Successful entrepreneur and VC, Luke Johnson challenges the value that lawyers bring to our economy in an article in today’s Financial Times – although his criticism is directed at lawyers, ALL professionals and consultants should take heed.
Johnson refers to a recent company acquisition and the significant six figure fees charged by the 4 law firms involved. Although he concedes that the fees were agreed in advance, one law firm (that was not named) raised its fees considerably at the last minute – £35k to £110k (ouch!).
Luke Johnson goes on to question the value that lawyers bring to our economy, arguing that the increasingly litigious nature of their work is a drain on value and wealth creation. He adds that innovation, enterprise and job creation may be stifled by lawyers – harsh words indeed.
As a professional advisor myself, I think it is important that firstly we listen to valuable feedback from a respected entrepreneur such as Luke Johnson. We then need to question where the value we can bring to business lies and to ensure that we communicate and implement this effectively. Agreeing fees in advance is important to me (‘no surprises’) – the ‘no name’ law firm does not help our cause with actions like those described above.
There is, however, a deeper and more fundamental underlying point. Professionals have long occupied a position of privilege, status and respect. Our ability to help clients navigate rules, regulations and best practise, whilst helping them identify opportunities adds value to businesses and the wider economy. This remains unchanged in my view. What has changed is a historical perceived ‘license’ to pass on escalating time costs in fees to clients – fees that have no direct relevance to the value delivered to the client. This must change if we are to keep pace with business demands and change.
Professional advisers also need to focus on and more effectively communicate the value that we can bring. We need to focus on future value creation alongside entrepreneurs and avoid getting bogged-down and indulging in bureaucracy. To be solution (rather than problem) oriented. The fact that Johnson states that businesses should “avoid lawyers altogether” should send shivers down the spines of all professionals and ensure that we focus on contributing to business success and avoid “ambulance chasing” tactics that can detract from the value we bring.
Tomorrow’s law and accountancy firms will look very different. Thanks Luke for nudging us further forward.