I am grateful for the opportunity to share my views on the above topic. My special thanks goes to the Chairman, other elected officers of the Branch and the members of the Law Week Organising Committee, who thought it would be a good idea to have me speak on the topic. I find this topic very interesting as it goes a long way in determining how well, our colleagues who make the decision to establish a law firm will go. In a paper I presented at the Law Week on NBA Awka, I noted that the negative effect of current economic recession is being felt in all spheres of our economic life. Many businesses are laying off workers, there is default by individuals, businesses and state governments in paying salaries, governments are borrowing to fund budgets, productive and manufacturing sector is recording losses, businesses are closing, foreign airlines are exiting the country, there is rise in the cost of goods and there is a steady decline in the value of the naira.
The legal profession cannot pretend to be insulated from all these. It is therefore a good time not only to look at the challenges of managing law offices in Nigeria but also to ask ourselves whether our practice of law is done with a right business mind-set. I am of the firm view that this discourse will be a mere academic exercise, if we fail to get to the root of the problem; which is identifying the challenges of successfully managing law firms to profitably deliver services to clients. Permit me, to quote copiously from the Awka paper, so as to show that practice of law is first of all, a business.
The Court of Appeal per Rhodes- Vivour JCA (as he then was) had opportunity in Int’I Inc v. C.I.E. Ltd (2007) ALL FWLR (Pt. 357) 990 at 1000 paras. D – E (CA), to define what carrying on a business means. His Lordship stated that “To carry on business means to conduct, prosecute or continue a particular vocation or business as a continuous operation or permanent occupation. The repetition of acts may be sufficient. It also means to hold oneself out to others as engaged in the selling of goods or services. See Black’s Law Dictionary, 5th Edition page 194.”. I am sure we noted that his Lordship employed ‘to conduct, prosecute or continue a particular vocation or business as a continuous operation or permanent occupation”. I will urge us to remember this as this discussion goes on, bearing in mind our earlier conclusion that the legal profession is an occupation.
Law practice involves two notions: the notion of law as a profession and the practice of law which has at its root the running of a law firm. We will in this paper be focusing on law practice vis-a-viz a running a law firm. The issue always elicits an emotive reaction from lawyers and judges alike. Lawyers bristle at the suggestion that law practice, can by any stretch of imagination be likened to or compared with a business. Such lawyers argue that since we are a learned profession, we are not running businesses, nor should we.
We cannot remain touchy about discussing the topic. We must confront our worst fears so we can chart a proper course for practitioners. Robert W. Denney, writing in the article; “Managing the firm like a business’, stated that “About 10 years ago, in one of our firm’s legal communiqués, I wrote: The practice of law is a profession, but a law firm is a business and must be managed like a business. That statement produced indignant replies from quite a few lawyers saying emphatically that a law firm is not a business and castigating me for saying it is”. I noted earlier that we should not be emotive about this issue. Even though we belong to a noble and learned profession, we all run businesses. Yes, you heard correctly, we run a business. In fact, Robert W. Denney concluded by admitting that “Today, however, most lawyers realize that a law firm is a business. So the question for many firms—perhaps including your own—is what structure is most effective for management in a businesslike manner?”. we will talk about this at a later stage.
Speaking on this matter, Bellas & Wachoswki in an even more urgent sense, warn that this philosophical debate is impractical in the real world. They observed that the rest of the world is preparing to move ahead with or without us. According to them “The market place has already recognized the legal practice as a business and is proceeding accordingly. In fact, the entire legal field is viewed by many Venture Capitalists as fertile grounds for investment opportunities, but not necessarily by investing in law firms. Instead, Venture Capitalists (who are not interested in whether or not they are part of a profession but are interested in making money) are throwing hundreds of millions of dollars at legal technology startups. The commoditization of the practice is already well underway. If you are curious about the inevitable outcome of this juggernaut, ask your doctor how his life has changed. In this rapidly evolving environment, I hope we can agree that simply doing a great job for your existing clients is not going to be enough. If you expect to compete with the legal services companies that are growing under your nose, it’s time to get in the game as a business manager. And there are plenty of resources available”. I daresay I agree.
