Capabilities

Firstly, firms need to make sure they are able to meet the needs of their target clients (including prospective and current clients). This might involve firms investing in new teams with a view to expanding the range of legal services that they offer (so as not to lose out to “full service” law firms). For example, some commercial law firms have developed private client practices to support the directors of client companies with their wills and estate planning, therefore offering a more holistic service to those clients’ key decision makers. 

Ignition Law founder Alex McPherson also points out that some firms achieve a similar outcome through developing close relationships with external firms and advisers that provide complementary services. If a firm has a strong network of trusted third parties, it can refer clients seeking services that the firm can’t provide (thus helping to meet a broader range of client needs), whilst mitigating the risk of clients jumping ship to other firms (as a trusted third party won’t want to risk burning a bridge with the referring firm by trying to steal its clients). Moreover, referrals often work both ways, so this approach can help a firm to bring in work that its trusted third parties are unable to deliver (plus, a referring firm might benefit from a commission on any work referred).

Other firms may maintain a competitive advantage in this context by quickly evolving to offer expertise relating to novel and emerging areas such as blockchain, the metaverse or artificial intelligence. To give an example, during the COVID pandemic, some firms quickly developed expertise advising clients in connection with the furlough scheme, bounce back loans, and other forms of COVID-related government funding, which demonstrated a willingness to quickly adapt to those clients’ current needs and address their pressing concerns.

Reputation

Secondly, firms need to actively build and maintain their reputations in order to maintain a competitive advantage. This could involve applying for industry awards, nominating lawyers to speak at events or contribute thought leadership pieces, and publicly promoting successes such as deal completions or litigation victories (communicating experience in this way can give firms the credibility needed to secure client engagements). 

Note that a firm’s approach to building its reputation will depend, in part, on the nature of its target client base. For example, a law firm focused on start-ups and scaling technology companies might focus on awards, events and publications relating to founders and venture capital firms. Some firms set up their own accelerator programmes, which can help to cultivate a reputation for being at the forefront of technology and innovation (for example, Allen & Overy launched its “Fuse” incubator, while Slaughter and May runs legal tech programme “Collaborate”). In contrast, a large firm with a leading M&A practice might focus on awards, events and publications that cater to the FTSE 250, large investment banks or global private equity firms.

International reach 

Thirdly, international firms might bolster their international reach and capabilities to attract clients and maintain a competitive advantage. This could be relevant if target clients might be more inclined to work with law firms that have offices or a network of partner law firms across those clients’ key regions. In this context, a law firm might open offices that act as gateways to new clients in regions exhibiting significant economic development (for example, a firm might open an office in Silicon Valley to attract tech clients, or in an emerging market to attract the increasing number of fast-growing businesses in that market).