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According to surveys done by Lawyer Firm News, Rocket Matter, and Logikcull, the near-unanimous greatest challenge facing firms today is increased difficulty finding new clients. In fact, every other obstacle to growth inherently compounds this challenge.
The main reasons this barrier exists are three-fold. First, legal services demand has been nearly flat for the better part of the last decade. This tells firms that to grow, they have to increase margins, not increase revenue. Second, the internet has allowed potential clients to digitally showroom to a greater extent than ever before, meaning there is increased pressure on firms to stand out through their digital sales pitch than ever before. Lastly, the proliferation of DIY legal solutions for individuals and businesses have reduced the need for some of the most common legal services. If nothing else, they’ve driven clients’ expected price for services down, but we’ll touch on that later.
This challenge is an extension of a point mentioned above. As we stated, because potential clients are digitally showrooming, firms have to stand out from the crowd. Additionally, across all industries, consumers are demanding subject matter experts rather than a jack of all trades service provider. In the legal space, that means both personal and corporate consumers would rather spread their legal needs across multiple specialized firms on a need-by-need basis than partner with one firm who can ostensibly do everything.
While younger firms, especially young solo attorneys, are creating specialized firms from the get-go, older firms who have had no need to specialize for decades are struggling to adapt. Unfortunately for them, consumers are only going to demand more specialization over the coming years. Thanks largely to the internet, consumers have more power than ever, which means they’re making more demands than ever. This brings us to our next challenge.
There are many reasons why this challenge exists. One of the most important factors is the introduction of cheap, DIY legal services that are driving potential clients’ cost expectations and the perceived value of legal expertise down. Another aspect is that more firms are presenting transparent pricing online and in person, forcing practices to compete on price for the first time. Coupled with the fact that legal services demand has been flat, law firms are undercutting each other more than ever and consumers are aware.
Unlike some of the previously mentioned challenges, we’re starting to see firms solve this problem. Instead of turning to increased revenue as a driver of business growth, they’re finding new ways to increase margin on existing revenue streams. How are they doing so? Two of the key methods are outlined in the final two challenges.
For years, the legal industry seemed immune to disruption by technology. However, this is no longer the case. Now, there are dozens of new legal technology solutions being introduced every year, making it more difficult to tell which solutions are the best fit for which firms. And more so than other industries, it takes more lead time for law firms to even test technology solutions. The result of these complications means that it’s difficult, costly, and time-consuming for practices to identify which technology solutions work best for them. Or, in some cases, work at all.
To combat this, companies like Legalinc have adopted a cloud-based model that’s totally free to sign up for. What does this mean for legal firms? It means they don’t have to install or integrate our solution if they don’t want to, and through their free Legalinc account, they can take a peek at what the solution looks like in practice. They only pay when they actually need to order services, and with no long-term commitment, if they don’t see value they don’t have to keep using the services.
On the topic of increasing margin on existing services, some of the most overt sources of waste being cut are administrative tasks. These tasks are labor intensive, low margin, and at worst, unbillable. The most wasteful administrative tasks are those that require the expertise of an attorney rather than a full-time administrative assistant or clerk. By reducing the time spent on these particular tasks, firms are increasing margins and face time with clients. When you consider that consumers expect a greater level of customer service when they choose to engage a firm over a DIY solution, this is a true win-win.
So, how are firms successfully streamlining these tasks? Through legal task automation. Digital solutions like Legalinc cut down the time spent on common administrative tasks like filings, searches, compliance, and registered agent services from hours each month to minutes, or in some cases seconds. Legalinc also makes pricing to firms totally transparent, allowing them to set prices with ensured margin. Click here to learn more about the full gamut of services Legalinc automates.
While these five challenges facing firms today may seem daunting, especially when considered together, the solution to all of them is innovation. Starting from the bottom and working our way back, using cutting-edge solutions like Legalinc eliminates time spent on low-margin tasks and makes it easy to ensure its the right piece of technology for your practice. This task automation allows firms to lower rates for services while increasing margin, satisfying internal and external stakeholders. Once firms identify what types of services create the most margin and provide the greatest value to clients, they can successfully specialize. When all of this works together, competition is mitigated and acquiring new clients once again becomes simple.
That’s the power of automation that firms are beginning to embrace in an effort to fight the greatest challenges they face today.