Rory MccGwire, CEO of Atom Content Marketing, explores the market for legal services and how marketing can help law firms survive and thrive
Whether you are an ambitious law firm looking to grow, or more concerned about defending your existing business, marketing has never been more important. In a changing market for legal services, the traditional law firm is becoming ever more difficult to sustain.
For example, some feel that the challenge is particularly acute for broadly based, mid-market firms with their large overheads. Increasing competition means that firms that cannot differentiate themselves face continuing pressure on fee income.
Marketing offers a way to navigate these difficult waters. Understanding the market lets you identify the opportunities for your firm. By focusing on client needs, you can create a compelling service. And you can update your marketing tactics to build your reputation and attract new clients.
"Change is inevitable. The choice is whether you lead or retreat"
Neil Lloyd, sales director, FBC Manby Bowdler
The key trends in the market for legal services are well-known.
The old model of strong relationships with loyal clients is breaking down. While reputation and relationships still matter, more and more clients buy legal services as and when they require them, from whichever firm matches their needs.
Competition has increased. New technology allows specialised providers of commoditised services to undercut traditional firms while spending heavily to build awareness. Self-service, online legal 'products' are emerging. The full impact of multi-disciplinary practices is yet to be seen.
Demand for commercial legal services continues to grow, in part as a reaction to regulatory pressure. But the private client market is being squeezed, as large numbers of potential clients find fees unaffordable.
And clients are more demanding. Clients expect better customer service. Commercial clients expect not just legal excellence but commercial awareness and sector expertise. Clients increasingly prefer risk-sharing arrangements such as fixed-fee services.
In the face of all this pressure, it's tempting to retreat to doing what you most enjoy – practising law – and trusting in the business model that has served you in the past. Instead you need to ensure you remain competitive, which might mean changing your approach.
"Keep an eye on your competitors so you're less likely to be blindsided by them. Use what you learn to innovate and improve within your own firm"
Jo Campbell, business development manager at VWV and manager of the 'VWV approach' law firm network
People and culture
Marketing isn't always a natural fit for law firms. You need to work to develop a truly client-centred culture and a business that supports effective marketing.
- The partners need a genuine commitment to marketing. Incentives may need changing to shift the focus away from individual billing.
- Work to change the traditional hierarchy where partner power derives from fee income and technical expertise. Encourage the managing partner to devote more time to marketing than legal practice.
- Break down the resistance to change and fear of failure. Look for opportunities to try out new ideas, even if they might not always succeed.
- Commit to invest in business improvement. While short-term equity returns may fall, investments that lead to better client service and reduced costs will boost net revenues and can quickly pay for themselves.
- Empower marketing employees with dedicated marketing budgets and agreed objectives. Avoid management by committee. Work to build trusting relationships between marketing teams and fee earners.
- Organise training in relevant marketing, business development and client care skills for everyone who needs it, including fee earners.
Your market position
Trying to be all things to all clients is no longer realistic. For some firms, specialisation may be an attractive option. In any case, regardless of the breadth of your practice, you should look to 'segment' your market, identifying precisely who your best clients are and where the most promising opportunities lie.
You need a real understanding of your firm's strengths and values, and how this can set you apart. A reputation based on the legal services you provide is no longer enough. You need a brand that resonates with your target clients.
Your legal expertise must be backed up by outstanding service that delivers what clients really want. For major corporate clients, that may mean creating client service teams that go beyond simply serving client needs and have a dedicated client development budget.
You need to look at how technology can help you improve the services you provide. Can routine tasks be delegated, not just to associates but to an outsourced provider or artificial intelligence? What scope is there to improve client communications and service through online channels?
Look again, too, at your pricing. How does your pricing compare, and how do you price your services? Should you be developing fixed-price offerings (for example, for small business advice services in areas like employment law)?
"Business as usual is not an option"
The Law Society, The Future of Legal Services, January 2016
Think about each market segment and practice area as a separate business unit and recognise their differences.
- How many clients does each practice area have, and what is their typical value? Are clients price-sensitive? How loyal are they?
- What are typical fee levels and margins? Do clients provide regular income or occasional high-value blocks of work? How profitable is the practice area?
- Is the work cutting-edge, or largely routine matters that can be delegated to associates?
- What sort of marketing approach is required?
- Do clients make use of multiple legal services? Do any practice areas act as a feeders for other practice areas?
As far as possible, recognise and resolve the potential problems of combining multiple practice areas in the firm. It may be difficult to create a clear brand for a firm that combines culturally different practice areas: for example, both high-volume and cutting-edge services. Equally, there is the potential for conflict where particular practice areas are more profitable or considered more prestigious.
Reputation and referrals continue to be key drivers of new business for law firms. Your marketing tactics should reflect that.
Networking remains crucial as a way of finding new contacts and strengthening relationships. That should be backed up by a consistent process for staying in contact with referrers, clients and prospects.
Recognise the importance of establishing an online presence, both through your website and your use of social media. Continue to build your reputation through PR. Recognise the role that advertising, particularly online, can play in attracting prospects.
Focus your marketing spend on the most valuable opportunities. Concentrate on existing clients, key referrers and prospects with the potential for repeat business.
Whatever your approach, be persistent. If you use social media, you need to continually post and engage to build a following. If you advertise, think in terms of continuing campaigns. Nurture relationships and keep building your brand.
"The easy marketing wins are often simple things like adding a call-to-action to a website to convert more of the visitors into instructions, or doing some training that leads to more phone enquiries being converted."
Paul Hudson, proposition development, Travelers
Your competitors are unlikely to be resting on their laurels, and new entrants continue to bring new approaches and create new challenges for you. You need to be continually improving.
- Keep up-to-date with market trends and competitor activities. Where are competitors expanding (or withdrawing)? Is this an opportunity or a threat?
- Invest in customer relationship management (CRM) systems and learn from the data. How do customers behave? Who are your most profitable clients and what are your most profitable activities?
- Actively look for client feedback. Don't assume that delivering excellent advice and a good outcome means that clients are happy. Follow up too with clients who no longer use you, or where activity is declining.
- Set targets for what you are going to achieve in terms of new clients, client development and so on. Measure the effectiveness of different marketing activities and channels.
Marketing top ten
- Get genuine buy-in from the partnership on the importance of marketing.
- Keep up to date with market trends and competitor activity.
- Define a market position that reflects who you are and what your target clients value.
- Focus on the best clients and the most promising prospects.
- Create processes and standards that help you deliver excellent client service.
- Actively solicit client feedback; analyse accounts and CRM data for useful information.
- Track client retention rates and learn from client losses.
- Invest in innovation, particularly technology.
- Incentivise partners to value marketing and client development activities, including cross-selling.
- Create sustained efforts to build awareness and relationships using multiple promotional channels.