Law Firm Strategy
A couple of years back I was invited to author a brief, highly pragmatic and regular 250-word snippet for the ABA’s Law Practice Magazine addressing the strategic issues that law firms face on a continuing basis.
To my chagrin, attempting to be relevant and prescriptive in a very brief number of words can be far more challenging than I ever imagined. What follows here are a number of my perspectives intended to stimulate your thinking.
• Fight Established Routines
Your routines represent all of those memoranda, reports, e-mails and trivial matters that conspire to sap your strength and smother your ability to focus attention on activities that really are the highest value-added use of your time. Routines will get you into ruts, dull your senses, stifle your creativity, constrict your thinking, remove you from real-world stimulation and destroy your firm’s competitive vitality.
Constant questions. Many of the things that made you successful in the past may now prove to be nothing more than time-worn assumptions about what clients really value, or what services remain worthwhile offerings, or what constitutes profitability, or what ensures quality performance. You need to regularly examine your firm’s various assumptions to see if they are still viable.
Constantly question “the way things are done,” and never, never allow your partners to rest on their laurels. (Is it really reasonable to count on having a given client’s work for a long time to come?) Some partners can be like those old spring-powered watches — they have to be shaken hard to get them going.
Especially beware one of the fallacies in the mindless espousing of “best practices”— you can’t just be as good as the competition . . . that never leads to market leadership.
Next steps. Put these questions on the agenda of your next meeting: What are we best at? What makes us unique? How are we going to serve our clients in a way that nobody else can? And what are we going to do that will truly lead the market in this new year?
• What Is Your Competitive Advantage?
Prospects need to know what makes you and your firm special. Every law firm professes to have years of experience, be responsive and provide exceptional service – so once we’ve exhausted the clichés, what’s left?
Your advantage should be quantifiable. Talk about the total number of clients served, total value of transactions, dollars saved, success rates, clients satisfied and provide impressive metrics to back up any assertion. Example: Our lawyers have handled more than ‘X’ commercial real estate transactions, at a total value of over $’Y’ during the past Z years.
Tout your star qualities. Provide a list of client testimonials. Prospects feel more secure with a firm widely acknowledged by their peers.
Identify an attribute that isn’t claimed by a competitor. Let’s say you serve a large number of women entrepreneurs. Even if your competitor does the same, claim it first and claim it loudly. Firms hate looking like copycats so you are likely to preempt their ever taking action.
Develop a proprietary solution. Make a list of your added-value methodologies, approaches, actions and / or those technology answers that serve to make your client’s job (or lives) easier (or more profitable).
Your goal is to come up with a hard list of advantages to answer the prospect that asks, “Why should I choose your firm, what makes you distinctive and what specifically do you offer that I cannot get anywhere else?” And don’t kid yourself, if they’re not asking you this question, they’re definitely thinking it!
• Welcome New Voices
Strategic blindness comes from too much inbreeding. It is the result of having the same partners, pursuing the same conversations, about the same subjects, in the same way . . . and expecting different insights to emerge.
Do seriously exciting ideas - about new services, new approaches, new methods, new niches, new ways to collaborate - bubble up with great regularity from every nook and cranny of your firm? Good enough is never good enough; it is only a sure-fire recipe for becoming yesterday’s news (and you know what pet owners do with yesterday’s news!)
Innovative insights only emerge from hearing NEW VOICES. Your firm needs to welcome hearing from new voices to hear new strategies.
Diversify the leadership voices available to your firm. Set up your own informal “Advisory Board” comprised of respected community and business leaders who can meet quarterly with the firm’s leadership and offer an impartial view. Have them tell you what is going on in their version of the real world.
Up the ante: Set aside a modest, special budget to fund new experiments. Assign one partner to oversee submissions and get the word out that the firm welcomes new ideas.
Ensure that at least one member of your firm’s executive committee is 30 years of age or younger. The younger generation has a different model for how they think about things. And if you don’t think one of your younger professionals (partner or not) could have some tasty contributions to make participating on the executive committee, you are clearly suffering a bad case of truth decay!
• Eliminate Barriers To Switching
When you are trying to get prospects to change from their existing law firm to yours, you need to consider a concept called “barriers to switching.” Eliminating the barriers is generally key in getting people to move their legal work to your firm. So for each new prospect, ask yourself: What keeps this person or company from becoming our client tomorrow?
Quite simply, you need to identify some motivating rationale for why this particular prospect should even try your services. And no, I’m sorry, assertions that you can
“do it better, faster and cheaper” are rarely perceived as believable. They are possibly even insulting of the prospect’s ability to choose a provider — so don’t go there!
You are refreshingly strategic if you’ve targeted a particular client niche that other competitive firms have not. If you have a service offering that is unique in some way (“We have a specialized team that serves the needs of women entrepreneurs in this region”), then you have a much better chance of getting your target prospects to consider giving you a try.
If you’re not differentiated . . . then perhaps this prospect is worried about how costly it will be for you to get up-to-speed on their matters. Devote some specific non-billable time up-front to learn about their business or situation, and inform them that you are prepared to make that investment.
Perhaps this prospect doesn’t perceive you offering any real added-value. Think through (or ask) what would constitute value for this kind of client. Perhaps it’s inviting them to an educational program, offering them preventative counsel, or helping them meet with influential contacts.
To dominate in your chosen market, you have to identify the most complete list of barriers and work diligently to eliminate them.
• Articulate “Stretch” Targets
Incremental goals fail to bring out the best in law firms or partners. “Make no small goals,” the old saw goes, “for they lack the power to stir our souls.”
