LexisNexis has released their latest Bellwether report which reveals that 46% of law firms are expecting to grow throughout tthe duration of this year.
The report also revealed that whilst there is a desire for growth, the industry is less bullish than it was in 2021 when 66% predicted growth. 38% expect to remain stable. What’s more, rather than merging, there is a strong desire to grow organically, with investment in business support functions.
Debbie Sumner, Go-to-Market consultant at LexisNexis, said:
“The previous Bellwether surveyed the legal market during the post-lockdown legal boom and prior to the cost-of-living crisis, so this shift in sentiment is understandable. Organically growing revenue will be the theme of the year for many firms.”
When it comes to achieving growth, the Bellwether report reveals that most firms hope to acquire new clients and increase their business with existing clients. Only 13% of respondents said they plan to grow through Mergers or Acquisitions, a drop from 16% in 2022 and 15% in 2021. 81% said that attracting new business is going to be one of their top challenges.
In 2022, only 24% of firms planned to increase investment in their marketing. In 2023, an incredible 81% of firms now plan to increase investment in marketing and 88% in business development. The results suggest that a strategy of retention is sensible. 88% felt that their firm enabled them to offer a good service to clients – which might help to balance the fact that 79% of respondents were concerned about client retention.
However, this investment in business development seems to be at the cost of implementing new technologies to improve the lawyer and client experience. Only 24% plan to implement new technology over the next 12 months, choosing to maintain systems rather than upgrade. Yet – a desire for legal intelligence technology was strong, with two-thirds making use of free and paid digital legal research tools and legal practical guidance.
Other key highlights:
- Predicted growth: 46% are expecting to grow in 2023 – a noticeable drop in growth prediction from 51% in 2022 and 66% in 2021.
- New business: Attracting new business cited as a challenge for 81% of respondents, with 41% listing it as quite significant.
- Organic growth: Most firms hope to acquire new clients and increase their business with existing clients – versus the traditional approach of growth via M&A.
- Strategy of client retention: 79% of respondents said retaining current clients will be challenging months. 88% plan to invest more time and money into business development, 81% in marketing (versus 24% in 2022).
- Salaries: 60% say they’ve increased salaries, bonuses, and incentives in the last 12 months. However, only 48% of respondents are happy with current salaries, and 33% with bonuses.
- Tech infrastructure: 81% of respondents list keeping working practices and systems up to date as a challenge in the next 12 months. Yet only 24% of respondents have any actual plans to implement new technology during this period.
- Pioneers of flexible billing: Only 8% of small law firms bill exclusively by the hour. 60% offer alternative fee arrangements to meet existing client demands, 48% do so to appeal to new clients.
- AI for legal sources: 24% of respondents would currently consider using open AI sources instead of paid, while 25% wouldn’t consider it. 51% seem unsure.
The Bellwether report, entitled “Bold Ambitions?”, can be read here: https://www.lexisnexis.co.uk/insights/bellwether-2023-bold-ambitions/index.html