Firms currently developing their strategic business plans for the next few years must test the strength of their strategy for the four scenarios laid out in The Law Society’s recently released ‘The Legal Services Market in 2025: Scenario Planning’ report. It will be a worthwhile exercise as there is a level of truth in each of the scenarios:
Law is an App – The New Normal
This is what is being referred to as the ‘new normal’. The overriding belief here is that an interconnected, global economy will enable nations, corporations and law firms alike to emerge from macro-economic troubles, well positioned to take advantage of new opportunities that the new global business landscape will present. New legal services brands based on a variety of new business models will also be hoping to establish themselves in this new environment, e.g. ABSs, multi-disciplinary practices and partnership/outsourcing organisations.
In this ‘client centric’ environment, customers will expect innovative approaches, a broader range of services as well as business process efficiencies and cost effectiveness. Innovation will be vital to success and enterprise-level technology will enable it by underpinning business operations regionally and across the globe.
Wise Counsel – Closest to the Status Quo
This is close to the present day scenario. There is a global dimension to the legal landscape and some law firms will embark on mergers and acquisitions, either aspirationally or driven by the evolving client requirements in order to gain the ability to manage legal activities across borders. There will be scope for success in the domestic market too. One stop shops will appeal to some clients and multi-disciplinary service providers will be attractive to wealthy, but time-poor consumers and corporates. Alliances between law firms and other professional services providers such as business consultancies and accountancy practices will logically flourish.
An in-depth understanding of current and future client requirements and expectations of the commercial relationship will be fundamental to survival. Firms will require business management type technology tools that enable them to quickly and flexibly adapt to deliver new working practices to respond to changing market demand.
Now to the bleaker scenarios:
The Mini Clubman – Reminds of the 1980s
This scenario paints a picture of a regional centric environment. Law firms will need to stand out to grow. Conceivably the number of law firms will shrink and attracting top talent will become increasingly challenging as top graduates choose other careers, enticed by higher salaries and better growth prospects offered by other industry sectors.
The nature of legal activity will be different - with money being tight, the focus of individuals and corporates will be on expecting their legal advisors to help them avoid legal issues rather than on handling them. Further, with clients being price sensitive, firms will need to ensure that they employ the right resources and use them efficiently. HR management will play a more integral role in business operation.
Bleak House – The Least Appealing Scenario
Law firms will find themselves caught between falling profits, reduced fees and ever demanding clients. Granting work by clients to the cheapest bidder will come from necessity not choice with alternative legal services providers who develop innovative ways of working offering ‘legal deals’, persistently eroding mid-tier law firms’ market.
Firms that are able to afford the most appropriate technology will be better placed to deliver added value to clients without tying up valuable resources. Cloud computing in all its guises will be fundamental to profitability as such technology significantly reduces IT costs across the board. Automation of business processes will be indispensable to business operation.
While a combination of the first two scenarios – i.e. Law is an App and Wise Counsel – the fact is that no one knows which way the cards will fall. However, given the ubiquity of technology in our personal and professional lives today, we can be reasonably confident that technology will play an ever increasing role in the business operation of law firms. Legal services providers must factor technology into their strategic planning as well as clearly determine how they plan to use it to demonstrate their unique proposition to clients, regardless of the market landscape.