Like any other business, law firms are not immune to the need for change and adaptation. Law firms must regularly evaluate their operations, performance, and competitiveness in order to remain successful in a rapidly evolving legal landscape.
One way that law firms can achieve this is through restructuring. Restructuring involves making changes to a firm’s organisational structure, operations, or business model with the aim of improving efficiency, reducing costs, or positioning the firm for future growth. R&R Solutions explore the reasons why law firms restructure, the types of restructuring models available, the potential benefits and challenges of law firm restructuring and how R&R Solutions can assist in the process.
Why do law firms restructure?
Law firms may restructure for a wide range of reasons, including:
- Cost-cutting: Law firms may restructure to reduce costs by eliminating redundancies, consolidating departments or offices, or streamlining operations.
- Expansion: Law firms may restructure to expand their business by adding new practice areas, merging with, or acquiring other firms, or opening new offices in different locations.
- Adapt to a changing legal market: Law firms may restructure in response to changes in the legal market, such as increased competition, changes in client needs, or the introduction of fixed costs in certain types of cases.
- Improved efficiency: Law firms may restructure to improve their efficiency by reorganising their operations or adopting new technologies.
- Succession planning: Law firms may restructure to plan for succession and ensure the continuity of their business by transitioning leadership and ownership to a successor.
Overall, law firms restructure to stay competitive, adapt to changing market conditions, improve efficiency, and position themselves for future growth and success.
Types of law firm restructuring
There are several types of law firm restructuring routes that can be taken depending on the specific goals and needs of the firm. Listed below are some of the most common types:
- Mergers and acquisitions: Law firms may merge with or acquire other firms in order to expand their client base, geographic reach, or service offerings.
- Practice area changes: Law firms may restructure by expanding or contracting their practice areas based on changes in client demand or market conditions. For example, a firm may choose to focus more on intellectual property law and less on personal injury due to market changes, such as costs reforms.
- Office consolidation: Law firms may consolidate offices in order to reduce real estate costs and improve efficiency. This may involve closing offices in certain locations or consolidating multiple offices into one larger location.
- Partner retirement or departure: Law firms may restructure as a result of partner retirements or departures. This may involve transitioning client relationships to other partners, restructuring the firm’s ownership structure, or hiring new partners to replace those who have left.
- Organisational restructuring: Law firms may restructure their organisation in order to improve efficiency or streamline operations. This may involve reorganising departments, creating new roles or positions, or adopting new technologies.
What should law firms consider when restructuring?
When a law firm decides to undergo restructuring, there are several key considerations that need to be taken into account. These include:
- Goals and objectives: The law firm must determine its goals and objectives for restructuring. This may involve identifying the areas of the business that need improvement, such as reducing costs, improving efficiency, or expanding or ceasing to operate in certain practice areas.
- Financial impact: The law firm must evaluate the financial impact of the proposed restructuring, including the costs of any changes, the potential benefits, and the potential risks. This may involve conducting a financial analysis of the firm’s current operations, as well as projections for the future.
- Staffing and personnel: The law firm must consider the impact of the restructuring on its staff and personnel. This may involve assessing the skills and expertise of current employees, identifying redundancies, and determining the need for new hires.
- Legal and regulatory considerations: The law firm must take into account any legal and regulatory requirements related to the proposed restructuring, including informing the SRA of their plans to restructure, and employment laws.
- Communication and Engagement: The law firm must communicate the restructuring plans to its employees, clients, and other stakeholders in a clear and transparent manner. This may involve engaging with staff and clients to address any concerns or questions they may have about the restructuring.
- Client files: If the law firm restructuring involves exiting a specific market, firms must consider what will happen to their existing client files when the restructuring takes place.
Law firms need to carefully consider the impact of restructuring on all aspects of their business, including finances, personnel, legal and regulatory requirements, and communication with stakeholders. Taking these factors into account can help law firms ensure a successful restructuring process that achieves its goals and objectives whilst minimising disruption to its operations.
How can R&R Solutions assist in law firm restructuring?
R&R Solutions helps law firms withdraw from specific sectors of the legal market in corporate restructurings and insolvency matters whilst ensuring maximum value is retained by the law firm. We work alongside restructuring lawyers, accountants, insolvency practitioners, restructuring and corporate recovery specialists to ensure the most profitable outcome is achieved on any file transfer agreement.
We provide a flexible approach and can facilitate a phased approach of transferring work to our panel of solicitors.
We recently assisted a law firm that made the strategic decision to exit the claimant personal injury market. This firm wished to exit the market so that they could restructure and focus on more profitable areas of law.R&R Solutions assisted the firm by allowing them to exit the market on a phased basis before the agreed upon final date, recovering more than 100% of the expected WIP value.
Using a phased approach allowed the staff in the personal injury department to focus heavily on the files which were capable of settlement before the final exit date. Files which were identified as being unlikely to settle within the required timescales were transferred to our panel of solicitors early using our usual file run-off method. A further review at a later date saw a further tranche of cases transfer to panel solicitors. Any cases that remained ongoing the month before the final deadline were transferred at that point.
This was a very successful project as we were able to recover over £500,000 of the work in progress value, which was more than our client had anticipated.
As well as assisting retiring solicitors and firms who are going through restructuring, we also assist many firms who are going through the formal insolvency process. We work alongside insolvency law specialists representing clients in insolvency proceedings to come up with the right plan tailored to meet the needs of each specific firm.
We guarantee 100% confidentiality for all clients. If you would like to find out more about our process, feel free to get in touch today via email at email@example.com or 07887796989, or contact Sally Dunscombe at firstname.lastname@example.org or 07774205870.
Retirement Project - Grant Saw Solicitors LLP
“With our claimant personal injury partner retiring in we decided the time was right to step back from PI work. We reviewed the market options, were disappointed at the discounts being applied by potential buyers of the WIP and were referred to R&R’s offering the full realisation of WIP over time. It has effectively delivered what it “said on the tin” - over the project period we have seen a steady flow of receipts being accounted for to us, allowing us to recover the full value we had built up in the files."
- Mike Clary, Partner
Restructuring Project - Copley Clark
“Having taken a strategic decision to be completely step out of the claimant personal injury sector we were R&R’s first client to step back on a phased basis. R&R customised their offering specifically for us and I am happy to say it has worked a treat. We could focus our own resource on matters where we had a possibility of concluding within our timetable and utilised R&R’s panel firms to continue to work on other matters. Not only have their services allowed us to retain the value we had built in the files, the nature of the services ensured we were able to offer our clients the option of moving to firms with the skill sets required to best service their specific needs. For firms considering restructuring we would have no hesitation recommending R&R Solutions."
- Malcolm Lawrence, Partner
Restructuring Project - Farley Dwek Solicitors
" We had an extremely positive experience working with R&R Solutions after making the strategic decision to move away from an area of law and retune our business model. The process was very straightforward, and we were really pleased with the overall outcome. We would highly recommend the Recovery First model as a practical solution to any law firm wishing to exit a specific sector.”
Jonathan Dwek, Director
Ticking all the boxes for a quick, clean, confident exit from legal markets due to restructuring or retirement.
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