In the new legal world, firms must deal with business first

4 Mar 2014

Andrew Jackson’s analysis in The Lawyer towards the end of last year caught our eye and has continued to provide worthy commentary on the industry as it enters 2014 and comes to terms with deregulation. There are a number of points in Jackson’s article that are highly relevant to firms and speak to where business focuses must lie in the first half of this year and beyond.

Threats from outsourced models

Speaking about Legal Process Outsourcing (LPO), the article in The Lawyer makes good reference to the ability of clients to look further afield for their legal requirements. ‘Using an LPO provider in India, the Philippines or Israel can save a lot of money’, writes Jackson, entirely correctly.

For legal firms, the days are long gone when you could rely on good repeat business because you happened to be local to your clients, or to have served them for years. Now, clients are looking for cuts in their prices and are aware that, for certain mundane legal tasks, they can go elsewhere. Firms must give clients a reason to go to them: either in terms of their expertise, service or price. It is no longer enough to rely on clients coming back time and time again, especially when fees are likely higher than many LPO providers.

The commoditisation of law will continue into other areas beyond those we have already seen (PPI and conveyancing are current prime examples, but for how long?) and firms must be ready for this situation to occur in their segment.

Firms have to become genuinely client focussed. They need to work out and be honest about who their natural clients are and figure out what more they can do for them.

Focus on your offering

Jackson writes that though many firms have embraced the need to have a sound business offering to clients, there are still some that are stubbornly holding out in high margin, high pressure fields, hoping that they can stem the tide.

The time for this sort of approach is, I am afraid, over. Firms that refuse to look closely at their model and their business offering are potentially gifting business to the new players in the market that will, by definition, have looked closely at their core business elements in order to launch their proposition. They will be targeted, well marketed and well set-up and it is essential that firms organise themselves to compete with them.


The Lawyer article highlights profit as something which must now be focused on in minute detail and, whilst bottom line is, of course, the be all and end all, a general focus on excellent performance, across departments and fiscal measures, is what all firms must strive to achieve if they hope to survive in the marketplace.

Too high WIP is as likely to drive a firm to the wall as a fall in profits, as is any falling measure of partner’s earning rates and potential. A drive to be outstanding may have always been required in some firms. Now it is more important than ever.

Act now

‘Make hay while the sun shines’. It’s an old lesson but one perhaps difficult to put into practice. Sitting on high profitability and stable business, it is tempting to stick with what you have, rather than twist on something new, unusual or unexpected.

As Jackson points out though, sticking at a time of vast industry change will leave you behind when this cycle is over. If you are profitable and performing well now, then now is exactly the time to make provisions for the future.

‘Nothing lasts forever’, Jackson ends on, something which several law firms are currently in the process of finding out first hand. Preparation for the dawn of the new legal industry is everything.

One thing that law firms are slow to do is to change when they could risk damaging the way they do business now. In a faster moving market you have to be willing to cannibalise your existing business model.

Kodak sold a lot of 35mm film. They made good revenue and margin on doing so. Keeping a focus on that market did not stop digital cameras coming in and wiping out the film market.