Buyer’s Market for Legal Services
Read it and believe: it is a buyer’s market for legal services. There are many forces at work here, but two clear drivers are overcapacity and unbundling. Appreciating the reality of each of these market forces will empower you to approach your engagements from a position of buying power.
Overcapacity in the legal profession is clear reminder of the financial crisis of 2008. No matter the size of the firm, there are still too many lawyers and not enough work. Although there have been many lay-offs and attempts to “right-size,” it remains the case that most firms struggle with idle time. Per Altman Weil’s 2015 Flash Survey, 61% of firms interviewed say that overcapacity is diluting firm profitability (and that increases to 74% of firms with 250 or more lawyers). What does this means for you? Law firms want your work. From the firms’ perspectives, lawyers working at discounted rates are far better than lawyers who are not working. On any given day, a firm with idle attorneys may offer notable discounts to win your work. You never know, until you ask. You may get some nice surprises when you put your work out to bid.
Historically, it was assumed that a law firm would handle the full spectrum of legal tasks for their clients. More than ever, it is possible to unbundle one’s work and match the specific legal and non-legal tasks to the most efficient professionals. There is a myriad of service providers that are happy to help execute smaller parts of your legal process from legal research and drafting briefs to due diligence and eDiscovery You can find virtual law firms who offer better pricing as they have shunned the overhead and traditional law firm business model (e.g. VLP Group, Paragon, etc.). There are consultants who will help you decide how to parse out your work and can then execute parts of it for you (Axiom). When it comes to eDiscovery, there is a dizzying array of providers—all of whom are competing with each other to stay in the game.
Law firms believe the market has permanently shifted – more so than they did during the depths of the recession. Per the 2015 Altman Weil Flash Survey, 94.4% of all law firms interviewed believe that price competition is here to stay. Firms know it is a buyer’s market, too, and expect to compete for work in a price-sensitive environment.
About the author – Kathy Heafey is a management professional with a long track record of delivering outstanding results for large consumer brands including Pillsbury, Green Giant, and Progresso Soup. A proven leader in Holistic Margin Management and Continuous Improvement, she enabled over $20MM in annual cost-savings for General Mills. As both a consumer of professional services and a key partner with strategic sourcing at General Mills, she has a keen understanding of professional services procurement. As President of BanyanRFP, brings a breadth of cost-savings expertise to help companies control spending on legal services. For more information, visit www.BanyanRFP.com