Q&A: Harriet Warlow-Shill – "Law is a very pressured profession, so it's about bearing in mind that we are all human"

In our latest Q&A, KWS Legal co-founder and managing partner Harriet Warlow-Shill discusses the challenges of setting up a new firm and the importance of safeguarding the value of law degrees.

You launched KWS Legal about five years ago. After previously working at top-10 Australian legal practices, how difficult was it to go it alone and set up your own practice.

“Founding a firm has been very challenging and rewarding. I didn’t anticipate all the skillsets I would need. I am certainly far more financially literate than I used to be, and I’m better at managing conflict resolution with staff and, in general, managing staff performance and bringing out the best in employees. I don’t think I ever anticipated that such roles would take up as much of my day as they do, but they definitely take up a large part of my headspace. I find it enjoyable.”

In what way?

“It’s nice that you don’t know what’s around the corner and you don’t know what challenges you are going to face. Now that I’m five years into this, things have started to settle down. I’ve started to feel comfortable about handling all these different aspects aside from just the law and, in fact, I think this experience enhances what I bring to clients because I can relate to them in their particular business challenges across a broader range of areas than I would have previously.”

Is the key to success simply learning as you go, or do you also need to bring in external expertise?

“I do have outside help. I have a CFO and a HR manager. By bringing in outside help you can immediately make the discussion more sophisticated because you are no longer just dealing with basic concepts – you are talking to people who have mastered those concepts and they’re taking you to the next level and tailoring it to your own business.”

Have there been any other surprises?

“Just the amount of skill it takes to manage the dynamics of the business. I read recently in The Economist that it is 100 years since Harvard Business School started management classes and how it has become such a huge industry. The article questions whether that is warranted, and I think it is warranted because each person in a services industry like law is a huge resource and they are very reactive to the type of atmosphere that you set for your firm – and being skilled at setting the right atmosphere is something that I’ve enjoyed learning about and taking up the challenge to get it right.”

What atmosphere do you try to create within KWS?

“We strive to be a firm with a positive management style. That involves a number of things, but one easily identifiable policy in our operations manual is that our staff are not allowed to speak badly of other staff. We have a no-negative-speech policy. Law is a very pressured profession and it is a battle from beginning to end to extract profit as a lawyer and people are under a lot of pressure. There is a high alcohol consumption rate in the sector and often we don’t give ourselves a fair go, so it’s about bearing in mind that we are all human and we need to give each other space and respect.”

What happens if that policy is broken?

“Often when someone breaks that policy, other more measurable performance indicators such as productivity are also an issue. As a result, having a discussion about breaking the no-negative-speech (policy) can be part of a larger performance discussion. However, if not then, yes, we bring it to the attention of the employee in question and have a discussion about it.”

But at all times, respect for individuals is sacrosanct. Is that right?

“Yes.”

KWS Legal is based in Melbourne and specialises in areas such as commercial law, property and conveyancing, business estate planning and intellectual property. What is the future for such boutique firms?

“Boutique is a kind word. It makes us small firms sound very exciting. But boutiques are in vogue because bulk law is becoming steadily less profitable as NewLaw moves in, including firms such as LawPath, because it sets up a bidding system, thus driving down the price. This makes bulk law almost a commodity from which, in the future at least, you will no longer be able to make lots of money. So it has cut a whole lot of profit potential out of the industry, and that means we are coming back to what lawyers initially started as – and that’s to be an advocate for someone. That’s where a boutique firm can really compete because at the end of the day if you are a really good lawyer it doesn’t really matter where you are; with today’s technology you can be in a huge firm or a small firm. The key is to be alive to your clients’ issues and to have good work conduct. And boutique firms, therefore, start to shine because they have fewer overheads and are therefore cheaper for the type of legal services that clients are looking for today.”

In such an environment, how crucial is pricing?

“Well, the other interesting thing is that as much as everyone says the billable hour is dead, studies show that the most profitable firms are those which can continue to bill clients per hour. We do use a lot of fixed price at KWS, but generally our most profitable matters are the ones where there’s a billable hour involved. Boutique firms are good when they have a steady and loyal client base that comes back time and again. Those clients don’t really care where the lawyer is from, as long as the lawyer is really good, and then they’re prepared to pay the money.”

Are you advocating, therefore, that firms should have a mix of fixed-fee and billable-hour work?

“We are flexible. I like to do fixed-fee because I like to provide clients with project certainty, however fees are always a multiple of time anyway and it’s always an assessment based on how much you are paying your staff per hour. So a fixed fee is really at the end of the day just a packaged or capped billable-hour matter.”

How do you attract clients? Is networking and word of mouth still the key?

“KWS is a hybrid. We have a very strong online presence, but we don’t try to be a ‘cheap and cheerful’ type of firm. We get a lot of interest from clients that have found us online and we actually differentiate ourselves as being the ‘leather armchair traditional lawyers’ that you can find online. But on-the-ground connections still matter and I spend a lot of time networking.”

How else does KWS Legal distinguish itself from other firms in a market in which many analysts are predicting an ongoing shakeup?

“Sourcing legal talent is important. We have found a number of offshore markets where we can source Australian lawyers and multi-jurisdictional lawyers, and we’ve come to the conclusion that in Israel we can find high-quality lawyers from a number of different jurisdictions. We pull them together as a team for a number of our start-up clients that are having commercial dealings overseas. For example, if they require an American lawyer we have one on our team. So that’s a point of differentiation in that we are a one-stop shop for multi-jurisdictional matters without the price tag of a multi-jurisdictional firm.”

How did you discover this potential in Israel?

“We have a close connection and interest in Israel anyway, and one of our partners, Allon Ledder, lives in Israel. So we had to make it work for him and, as our clients required offshore advice, it was a natural step forward for us.”

You are a strong advocate for innovation within law firms. What trends are you expecting to see in coming years?

“I’m interested to know where artificial intelligence is going to take us in terms of solving legal problems. I wonder to what extent it’s going to be used to become an arbiter of disputes. We are seeing in China and in Singapore our first robotic receptionists – they are humanoids – and I wonder where that’s going to take us in the legal profession. I think we’re all in for a very interesting ride in the next few years.”

Does that worry you?

“I don’t believe you can be scared of change – you have to embrace change and with every change comes an opportunity.”

You have also been very active in the pro bono space and making a difference in the community, including assisting with a high-profile Aboriginal rights matter that went to the High Court of Western Australia and helping community bodies such as the Jewish House homeless refuge. How important is this type of work to you in terms of career and life satisfaction?

“I’ve always believed in dedicating time to pro bono causes. It gives to me as much as I give to it. It’s absolutely essential as a practitioner to have that space in your day to give a little back because we are very privileged to have law degrees and to live in a first-world country and we all need to look after those less fortunate.”

Do you have any other messages for your peers?

“The profession needs to be proactive in predicting the changes that are going to happen and, instead of hoping they go away, be proactive in making sure we are looking after our solicitors coming up through the ranks – to ensure that they have a stable livelihood. People are investing hundreds of thousands of dollars in law degrees and, with some proactive thinking, we have to safeguard and reward that training. At the moment we are allowing thousands of graduates to come through the system with no real prospect of having a career in law and I find it sadly misleading. As a profession we need to come together and think about what we’re going to do and to try to give them more opportunity.”

For more details about KWS Legal, visit www.kwslegal.com.au.