We need to talk about SVB
Unless you’ve been living under a sound-proofed rock this past week, you will have heard all about the collapse of Silicon Valley Bank (SVB) last Friday. The facts are pretty well established by now: America’s 16th-largest bank, and the biggest bank in the Silicon Valley – famously home to the world’s densest concentration of tech startups – suffered a run when depositors rushed to withdraw their money as confidence in the bank’s situation melted away. SVB had fallen victim to a lethal combination of bad bond investments, poor risk management and rising interest rates, and was shut down by US regulators on 10 March.
On Monday morning, it was announced that HSBC had purchased Silicon Valley Bank’s UK arm, SVB UK, for a symbolic £1 in a fire sale following a weekend of backroom dealing with Rishi Sunak, Bank of England bigwigs and assorted legal advisors. HSBC and the Government thereby averted what could have been a catastrophe on a scale not seen since the 2008 collapse of Lehman Brothers.
And let’s be clear: we were on the verge here. Had HSBC not rescued SVB UK, a minimum of 250 and possibly up to 3,000 startups and scaleups would not have had immediate access to the £7bn they had lodged with SVB UK. In other words, a very sizable tranche of the startups and scaleups that make up a large proportion of UK law firms’ pipeline, and which are the engine for much of the future growth of the UK economy, were facing a huge liquidity problem and were at very real risk of being wiped out: if all of these companies had lost access to the funds needed to pay their bills, service their payroll and deal with their supply chain, their business would have gone kaput in short order.
There was perhaps one crucial difference to the events of 2008: unlike with Lehman Brothers, the parent bank didn’t take SVB UK’s money to the US overnight. As an aside, after 15 years of litigation, the Lehmann saga is now finally coming to a close, after lots of sterling work by Linklaters and South Square, among others. But make no mistake: the collapse of SVB had all the makings of a cataclysmic event for the UK startup and tech sector, as well as for the financial services sector.
It’s also very important to state that we are far from “and they all lived happily ever after” territory here. I certainly don’t think the SVB bond-holders will have been wearing smiles this week. And at the time of writing, the FTSE is still way off pace from where it was before news of the SVB collapse broke – the percentage drop we’ve seen over the course of the last seven to 10 days is double the effect of the events surrounding the mini-budget debacle. And the financial news is full of ominous mutterings over the continued fallout, with CreditSuisse in particular beginning to look like it’s sailing into choppy waters. To mix metaphors, we are not out of the woods yet. Not by a long stretch.
And there are also profound implications for the legal sector here: one of the things that really struck me as I watched events unfold over the last week to 10 days was the wide-spread absence of instantaneous legal marketing I witnessed in relation to this seismic event. Only very large firms seemed to be doing any marcomms regarding the collapse of SVB UK, and I only saw a select number of firms engaged in BD and CRM work. We mustn’t be in any doubt that this collapse of a major bank was a dry-run for whatever the next crisis may be – and yet the legal industry as a whole really seemed off the pace.
There are several law firms out there that emphasise the importance of comms and marketing, and who – in all fairness – played a blinder during the pandemic, but which were notable for their deafening silence last week. No all-client calls, no messaging around seeking the appropriate legal support, no big news updates. Nada. Just crickets and tumbleweeds.
As marketers, we need to be bolder, sooner.
Yes, A&O ran a webinar addressing the SVB UK situation at 9 am on Monday morning, by which time the bank had been bought by HSBC.
Yes, some pretty significant law firms (some of which were startups themselves a few years ago and are now the go-to advisors for the startup community) were working flat-out for 72 hours over the course of last weekend.
And yes, beneath this work, there was clearly some BD going on as clients were contacted in order to advise them of the services they were likely to need: banking advice, employment law advice, litigation advice, contractual advice, and so on. These conversations clearly took place in private, as they should.
But here’s the thing: surely those phone calls should have been happening on the Tuesday and the Wednesday of last week, when the first tremors were being felt. And so the question I want to ask is: what earthquake early alert systems do you have in place, if any, and how robust are they?