Permit me to further quote Bellas and Wachowski, :
“It speaks for itself that most of the lawyers who claim we are a highly educated profession and therefore not a business were either very successful in a specialty field or were professors of law. More power to them. But as for the rest of us, we are operating businesses. And if we don’t begin paying attention to how well we manage and promote our legal enterprises, we are in danger of going out of business as a profession. If you don’t think the legal industry is a commercial enterprise, consider the following. We hire employees with related personnel issues. We have a payroll and pay payroll taxes. We pay rent or buy real estate. We have debt. We have (or should have) systems to operate our practice. We have partnership issues. We market ourselves. We have business plans. And we are regulated. What else is needed to convince lawyers this is a business? In one sense, the question at this point is more or less a matter of semantics. Law is clearly a profession, but since you are selling a service, it is also clearly a business. The distinction is not only arbitrary, it is also a potential threat to our future livelihood”- emphasis supplied by me.
The apex court was faced with the question whether a lawyer in practice is involved or engaged in business in Hairat Balogun v. N.B.N (1978) 3 S.C. 11; (1978) All N.L.R 63. In the case, Hairat Balogun, a solicitor in practice issued a cheque on the business account of her clients and the same was without justification dishonoured by the respondents. The cheque was for a mere 20pounds (N40) which she had previously collected on the instructions of her client from a debtor. The Respondents returned the cheque to the client to whom it was issued and endorsed thereon “refer to drawer”. The client had returned the dishonoured cheque to the Appellant telling her how surprised she was at a solicitor of her type. Although, apparently, a moot point, there is, however, authority for the view that the endorsement “RID” or “refer to drawer” upon a dishonoured cheque is defamatory of a customer”.
In upholding the appeal, the court noted that ’person in trade” is a “person engaged in business” he is not necessarily a trader; but a trader is necessarily engaged in business. Continuing the court per Idigbe, JSC, held that: “The learned trial judge in the court below rightly, in our view, declined the invitation of learned counsel for the Appellant that he should regard a solicitor as being in the same category as “a trader”; we, however, take the view that a solicitor in practice is “in business” and for that matter “in commercial business” but that is not to say that he is “a trader”.”Business is a wider term, and not synonymous with, trade; and means practically anything which is an occupation as distinguished from pleasure. Profit or the intention to make profit is not an essential part of the legal definition of a trade or business; and payment of a profit does not constitute a trade or business that which would otherwise not be such”. (See 38 Halsbury’s Laws of England. Lord Simonds Ed. or 3rd Ed. P-10 ,11.
In arriving at a decision in the matter the court cited with approval the British High Court decision in Re Wilkinson (1922) K.B.548. Our apex court per Idigbe JSC noted that although the court in that case was dealing with the term “business” under the Unemployment Insurance Act of 1920, “we consider the observations of Roche, J. pertinent to our consideration. In that case the learned Judge observed: ‘My present view is that a solicitor’s practice, at any rate in London, is a pursuit upon lines sufficiently commercial to bring it within the term business as distinguished from an occupation such as that of a school-master which is not organised and conducted upon commercial lines” (See (1922) 1. K.B at 587 Per Roche, J.)
I am sure that we all agree at this point that a lawyer in practice is a person engaged in business. It therefore follows that if a lawyer in practice is engaged in business, then law practice is indeed a business, not quasi-business. I believe it is important to look at some considerations to make for a better law practice. I will pause at this point to sound a warning that while law practice is business, legal practitioners are not business people. Practitioners involved in legal practice are engaged in business but are not businessmen.
John Balestriere’s affirmed this much when he noted that “Law firm managers have responsibilities that businesspeople have that have nothing specifically to do with serving clients and doing justice. This absolutely includes the obligation to manage finances well. Without enough money coming in, staff cannot get paid, Westlaw subscriptions get canceled, and there’s no toner in the printer……..But while being mindful of this reality—perhaps never once considered in the halls of law schools in New Haven or Cambridge or Morningside Heights—we also do need to keep something else, at least as important, in mind. We are not just businesspeople. We are lawyers. We are part of a profession that has a special obligation to our clients, to the courts, and to justice. Businesspeople do not have that obligation. We do”.
