Elaine Pasini

All episodes of the Podcast for Lawyers can be found HERE.

Simon McCrum, author, speaker and law firm management consultant was Elaine Pasini’s guest on the Podcast for Lawyers “Coffee Catch Up With….” series on 19 November 2024. They chated what Simon’s experiences as a Managing Partner of a successful law firm have taught him about leading the perfect law firm when it comes to colleagues, compliance, cash and client.

Below are snapshots of the Podcast (tune in HERE).

Elaine asks Simon a variety of questions including where he started in law, what his thoughts on cash versus profits are, delegation, bank overdrafts, compliance and mental health for leaders.

Career Path: Simon McCrum started his career as a litigator but discovered his strength in client relationships and development. He shared that, “One of the great things that I’ve learned about life is that you can’t prepare for everything.”

“My career literally has been like a pinball… sometimes there’s bells, sometimes there’s explosions, but every time that’s where your metal is tested.”

Client Relationships: Simon emphasized the importance of client relationships, highlighting how returning client calls promptly had a significant impact on his career. He said, “I just never felt comfortable going home at night until I’d returned all calls. Oh, boy, did it count.”

Leadership Journey: He transitioned into leadership roles, learning on the job. He recalled, “I couldn’t have planned that. No prep could have got me ready for that.” Simon shared how he led teams by involving people and delegating management tasks effectively.

Managing Challenges: Simon spoke about the challenges he faced as a managing partner, particularly during the financial crisis. He stated, “Nothing prepares you for being in the hot seat. It’s only when you’ve got the wind in your face that you realise.”

Decision-Making: Emphasizing the importance of decision-making in leadership, Simon advised, “Just have your radar up. Is this a moment where I’m the only person who’s going to take us left or right, or forward or back?”

Restructuring and Growth: He discussed the restructuring process at Darby’s and how it was crucial for the firm’s survival and growth. Simon clarified, “It was a restructuring. As we restructured the business, there was as many arrivals as there were departures.”

Crisis Management: Simon described the intense pressure and lack of time to prepare during financial crises, emphasizing the harsh measures required, such as “people couldn’t have milk in their cereals at work.” Every measure to keep the firm afloat was vital.

Inefficiency in Law Firms: Simon highlighted the persistent inefficiency in the legal profession, noting, “Lawyers are working hard all day for clients… Why are we only selling 3 hours per day?” He stressed that inefficiency in profit generation exacerbates cash flow problems.

Cash Flow Challenges: Simon discussed the critical issue of cash flow in law firms, contrasting it with other business sectors. He pointed out that while law firms often rely on bank loans, other “highly successful businesses couldn’t get a £5,000 overdraft.” therefore they know they need to get the cash in ASAP. He advocated for law firms to transition to being cash businesses rather than overdraft-reliant ones.

“Lawyers are delivering 6, 7, 8, 9 hours to clients… but just not for the business…..Why don’t we just turn into a cash business?”

Culture of Borrowing: Simon criticized the culture of borrowing within law firms, where partners often depend on loans for payouts, pay raises, and bonuses. He described this as “lunacy,” highlighting the reliance on borrowed money even while clients owe significant amounts.

On the topic over banks and overdrafts, Simon said,

“We borrow money to pay ourselves all the while the clients owe us a fortune.”

Sustainable Financial Practices: Encouraging law firms to adopt more sustainable financial practices, Simon suggested focusing on both profit and cash behaviours, arguing that “if you do them both, it’s beautiful.” He emphasized the importance of making law firms financially stable and resilient.

Importance of External Perspective: Simon emphasized the value of having an outsider’s perspective in law firms to identify inefficiencies and areas for improvement. He pointed out that even successful businesses like Apple and Tesla listen to external advice: “Why wouldn’t you listen? You listen to a barrister about law why not a consultant to complement your financial growth?”

Resistance to External Help: Simon highlighted the resistance within law firms to seek external help due to perceived weakness. He shared an example where a managing partner said, “We need this, but I can’t bring you in because it would be a sign of weakness.”

