There is a lot of hoopla flying around the legal space about the “new normal” and predictions that “law firms will never revisit their prerecession heyday.” It is hard to disagree with all the evidence out there, including the joint client advisory by Citi Private Bank’s Law Firm Group and Hildebrandt Consulting, and the joint report by the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Rueters Peer Monitor. Both studies, by credible organizations, point out clearly that the legal profession is experiencing real change.
- Lesser demand for legal services currently (although Georgetown- Peer Monitor study had demand increasing slightly by 0.5%;
- “Too many lawyers chasing too little work”;
- Slower increase in billing rates;
- Client pressure for more discounts and alternative fees;
- Forty percent of lateral hires (apparently in attempts to increase market share) are unsuccessful;
- Requirements for increased capital contributions as bank LOCs are less available; and
- “Historic lows” in realization rates (82.5%) in AmLaw 100 firms.
What does all this have to do with marketing, you may ask? Everything, actually.
Other than the need to get hungry enough to ensure your law firm gets its fair share of the legal business out there, especially in light of the highly competitive marketplace (not just from other law firms I might add), it is more crucial today than ever that firms do a lot of smart marketing.
So, in light of greater client scrutiny over rates, less overall legal work, too many lawyers, and basically just a mature industry, one highlight from the Georgetown-Peer Monitor study by Randazzo says it all in one bullet point in my mind: “Competition is increasing among firms, meaning that ‘the only way (short of a merger) for a firm to capture market share is to take it from another firm.’”
That takes marketing, and that’s why it is critical that firms demand greater business development efforts from their partners today.