The growth rate of law firms is still pretty low. While the senior partners are trying to change that, the firm expenses are starting to outpace revenue. The main factor in it has expensive marketing services that in many cases have a low ROI. While that’s one of the major causes of slow growth, low-efficiency levels are also affecting the growth rates. Firms that are making efforts are relying frequently on knowledge management and legal project management training as their preferred tools for unlocking efficiencies, but only a few firms are seeing quick successes with their mechanisms. One of the tactics that have resulted in a significant improvement in performance is using technology tools to replace human resources. Out of 49.1 percent of firms that are using this tactic, 39.4% have seen a significant increase in performance. One way for increasing efficiency is for firms to double down on their strengths by carving out a defined strategy to better achieve efficiencies and to help boost profits. The consultancy warns that a surprising number of firms have yet to define their strategy. A firm that can target what they want to be known for in the market and shed unprofitable business segments are better positioned to leverage their strengths and then focus on achieving efficiency. 80% of firm leaders anticipate marketing and business development to be a major priority for the firms. While they’re trying to cut costs, the reality is that the costs are continuing to rise.
In-house legal services and ALSP (alternative legal service providers) are a growing competition for traditional law firms, which results in a shrinking talent pool. The likelihood of associates staying loyal to one firm is diminishing. To ensure that high achievers stay put, firms need to redouble efforts to prepare a younger generation of lawyers for success. Key areas include business development training and protecting work/life balance, similar to the opportunities and benefits available in non-traditional legal roles. Retaining and cultivating emerging legal talent also means managing lateral hires appropriately, including more careful scouting at the onset and the establishment of performance requirements once they join the firm. Diligently weeding out underperforming lawyers, laterals included, can create a wider path for high performers to emerge.
The wave of legal innovation continues to build, beyond technology alone, to encompass how firms deliver legal services. Some firms have already benefitted from the efficiencies and business development opportunities that these innovative models and solutions present. Firms that don’t keep up stand to lose work to better-positioned competitors, alternative providers or in-house departments that are. Firms will need to determine what technology is most beneficial and whether to build solutions in-firm or outsource and they need to commit to the upfront investment and ongoing attention to those markets’ fast pace. If implemented properly, these innovative solutions can hold the promise of lower costs, increased revenue and stronger client relationships.
Cybersecurity is a principal concern in the coming year, driven by the recent proliferation of high-profile breaches, the abundance of highly sensitive client information retained at law firms and the serious damage that a cyber attack can do to a brand. Firms will need to better understand how their data is stored and used, revise data security policies and practices, implement layered defenses and develop response plans while exploring cyber insurance protection policies.
People often turn to the internet when they’re looking for legal service providers, and that includes lawyers. Webris reports that “96 percent of the people seeking legal advice use search engines”. Search Engine Optimization has long been a point of emphasis for businesses, but local SEO is becoming just as important, especially for firms. The issue with that is flooding the market. Between paid and already established business listings, it’s really hard to get to the top of the search engine results. Even bigger problem is happening with social media. Most of the firms are promoting services without properly targeting their audience, or giving them a CTA (call to action). A lot of businesses decide to take the easy way of hiring a marketing agency, but that, in most of the cases, ends up being a bigger issue and brings extremely low ROI. Even if the marketing agency has proven itself in the past, we live in a day and age where marketing algorithms change more than once a day, and keeping up to date with every update tends to be pretty hard for most of the agencies.
Customer Relationship Management (CRM) software has been used by businesses for years. It allows them to keep their customer information organized, thack all interactions with each customer and provide a better experience that’s more tailored to the individual customer. Firms are expected to take advantage of these benefits since such software would allow them to have client information at their fingertips and would foster better relationships with clients.
Clients now expect to be able to pay just about the way they want. Most firms accept credit cards, but mobile payment apps are growing in popularity, Businesses that want to keep up will need to accept the latest payment methods. Payment methods aren’t the only way billing is changing in the legal industry. Many firms are moving away from billable hours and trying alternative methods, such as flat rates, to bring in new customers.