Build it and they will come, won’t they?

09/03/2016 by Matt Florendine

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It has now been nearly 10 years since the introduction of the Legal Services Act (LSA) following the release of Sir David Clementi’s report on the legal services market in 2004. The LSA was supposed to usher in a new era for the delivery and consumption of legal services. Back in 2007, the market seemed obsessed with what the future held for lawyers and all the talk was about “Tesco Law” and the commoditisation of legal services.

 

One of the main reasons for its introduction was to help revolutionise the way consumers were able to access and buy legal services. This was mainly through the launch of alternative business structures (ABS) and was supposed to herald the establishment of outside investment in law firms and for non-lawyers to enter the market. The change was supposed to improve customer service and to introduce new forms of competition in what was seen as a restricted and anti-competitive market.

 

Since 2007, over 450 ABS applications have now been approved, offering a variety of services to both consumers and businesses. Law firms have utilised the new ABS rules to offer incentives and ownership rights to existing and new non-lawyer employees, as well as seeking outside investment. Today, you will also find insurance companies, brokers, unions and accounting organisations to name but a few non-lawyer organisations owning part or all of a law firm as a result of the changes ushered in by the LSA.

 

Although the market has been busy exploring new innovative business models and trying to change how it delivers legal services, since the introduction of the LSA in 2007, have consumers (i.e. the business to consumer market) changed their buying behaviour or has the so called ‘Tesco Law’ been nothing more than a damp squib?

 

Historically, consumer legal services have largely been bought out of necessity rather than desire or want. It is often referred to as a ‘distress purchase’ as it is not a commodity that one thinks of buying out of choice or on a regular basis.

 

In order to review the success of the post LSA world of legal services, you have to consider two strategies that influence the buying decision of a consumer. These are often referred to as push or pull strategies.

 

Firstly, a push strategy is where an organisation pushes the consumer into its products or services. For example this may be as a cross sell via a supply chain process, intermediary or where the consumer had not previously considered making a purchase of a product or service, but has seen it at a point of sale display. A push strategy is often used where there is low brand loyalty, low risk, the consumer knows what they are buying and it may sometimes be considered an impulse buy.

 

Most large non-lawyer brands have been selling commoditised legal services for many years using the push strategy, even pre LSA 2007. Examples include insurers referring injured parties to law firms or their ABS during the reporting of a claim, banks cross-selling wills to consumers at the counter and estate agents referring consumers to law firms for conveyancing. For the majority of these services, the non-lawyer brands are in control of the consumers and they go to the law firm as advised, which is the “push”. Consumers view this as low risk as there is a brand name standing behind the service on offer and they expect that the relevant research has been conducted on the law firm in question.

 

Secondly, a pull strategy is where the consumer is motivated to seek out a product or service and actively engages with a brand. For example, this may be where the consumer has an urgent need to be fulfilled and has been recommended by a friend to seek out a brand or is responding to a form of advertising or promotion. A pull strategy is often used where there is high brand loyalty and consumers may sometimes perceive there to be differences between competing brands.

 

For a large proportion of legal services on offer today, consumers are still not actively seeking to buy out of choice. Indeed, throughout a consumer’s life they may only seek out and utilise a law firm on a few occasions. Typically, an event occurs in a consumer’s life and, suddenly, the immediate focus on the ‘distress purchase’ forces them to seek out a law firm to resolve their problem. This is where the pull strategy is most effective as consumers seek out a law firm and “pull” services to them, however, there is still low brand loyalty for legal services and consumers find it hard to differentiate between law firms. Personal recommendations, social media and advertising or promotion often dictate how the consumer buys the required service. Therefore in the legal market this creates a different type of buyer behaviour which could be described as a ‘distress purchase pull strategy’.

 

Since 2007, large consumer brands have entered the legal services market with the aim of capitalising on the theory of Tesco Law. There has been some success but the end of year reports mainly say could do better. As big brands continue, as they did before the LSA, to cross-sell legal services, has there been an impact on the day to day life of the consumer? Well the answer is probably no. As the recent Law Society paper on the future of legal services suggests, there will be no real growth in legal services buying over the next 5 years, so it is as we were. New entrants with strong consumer brands came to effectively grab market share, but they have failed to convince consumers to part with their money.

 

A recent announcement from the AA that they are to exit their ABS model would suggest that even with commoditisation and brand trust, the consumer is still not interested in making legal services a regular purchase. Competition in the battle to motivate consumers to buy legal services via the ‘distress purchase pull strategy’ remains as fierce as ever and the one who excels in marketing will be the winner as consumers find it hard to differentiate between lawyers. So remember, maintaining a consistent marketing message using your brand and or service offerings will help consumers make their buying decision in times of distress.

 

So in conclusion, they did build it, but they didn’t come! Is this the end of the story, probably not. It is likely to be a false start and in time lessons will be learnt, changes will happen, progress will be made and inevitably over time, buyer behaviour will start to shift. This chapter in the history of consumer legal services will probably stand as the start of the new era for the delivery and consumption of the ‘distress purchase’ and the foundation of future technological innovation in the legal industry.

 

If you would like to find out more about consumer marketing strategies, speak to Zecter today. We are experts in delivering law firm strategy and can help you to improve your sales and marketing results and ultimately the effectiveness of your brand. For a no cost, no obligation consultation contact us via email at info@zecter.co.uk or call us on +44 (0) 333 207 6551.