Abstract
US Legal Support is working in legal services industry. The company advise clients on legal matters and represent them in business transactions, civil or criminal cases, and in other matters.The market structure of legal services industry is Monopsony verging on Oligopoly.Court Reporting as function is inelastic with very high utility as it is needed by everyone. It appears that US Legal Support is operating in a highly saturated industry, the growth of which is pretty much stagnated. However, overall, its outlook seems positive in both short and long term.
Our Company, Industry and Short and Long Term Outlook
The purpose of this report is to describe the company and its major products and or services from economic perspective. The name of our company is US Legal Support and it is operating in legal Services Industry. The company advise clients on legal matters and represent them in business transactions, civil or criminal cases, and in other matters.The report will analyze the company, industry and services as well as the pricing structure and will evaluate the future prospects of the industry and company.
1) Market sector and industry
US Legal Support is working in legal services industry. Thelegal services firms advise clients both individuals and corporations about the legal rights and responsibilities they possess and also represent them in business transactions, civil or criminal cases, and in other issues and instances where the legal advice and other assistance are required. The people and organizations that provide legal services include offices of notaries, title abstract and settlement offices and the office of lawyers. (Report Linker 2018)
The services that our company provides is as follows,
- A notary public or an attorney
- A mediator or an arbitrator
- A title insurance agent
- A government affairs advisor or lobbyist
- A trustee, administrator, executor, guardian, receiver, conservator, or in any similar court appointed fiduciary capacity
- An author of legal research papers, including CLE, where remuneration is less than or equal to $25,000
- A member of a bar association or other legal or attorney related ethics, peer review, accreditation, licensing or similarorganization, committee or board.
(FAQ – What is included in the definition of legal services – Attorney Protective)
Legal services accounts for 1.3% of United States’ GDP and are valued at $250 billion (U.S. Bureau of Economic Analysis -BEA) with almost no growth expected. (Legal Executive Institute)
Our company is basically working in court reporting segment of Legal services industry. The court reporters like built to love. The court reporters are a struggling career. The industry is focused on hourly rate and production of services in minimum costs in order to have competitive advantage and to attract customers.
2) Market structure
The market structure of legal services industry is Monopsony verging on Oligopoly. The structure of the market is monopolistic in large markets where there are few large Court reporters clearing houses and many small firms and freelance service providers.
On the other hand, the structure of the Legal services industry market is oligopoly in smaller markets where the resources and expertise are limited. In these markets the national accounts and insurance companies already share resources in various markets via shop out.
3) Major products and/or services
The Legal Services Industry is broken into two major functions reporting and records.
In the Reporting segment of the industry involves the court related matters and depositions which are carried out by court reporters. The court reporters are often Contracted employees. The second service that the legal services industry provides is the production of records or subpoena records.
4) Elasticity and the Factors Effecting Supply and Demand
Court Reporting as function is inelastic. This is because whatever is the cost and whatever is the pricing, it is required to carry out the court functions which are unavoidable. The court reporters on the other hand are very elastic in terms of money. They are short in demand and that is why their salaries also reached to six figures. (Wells 2014)
5) Other Economic Characteristics
The utility of legal service industry is very high. This is because it is required by all. However, as a service the utility is based on the volume of need. In any given market, the fewer the reporters the more utility they command. Conversely in a larger market, with lots of freelance reporters the utility could be very low if the demand is low.
5) Noneconomic forces
There are several non-economic factors and forces that impact sales and profitability, such as weather, business cycles, technology releases, or regulations. Moreover, the sales are impacted by warm accounts, business cycles of construction, the availability of the trained staff, decreasing vocational skillsand medical (trained staff geriatrics) lack of expertise, lack of sufficient cash flows or financialincentive. The growth in the industry for the firms is through increasing the output. Moreover, technology is also impacting the industry. However, to use technology effectively, there needs industry specific expertise and multi conversational input.Particularly, off the shelf voice to text technology curve and the control of speakers. However, the off the shelf solutions still require admin controllers, much like a director of a movie ‘action, cut’ “lets try it this way to get a better result”.
6) Industry Situation
The industry structure can be analyzed using Porter’s five forces framework.
Competitive Rivalry – Strong Force
The competitive Rivalry in the industry is very strong. This is because the industry in terms of revenues is not growing much and is pretty much stagnant and the existing players are fighting fiercely for the market share. The source of competitive advantage comes from the human capital that the company possess and the company should strive for attracting the best talent in the industry to compete effectively.
