The legal market has excess capacity and clients know it! Law firms are telling me their core clients are demanding a reduction in rates and alternative pricing structures. In-house lawyers and business leaders are telling me that they want to reduce their legal spend even further. The pressure’s on and law firms need to act fast to retain and grow their businesses.
This is almost exclusively eating into margins and shrinking profitability. Some of the solutions include:
- Ride the storm – hold your breath and eventually we’ll be back to the good old days of 2006. Fail.
- Reduce rates – this maintains or increases work coming in the door. Busy = good, yes? Very often this just leads to a race to the bottom and offering ‘suicide rates’. Fail.
- Reduce costs – reducing headcount and the biscuit budget are clear and measurable ways to reduce overheads, albeit both agonising. Short term.
- Get some of that work out there – networking, building relationships and developing new business are more important than ever. Strategic imperative 1
- Change the business model – know how the business operates, innovate, improve and get back in the race to compete. Strategic imperative 2