Since the introduction of fixed fees around RTA’s in 2013, solicitors have been unable to charge based on an hourly rate. Together with an increase in court fees of up to as much as 600%, it is unsurprising that small claims and personal injury lawyers have been hit hard.
These changes effectively mean that traditional sources of work are becoming less economical and may result in a move to contingency based agreements, whereby the solicitor will take an increasingly large share of the claim; enough to make a claimant take a more direct approach and by-pass a law firm completely.
We are also seeing larger firms, backed by Private Equity Funding, acquiring smaller firms, and whilst the cost of acquisition is often more than the costs recovered, this allows them to continue to dominate the overcrowded market.
In a battle to raise their profiles, spending on marketing by legal firms has increased accordingly.
In 2010, law firms and claims management companies spent £27 million on advertising. This increased to £76 million in 2014, 1 year after the fee changes were implemented. However, it is important to note that the top 10 law firms account for 85% of this marketing, highlighting their market saturation.
So how can small legal companies survive in an industry dominated by large firms, whilst having limited spending power to complete financially due to fixed fees and increased court costs?
Smaller firms can overcome the current burdens and differentiate themselves from their competitors by implementing a well thought out, strategic marketing plan.
Initially, it is important to conduct an internal audit to identify which services you offer and what skill set your staff has. What are your current objectives? What are your USPs? Are there opportunities to expand or alter the services which you currently offer based on market research findings?
Once identified, external market research should be carried out in order to identify gaps in the market. During this stage, it may be beneficial (but not essential) to identify a niche in order to tailor your services to an area which is currently being neglected by other firms. By offering a speciality service, you are ultimately separating yourself from your competitors.
Invest time into researching who your potential customers are and what they need. Focus on providing not only a high quality, tailored legal service, but an excellent customer experience too. Are your lawyers accessible out of hours, not just 9-5? You could consider making yourself available on social media or via a live chat on your website. Positive customer experience will in turn lead to referrals can create advocates for your brand.
It could also be economical to tactically tailor your services to the local market, rather than aiming to compete with major national firms. This will help to strengthen your brand’s presence in the area, and will allow you to save money by investing in local marketing rather than national marketing.
It is essential to have control over your own budget and attribute a cost to each marketing service and each case. This will help you to evaluate which marketing strategies are the most valuable and which services are the most profitable. Once highlighted, strategies and services can be adjusted accordingly in order to maximise profit margins.
Flexibility and adaptability are therefore paramount, as big companies are often more restricted due to having a more rigid structure. Small firms can use this opportunity to stand out in the industry by investing time into evaluating their current situation and re-aligning their objectives and services to more efficiently meet the needs of potential customers.
Here at Provoke we have a wealth of experience in marketing within the legal sector. To hear more about how we can help you, get in touch to discuss our services.