Legal market research in the LexisNexis Bellwether Report 2016 “The riddle of perception” was recently published. The research involved structured interviews with 122 independent lawyers and 108 clients of which 93% had experience of private client legal matters.
Some of the highlights from the report include:
- Just under half of the sample have seen some growth over the last few years
- 95% are predicting rough times ahead but over half (58%) are still planning for growth
- 41% agreed that their own firm was optimally sized for the desired profit ratio, dropping to 27% among firms with between 11 and 20 fee earners
- 92% believe that ‘continued investment in technology’ is no longer optional
- Just under 72% agreed that change is not a strength for lawyers in general, while also maintaining that they had made significant progress in their own practice
- 85% agree that client demands are having as big an impact on working practices as regulations, yet only 40% of firms have taken on more staff to meet those demands
- 77% agree that “Lawyers don’t recognise they are operating in the service industry”
- On average, firms have implemented 6.3 changes
- 87% of firms don’t see the advantages of using artificial intelligence (AI) to inform their decisions
- 30% of lawyers think they offer excellent value for money and only 8% of clients agree
- 63% of clients say they always use the same firm (41%) or same range of firms (37%)
The top 10 challenges/threats were shown to be:
- Continuing demands of compliance regulations
- Attracting new clients
- Attracting and retaining good lawyers
- Increased cost consciousness/more shopping around
- Keeping up to date with the changes in the law
- Keeping working practices up to date
- Increased demands for fixed fees
- Increasing commoditisation – more areas being handled by unqualified lawyers/online DIY services
- Being able to secure and renew PI cover
- Clients increasingly relying on the internet for legal information
Yet the top 10 changes firms implemented in the last year or plan to implement in the forthcoming year were:
- Attracting/retaining good lawyers
- Promoting networking/Raising firm’s profile
- Increased investment in processes/technology
- Website development
- Developing client service policy
- Using technology for CRM
- Investing in training
- Increased specialisation
- Taking on non-fee-earners to help business develop/efficiency
- Convincing established lawyers of need to modernise business practices
- Increased investment in marketing
- Deliberate shift towards fixed/capped fees
- Review of information sources
- Taking on more staff
- Correcting profit share imbalance
The report authors suggest “There is a clear correlation between growing firms and the entrepreneurs in our sample – which suggests that thinking outside the legal box may well be a pre-requisite for success in the future”. It also reports that “While firms struggle to discover the optimal size, most agree that it’s safer to specialise”. The authors also suggest that “today’s lawyer needs more sophisticated business skills to run a successful practice”.
Stephen Mayson notes the drop in business confidence and performance shown in the report. He doesn’t mince his words: “The report provides evidence of what I once described as ‘the grand delusion’ – essentially, a culture that is out of tune with the market and a broken business model”.
He goes on to comment “The foundations lie in firms actually doing something about the fundamentals of their business through entrepreneurialism, thinking outside the legal box, focusing on client value and their experience of service delivery, specialisation, re-staffing, and the appropriate use of technology. The principal messages and lessons to be learnt are summed up in the report’s title. Seeing legal services as those who pay for them would wish to see them is far more valuable than pursuing one’s own pre-conceived and unchallenged notions”. https://stephenmayson.com/2012/10/09/law-firm-partnership-the-grand-delusion/
I would echo Mayson’s comments. But for me, the most striking issue is the apparent mismatch between what law firms perceive as the greatest threats and opportunities facing them and their management action. There seems to be a vacuum between the market and client changes they perceive and their strategic response. The planned hotchpotch of actions (including a lot of “panic promotion”) look like a ad-hoc, shoot-from-the-hip, fire-fighting, operational projects rather than a considered and integrated strategy. Is this fiddling while Rome is burning?
The full report can be obtained here: http://businessoflaw.lexisnexis.co.uk/download-the-bellwether-report-2016-the-riddle-of-perception/
My views on the 2015 Bellwether report can be seen here: http://kimtasso.com/legal-sector-research-highlights-from-the-age-of-the-client-by-lexisnexis/
