June 11, 2014
The Thomson Reuters Peer Monitor Index recently released data covering the first quarter of 2014. While there are many interesting statistics within the report, the overall takeaway is this: the “New Normal” really is still the “New Normal.” In other words, 2014 is looking a lot like 2013 and 2012
The PMI Q1 2014 data lends some statistical evidence to observations I have made as I work with business development and marketing units in Midsized and Large Law firms across the southern U.S. In reaction to market pressures, both from the economy and from larger firms, Midsized firms are responding with an increased focus on business development professionals and tools.
The Squeeze on Midsized Firms
What I am seeing consistently across the country is that the economy and resulting market changes in the legal industry have had the greatest effect on Midsized firms.
On one side, you have the economy – the legal market is not growing, and has not grown, in the past six years. That means that firms that want to grow can only grow their “pie” (share of the market), by taking a slice from another firm. This has caused an across-the-board increase in focus on having a strong firm-wide business development strategic plan.
Historically, many Midsized firms have not had a dedicated business development role within the firm, and many others have had a dedicated marketing role that is focused on the communications side of marketing (website, Twitter, branding, brochures and the like), rather than business development. These firms had no dedicated tools in place which would allow them to execute a business development strategy and had not budgeted for such.
On the other side, you have Large Law firms – these firms tend to already have a business development staff, strategic plan, and tools in place to execute their plan. My observation is that they have been focusing on business development longer; they recognized the need for business development at an earlier point, so they are further along on the learning curve, and they have already recognized the need to have tools in place in order to execute their strategies efficiently and effectively. This also means that they have already fought the battle to budget for these tools.
The Focus on Business Development
To fight this “squeeze,” forward-thinking Midsized firms are now hiring dedicated business development staff. One Midsized firm I worked recently had hired two new business development people in the past five months. Scores of others have hired one person into a newly-created position. Two years ago, it was rare for me to see a firm with less than 60 attorneys have a dedicated business development staff member. Today, it is rare not to see that position exist.
Furthermore, not only are Midsized firms hiring, they are interested in properly equipping these professionals. Firms that hire a business development professional but do not give him or her the instruments he or she needs are not investing as wisely as they could, since they are handicapping the potential for return. That has shifted rapidly, and I am now seeing Midsized firms looking to acquire tools that will help them to successfully execute their strategies and achieve their business development goals.
In the end, the fate and fortune of law firms on any size depends on the market. However, I have to say that Midsized firms that are responding intelligently to business pressures with new business development staff and tools are really positioning themselves well to meet the future.