Staying competitive in the legal market
In his latest blog Mitchell Charlesworth partner, Mike Buxton, looks at how law firms can remain competitive.
Competition in the legal sector has never been greater, with a continuous stream of new entrants entering the overcrowded legal market exploiting changes in legislation and technology. There is constant pressure on law firms to ensure they stay on top of their game, and this is only going to become a greater issue over the foreseeable future.
We are seeing a lot of competitive activity in the sector. Some of the ways law firms are gaining and maintaining an edge over the competition include mergers, investing in technology and innovation to improve client service, attracting talent through flexible working, showcasing expertise, offering added value and developing their brand. There are frequent media reports of larger, more diverse firms acquiring mid-tier or boutique firms to complement their existing service offering, or a departmental head leaving an established practice to set up their own firm, and often taking several employees with them.
Frequent regulation changes, including the SRA’s 2013 “Red Tape Initiatives”, the long-awaited redrafted Solicitors Accounts Rules, as well as other changes in the sector from the SRA, are all looking to increase “access to justice” and efficiencies. Essentially, they are intended to bring more supply and demand to the legal sector as a number of firms are repeatedly finding themselves priced out of the market, especially as price transparency increases, with more firms readily publishing prices on their websites.
However, this has led some commentators to say that it could turn into a race to the bottom, leading to dissatisfaction in the legal sector and a reduction in consumer confidence. It is, therefore, a delicate balancing act to improve the current situation whilst not compromising on quality.
There has been a rise in alternative legal services which has also increased competition. In addition to major accountancy firms launching legal services over recent years, the sector has seen a large increase in “platform law firms”, of which there are now over 1,000 in the UK. These allow lawyers to leave the traditional firm structure and work in a more flexible environment. Lawyers at this style of firm are usually self-employed, decide their own hours of work and tend to keep a higher percentage of the fees they charge. With the added benefits of cost savings via working remotely and using shared services, such as accounting and IT provided by a central hub, this leads to less fixed overheads for the firm.
To succeed in such a hugely competitive market, law firms need to get the basics right by offering incentive packages which attract and retain the best lawyers and staff, and consistently provide added value and attentive client service, whilst bolstering their offering with specialist knowledge. Investment in technologies which improve efficiency and drive productivity, including the use of AI and automation, should be high on the agenda, with business analysts McKinsey predicting that up to 23% of lawyers’ time can be automated by 2025.
If you would like to discuss how your law firm can stay competitive, please contact Mike Buxton below.
To read Mike’s blog on Brexit please click here.
To read Mike’s blog on technology please click here.