The recent report Australia: State of the Legal Market 2015 revealed just how much the legal market has changed over the past 10 years. What I’m interested in is what this change means for law firms hoping for a future.
Here’s 6 things I think we all need to accept.
1. Business development is no longer a department
The report showed that, unlike most industries, law firms aren’t meeting challenging times by investing further in marketing and business development. It’s true that the fastest growing law firms have some of the leanest business development teams, if they have them at all. But that doesn’t mean BD is being neglected.
Instead, good firms are investing in quality sales and business development training, systems and tools that empower all fee earners to grow their own practices. They’re also building the structures that promote a firm-wide culture that makes everyone responsible for sales.
It’s worth noting that this is part of a global phenomenon and that many US-firms expect lawyers to pull their weight right from day one when it comes to growing a practice.
And if you want to know what your own firm can do, you can read my article about how to start a sales program that gets your fee earners bringing in more work.
2. There’s a lot of talent within
The enthusiasm for tapping into a firm’s existing skills and ability doesn’t start and end with business development. With many firms concentrating on pricing as a way to give themselves competitive advantage, CFOs, corporate advisers and analysts (often from accounting and investment sectors) are all being called on to help review data and build better pricing models.
Another trend I’ve noticed is savvy firms using the immense negotiating skill sitting within their in-house litigation teams to negotiate deals for their own services.
3. Positioning is everything
The report also revealed that many of the most profitable firms were at the top end of town. That’s partly because they work they do - often big M&A transactions or litigation involving millions or of dollars – which simply isn’t as price sensitive as other legal work. It’s also often because they went through the pain of changing their business models to become more profitable when they became global. For everyone else, I think success comes from knowing where you stand in the market.
The firms who are doing well have done their segmentation and they know what industries they’re working in, as well as the adjacent industries they can move into.
They also usually know why people come to them. They know who their potential clients are. They know what their triggers are. And they know why they’re different to their competitors. They also know who’s referring them work and why. (If you don’t it’s probably time to ask yourself who’s in your First XV).
After all, a strong positioning protects brand equity and your brand equity will protect fee margins, even in the face of strong competition.
Speaking of which...
4. Branding is so last century
I know I just talked about branding but the truth is that clients are more sophisticated than ever. There once was a time when they bought legal services based solely on a brand (it was their insurance policy).
All of the client research I do says that’s no longer the case - especially once you get out of the top-tier work I mentioned at 2. above.
Think of your firm’s brand as the ticket to get you into the arena. But beyond that, it’s their day-to-day experience with your firm and the relationships and expertise your lawyers bring that will ultimately win the prize.
To show off your own expertise you should be producing quality content that offers something of value to potential clients. You should also be using all the tools at your disposal - seminars, blogging, eNewsletters, social media - to make sure your message gets read by those who matter.
If your firm has trouble producing good content read my 7 steps to better eNewsletters.
5. In-house teams are on your side (no, really)
It’s true that in-house teams are taking more and more in-house. It’s also true that they’re asking law firms to do more with less. But believe it or not, they’re on your side.
As one general counsel said: “we want you to bill less but be more profitable”.
In fact, in-house teams are being squeezed just as much as the firms they brief. Just consider - the rise of work being taken in-house hasn’t been met with an equal rise in in-house recruitment. (Ask any legal recruiter about that.)
The firms that are winning are the ones who see their clients as equals on the same team. What I mean by this is that they’re prepared to have direct discussions about things like budgets, and work with clients to find out a solution that suits everyone.
I also think the reality is that we’re now in an environment where clients are prepared to wear a little more risk than they once did and where ‘good enough’ is fast becoming the new norm.
6. There is no silver bullet
I know some lawyers still see what’s going on as just another phase that will pass soon enough and, that when the global economy picks up, things will get back to normal.
I think we can all now accept that’s not the case.
I’m watching with interest those firms that have adapted to what’s happening by setting up ‘Jetstar’-style offshoots to bring a different level of service and pricing to their markets. (eg Orbit for Corrs, Lex Voco for McInnes Wilson or Allens Accelerate).
I’m watching with less interest those firms that have invested in ‘technology’ for the sake of it, as though this alone will solve their ills.
Instead of throwing money around I think the best approach is to go straight to the horses’ mouths and to ask your clients why they choose you, what they want from you, how you can make your service offering better and what you can do to make the relationship a lasting one.
Yes, I know it’s a bit ‘old school’ but what’s wrong with picking up the phone and asking for a little client feedback?
Make the process easy for your lawyers by giving them the tools and training they need to prepare for these conversations. (You can ask me for a ‘feedback help pack’ which includes example questions, conversation structures and questions to avoid).
Otherwise get some outside help in making those calls so that you can be sure they’re done right. And, better still, ensure your firm has at a minimum a regular program of collecting client feedback and using these insights as impetus for improvement.
So what do you think the changes in the legal market mean? And what do you think all lawyers now need to accept?
Sue-Ella is the Principal of Prodonovich Advisory, a business dedicated to helping law and accounting practices sharpen their business development practices, attract and retain clients and become more profitable.