Subscribe to radical goals. Imagine what might occur if you declare to your partners that you want to achieve a 35% growth in revenues-per-partner over the next two years. Then asked them to come forward with ideas as to how you could make that happen.
In one firm, the managing partner decided she wanted to survey every member of the executive committee prior to an important meeting. Using a questionnaire, she asked each of them their views of what might constitute a reasonable expectation for the firm’s future growth prospects. In the questionnaire she distributed, she told partners, “our profits-per-partner have increased during the past five years at an average rate of around 6.2% per year. What do you believe is an acceptable annual rate of growth in profitability over the next five years?”
What she did not disclose was that 6.2% was not the real number, and in fact, the 6.2% quoted was somewhat less than the actual results achieved. Quite predictably, based on the information this managing partner provided, nearly all of her partners responded that they would be quite happy to realize a level of 6 to 7% growth over the next five years.
Be Warned. The evidence is irrefutable. No organization ever outperforms its aspirations. Our beliefs set the upper limit on what is possible.
• Be A Creator of Best Practices
Strategic wisdom has it that if you don’t want to reinvent the wheel, you should seek out “best practices.” This is where your firm invests time in studying what some other firm may be doing better than anyone else. You then try to integrate that best practice into your own not-so-terrific activities, systems or structures.
But here’s the deal: Copying another firm’s client service standards may be easier than creating your own, but the creators of change always have the highest commitment to change. It is only through creativity, not replication, that people get the opportunity to fully commit to constructing the conditions for which they yearn.
You could also run the risk of becoming a firm of mimics. Ask yourself, where did this firm with the current ‘best practice” get it from? If they got it from somebody else, you are admiring the wrong firm. And if the practice was the result of the firm’s own innovation, then they’re probably planning to move on to something even better.
Innovation is an innate part of who they are. You are going to be left trying to mimic last year’s model. You will never catch up with the front-runners. Innovators, by definition, are always one step ahead.
Simply adopting someone else’s best practice may not be your best practice after all.
• Internal Effectiveness Is Not Strategy
There is a fundamental distinction between developing strategy and focusing on internal effectiveness. In a recent survey we discovered that among those law firms that have a formal strategic plan, 79% of those plans are predominantly internal focused.
Typically, “the strategy” seems to be either fixing problems or emulating best practices. We are trained to resolve the issue, put out the fire, correct the underperformance and generally fix the problem – all time spent in looking backwards rather than focusing on the future, exploiting opportunities and building on strengths. Meanwhile the more benchmarking that you do and the more you seek to copy some other firm, the more indistinguishable you are from your competitors. Admirable, but not a winning strategy.
Shatter the mold. Your firm can outperform rivals only if you can establish a difference that clients actually value. Strategy is about making choices: Sorry, but you can’t be all things to all people, It is about deliberately choosing to be different. So if you have a really great strategy, people are fired up: “We’re not just another law firm. We’re claiming a territory in which we can be unique and contribute something important to the profession.”
If all you are trying to do is essentially the same thing as competitive firms, then it is unlikely that you will be very successful. Malcolm McLaren, manager of the notorious rock group the Sex Pistols, once said, “There are two ways to lead your life: karaoke (copying) or authenticity.” Copy or break the mold. That’s the choice we face every day.
• It's Not About You
Recently, a law firm sought help as they practiced for a presentation in response to an RFP invitation. They were interviewing with a business client and were nervous, as they had been less than successful in a number of their recent pitches. They attributed their poor showing to a shift in the marketplace, increased competition, and prospects who were becoming increasingly sophisticated.
First they talked about their firm’s long history in the profession, and some of the impressive clients they had worked with. Then they presented their unique process and their wonderful team. Finally, they closed with a number of testimonial comments from other satisfied clients. It was clearly a presentation designed to impress the prospective client (or maybe themselves) about them. It was clear why they were striking out – and why they were destined to fail again!
The problem. All too frequently, firms pitch prospects focused only on how they think they differ from their competitors, what unique process they have that the other guy doesn’t, and how successful they’ve been in the past. Nothing at all in this presentation talked to the specific situation, the needs of this particular client, an understanding of this client’s industry or what specific rewards the prospect could enjoy as a result of doing business with this law firm.
Too many pitches are like that old actor’s joke. “Well, I guess I’ve talked enough about me. Now it’s your turn. So, what do you think of me?”
The solution. Clients want to hear that you’re thinking about them.
• When You Absolutely Must Provide a Discount
Your last resort should be to discount fees. In such situations, you must extract a reasonable quid pro quo in exchange for the discounted fee. This is because we all know, giving away a service will only cause your client to attach no worth to it, and also create a precedent for repeating the practice. Here is a short list of quid pro quos that you might want to consider:
- I am constantly surprised at the willingness of sophisticated attorneys to offer discounts unconditionally. If you are going to offer a discount, that by definition affects your firm’s profitability, it should only be in exchange for a commitment from your client that the deal is your as a result of the concession.
- Your request might be that the client promptly pay your accounts on a monthly basis and render payment electronically within two business days of receiving the account. The effect of this quid pro quo is to enhance your cash flow and profitability.
- It may be somewhat easier to provide a fee concession if you can reduce some of the time you or your people might have to spend on the more mundane aspects of the transaction. If your client then would be willing to provide some human resources to supplement the effort, the effect would be to reduce your costs.
- There could be enormous compensatory value to your firm in having a client agree to serve as a spokesman for your firm or as a reference with interested prospects.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.