2020 is gone, and it left enough change in its wake that the legal field is evaluating what the future looks like for law firms. Over this past year, we’ve seen reduced billing, pay cuts, and unparalleled labor loss. In other words, times are tough.
As we round the corner, growth is back on the menu.
Make no mistake: there’s never been a more critical growth period. This isn’t about regaining lost revenue. Your firm has the very real potential to find unprecedented growth through newly-available clients, mergers and acquisitions (M&A), and technology.
But where do you start?
Growing a law firm after a black swan event requires savvy strategies and an appetite for disruption. Here are 4 tips to help you achieve remarkable growth in 2021.
1. Emphasize Client Retention
The economic ecosystem is uncertain. Despite law firms traditionally faring better than most industries during dips, the raw disruptive power of COVID has put significant pressure on lawyers to think lean. It’s difficult to pinpoint the economic turbulence of 2021 in the face of the legal industry. Every sector is hit with unique challenges, and certain sectors (e.g., litigation, restructuring, etc.) may actually find fuel in this specific period. However, there’s a tangible sense of unpredictability surrounding the legal industry’s overall recovery. Depending on stimulus packages, regulatory agencies’ appetite, and market conditions, this disruption will impact the industry on a deeper level than sectors. The recovery will depend on location (on the granular level), pricing structures, and existing liquidity and assets.
Due to the vast pool of metrics involved on this road-to-recovery, law firms should gear up for a client war. Even if your firm is prospering, other firms are undoubtedly hurting—and they would be more-than-happy to pull your clients over. If you don’t emphasize client retention, you risk losing clients due to pricing wars or aggressive marketing campaigns from your competitors. According to the National Law Review, it’s 5x more expensive to acquire new customers than it is to keep your existing ones. Don’t make the mistake of overvaluing acquisition this year; keep a significant portion of your focus on retention.
2. Explore New Digital Opportunities
Traditionally, law firms have three growth options:
- Increase clients through marketing
- Expand the practice to new areas of opportunity
- Mergers & Acquisitions
For years, those have been the three core pillars of growth. Now there’s a new one: The digital landscape of law. Lagging behind other industries, digital technology is still in the “Wild West” stages of growth for law. Mobile apps, automation, AI, and machine learning are all massive growth opportunities. And many firms are still ignoring their value. PwC found that while lawyers had increased their overall digital cadence during COVID-19, only 40 percent were even at the early stages with robotic process automation, predictive analytics, and blockchain. These back-end technologies typically get overshadowed by custom-facing tech like conferencing and mobile apps. But they have tangible value that’s ripe for the picking.
McKinsey makes the bold prediction that 23% of legal activities could be entirely automated. On the surface, this sounds scary. But most of these activities are redundant and manually-intensive tasks like data entry. Predictive analytics, which can help firms with everything from case selection to budgeting, completely disrupt the way you navigate client intake and pricing. And blockchain has immense implications in spaces like intellectual property rights and deeds. To be clear, investments should prioritize client-facing needs first. But don’t do a half-job on digital transformation. There’s real growth trapped in the nooks-and-crannies of today’s tech-drenched vendor space.
3. Outsource Effectively
With a chaotic labor market and an aggressive need for digital expansion, many law firms will struggle to secure the skills necessary to maintain their IT infrastructure. It’s a double-edged sword. To ingest new tech, you have to have an IT team on standby. But having an IT team on standby requires significant capital, time, and resources—which are all supposed to be provided by that tech you’re onboarding. It rarely makes sense for law firms to staff an entire IT department—outside of global players.
Outsource effectively. Chances are, you need some form of managed IT services. Finding the time, people, and resources to handle your new stack of digital tools—much less cybersecurity, hardware support, and compliance—can be draining. Think about hiring outside resources to help you keep pace. For smaller law firms, outsourcing is probably your only option, especially if you want to stand against the increasingly-dangerous cybersecurity landscape. For larger companies, outsourcing IT is a cost-effective way to manage your digital transformation at scale.
4. Pay Attention to Cybersecurity
So far, we’ve mainly discussed pure growth strategies. But this isn’t a growth strategy; it’s a fail-prevention strategy. Law firms are hungry for digital technology. In a recent interview with Financial Times, Robert Shooter — Head of IT at Fieldfisher — noted that “Our clients are squeezing margins, demanding faster turnaround times, and greater use of innovation. If law firms don’t change culturally, our clients will go elsewhere.” And he’s right. Law firm digital spending will increase significantly this year (as well as over the next decade). Unfortunately, many firms will explore the risk-laden trenches of digital transformation without the right digital security infrastructure. The results won’t be pretty.
Twenty-nine percent of law firms faced a cybersecurity breach this year. Yet, less than half of law firms use two-factor authentication, remote device management, monitoring, or even encryption. Obviously, cybersecurity is a little outside of the scope of the standard law firm, but there’s always outsourcing solutions to fill the gaps. Don’t invest heavily in tech without securing your infrastructure. It can destroy your firm.
Vertex Helps You Grow Your Law Firm in 2021
Your law firm’s growth is hinged on technology. From client acquisition to digital transformation and analytics, technology touches nearly every lever of growth in 2021. You need a rock-solid IT infrastructure and round-the-clock security monitoring to embrace that technology in a truly transformative way. We can help. At Vertex, we specialize in best-in-class managed IT services for law firms. Our team of hyper-specialized IT professionals is well-versed in IT compliance and technology, and we can help you manage your entire ecosystem of technology with industry-leading cloud deployment, hardware support, and customized deliveries. Contact us to jumpstart your growth.