By Rod Wittenberg, Vice President of Financial Productivity Solutions at Legal Futures Associate BigHand [1]
When challenged to describe today’s legal market in one sentence, I say: Every law firm can benefit from more profitable matter staffing, resourcing, and pricing strategies, but tapping into your firm’s full potential requires the precision, accuracy, and visibility only modern business intelligence solutions can offer. (A compound sentence is still one sentence, right?)
It’s true any way you phrase it. Market fluctuations and economic uncertainties are disrupting the traditional legal market. Consequently, large law firms are now focusing on a new target: the ‘middle market’ of small and medium-sized businesses (SMEs). And those law firms that adopt advanced BI solutions can leverage actionable data to attract this emerging group of new clients.
Improve financial visibility to win more mid-market clients
On one hand, enterprise clients are growing more cost-conscious and adopting more automated tools, ultimately reducing the demand for outsourced legal work [2]. As a result, it’s become more difficult for large law firms to win the enterprise clients that can offer the most substantial transactions to work on.
On the other hand, these same factors lead to new opportunities for large law firms to target the middle market of SMEs. The timing is perfect, too, as demand for mid-sized deals is expected to increase in 2024, likely increasing SMEs’ need for legal services as well.
This represents a significant growth opportunity. Large law firms that invest in the middle market can develop a more diversified portfolio that helps them remain productive and profitable, even in challenging times. Over the past 24 months we’ve seen demonstrable evidence of this infiltration as the largest firms are acquiring midsize firms to capitalize on opening new regional offices and obtain new mid-market clients.
Advanced financial solutions deliver actionable data
The mid-market space is already highly competitive. And SMEs differ from large corporations in several ways. They are typically more resource-constrained, value-conscious, and even more likely to feel the strain of economic uncertainty.
Reaching their full potential in this new environment requires law firms to optimize their matter staffing, resourcing, and pricing strategies to address SME challenges. To identify the appropriate tactics, advanced legal BI tools [3] offer clarity into valuable financial metrics, such as:
- The cost of delivering specific types of legal services
- The profitability of each matter type
- The utilization rates of lawyers and staff members
- And much more
BI data analytics support purposeful and targeted decisions that lead to more profitable outcomes because you can:
- Resource matters more cost-effectively. SME clients often can’t afford the same resources as larger corporations. You learn where to save money by automating tasks and adopting software tools that help your firm scale legal services efficiently.
- Approach staffing more flexibly. Mid-market clients may not have the complex legal needs of large corporations. Data insights also help you determine when to use more junior lawyers or paralegals to handle tasks.
- Offer competitive pricing options. Use early case assessments and predictive analytics to capitalize on the trend toward alternative fee arrangements by offering:
- Fixed fee pricing and blended fees in addition to hourly billing for flexible options.
- Capped fees for the most predictable transactional services.
- Value-based pricing with success incentives tied to matter outcomes.
- Subscription services and payment plans
With every option, data-backed specificity helps you protect firm profitability.
Yesterday’s outmoded tools and strategies lack the sophistication to unlock modern growth opportunities that hinge on financial transparency and precision. Firms that harness financial data and BI insights can become highly attuned to the challenges their clients face. Strategically tailoring your services paves the way for cutting-edge tactics that will strengthen your firm’s market position while ensuring it remains agile enough to adapt to future advancements. Speak with one of our Business Intelligence experts [3] today to learn how you can equip your firm to embrace new opportunities and thrive in the new legal landscape.