Career Journal: Messaging New Marketing Concepts

Clearly, there is an ongoing recalibration of the business and delivery models affecting the relationships between clients and law firms. These new models prompted at least one law firm leader to refer to the “new normal” that has beset the legal industry. The market for premium legal services continues to shrink domestically. A chairman of a big firm put it bluntly to me earlier this year when he said, “Let's be honest; like many firms of our ilk, we're chasing revenue, period.” That's frank, honest, and perhaps lamentable for those who want to hold onto historic tenets of the profession. But it is now a fact of life that some firms are fighting for relevance and even survival in this “new normal” market. Law firm leaders have gone from not addressing the “elephant in the room” to diving full-throttle into the “Belly of the Beast” as they navigate through this transformative crucible.

In an environment of falling demand, all law firm business development leaders must work aggressively in many new areas they have not covered before.

Pricing and Project Management

In recent years, many law firms have tweaked their pricing and delivery models. Too often, these improvements have not been trumpeted to customers. They have been quieted as discounts law firms prefer not to talk about, let alone advertise. For a few firms, especially those that deliver work in slim margin segments such as insurance defense, demonstrating a principled approach to pricing and effective project management has become part of the marketing messages they brag about to prospective clients. Seyfarth Shaw, for example, showcases on its website its six-sigma-like approach to legal service delivery, called SeyfarthLean.

Market Segmentation and The 'P' Word; Productization

'Big law firms have set up domestic service centers in less expensive cities such as Tallahassee, FL; Wheeling, WV; Dayton, OH; and Lexington, KY, offering lower-priced services to clients ' thus mimicking the services provided by offshore, Legal Service Outsourcers, (LSOs). e-Discovery services are also segmented into completely different business units within some firms. Each represents a further manifestation of market segmentation. The reality is that these new developments are harbingers to the inevitable “productization” of all legal services. There, I said it!

Product marketing has long been associated with consumer-based marketing found in the retail, manufacturing, and consumer-packaged goods industry. Marketing of products that have lost their differentiating qualities, also called commodification, occurs when a product can no longer command premium pricing and profit margin because it has lost some part of the intellectual capital necessary to produce it efficiently. What is often lost within the legal industry is that product commodification can be applied to both goods and services.

It is imperative that “in-house” legal marketers work these product concepts into their own vernacular when interacting with practicing attorneys. Using a term such as “product” to an attorney may be a daunting proposition. Message incorrectly and the messenger saying it can face instant “organ rejection” of the concept. Attorneys may spit up in their coffee cups when they hear it. But, it is important that they understand that it does not necessarily lead their practices down the slippery slope toward dissintermediated irrelevancy. Instead, it affords them the flexibility of pricing based on relative value of services and in the process, preserves the premium clients pay for high-end services and, ultimately, it helps preserve client loyalty.

e-Commerce Tools and the Use of Big Data

New technology enabled customer interactions have enhanced the way law firms and customers identify with one another and manage ongoing relationships. There are many new procurement and delivery devices appearing in the market today that may on first blush appear gimmicky. However, they are anything but.

Tymetrix has released a smart phone app called RateDriver in which a “buyer” can theoretically use a slot machine-style screen to select certain criteria such as firm size, legal specialty, years of experience, and geography, to determine appropriate hourly pricing for an attorney's services. Schpoonkle.com is an online reverse auction service available to consumers of legal services. Of course, many are already familiar with LegalZoom, an online legal education service that may become the largest provider of legal services in terms of revenue in the United States in the years ahead. Lex Machina, a Palo Alto, CA-based data analytics firm, can help lawyers and clients determine which cases to take on and dish out based on calibrating past results, both in terms of legal success and economic outcome.

While all of these new products remain on the margins of the legal services spectrum, their presence needs to be heeded. These are examples of prosumerism, a portmanteau that identifies the business trend whereby professional services are procured, using similar tools heretofore relegated to business-to-consumer (B to C) transactions.