In whatever way we carry on the practice of law, we must look at things the right way. We should always endeavour to do justice and serve clients when they come to us. Sure, we deserve to be well paid for the services we render to them as well as the value we obtain for them when we help them resolve such dispute or minister to their needs. “But if we can serve them well, we are satisfying our own professional calling. And—simply being blunt—most of those that have problems now that require a lawyer will have problems later that require a lawyer. Serve the client well and he very well, may not be back when you cannot resolve the dispute quickly. Law firm managers must be smart businesspeople. But we always need to keep in mind that we are more than that. We’re lawyers, too, and need to act like lawyers every day”.
Importance of Having a Law Office
Law office is defined as an office maintained by a lawyer or a firm of lawyers for the practice of law. According to Orojo,O, ‘one of the options open to a legal practitioner is to establish a law firm to engage in private legal practice. The emphasis on establishing a law firm to engage in private legal practice is necessary because some practitioners practice law without establishing a firm or working from”. A legal practitioner, who makes a decision to engage in private legal practice, needs to open a law office from where he or she is expected to practice from. This is important as a legal practitioner is not expected to take instructions from prospective or existing clients at their homes, court premises, street corners etc.
The importance of having a law office is accentuated by Rule 22 of the Rule of Professional Conduct for Legal Practitioners, 2007 (RPC). The Rule stipulates that a “lawyer shall not call at a client’s house or place of business for the purpose of giving advice to, or taking instructions from the client except in special circumstances or for some other urgent reason preventing his client from coming to his law office”. From the foregoing it is clear the RPC, requires legal practitioners to give advice to, and or take instructions from clients in their law offices, except in special circumstances or for some other urgent reason preventing his/her client from coming to his/her law office.
As used in Rule 22, it is clear, a law office is a place. It could therefore be the place of work of one or more lawyers. It could house a small number of lawyers, who may be independent or who may work together. Or it could be the place of business of a law firm. Therefore it is the place from which lawyers or a law firm operates from. I would refrain from the argument whether a ‘law office management’ as used in this topic refers to the management of the office (place from which a law firm carries on business) or to the management of a law firm (the business of the practice of law). I will use them as meaning the same thing. According to Mayson, the various aspects of management, such as personnel management, client management, management of the firm, are vital to the success of a firm. The success of a firm does not only depend on the legal knowledge and skills of lawyers in the firm, it also depends on management knowledge and skills.
3.0 Organization of Law Firms
3.1. Law firms are organized in a variety of ways. Widespread arrangements include:
SOLE PROPRIETORSHIP, in which the law firm is owned by an individual who may employ other lawyers and is responsible for all profit, loss and liability;
GENERAL PARTNERSHIP, in which all the lawyers who are members of the firm share ownership, profits and liabilities on terms contained in a partnership deed.
ASSOCIATESHIP: In this type of practice, two or more practitioners contribute capital to provide facilities and personnel required for the law firm. They occupy the same premises, share facilities and contribute to payment of rent, rates, utilities, wages/salaries of support staff, while remaining independent practitioners.
LIMITED LIABILITY PARTNERSHIP (LLP), in which the attorney-owners are partners with one another, but no partner is liable to any creditor of the law firm nor is any partner liable for any negligence on the part of any other partner. The LLP is taxed as a partnership while enjoying the liability protection of a corporation.
- Some Challenges Of Law Office Management In Nigeria:
The health of any business depends on the skills of its management team. Whether a business was set up with the simple objective of making money or to render much needed not-for-profit services, the safest way to succeed is to be highly efficient and deliver good services. A law practice must therefore strive for excellence. A practice may not achieve excellence or run efficiently if it is not run like a business. Like Jay Z wisely opined, ‘YOU ARE NOT A BUSINESSMAN, YOU ARE A BUSINESS, MAN’.
