Law Society: competition concerns
Competition from alternative business structures (ABSs) and non-solicitor organisations is of increasing concern to law firms, Law Society research has revealed.
At the same time, compliance with Solicitors Regulation Authority (SRA) rules remains the main problem identified by solicitors, according to the poll of 900 practices.
Of those who reported problems with competition for business, 34% identified ABSs as a source, compared with 25% in a 2012 survey. The number naming non-solicitor organisations rose from 38% to 47%.
At the same, those naming local solicitors as their competition fell, from 36% to 31%.
The main source of competition, however, was volume providers, with 51% of solicitors citing them.
Competition for business was the most frequently cited problem for large firms (26 or more partners) – 35% named it their number one concern – although for them it came from regional and national practices and from volume providers.
For small and medium-sized firms, complying with SRA rules was their main problem in practice, with changes in legal aid following close behind, and competition and the cost of employing solicitors equal third.
Medium-sized firms – defined as having five to 25 partners – generally had more problems than either small or large practices.
As well as having greater concerns about compliance – 36%, compared to 27% of small firms and 15% of large firms – lesser issues such as obtaining equity investment from existing and new partners, and recruiting paralegals and support staff with the right skill set, were also far more prominent for this group.
The survey also identified some regional differences, with legal aid the number one concern of firms in the north and, in particular, in Wales.
It also indicated that financial issues were of greater concern to law firms owned by a majority of minority ethnic solicitors. Compared to others, they were more likely to report problems with the cost of employing solicitors, the cost and availability of premises and the availability of bank finance.
Overall, the survey indicated that bank finance has been easier to find, with 11% describing it as a significant or very significant problem, down from 16% in 2012.
The survey was conducted between November 2013 and January 2014 but has only now been published.
On the issue of increased competition I’m convinced that most established firms already have an undiscovered and distinctive competitive advantage. It will be built on a company’s values and characteristics that influence a client’s decision to buy. Harnessed correctly, this competitive advantage will help a firm reach new audiences and enable their businesses to grow in new markets.