Big brand entrants to the legal market will have a “huge advantage” because of their vast client databases, the Chief Legal Ombudsman has warned.
Speaking at this week’s Legal Futures conference, which was sponsored by NatWest, Adam Sampson said new entrants will come with ready-made databases, higher customer service standards and an acute awareness how to utilise their existing clientele.
“One of the key messages is about data,” he said. “While the direct impact to the market of ABSs may end up over-inflated, the entry of large corporations that know their clients will give them a huge market advantage over the legal profession.”
At the same time, research released at the conference, commissioned by Peppermint Technology, found that a brand name would not heavily influence consumers’ buying choices when it comes to selecting a lawyer. Recommendation was the most important factor for 35%, followed by total price (30%), quality of service (15%), a trusted brand (15%) and location (6%).
The research, which polled 1,017 consumers and 150 businesses, found that nearly half of consumers (44%) would seek a recommendation from a friend to find a lawyer. The second most popular method was a web search (24%), but nearly all of consumers (97%) said they researched online before instructing a firm.
Peppermint chief executive Arlene Adams said: “Online recommendations are attracting similar levels of trust as friend-to-friend recommendations. As the younger generation increasingly looks online for everything, the online element will come into play much more.”
The other methods used by consumers were to ask/seek a referral from another professional they already knew (accountant, bank manager, estate agent etc) on 16%, followed by having a look in their local high street (9%), and local advertising (7%). The results all indicated that the value of having a high-profile local presence is diminishing.
Mr Sampson told the same session that the emphasis for law firms should be on word-of-mouth recommendations; if they service customers well, then these customers in turn will become advocates of the firm. “It does not take many rogue customers who are dissatisfied to do a disproportionate amount of damage to reputation and business,” he warned.
Both consumers and businesses claimed they needed better, bespoke communications across different interfaces, so-called multichannel communications, whether on the phone, e-mail, text or face to face. This requires lots more customer interaction and exploitation of data, which law firms have historically struggled with.
Ms Adams warned that law firms, however, were more interested in winning new clients than utilising the existing ones for referrals and follow-on instructions. The research found that 77% of businesses prefer to use a lawyer they had previously instructed, showing the need to develop long-term relations. More than half (53%) also said a partner they knew and trusted was the prime driver for selecting an adviser.
“Partners are the sales force,” Ms Adams said. “Law firms, though, do not have that culture. Firms should be spending more time focusing on existing customers, known as ‘wallet share’, and how to cross-sell and up-sell to them and existing customers provide the best references. I have not heard of much of this type of strategy in the legal sector.”
Price, invariably, was the key concern for clients in terms of instructing lawyers. The research found that 95% of consumers expected fixed prices to be the future norm for legal services, while 94% of businesses said that knowing the total legal costs up-front would influence their decision on whether to instruct or not.
“Price really matters,” Mr Sampson stated, providing the example of a divorce case that was initially estimated to cost £7,000 but the final bill was £42,000. “It may not always be fixed but a broad estimate about what could happen in certain situation over the life of an instruction is essential.”
Lawyers will also have to be more flexible on time; 81% of consumers and 61% of businesses want some out-of-office hours service. Ms Adams said 7pm to 9pm is the time many clients want to be able to contact their solicitors.