The State of U.S. Law Firms
Changing Market Conditions Challenge Law Firm Business Models
Aug 19, 2009
There are tough challenges facing law firms today. Among them pricing pressure, and the debate about alternative fees, succession planning and associate development, as well as the alignment of interests and incentives with clients to name a few. Suite101 asked Mark Usellis, Chief Marketing Officer for Davis Wright Tremaine about his thoughts on the state of U.S. Law firms and legal marketing strategies in this new economic reality.
The Impact of Economy on U.S. Law Firms
Suite101 asked Usellis about his thoughts on the current state of the law firm industry. Usellis points out that over the past 20 years, law firms have fallen behind client expectations regarding pricing, service and innovation. Concurrently, market conditions are strengthening client’s leverage. Specifically, law firms are burdened with “high fixed costs, an extremely perishable product and excess capacity in many of the areas in which they provide service," says Usellis.
The factors and the urge to cut costs in the current economic climate law firms are under tremendous pressure to cut costs and make concessions to their clients. According to Usellis, in order to respond to these changes effectively, law firms need to fundamentally rethink their business models to build more variability into their cost structures.
Usellis advises that particularly in the areas of associate and staff compensation firms need to scrutinize all areas of their business to find ways to cut costs while maintaining their ability to serve their clients. Further there is a strong need to systematize processes to engage with clients and develop customized solutions for clients.
Usellis adds that “firms need to focus resources and attention on those parts of the business where they are truly a short-list firm. Mid- to lower-tier practices simply won't be economical in the future and firms cannot afford to have them consume management time and drag down earnings.”
Successful Change in Law Firm Marketing Strategies
Suite101 asked Usellis to share his lessons learned leading to legal marketing success in general and how it needs to be adjusted in this new economic reality.
Usellis responds: “First, I believe generating legal work is primarily about developing deep relationships with a relatively small number of people. While developing brand and name recognition is valuable, I think most firms over-invest in the general visibility area and under-invest in the relationship development area.” He continues: “Second, the most valuable asset a firm has is its lawyers' time.”
For Usellis, good staffing, the combination of support and advice, are the pillars of a solid marketing strategy. This allows lawyers to focus on what they do best. Usellis adds that firms need to “resist the instinct to be like everybody else.” Lawyers are extremely driven by precedent and best practices.
Usellis goes on to say that "Legal marketing professionals need to have the credibility to convince partners that following others is the path to undifferentiated mediocrity and the market demands distinctive excellence. It’s a lawyer’s business to sell solutions and focus on creating value for clients, communicating that value, and pricing services accordingly."
Usellis’ advice to legal marketing managers in this new economic reality is to better understand the business and the numbers, as well as the value proposition one’s firm is offering to clients. Legal marketing is not simply providing responsive administrative support but a successful legal marketer today is a substantive advisor to his or her internal attorney clients.
 |
 |
