The challenging legal landscape has given way to a rise in new and innovative start-up practices, a report has revealed.
The finding, published as part of professional network MHA’s new 2019 Legal Benchmarking Report, indicates that firms must diversify and innovate in order to stay relevant in what has become an extremely competitive sector.
According to the report, start-ups, niche ‘boutique’ practices and sole practitioners are outperforming traditional law firms in terms of growth and profit per equity partner.
This is because the smallest of firms have the ability to reduce expenditure and capitalise on emerging opportunities, resulting in improved profit-per-equity partner figures.
Likewise, sole practitioners have soared past small and medium-sized firms in terms of fee income growth. According to MHA, single partner outfits posted a 12 per cent growth in fee income in 2018, compared to a two per cent fall for two-to-four partner firms and a three per cent fall for firms with more than 25 partners.
Commenting on the report, Karen Hain, head of the Professional Practices sector at MHA, said firms should be making changes now for a “different future work environment” and this starts by “scrutinising their staffing mix, IT, management information and case management systems”.
“Less paper and more flexible working patterns should be in every businesses DNA; successful businesses automate and gain efficiencies from maximising the use of technology and the latest software. They also sell the value of what they’re providing rather than base their fee on what it costs, avoiding an undersell situation, and pay attention to their lock up situation,” she said.
She added that law firms who “improve their efficiency” will benefit from greater profitability and financial stability, giving them a “better chance of survival in this highly-competitive and challenging market”.
“Practices need to ensure they can react quickly to new work prospects as they arise, and this involves staff being ‘nimble’ and ready for challenges,” she concluded.
The 2019 Legal Benchmarking Report can be read in full here.