Report

Part 1

Market Size and Growth Rates

The UK legal services industry is a world leader in the provision of legal services internationally.
The UK market for legal services has steadily grown in value since 2000, reaching an estimated
£20.2bn in 2004. The market is diverse, but the four largest practice areas, in terms of annual
revenue, are business and commercial affairs, personal injury and accident, commercial property,
and residential conveyance (Keynote, 2001). (See appendix A)

The sector that had the strongest growth between 2000 and 2004 was business and commercial
affairs, which saw a 47.6% rise in income. This growth was the result of various factors, including
an increase in company legislation, tighter controls on company procedures, more international
trading and improved mergers and acquisitions activity. (See appendix B)

The UK market for legal services was forecasted to increase in value by 5.4% in 2005 and continue
to grow at mid-single-digit level each year until 2009. The market was expected to reach a value of
£25.7bn by the end of 2009, with all main market sectors experiencing some growth (Keynote,
2001). (See appendix C)

However, the economic downturn made the industry, including private practice firms such as Ellis
Jones experience a decline in growth of 7% in 2009 to £23billion (Euromonitor, 2010).

According to figures released by the professional bodies, there are a total of just over 200,000
people employed in a professional or ancillary role in the UK legal industry. This is about 0.7% of
the total UK working population (Office for National Statistics, 2009). However, global recession
and economic decline in recent years has led to many law firms restructuring. In 2009,
redundancies and deferred entry of training contracts has been widespread (Prospects, 2009) and
there has been a drop to almost a tenth in the number of graduate vacancies in the legal sector in
2009 (High Fliers Research, 2009). Training contracts are more competitive with almost 3 times as
many applicants for each vacancy in comparison to 2008 (Sweet and Maxwell, 2009).

Trends

The growth of the legal-services market has brought about certain underlying trends that are likely
to promote dynamism in the market in years to come. These trends include globalisation, value for
money, niche positioning, outsourcing and legal disciplinary practices (LDPs) (Keynote, 2001).

The widespread trend towards globalisation has led many companies to seek worldwide coverage
from their legal advisers, which is of great benefit to legal practices that are able to provide this
type of service. Since 2000, companies such as Clifford Chance and Allen & Overy have expanded
through overseas acquisitions in order to give international clients international coverage
(Keynote, 2001). (See Appendix D)

Among both consumers and companies, there has been growing concentration on value for
money, creating an increased competitive market for legal services, which has made marketing
and quality of service much more necessary. Some legal services have attempted to reduce their
costs by outsourcing services such as IT and HR. The focus on service quality and outsourcing may
be aided by the rise in legal disciplinary practices (LPDs) (Keynote, 2001). (See Appendix E)

Small firms such as Ellis Jones cannot benefit from economies of scale and do not have the
resources for extensive marketing therefore they have had to strengthen their market position by
focusing on an appropriate niche or a perceived local competitive advantage. This effect could be
further stimulated by growth in LDPs and the focus on value for money (Keynote, 2001). (See
Appendix F)

Part 2

There are many macro-environmental factors affecting law firms.

Political Issues

There have been numerous changes to legislation that have already and will continue to affect the
legal sector such as the Legal Services Act. The Legal Services Act has allowed legal services to be
offered by non-legal entities such as banks, supermarkets, trade unions and property management
companies. This may see the expansion of the number of opportunities for less highly paid
paralegals who will be able to deal with less complex legal work and make the legal commodity the
company is selling more affordable to the consumer. A recent survey illustrated that two thirds of
consumers are open to the idea of securing legal services from high street names rather than
solicitors, this trend could develop more over time (WOWBC, 2011).

High Street legal services have been fundamentally transformed by the Legal Services Act. A
number of major brands will continue to dominate the provision of retail legal services. Existing law
firms need to be able to develop strong enough retail brands. Small and specialist firms such as
Ellis Jones will still have a future if they can provide a clear, distinctive offering that they can
articulate to the market (Times Online, 2007).

New government legislation and regulations are continually changing the areas that need to be
covered by legal services, and firms need to keep up with these changes to continue to be
successful.

Economic Issues

Like many parts of the economy, the legal sector has faced challenges in the recent recession and
although it is recovering the sector is also on the verge of significant change over the next 20+
years (WOWBC, 2011).

The economic recession may put stop for the legal profession’s practice of charging by the hour.
The clients of some legal firms are reportedly demanding alternative billing as a way to better
predict their expenses. The New York Times (January 29, 2009) said “Clients have complained for
years that the practice of billing for each hour worked can encourage law firms to prolong a client’s
problem rather than solve it. But the rough economic climate is making clients more demanding,
leading many law firms to rethink their business model.” (Q Finance, 2009)

The economic recession has and will continue to influence the UK legal service sector not only in a
negative way. For example, the stronger the growth in the housing market and consumer
spending, the more income solicitors secure from conveyance and other property-related work.
However, many areas of solicitors' work are largely unaffected by economic conditions. These
include crime, personal injury, family law, human rights, and probate, wills and trusts, many
services in which Ellis Jones provides. (Keynote, 2008)

Social Factors
Social factors have a direct impact on the UK’s Legal Sector, for example, the growth in home
ownership in the UK and the expected increase in the number of UK households over the coming
decade will maintain a high demand for residential conveyancing. (See Appendix G)

There is growing concern among consumers about the state of the environment, and those living
in the countryside are worried about new building and development in these rural communities.
This continues to ensure a steady stream of legal work.

