Executive summary

Strategic marketing has become an area of increased focus in law firms, as competitive pressures and a changing business environment has forced many firms to rethink their approach to market. The traditional model, where partners ruled the roost and ‘owned’ their clients is coming to end. This is partly because of a globalising marketplace where a law firm’s clients are likely to work across multiple jurisdictions and expect their law firms to be able to do the same. This has persuaded many law firms to adopt a more holistic approach to client-service delivery, where lawyers are expected to cross-sell, referring clients to other departments and lawyers, based on a much better understanding of the firm’s overall capabilities.

But it is not just the largest firms that are facing competitive pressures. If anything, smaller firms face the toughest market of all. In the UK, the government’s recent white paper, ‘The future of legal services: Putting the consumer first’, is adding to existing market pressures for small firms to rethink their business models. While the largest commercial firms will continue to profit off complex high-end work, the consumer end of the market, characterised by the smaller, high-street firms, is seeing a rise in volume-driven businesses among law firms specialising in areas such as conveyancing, remortgaging and personal injury. In the future, this market may be characterised by a very small number of big volume businesses, owned by building societies, insurance companies and banks. There may be a few law firms that become national brands in their own right for mass-market business, but it may also be the death knell for the traditional high-street practice.

Between the largest commercial firms and the small or volume-driven firms lie the mid-tier practices that have tough choices to make about their business development. Some firms have taken the tough decision to get rid of less profitable practice areas to become niche firms, investing resources in a particularly strong discipline, rather than attempting to retain a far more diluted full-service capability. Others have decided to focus on geographic strengths; for example, becoming strong regional players that can more effectively compete on price with the City firms. Consolidation through merger has also remained a popular strategic choice for firms wanting to keep up with the competition.

Firms beyond the UK are facing similar competitive pressures, albeit with some geographic differences. For example, smaller European firms face the challenges of larger US and UK firms entering the space, either through organic growth or acquisition. This makes it increasingly difficult for European practices to retain their independence, forcing many to seriously rethink the ways in which they can use local expertise and price to win and retain work.

A new approach to working

A changing external market, however, has also been paralleled by internal developments. Many younger lawyers appreciate the concept of work/life balance and are less prepared to put in the gruelling hours often necessary to attain partnership. Where some lawyers are now happy to admit that becoming partner is not a career goal, an increasingly limited number of equity partnership positions means that even fewer lawyers will make it to equity partner level anyway. In such a scenario, many firms are rethinking the ways in which they can provide career opportunities for talented lawyers that are unlikely to become partners in the business.

Such change has also been paralleled by firms converting to limited-liability partnership. This not only flushes out structural issues, pushing more firms towards a corporate, rather than partnership, model, but is a step that most firms are likely to take in coming years, further reinforcing the internal business transition of the legal profession.

The impact of change

While the market may hold many difficult challenges, there are also opportunities for more business-minded law firms with forward-looking management teams. Good business leadership, for example, will be essential to driving through internal people and external client-facing strategies that will keep firms ahead of the competition. In the future legal business, lawyers will not be able to profit off the back of technical expertise alone. They will increasingly have to become commercially-minded, business-development gurus who understand the profit imperatives of the modern age, and look to ways to secure firm-wide advantage through winning clients and nurturing existing relationships.

This concept still horrifies many lawyers who did not join the profession to do ‘sales’. Indeed, the thought of a lawyer acting as some kind of business entrepreneur appears like a juxtaposition; the quiet, independent expertise of the legal professional wildly at odds with the go-getting determination of the corporate manager. And yet, in many firms it is a vision that is beginning to be realised, as corporate structures replace partnership models and lawyers find themselves learning techniques as seemingly outlandish as cross-selling.

It is a movement, however, that is aided by changing values. Where the ideal of partnership no longer suits all lawyers, management can theoretically hand pick those lawyers who are more interested in such commercially-minded initiatives – getting them involved in business-development and cross-selling activities and using their differing ambitions to spearhead broader management projects in the firm. New ideas about what constitutes a legal career will also support another key challenge for law-firm management: that of gaining buy-in to change so that firms can move away from the individual lawyer-to-client relationship, to a holistic firm-wide approach to winning and retaining business.

The marketing role

Most significantly, such challenges and opportunities have opened the door to strategic-marketing initiatives that have pushed the marketing role to new heights of responsibility. Not so long ago, law firms might have selected a partner to head up some ad hoc marketing campaigns or, if marketing managers were appointed, they would only be involved in event planning, directory listings and the firm’s brochureware. Such marketing managers were little involved in the core functions of the firm and would have few dealings with fee earners or partners.

With a changing landscape, however, marketing directors have become more involved in client-facing activities, often heading up client-relationship-management (CRM) programmes and getting involved in mentoring and coaching the firm’s lawyers to cross-sell. They often manage the client-review process, preparing client-action and service-development plans that will include everything from better communication processes to pricing strategies. Working closely with other support functions, particularly human resources, the modern marketer’s work has moved out of a siloed department and into the heart of the firm.

There are still obstacles, however. Marketers can at best expect to face cynical partners who do not believe in the value of marketing activity; at worst, they will meet outright resistance to change. The first challenge for a marketing director in a typical mid-tier firm will be gaining buy-in for client-focused marketing activity. For lawyers that are quite happy with their existing client relationships, inspiring a change in attitude will be hard – and getting them to actually change behaviours will be even tougher. Many do not succeed and end up leaving the law firm after two to three years, before their efforts have had any serious impact on the firm’s business development. The firm recruits a new marketing director who faces just the same problems, and so begins a vicious circle that merely reinforces partners’ views that marketing is a waste of money.

The legal profession now offers more opportunities to ambitious marketers than ever before, but strategic success on a firm-wide level will take time and effort, often involving an extensive change-management programme that will impact every function of the firm. Successful marketing initiatives, however, are increasingly fundamental to a firm’s ability to survive and prosper in today’s competitive age.