Many smart analysts and commentators have made their predictions for the legal industry in 2014. LexisNexis compiled a number of predictions; the Future Lawyers Network made their predictions for the UK legal market; the Wall Street Journal legal blog made financial predictions; and the Time Blawg compiled a range of predictions around legal IT and marketing. Rather than add to that pile, we thought it might be useful to answer the natural follow-up question to the predictions. Namely, what should we do given the trends and likely future of the legal industry in 2014?
The short answer to that question is, “Do what your clients want you to do.” Taking that a step further, you will find three pieces of pragmatic strategy advice for large firms; for mid-size firms; and for smaller firms in the sections below.
LARGE AND MEGA FIRMS
There is a continuing stream of good advice available to larger firms – both solicited and paid for as well as unsolicited and offer via ALM, consultancies, and blogs. Much of that advice is well conceived – invest in technology, get knowledge management tools in the hands of client servers, adopt project management discipline on large scale matters, understand the growing importance of non-lawyers to your firm, and so on. That advice responds well to the mega-trends influencing the legal industry, and particularly larger firms. We would add three areas of focus for 2014.
- Process Redesign – There are a number of buzzwords associated with process redesign (e.g., six sigma, lean process, re-engineering, etc.). Take a step back from the buzzword bingo card and remember what the clients are asking for – greater efficiency and predictability. Focusing energy on the so-called “golden triangle” of people-process-technology remains the best approach to improving efficiency. And, the analysis required to truly improve processes will lead to better pricing decisions and substantially improved predictability.
- Partner Loyalty – Bruce MacEwan posted a couple of short, insightful articles around the turn of the New Year regarding people management (See Talent, Kill It; and See Talent, Feed It). The demise of major law firms can be traced – at the core – to a loss of partner loyalty. As partners depart via the back door, instability grows and the risk of a downward spiral increases. Ask yourself what cements partners to the law firm. Dedicate energy to strengthening the ties that bind partners to the law firm – particularly the non-monetary ties.
- Client Focus – The largest law firms have built tremendous platforms that span geography, legal specialties, and industry expertise. You have to make sure your firm and your partners are harnessing that platform for the benefit of your clients. Is client work being done by the right people, in the right places, at the right rates? Do your people have the tools they need to make that happen? And critically, ensure that clients’ broader needs are well understood by the firm and that the firm’s ability to address those needs are understood by the clients.
Recognizing that “mid-size” is in the eyes of the beholder – and therefore one size most decidedly does not fit all – we offer three points of advice for mid-size firms at the start of 2014.
- Capitalize on Being “Big Enough” – LexisNexis (pdf) has found that large scale matters are moving to mid-size firms. That is a trend we have seen anecdotally at our mid-size clients for many years – now the data confirms it. To capitalize on the trend, you need to target large companies (ideally via personal/professional contacts you already have among your people), let them know what your strengths are, and emphasize the dual advantages you bring to the relationship (i.e., your firm is cost effective and lean and it has sufficient scale, sophistication and experience to hand complex matters). This window of opportunity will close – make sure your firm benefits before that window closes.
- Portfolio Management – As a mid-size firm, you almost certainly have practice gaps. That is perfectly fine – you can’t and shouldn’t try to be all things to all clients. That said, your most important clients would probably like you to add selected capabilities. Ask them directly what legal issues they wish your firm could fulfill so they didn’t have to send it elsewhere. Filling strategic gaps is one of the biggest (if not the biggest) driver of last year’s record merger activity. Manage your portfolio of practices and fill your most strategic gaps in 2014.
- Client Focus – Real growth, profitable growth, is available to mid-size firms from the relatively simple task of investing time off-the-clock to ask clients directly what challenges they anticipate and/or face today. Those conversations lead to better relationships, add to the existing flow of work from the client, and sometimes open doors for new types of work. Yet, remarkably few firms put any kind of discipline behind systematically gathering and acting on client feedback. If you don’t already do so, make 2014 the year you focus on asking clients about their business and their future (and of course, how you can help them achieve their goals and objectives).
In many ways smaller firms have been insulated from the mega-trends influencing the legal industry. That was unfortunate in the go-go years, when profits at larger firms soared, but somewhat satisfying in the wake of large firm lay-offs and competitive pressures. That said, this is no time for leaders of smaller firms to be self-satisfied. Technology and non-traditional competitors threaten to erode work from small businesses and individuals, while the increased competitive pressures facing large and mid-size firms encourage them to hunt for work among your largest (and probably most lucrative) clientele. Advice for smaller firms for the coming year includes the following.
- Focus – Know what your genuine strengths are (be honest with yourself) and build on that strength. In particular, ensure that your business development investments are focused on your existing strengths. The surest way to waste those investments is attempting to gain visibility (or new work) in areas where your firm isn’t genuinely strong.
- Be Open – It is entirely reasonable to adopt a strategy that does not include mergers. In fact that may be the most advisable strategy (depending on your circumstances). However, you will learn something valuable almost every time you have lunch with the managing partner of a mid-size firm. And, you never know when you might run across a proverbial match made in heaven. Autonomy is great, but the legal industry is changing fast. Technology and other advances carry substantial costs. So, be open – to conversations, to learning, and to possibilities.
- Client Focus – The need for active client focus is just as valid (if not more valid) for smaller firms as it is for the larger and mid-size firms. That is often easier for smaller firms – clients may be close personal friends and/or you may be their most trusted advisor. Maintain that active focus on clients as 2014 unfolds.
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Obviously, the common theme across all firms for 2014 is focusing on clients and their needs. As Peter Drucker observed 50 years ago, “The purpose of business is to create and keep a customer.” Everything else follows from that – make that your mantra for 2014.