Bargain Power of Suppliers – Strong Force
The Bargaining power of suppliers in the industry is a very strong force. This is because the court reporters are in high demand, and they are 1099 employees. Moreover, in the industry, the quality commands price and the exclusivity commands discounts. The best way to leverage in the industry is through the acquisition of existing suppliers and creating new supplier source with loyalty to USLS.
Threat of New Entrants – Weak Force
The threat of new entrants in the industry is quite low. This is because of the lack of interest of people in this industry due to the Vocational skills gap and that the labor force participation in the industry is low. The best way to leverage is through keeping new CRs aligned with loyalty to USLS.
Threat of Substitutes – Moderate Force
The threat of substitute services is moderate in the industry. This is because although technology related to legal services (that can advise clients without need of a practitioner) is cheap but imperfect. Although legal services technology is improving rapidly, however, there is not much interest in developing specific application that can replicate expert advice. However, general technology will replace some of the services provided by legal service industry due to market demand.
The best way to handle threat of substitute is that the organizations should continue to use available technology and keep an eye on the tech progression at large and act as per the situation. Bargaining Power of Customer – Strong Force
The bargaining power of customer is strong because in the larger markets, they have so many options to switch to if not satisfied with the services of particular firm or individual. On the other hand, in the smaller markets with smaller business, although there are less options but the businesses are able to part and piece work outside of the local market. Therefore, it is important for the firm to keep its customers satisfied.
7) Pricing Practice
There are two methods with which the services are prices by the legal services industry.
- Court Reports are priced by hours worked
- Records are priced by the number of subpoenas, the type of subpoenas and the number of pages of the subpoenas.
- Pricing Discrimination Options Not Being Used, but Possible
There are definitely options and opportunities for price discrimination which are not largely being used. However, some firms still use it in order to acquire some large client. These are,
- Discount pricing for large cases
- multi market discount for national accounts.
- Company’s Short-Term and Long-Term Economic Outlooks
- Macroeconomic Factors
There are several macroeconomic factors that can impact the economic outlook of the company. The greatest concern however comes from lower labor participation rates, particularly in the legal services industry and the lack of suitable education by the labor. The decliningGDP may also effect the demand for the services.
The macroeconomic factor that can impact the short and long term economic outlook of the company in a positive way or provide reassurance is thecorporate tax rate that allows cash reserves for investment in future or maintenance in the event of downturn.
8) Company Outlook Over the Short-Term (5-7 Years) Horizon
From the factors and facts discussed above, the company outlook over the five to seven year periods seems highly positive and favorable. This is because the company holds a large market share, there are declining number of entrants in the market place, and there is no technological competitive advantage from competition. So, there seems no reasons why company does not progress well and remain highly successful in the short- term/
9) Company Outlook Over the Long-Term (8- 10 Years) Horizon
The company’s outlook in the long-term seems highly positive. The need for the industry services is always present and cannot be avoided. Moreover, the monopolistic market structure is expected to change that would fuel growth for the smaller companies as well due to increased number of customers.
However, it is the performance of larger market participant companies that would determine whether the outlook will remain favorable or not. Currently, the focus of the industry is on the growth of supply, and customer service which are important in determining the growth rate for the industry.
References
FAQ – What is included in the definition of legal services – Attorney Protective. (2018). Attorneyprotective.com. Retrieved 8 June 2018, from https://www.attorneyprotective.com/faq-what-is-included-in-the-definition-of-legal-services
U.S. Bureau of Economic Analysis (BEA). (2018). Bea.gov. Retrieved 8 June 2018, from https://bea.gov/iTable/iTable.cfm?reqid=51&step=51&isuri=1&5114=a&5102=1#reqid=51&step=51&isuri=1&5114=a&5102=5
Legal Services Global Market Report 2018 (2018). Reportlinker.com. Retrieved 8 June 2018, from https://www.reportlinker.com/p04226840/Legal-Services-Global-Market-Briefing-Outlook.html
Report on the State of the Legal Market (2018). Legal Executive Institute. Retrieved 8 June 9, 2018 from: http://www.legalexecutiveinstitute.com/wp-content/uploads/2018/01/2018-Report-on-the-State-of-the-Legal-Market.pdf
Wells, J. (2014). This job makes six figures, with no college degree. CNBC. Retrieved 8 June 2018, from https://www.cnbc.com/2014/11/24/court-reporter-salaries-hit-six-figures-with-no-college-degree.html
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