Legal market's 'grand delusion' laid bare as 'rough times' predicted
Confidence and performance of midsize firms dips, new report shows
Some 95 per cent of solicitors believe there are 'still rough times ahead' for law firms, according to the findings of a new report.
While last year's research saw a rise in confidence within the profession, the latest findings from the Bellwether Report from LexisNexis are less bullish and show that both confidence and performance have dipped back to the levels reported in 2013/14.
Just under half of respondents have seen some growth in recent years and are quietly confident about the future.
The report suggests the lack of confidence might be due to a mismatch between lawyers' key challenges and changes, planned or already implemented, in their firm.
Around 85 per cent of practitioners agree that client demands are having as big an impact on working practices as regulations, yet only 40 per cent of firms have taken on more staff to meet the increased demand.
Taking on non-fee earners to develop business and increase efficiency is also low down on the list of firm priorities; even though a number of the challenges facing lawyers lie outside their skillsets.
Value for money
The report also argues that while clients are concerned with value for money, lawyers have yet to understand the distinction between price and value and there is often a failure by some to appreciate they are operating in a service industry.
The survey of 122 practitioners shows that lawyers are three times more likely to rate the 'value' they offer as 'excellent' or 'very good'. However, only 8 per cent of clients agreed.
Clients - of which 108 were surveyed - were found to be seven to eight times more likely to rate service as average or poor. This difference seems to stem from the fact that the two parties are using very different benchmarks to judge value.
'The recurring theme in this report is the expanding gulf between perception and reality for independent lawyers in a rapidly changing world. Specifically, it is about the growing disconnect between what lawyers value and what is important to their increasingly powerful client base,' said Jon Whittle, market development director at LexisNexis UK.
'The research indicates that independent law firms appreciate the need to constantly change and evolve, but the focus and business skills required to win often fall outside their traditional, professional training, experience and comfort zone of many of those gearing up for the future.'
Whittle added: 'Nevertheless, it's encouraging that the legal profession recognises the challenges it faces. It must now step out of its security blanket and embrace business practices, technology, and new ways of working to overcome the issues with which it is confronted. It's a business imperative.'
With nine in ten lawyers believing that continued investment in tech is no longer optional the report shows that adoption of technology into a firm's working habits is now widely accepted as a necessity.
The research found that investment in processes, website development, and using customer relationship management (CRM) tech appear in the top six priorities of law firms.
However, modernising a practice ranked only 10th in a list of practitioner priorities. Some 87 per cent of firms do not see the advantages of using artificial intelligence tools to inform their decision making.
With modernisation widely seen as a major barrier to technology adoption, lawyers aren't tackling the problem at its roots, the report suggests.
Commenting on the report's findings, Professor Stephen Mayson said: 'The report provides evidence of "the grand delusion" - essentially, a culture that is out of tune with the market and a broken business model.
'Tinkering around the edges of the cost base and blaming others for the rest, rather than tackling some possibly uncomfortable home truths, will not address it and secure a sound future.'
However, the legal thought leader added that report also showed a correlation between growing, successful firms and other identifiable factors.
'The foundations lie in firms actually doing something about the fundamentals of their business through entrepreneurialism, thinking outside the legal box, focusing on client value and their experience of service delivery, specialisation, re-staffing, and the appropriate use of technology.'