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Why Court Reporters Should Follow Hermes... and Zara

[fa icon="calendar"] Jul 8, 2015 5:34:00 PM / by Andrew Feinberg


The fashion industry is synonymous with change. High-end designers present new collections each season, rendering last season’s designs hopelessly out-of-style.

The high-end fashion industry thrives on this model – Hermes’ sales increased 19 percent in the first quarter of this year and the luxury fashion segment grew nearly 5 percent on the whole in 2014 despite problems in the broader economy.

Meanwhile, responding to down-market demand for access to trendy clothes without the sticker-shock, companies like Zara, H&M, and Forever 21 (“Fast Fashion” providers) have turned the fashion business model on its head by dramatically shortening fashion seasons.

Fast Fashion retailers observe the latest industry trends set by Hermes and its peers and deliver those same styles in their stores at reduced prices in a matter of weeks – significantly faster than traditional retailers. Their items might be lower quality, but the market still responded – Zara is now the world’s largest fashion retailer.

The rise of Fast Fashion is devastating the industry’s middle-market brands. Before the age of Fast Fashion, “affordable quality” stores such as Gap, Anthropologie, and J. Crew were considered attainable and stylish. Consumers couldn’t afford the fashion fresh from the runway, so why not buy a well-made dress from Gap without breaking the bank, even if it wasn’t as cute as what you saw in a Michael Kors fashion show? Not so, anymore.

Now that Zara and H&M have gained market share, the middle-tier brands are scrambling to keep up. Gap recently announced that they would close 175 stores over the next year. Anthropologie apologized for too-expensive, non-trendy dresses and put them all on sale to make up for it. J. Crew fired their Women’s Design Head and replaced him with a designer from Madewell, one of the company’s less expensive spinoff brands.

These retailers have suffered because they lost sight of what their customers truly value. They fail to offer relevant clothing at either the highest prices with the highest quality, or cheaper clothing that mirrors the hottest trends. The result is inevitable – a decline in sales because customers no longer value their products.

But how is this shake-up in fashion relevant to the court reporting industry? The simple answer: the dynamics of margin pressure.

What is Margin Pressure?

If you own a court reporting firm or are employed by one, you’re probably familiar with the impact of margin pressure.

Basically, margin pressure is the effect that various internal factors or external market forces have on a company’s shrinking margins. These forces can include:

  • New competition: new firms in your market offering similar services can drive your rates down, thus lowering your overall revenue.
  • Commodity costs: the cost of providing your services can increase. For example, the freelancers you work with might increase their rates.
  • Selling, General, and Administrative Expenses (SG&A): even if your service costs and pricing stay the same, your margins can be impacted by increases in fixed costs like rent or taxes.

Margin Pressures in the Legal Industry

According to Georgetown Law, “Since the beginning of the economic downturn in mid-2008, law firms have aggressively managed their expenses – both direct and indirect – reducing them dramatically from pre-recession levels.” Attorneys spend almost 20 percent less today on corporate overhead – including expenses like marketing, technology, and personnel – than in 2007. In turn, downstream service providers – such as court reporters – often lower prices to win attorneys’ business.

Now that court reporting firms are beginning to feel like fabric scraps on a fashion warehouse floor – their services are being cut and discarded – the industry is consolidating. Larger firms are purchasing dozens of smaller firms to gain market share, selling power, and deliver their products to market faster – and cheaper (Zara, anyone?).

The upshot? According to the NCRA Firm Owners Economic Benchmark Survey, 30 percent of firms who reported a decline in revenue attributed it to stronger competition from ever-growing competitors.

What Can Court Reporting Firms Do?

Don’t worry, it isn’t all doom and gloom for court reporters! We wouldn’t bombard you with all of this information and then let your services resemble last season’s wedge boots.

  1)  Don’t Just Compete on Price

Customers perceive Gap as a “value” brand – they don’t really want Gap’s clothing, they historically just liked the price. Now that new market entrants offer trendier – albeit lower quality – clothing at a lower price, and older market staples offer higher quality, expensive items straight off the runway, Gap is in trouble.

You might think that attorneys only shop on price, demoting you to Gap status, but oftentimes that’s not the case. Providing competitive prices is important but it’s not the only thing you should focus on when marketing yourself to your clients.

Your reputation and brand in the industry is just as important (think of the Hermes Birkin bag). Become an expert in certain areas of the law to give yourself a leg-up when competing for specific litigation; provide high-quality work; and deliver trust. Avoid positioning your firm as Gap – provide your clients with a justification to consider your services beyond “low price”!

  2)  Lower Your Technology Costs in a World of Technology Proliferation

While H&M and Zara have different sourcing strategies, both operate at a lower cost than the mid-tier segment. You can follow suit: lower your per unit costs by consolidating the number of vendors you use.

As opposed to working with a separate text streaming vendor, mobile videoconferencing vendor, remote realtime vendor, and more, go with a comprehensive solution like Remote Counsel. This will strengthen your buying power and end up costing you less in the long run. Even better, using this approach won’t impede your ability to offer a high-end court reporting service.

You don’t have to choose between Zara and Hermes!

  3)  Increase Your Margins by offering Add-On Products and Services

Protect your overall revenue on a job by offering add-on products and services. This could include simple things like offering edited video clips, providing secure and high-speed Internet access in the courtroom, and more.

These services complement your core court reporting service. That way, even if you compete on price per page, you can boost the overall revenue from the job by offering these additional services.

You can think about these services in the same terms as fast-fashion retailers. When you go to purchase your clothes in Forever 21, dozens of inexpensive items litter the counter and surrounding areas, persuading you to take advantage of the deal on that cute piece of jewelry or pair of sunglasses. These last-minute accessories can be similar to your add-on products and services – you’re letting your customers build the overall value of the items in their shopping basket.


To remain successful in the court reporting industry, avoid making the same mistakes as “affordable quality” retailers. Don’t make your customers compromise on style or quality. Your services are valuable and worth the price, like Hermes, and they won’t go out of style next season, like Zara. Operating at a lower cost and consolidating your number of vendors – similar to H&M – will keep you ahead of the competition. Take this advice into account the next time you meet with a new client.

Do you have any examples of margin pressure in your firm? Let us know in the comments below!

Topics: Court Reporting, Margin Pressure

Andrew Feinberg

Written by Andrew Feinberg

Andrew is the CEO at Courtroom Connect, Remote Counsel's parent company.