It’s no longer news that Alternative Business Structures (ABS) has changed the way the legal game is played and changed the skillsets required to be able to play the game effectively. If you haven’t heard about this, any firm considered ‘fit and proper’ is now allowed to practice law. It has been dubbed ‘Tesco Law’ because it has levelled the playing field and opened up this historically closed industry to the likes of Tesco and Co-Op.
What is news however is that some legal firms are changing to gain first-mover advantage, while others simply haven’t moved at all. I know this, because I personally called most of the Top 200 Law Firms in the UK and asked them all. Attitudes among Managing Partners vary wildly, from denial, ‘I don’t need to be told how and why I should change my firm, thank you very much’ to a wonderfully understated panic, ‘I know we should do something but I have no idea what’. The overall picture brings to mind the animal that has never been hunted before who has just had a natural predator introduced into its ecosystem; there is no inbuilt defence mechanism.
ABS is in fact a tremendous opportunity – but one that most law firms will watch from the stands as their revenues are whittled away by more commercially competent upstarts. ”Commercially competent” simply means that they are set up to sell. New entrants such as Co-Op Legal Services are starting with the thin end of the wedge, offering services such as Will writing.
In a short time the services offered will expand, meaning ever more business will be wrested from traditional law firms.
As critical mass builds, a brain drain will take place as newly qualified solicitors are afforded a broader range of career options than simply working their way up the partnership ladder. All told, the outlook for the unprepared law firm is not good. It will take a while for new entrants to find their feet, but erosion of market share and hitherto untouchable revenue streams will be inevitable and deadly
WHY PEOPLE WILL CHOOSE NEW ENTRANTS OVER TRADITIONAL LAW FIRMS
This is how consumers make decisions these days. If it’s on the first page of Google, looks like a law firm and sounds like a law firm, people will assume it can help them with their legal affairs. If it’s a name they recognise, even better.
2) Commercial Acumen
Co-Op and Tesco have huge databases of happy customers. They know how to cross-sell and up-sell. Law is the only professional service that has not addressed these skill sets. Lawyers sit in their silos and bill, essentially ignoring many cross-selling opportunities.
New entrants engage with their customers, demonstrating a great level of customer care. Most law firms, meanwhile, continue to intermittently wheel out senior partners to meet with only their biggest clients.
This will be simplified and repackaged. Billing in six minute slots will be seen for the anachronism that it is and rightly consigned to the dustbin. New ways of charging will become the norm. Customers will not put up with this.
In the next installment, I will cover the question of people and strategy – which Law Firms will step up to this challenge and how will they go about it? In the meantime please feel free to email me at email@example.com to discuss your Firm’s commercial edge, namely how you are planning to meet this new competitive market.