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It is no secret that the legal profession is evolving. The message from the industry experts is an uncomfortable one – adapt your business model and move with the times or your firm won’t survive.

Much has been written about lawyers distinguishing themselves from the competition in order to claim a bigger piece of the pie. For many firms this has meant abandoning lower value work and carving out niche practice areas. This has provided some firms with the opportunity to command premium prices, to streamline efforts and simplify the business, and establish their credibility and brand in a particular area.

But in a saturated legal market, where new entrants are nipping at the heels, firms which have an over-reliance on just one or two areas of legal work may find themselves at greater risk of financial difficulty.

This was highlighted . In a review of 76 case files of firms which had experienced financial difficulty, it was found that firms taking a narrow approach may be at greater risk to market changes.

The economic downturn has placed huge pressure in certain markets. The housing market, for example, has seen fewer transactions, which has subsequently led to a reduced demand for conveyancing services. At the same time, demand for other services such as insolvency has increased. This has led to several firms moving into unfamiliar areas of work to survive.

For some this has been a successful strategy – by employing the right specialists and managing the transition properly, changing their specialism or concentrating on a niche area has resulted in growth and stability for the firm. But there are also those firms that have been less successful. The SRA report suggests that this may be due to firms moving into areas where they have little or no experience and there is already strong competition – or in a market where there simply isn’t enough work to go around.

What’s more, reliance on one or two areas of work or a single source of funding can make a firm or individual highly vulnerable – as the demand for that service could diminish or disappear. The recession isn’t the only catalyst for shrinking workloads. Over the past 30 years the digital revolution has displaced many mid-skill jobs and it seems that the wave of technological disruption to the legal market has only just begun – lawyers are no longer immune. The emphasis is on automation, cost-effectiveness and streamlining processes. Now is not the time for lawyers to sit behind their desk crossing their fingers.

So with this in mind, how do law firms move forwards?

The report suggests that while there is not any particular problem with concentrating on a niche areas, it does highlight the importance of contingency planning, and the need for proper due diligence. If the era of the generalist lawyer is over and specialising is key, then it is important to look for practice areas where there is unmet need and room for new suppliers in the market – to offer services that most other lawyers don’t do.