You must admit your shortcomings and constantly strive to improve yourself. A wise lawyer who wants to be successful in the business or practice of law people must admit his/her shortcomings. He/she should not be afraid to say, “I don’t know.” You should not be afraid or detest the need to learn. Always make out time to improve yourself. Continually develop yourself. Avoid being complacent or thinking there is no further to learn. You will be shocked at how much you do not know. You will be surprised at the changes and innovations that have been introduced in the law as well as areas of practice. As Gerber wrote: “Contrary to popular belief, my experience has shown me that the people who are exceptionally good in business aren’t so because of what they know but because of their insatiable need to know more.” To be good at this business of law, we must admit that we don’t know everything and to be not only okay with it, but embrace the unknowingness. What are the important elements for people who start a business based on the skills they do best, such as practicing law?.
Lack of Quality Control and Feedback Mechanism: One of the challenges of law office management is the failure of lawyers to put in place a feedback mechanism from t heir clients. In the management of law offices, there is need to constantly ask clients how the law firms are doing. How can the firm improve? How can we become better at our work? As human beings, we often learn from our mistakes. When those breakdowns occur, clarify why they happened and what you will do differently so it doesn’t happen again. The old adage “stuff happens” is not in the language of successful folks”. Lawyers should not be offended when clients complain about their services. Such complaints should be an indicator that sometime is wrong and there is need to make amends or improve service delivery to clients.
I will crave your indulgence to use some quotations to drive home this point: “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”- Kenneth B. Elliot.
“Problems are always going to arise for any business no matter how hard you try to avoid them. While you can’t run a perfect business with all the perfect customers, you can ensure friction doesn’t become an issue. If customers know that they can voice complaints and those issues will be handled properly, they will feel more comfortable doing business with you”
Lack of Quality Clientele: This is a major challenge of law office management in Nigeria. Many practitioners rush to open law offices, without having any client or potential clients. A law firm is established to render services to clients. Before a legal practitioner establishes a law firm, he or she must ensure there is a market for his/her services. There must be sufficient number of potential clients to justify the establishment of the firm. According Doherty, management theorists advise that an intending private legal practitioner should have some clients before establishing the firm, and that it is imprudent to establish a law firm without having some clients without having some clients or potential clients with promises of patronage for the firm. Continuing Doherty stated: “The success of the firm will depend on its ability to get work, and its clients that provide work. Without clients there would be no work and, the purpose of establishing the firm is defeated”.
One of the challenges is getting quality clients who not only tap from the skills of the lawyer but also have the ability and see the need to pay for such services. Most clients including the ones that are rich see no need to pay lawyers. They have the mindset they are doing lawyers favours by paying what ordinarily is an obligation but now tainted and seen from the lenses of benevolence. Many law firms therefore struggle to stay afloat and may sometimes do things that are not only unethical but also diminish the profession in the eyes of the public.
Avalanche of Small Law Firms – The proliferation of small and average law firms pose a big threat to managing a befitting law firm. Most small law firms are borne out of frustration and desperate need to escape poverty. With such uncertainty hovering around the mind of such Lawyers they charge peanuts for mouth watering jobs. Clients tilt towards them because they are cheap and so doing crash quality of legal services which affects running a promising practice. These small firms are usually run without any business plan, vision or goals. The practitioners live for the day. They get increasingly confident in their ability to make money every day, no matter how little. The danger is that sickness or anything that disrupts such practice may sound its death knell.
Not having a vision for their business and failing to manage their resource to meet a vision ultimately proves fatal to the practice. Having a vision means writing your vision down. It means determining who your firm serves. It means deciding what kind of employee will fit that vision and deciding what makes an ideal client. It means asking questions such as, where do you see yourself in a year? In two? In five? How do you keep current? How much money do you want to earn? Do you have a budget to help your firm meet your vision? What services do you provide?.
Outdated Practice Model and Lack of Knowledge of How to Access Wider Legal Market – Many lawyers have failed to update their knowledge since leaving Law School. Their failure to ask critical questions, prove to be the albatross of their law practice. Such critical questions like : Should I update my services? Should I eliminate services? How do I market my business? Do I need a website to advertise my firm? The impact of transactional practice and its affiliation to modern legal services has now made it difficult for many law firms to make money from such legal business because of lack of know how. Thus the ability of law firms to make money from such transactions is grossly affected owing to poor knowledge.
