First and foremost, if another firm gains a competitive advantage, it often puts you at a competitive disadvantage. An example of this would be in the case of firms located in major metropolitan areas such as Chicago, Philadelphia, Los Angeles, etc. that have historically billed out for services at a higher rate, are now acquiring or merging with firms outside these metropolitan areas and pushing out work to those other locations that can complete it at lower rates. If the client is billed at the historical rate and services are now performed at a lower cost, the reduction in service cost (additional profit for your competitor) becomes a tool to accomplish many things including, but not limited to:
Should you hit the panic button? No, but you should begin a process of strategic planning and practice analysis. It does not take much thought to realize the potential ripple effect on the smaller firms in the coming years and values of practices continuing to drop.
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