Nov 27 '12
The Legal Marketing Association (LMA) Intelligence Brief has long had the helpful habit of sharing the latest and freshest legal industry news. Their eagle eye view of the market keeps us on top of our game and November’s brief was no different.
Four articles in particular grabbed our attention. They crossed different aspects of the legal industry but largely they told a similar story: as far as the practice of law goes, things are changing. Whether it’s through funding pressures or a lack of training, the hardships are being experienced across the board. As a result firms are having to reconfigure and rethink the very way that law is practiced in order to compete, keep pace with clients and remain profitable in a volatile post-2008 corporate world.
In the intelligence brief the LMA presented a series of articles that document some of the leading challenges currently confronting the legal industry. Of particular interest to us at Elephant Creative was the revealing content on Firm Management and Marketing and Business Development.
On Firm Management the LMA presented two pieces by the Wall Street Journal which narrate two of the biggest challenges facing post-2008 law practice: firstly the rise of office overheads and secondly, a fall in revenue as clients object and refuse to pay miscellaneous legal fees.
On the rise of costs, available here, the WSJ reports on the growing appetite among the captains of law to adopt legal process outsourcing (LPO) as a way to face down some of the very real funding pressures. This has prompted some interesting industry-wide developments as law firms adopt in increasing numbers the strategic outsourcing tactics that their corporate clients employed years ago.
Foley and Lardner have recently outsourced their mailroom, reception and copying responsibilities to business-service company, Williams Lea. This features as part of their wider strategy to digitize records and cut costs.
On the fall of revenue, available here, the post-crisis fee squeeze has been compounded by another client backlash: increasingly clients are protesting against all-inclusive billing for miscellaneous legal fees. After the crisis clients objected to large fees but not invoices for food and legal research are increasingly drawing criticism and clients are starting to say “no more” to first-class travel.
This client caucus and protest movement piles yet more funding pressure on the legal trade but goes to show that the post-2008 terms of trade between client and attorney have yet to be fully hammered out.
On Marketing and BD the intelligence brief directed us to an article by americanlawyer.com which sounds the alarm bells over the lawyer’s lack of competency for business and client development. The Am Law article pulls apart a recent survey which has shown that new partners fear that a lack of practice and client development training is hampering their ability to win over new clients.
The article, available here, quotes a partner who put the dilemma in pretty simple terms: “I learned how to practice law, but I was not trained in how to develop business.” The article also cites a recent LexisNexis report which echoes the concerns that attorneys are largely illiterate in BD, and because of this found that 9 out of 10 AM law 200-size firms have “unprofitable” partners.
The second article on marketing and BD highlighted by LMA was a piece by law.com, available here, which looks at the divergent aspirations as they exist between attorney and client. Like the previous this article pulls apart a survey and presents some interesting, but not altogether surprising findings.
The main finding was that revenue growth is the single most important goal for law firms in the coming year in the face of an all but contracting client market. The other main goal for firms is market share growth. However as the article says, offering reduced rates is not the best way to do it.
Rather, according to the survey the key to growing market share is to provide client-centric commercial advice. Whilst the previous 5 years saw client prefer reduced rates, the name of the attorney-client game is changing. Motivated by political and economic uncertainty, clients want client-centric commercial advisors who offer value-added services, commercial acumen and strong strategic guidance.
So as we conclude it’s easy to see that all these articles paint a picture of a market in the throes of some pretty violent and painful changes. Interestingly the 4 articles referred to chime rather harmoniously with the findings of the FT/Meridian West research paper, available here, which said that “a revolution is underway in professional services.”
We pulled the FT/Meridian West research paper apart across a series of blogs, available here, here, here, here and here. In any case the volume of material on this matter goes to underscore and pay homage to the fundamental shifts that have occurred in legal practice. Ostensibly the lasting market share and competitive advantage will lie with he who sees and properly responds to the challenges.