Edge International


Developing Law-Firm Strategy in a Buyer’s Market

Developing Law-Firm Strategy in a Buyer’s Market

Right now, law firms of all sizes in a majority of jurisdictions are facing several serious challenges, including the following:

These and other contentious developments have arisen because of fundamental changes in the marketplace for legal services.

We’ve shifted from a “seller’s market,” in which lawyers faced limited competition, and clients had little bargaining power, to a “buyer’s market” in which sophisticated, informed and now more demanding clients can choose from an array of providers, powered by new technology and advanced processes.

This wide array of non-traditional suppliers of different niche sections of legal services allows clients choice, sometimes at lower cost. Many law firms are themselves using such service providers as sub-contractors. What this has meant is that a significant chunk of work traditionally done by law firms has moved in-house to large corporates, or is being provided by alternative suppliers. As a result, in just the past decade the world-wide legal market has changed significantly.

While it is true that some markets have not been impacted to the extent of the North American and U.K. legal markets in regard to the evolution of so-called “New Law,” even these markets are feeling the winds of change. Clients, particularly corporates served internally by general counsel, have been quick to adopt some of the more aggressive buying tactics so common now in the U.S.A and U.K.

This is the thrust of Law Is a Buyer’s Market, authored by International legal market analyst Jordan Furlong, publisher of the influential Law21 website and former Edge International principal. It has been a timely wake-up call for the industry.

What this means is that traditional law-firm strategic thinking, developed and evolved for a seller’s market, doesn’t work anymore. A new market requires a new, more refined approach to strategy.

Taking account of these world-wide market forces and developments, the author has developed a streamlined law-firm strategic planning process for the 21st century, customized to firm requirements. This takes account of various important pre-strategy exercises, the strategy-development phase itself, and then strategy-implementation support.

Depending on a firm’s circumstances and requirements, various tried-and-tested systems, structures and processes are brought to bear to evolve appropriate strategies for different markets, jurisdictions and practice types. While smaller firms sometimes feel these trends do not apply to the same extent to them, the author’s experience has been that even these firms need to act decisively.

Some or all of the following require particular attention:

In some jurisdictions, and Australasia is one, law firms have not suffered from these changes to the same extent as firms in the U.S.A. and U.K. The main reason is that they have long adopted a more businesslike approach to law firm leadership and management, and many have recognised the importance of truly putting clients and their interests first. While this is a generalization, and many firms have work to do, one can say that many of these firms have retained the trust of their key clients and worked in tandem with them in genuinely trying to source alternative, preferable ways of delivering legal services.

In some cases, this has meant out-sourcing. In others, firms have developed new methodologies, systems and structures themselves and obviated the need for clients to look elsewhere, a win-win for clients and their legal providers in these markets.

At the heart of this has been rigorous, appropriate strategy development to ensure necessary objectives are identified and new structures, systems and philosophies are adopted and implemented.

While the changes outlined above represent significant challenges, those firms which see them as an opportunity to stress-test existing strategy, or develop appropriate new strategies, are well set for the future.