As consumer demands heighten and legal competition becomes fierce, Peter Scott advises smaller firms on surviving the hard times ahead

If anyone wanted proof that far-reaching change lies ahead for law firms, the recent Law Society annual conference must surely provide the evidence.

External regulation is on its way and with it will come a determination by those governing us that lawyers must begin to serve consumers in a manner they have never done before.

Lawyers, unlike businessmen and women in the commercial world, have not been good at asking their clients what they want and how they rate their service.

And while consumer-level clients have in the past shown a similar deference towards lawyers that they once showed to doctors, that attitude has now gone for ever.

Consumers of legal services now demand an efficient, packaged and cheap 'product', and if not completely satisfied, they will complain as loudly as they do in a shop.

So if you are a high street solicitor, you need to begin running your business on the same basis as the rest of the high street - or even get off the high street.

Consumer-led volume work, including residential conveyancing and claimant personal injury, depend on being able continuously to drive down prices, while at the same time providing an ever more efficient service.

But to set up an operation capable of achieving this requires heavy investment and organisational abilities that are beyond most law firms.

When the legal services market is opened to greater competition, the big battalions with their financial muscle and business experience will put such operations where they should be - on business parks, clustered around call centres.

These operations will be staffed in the main by paralegals, using case management systems that not only help drive the day-to-day work but, at the same time, build in risk management, which the profession sorely needs.

The demise of the cottage industry law firm is fast approaching.

This is not crystal-ball gazing - it is already here for debt recovery and defendant insurance work, where firms are continuously subjected to demands from their clients for an ever cheaper but more efficient service.

So what future is there for high street firms? Are their strategic options fast disappearing? Those firms that decide to remain small can prosper, but only if they focus their businesses on a smaller number of chosen areas of work, for which it is judged there will be increasing demand and for which 'premium' rates can be charged.

But those firms that attempt, as small, inefficient organisations, to compete in the volume work with the 'big boys' need to remember what happened to the high street grocery trade over the past 30 years.

Survival will require critical mass, which will bring with it resource to invest, not only in IT systems and the like, but in better quality people to manage and lead businesses.

If smaller firms are to survive, they should put aside their perceptions and prejudices about their competitors.

Consolidation on a large scale across the profession is now needed more than ever, and for those firms that go about it in the right way, it can be very profitable.

Above all at this time, firms need a clear and realistic vision and the determination to achieve it.

Peter Scott is head of strategic development at London-based Steeles solicitors.

He also runs Peter Scott Consulting where he advises law firms on strategic and management issues