things could get as bad as a recession. The things to watch as part of your own survival mode would be the examples described above.
Of key importance in times of uncertainty is the defining, monitoring and review of the limits to the practice’s resources. Boundaries and key indicators need to be established across all areas which are realistic, achievable, challenging but critically not destructive or undermining. These boundaries and key indicators can be changed as circumstances change but must not be permitted to drift or become unstable.
Now our natural human response to the vote has passed (shock or joy), we can now start with the process of forming new ideas, aspirations, plans and strategies – helping us to regain an element of certainty, comfort and vital control.
In my view the changes we will face walking toward the exit door and being out of the EU mean that it’s not going to be “business as usual”. How your practice was operating and how you were wanting to move it forward will need a disciplined and well managed review with a positive and confident approach to change.
While we may all be in this together it will be the strength and success of the individual parts that will ensure we make the best of the situation. This is not the time to rely on the big plan and gesture from our leaders, because they are just as uncertain about the future as we all are.
With the present lack of facts and direction from leadership – ironically we don’t even know where the leadership is going to come from at this time, we can be active, we can plan and form strategies to move forward. We can anticipate that the key benefits from EU membership are likely to fall away or have to be very hard fought for- we’ve had the message loud and clear from Brussels that there is no “deal” to be brokered – it’s all or nothing. On the other hand there will be new business opportunities, if your practice is correctly informed and positioned.
I hope you will find this article useful in assisting you start to think how you and your practice might be able to feel able to plan a response to the current and probable ongoing uncertainty of the next 24 months and years beyond. Put simply, until we have leadership and facts we cannot plan with any certainty.
If nothing else the EU referendum presents opportunity for your firm to get back to its core values, beliefs and reason for being. The key is to recognise the opportunities for doing this early on, to take back control and build confidence for you and your stakeholders. Key to achieving this is to know the reality of where you are now, see where you want to be, recognise the landscape of what is ahead for you, then plan to go forward with a little less “flying by the seat of your pants”.
I am available as a freelance consultant to assist you with your EU Management plan, or on any other practice management issue. Please contact me through LinkedIn with a connection request.
Author: Paul Wood, MA.
Date: June 2016.
About the Author: Paul, a freelance and independent practice manager and mentor offers law practices his experience and expertise in legal practice management support. With 38 years of experience and knowledge in private practice with the last 17 being a practice manager / director. He studied for his MA titled “Developing a Law Firm using Lexcel 2004″ while in fulltime employment. Paul was a guest speaker at the LMS Lexcel Annual Forum (2008) talking about “The Reality of Quality Standards”.