A new white paper lays out the Apex Strategy Model, which can provide law firms with a structured framework to achieve differentiation and sustainable growth by identifying a firm’s primary strategic focus
In today’s increasingly competitive legal market, law firms face significant hurdles on their path toward sustainable growth. And now, those key sources of growth that law firms may have depended on in the past, such as increased billing rates, may soon face changes of their own as the legal industry encounters dramatic shifts in market dynamics, technology, and client needs.
Indeed, the average law firm billing rates have grown by 107% since 2006, while demand for law firm services — as clocked by total billable hours worked by the average law firm — has not followed suit, increasing just 5% during the same timeframe.
Clearly, this dynamic is not sustainable, creating an approaching financial pinch point that law firms will have to navigate.
In a new white paper from Thomson Reuters’ Jen Dezso, Developing a Framework for Law Firm Differentiation and Growth: Introducing the Apex Strategy Model, the author looks at a new methodology that can help law firms with this navigation by allowing them to achieve the differentiation and sustainable growth they need in a competitive market.
The case for a different strategic focus
Despite the legal industry being one of the oldest professional service sectors, the paths to success for its participants are varied. There is no one law firm, or even type of firm, that has emerged as a dominant market leader with all the answers on how to most successfully operate within the business of law. In fact, data from the Thomson Reuters Institute shows that over the past decade less than 40% of top law firms have grown their top-of-mind awareness in the market — how clients call to mind a certain firm for legal matters — a metric we refer to as market mindshare. During this time, the average law firm actually experienced an erosion in top-of-mind awareness among clients.
This leaves the legal industry at an inflection point with no dominant market leader.
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Further, recent interviews with managing partners also reveal that several market dynamics are driving a significant shift in their strategic thinking which is being driven by diminishing returns from rate increases, growing client sophistication, and technological disruption. What makes the situation even more ripe for significant change is that while previous years were characterized by cautious optimism about market conditions, today’s law firm leaders have shifted more heavily toward caution, expressing heightened concern about their competitive positioning.
Enter the Apex framework
As law firms increasingly find that both their clients and the market have matured, the previous business model that allowed them to be nimble and explore different growth opportunities has become difficult to manage at scale. With many law firm managing partners becoming more focused on profit and return on investment rather than on simply increasing revenue, many firm leaders are quickly realizing that being all things to all clients isn’t as profitable as having a targeted focus that could potentially drive a true leadership position within the market.
It is here where the Apex Strategy can help by providing a structured approach to differentiation by identifying a firm’s primary strategic focus while maintaining its balance across all essential business elements. This can work to reinforce the strengths of the firm’s talent and investments rather than spreading those resources too thin across multiple strategic initiatives.
As the white paper illustrates, the Apex Focus Square helps law firm leaders identify a primary strategic focus among geography, expertise, industry, and client type by allowing them to select one corner as the primary differentiator that ultimately guides all other strategic decisions. By creating this effective differentiation, law firms can appeal not only to prospective clients and matters, but also to prospective lateral attorneys.
Going forward with the Apex Strategy
For most firms, this path forward requires making difficult choices about where to focus limited resources. The Apex Strategy provides a framework for making these decisions coherently and — most importantly — strategically rather than pursuing disconnected opportunities that lead to over-diversification.
Today, as the legal industry continues to evolve, those law firms that can create strategic differentiation will be able to wield a key driver of sustainable growth. Indeed, the Apex Strategy framework gives law firm leaders a practical tool to establish meaningful market differentiation, subsequently enabling more focused decisions about where to invest their firms’ time, talent, and resources.
You can download a copy of the Thomson Reuters Institute’s new white paper, “Developing a Framework for Law Firm Differentiation and Growth: Introducing the Apex Strategy Model”, by filling out the form below:
