The Thomson Reuters 2018 Report on the State of the Legal Market begins by using the “Maginot Line,” a faulty defense built by France in the 1930s to deter a German invasion, as an example of “The Lure of Failing Strategies” and the consequences of having strategic blind spots. The report then applies these same examples to organizations of all kinds, including law firms, adding that “people tend to stick to an existing course of action, no matter how irrational.”
Rapidly Changing Legal Services Market
The researchers’ conclusion is that many (if not most) law firms in today’s rapidly changing legal services market are ignoring strong indicators that their old strategies for managing such things as pricing, leverage, staffing, project management, technology, and client relationships are no longer working. But they choose to continue with them rather than risk the change required to respond effectively to competition and evolving market conditions. They are not ready to meet the challenges that are already here.
Sluggish Growth or Accelerated Decline in Demand
Even in 2017, law firms on average, saw very sluggish growth or even an accelerated decline in the in demand for their services, a decline in productivity and an increase in expenses. Statistics also indicate that the market for law firm services is not as healthy as it may appear on the surface. When the next economic downturn occurs, law firms will have less room to use the strategies they used to stay afloat in 2007. Slashing expenses, reducing hiring goals and increasing rates could cut profits per partner by as much as 20 percent.
Loss of Market Share
The report also supports the idea that law firms have been losing market share to an increase in spending within corporate law departments. Internal spending increased by 4 percent in 2017, while outside legal spending remained unchanged. Almost 100 percent of corporations indicated they were taking measures to reduce their spending for outside counsel or turning to alternative legal service providers, such as temporary and outsourced legal staffing.
Become a Dynamic vs. a Static Law Firm
Perhaps most encouraging is what the report says law firms can do to proactively address the needs of their clients and attract new ones—to become dynamic vs. remaining static. The strategies recommended by the report include:
- Increase investment in marketing and development
- Make innovative technology investments focused on:
- Improving workflow efficiency
- Enhancing the ability to assess profitability
- Better analyzing data
- Implement alternative staffing methods
- Improve communications with clients
- Actively pursue alternative fee arrangements (AFAs), e.g., contingency-fee-based
Where NL Advocate Comes In
NL Advocate is new technology specifically designed to help forward-thinking, proactive, contingency-fee law firms with strategies to grow their practice in today’s competitive market. Qualified attorneys can improve their financial outcomes with the help of this unique product from The National List® of Attorneys (The NL).
Access to the NL Marketplace
NL Advocate membership grants access to The NL Marketplace, an exclusive online environment where NL-vetted attorneys easily communicate with clients and compete for millions of claims placed with The NL. Technology, secure information and specialized services are combined to objectively market a limited number of pre-qualified attorneys to thousands of forwarders anywhere in the world. Every day, our business development team brings in additional qualified forwarders who place new claims across multiple regions in a variety of commercial and consumer collection practices. Our Marketplace network works like your firm’s sales and business development operations, but with improved workflow efficiency.
Invest in Technology
An investment in our technology is an investment in strengthening your practice with data-driven market intelligence. It gives NL Advocate attorneys a significant edge over the competition. The NL aggregates the placement, process, and performance metrics of each claim in a constantly growing database that already exceeds more than $50 billion in claim value. Then using proprietary algorithms and predictive analytics, we optimize financial results and profitability by matching forwarder claims with NL Advocate attorneys by practice areas, regions and statistically significant performance data, market trends and benchmarks. NL Advocate account managers consult with their firms, delivering key business growth opportunities and strategies based on objective market data, not just hearsay. Individual claim data remains secure and confidential.
NL Advocate Member firms earn an average of eight times their NL investment (8:1 ROI). With the power of NL Advocate on your side, you can more professionally and cost-effectively monetize claims.
Get Ahead of the Market
The market for law firm services is being transformed – by clients, by competitive law firms and by providers of efficient new services and technology. The pace of change is accelerating. Firms that respond proactively to these changes have the best prospect of doing well. Firms that ignore them may find themselves limited by outmoded strategies and operating practices that (like the Maginot Line) will fall short of their desired results.