A study of small and medium sized (SME) law firms published by Thomson Reuters shows that, while demand for legal services remains high, so the challenges faced by firms continue to put pressure on profitability.
The research piece entitled ‘The Lawyer-Entrepreneur’, questioned senior decision makers in SME law firms to find out if they are fit and ready to weather the economic storms resulting from the decision to leave the European Union, and whether they grasp what success looks like in the future.
The key findings are as follows:
- 79 per cent of SME law firms claim their revenue has grown over the past 12 months
- 54 per cent put client satisfaction as a key measurement for success, scoring higher than revenue and profitability
- Whilst law firms are able to identify areas of focus to achieve success, many are struggling to perform against these areas of success
- 76 per cent of SME law firms are expecting revenue to grow in the coming 12 months, with private client, residential and commercial property, and dispute resolution expected to be the biggest growth practice areas
- 59 per cent consider their existing clients to be their main source for generating new business opportunities
- 82 per cent feel that market conditions are tougher now than they were a year ago
- Many are finding it hard to prioritise where to focus their efforts in order to achieve success
- 46 per cent are looking to grow through acquisition, but only 27 per cent of small firms and 25 per cent of medium firms believe they will merge or be acquired
- While 39 per cent consider entrepreneurial thinking to be important in achieving success, 59 per cent feel they aren’t achieving it
Roxanne Selby, Director of Small & Medium Law Firms Legal UK & Ireland at Thomson Reuters, says: “With new entrants to the market, the move to fixed fees and more transparent pricing, alongside technological advances, firms need to think strategically about where to invest in order to remain competitive and relevant.”
The report adds: “A change in mind-set will be crucial in driving success for the sector in the future. Doing the same things slightly better will inevitably lead to diminishing returns, and is no substitute for a genuine, innovative, long-term strategy.”
Whilst SME law firms do appreciate that the market is changing and that it will get tougher, they recognise that this change cannot be managed by lawyers alone. Business development teams, project management professionals and technology solutions will all play their part. As will the external support of key service providers such as accountants and business advisers.
Beavis Morgan – specialist advisers to the legal profession
At Beavis Morgan, we work closely with solicitors and barristers, assisting sole practitioners, through to large London-based firms and chambers. Our services are tailored according to each specific requirement and objective, always seeking opportunities to enhance wealth accumulation and succession planning, and ultimately reduce the tax bill. Our partners are readily available and are committed to supporting fellow professionals.
Where there are concerns about your business or personal financial situation, our specialist insolvency, recovery and advisory partners at BM Advisory are also available to assist with resolving issues and finding innovative solutions for businesses and individuals in distress.