Legal reprographics is the fastest growing market niche in our industry. This is no big surprise, since profit margins can be extremely high. The third party billing system inherent to the legal industry makes legal reprographics less price-sensitive than AEC reprographics services, because law firms pass copy service charges on to their clients who are ultimately responsible for paying the bill. In most cases, the client is an insurance company who would rather pay for litigation-related costs than fork over big bucks for a claim that may or may not be valid.

Legal reprographics is a competitive niche market that has been dominated by companies that specialize in, or have divisions dedicated to, providing reprographic services to the legal industry. Since legal reprographics became a specialized market niche in the mid 1980s, it has been dominated by companies like NightRider (Alco/IKON), Legal Copies International, Pitney Bowes Management Services, Merrill, and Xerox Business Services. However, several large reprographics companies that have traditionally served the AEC market have recently dedicated entire divisions to this profitable and fast-growing market segment.

Overview Of The Legal Reprographics Niche: Legal reprographics is a highly specialized service-intensive business that serves the high-volume small and large format copy needs of attorneys and paralegals. During the discovery process (a pre-trial information- gathering phase of litigation), opposing counsels are required to furnish each other with copies of their respective files so that each side has access to the same information during a court trial. This exchange of information is called production. Production also provides an opportunity for attorneys to 'flood' the opposition with thousands of extraneous documents that may or may not be relevant to the case (this forces the opposition to spend enormous amounts of time sorting through hundreds or thousands of files just to find a few pieces of key information that could make-or-break a court case). These strategic opportunities for attorneys to overwhelm each other with documents and information fuel the high volume of copying that makes the legal reprographics business a very lucrative opportunity (while working as an account manager at a legal reprographics company several years ago -- I recall seeing numerous single work orders that exceeded $10,000, many that exceeded $25,000, several that exceeded $50,000 and at least one that was over $160,000).

Three factors contribute to the high dollar volume and high profit margins of legal reprographics:

High volume document productions, especially on the defense side of a case Demand for add-on services such as bates labeling, binding, and tabbing Relative price-insensitivity due to third party cost reimbursement responsibilities

The third party cost reimbursement responsibility means that reprographics costs incurred by attorneys are passed on to the insurance company or parties involved in the law suit. For many years, attorneys did not even question the prices charged for litigation support services -- but in the early 90s, insurance companies and litigants began to pressure attorneys to become more cost-conscious. While high margins are still prevalent today, some savvy reprographics companies have negotiated blanket contracts with insurance companies. In this type of arrangement -- the reprographics company handles all of the insurance company's litigation-related copying in return for a discounted price structure. Either way, legal reprographics provides a highly profitable opportunity for repro shops that can meet the demands of the marketplace.

Reprographics Services Outsourced By Law Firms. Law firms and corporate legal departments outsource a broad range of reprographics and related services that include the following.

• Small Document Copying
• Large and Oversize Document Copying
• Color Copying
• Traditional Trial Exhibits (including large format digital color, mounting, laminating, etc.)
• Multi-Media Trial Exhibits
• On-Demand Printing (Docutech-type work)
• Scanning & Imaging (conversion and archiving)
• Audio/Video Duplication
• Photographic Services (developing and duplication)
• Bates Labeling and Document Numbering
• Tabs
• Binding
• Finishing Services
• On-Site Document Productions (sometimes in the middle of the night)
• Facilities Management Services

The categories of legal documents that provide input for the various outsourced repro services include a broad range of discovery documents, verbal deposition transcripts, written depositions, bankruptcy documents and mailouts, business records, medical records, and post-litigation documents.

The United States Market For Legal Reprographics Services. Dun & Bradstreet defines the legal services market (which comprises the customer base for the legal reprographics market) as establishments that are headed by members of the bar and are primarily engaged in offering legal advice or services. The U.S. legal services market consists of over 231,000 firms generating total industry revenues in excess of $90 billion. Nationally, the legal services industry employs nearly 1.5 million people. The average law firm employs six people and generates $400,000 in annual revenues. This translates into a U.S. legal reprographics market of approximately $500 million.

Ten states comprise over 60% of the U.S. legal reprographics market (see the chart below). However, these same ten states also make up some of the most saturated and competitive markets.

Size of the legal reprographics market is based on a percentage of revenues generated by the law firms in each state. Therefore, only a loose correlation exists between the number of law firms or total employment and the size of the legal reprographics market. See the accompanying graph displaying the size of the market for every state.

