Differentiation in an Age of Growing Competition
Seeking to differentiate in a climate of continued and growing competition is critical for law firms to retain and expand their client base. Altman Weil, in their Law Firms in Transition 2018 report, directly advises firms to “Pursue real differentiation,” while stressing the financial implications of differentiation along with legal innovation.
Polling from Managing Partners and Chairs at 398 US law firms with 50 or more lawyers (including 52% of AmLaw 200) on a yes or no question suggests that the need to differentiate is increasingly important when there is an excess of legal expertise to go around.
These responses of Managing Partners and Chairs led Altman Weil to note that, “Today, service delivery (efficiency) and cost/price (the client value proposition) are clearly what clients are focused on.” Achieving real differentiation “requires change, doing some things differently, pursuing innovation aggressively and putting client needs first.”
Building Your Brand through Enhanced CX
While there are many more ways to tarnish your reputation as a law firm than to build a prominent, distinguishable name, it is becoming increasingly difficult to positively differentiate in the legal market. One of the best ways to differentiate for lawyers is to provide excellent client communications with frequent updates and helpful data that can be easily used by clients.
Building a brand of responsiveness is a great guard against a languishing name, because clients – both corporates and consumers – remember who kept them in the dark, who didn’t answer phone calls and let emails sit for weeks. But being responsive isn’t always enough. Client expectations are framed by the now everpresent advances in AI and machine learning, the convenience of Amazon shopping, and access to meaningful, game-changing information within seconds.
In the era of Google, law firms can differentiate by automating the sharing of case updates with clients to provide real-time, actionable information, while eliminating unnecessary time spent emailing the latest case filings or orders. Being able to passively share updates on cases not only gives clients timely knowledge of what’s happening, but it also removes the initial want/need for a client to ask in the first place, further freeing up lawyers to focus on improving the outcome of the legal representation.
Through implementing service delivery enhancements law firms can transition to concentrating on innovation and business development beyond just the billable hour.
Fundamental Truths for Future Law
Innovation is the key to differentiation for law firms of the future. More than needing to separate their work product or delivery model from the rest of the pack, law firms need to find ways to internally reorganize and prioritize their resources to stay profitable. In attempting to wake law firms to the reality of a changing legal market, Altman Weil listed out three bold axioms law firms must accept:
“We believe that even though the future is unclear, there are some fundamental truths that must be acknowledged:
- Law firms are no longer operating in a closed system in which virtually all legal service providers play by the same rules. There are outside players with outside money and a commercial mindset who are offering viable legal service alternatives to clients. They are established; they are growing; and they are not going away.
- New, smart technology is a pervasive force for change that extends into every facet of our lives. It is a force that is literally changing everything – at a staggering pace – and the legal market will not be immune.
- Change moves in only one direction. There is no going back.”
To play the long-game in terms of innovation and business development requires being proactive and creating conversations about your clients’ needs and available work. When your clients are involved in litigation, there is real need for your assistance. Court data is the perfect way to identify this need whether your clients are the plaintiffs or defendants. Law firms can innovate and differentiate by being the first to know when their clients are involved in litigation, and by demonstrating to their clients that they care about their clients’ needs and are actively trying to protect their interests. It can also help set you apart from other firms, especially when you come prepared with a strategy to win.
While it’s true that change takes place on a one-way track, it may not feel like a linear pathway forward for law firms. Differentiation through innovation requires expansion and taking risk, and beckons another fundamental truth for law firms of the future, that innovating requires looking at more than just one facet of your firm. It requires the deep, high-brow thinking of constitutional law scholars applied to every aspect of running the business of law. It takes seeing previous missed opportunities in conjunction with ways to leverage new technology to take on new business, it takes working with or even acquiring an LPO or legal tech startup, and it takes time.
For the 50% of firms who do not believe their brand displays a compelling value in contrast to the competition, the only viable option is to innovate and build a better brand. In the words of Dan Katz at the ABA Techshow 2018, “To the legal innovators, I say let’s stay the course.” Staying the course for law firms means opening new channels of communication with your clients, reminding them that you care about their bottom line, and focusing your combined resources on future successes.