Charles Layfield - Head of Connect2Law and Partner in Pannone Affinity Solutions looks at this major change in the legal marketplace
The coming weeks see the build up to the implementation of the Legal Services Act (LSA) and in this time I will be addressing what we here at Pannone see as the potential opportunities afforded by the LSA.
It is well documented that the LSA will hit many law firms hard and undoubtedly for many it is a major threat to their margins and very existence. Considering that one of the 3 stated priorities of the LSA was to introduce greater competition into the legal market this isn’t surprising.
It’s widely acknowledged that the LSA will be cause an unprecedented shift in the face of the legal market, although it is only one of various market forces currently at play in the legal world.
Where the future lies
Whilst the negative impact of the LSA on law firms has understandably taken up most of the column inches written on this subject, there is no doubt that the LSA represents an opportunity for those nimble enough, smart enough and with the foresight to see where the future lies.
There are always two sides to the coin and whilst for some the current environment and market forces represent a threat, for others it will be the making of them.
What is not in question is that the demand for legal services, estimated by the Legal Services Board to be worth £26.7B in 2011 is not abating, In fact the demand is growing and the market needs legal suppliers to satisfy it.
Unless radical steps are taken to limit the customer’s access to legal services, such as reducing the fixed costs applicable on fast track RTA Personal Injury work to an unsustainable level, then the market will remain much in tact.
The key will be to ensure that law firms have the appropriate model and cost base to service work, as the margins on legal work are only heading in one direction.
Firms will need to have a clear strategy as to where they fit into the new world of legal services. An absolute priority of strategic planning for law firms will be market positioning. Growth and goals are not as important as having clarity around where you want to be in the market, why you want to be there and what you have to do to get there.
Stand out from the crowd
Law firms will have to identify where they see their own opportunities to achieve the most basic of strategic objectives, namely long term and sustainable competitive differentiation. Put more simply, law firms with the advent of new entrants, will more than ever need to stand out from the crowd. The legal world is a busy space, and being known for something different is crucial to success and survival.
I am convinced the future is bright for those willing to grasp the nettle and in my next piece I will discuss the external environment relevant to law firms and what opportunities this may provide.
