Getting ahead of the pack

In the latest instalment of a continuing series on law firm marketing, Sebastian Fox looks at the impact the Clementi report could have on existing legal practices


After a lengthy consultation period, much discussion and even more speculation, Sir David Clementi's report has finally arrived.


The impact of the report - if the government adopts its recommendations - is likely to be far-reaching.


Although its focus is on the regulatory regime, the objectives outlined by Clementi include 'promotion of competition and promoting public understanding of the citizen's legal rights'. The report has also recommended the adoption of legal disciplinary practices (LDPs) and outside investment. This has heightened fears of 'supermarket law' and eventually the demise of small, particularly rural, firms.


Consumer groups have welcomed the report. The Consumers' Association 'would like to see retailers taking the initiative... moving into [the legal] market and offering quality legal services at competitive prices, thereby increasing access to the legal system'. As a recent Which? survey shows, almost two-thirds of adults think that being able to obtain legal services at supermarkets and high street banks is a good idea.


And, notwithstanding the views of the profession about the rights and wrongs of the proposals, there will be a profound effect on the delivery of legal services in the medium to long term. This is because &150; from the perspective of outsiders &150; the delivery of legal services is ripe for attack. There are several reasons for this view:

Other service-led industries have become expert at identifying the needs of users of their services, and at delivering these services efficiently. Much of the expertise could be transferred to the delivery of legal services. This is not to confuse the advice given (on which most clients will not have a strong opinion) with the way the advice is delivered (on which all clients will).

The legal profession is highly fragmented, with many small firms and sole practitioners.

The legal profession does not have a reputation for being modern and forward thinking.

But what do law firms need to do to take advantage of the opportunities likely to be presented by the Clementi report, rather than fear its consequences?


For a start, solicitors' firms need to know their strengths and weaknesses. As the report states, 'it is the right of existing legal practices to determine which areas of the law they wish to practise in'. It also goes on to say that a small firm with a good reputation and loyal following need not necessarily fear losing clients to entrants into the market place if the service offered is superior.


This points to opportunities for firms to exploit. The first is to move away from areas where new entrants are likely to provide better, faster and cheaper services &150; these are most likely to be residential conveyancing and simple wills and probate work. Large retailers will be very good at providing those legal services that are standard, non-complex and repetitious, because this replicates their existing business models. They will find it much more difficult to provide complex, bespoke advice on, for example, inheritance tax planning.


This leads to the second opportunity &150; to offer superior service for more high-value work. It will be difficult to compete with large retailers on the high-volume, low-margin work. It would be better to move out of that market and focus on the high-margin work, even if the actual volume goes down (this will almost certainly be more profitable). And although large retailers and providers are good at understanding the needs of their consumers - and delivering to them - they do not have deep personal relationships with people.


If you have done a good job and enjoy an excellent relationship with your clients, then this is likely to be a strong factor in retaining client loyalty. (But beware - providing good service is insufficient to generate loyalty. Service has to excel.)


Providing a highly personalised, bespoke service is not something large retailers are going to be able to do any more effectively than traditional firms. In fact, they will be at a disadvantage because of the learning curve involved. There is a definite time lag when you have your existing clients' loyalty before the new entrants could potentially woo them and win them. Use this time to wow your clients with your service, and they will have no reason to go elsewhere.


Thirdly, consider developing a niche or specialism in an area that cannot be easily replicated. One reason why the government and consumer groups are keen for the changes to happen is because it is believed that they will eventually allow the general public greater access to legal advice.


Although it may be some time before the changes arising from the report come into effect, start preparing now. Tesco started - albeit in a low key way - to sell DIY legal services last year. While this poses no threat in itself, it is certain that Tesco is taking a long-term view and will use the time available to build its knowledge of the market and consumers. When the time is right, that supermarket and perhaps others will strike &150; by then it could be too late for law firms to defend their position.


Law firms need to decide which areas of their business will be vulnerable to competition from new entrants to the market and which they should build on. Plan how to migrate business away from the former &150; what will happen to existing clients? How do you intend to build up new business? How will you inform clients in due course of any changes? What about the business? Do you have people with the right skills to take the firm forward, or do you need to change some of your staff? And if you have a particular specialism or niche to exploit, how will you go about it? Does it make sense for you to join forces with other like-minded firms and support each other in making the necessary changes? Does the firm have the right skills and time to drive the necessary changes through, or do you need outside help?


Whatever you choose to do, plan for it now - if the Clementi report is implemented, you will be better placed to deal with it. The status quo will not survive.


History is littered with examples of incumbent businesses that failed to recognise the threat from completely new competitors and changed paradigms.


The legal profession is not immune to these forces, but it is certainly not too late to act and turn the situation to an advantage.


Sebastian Fox is a marketing consultant and is a former marketing director at national law firm Eversheds