Law firm management – what do law firms need a strategy for, and how proficient a swimmer are you?
Why is a strategy necessary, and what does a strategy have to achieve? The answer to the question as to the necessity of a strategy may not be all that obvious. In my last blogs, I dealt with current trends in the global law firm market. Issues such as digitalisation in the field of law, the millennials’ impact on the business model of law firms, the pressure brought to bear to lawyers’ fees and the increasing significance of alternative legal service providers are important and must be debated. What is even more important, however, is to draw conclusions from this debate for the configuration of a law firm strategy.
In my coming blogs, I will therefore focus on the development of a strategy for law firms. It must be borne in mind that since the financial crisis, the legal consultancy market has registered a pretty robust growth. You will remember: it is assumed that the number of professionals employed by law firms in the US has been increasing by a pleasing 2.6% per annum in the last ten years. In a growing market, however, there is room for everybody! We could therefore presume that it is sufficient to undergo good training as a lawyer, be capable and industrious and unfailingly make out invoices. So why a strategy?
It’s a bit like swimming in a river. You have two options: you can either drift and, if you’re lucky, you’ll eventually end up in a place where you can get out of the water without any problems; if you’re unlucky, however, you may end up at a spot where you can’t get out at all. Alternatively, you can use your muscles and grey matter and reach precisely that point of the riverbank which you aimed at and which is ideal for landing. To ensure that your law firm, too, ends up where you want it to be, you’ll need a strategy.
Your strategy must be able to achieve three things:
It must specify clear-cut goals for a planning horizon of three to five years. How should my service portfolio develop? In what client segments do I want to gain a (stronger) foothold? Which market territory do I earmark for my activities? And through what distribution channels should my services be placed in the market?
The strategy should reveal clearly the performance characteristics with which you want to be visible in the market. In other words: the strategy must answer the question as to why a client should approach me rather than one of my competitors. This requires performance characteristics which result in a certain degree of uniqueness. If I only do what everyone else does as well, my law firm is probably surplus to requirements.
Finally, the strategy should also entail you gaining a competitive edge over other law firms in the same market. This competitive edge must yield quantifiable results and lead to higher law firm profits in comparison with competitors. In essence, there are two options for this: either I am the price leader or I differentiate myself through my superior performance. Both can be very successful strategies – but more about this in one of my next blogs.
This blog was originally published on 17 September 2018 in Vista, the online magazine of the Executive School, University of St.Gallen, Switzerland.
About the Author Prof. Dr. Leo Staub is a Titular Professor of Business Law and Legal Management at the University of St. Gallen. He also is one of the Directors of the Executive School of Management, Technology and Law of St. Gallen University where he chairs the division “Law & Management”. Leo can be reached at email@example.com