The legal market is in danger of being consumed by the same doom and gloom that taunts the UK economy.
I see the same pattern emerging in the legal world. We are surrounded by articles, social media and experts predicting the end of the world for law firms. If you follow the hype then ABS’s will take over and traditional firms will shrink and die. There is unprecedented change in the UK legal market but that doesn’t mean the end. Where there is seismic change there is always seismic opportunity. Winners are defined by what they do, not their history.For years the media have filled our TVs and newspapers with stories of fear, uncertainty and doubt. While some of the stories may be true many are fiction. There is a real danger we are consumed by fiction and allow negative predictions to become a self-fulfilling prophecy. We end up acting out the very scenario we want to avoid.
Traditional law firms have as much chance of prospering as new entrants, and perhaps more, if they are willing to take some risk and turn legacy into competitive value. I meet with Managing Partners of law firms on a regular basis. Yes, there are some in denial but most are acutely aware of the challenges ahead. Those who ‘get’ the new world of legal understand the need to change business models, skills and company structures. There is however a big difference between recognising the need for change and doing something about it. Change means taking risk which, ironically, lawyers spend their life trying to avoid.
Focus on the big picture
The fear of taking risk is one of the greatest barriers for traditional law firms competing in the new world. Law firms focusing too much on the risk of change are in danger of looking down the wrong end of the telescope. They will only see problems and reasons not to change. They will miss the bigger picture of the changing environment, threats and opportunities around them. Often external risk factors, which you have no control over, are far greater risk than internal change which can be planned and managed.
Managing Partners often tell me it’s much easier for a green field site, starting in the legal market today. That’s one reason we are witnessing a surge of new start-ups and ABS’s, funded and backed by traditional firms. In many ways it’s a good strategy and it avoids the risk associated with change. This approach however has some drawbacks that firms should explore carefully before adopting this strategy.
Existing firms have scale, customers and reputation, the crown jewels in a business. New entrants don’t. Firms who turn round the telescope and look at the bigger picture will quickly see they have some strong and unique value over new entrants. We already see new entrants buying up law firms. Why? New players recognise the need for scale and customers to cement their position quickly. Ironically it seems that new entrants are buying the problems and risks that traditional law firms claim hold them back. Perhaps the biggest difference between new entrants and traditional law firms is not so much legacy, structure and agility, but their appetite for taking risk.
ABOUT THE AUTHOR
Arlene Adams is the Founder & Executive Director of Peppermint Technology. Arlene is known for providing insight and vision, particularly in markets undergoing radical change. Drawing on her vast and varied experience, Arlene brings a fresh, enthusiastic and sometimes controversial approach to helping law firms succeed and grow in the volatile legal services market.