Law firms face increasing competition, both from their traditional rivals and from new entrants, such as the Big 4. The strongest firms have focused on identifying their key strengths, articulating them to clients, and improving service delivery.
It is perhaps no surprise that the majority of the respondents to the survey expect competition to increase. The legal market represents a sizeable business opportunity and has historically attracted a large number of firms. In an attempt to remain relevant and to differentiate their offering, law firms have increasingly invested in their marketing and business development approach. Clients, perhaps not historically used to this new-found attention, have been influenced. At the same time, new law firms, in-house teams, new investment in law firms, new business models and specialist law firms are all changing the competitive landscape.
The Big 4 and other mid-tier accountancy firms are also focusing on the legal space. While this has not yet had a significant impact, I am not the first to warn that their interest is unlikely to wane in a market that is currently dismissive of their potential impact.
While firms are facing increasing competition from traditional and new firms, they are also operating in an environment where clients are more demanding. In the last decade, the balance of power in the law firm/client relationship has moved dramatically in favour of the client. Principally through the use of technology, the client is now more knowledgeable about what they require and the firms that can service their needs. This has not only led to pricing pressure, but also clients becoming more challenging around what they require.
Without change, firms face losing clients, reducing fees for those they retain, plus increasing costs for doing so. However firms are changing.
The most progressive firms have seen the weakness of others as an opportunity to take market share. They have focused on identifying their key differentiators and have been rigorous in articulating the benefits of these differences, requiring all partners to be ‘on message’. In a number of cases this has led to partners and teams leaving, as firms ensure there are no areas of their offering that dilute the overall message. They have also focused on enhancing service delivery models, ensuring they engage with clients to understand their real needs, emphasising relationships with their key lawyers and aiming to deliver real insight.
So while competitive threats are coming from all angles and clients perpetually want more, the legal market holds vast opportunities for those firms focused on identifying and communicating the key benefits they can deliver for clients.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.