As recently as last Friday, I made the claim that the legal profession is in a Buyer's Market for legal services. I've even made the same statement here at 3 Geeks. Pondering over the weekend got me re-thinking that assertion. After an enjoyable dialog this morning with Jordan Furlong on a range of topics, I mentioned this concept to him. Talking over it further solidified the idea in my mind. We're not in a Buyer's Market right now. Lawyers are in a plain ole Competitive Market.
In its simplest definition, a Buyer's Market is one that has more sellers than buyers. Looking at the legal services market - has there been some big shift in the number of buyers or sellers recently? No. There has been a downturn, but that's not the same as a shift in the basic equilibrium. Numerous reports have shown that the seeds of the current situation for law firms were sown a few years back, but only recently came to roost. For a number of reasons firms have for years been able to raise prices without much regard to the market. This is no longer the case.
My main point is that since we are not actually in a buyer's market, instead of tactics focused strictly on price competition, we should be contemplating survival in a competitive market. My prior blog post noted above on Change Happened, argued that we are in the 'New Normal.' For law firms this new normal means that in addition to dealing with rapid technological change, we must now learn how to function in a competitive market. This means being innovative, efficient and effective, pricing competitively (hourly or AFA) and focusing on the right markets and service lines. This is, in the words of Karl Polyani, the time for The Great Transformation of the legal market.
My suggestion: Keep you hands inside the car at all times. This is going to be one big thrill ride.