If you run an employment law firm, a financial services law firm, a corporate finance boutique or a restructuring boutique, you must be acutely aware that the next crisis could be just around the corner, and that you should be able to react at pace. It is therefore crucial that you and your team role-play your response.
- Who is responsible for pushing the ‘go’ button?
- What’s the response cascade?
- Who do you call?
- How do you ensure they pick up the phone?
- How do you mobilise your team?
- What do you do in terms of weekend working?
- What can you ask your agency to do for you?
You need to know the answer to these questions, and have the muscle memory of war-gaming your response.
True, the picture at the start of this week was a lot less bleak than feared – HSBC stepped into the fray, the market stabilised and thousands of businesses were able to breathe a sigh of relief. But this has to be a wake-up call. Managing partners: if you see an event of this magnitude in the making, you have to pick up the phone to your CMO and tell them to press ‘go’ on your well-rehearsed emergency comms plan.
Even if you subsequently call off the dogs in light of unfolding events, it is crucial that you are able to mobilise immediately. Don’t worry about getting every detail perfect – it is better by far for your clients to receive an urgent but not brilliantly crafted heads-up on the Friday, rather than a perfectly branded piece of comms on the Monday, when the opportunity to save their business already passed them by. Don’t let perfect be the enemy of good.
What does this look like in practice? Well, to refer back to my earlier example of a previous banking catastrophe: on the day that Lehmanns was tottering, Simmons & Simmons hosted a conference call – this was in the days before Zoom, remember – for thousands of asset managers, hedge fund managers, VCs and others to advise them in real time on what steps to take to avert disaster for their business. From memory, this was led by Darren Fox at Simmons, and was a great example of reacting quickly and effectively in the face of an unprecedented calamity.
Another example from that era: Slaughter and May saved the banking sector in the course of a weekend, allowing for Northern Rock to be acquired and helping the Government to stop the FS sector sliding into the abyss. As far as I recall, every Slaughters partner was working that whole weekend, showing that a) they took the call (or, more likely given their close ties to the treasury, made the call), and b) ego has no place in a crisis. What do I mean? Well, rumour has it that Nilufer von Bismarck OBE – who was one of Slaughter and May’s highest-billing partners at that time – was put in charge of document control, a task too often assigned to a junior but here recognised as critical to the success of the entire endeavour. When the ship is sinking, it’s all hands on deck!
I simply didn’t see much of this happening last week. And we are at a stage in the economic cycle where that worries me. Why were we talking about the possibility of webinars at the weekend, when those invitations should have gone out days earlier? Credit to A&O for actually running their webinar – but is this how big an organisation you have to be in order to react at least semi-effectively in the face of potential catastrophe for an entire business ecosystem? I hope not, or we are in for some very rough times as an industry.
When Stowe comes to town
In a week that saw the announcement of yet another family law practice acquisition by Stowe Family Law – a firm that “really started to fly” after founder Marilyn Stowe survived an attack by three masked men armed with metal bars in 2003 – I was asked my opinion on various aspects of how law firms are performing in terms of their digital marketing. The article containing my advice will hopefully appear in the next few days. However, one thing I can already say now is that if you work in the area of family law, then you should be worried when Stowe Family Law comes to town.
Why? Because Stowe Family Law has always taken its digital marketing incredibly seriously and now has a model that allows them to out-perform long-established, very high-end regional practices mere weeks after announcing their arrival within the local market.
How? By knowing what it takes to deliver local recognition. In one recent example, the three local established major players in family law have seen a huge erosion in their rankings – and with that decline in ranking comes fewer website visits, and fewer website visits means less business (for those of you who don’t believe that digital marketing works, you have to ask yourself why Stowe is so successful and committed so heavily to digital marketing as part of its expansion strategy).
If you’re practising in an area where people used to visit you for a face-to-face meeting or consider driving to come and instruct your firm, the odds are that you are now going head to head with other law firms online for that same business. And you may have seen a gradual decline, or even a huge decline, in the number of leads you are getting.
