Law firm leaders are more than aware of the perfect storm of fundamental industry shifts that have shaken the legal industry from to its core.
- Commoditization - Technology automation
- Globalization - Offshore / outsourcing
- Education - Corporate Buyers who research and know their options
- Economic Recession - drove the acceleration of all of the above as consumers sought lower cost legal solutions
The Real Impacts of Legal Industry Turbulence
Firms of all sizes are experiencing some or all of the following impacts:
- Revenue pressure
- Challenged profitability
- Cash flow pressure
- Reduced realization
- Reduced leverage
Leading Indicators - More Turbulence on the Way
- Large firm shutdowns and Mid-size firm shutdown threats
- Significant reduction in law firm student enrollment - this indicates broader recognition that becoming a lawyer isn't the sure thing it used to be
- Higher partner versus associate billable hours ratio - indicates experience is key to continued revenue and profitability
Culture May Be the Biggest 'Hidden' Threat
Perhaps one of the most dangerous threats to law firm survival are the long-term cultural considerations that directly impact the ability of firms to respond to the real-world current and coming survival threats.
I've been consulting nearly 20 years with law firms and other corporations, so have had a third-party observer seat to the differences between other industries and the legal industry. It has become crystal clear to me that the legal industry, more than any other I've worked with, operates on a 'follower' approach to both strategic and tactical decision-making.
"What are other law firms doing?" is the most common question I hear when a firm is considering any perceived 'new' thing.
I suppose that approach may work well when pretty much every law firm is fat and happy doing what they've been doing in essentially the same way they've been doing it for decades. And, of course, when your only real competitors are other law firms - but those days are over.
Very quickly this deeply embedded 'follower mentality' has become the enemy of survival and the ability to thrive. That's because INNOVATION and UNIQUE DIFFERNTIATION are the attributes now key to success. You can't get either of those things when you are following - because that means you are already behind and in danger of being tromped by what are now deeply intensive competitors - and not just other law firms!
The fact is, that firms that will survive and thrive in these new (and forever evolving) market conditions are those that are able to transform (not just 'change') the way they operate and deliver services (and products!) to their clients. Fundamentally, it will be the firms that lead the charge in innovating and effecting these transformations that win and win big (with a bigger chunk of the pie becoming available as other firms fall off). Those that don't innovate, but follow, will enter the 'spiral down decline' spin cycle from which they won't be able to recover - it will simply be too late.
Learn How to Win As a Law Firm Leader
We help law firm leaders and their teams think differently on a strategic level - but we don't abandon them there. We keep going - helping them implement their transformational strategies in ways that are 'digestible' inside the law firm culture that exists today. Our customers leverage our experience in introducing 'disruptive' ways of conducting the business of law while maintaining the cohesiveness of the running firm. Its an art form to say the least...because you have to push the envelope, while at the same time bring everyone along with you. We know how to do that strategically, incrementally and over the long-term.
If this discussion resonates for you, I encourage you to schedule a strategy session with us. If nothing else, our experts can help you vet your thoughts and ideas and provide some key lessons learned that will help you not just weather the storm, but come out cleansed and ready to take on the new world!