Diversification in the Legal Sector

Posted on 27/2/2018 by Katherine Memery

In today’s crowded legal market, competition for clients is fierce. Memories of the 2007-8 recession continue to linger for some firms, leading them to look for ways to future-proof their businesses. Some are looking to merge with or acquire other practices, leading to big firms getting bigger, while others are entering new markets to widen their service offering.

Mergers and acquisitions

Consolidation within the legal industry has been rife in recent years, with firms undertaking strategic growth so that they can more effectively meet client demand. With costs rising and profits plummeting, mergers and acquisitions enable firms of all sizes to broaden their expertise, reduce overheads and elevate their presence within the market.

In Manchester, Kennedys’ acquisition of berg last year allowed the firm to enhance its commercial litigation service offering and grow its presence in the North West. In 2013, regional heavyweight DWF merged with Mancunian firm, Cobbetts, in a deal that secured DWF’s position within the UK’s Top 30 firms.

Diversification

While joining forces with another business is one way in which law firms can add to their practice areas, boost their reputation and expand their client base, many firms are choosing to go down a different route and instead, widen their portfolio of services.

Law firms are aiming to become a one-stop shop for their clients, with many branching out into new, recession-proof practice areas. Not only does this help firms to maintain their competitive position by creating more opportunities to generate revenue, but it helps make legal services more accessible and improves client retention.

In our dealings with the regions’ law firms, at Realm, we have recognised a number of key trends taking place within the profession:

  • Commercial firms are trying to break into Private Wealth
  • Large Real Estate teams are starting to offer Construction services.
  • Personal Injury firms are on the hunt for Court of Protection Lawyers.

Unsurprisingly, firms are continually looking to get as much value as possible from their clients. Expanding their service offering means that lawyers can make inter-department referrals to other teams within the firm. For instance, Divorce Lawyers can refer clients to the Wills team or a member of the Conveyancing team can recommend a specialist Personal Injury Solicitor.

Commercial law firms and the move towards Private Wealth

For Commercial firms dealing with High Net worth Individuals with complex business or property assets on a daily basis, this involves building long-term client relationships. Their comprehensive legal needs mean that these people need a lawyer they can trust and whom they can return to year after year.

It makes sense for these firms to have strong Private Client departments so that lawyers can refer their clients to the teams dealing with wealth-related matters like prenups, wills and trusts. At Realm, we have helped Commercial firms make a spate of lateral hires in these specialisms across Manchester and the North West. In particular, over the last 12 months, we have recruited a number of Family Solicitors and Private Client Lawyers for Commercial law firms.

This trend of legal diversification shows no sign of slowing down. If firms are to guarantee their longevity, they must continue to look for ways in which they can adapt and stand out in the market.

Crucially, though, they must work hard to ensure that they are able to meet the varying needs of their discerning clients. Venturing into new practice areas provides firms with the security to weather tricky market conditions, whilst also ensuring that their clients are happy, satisfied and likely to return time and time again.

Are you looking for talented lawyers to enable your firm to enter new markets?

At Realm, our Consultants each specialise in a particular area of the legal market. If you’re looking to grow your Court of Protection team, take on Private Client Solicitors or bolster your Family department, are experts are perfectly placed to help you find the lawyers you need to help your business thrive. Contact us today for a confidential discussion about your needs on 03300 245 606.

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