6-7% growth in Asia’s legal services sector over the next 7-8 years is projected to transform the global legal services market‘s composition and structure, presenting a significant opportunity for law firms in Asia.
Legal services market management consultant Alan Hodgart recently outlined these statistics at an Inter-Pacific Bar Association (IPBA) Conference Panel composed of managing partners from law firms in Asia, the US, Europe and the Middle East – the focus of which was opportunities and challenges in the global legal marketplace.
Hodgart also noted that “North America and Western Europe (including the UK) had 69% of the legal market in 2012 – [which will] fall to 61% by 2017 and will continue falling for some years after that. Asia Pacific will be[come] the second largest regional legal market –increasing from $109 bill in 2012 to $215 bill in 2017.”
Consensus around new market realities
The panelists agreed on the new market realities that law firms face in a globalized legal market, emphasizing the importance of taking proactive measures to strengthen revenue and profit.
While Hodgart asserted the new legal marketplace is a radical departure from the past – Mark Leddy, Managing Partner of Cleary Gottlieb Steen & Hamilton and Francesco Gianni of Giannia Origni Grippo Capelli Partners in Italy both outlined why they believe the market is in the process of a readjustment and not “turmoil” – as Hodgart argued.
US firms at risk
Hodgart contends US law firms are at risk due to Asia legal market expansion and their underexposure to the market. He outlined that sustaining competitiveness in the future will require high quality leadership and management, including:
- High levels of performance in financial, governance and management structures.
- Implementation of systems to ensure work is performed efficiently.
- The development of effective, structured and disciplined business development and client relationship programs.
- Developing appropriate economic structures for each practice group.
- Articulating and managing a set of acceptable behavioral standards; and
- Ensuring there is a strong international capability available to clients
At what stage of sophistication is business development?
When asked to rate the progress of international law firms in adopting sophisticated business development practices — Hodgart rated them a 5 out of 10, citing the need for further professionalization.
The legal industry has come a long way in accepting the term marketing, he said, indicating progress towards professionalization. But despite this progress, more efforts are necessary to attain complete professionalization.
