Small firms gearing up for legal business success

Small firms gearing up for legal business success

At 95%, small law firms make up the majority of legal businesses. We look at the link between a firm’s size, and its ability to scale and grow effectively. 

Research conducted by LexisNexis [1] for the Bellwether Report series highlighted that small law firms are becoming more and more attractive to legal business professionals as their chosen employer. The Bellwether Report, entitled, ' Is the Future Small?', surveyed solicitors currently working at small law firms, where the majority – 2 out of 3 of those surveyed – had previously worked in medium to top tier firms.

 

Currently, small law firms make up an overwhelming majority of legal businesses, with 95% of firms earning under £500k and 50% earning less that £150k. 44% of the solicitors surveyed in the study said that they would consider working for a small firm in the future, with less than 2 in 10 citing that they would choose to work for a large firm. The benefits of small law firms were resoundingly clear: a better client experience, workplace efficiency, an agile approach, competitive pricing and the ability to remain in control. 

 

Advantages outweigh disadvantages in small law

 

Many of the positive attributes of small law firms relate to a lawyer’s ability to focus on their work, and their clients, as opposed to being bound by the high levels of bureaucracy typically associated with larger law firms.

What is evident is that solicitors who have worked hard to study law, have usually shown real commitment to their subject, a passion for the industry and their area of expertise. Therefore, it is perhaps unsurprising that so many are attracted to the qualities offered by smaller firms. Swifter decision-making, a greater control in their work, and a single point of contact managing client issues, all invariably affect not only the experience offered to the client, but the potential impact the lawyer can have, and their ability to focus on delivering high quality law. Interestingly, The Bellwether Series research found that, while there are challenges associated to working in smaller firms, there are typically sensible ways they can find to combat these issues.

For example, while 82% of solicitors are concerned that a lack of capacity could force them to turn good work away, in fact, for larger company deals, firms can turn affiliate networks, co-branding and other means to bulk up in their lighter areas. In addition, three-quarters of those surveyed from small law firms admitted to finding it hard to take time off. However, at 44%, the majority of solicitors surveyed said they would consider working for a small or solo outfit (firms with less than 20 fee earners) in their next role, meaning that their overall outlook seems unaffected by the potential disadvantages of working in small law. 

Despite of the positivity of small law solicitors, the question remains as to whether a company’s size has a real impact on its ability to grow. And, to what extent can a small firm stand up to larger firms regarding succession planning, client strategy and growth targets? 

 

Big is not necessarily better

 

One point which remains prevalent among solicitors of small law firms was that the majority (91%) felt that growing the business model was a potential problem. Indeed, a key part of a law firm’s business model is individual relationships between client and solicitor, therefore, a model which is difficult to replicate and scale, leading to overall growth of the business.

Additionally, over half of the respondents from the study felt that model and succession planning would be stunted as a result of individual lawyer/client relationships in small law firms. 39% also said that a lack of capacity for taking on good work was a ‘major’ problem for them in their role.

However, if we assess the key challenges faced by all law firms, including those in the top tier, 55% of lawyers quoted attracting new business as a key issue, while 32% stated retaining clients as a one of their main challenges.

It would seem, therefore, that the size of the firm cannot be directly attributed to challenges in growth and scalability. In fact, a total of 91% of the solicitors in the study felt positive about the future and 76% were planning to grow in the next five years. When compared to figures from 2016, we can also see a 10% increase in the number of lawyers stating that they believe their small firm is optimally sized for success, currently standing at 51%. Evidently, in the legal businesses, big is not necessary better, and confidence in small law among its solicitors is on the rise.  

 

To read Is the Future Small? Bellwether report, visit:  LexisNexis Bellwether Series

 

[1] The Bellwether Report Series 2019: Is the Future Small? – an independent study conducted by LexisNexis UK, consisting of eight in-depth interviews with lawyers in small law firms, legal businesses and small offices of larger firms, as well as online surveys completed by 176 solicitors in England and Wales. Respondents represented a wide variety of positions in the firm and areas of expertise. The research was conducted in November and December 2018.


 

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About the author:

Amy is an established writer and researcher, having contributed to publications, such as The Law Society, LPM, City A.M. and Financial IT. Her role at LexisNexis UK involved leading content and thought leadership, as well as writing research reports, including "The Bellwether Report 2020, Covid-19: The next chapter" and "Are medium-sized firms the change-makers in legal?"