For generations, law firms have been owned and run by lawyers. Their primary competition has been other law firms, which have also been owned and run by lawyers. Market regulation has also actively prevented legal services being sold by firms who are not owned and run by lawyers. This has led, inevitably, to a world in which all law firms have been able to thrive and develop without having to deal with the normal pressures of open market competition.
No other industry has been able to grow so big and to be so successful whilst at the same time investing so little intellectual or commercial effort in areas such as Sales, Marketing, Customer Service, HR or even Logistics. No other industry puts their commercial strategy solely in the hands of the people that make the product and yet most law firms deliberately put 99% of the commercial control of their business into the hands of lawyers.
All of this is, however, now changing. Law firms will need to harness the power of non-legal business talent if they are to thrive in the evolving legal ecosystem because being a good lawyer is no longer good enough to run a good law firm. Clients are also no longer prepared to accept the take-it-or-leave-it approach of traditional law firms. Technology and deregulation are driving new and different forms of competition and a new generation of clients are demanding that law firms behave like regular businesses.
Success in the new ecosystem will require law firms to have properly developed commercial strategies if they are to thrive as the market starts to rid itself of the protections traditional law firms have previously enjoyed. Law firms, owned and run by lawyers, are running the risk of being left behind in the new world order. Every modern law firm will have to rewrite their strategic plan if they are to survive.
Many firms have, of course, incorporated non-legal skills into their operations with Marketing, IT, HR, Finance and Administration practitioners working within law firms. The challenge is that firms often lack the will to use these skills effectively. In almost all circumstances the balance of power, the decision-making heart of a legal organisation, still rests, exclusively, in the hands of a management team composed of lawyers. This means that decisions about strategy, about commercial direction, about how the firm sets itself up and goes to market are often taken in an environment where non-legal skills are not just absent but regarded as essentially irrelevant.
In a world of rapidly increasing choice, legal market deregulation and growing client power it is vital that law firms have a clear understanding of where they sit in the market. They need to know where commercial opportunity lies and where commercial threat exists and recognise that their legal skill is only one of their assets. They must have a clear understanding of their strengths and where there might be weakness in their total offering. If a law firm has not tested their entire business against such metrics, then they are exposed.
The overwhelming majority of law firms believe that their legal service (the product) is what differentiates them from the competition and they will build their business around their belief in their legal service. In most cases, under the lid, the legal service all firms provide, from a client's perspective, is essentially the same.
In an environment where most law firms essentially deliver exactly the same client benefits it becomes ever more important that marketing and sales functions are able to drive individual firms to prominence. Providing compelling arguments in favour of the service from a particular law firm requires a sophisticated understanding of the market and what potential consumers of legal services actually want.
Law Firms need to learn quickly from non-legal businesses - where it is entirely normal for management teams to be built around a wide range of complementary skills. Alongside Executive and Operating Officers one would expect specialists in Finance, HR, Marketing, Customer Service, Sales, Product and Technology. The management team work as a unit to balance the cost and benefit of each lever and completely recognise that the whole is, by definition, greater than the sum of the parts.
It also requires a pro-active approach to marketing and sales - one which is designed to attract and retain the target customer. It is important to recognise that effective marketing and sales in law firms does not require specialist legal knowledge or an intimate understanding of the law. For the majority of law firms, marketing and selling legal services requires, first and foremost, an understanding of the potential client and an ability to talk, using the client's language, about how the firm can address their needs and requirements.
Law firms have a tremendous opportunity to thrive in the new legal eco-system. The market for legal services continues to expand whilst the social and business disruption caused by a global pandemic will lead to increased demand for customer-centric legal solutions. Law firms that can deploy, effectively, the tools, skills and business models that have been so successful in other professional markets will be best placed to serve this new demand.
Contact Viv Williams Consulting to speak to our team of specialist consultants on how to develop a successful modern law firm and to embrace the power of non-legal business skills to build competitive advantage into the DNA of your operation.
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