Now you know why.
What is clear to us is that firms are getting ever more serious about signing up clients predominantly through digital platforms, above and beyond the word-of-mouth (WOM) recommendations that of course continue to be the most important driver of business. But here’s the thing: even WOM recommendations erode over time, as people now have several tools via which they can compile, say, a friend’s recommendation along with the feedback of others.
The first tool they will reach for is Google. And all Google is local. I mean that on a personalised level – no one else will have your exact results, as they are tailored to you – as well as a geographical level: if you type in “divorce lawyers near me”, then that is exactly what Google will show you: firms based in physical proximity to your location. And those names shown – three – will be based on factors which you can heavily influence.
And that brings me back to Stowe, whose digital marketing efforts are geared towards harnessing the power of Google’s localised functionality: personalisation, then regionalisation, both in tandem with a consistent national voice that makes the firm extremely hard to go up against. The only way of doing it is to up your own digital marketing game.
WTF is up with WFH?
The Law Gazette published an article this week featuring a summary of the results of the annual Law Society financial benchmarking survey. Amongst the conclusions drawn in the piece is that, despite firms sustaining their rise in pandemic profits, work from home is apparently hurting productivity. This is based on the median number of chargeable hours recorded, which fell from 863 in 2021 to 841 in 2022.
Perhaps I’m missing something obvious, but there seems to be a contradiction here: how can the legal sector have experienced a 40% rise in profitability during the pandemic years, when every lawyer and their dog (or cat) was working from home, and yet simultaneously have suffered a drop in productivity as a result of people not being in the office?
Something doesn’t quite stack up. I wonder if we have to start using different metrics to have a more nuanced and meaningful conversation about the impact of WFH. I will leave you with the thoughts of one anonymous BTL commentator:
“There is a small and very loose connection here between WFH and loss of productivity. The pandemic has allowed many legal professionals the chance to drop their kids off at school, take a morning walk or just actually get some daylight. Can we ever focus on the basic and primary cognitive elements that make us tick?”
Tweet of the week – One-click lawsuits
Joshua Bowder, dubbed the ‘Robin Hood of the Internet’, has tweeted a video of his legal services platform DoNotPay using ChatGPT4 to generate “one click lawsuits” to sue robocallers for $1,500. Scary as hell? I consider it a thing of beauty – check out his tweet here.
News in brief
Mishcon de Reya bans ChatGPT
Speaking of ChatGPT: mere weeks after Allen & Overy launched its AI-driven advice service Harvey, and in the same week that ChatGPT4 launches, Mischon de Reya has decided to restrict its lawyers’ use of the ChatGPT platform. The move comes amidst fears that client data could be compromised when uploaded to the AI tool. Read the full story here.
The Brunel of shoplifting
A “substantial” jail sentence is winging its way to a Wiltshire woman who was found guilty of shoplifting “on an industrial scale” at the end of what is believed to be Gloucester Crown Court’s longest ever trial. You simply have to read the full story here.
Jobs of the week
- Compliance Counsel, RSA – RSA is a multinational personal and commercial insurer operating across the UK, Ireland, and continental Europe. The firm is seeking a Compliance Counsel to provide high-quality legal and regulatory compliance services, advice, and guidance to a broad range of areas across the company in respect of data protection and financial crime. Read the full job advertisement here.
- Intellectual Property Legal Director, JMC Recruitment – This non-contentious role sits in a renowned Legal 500 IP team, works with prestigious clients and is known for handling some of the most high-level and engaging IP work in the market. Read the full job advertisement here.
- Chief Operating Officer, Bellevue Law – The firm has grown considerably recently, and is looking to make the key hire of their first COO to support further growth in the immediate and medium-term future. Read the full job advertisement here.
I hope you’ve enjoyed reading this week’s edition.
Legal marketing expert – I inspire lawyers to maximise the positive impact they have on the world