Posted by Arlene Adams, founder and CEO of Legal Futures Associate Peppermint Technology
[1]Adams: an inability to make decisions may slowly put firms out of business
Fast forward 18 months from our last report [2] on law firms becoming customer-focused organisations, and our latest research, How law firms measure up against other sectors [3], suggests the speed in which most law firms are moving is not fast enough. While the legal market has delivered strong growth in recent years, compared to other professional services sectors, there are some disturbing trends emerging.
Evidence suggests the gap between successful and failing law firms is growing, a fact supported by the large number of firms that are under financial stress. It seems the gap will only widen given the constant pressure on law firms to reduce price and increase value. Unfortunately for some firms the gap may have become a chasm and some will fail to reach the other side.
In markets where price and value are critical dynamics, history shows the battle is won on the customer experience. While law firms seem to recognise this, our research shows they are slow to take action. In my own experience it is not unusual for firms to put off making decisions and continue with the status quo. For many the prospect of business as usual seems like the best, and least risk, option. The reality however is very different.
Any business has to evolve, and take calculated risks, to survive and progress. I worry that for some firms their inability to make decisions will leave them further behind and slowly put them out of business. I’ve seen it happen in other markets and I can see it happening in legal.
My personal thoughts are supported by this research, which shows law firms at the bottom of the league table, when comparing customer satisfaction, to other industries. Perhaps more worryingly, the divide is increasing. There is undoubtedly a link between this and the fact law firms still fall way behind in technology investment compared to other sectors.
In all walks of life, technology is becoming a way of life and central to the way people do business. Law firms need to embrace, and invest in, technology in order to understand their clients in a meaningful way then design and deliver services to satisfy them. If they don’t, others will.
While some of the findings are somewhat depressing, the flip side is a bigger opportunity for those firms who have the courage and ambition to make decisions and change. This starts, not with technology, but with a change in thinking and culture. In my view, firms need to stop focusing on time and billing and start focusing on the client.
If firms put the client at the centre of everything they do then the time and billing will follow. If they remain inwardly focused on how they can bill more hours then they will miss the thing that really drives billing – the client experience.
Our research confirms that legal services is still a good market to be in and for that reason it is attractive to new entrants. The pressure of price will only increase and the client experience will become more prominent in defining the winners and losers. The equation for success is simple: Those firms who make the client experience the spine of their business will succeed; those who remain inwardly focused on their firm’s desires won’t.
It’s all to play for. What will separate the winners from the losers are the firms who make decisions, invest and have an unquestionable desire and obsession to deliver a great client experience.
A full copy of the research findings can be obtained here [3]