Posted by John Thomas, chief executive of Legal Futures Associate LawNet
We all know the headlines: small firms under pressure; reforms beginning to bite; professional indemnity insurance becoming more uncertain; takeovers and mergers on the cards as consolidation sees big firms getting bigger, smaller firms getting knocked out.
Then there’s conveyancing and other commoditised services being bundled and provided by big players, which is threatening smaller firms; or the likely polarisation of services in the changing market, with law firms focused on specialisation to get economies of scale.
So you know exactly what I’m talking about. And you know where you are – in the UK in the year 2000…
No, that’s not a typo. Those facts and figures were just some of the statistics I was quoting in an interview not long after I become chief executive of LawNet, just over 12 years ago. The reforms were the Woolf reforms, indemnity insurance was uncertain following the demise of the Solicitors Indemnity Fund, and estate agents were threatening the conveyancing market.
I came across the cutting the other day and it set me thinking about how easy it is to be terrified by threat.
There has been change since 2000, but not to the degree anticipated at the time. The frequently bandied threat was that 5,000 small law firms would go to the wall. Well, I know that many firms have shut their doors during the past decade, but a lot more new firms have started. Some of those are different models, like niche firms developed by lawyers leaving the City, or virtual law firms, but the result is that we have not had the huge falls predicted.
So, what does that tell us? I think it suggests that for many people, seeing their local lawyer is still important. The pace of change to new styles of delivery is swifter in the big cities, but in smaller communities and towns, it’s a different style of society – one where people still like to visit their local market solicitor.
Sector comparisons are continually drawn with undertakers or opticians. Yes, the opticians had to go through deregulation as we in the legal sector are now experiencing, but it’s a different purchase – more a fashion item these days, which is ordered today, collected tomorrow, with little interaction beyond the eye test itself. If we compare that with the law – conveyancing for example – we find that it’s a process over a number of weeks and, most importantly, involving what is probably the most valuable asset any of us will own. We want a trusted adviser.
The other important message we can draw from the figures is that I think change is often slower than we expect, and so you don’t have to panic. What’s important is being strong, welcoming change, riding with it and exploring the opportunities provided.
I believe that lawyers are facing up to the challenge, making incremental changes that are helping them to keep pace. They’re not the ostriches so many would have us believe – and the fact that the number of firms is holding up, is a reflection of that. Lawyers are indeed open to new ideas – they’re getting the message and there’s every chance of not just survival, but also success.
As long as firms are not paralysed by the threat, there is time to make the changes needed to keep up.
Yes, firms have to find their differentiator but, in the words of Mark Twain: “The reports of my death are greatly exaggerated.”