It’s not your imagination: Legal business development in 2024 is harder.
In a January survey by BTI Consulting, 53 percent of lawyers and law firm leaders said business development would get harder this year. And it’s worth noting that among the 47 percent who said it would not, one of the primary reasons was “It’s already monumentally hard – it can’t get any harder.”
When the market feels tight, it’s imperative to take a closer look at buyer behavior. For corporate law firms, that means understanding what types of matters general counsel are outsourcing (and what they are not), and what law firm intangibles are part of their criteria.
Let’s dive in.
Budget cuts prompt insourcing, shopping around
Nearly 70 percent of general counsel are under “moderate to significant” cost pressure from their business leaders, according to Thomson Reuters’ 2024 State of the Corporate Legal Department.
To meet that challenge, 68 percent plan to bring more work in-house. Specifically, that will include:
| Contracts | Litigation | Corporate | Compliance | Transactional | M&A |
|---|---|---|---|---|---|
| 22% | 16% | 14% | 9% | 7% | 5% |
In addition, nearly half – 48 percent – said they are looking to move work to less expensive firms, and 22 percent are considering alternative legal service providers. The matters affected:
| Litigation | Transactional | Contracts | Corporate | M&A | Compliance |
|---|---|---|---|---|---|
| 39% | 13% | 11% | 11% | 7% | 4% |
Law firms who hold onto their work should expect more aggressive negotiations; 67 percent of respondents plan to seek additional rate discounts, and 52 percent want alternative fee arrangements.
What this means
Litigators should be on alert: More than half of respondents are looking for new solutions.
For Big Law, it’s time to play defense; start proactive outreach about rates, value and new fee options.
For more nimble boutiques, go on the offense: While we would never advocate selling on price alone, get aggressive with your visibility, credibility and networking. In-house departments will be increasingly receptive to proposals that lower their spend and make their lives easier.
Secondary factors matter
Beyond expertise and value, how are GCs scouting and selecting firms? The Thomson Reuters survey also asked which law firm traits mattered – and to what extent. Respondents rated these as “mandatory” for their legal providers:
| Firm purpose and values | Use of appropriate technologies | Transparency in AI use | Diversity within the firm | Firm carbon footprint |
|---|---|---|---|---|
| 25% | 20% | 14% | 14% | 5% |
When combined with the next category, “not a specific requirement but considered as a part of decision-making,” we can find new priorities for firm marketing. These are especially important for the boutiques who may look to capture new clients in 2024 – and who may not have yet addressed these topics.
Firm purpose and values
These will be considered by 74 percent of in-house counsel. Do you have an authentic, relevant purpose statement? (And can you back it up?)
Use of appropriate technologies
This matters to 72 percent of potential clients. Beyond a laundry list of the software you use, work to show how you use it: It’s time to draft case studies that show efficiency and effectiveness.
Diversity within the firm
71 percent of legal teams will evaluate your firm on its diversity, equity and inclusion efforts. Many in-house counsel understand that your demographics may not be perfect; they are looking for well-rounded teams, purposeful efforts, and a lack of red flags. From a marketing perspective, do you use inclusive language? Is your website ADA-compliant? Do you have progressive policies for your lawyers and professional staff, and do you invest in positive change?
Transparency in AI use
This is one to watch. In 2024, transparency matters to 34 percent; it’s likely this will go up in the coming years. The phrasing here is key: Clients are not mandating AI use, but they want to know where you stand. Decide what you will (and won’t) allow, commit to it, and communicate it clearly. (When asked by the American Lawyer in January, about 30 of 100 shared clear AI policies.)
Firm carbon footprint
This is on the radar for 34 percent, but Thomson Reuters notes that this is a mandatory requirement for about 20 percent of United Kingdom-based legal departments. When data is adjusted for the U.S., this is only considered by 20 percent of respondents, making it a long-term issue (for now).
Again, business development feels a bit tougher in 2024. The law firms that will prosper in a tougher climate are those who will position themselves effectively when it comes to value, either through creative offense or smart defense; those with well-defined brands that are relevant, authentic and ownable; and those who translate concepts like “use of appropriate technologies” into compelling case studies that show a better client experience.