Herald Scotland reported this week that “senior lawyers at some of Scotland’s largest firms believe more mergers are on the way in 2013 but are warning quality deals will be harder to find.”
Traditional law firm business model is failing
The report outlines that some firms are simply not attractive enough for potential merger partners, and that “The New Year may also finally see the introduction of alternative business structures (ABS) in Scotland, which would allow non-regulated professionals to take up to a 49% share in a Licenced Legal Services Providers (LPs).”
So what you have is a traditional law firm business model facing increased competition from Legal Process Outsourcing Companies (LPO’s) and now ABS’. Indeed, the Herald also reports that Chris Smylie of Maclay Murray & Spens, echoing a sentiment shared in the Scottish legal community said that “Trying to stave off the inevitable decline of an outdated business model is not [a good reason to merge]“.
The solution is never mentioned
What is conspicuously absent from this discussion about mergers – as is the case with essentially all discussion of law firm mergers – is the need for traditional law firms to adopt effective business development practices in order to become more competitive. The primary reason why traditional law firms are faltering is a direct result of the refusal to adopt effective business development as a mission critical component of the business model.
Scale, cost savings, geographical reach, more specialist reach are all good reasons to merge, stated Chris Smylie in the Herald. But the elephant in the room, effective business development, once again, is not mentioned.
As Mike O’Horo, President of law firm business development consultancy Rainmaker VT wrote earlier this month: “Getting paying clients is Job One”. And this is fundamentally why traditional law firms are failing. By seeking to merge to solve a problem which cannot be solved by merging — and now facing increased competition from ABS’ and LPO’s — traditional law firms must adopt effective business development initiatives in order to survive.
What do traditional law firms need to do to compete?
As I wrote a few days ago in a blogpost entitled: “Will your law firm survive 2013?”: “Traditional law firms need to embrace effective business development practices as a matter of urgency to fight for their survival in the increasingly competitive legal services market of 2013 and beyond. The core basics of what must be done are:
1. Research and identification of ideal potential clients (aligning firm services with the commercial interests of clients).
2. Contacting those prospects with an aim to securing a meeting/discussion around those opportunities.
3. Driving the process to the close of new business.
Secondary initiatives that follow, not lead 1 through 3 are:
4. Develop a robust social media initiative, with blogging as a centerpiece
5. Develop active, revenue generating referral relationships – where your staff/consultants drive the process to the close of new business.”
The future is bleak without facing reality
If traditional law firms in Scotland do not adopt effective business development initiatives, they face a future – whether they merge or not – where they will either be supplanted by LPO’s, ABS’, traditional law firms who do adopt effective business development, or other competitors yet to enter the market.
John Grimley helps law firms, law firm practice groups, individual lawyers, financial services and governmental relations professionals develop and implement custom business development initiatives. To enquire about his services, contact him at +1.213.814.2855 or at email@example.com.