How will tomorrow’s clients differ from today’s?
What better way to predict – and prepare for – the future than to look at how the younger generation of legal buyers differs from their older peers. By comparing the demographic profile, attitudes and buying behaviours of the two groups, lawyers can start to prepare for what lies ahead as the older age range gradually retires and the younger, more modern buying approach becomes the norm.
The statistics supporting this article and the infographic on the next two pages come from Acritas’ annual Sharplegal study. The analysis compares the results of those under 50 years to those over 50 years from 1,782 telephone interviews with legal buyers across the globe during 2016.
The overwhelming findings are that younger legal buyers are more astute spenders and more international in both their outlook and in their actual location. This means they pay more attention to value and require firms to think beyond their own backyard.
A key demographic difference is that the female contingent is more than 50% higher in the under 50s. Women tend to have different attitudes and buying behaviours than men. They are more likely to want a more rounded service from their law firms whereas men tend to be more focused on the core expertise.
Women are also more likely to recognise female star lawyers than their male counterparts – women want more gender balance on the law firm side. This has implications for firms who aren’t retaining and promoting enough women.
We will now explore each of the main findings in detail and consider the implications for firms.
A closer look at legal buyers under 50
Younger clients are more diverse and expect the same form their external advisors. There is significantly higher proportion of females and the under 50s in general are more internationally spread. North America, in particular, has a much older age profile. They’ve grown up in a competitive world with globalisation, financial distress and instant communication methods as the norm, creating a more global, commercial and spend-savvy mind-set.
They require firms to be better at budgeting and more cost-conscious; they’re more likely to adopt modern procurement methods and measure performance. Typical behavioural traits:
- Significantly more likely to have met budget and to have set objectives
- Work by fixed fee twice as often
- 37% more likely to involve procurement
More likely to increase spend
Because they’re more likely to reside in high-growth industries and regions, they’re more likely to be increasing spend.
They expect firms to deliver higher standards and more value-added services. They’re hungry for knowledge, demand responsive service and are less satisfied with current standards of service in the profession.
Attention to spend
For most of the younger client group’s senior working careers, the Western world has been in recession, and the drive for greater legal value has been the norm. Younger clients are more cost-conscious, more likely to have set objectives and more likely to have met their budget last year. Clients under 50 report twice the use of fixed fees, which undoubtedly aids them in meeting budgets and may be explained by their higher likelihood to have involvement from professional procurement. The discipline and objectivity this joint approach to buying legal services instils will stay with these clients throughout their careers, driving a sustained focus on budgets.
Firms must respond to this need for greater awareness and control around costs to win the attention and loyalty of younger clients. Clients want accurate budgets based on real historical data, not gut feel. They want to be kept abreast of spend levels. Some desire more communication, more open dialogue around resourcing approaches. They need to be made aware when costs are likely to go outside of plan and be alerted to what the drivers are. Overshooting fee estimates will alienate younger clients. Improved data and transparency around fees will help to increase trust from clients.
Despite their strong focus on managing legal budgets, younger clients are more likely to expect to increase spend moving forward, suggesting perhaps that they are more realistic about the growing extent of their legal needs.
Younger clients are more likely to be at organisations that have international legal needs. As a result, they are more likely to favour firms with international reach and recognise international offices as a strength.
The younger client base is also far more broadly geographically spread, particularly in mainland Europe, Asia Pacific, Latin America, Africa and the Middle East. The typical in-house decision maker in the US legal industry is far older than any other market. Sixty-three percent fall into the over-50 category versus only 28% in the rest of the world. For this reason, we have normalised the results by looking at age within the US, to ensure the key differences we observe are found both globally and within the US market and not just caused by differences in US buying behaviours. We have included only those findings validated in both sets of results.
Younger clients have grown up in a more international world and are alert to the opportunities that globalisation brings. It is interesting to note that younger clients, when questioned this year, were more likely to be changing their structure or strategy as a result of the Brexit referendum, much like the vote itself, where the younger generation voted overwhelmingly against Brexit.
International firms in particular would be advised to respond to these younger buying needs as a priority, as they are likely to have a younger client base. Firms without international offices or strong links to international firms might need to rethink their strategy to respond to these increased international requirements among the future generation of legal buyers.
Impact on marketing and client management
Firms would be wise to start to segment their clients and the related marketing and client management approach to different buying types. Not every person under 50 follows this more modern buying pattern, and conversely, not every person over 50 follows the more traditional approach. But by understanding the more common buying traits and servicing preferences of different types of buyers and segmenting them as such in internal systems, a more tailored approach can be created.
A good example is the sharing of know-how and invitations to training seminars. Younger clients are significantly more likely to cite these as an attraction factor to one of their favourite firms. Older clients, however, place more emphasis on long-standing historical relationships and feeling they have hardworking, committed lawyers.
The types of firms that younger clients are attracted to differ greatly from their older counterparts. When comparing the brand profile by age, of those who favour each firm, some firms have a predominantly 50+ profile whereas others are more balanced. It is important to appeal to both age groups to ensure you are future-proofing your brand in the market.
Younger clients are generally less happy with their law firms and are more likely to offer up criticisms which they feel need to be addressed. The under 50s gave lower ratings on every single attribute, including commerciality, business understanding, consistency of quality, value received, effective communication and responsiveness. Given that the younger generation has grown up in a world where almost everyone is connected all of the time and products continually get better and cost less – it is not surprising that they are more frustrated with the state of the legal industry today.
Younger buyers appear to be more structured and strategic in their approach, and they care more about the commercial value-add from their law firms. The greater demands of this group of buyers will push law firms to raise the bar on service, as well as value, in the long term.
About the author
Lisa Hart Shepherd is CEO and founder of Acritas Research Ltd., a firm launched 13 years ago to exclusively service the research needs of professional services firms. She has worked on projects with many of the world’s largest law firms, devising research programs to help clients achieve service excellence, brand strength, employee engagement and global growth.
To access more of this research, including how well your firm performs among younger buyers, please contact Acritas at acritas.com.
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