Survey finds engineers more adventurous than law firms in branching out
Grant Thornton, an accounting and business consulting company, recently did a survey of legal, engineering and arch...
Grant Thornton, an accounting and business consulting company, recently did a survey of legal, engineering and architectural firms in Canada.
They found that engineering and architecture firms are more likely than law firms to expand their companies beyond a partner and principal ownership structure, by a margin of 37% vs 26%. Also engineers and architecture firms are also more likely to try offering new products and services than law firms, by 35% vs. 24%.
The survey found that professional services firms were much more likely to be focused on clients in their own cities than business in general. Doug Moore, a partner of Grant Thornton in Vancouver says, “On average, among mid-sized firms, 62% of revenues are derived from clients based in the same city.” He says professional firms need to expand their markets outside their traditional areas. “And while there are often regulatory hurdles to be overcome … things like alliances and mergers and acquisitions can give one’s firm a bigger reach.”
The survey noted that in all these professions, clients’ demands are changing while the problem of recruiting and retaining employees is growing. They found that 90% of the respondents agreed that recruiting skilled employees is a challenge. They noted that unless businesses change, this shortage of people will inhibit firms’ growth since “under the present business model, the only way for these firms to increase revenue is to have more people accumulating more billable hours.”
Moore therefore advises companies to adopt a broader team-based model, where the client’s relationship is with the firm, rather than with individual partners or practitioners.
Of the 200 organizations surveyed, 100 were law firms, 35 were architectural firms, and 66 were engineering companies. The survey respondents were from Western Canada, Ontario and Atlantic Canada, and the respondents were stakeholders with first-hand knowledge of firm decision making. The companies were all “mid-sized,” which in the case of the engineering companies, meant having offices in up to four provinces and a minimum of 10 employees, including at least two engineers who are partners or principals. A “mid-size” law firm was classed as one with offices in up to four provinces with a minimum of 10 and a maximum of 100 professionals on staff. A mid-sized architecture firm was classed as one with at least five employees, including at least two architects who are partners or principals.
The survey report also noted that recent growth in the professional services industry has outpaced others. In April 2007 the industry posted a 3.5% year-over-year gain in GDP compared to 2.1% overall.