Part 3 of a 5-part series

By Debra Baker

“I do not start with the numbers any more than a mechanic starts with a monkey wrench. I start with the game, with the things that I see there and the things that people say there. And I ask:Is it true? Can you validate it? Can you measure it? How does it fit with the rest of the machinery? “

- Bill James, 1985 Baseball Abstract, as quoted in Moneyball by Michael Lewis

Understanding the client base of a given market is akin to fielding a team based on the totality of circumstances — the opponent, the stadium, the talent pool.

Legal Vertical Strategies analyzes the legal landscape from three perspectives: Demand, Client Base, Competition. Each has its own set of measures that provide insight into the overall market. The second perspective, Client Base, provides insight into the mix of legal needs that exist and how decisions about who to hire are made.

Buyers of legal services vary based on size, market reach and relative sophistication. Legal needs range from day-to-day matters – perceived as part of the cost of doing business – to high-risk, premium matters where price plays little, if any, role in who gets hired. The larger an organization, the more complex the legal needs are likely to be. The buyer profile of a given market, therefore, provides insight into the value (cost) of different types of legal needs and the decision-making process for selecting who to hire.

In general, businesses can be categorized into four clusters: Multi-nationals, Large Companies, Medium-sized Companies, and Small Companies. Combined with an analysis of market demand, insight into the client base of a given market provides informs decisions about:

1. What clients to target;
2. How to reach decision-makers and key influencers;
3. How to focus marketing and business development resources around the highest value opportunities;
4. Projecting revenue and developing creative pricing strategies.

Lawyers and law firms should evaluate how much of their client mix is dependent on clients in this region and ensure that growth strategies take into consideration the nature of work this client base has and how these clients make decisions.

Part 2 of a 5-part series

By Debra Baker

“Baseball was theater. But it could not be artful unless its performances could be properly understood. The meaning of these performances depended on the clarity of the statistics that measure them.”

- Michael Lewis, Moneyball

Like baseball, the legal profession is as much art as it is discipline. But if objective measures will provide clarity as to how legal services are defined, what are those measures?

Legal Vertical Strategies analyzes the legal landscape from three perspectives: Demand, Client Base, Competition. Each has its own set of measures that provide insight into the overall market.

Demand identifies what opportunities exist, with whom, and the relative value of those opportunities, informing decisions about:

1. Target practices and industry groups;
2. Talent development;
3. Maximizing marketing and business development investment;
4. Aligning resources.

Economic, industry, regulatory and geographic trends all impact demand.

Economic climate. A strong economy contributes to legal needs driven by opportunity – deal flow, investment, joint ventures and strategic alliances. Weak economic confidence stifles deal flow, lowering overall demand for transactional services.

Regulatory environment. The more regulations, the more complexity to running a business. Heavily regulated industries and states created environments increase demand for legal services.

Industry Trends. Industry trends can create or deter demand for legal services within specific sectors.

Geographic Trends. With increased globalization, geographic trends are important to understand even when evaluating the legal services market of a single region. Businesses inside that market do not limit their business to a given reason, so their legal needs bleed into other geographies.

Law firms need to understand the impact of these factors on the markets they serve in order to assess what type of work in their areas of expertise will be in demand. It will assist firms in identifying common characteristics among businesses with specific needs that can be used to more effectively target and market the practice.

It’s December. The time you stop and wonder where the year went. I’ve been fortunate to have been extremely busy this year, but that is not an excuse to lose sight of my long-term goals. With winter just around the corner, now is the opportunity to refocus on priorities and develop a plan for the coming year. To me, planning must always begin with a discussion about vision.

Vision is one of those lofty words that can be off putting to some, but that should not diminish its importance. Vision is really about knowing who you are and what you want to be. I co-hosted a panel sponsored by the Center for Competitive Management earlier this month where I described vision as a practice group’s “WHY.” Another way to think about it is, “What does success look like?”

Regardless of how you ask the question, developing a short, concise statement of what you aspire to be is an essential component of a successful practice group plan. To ignore vision is to ignore defining what you are trying to accomplish. Equally important, from the perspective of building a strong practice group, a clear vision provides other benefits:

1) A vision provides your practice group with an identity. This aids in decision making about work that should or shouldn’t be done. It also drives decisions about the people side of the practice.

2) Discussions about vision offer an opportunity to emotionally engage members of the practice group. How often have you sat in practice group meetings, where colleagues eat their lunch, nod in the appropriate places and then go back to work without truly participating in the discussion? Meetings focused around vision offer an opportunity to engage your group. The point is not so much the words you end up using as it is the process of keeping your purpose at the forefront of everyone’s mind.

3) Vision guides planning. Once you have a clear vision, planning is easier. It also gives you a framework for ensuring your plans stay on track.

To be sure, law firms as a whole need to focus on vision. If your firm has a defined vision statement, then that should be the starting point for your practice group discussion. That said, even with firms that do have a vision statement, many attorneys are not aware of it or have not been part of the discussion to create it. Bringing vision to the practice group level offers multiple benefits in engaging attorneys. It’s a leadership opportunity.

Reflections on the emerging Global 25: Part 2

Legal is a profession, not an industry. Law firms are different; They don’t sell widgets.

These are the theorems I was first introduced to when I started covering law practice management for the ABA Journal after graduating from law school in 1998.

I challenged the first when I saw lawyers taking stock in lieu of fees during the dot com era. Clearly the “double comma” revenue lawyers that sprouted up after a successful IPO proved being a profession and an industry are not mutually exclusive. Lawyers are in the business of making money. Revenues from legal services are estimated at $210 billion in the United States alone.

