Strategy is specification!
Updated: Aug 14, 2020
To be visible and attractive to clients, a law firm must have a profile that distinguishes it from its competitors. However, distinctiveness calls for specification in the major strategic fields of action, in the law firm’s services, client segments, market territory and service distribution channels.
What should my law firm do?
The first question which a law firm strategy must answer is therefore that concerning the service portfolio. I have to specify in which fields of the law I want to operate. Do I want to offer a wide range of services by covering numerous areas of law, or do I conceive of my law firm as being more of a specialist in selected fields, perhaps even as a “boutique”?
It is not only the breadth of the range of services that plays a part in this respect, however, but also the depth. Do I only want to provide advice in my specialist domains, or do I also want to litigate? Might it make sense to additionally offer notarial services in one of the selected fields of law? Considerations concerning real net output ratio are also rewarding. My client should, of course, receive the services from one single source. I must decide, however, whether I “manufacture” them myself or outsource part of them to external firms – in M&A cases, for example, to due diligence specialists. This, then, is the question of make or buy.
For whom should my law firm work?
The second question concerns the market segments which the law firm wants to serve. It is becoming increasingly clear that clients do not only expect law firms to provide convincing evidence of their legal proficiency, but also to have industrial or sectoral expertise. What knowledge will enable me to make a difference here? Are we well-versed in the health sector, or are there lawyers in our firm who are experts in the field of banking? Do we have a colleague in the team who is experienced in setting up and running foundations or knows the food industry inside out?
Client segmentation is not only important for a law firm to attain credibility and visibility in the market; rather, it is decisive when it comes to efficiency and quality in its contact with clients. The more homogeneous a law firm’s client segments look, the more precisely clients can be addressed successfully and the leaner the client interaction processes can be designed. Think of mailshots, newsletters, website design or the law firm’s advanced training courses for its clients, but also prioritisation of the firm’s own lawyers’ advanced training or the architecture of knowledge management in the firm.
Where should my law firm operate?
Generally, the principle applies whereby a law firm with a boutique strategy tends to require a wider territory to be economically successful than a full-range provider. Depending on the extent of the service range, there is a bigger or smaller density of potential clients for the law firm’s services.
A further question in this connection is that of the number of branch offices. In principle, it is certainly an advantage when the law firm is close to its clients. If the latter are scattered across several parts of the country or even across different jurisdictions, it may be worth your while to run several offices. The operating costs arising from them, however, have to be carefully calculated. From the perspective of costs, running several branch offices might make sense, in particular if the law firm succeeds in reducing the complexity generated by them to the greatest degree possible. This can be done by pooling important processes and managing them in one place and with one team for all the branch offices. These processes include some of the so-called support processes, which I will deal with in one of my next blog posts.
How does my law firm market its services?
Admittedly, the question concerning distribution may sound somewhat curious to lawyers. It is important, however, and has recently become a great deal more important. Does the law firm want to provide its services from its physical locations alone, or does it also provide secondments, for instance? Does the law firm offer online services by means of which clients are able to obtain legal advice or configure (minor) transactions themselves without any lawyers’ assistance? Does the law firm propose digital or analogue training options to its clients in order to make the latter’s employees fit for dealing with legal issues concerning distribution contracts, for example?
If a law firm succeeds in taking up unequivocal positions in these four strategic fields of action, it has a strategy that provides it with a clear position in the market. Translating this strategy into everyday law firm life, however, is not always easy; after all, we lawyers are always also driven by opportunities. The temptation to accept the mandate of an interesting client (who, however, is situated outside the defined market segments) is often great. If we give in to this temptation in one exceptional case or another, that’s probably fair enough. If we do so regularly, however, it will erode the strategy, weaken the law firm’s profile and thus its visibility in the market. This means that discipline is required! Successful strategists know how to say no!
This blog was originally published on 16 January 2019 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 firstname.lastname@example.org