I recently had the opportunity to work with Ian Turvill, Chief Marketing Officer of Chicago-based Freeborn & Peters, to develop a framework for law firm strategic planning focused around the concept of designing a better business model. The paper, Reinventing the Law Firm Business Model, encourages law firms to take a holistic approach to confronting the myriad challenges they face in today’s ever-evolving legal market, rather than haphazardly trying to overcome each obstacle individually.
By focusing on four intersecting dimensions, law firms can approach the market with a much more robust strategy than simply trying to offer the same services to the same clients priced at either a flat or discounted hourly rate.
To utilize these four dimensions, law firms must examine:
- their client selection;
- their pricing and profitability models;
- the scope of activities they offer; and
- how they win and keep that business.
Or, put another way, the strategy relies on doing the most profitable activities for the most profitable clients, priced in a way that allows the firm to capitalize on the value they create for the client, with a focus on how the law firm retains that client in the long term.
Some initial feedback I’ve heard about this approach is that it seemed workable for mid-size law firms, but perhaps less so for BigLaw Firms. My response to that was, why?
True, mid-size law firms may have fewer moving parts and may be better able to approach new strategies somewhat more nimbly than their BigLaw colleagues. But large law firms rarely operate under a single unified strategic plan, at least when it comes to how matters are handled. Instead, it is quite common to find individual practice areas — if not even individual attorneys — determining for themselves how matters should be handled. In this way, large law firms operate less like monolithic enterprises and more like a collection of smaller firms. Because of this, large law firms have much the same opportunity to take a strategic approach to business design as do their mid-size law firm competitors.
In fact, some are doing just that.
Akerman recently announced the launch of their Akerman Data Law Center, a service that allows clients to obtain answers to their data practices questions without necessarily having to consult a lawyer. In an age where clients increasingly demand efficiency and cost containment, efforts like this fit the bill, while also creating a natural funnel of potential business for Akerman’s lawyers. “Got a question the Data Law Center can’t answer or need additional advice? One of our friendly attorneys will be happy to assist.”
It is quite common to find individual practice areas — if not even individual attorneys — determining for themselves how matters should be handled. In this way, large law firms operate less like monolithic enterprises and more like a collection of smaller firms, [allowing them] much the same opportunity to take a strategic approach to business design as their mid-size law firm competitors.
And Akerman is hardly alone in this venture. Littler Mendelson has several alternative service model offerings including ComplianceHR and CaseSmart, both geared toward helping clients managing their Labor and Employment law needs more efficiently.
The Magic Circle firm Eversheds offers their Agile service, helping clients find effective, flexible staffing solutions to help meet client goals of controlling costs and bringing more work in-house, but in a way that still provides a profit stream for the firm.
There are more examples, of course, but they all have a few things in common. All focus on a specific segment of the firm’s clients. All offer an innovative way to create value for the client, while also capturing a portion of that created value for the firm to realize as profit. All confine the scope of activities offered to those that most directly address the identified client need, and do so profitably for the firm. And all allow the firm to create and maintain close control over the client relationship in order to protect the law firm’s future profitability. None of these examples rely on a relationship partner to maintain the flow of money from any client. Instead, the profit flows first to the firm, and the relationship with the client is strengthened through the unique delivery of a valuable service.
Law firms, whether small or the biggest of the big, can follow these examples to create new, innovative ways to ensure future profitability. The white paper linked above can help lay out more of the details of one helpful framework to start along this path. And it will be fascinating to see what other innovations law firms can develop in the near future.