Business demand for legal advice to rise sharply but many will shop around

Stamp of approval: quality marks important to both consumers and businesses

The economic recovery is set to benefit lawyers with new research finding that two-thirds of businesses expect their spending on legal services to increase over the next year.

The research – by Peppermint Technology – found that there will be quite a battle for this work, however, with four in 10 businesses shopping around for legal representation.

At the same time, it highlighted the importance of quality marks helping both consumers and businesses sort out who to instruct.

Peppermint’s third annual survey on ‘what clients want’ said that the 66% of the 151 medium-sized businesses polled anticipating more legal spend was up from 39% last year. Most notable was that 27% expected it to increase significantly, compared to just 6% in 2012.

But while 59% of businesses preferred  to deal with lawyers they know, the remaining 41% shopped around. “This will encourage new entrants to the legal market whose business plans require them to break into the commercial law market and secure a healthy market share,” the report said.

While usual issues such as cost continue to dominate the choice of lawyer, with quality of service an increasingly important factor, three-quarters of the business customers polled wanted to employ law firms which had achieved reputable quality marks – a finding running contrary to previous research by the Legal Services Consumer Panel that found little reliance on such marks.

The report suggested that in an era when sophisticated marketing has made choosing between law firms harder, “perhaps filtering the claims to excellence of a large number of law firms is a little easier when it emerges that one took the trouble to convince an independent body it has reached a required standard and another did not”.

There was a major jump – from 9% last year to 32% – in the number of businesses ranking the availability of e-mail and online services as a key factor in choosing a firm.

“There is now a significant body of businesspeople for whom online access has become a necessity of their working life,” the report said. “If their legal advisers are not perceived to be up to speed with this development, the people running those businesses will understandably feel alienated.”

The poll of 1,026 consumers indicated that more than eight out of ten people were either satisfied or very satisfied with the choice of legal services available to them, but that more than half choose not to seek the advice of a solicitor when they have a legal issue.

Some 68% either fear that using a solicitor will be far too expensive or that “the costs are not clear and could escalate”. The groups closest to pensionable age were the most price sensitive.

Among the remainder, 15% believed they could probably sort out their legal issue themselves “with help off the internet”. This percentage rose to nearly one in five of the group aged 55-64 (19%).

“For the lawyer of the future, confronting the reluctance to instruct is absolutely essential and possibly the key challenge to building market share and surviving in a crowded market place,” the report said.

Quality marks were even more important to consumers, with 85% indicating that a firm having one was likely to influence their decision to instruct.

A separate poll of 156 law firms by Peppermint revealed that law firms are making greater strides than in previous years to find out what their clients think, through surveys and also making use of complaints data.

Asked to rank a series of factors that could prevent them from optimising the ‘customer experience’, firms pointed to a host of problems – such as a lack of business skills, the firm’s ownership structure or culture preventing change, and a lack of processes – but technology was by far the biggest hindrance.

Four in 10 law firms gave poor data management and inadequate business intelligence as their first reason for not delivering the best client experience, with a further 19% citing it as their second reason. Some 42% chose inadequate IT systems as either their first or second reason. Lack of processes and culture problems trailed in next at 29%.

Half of firms did not have systems that connected to provide a single, real-time view of all data relating to a client, and three-quarters did not have real-time data from across all areas of the firm to assist in its management.

Despite the importance of fixed fees to both consumer and business clients, only 41% of firms said they were able to track the cost and profitability of individual matters.

    Readers Comments

  • Joe Reevy says:

    As the recession ends, this is as would be expected. Certainly data from the ICAEW suggest more business activity next year and that, in turn, means more need for legal advice.

    I am not sure, however, I would equate ‘shopping around’ to mean using the unknown as it were. Even when we do look for better value than our current suppliers, grey-haired old plc directors like me still will make sure we do our research on the supplier we’re looking at and in that context the opinions of our peer network is probably more important that quality marks if advice is wanted, not just form-filling.

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