Proper management of such law firms is hampered by inadequate knowledge of what they could do or not do. They wrongly assume that marketing or advertisement is entirely forbidden by the Rules of Professional Conduct. They fail to realize that Rule 39 RPC only forbids advertisement through circulars, handbills, advertisement, through touts or by personal communication or interview; furnishing, permitting or inspiring newspaper, radio or television comments in relation to ones practice of the law; procuring photograph to be published in connection with matter in which one has been or is engaged, or concerning the manner of their conduct, the magnitude of the interest involved or the importance of the lawyers position; permitting or inspiring sound recording in relation to his practice of law; or such similar self-aggrandizement.
They fail to realize, the Rule does not however preclude a lawyer from publishing in a reputable law list or Law Directory, a brief biographical or informative data of himself, including all or any of the following matters one’s name or names of one’s professional association; address, telephone number, telex number, e-mail address, etc ; the school, colleges, or other institutions attended with dates of graduation, degree and other educational or academic qualifications or distinctions; date and place of birth and admission to practice law ; any public or quasi-public office, post of honour, legal authority, etc;(f) any legal teaching position ; (g) any national Honours ; membership and office in the Bar Association and duties thereon ; and any position held in legal scientific societies.
They fail to realize, they could write letters which include their firm profile to banks, corporations, companies etc for enlistment as external solicitors as such marketing creates the customer expectation for your business. Marketing can come in many forms, including volunteer work in the community or legal aid. . You can promote your brand through your website, a newsletter, legal articles, paper presentations, workshops, seminar, etc.
High Turnover of Lawyers – Many law firms cannot retain quality staff and this affects practice and office management. This may no doubt be related to the unwillingness of law firms to embrace partnerships. Many lawyers are minded to leave their principals on account of the owner/worker relationship which leaves them without any stake in the law firms they work. This in turn leaves the law firms in a bad position as brilliant lawyers who would add value to the firms, leave so they can set up their own practice. This brain drain or high turnover of lawyers is also vertical as many lawyers leave the profession to seek greener pastures in order areas. These practitioners see private practice as being both professionally unrewarding and lacking in financial safeguards for the future.
Failure to Plan for Succession: Another important point, which many managers of law offices in Nigeria fail to focus on, is planning for succession when they can no longer practice. We spend so much time growing our practice that we neglect or fail to plan for succession or its ultimate disposition. A legal practitioner who fails to plan, runs the real risk of doing himself, his/her clients and his/her professional colleagues a major disfavor. The fruits of his hard work, commitment and passion can be irretrievably and quickly lost when they leave the practice. Good will dissipates fast. Interestingly, succession planning sits squarely in the center of an intense vortex involving psychology (professional/personal identity questions and anxiety about losing the “lawyer” role), sociology (the functioning of the lawyer’s team and others in the firm and the firm’s role in the larger community), business (the financial/commercial implications for the firm and for the individual lawyer and his/her team members), and even anthropology (the cultural “history” of the departing lawyer’s way of practicing, team management, firm culture etc).
These practitioners practice as if they will live forever. They do not admit those who have worked with them as partners. This ultimately proves fatal for the practice if they die untimely, are involved in an accident or suffer protracted illness.
Power is also another variable affecting the running of Law office. Most law firms can’t function optimally because they spend a fortune on alternative source of power and do not necessarily have the clients to leverage on to cover costs. The implication is that the law firm starts dwindling. This development has the unsavory effect of causing some jobs not to be done in good time or even sensitive and confidential jobs are taken to business centre. It also negatively affects the profitability of law firms.
Dear colleagues, we have determined that law practice is a business. We have further warned that even though legal practitioners in practice are engaged in business, they are not businesspeople. We are part of a profession that has a special obligation to our clients, to the courts, to the society and to the higher cause of justice. Business people do not have such obligations. We do.
It would be important for legal practitioners who have not made the commitment to run and or manage it as one, to do so today. We may hate the idea of developing a business plan/concept, but we should realize that making strategic plan allows a lawyer or the firm to plan for the future. Let us therefore make sure that expectations are reasonable; no matter how well intended, if they are unreasonable, expectations will not be met
Mazi Afam Osigwe LLM(Jos) LLM (Lazarsky) FCIArb (UK)
(Legal Practitioners, Arbitrators & Notaries)