According to an October 2011 report by IBISWorld, the entire U.S. legal industry is a $281.2 billion market, but it only grew at a rate of 1.7 percent per annually in the past five years.
That is slower than the rate of legal service price inflation, and indicates that clients are figuring out ways to reduce or avoid legal spending.
It is no secret that real estate work, once a staple practice area for legal service providers, has been on the wane since the 2007 peak, but so have other services which have thrived during downturns in the past, such as litigation (see Fulbright litigation trends survey).
One of the areas or practice that is increasing in market size, however, is that of intellectual property. Patent law in particular has seen an increase in demand with the number of patents issued growing at more than 30 percent per year over the past two decades (see FindLaw Legal Career Center article). Demand for IP services could take up 20 percent of the legal market in gross dollars within three to five years if this pace continues.
But the bulk of legal services demands are still housed within commercial law practice areas (judging by inference from the staffing allocations at AmLaw 100 firms) including legal counseling related to commercial transactions, financing and capital raising.
If you are a marketing strategist, practice group leader or managing partner at a law firm, you have to decide if and how you will compete for the fast growing IP segment of the legal market and/or the relatively stable segment of commercial legal services.
You also need to decide if and how you will compete for a shrinking piece of the real estate pie and/or a slowly dwindling litigation segment that maybe losing “customers” to alternative dispute resolution or private settlement.
In the case of the services for which demand is shrinking, law firms will have to use “process improvement,” as well as technologies for knowledge management, e-discovery and other tasks, in order to shrink their product costs. If they don’t, they will go the way of the post office.