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Law Firms as Businesses - What Type of Companies Are They?
"When billions are at stake, nobody is sacked for
hiring the best lawyers." - The Economist
The legal market is highly
fragmented.
- The top end of the market mainly serves corporate clients and is dominated by large firms which can offer a wide range of legal services.
- Small firms can compete successfully by providing specialized expertise or by operating locally.
London and New York house the greatest concentration of law firms.
- These cities house the world's largest capital markets and companies everywhere want to tap into them.
- International business is therefore often conducted under English or American law regardless of the client company's own jurisdiction.
Demand is dependent on the volume of economic transactions.
Profitability depends largely on the reputation and contacts of the
partners.
Happily for lawyers, salaries are the major operating expense.
Unlike most other industries, marketing is often aimed at other lawyers
since a large amount of work is done through referrals.
- Referrals are mainly inter-jurisdictional but some are inter-specialization.
Serving corporate clients is both the most profitable and the largest slice of
the market.
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