The perception is often that the legal services market is tougher on small and medium sized firms. They have smaller budgets, less capital to invest in innovation to stay ahead of the curve and lack the necessary size to meet the needs of big clients. But in a changing marketplace, perhaps their small size could be the key to success. The ability to move with agility (and without the need for 300 or more partners to come to agreement on any given topic) means they can be more dynamic than their larger counterparts. Thomson Reuters’ recent report titled ‘The Lawyer Entrepreneur; Are small and medium firms set up to succeed?’ sets out to determine how they are meeting the same challenges their larger brethren are facing.
Confidence is high
Clearly small and medium sized firms are confident of growth. 79% claim their revenue has grown over the past 12 months with a further 76% projecting growth for the coming year too. Interestingly, this confidence could be misplaced. Of the firms reviewed, almost all indicated they believed they would outperform the market in 2017 which while heartening to hear, is also statistically impossible. However the picture becomes even more interesting when Thomson Reuters delved into the perceived source of this success:
“it seems law firms are struggling to develop a clear definition of what success look like” (Thomson Reuters)
The vast majority of firms listed client satisfaction as their primary criteria for success, but as Reuters points out this has no industry standard against which it can be measured. What, indeed, comprises client satisfaction and how do you measure your firm’s ability to outperform itself year on year?
How to measure the immeasurable?
Respondents identified 18 different categories which clients hold important and thus contribute to their overall satisfaction (not to mention thus being measurable integers). These included everything from implementation of technology to taking risks. Interestingly whilst firms saw the importance in all these areas, not a single metric had been achieved by more than 50% in any firm. This includes such simple things as ‘speed of response’ and ‘focus on what’s needed’. Compare this to 88% of firms’ belief that in spite of this failure to meet client satisfaction indicators they are still the best or better than most of their competition.
Herein, then, lies the crux of the problem besieging the legal services market. As this report shows, 76% of firms believe they will grow in size next year, but are at the same time aware that customer success, their primary driver of demand, is failing to be either measured or improved upon. And here we would note that the legal world could take some ideas from other services industries.
Knowing what your customers want requires testing
As Thomson Reuters states:
“While law firms admit the coming year will be tougher, it seems that firm leaders are retreating to their comfort zones – putting their faith in doing things the same but doing it better.“ (Thomson Reuters)
So if complete service delivery innovation isn’t on the cards in the near future, then firms are going to need to know what makes their customer tick. This is where we believe the size of small firms may play well to their advantage. Like the agile startups that brought in the wave of new tech giants (think Uber, Airbnb and Facebook) their origins were small and most importantly client centric. As such boutique firms are best placed to build traction the same way that their tech counterparts did – with testing and measuring.
By testing small product improvements or features; for lawyers this could mean online signatures, online case bundles, weekly project updates emailed directly to clients; smaller firms can quickly see what generates the best response from their client. Take client wait times – set a benchmark around the time it currently takes you to reply to a client (over multiple tests) and then change one thing at a time and retest response times until you are happy with the results. Because smaller firms have smaller decision making bodies they are ideally placed to make their service agile and client friendly in increments.
The legal profession has long had the comfort of knowing that it has a captive audience. With the opening up of the legal services market firms do themselves no favours in just guessing what makes their clients happy. As we addressed in our previous blog, clients are looking for more than just high quality execution, they also want effortless legal services. The only way to ensure that these requirements are met, is by testing to see which works best. Thankfully, small and medium sized firms are ideally placed to do just that.