The balance of power in the client/lawyer relationship is shifting, with knock on implications for law firm sustainability. To be one of the “fifty survivors” in the long term, law firms need to understand and meet client demands while also maintaining a keen eye on profit margins.
This year’s LexisNexis Bellwether report ‘The age of the client’ examined how independent law firms and sole practitioners are responding to a new breed of client; one who is “more informed, more demanding and more price-sensitive than ever” and is “challenging traditional working practices and forcing lawyers to adopt a smarter approach, not just to client service, but to every aspect of the business”.
In this blog post, I will examine some of the report findings and suggest some practical ways in which law firms can secure growth in ‘the age of the client’.
Two out of three lawyers expect their business to grow in the next five years, and 63% of lawyers say performance is on the rise, which shows great confidence within the sector. But as six out of 10 lawyers also see retaining clients as an issue, it is clear they know that the road to growth will not be easy.
Demand for fixed fees has pushed law firms towards a business model whereby they understand and can predict the costs for different types of work. This is only possible with a full understanding of operational costs and profitability of different services. Investment in effective management information systems that can calculate and deliver this kind of information has therefore never been more important.
There is also a trend for clients turning to internet and automated services, with one respondent saying that “more firms are going to have to become more specialised because there are all these competitors who can do the bog standard work.” In response, law firms need to fully understand the value they can add to a case or the type of service they are best placed to deliver. Thorough market analysis (and regular client communications) combined with internal systems analysis of operational efficiencies gives law firms the information required to make these important strategic decisions.
The LexisNexis Bellweather report, which is based on interviews with 118 independent lawyers and more than 500 private clients, recommends and monitors 15 changes that law firms should be making. These changes include:
All of the above rely on the recording and monitoring of good quality data, and the efficient and effective delivery of this data as useful management information.
But how do you put this into practice?
How to put law firm growth strategies into practice
(1) Ensure your MIS is fit for purpose by setting KPIs and analysing your MIS for weaknesses
(2) Develop and build an MIS system that meets your specific business requirements
(3) Put in place a process of continuous improvement to track and deliver the required changes over time.
80% of lawyers describe their firm as “actively embracing change”, which gives a positive indication of willingness, however I wonder how much of this is based on personal optimism and how much is played out in measurable results. Progress should always be quantified and monitored.
But as lawyers had implemented just five of the report’s recommended 15 changes, there is still a way to go for most firms to secure growth in the age of the client.
Is your law firm management information system (MIS) set up to deliver sustained growth?
For a review of your law firm management information system (MIS) to ensure it can deliver the recommended changes, contact us today.
Or to share your views about the findings of the report, tweet me at @KatchrData
Blog post by Graham Moore, Managing Director at Katchr