We continue our blog series, presented by Patrick J. McKenna and Michael Rynowecer, on the value to your law firm of having an Industry Focus and how it can enhance your firm’s strategy.
Strategy is often a misunderstood concept among law firm leaders.
Often, being a law firm leader means that you are not managing one homogeneous firm, but rather a portfolio of very different businesses. Strategy should be thought about at the business unit level with a clear, shared understanding of where the firm will allocate its scarce resources (people, time, and dollars) towards the goal of being the go-to firm for one (or multiple) segments of clients, facing one (or multiple) types of business issues.
In practical terms, strategy helps guide deliberate choices about where your firm is; and, just as importantly, where the firm is not going to direct its limited resources. More controversially, strategy can also determine which clients and targets your firm will (and will not) continue to serve or pursue. Our experience is that being more industry focused allows your firm to find more (and better) client opportunities for four key reasons:
- Prospects and clients actively seek you out because of your enhanced profile within their particular industry and within trade associations, and because you have been publishing and speaking on topics that are relevant to their specific businesses interests.
- Unlike more “generalist” firms where the client is often wondering how much time and money it will cost to “bring you up to speed” on their business issues, you demonstrate an insider’s knowledge of key industry issues and trends.
- With an industry focus, you are able to more quickly and concretely identify how a new regulation, piece of legislation, disruptive technological advance, or economic development, will likely impact a particular industry and the companies within it.
- Clients believe they will get better outcomes and results because you understand the business risk, which clients believe drives legal strategy with the business risk defining the goal.
These points were reinforced in a recent discussion we had with by Jon Lindsey of Major, Lindsey & Africa, who outlined some of the results from his firm’s recent 2020 Lateral Partner survey. According to Jon, the search for the right lateral is not about the individual simply having “a book of business” anymore, but rather, 75% of Major Lindsey’s executive searches are concentrated on finding some attorney with the “right practice specialty.” And at least one-third of the inquiries Lindsey’s firm receives are very industry specific, along the lines of: “Please find us a private equity attorney with a specialized knowledge of the pharma industry.” Lindsey said that from his experience, those kinds of industry-specific inquiries have definitely been on the rise.
In Australia and New Zealand, our friends at Beaton Research conducted their annual survey on the performance of their professional service firm clients and found that half of the law firms in the study had their clients rank Innovation as the law firms’ worst performing attribute. Also, there appears to be a big gap between firms’ current innovation activities and what clients truly value. For example, clients do not view innovation simply as technology, apps, AI, etc. In fact, the number one thing that clients say they want is for their law firms “to understand them better.” Indeed, clients want firms to “improve client service and client experience through better understanding the needs of clients, including understanding their business and industry.”
75% of Major Lindsey’s executive searches are concentrated on finding some attorney with the “right practice specialty” …and at least one-third of the inquiries the search firm receives are very industry specific.
Meanwhile, Graciela Gomez Cowger, CEO of Schwabe, Williamson & Wyatt directs her firm on a strong focus on six industry sectors. In a recent interview she explained that the firm moved that way as a response to client feedback. “They wanted industry-tailored legal advice that takes into account the particularities of the industries in which they operate,” Cowger said, adding that how the firm spends its time and resources, how it hires, and how it trains its lawyers is all dictated by this industry knowledge. “Having this narrow focus simplifies our operations, helps us make decisions, and allows us to partner with our clients.”
And in a time when some firms still do not understand the dynamics of industry fragmentation and too often simply attempt to package it all under one umbrella, we salute the announcement made last month by Marshall Dennehey. In an effort to keep pace with client needs in the evolving healthcare environment, this firm launched four new practice groups: Behavioral Health Risk and Liability; Electronic Medical Record and Audit Trail Litigation; Emergency Medical Services; and Telehealth and Telemedicine. As an example of how strategic this move is, we all know that healthcare is one of our most regulated industries, but COVID-19 is taking the shackles off telemedicine. As part of the $2 trillion CARES Act passed by Congress, the Federal Communications Commission plans to spend $200 million to support telehealth programs. So, if your firm has a vanilla-labelled Healthcare group, how are you expecting to compete?
When your firm focuses on a specific industry, it quickly deepens its understanding of how to apply its expertise within that industry. Your firm can move quickly to identify key issues, determine best practices or identify how emerging trends may create new opportunities and problems for companies in that particular industry.
But the real issue here is not about the deepening of industry knowledge and insight, but whether your firms has a structured process for developing, refining, and sharing those industry insights that can then allow your team to enrich their relationship with valued clients.
In the next part of our series, we will look at specific steps you can take to ensure your industry groups’ efforts are worthwhile.
This post was co-authored by Michael Rynowecer, president of The BTI Consulting Group and author of the widely followed blog, “The MAD Clientist”.