Independent law firms failing to adapt to client-driven culture
Almost three-quarters of lawyers in small firms report clash between client-driven market and traditional role of solicitor, yet over two thirds failing to adapt or evolve business strategy.
A new survey published (The Bellwether Report 2018: The Culture Clash – Solicitor Confidence vs Client Power) by LexisNexis UK, a leading global provider of information and analytics, raises concerns over the complacency of independent law firms, in the face of a rapidly evolving legal landscape and escalating industry challenges.
The research shows that three-quarters (75%) of professionals from across the independent legal market believe the legal landscape is changing at a faster pace than ever, yet only one in five acknowledge that significant change is needed within their own firm to keep pace with the industry.
With over 700 new firms opening each year, the legal profession is becoming more competitive by the day. This increased competition, the emergence of alternative business structure (ABS) firms, and rapidly changing client attitudes and behaviours, have transformed the industry over the last decade. Against this backdrop, the confidence and relaxed attitude to change amongst independent firms indicated by the survey could be misplaced.
This sense of complacency is also reflected in the fact that lawyers rank the continuing demands of compliance regulations (81%) attracting new business (80%) and keeping up-to-date with industry changes (78%) as the top three challenges facing their business. These are exactly the same as those identified as most pressing five years ago in 2013. The lack of movement indicates little has been done to address how firms are dealing with them. As one respondent commented: “I don’t think law is a modern service industry. The law is old and entrenched – it is not very good at keeping up in any way, shape or form.”
Nowhere is this complacent attitude more evident than in the lawyers’ response to enhanced client power and the development of an increasingly price-driven culture. Almost three-quarters (71%) of lawyers surveyed have had personal experience of the culture clash between an increasingly client-driven market and the traditional role of the solicitor, with a further quarter (26%) highlighting a negative impact on fee structure. While 97% acknowledge that a client-first culture is now important to the success of their law firms, over two thirds (69%) report that their business is making little or no change to meet these demands, raising concerns around their long-term future.
Jon Whittle, Market Development Director at LexisNexis UK, comments: “Online search and price comparison is now the norm and client empowerment at an all-time high as a result. While our research reveals that most independent firms are aware of this shift, it also shows that too few are responding by taking proactive steps to adapt to this new world order.”
Many clients also now seem to be moving away from the full-service model that traditionally defined the industry and towards a more mix-and-match approach, selecting services that suit their needs from a range of providers.
Whittle continues: “All of these changes require legal professionals to entirely re-think their long-term business strategy, and how to best attract and retain clients. Firms need to review operations in full – looking at how areas like pricing, marketing, client liaison systems and tailored staff training and development solutions – like those created by LexisNexis – can help professionals stay on top of their game, to ensure practices remain profitable within this new context. Our survey indicates that, year-on-year, many businesses are undertaking only small-scale development. Whether this stems from complacency or fear, firms risk the market moving on without them.”
As one survey respondent commented: “The legal profession has taken an awfully long time to realise that we’re not in some highfalutin position where clients should be honoured to work with us. Actually, this is a business and we have to sell ourselves.”
Generalist firms struggle more than specialist counterparts
The research also reveals that generalist law firms are struggling to keep up with industry changes significantly more than their specialist counterparts. Nine out of ten generalist practices surveyed expressed concern about their ability to adapt and adjust to major industry challenges, compared to just four out of ten specialists.
Whittle comments: “Specialist firms are naturally more cushioned from the pressures of the market. Their practices are more contained, and their specialisms are, in effect, their market insurance. They are more likely to gain business based on their expertise, while larger firms are more likely to get business based on price.”
“However, while specialists are less concerned by these issues than generalists, the challenges are still there and the need to think about how to adapt going forward.”
