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2008 heralded in a stark reality for law firms. Growth in outside counsel spending slowed to a crawl after nearly five years of often double-digit increases. Single-digit growth, declining budgets and work moving in-house hit law firms hard. With economic uncertainty, crashing financial markets and shifting political powers, how can you best weather the storm?
The BTI Consulting Group recently completed more than 270 interviews with corporate counsel at large and Fortune 1000 companies. We scrutinized spending trends, legal budgets, risks and goals to decipher exactly where the legal services market is headed in 2009, and concluded that savvy firms will do well by paying attention to these six market trends.
Economic Uncertainty Flattens The Legal Market
2009 will usher in the third straight year of single-digit growth for the legal market. It’s no surprise that corporate counsel are looking to rein in costs, but market growth for outside counsel services in 2009 is projected at just 1.9%.
Capturing a piece of this shrinking pie is essential to law firms facing increased costs and tighter budgets within their own organizations. Savvy law firms align closely with client needs and position themselves as strategic partners to maintain and grow primary relationships in a turbulent market. Take advantage of this robust list of top client needs for 2009 to help jumpstart your marketing and business development strategies:
Add to in-house staff: Boost realization without layoffs by contracting associates to short-term in-house roles
Get better value from law firms: Create and adhere to budgets; Provide more business-specific advice; Offer alternative billing arrangements
Manage electronic records: Provide clients access to e-discovery experts (before they’re needed)
Streamline business processes: Share best practices in operational management;Offer access to tools and protocols in use at the firm
Make technological improvements: Host a forum to allow clients to share experiences on in-house technology
Achieve a better regulatory understanding: Deliver relevant, timely updates on changing regulations; Inform clients how to get involved and proactively impact new regulations
In-sourcing Is The New Outsourcing
Corporate counsel have strategically augmented their internal departments with resources. As part of a growth trend started in 2005, corporate counsel added two new attorneys to staffing rosters in 2008—bring the total average number of attorneys to 33.2. Internal resources help clients boost productivity and get a handle on ever-skyrocketing outside counsel costs.
Don’t expect too many additions in the upcoming year as clients tighten purse strings in response to a potential recession. The most strategic law firms prepare for corporate counsel to demand a boost in productivity and value from their law firms.
Demonstrate your firm’s value-added services
Articulate the value you deliver in client-friendly terms
- Time saved
- Costs avoided
Review draft invoices with clients
- Be sure to share budgets and changes with the client before they see the final bill
Offer savings to clients on routine work
Establish your firm as a trusted advisor for clients
Work together to implement cost-savings strategies and legal management plans
Send proactive updates on market trends affecting their business and industry
Convergence Is A Reality
Shrinking dollars are not the only hurdle to overcome in this downturn. Clients cut law firm rosters to all-new low levels. On average, corporate counsel rely on 42 law firms for their legal needs, cutting the number of firms used by almost 20% in one year. This trend is expected to continue through 2012 as clients anticipate shrinking rosters by another 26%.
Successful law firms hyper-focus on client retention to ensure that their client relationships last long into the future. Some of the most effective client retention strategies include:
Adopt proven key metrics to keep your firm focused
- Number of meetings with client outside of current project
- Client business goals identified
- Work imported from other practice areas
- Post-success briefings
Deploy SWAT teams to attack and build relationships that are deteriorating
Create a Client Advisory Board to build client investment in the firm
- Small group of top marquee clients
- Delineate client service standards
- Adopt client-facing metrics
- Meet annually to assess firm’s performance and discuss new issues
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