Gender Perspectives in Legal Practice: The discussion touched on how women-led smaller law firms are more open to external consultation and support, which contrasts with some traditional male-dominated practices. Elaine noted, “I’ve seen a whole new raft of women-led smaller law firms embracing external collaborations to advice on a range of business matters.”

Mental Load of Leadership: Simon shared his experience of the mental load and complexity of running a firm, stating that it took him over a year to regain clarity after stepping down as managing partner. He mentioned, “You have got so much going on in your head, and you are being pushed and pulled.”

Admitting Knowledge Gaps: Simon stressed the importance of acknowledging one’s limitations and seeking help. Reflecting on his own experience, he said, “I am proud to confess my gaps in knowledge.” Knowing his gaps he has been able to learn and grow.

Risk Management: Simon emphasized the importance of proactive risk management, noting that law firms often resort to hiring more staff instead of addressing root causes. He stated, “Risk management is our licence to print an awful lot of money. So let’s do it.”

Compliance and Leadership: Simon discussed the role of partners in leading by example for compliance. He highlighted, “With privilege comes responsibility, and partners are leaders. If they’re not, they shouldn’t be partners.”

Culture and Transparency: Elaine and Simon agreed on the necessity of fostering a transparent culture where staff feel comfortable speaking up. Elaine noted, “Having a culture that breeds transparency and open-door policy… ensures clients are always looked after while running a business effectively.”

Four-Legged Stool of Law Firm Success: Simon outlined four critical components for a successful law firm: good people, career progression, high standards, and being surrounded by great people. He stated, “A law firm is a four-legged stool… you need great people, career progression, development investment, and a high bar.” Investing and keeping good people is one leg. Compliance is leg two. Clients is leg 3, and cash is leg 4. Without just ONE of those legs, what the stool collapse.

Colleagues, Compliance, Clients, and Cash: Simon discussed the four critical legs of a successful law firm: colleagues, compliance, clients, and cash. He emphasized that each leg is essential for stability, stating, “If you take one of those legs away, the chair falls over.”

Leadership and Accountability: Simon stressed the importance of partners leading by example in all areas, from compliance to client care. He explained, “As a partner, I’m going to lead the way on pricing, time recording, realization, and getting paid.”

Delegation and Development: He advocated for effective delegation, where senior lawyers should mentor and develop junior lawyers. Simon noted, “The senior lawyer needs to know that filling the vessels by sending work down isn’t going to prejudice his or her profit share.”

Profit Sharing and Motivation: The discussion highlighted the need to rethink profit-sharing models to motivate lawyers. Simon stated, “All you’ve got to do is look at what makes people here tick… It might be money for my personal billing, it might be other things.”

Human Touch and Satisfaction: Simon emphasized the importance of making everyone feel valued, from clients to junior lawyers. He shared, “Everything I do boils down to making people feel good… you always feel good when the clients are giving you 5-star feedback.”

Feeling Part of a Team: Simon discussed the importance of feeling like part of a team, where leaders have a plan for everyone. He expressed, “We’re all wearing the same kit. We’re on a team. Someone’s got a plan for me.”

Recruitment and Emotional Intelligence: The conversation highlighted the need for new lawyers to have emotional intelligence and sales skills to connect with clients. Simon shared a story about a law student who impressed her interviewer by mentioning cash flow as the managing partner’s primary concern.

Understanding the Business Side of Law: Simon and Elaine emphasized the importance for new lawyers to understand that law is a business. Elaine noted, “New people coming through need to understand it’s a business… including the “sales” aspect, it’s not just about being brilliantly technical with the law.”

Passion for Law and Change: Simon reflected on his passion for improving the business model of law firms and the well-being of lawyers. He stated, “We can do a lot more of it a lot better if we change our business model.”

Importance of Listening: Simon concluded with a call for the legal profession to embrace listening more. He said, “My parting words here is as a profession. I wish we could listen more… Give it a try.”

“Our performance here ought to be judged, not by how we make clients safe, but how we make ourselves safe as a business.” SIMON MCCRUM

To work with Elaine please email her: hello@elainepasini.com

To work with Simon, please contact him HERE.