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Thomson Reuters

New report—the competitive landscape of small and medium law firms

Kirsten Maslen

27 Mar 2020

REUTERS/Lisi Niesner

At the end of last year, we surveyed 200 of our customers in small and medium sized law firms (those with up to 100 fee earners). We asked about the competitive landscape and their views on how technology supports their growth.

The firms surveyed were of varying sizes serving mostly SME businesses and consumers. The majority practised in litigation/ dispute resolution, commercial and residential property, private client, family and commercial law.

We are presenting the survey data in two reports; this first report looks at the competitive landscape.

Download your copy of ‘Small and Medium Law Firm Report: Competitive Landscape

Expectations around growth in 2020

Our law firm customers are broadly optimistic about their prospects in 2020 and how they will thrive.

  • Most respondents were cautiously optimistic about the market and competitive environment in spite of some strong headwinds, including the pressure from savvy and price-sensitive clients, the threat from new entrants, and the uncertainty of Brexit and regulatory change.
  • Firms that predicted strong or steady growth pointed to an increased focus on profitable work, improved client experience, and increased efficiency as being key to achieving their objectives.
  • Smaller law firms were slightly more pessimistic in their revenue expectations for the next 12 months compared with last year. They recognised the importance of doubling down on business development activities to support repeat business—and drive new business and cross-sell opportunities.

The 2020 client

A key area of concern is how to meet the needs of clients who are well-informed, price-sensitive and who expect the sort of responsiveness they experience from the retail sector. The challenge is particularly acute for lawyers, who attract business based on their reputations as experts and for the quality of that personalised client service.

Law firms are exploring technology solutions to help them manage the various levers at their disposal to improve productivity and the working environment for their lawyers while meeting their clients’ needs for personalised and responsive services.

Respondents said the majority of their work came from repeat instructions. This explains the strong focus on improving the client experience to build loyalty and differentiate from peers.

Commercial threats and objectives for 2020

Last year firms saw the biggest threat to their businesses coming from online legal service providers or other tech-enabled businesses. For small law firms, this is still the case. For medium-sized firms, there is a slight shift back to seeing peer firms as the biggest threat with online legal service providers ranked third.

There are several possible explanations for this shift: larger firms may see the threat of online providers as receding, or the impact of technology as over-blown. More likely, judging from the verbatim comments, firms are becoming increasingly confident in using technology themselves to shift those profitability levers, and no longer see the effective use of technology as something that is done by alternative legal service providers. There is a sense that the biggest threat is from the firm next door that engages with these tech tools to identify profitable work, improve the client experience to secure greater loyalty, and to maximise business development opportunities.

Download your copy of ‘Small and Medium Law Firm Report: Competitive Landscape

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