New players in the UK legal market may cause a bloody revolution

Do you remember a great Neil Young song called ‘Powerfinger’? As the song opens, the narrator is being threatened by a white boat with numbers on the side and a gun. Despite his alarm, the young man makes the rather laconic remark “it don’t look like they’re here to deliver the mail”.

In our legal pond, there are more new players emerging by the day. They are going to ratchet up the competition and are certainly not here to deliver the mail. The leader of the pack so far is Co-operative Legal Services. But, recently, other organisations including Saga, Direct Line and the AA have all indicated that they are either applying for or intend to apply for a license to become an ABS.

There will be more to come. These new entrants all have deep pockets and substantial resources. They can use their capital base to advertise widely and invest heavily in technology. All have established and substantial customer bases to sell to using their strong brands. The Co-op plans to recruit 3,000 new people to its business in the next few years, most of them to provide legal services.

The marketplace for legal services will undoubtedly be expanded as the new players aggressively pursue people who may not normally spend money with lawyers. However, they will not just create a new client base. They will also raid the existing client base of many practices. It won’t just be firms specialising in volume work or selling low-cost services that will be affected by the new entrants. The new kids on the block are not going to stop there.

Witness the Co-op putting its toe into the family law market. Undoubtedly, once it has established itself in the marketplace, some of these big companies will go after areas of the law that are more complex and traditionally more expensive. That is what big companies do, they invest and they expand.

Many firms will have clients stripped from them by the highly professional marketing and service levels provided by these companies. Those firms are going to ask themselves what they are going to do. Undoubtedly, some will use their low cost base to attack the work currently carried on by bigger firms. Many mid-sizes firms will suffer a double whammy as they are attacked by both new market entrants and existing firms.

Every firm in the country should have thought through what its response is to the challenges created by the new entrants to their market. Even if the threats seem remote, they should be addressed by everybody and then reviewed regularly as the predatory new players push into their marketplace.

Any lawyers who think that they are here to deliver the mail, who do not have a strategy to deal with these issues or have not planned for this future are closing their eyes to the inevitable.

Through the shriek of Old Shakey’s guitar, you can make out the fate of the guy narrating the song. He never figured that he “would fade away so young, with so much left undone”.

What do you think? Are new entrants to the profession going to cause a bloody revolution?