How RMB Lawyers grew 500 per cent in 10 years

Successful Wollongong firm RMB Lawyers has been named Regional Law Firm of the Year in the 2015 Australian Law Awards. Set up in 1885, the firm has evolved to become a strong, modern business complete with an outsourcing arm. Managing partner Craig Osborne tells ALMJ that RMB is “a completely different animal” to your average firm and gives his insights into the key issues facing his firm and others.

On the challenges facing regional law firms …

“I think regional law firms, or country law firms, are struggling in so many ways. As a rule, law firms in the country sometimes lack the resources to buy clever technologies, are reluctant to set strategies, are suspicious of marketing, and don’t always invest time into training their lawyers. They have difficulty growing leverage, and find hurdles in attracting and keeping talented lawyers who can grow through the firm and become leaders of the business.

“We’ve had to be honest at RMB about what we do as a regional law firm. A very large percentage of our work is personal services work and one of the good things for us is that this work is not attractive to most of the multinationals or even the national firms. It’s just not a space they work in because the profit margins are reasonably small and the client contact required is massive. It means you can only make consistent profit if you can do a high volume at high speed with great customer advocacy. There is huge scope to develop systems to improve the speed and the accuracy with which you do things and to take on bigger geographies to spread your brand across a wider geographic space.

“We’ve just opened in Camden (south-west of Sydney) and we’re on our way to opening a few other offices in southern NSW. By using technologies, you can build a business that performs work for people outside your traditional geographic area.”

On how RMB has prospered …

“We started in Wollongong and over the past 10 years RMB has grown by 500 per cent and we now have eight offices. We run a clever best-practice system with a big focus on ongoing training and career path mapping for people. It’s a flat, egalitarian management structure; there’s no seniority.

“Progress for lawyers through the system is important. Regional law firms typically hire young lawyers, but don’t necessarily have the resources to train them and or give good work to them and they dry up on the vine. At RMB, we have lawyers challenging for senior positions and partnership consistently. We talk to them openly and honestly about what they need to do to advance.

“The younger generation coming through is talented. They use the right and left side of their brains, they play musical instruments as children, they play sport and have travelled. I think they are more equipped than ever to take on business challenges and to be change agile.”

On an unusual training approach …

“Lawyers aren’t always necessarily great business people because they’ve been good at school and gone through law school and got good marks. The skills required to be good in business are being redefined constantly and are harder to garner. So as well as training lawyers to be lawyers, we train them in the commercial aspects of the business. Traditional law firms place people in little teams and team members often compete with each other for work. We do things differently. We challenge people from the very beginning – in a nice way – to have business acumen and show them how to be the managing partner of the firm so that no one is protecting their position. It’s about being generous enough to give other people the chance to take your job and do it better. Defending your own position is counterproductive to business success.”

On why business strategy is a big focus …

“It has always been important, but when I became managing partner my love of economics kicked in and I could see that the traditional legal model wasn’t working for us; that we were facing some real challenges. I was called to be managing partner at a young age and I saw that I could do more good for the business as a strategist than as a court advocate.

“RMB is still a partnership and partnerships and change agility often don’t go together. That’s one of the biggest challenges because power sometimes sits in firms with senior lawyers and we have worked to redefine power into ‘responsibilities’. In my early days, being the youngest partner and the managing partner was a huge challenge because there was a lot of blowback and resistance. Thankfully, 10 years down the track the resistance has given way to more productive and innovative behaviours and to some extent the results speak for themselves.”

On the firm’s latest venture, Unison, an outsourcing business …

“Five years ago I could see that lots of low-end legal work was being outsourced by large legal firms and in-house counsel to India, the Philippines and Vietnam. I realised that some areas of regional Australia mimic India and the Philippines in that the business cost base is very low. For example, our rent across our group averages about $220 a square metre, and our wages are lower than capital city wages. We did some modelling for Unison. We understood that some larger firms were having difficulties with outsourcing arrangements to foreign providers. We realised that if we could offer a better service locally at similar pricing that demand would be strong.

“We started a trial of the model in very controlled conditions about two-and-a-half years ago and calibrated what is now Unison by sending our own work into it. We went to market on July 1 last year and people are finding us. And there’s only two types of clients, which makes it easy. It’s the Australian corporate world and Big Law.

“The response has been overwhelming and we are being very careful not to market or pitch too hard because as we take on new work we want to make sure that what we say is true – that our quality is much higher than India, the Philippines and Vietnam, that we are a law firm corporation and we operate with the same ethics and rules, and that confidentiality is absolutely protected. And not to put too fine a point on it – we’re insured as well, so we must take responsibility for the quality of our work.”

On Unison’s structure …

“Unison is a separate business to the RMB partnership and is a law firm corporation. We are currently in stage 1 of our growth phase with approximately 15 staff.  We second lawyers from RMB at present to ‘accordion’ up. Stages 2 and 3 will see us move to 50 through to 100 staff. Headcount doesn’t mean everything, but you are looking at a business whose profit margins will be necessarily low – about 17.5 to 22 per cent. That’s all hopeful; that’s all gazing into the crystal ball; but Unison is gaining significant momentum.”

On the challenges of running a regional outsourcing business …

“You need a significant supply of talented labour, so you have to be reasonably located to attract the sort of people you need. You also need a very good university law school, which Wollongong has, and we are working very closely with the University of Wollongong Law School. And you need to be accessible to airports – you can’t be too remote. It lends itself to geographies such as Wollongong and Newcastle in NSW.”

On customer relationships …

“Our new vision is to become a law firm with no geographic boundaries that shares commercial risk with its customers, as opposed to clients, that uses clever technologies for the benefit of customers and provides a unique customer experience.

“Sharing commercial risk with customers is a big thing. Fixed fees are the start of it and it’s a very important part of it because they make law firms more efficient. A fixed fee drives efficiency and innovation.”

On the future …

“It’s not all beer and skittles, but what we are seeing with the market for Unison is that the market has strong appetite for Australia’s first owned located and operated LPO, and RMB is having a very happy run at the moment. We grasped the nettle because we had to. I’m just pleased for all our stakeholders – staff and family and the customers we serve – that Unison is a fast-growing and outstanding business because while we had longevity as a firm, longevity in itself is not enough.”