020 7129 8651

Niche Firms: What Are the Risks and Rewards?

  1. Home
  2. Knowledge Base
  3. Running a business
  4. Niche Firms: What Are the Risks and Rewards?
  1. Home
  2. Knowledge Base
  3. Legal
  4. Niche Firms: What Are the Risks and Rewards?
  1. Home
  2. Knowledge Base
  3. FAQs
  4. Niche Firms: What Are the Risks and Rewards?

How do you picture your very own law firm? Do you see it as a ‘one-stop-shop for all things legal’, or are you thinking more along the lines of a highly specialist service based on a single practice area? Unless you’re a Linklaters or Eversheds-sized juggernaut, trying to be all things to all people is a big ask — so going niche would seem to hold obvious attractions for a freshly qualified lawyer thinking of going it alone. How then to choose the right area to focus on? How do you build a client base without the luxury of cross-referrals from other departments? We take a look…

Carving a niche: is it possible?

If you’ve come from a full-service law firm background, you’ll be used to a certain way of doing things — namely, clients being passed seamlessly from one department to another depending on their specific requirements at any one time. How, you may ask, can a boutique specialist service possibly compete with firms that appear to offer everything in-house?

Let’s take two scenarios:

  • Firstly, a longstanding client approaches the firm with, say, a work permit issue for a new employee they are recruiting from abroad. This specific issue lies outside the firm’s scope of expertise. As such, that firm is asked to recommend someone else to deal with it. Sending the client to a direct competitor who just so happens to deal with this issue gives rise to the possibility of that client liking what he sees, and deciding to jump ship completely. The alternative route is much safer — namely, recommending someone who focuses exclusively on international secondments and recruitment. The client will receive precisely the advice he requires without risk of him moving his entire account elsewhere.
  • Secondly, a new client approaches a firm with an urgent litigation issue. A conflict of interests prevents the firm from taking on that particular matter. Although it’s clear that longer term, this client will have a need for advice on various non-contentious issues.  One way forward is to refer him to a niche specialist for the urgent matter. This leaves open the possibility of securing the non-contentious work later on.

Then there’s the question of what individual clients are looking for. Research shows that what comes top of clients’ priorities when looking for a solicitor isn’t having absolutely everything in one place, and neither is it cost. Rather, it’s specialist knowledge. This is something that niche firms are well placed to be able to market themselves as having.

Why go niche? Startups should consider the following…

Insurance

Securing professional indemnity insurance (PII) is one of the most challenging aspects of setting up a new firm. A startup is essentially an unknown entity to brokers and insurers. It secures that all-important cover you need to convince them that you are a safe bet. Insurers are especially keen to establish that you’re not going to ‘dabble’ in areas that are outside of your area of expertise — and in doing so, potentially rack up negligence claims.  By making it clear that you’ll be sticking to a narrowly defined niche, you can help insurers breathe a sigh of relief that you’ll stay on the straight and narrow.

Marketing

With online marketing especially, trying to be all things to all people means that you’re at risk of failing to get your message across to any particular market.

Having a single core area to focus on makes it easier to hone your message; to gear everything towards meeting the needs of an easily-identifiable market, and to convince the search engines that you’re a ‘go to’ authority worthy of a high search results page ranking.

How to choose a niche

Don’t assume there’s a market…

Some areas are ‘niche’ for a very good reason. For instance, you have a steady trickle of entertainment licence work, and you like the idea of going solo and focusing on this. But is it profitable enough to make up an entire caseload? Are the clients out there, and will you be able to break into the market? Don’t assume any of this — research it.

Build on your strengths

Look back at your post-qualification experience and training contract. In which areas of work did you thrive? Conversely, if you absolutely detest an area, then no matter how profitable a niche focusing on that work might be, it’s probably best if you avoid it.

Location counts…

It’s easy to obsess over our online presence and forget the opportunities that are out there in the real world. Has a digital hub just opened on your doorstep, for instance? Is your area becoming a hotspot for certain types of business, or even a certain type of audience group (retirees, for instance)? Are existing firms making the most of these opportunities? If not, consider whether there is scope for you to fill the gaps.

This involves providing a range of services to a tightly defined group of clients, whether it’s agri-businesses through to offshore contractors. It involves finding out what those potential clients are looking for, and providing a menu of services to meet those needs. For success with this approach, focus on ‘learning the language’ of your target niche — for instance, by getting familiar with their business processes.

Focusing on up-and-coming markets (tech or green energy, for instance) could mean greater scope for attracting new clients who haven’t already been tapped up by established firms.

Beware…

This type of approach doesn’t cause you to stray into unfamiliar areas. If you identify a market you’d like to cater for, but don’t have the skillset to provide a comprehensive service, perhaps it’s worth considering bringing on board a partner with complementary experience?

Want to find out more about positioning your business to appeal to a certain market? Check out our help centre for no-nonsense tips on effective marketing.

Was this article helpful?

Related Articles