The Value of 'Brand'

Similarly, the concept of brand identity and loyalty has elevated to a new level of importance. In an era of falling demand for legal services, law firms have begun to look to other client service companies, long associated with b-to-c services, such as Apple, Costco and Disney, to learn more about maximizing the customer experience and developing brand loyalty and ambassadors.

Some law firms have started to implement Net Promoter Score (NPS) client surveying programs which measure customer loyalty and detraction. This represents a significant shift from an intra-industry comparison of services, to a consumer-based model. NPS, at some point, will challenge legal directory submissions, as the standard by which to truly rank and rate the best law firms.

Conclusion

I have often written in this column about the emerging skills legal marketers must be prepared to bring to the table to continue to compete for top industry positions. Legal marketers can be so preoccupied with the daily demands of generating proposals, submitting peer review ratings, and one-on-one attorney coaching that they begin to lose sight of the bigger picture. While addressing the daily individual b-to-b marketing needs of the attorneys they support, legal marketers must also take a step back and not only understand the current “consumer” trends impacting the industry, but also educate their “clients” as to how this new normal will impact their practices in the not-too-distant future.

While I have seen no demand in my practice to recruit marketing talent from consumer-based industries such as retail or CPG, my clients are asking for us to identify legal- and professional-services marketing executives who have embraced the models used by these industry sectors to understand and capitalize on customer buying behavior.

Michael DeCosta, a member of this newsletter's Board of Editors, is a Partner with the international executive search firm, Caldwell Partners. Michael is a member of the firm's professional services and legal practices. Reach him at 203-348-9581 or via e-mail at [email protected].

We have all heard the business clich's with which lawyers have historically revealed their true attitudes toward business development and marketing of their services. Not too long ago, law firms took a dismissive stance toward business development. If the pipeline of new work slowed, the prevailing wisdom was, “This too shall pass.” I have heard their arrogance, first-hand. They joke, “We may aggressively stare at the phone and hope it rings,” or “We'll pick up on the second ring instead of the third.” That's about as far as many lawyers ventured to develop new business.

In recent memory, some firms actually had standing committees tasked with deciding which new clients to accept. And this was not a “conflicts check” procedure; it reflected the hubris of law firms that they could hand-pick their clients. Who could blame them? The United States, as the single largest legal market in the world, offered up a tremendous volume of legal matters to feed the masses.

Of course, we all know those halcyon days are over. And even if volumes return to pre-recession size, new legal procurement models suggest that not all law firms will share in the wealth as they had before. There will be winners and losers, already evident by the trail of dissolved firms littering the legal landscape over the last decade.

Clearly, there is an ongoing recalibration of the business and delivery models affecting the relationships between clients and law firms. These new models prompted at least one law firm leader to refer to the “new normal” that has beset the legal industry. The market for premium legal services continues to shrink domestically. A chairman of a big firm put it bluntly to me earlier this year when he said, “Let's be honest; like many firms of our ilk, we're chasing revenue, period.” That's frank, honest, and perhaps lamentable for those who want to hold onto historic tenets of the profession. But it is now a fact of life that some firms are fighting for relevance and even survival in this “new normal” market. Law firm leaders have gone from not addressing the “elephant in the room” to diving full-throttle into the “Belly of the Beast” as they navigate through this transformative crucible.

In an environment of falling demand, all law firm business development leaders must work aggressively in many new areas they have not covered before.

Pricing and Project Management

In recent years, many law firms have tweaked their pricing and delivery models. Too often, these improvements have not been trumpeted to customers. They have been quieted as discounts law firms prefer not to talk about, let alone advertise. For a few firms, especially those that deliver work in slim margin segments such as insurance defense, demonstrating a principled approach to pricing and effective project management has become part of the marketing messages they brag about to prospective clients. Seyfarth Shaw, for example, showcases on its website its six-sigma-like approach to legal service delivery, called SeyfarthLean.