With the gap widening between the Global 25 and the rest of the law firms, it’s time to challenge the second theorem. These elite firms will get the most profitable work and will be able to cherry pick the best talent from the other firms.

The rest are going to have to compete for the remainder of the work – much of which is being commoditized. Instead of fighting the inevitable, firms have an opportunity to provide more value to their clients by finding ways to productize what they do. Law firms outside of the Global 25 will need to fundamentally rethink the way they deliver legal services. They need to start selling widgets.

By selling widgets, I’m suggesting lawyers look to productize their services in a way that better demonstrates value and is priced accordingly. Whether you call it value-based billing or an alternative fee arrangement, its about packaging legal services in a way in which clients understand what they are getting for what price.

What’s more, it may actually mean that lawyers get paid for doing less work than they would if billing by the hour. Let’s face it, the things lawyers provide that add the most value — making a vilified defendant look sympathetic or opening doors a client might not even know exist — cannot be billed in six minute increments. So instead, there is pressure to make the “stuff” of lawyering — the documents, the briefs, the filings — to be created in an inefficient way in order to create enough billable hours to make the work profitable. In the end, whether it takes 10 hours or 100 hours, the “stuff” that is produced — so long as it is right — is worth the same. Why penalize those who produce the work more efficiently?

By billing at a flat rate or on a project basis, lawyers and their firms will be incentivized to work more efficiently on the paper work and to focus their efforts on the areas that truly make lawyers valuable — their role as a strategic partner.

Why not sell the widgets and differentiate yourself on the distinct strategic services you provide?

“[INSERT LAW FIRM NAME] is a full-service law firm with market-leading strengths in the energy, financial services, real estate, technology, pharmaceutical, and [insert industry] sectors. Our multidisciplinary teams handle business transactions, M&A, intellectual property, corporate governance, complex litigation and anything else that could come your way. In other words, we do anything for anyone.”

With the exception of the last sentence, this description or a near facsimile could be found on any of hundreds of law firm websites around the globe.

Well-intended writers — usually at the direction of attorneys — often try to appeal to the widest possible audience of existing and prospective clients. The impact is just the opposite. The description ends up so broad that the message appeals to no one.

Buyers of legal services are more sophisticated than ever. They don’t have time to waste. And the competition for their attention is fierce. Too often law firms fail to reach their target audiences because they try to be everything to everyone.

Through market segmentation, law firms can gain greater insight into what drives the unique audiences they serve to buy legal services.

Market Segmentation

Simply defined, a market segment is a group of people who have similar demands and needs based on common characteristics, such as a shared demographic, geography, psychographic or behavior. As a result, the way a segment makes buying decisions is typically the same.

With an understanding of what drives and motivates a segment, you can create messages and identify specific marketing tactics that will allow you to get the attention of your audience.

A simple exercise to better understand a market segment is to consider the following:

1) What are the unique challenges facing this segment?

2) What specific benefits does our firm offer this segment?

3) How does this segment communicate?

Do this with two-to-three different segments and compare the results. Then look at the key messages your firm uses to market. Do they apply to the segments you’ve identified?

The reality is one-size marketing usually fits none.

I’m calling last week the week of pain – growing pains. On the same day, I had calls from colleagues at three different clients. All wanted to bend my ear about struggles they were having trying to implement new initiatives.

Strategic direction wasn’t the challenge. All three clients have virtually universal support for their end goals. Budget wasn’t even a problem. Sure, money is always a factor, but in all three of these cases, funding for the projects was available. It wasn’t even a question of timing. Again, in all cases, key stakeholders agreed that it was now or never.

The challenge is change management. It seems no matter how much agreement there is about the need to change people continue to struggle to break the status quo.

This is particularly tough for law firms. If for no other reason than the partnership structure itself, law firms struggle with change more than any other organization I know.

The same week I was having these discussions with clients, I had the privilege of attending the LA Legal Marketing Association Chapter’s annual continuing marketing education program. (My company, Legal Vertical Strategies, was a sponsor).

There, Henry Givray, Chairman and CEO of SmithBucklin, spoke on the topic of leadership and, specifically, the importance of transparency in decision making. The framework he uses to communicate decisions is simple:

1)      I’ve made a decision and this is what it is.

2)      I’m leaning toward a decision but want your input.

3)      This decision is open to debate and I welcome your opinion.

This allows the team to respond accordingly.

1)      Yes, I agree.

2)      I don’t agree, but I can live with it.

3)      I don’t agree, and I cannot live with it.

On its face, decision-making clarity and change management seem distinct topics. Yet adapted, Givray’s framework provides a formula law firm leaders can use to drive change in their organization.

There are decisions that require extensive debate among partnerships. What are our goals? What are the principles we all agree are non-negotiable in achieving those goals? Who do we trust to lead us toward accomplishing those goals?

These are important questions. Once the debate is closed and those decisions have been made, however, firm leadership needs to be able to move on and make decisions on behalf of the firm without debating every step.

Firm leaders need to be clear about how they are making their decisions. Some decisions will be open to debate. Others will not. So long as there is clarity about what type of decision it is, the partners will retain their individual right to agree or not.

Individual partners can then make their own decisions. Can they agree and, if not, can they live with it? If they cannot live with it, the individual partner needs to have an honest conversation with himself or herself as to whether they are in the right place.

Law firm leaders can and should try to help partners who disagree and don’t feel they can live with the decision. You don’t want to lose good partners because they are struggling with change. Good leaders need to provide the guidance and will support. But that is a conversation distinct from decision making.