The annual forecast for the business of law done by Citi’s Private Bank division says that middle-market firms that try being “all things to all clients” are in for a rough ride in 2018. But there’s good news for midsized firms in the U.S. and Canada that have a strong brand along with niche boutiques: Along with the biggest of the BigLaw whales, they are positioned to do well during the year.
“A strong brand will be critical for firms to capture revenue growth in their established markets, practices and industries,” the Citi report says in its executive summary. “Success in the market will likely come to firms that … focus on building a robust growth model.”
Citi predicts that growth will be in the mid-single figure range during 2018. This is due in par to alternative legal service providers – a broad term covering everything from the law firms set up by Big 4 accountancies to NewLaw upstarts – will continue to capture work and market share from traditional firms.
Moreover, fewer client dollars being spent with traditional firms means “the higher level of competition for matters, for clients and for talent,” according to Citi.
Big Brand, Smaller Firm
The strength of a law firm’s brand is likely to make a big difference in driving its revenue growth in 2018. This doesn’t mean simple name recognition per se, although that certainly helps the Top 20 BigLaw firms. Rather, for midsized and smaller firms, it means ensuring that it has a strategic, integrated marketing plan both to keep its name in front of its clients and targets and to establish itself as a thought leader for its selected industries.
Growth will be in the mid-single figure range during 2018.
Indeed, Midsized and smaller firms can have a big brand:
Develop a genuine brand – which isn’t a tag line or slogan – and use it to define everything the firm does when working with clients and doing business development.
Ensure that blogs and articles it publishes are not mere rehashes of things that have been covered elsewhere such as a newspaper or trade magazine but offer new ideas that readers can use to do their job better or more effectively.
Social media – especially LinkedIn but also Twitter – is used to engage with clients, and that everything from lawyer profiles to newsfeed updates aren’t simply vanity items touting experience or what the firm is doing.
Deliver client service that involves more than returning phone calls promptly, and includes being a Known Authority©, keep its position as a trusted advisor to clients, and deliver genuine value which more than an hourly rate.
Midsized and smaller firms can have a big brand if they follow these four steps.
While it’s always dicey to predict what practice areas will be hot over the next 12 months, the Citi report prediction parallels what we wrote last week: Cybersecurity and protecting the data of both clients and law firms themselves is likely to become a major growth practice for firms with the expertise to market it. Other growth areas cited by Citi include M&A, banking, white collar crime and regulatory investigations defense, technology.
Clouding the picture is a general uncertainty over maintaining margins. “Modest law firm demand growth and heightened competition have created a buyer’s market, fueling pricing pressure,” the report reveals.
Midsized and smaller firms can have a big brand.
It’s critical of firms for being largely reactive to pricing pressure, offering discounts rather than drilling down to understand the profitability of specific clients and even practice areas. This would enable a firm to create a pricing model that meets client demands while enabling the firm to predict margins reliably and improving realization rates. For larger firms, there seems to be a shift to hiring lower cost lawyers to handle routine work.
The Citi report is not all doom and gloom, noting that – broadly speaking – the business of law remains one of the most profitable personal service businesses in the world.
Beyond this, the report concludes by urging firms to maintain “a strong brand focused on key practice areas and industries … solid client relationships and a powerful talent model. Finally, it alerts the leadership of firms to extend “their use of high-caliber and empowered executive talent, who are focused on growing both revenue and margins, which will continue to set them apart from the broader industry.”
Firms that do not feel they can afford hiring high-powered executives in areas such as finance, technology and marketing are well-advised to “outsourcing” the function. But otherwise, it appears as if 2018 will resemble the previous two years: Many challenges but opportunities in select areas for select firms nimble enough to grasp how to seize them.
I have spent most of my career working in and with law firms on business development, marketing and management issues, and am now also working with Professional Services Marketing LLC on strategic marketing and communications matters.
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James Bliwas is Senior Marketing and Communications Strategist for PSM-Marketing.com, and managing director of Leaner Law Marketing Strategies.