Small and medium law firms in South Africa have the unique opportunity to harness their agile decision-making and more efficient cost structures to take advantage of realities in the profession such as disaggregation, legal process outsourcing and stratification, in order to grow their businesses.
This is according to law firm strategy consultant, David Lancaster, who says: “Smaller firms can be much more agile in responding to market trends. If they can identify their niche markets and the clients they want to act on behalf of, if they have an attractive pricing model and also use the right technology, then they can position themselves quite well in this new world where clients are looking for much more value than they were historically.”
Cost pressures and greater competition in the market are creating challenges as well as opportunities for the smaller firm.
Lancaster says that the disaggregation trend is seeing more clients breaking down work into smaller components, rather than placing all their legal work in the hands of just one large firm. In an increasingly stratified and cost sensitive market, small to medium sized firms are also scooping work from bigger firms when they are able to demonstrate clearly identified areas of expertise.
Technology also remains a big driver of change that acts as both a disruptor and an enabler. “Clients are now turning to legal process outsourcing and alternative legal services providers to serve them as new age technology partners. At the same time, many clients are also developing stronger in-house teams,” says Lancaster.
Small and medium law firms do contribute significantly to the South African legal landscape. However, like most businesses, they are faced with a host of challenges. Cash flow, retaining and growing a client base, the effects of the economy and being up to date with their profession are all concerns.
The market has also changed since 2014 when LexisNexis data showed that of the 10 930 law firms in South Africa, more than three quarters were considered small firms of one to 10 fee earners mostly engaged in litigation, debt collecting and conveyancing.
Lancaster indicates that in addition to the roughly 14,000 different attorneys that are qualified according to the Law Society, of whom 18% are in small practices, there are a number of other variations within that grouping. They include the big six firms, mid-range firms, the 12 to 13 international firms, audit firms running legal practices, in-house teams and counsel, legal process outsourcers and alternative service providers, as well as legal networks and alliances of top tier firms such as Lex Africa and the African Legal Network (ALN).
“If you look at the market from the client point of view, potential clients see so many options from which to choose – from a sole practitioner to the biggest firm in the country or an international firm. This means that the small to medium sized firm must position itself to be truly competitive,” says Lancaster.
Recognising the challenges and the need for inclusive conversation and support for such firms, LexisNexis South Africa and the Gauteng Law Council will jointly host the Small and Medium Law Firms Boot Camp on 20 July 2018 at CSIR in Pretoria.
The event aims to address the future of Small Law in South Africa and to offer insight into best practice to keep smaller firms on the road to success.