One of the main factors is the rise of the alternative legal service providers and how they change
the public and SME view of, and access to, general legal services. While much of the change to
date has been in regulations and within the legal sector, there is little evidence yet that this is
having any effect on the public and SME view of solicitors and legal services. Each service area will
have different conclusions, for example divorce and disputes rise in a recession, M&A and business
investment fall. (Law Society Gazette, 2010)

Technological Factors

Technological factors continue to influence the market for services provided by Ellis Jones.
Experience of computer systems within law practices has grown considerably over the past 10
years. However, the majority of law firms that have websites maintain only `brochure' sites, giving
information about the firm and its work. According to research by The Law Society, only 20% of
firms offer some form of interactive functionality.

A law firm's income basically depends on the number of hours billed by its fee earners. The
increasing use of computer systems to perform `back office' routines that have in the past been
carried out by fee earners may have a negative effect on gross fee levels, but it arguably offers the
potential for a firm to enhance its profitability. (Keynote, 2009)

Part 3

There are many law firms throughout the regional area that Ellis Jones serves. Many of the
competitors provide similar services and it is essential to stay on top of competition in order to
continue being market leader. Appendix H provides a list of chief competitors, along with criteria
and company specific information. Having researched all regional competitors, there are five
leading law firms that could be tough competition for Ellis Jones. A SWOT analysis of the top 5
competitors has been carried out. (See Appendix I)

Research shows that the 5 top competitors all have a website available for clients to browse. Each
company’s website has an overview of the company’s services offered and contact information.
However, some websites are dated, not very easy to navigate and not very interactive. This could
divert clients to look at other sites for easier navigation and a more appealing site. Ellis Jones is the
first company that appears when typing ‘Bournemouth solicitors’ into Google, and without a
constructive, easy to navigate, appealing website with interactivity, clients may search elsewhere.
With the exception of Ellis Jones, many regional competitors have inconsistent branding
throughout their webpage, this in unprofessional and misleading to potential clients.

Location is a major factor for these competing law firms, and many competitors offices are not
very central or easy to get to via public transport, this can limit the customer base to clients with
own transport only and consequently limit the customer base. Ellis Jones offices are easy to get
too, which may be a factor for choosing the firm over competitors. (See Appendix K)

Many of the regional competitors sponsor local charities and put on free events. “Ellis Jones is
proud to support a wide range of charitable and community events every year as well as holding
their own events.” (Ellis Jones website) Whilst some of the top 5 competitors also sponsor
charities, Ellis Jones has a very good reputation within the local community and this gives the firm
a good opportunity to reign over its competitors.

Porters five forces model has been used to assess the attractiveness of Ellis Jones by using five
separate perspectives. (See Appendix J)

The threat of new entrants into the targeted law firm industry seems relatively low, however, well
established names such as Tesco and Co-Op are starting to offer similar services, and customers
may go to these national competitors as they have a well established brand name and a good
reputation.

The bargaining power of suppliers in the targeted law firm industry is moderately low. While some
suppliers (e.g. of stationary) can be easily replaced with little transaction costs, other suppliers
(e.g. application software, information systems, research databases, etc) can be difficult not to rely
on. However, there are many alternative and sometimes free sources which can be used as a
substitute to those suppliers.

The bargaining power of buyers in the targeted law firm industry seems to be moderately low.
Lawyers do offer some services for which only they can deliver (e.g. representation before a court,
public notary/commissioner for taking affidavits, etc.). Yet competitors such as other law firms,
consulting companies, and paralegal firms can perform legal services but at a cheaper rate.
Moreover, access to information through the internet may allow potential clients to engage in self-
help or conduct their own legal research.

The threat of substitute services is somewhat high: primary competitors can be found in
thousands, while secondary competitors (such as consulting companies and paralegal firms)
promote themselves for low-cost alternative legal services.

The primary and secondary competitors generally have not distinguished themselves from one
another and, as such, do not have an effective strategy. They do not seem, in their advertisements
or other marketing communications materials, to understand or appreciate what the competition is
doing to win clients over. And because they do not openly advertise their fees or offer warranties
to compete, the intensity is relatively low. Given that most of the competitors can offer the same
services, they can only distinguish from one another based on price and non-price factors for
example, quality of services, environment and brand image.

This 5 Forces analysis indicates that, overall, the attractiveness of the Ellis Jones is considered
moderately high.
Part 4
Strategic recommendations for Ellis Jones to optimize revenue, profitability and competitive success.

This section needs to offer and justify recommendations for market segmentation, changes to the overall marketing mix,
segment-specific marketing mixes, realistic investment plans including facilities, growth, IT, professional development /
capabilities, and of course marketing.
(40 marks)

Recommendations of marketing web advertising fb twitter current website what they can do to
make it better ellis jones come up first asocial media change perception “ambulance chasers”
improve perceptions

appendices

Analysis of completion mckinsey 7’s. Google annex report my bu advertising google

Euromonitor
Part 3

Competitive Analysis

• Overview on competition

• Regional competitors

Part 4

Strategic Recommendations in order to optimise:

• Revenue

• Profitability

• Competitive Success

Recommend:

• Market segmentation

• Changes to overall marketing mix

• Segment specific marketing mix

• Realistic investment plan including: facilities, growth, IT, professional

development/capabilities, marketing.
Competition-The rise of the solicitor advocate, and the relaxation of
rules about barristers and solicitors working together to provide a range of
services. Solicitor advocates with their ability to do High Court work have
offered some competition to barristers, and equally in the future more
barristers may offer more of the work traditionally done by solicitors. This may
lead to changes to, and more flexibility in, the education and training system for
would-be lawyers in the future.

Globalisation – although the UK has, like the US, an advantage in that UK or US

law is often the law of choice for many global transactions, commercial legal
work is increasingly global and UK commercial lawyers may need to work more
internationally in future to compete.