Market Segmentation and The 'P' Word; Productization

'Big law firms have set up domestic service centers in less expensive cities such as Tallahassee, FL; Wheeling, WV; Dayton, OH; and Lexington, KY, offering lower-priced services to clients ' thus mimicking the services provided by offshore, Legal Service Outsourcers, (LSOs). e-Discovery services are also segmented into completely different business units within some firms. Each represents a further manifestation of market segmentation. The reality is that these new developments are harbingers to the inevitable “productization” of all legal services. There, I said it!

Product marketing has long been associated with consumer-based marketing found in the retail, manufacturing, and consumer-packaged goods industry. Marketing of products that have lost their differentiating qualities, also called commodification, occurs when a product can no longer command premium pricing and profit margin because it has lost some part of the intellectual capital necessary to produce it efficiently. What is often lost within the legal industry is that product commodification can be applied to both goods and services.

It is imperative that “in-house” legal marketers work these product concepts into their own vernacular when interacting with practicing attorneys. Using a term such as “product” to an attorney may be a daunting proposition. Message incorrectly and the messenger saying it can face instant “organ rejection” of the concept. Attorneys may spit up in their coffee cups when they hear it. But, it is important that they understand that it does not necessarily lead their practices down the slippery slope toward dissintermediated irrelevancy. Instead, it affords them the flexibility of pricing based on relative value of services and in the process, preserves the premium clients pay for high-end services and, ultimately, it helps preserve client loyalty.

e-Commerce Tools and the Use of Big Data

New technology enabled customer interactions have enhanced the way law firms and customers identify with one another and manage ongoing relationships. There are many new procurement and delivery devices appearing in the market today that may on first blush appear gimmicky. However, they are anything but.

Tymetrix has released a smart phone app called RateDriver in which a “buyer” can theoretically use a slot machine-style screen to select certain criteria such as firm size, legal specialty, years of experience, and geography, to determine appropriate hourly pricing for an attorney's services. Schpoonkle.com is an online reverse auction service available to consumers of legal services. Of course, many are already familiar with LegalZoom, an online legal education service that may become the largest provider of legal services in terms of revenue in the United States in the years ahead. Lex Machina, a Palo Alto, CA-based data analytics firm, can help lawyers and clients determine which cases to take on and dish out based on calibrating past results, both in terms of legal success and economic outcome.

While all of these new products remain on the margins of the legal services spectrum, their presence needs to be heeded. These are examples of prosumerism, a portmanteau that identifies the business trend whereby professional services are procured, using similar tools heretofore relegated to business-to-consumer (B to C) transactions.

The Value of 'Brand'

Similarly, the concept of brand identity and loyalty has elevated to a new level of importance. In an era of falling demand for legal services, law firms have begun to look to other client service companies, long associated with b-to-c services, such as Apple, Costco and Disney, to learn more about maximizing the customer experience and developing brand loyalty and ambassadors.

Some law firms have started to implement Net Promoter Score (NPS) client surveying programs which measure customer loyalty and detraction. This represents a significant shift from an intra-industry comparison of services, to a consumer-based model. NPS, at some point, will challenge legal directory submissions, as the standard by which to truly rank and rate the best law firms.

Conclusion

I have often written in this column about the emerging skills legal marketers must be prepared to bring to the table to continue to compete for top industry positions. Legal marketers can be so preoccupied with the daily demands of generating proposals, submitting peer review ratings, and one-on-one attorney coaching that they begin to lose sight of the bigger picture. While addressing the daily individual b-to-b marketing needs of the attorneys they support, legal marketers must also take a step back and not only understand the current “consumer” trends impacting the industry, but also educate their “clients” as to how this new normal will impact their practices in the not-too-distant future.

While I have seen no demand in my practice to recruit marketing talent from consumer-based industries such as retail or CPG, my clients are asking for us to identify legal- and professional-services marketing executives who have embraced the models used by these industry sectors to understand and capitalize on customer buying behavior.

Michael DeCosta, a member of this newsletter's Board of Editors, is a Partner with the international executive search firm, Caldwell Partners. Michael is a member of the firm's professional services and legal practices. Reach him at 203-348-9581 or via e-mail at [email protected].