Growth of legal reprographics has been fueled by the expanding legal services industry. According to American Demographics Magazine (The Future of Services, November 1995), the number of law firms increased in 85% of U.S. metropolitan areas between 1987 and 1992 with the southern U.S. leading the way. Legal services are growing most rapidly in small cities like Las Cruces, New Mexico and McAllen, Texas where the number of firms increased 64% (to 54 firms) and 55% (to 192 firms) respectively. San Francisco and Miami have the highest concentration of law firms with just over 13 firms per 10,000 population. Anchorage, Alaska has the third highest concentration with 12 firms per 10,000 population. Interestingly -- each of the areas with the highest concentration of firms has shown a slight decrease in the total number of firms over recent years. Markets like San Francisco and Washington, DC are relatively saturated with legal reprographics companies, while many smaller markets remain largely untapped.

Four Approaches To The Legal Services Market. There are four basic approaches for obtaining business from the legal services market. Each marketing channel provides a unique set of opportunities for becoming involved, or expanding your presence, in the legal niche.

Direct Selling To Law Firms. This approach offers the most profitable opportunities for obtaining a piece of the legal reprographics business. It is also the most demanding. Be prepared to compete with some of the nation's premiere legal reprographics companies who have several years experience and expertise in serving the unique needs of the legal profession. To successfully compete in this market, you must be willing to allocate the necessary resources (including time, money, education, and personnel) to develop an adequate level of expertise in the legal services niche.

Marketing To Insurance Companies. Insurance contracts provide a lucrative opportunity to capture a long term flow of business through top-down directives from insurance companies (requiring their law firms to utilize a particular vendor). This marketing channel is most suitable for the reprographics company with at least one year of experience serving the legal niche, a well-trained team of account managers, and a good reputation for quality and service. While insurance companies are fond of money-saving blanket contracts, they do not want to have their representing law firms protesting the reprographics vendor they are required to use (because of quality and service problems). Successful marketing through this channel requires a specific strategy that includes a unique sales model, a series of post-sale follow-up procedures, and a consolidated billing system (the details are beyond the scope of this article).

General Overflow Sub-Contracting. As a general overflow contractor, your shop would market its services to meet the overflow needs of specialized legal reprographics companies. Overflow work provides a profitable opportunity for the shop that would like to benefit from the legal niche but does not have the resources or the desire to become a direct service provider. An extensive quality assurance program and a reputation of dependability are necessary prerequisites for becoming a successful sub-contractor.

Specialty Sub-Contracting. The specialty sub-contractor markets its unique and specialized capabilities to reprographics companies directly serving the legal niche. High-quality trial exhibits (large format digital color), multi-media presentations, scanning and archiving, and on-demand printing (Xerox Docutech or equivalent) are highly marketable services to legal copy companies that do not possess such capabilities in-house. Again, quality assurance and dependability are vital for success as a specialty sub-contractor.

Blueprint For Success. The legal market requires reprographics companies to customize their business practices to accommodate the unique needs of attorneys. This niche is highly demanding and service-intensive, just like the legal profession. For instance, the most successful legal reprographics companies run 24 hour operations and never shut down -- not even for holidays. Moreover, account managers must be available to their customers, by pager, at all times (even in the middle of the night on weekends and holidays).

If you are considering a move into this market -- and hope to make a serious competitive impact -- you must have a well-trained outside sales force that will work in partnership with paralegals and attorneys. If you are not prepared to invest in high-caliber sales people and a comprehensive legal sales training program -- then, you are better off NOT entering the legal niche as a direct service provider. Successful legal reprographics companies consider recruiting and sales training to be their top priorities. If you hope to successfully compete in the legal reprographics market, you must do several things.

Implement a highly selective recruiting process (I suggest using a professional sales recruiter) Develop an extensive training program so your account managers learn to think like an attorney Train your account managers to specialize in solving problems for their customers Be sure that all service personnel understand the unique demands of the legal profession Be available to your customers around-the-clock every day of the year (pagers for everyone) Be willing to do anything your customers request of you (even it is 2:00 am on a Saturday) Develop an extensive quality-control program (it's more important in this niche than anywhere else)

Conduct a comprehensive market analysis before entering the market (the market analysis is a prerequisite to developing an effective marketing strategy) If you already have a presence in the legal niche, consider developing a strategy for marketing to insurance companies as a means of capturing top-down business.Contract with a specialist to help you conduct your analysis and assist in developing an effective marketing program and/or formulating a strategy to obtain contracts with insurance companies.

The legal profession places high expectations on its service providers, and customers are extremely loyal to account managers who understand their needs and work in partnership with them (that's right -- the account manager is often more important than the company he/she represents). While the demands are stringent, the legal niche can be highly rewarding for the company that is willing to do it right. BON VOYAGE!