On the up: Firms target growth
It will be the law firms that embrace innovation which will maximise organic growth opportunities and create an offering that sets them apart from the competition, a new report has found.
Law firms wary of mergers were instead driving growth “by finding new ways to leverage and maximise their current client relationships”, including offering technology as a service alongside traditional legal services.
The report from LexisNexis, The Laws of Organic Growth, said growth was at the forefront of many law firms’ minds following their resilient performance during the pandemic.
While many tended to favour mergers and acquisitions to achieve growth, there were concerns that a resulting loss of culture could “devastatingly impact staff retention, recruitment and client acquisition”.
Those looking at alternatives were targeting “enhanced client relationships, lateral hiring and talent attraction/retention, business development strategies as well as offering technology-as-a-service”.
They have also looked at ways of growing revenue without boosting headcount, such as using flexible resources like consultants or barristers to cope with increased workloads during busier periods or stepping up automation.
A fifth of the small firms interviewed for the research said their ‘small firm culture’ was their top priority when looking to attract and retain talent and appeal to clients.
But LexisNexis warned that lateral hires could act as “unofficial mini-mergers, especially when a high-profile fee-earner comes into a firm, bringing new expertise, clients and, in some cases, entire teams with them”.
This meant lateral hires “will not necessarily protect their current culture”.
Dylan Brown, editor of the report, said: “While there is no ‘one-size-fits-all’ approach to growth, it’s clear that there are some winning strategies law firms of all sizes are deploying to drive growth organically.
“Whether you choose to empower your employees with a growth mindset, utilise new technology to enhance your services, commit to building longer-lasting relationships with your clients, or take on a more flexible approach to both billing and remuneration, the key to growth seems to stem from investing in innovation.”
“In the years to come, the firms that innovate – and subsequently embrace a culture of innovation – will have maximised these growth opportunities and more to create a legal offering that sets them apart from the competition.”
The majority of firms, the report said, were “looking inward to create an organic growth agenda focused on their existing people, clients and processes”.
Some firms – such as Wiggin, Radius Law and Taylor Wessing – were also focused on bundling additional business services, such as legal technology solutions, together with traditional legal services “to create a personalised package that adds greater value to clients and increases their own revenue”.
Nick Perry, the managing partner of Bird & Bird, told researchers: “Clients are coming to us with problems which cannot always be solved by lawyers and so it’s becoming more and more common for teams of lawyers to collaborate with other professional staff to co-create client solutions.”
‘Technology as a service’ was largely the preserve of larger firms, unsurprisingly, with LexisNexis finding only one in 10 small firms offered it.
“It’s a huge investment for a small business to undertake, and there’s arguably less demand from clients at smaller or independent firms than you would see at a larger firm. However, some boutique firms have embraced tech via their existing practice areas.”
Other boutique firms were founded with the specific goal of providing clients with senior-level attention from start to finish.
Mirthe van Kesteren, partner and co-founder at small London firm BVK Partners, said: “Right from the outset, we have been clear that we do not want to grow to the extent that we cannot personally be involved with our clients’ transactions.
“We will likely end up with a reverse pyramid structure, with senior people as the majority of employees.”
When it came to billing, most firms agreed that there was no magic bullet “other than simply being open to the client’s preference”.
In fact, the report continued, many have found that their clients rejected more innovative billing structures in favour of the hourly rate.
There were more moves to get junior lawyers involved in nurturing client relationships and building new ones, but firms were “united in laying responsibility at the feet of the partnership”.
LexisNexis said: “Business development (BD) strategies hinge on tactics such as giving partners formal training in sales techniques, publishing thought leadership, organising and/or attending trade events, joining industry bodies and even publishing bespoke content to be sent directly to clients.
“Litigation firms are also tapping into new avenues for BD, including referrals via accountants, barristers and third-party funders.”
Peter Jackson, chief executive of Hill Dickinson, said: “There are very good lawyers in all the firms that compete with us and so to attract a client’s attention you have to put yourself in the firing line.
“And that means writing articles in trade magazines, that means being quoted in the press. That means speaking at seminars or webinars to provide that peg that a client can hook something on to establish credibility. That’s important for juniors as well as partners.”
Law firms were also looking at being more flexible with remuneration for both lawyers and other business staff to incentivise growth.
“Ultimately, most firms believe that their culture, location, flexible offering or high-quality clients give them enough of an edge to compete with the sky-high offers from their US counterparts.”
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