As the Christmas break approaches most lawyers will be looking forward to having time off in a period when things genuinely go quite and the e-mails slow or stop, at least for a few days.
Then there will be those managing law firms, who will be thinking, “..another year gone, didn’t it go fast, what do we need to do it 2016…?”
None of us have a crystal ball, mores the pity, but a pattern has certainly developed since the UK came out of recession. The demand for commercial legal services has increased and we have seen financial performance in the sector improve accordingly, initially in the Top 100 then cascading into the Top 200 and beyond.
The consumer sector has also seen a resurgence, demonstrated by the appetite for new entrants to move in, whether they be virtual, technology based businesses such as LegalZoom or corporates such as Fairpoint Group PLC.
So what can we expect in 2016?
Consolidation – growth, whilst controlling central overheads is the name of the game for many and I expect the merger market to continue at a pace as law firms seek critical mass and scale. Nothing new there then.
Lateral movement – lawyers or teams who hunkered down in the recession, but whose clients have returned with a vengeance will be in demand. Holding on to these teams could be as difficult as attracting them. Lots of expectation management to do for the Managing Partner!
Client power will increase – technology means clients are getting savvy and as a result increasingly demanding. What they want more than anything is value. Innovative pricing models & therefore a real understanding of your overhead base will be a must for lawyers who mean business.
Disruption – whether it is new technology or new market entrants I expect more disruption than ever in 2016. LegalZoom will no doubt look to build on the Beaumont acquisition whilst those listed law firms like Gateley & Fairpoint will seek growth to boost their share price and let’s not forget about the Big 4 accountants who are building legal businesses very nicely thank you.
Increased polarization – much of the profession remains a cottage industry, there are c. 11,000 law firms so outside the Top 200 they are SME at best. I see an increasing divide between the Haves & the Have nots. If nothing else due to major challenges facing smaller firms such as access to capital, retaining talent and routes to market.
A focus on sectors – lawyers talk about having a USP or a brand. Difficult to achieve, but being experts in a sector and possibly all aspects of that sector can set you apart. I expect technology, construction, media and intellectual property to be busy areas.
Reliance on suppliers – for many years’ law firms sought to do everything in house, but now outsourcing and external vendors, especially in IT, are commonplace. This makes those suppliers a hugely important part of the lawyers’ armoury and indeed the value chain to clients. This will only increase and makes managing those relationships and the procurement processes associated with them so important.
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