Projected 6-7% growth in Asia’s legal services sector over the next 7-8 years will transform the global legal market’s composition and structure, as per Hodgart. This growth presents a significant opportunity for Law Firms in Asia to expand and tap into the rapidly expanding market.
Hodgart noted that “North America and Western Europe (including the UK) ha[d] 69% of the 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 market –increasing from $109 bill in 2012 to $215 bill in 2017.”
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Hodgart outlined these statistics at an 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.
Consensus around new market realities
The panelists agreed on the new market realities that Law Firms face in the 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 stated.
US firms at risk
Hodgart contends US firms are at risk due to Asia legal market expansion and their underexposure to the market here. 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 done efficiently.
- The development of very 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 behavioural standards; and
- Ensuring there is a strong international capability available to clients”
At what stage of sophistication is business development?
The panel discussion ended and the floor was open to questions. I posed the question to Hodgart: “When discussions of law firm competitiveness take place – internal efficiencies tend to take precedence over top-line revenue-producing business development initiatives.
When asked to rate the progress of international Law Firms in terms of implementing sophisticated business development measures, Alan Hodgart gave a rating of 5 out of 10, citing the need for further professionalization.
The legal industry has come a long way in accepting the term “marketing,” indicating progress towards professionalization. Despite this progress, more efforts are necessary to attain complete professionalization.
The future is now
Given the new hyper-competitive realities in the Asia market as well as other market realities law firms now face. The need to establish business development systems that go far beyond the 5 Hodgart applies to current efforts appears self-evident.