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Bar Association of San Francisco Member Benefits: PublicationsThe Changed Legal Services Landscape

The Changed Legal Services Landscape

 

By Michael Bond, Blattel Communications

Each year, the Legal Marketing Association – Bay Area Chapter pauses to reflect and take the pulse of the legal profession with its “State of the Industry” program. In February, Michael Short of the LawVision Group addressed the organization. He provided a comprehensive look at where law firm business stands five years out from the financial meltdown of 2008 and offered unique insight – illustrated by quantitative data – as to where it is going in the future.

Short began by taking stock of key law firm financial bellwethers, analyzing how they have shifted during three key periods: 1) 2000-2007; 2) Recession; and 3) 2013 Outlook.

Demand, which was running 3-5 percent and showed consistent growth, dropped into the negative, then to flat in the depths of the recession, and only now is it starting to look slightly up. Rates went from steady increases pre-recession to today’s environment where they are trending flat to down. Margins are also showing a flat-to-down outlook after peaking in the heady pre-recession era. Short used these trends to illustrate the larger point: the legal industry – once thought to be “recession-proof” – has experienced a transformative period of change.

Short also walked the audience through a detailed look at demand growth by firm. The results ranged from a high of nearly 25 percent to a low of close to negative 15 percent. A majority of firms landed in the middle range (slightly negative to 5 percent). At these firms, he urged business developers and marketers to be teachers and educate their partners to find new engines for growth. When it came to firms in the lower portion (negative 2.5 to negative 15 percent), he urged the marketing teams to be agents of change and help save their firms. And, for those at firms in the upper regions (5 percent above), he urged professionals to be leaders in the industry and build on their momentum.

Later in the program, Short went into depth about the issue of profitability. Looking at alternative fee arrangements, which can (if not thought through) crimp profitability, he noted, “… you should have everybody thinking about productivity…How can we change people in and out of the different roles? Different people in your firm have different profitability levels, different cost levels.”

Effortlessly mixing anecdotes and examples with statistical data, the takeaway from Short’s presentation was clear: Firms that fully understand the new market dynamics and keep a laser-like focus on profitability will be in great shape to succeed.


 

Michael Bond is a board member of the Legal Marketing Association – Bay Area Chapter and a senior account executive at Blattel Communications. He can be reached at michael@blattel.com.

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