Guest Post: Why are we Really In the Business of Law?

I’m pleased to welcome Heather Gray-Grant as our guest blogger for this edition.  Heather is a marketing strategist, planner and implementer, and an executive coach.

The first question in a strategic marketing plan is always the same:  what is your purpose?  From there, we essentially determine how to fulfil that purpose in a way that demonstrates positive differentiation in the eyes of target clients.

Within the free world, “purpose” is clearly a desired understanding.  Amazon has over 53,000 books under that keyword search, and yet I couldn’t find a single one dedicated to the purpose of a law firm. You might suggest that’s because it’s obvious: to provide high-quality, cost- effective legal services together with outstanding client service.   But is it the truth?

Lately, I’ve been reacquainting myself with some law firm outliers , sometimes referred to as “new law” firms (as opposed to the “big law” firms from which they seek to differentiate themselves).  These new law firms purport to be changing the law firm business model based on a different set of purposes.  See if you can figure out what their purposes are:

Firms like Conduit Law, Delegatus and Axiom provide clients with flexible service delivery through such mechanisms as embedded lawyers (think secondments) on demand for projects, or for short or long term general placements.

Cognition motivates lawyers to provide outstanding client value and service with a “gamification process” that earns them redeemable points.  Miller Titerle focuses on the other side: providing exit bonuses to lawyers who aren’t fitting in with their service methodologies and client service-focussed culture.

The pool of professionals and how they operate are a little different at these firms as well.   Delegatus has no interns and is completely comprised of fully-trained lawyers from big firms.  This includes many part time and contract lawyers, and most of them work virtually, which means a 50% savings on overhead costs.  There’s no minimum target for their lawyers.   As you can imagine, they tout significantly reduced fees over their big firm counterparts.

Axiom professionals include lawyers but also business people (analysts, financial planners, accountants, etc.).  They maximize efficiency by eschewing the traditional law office layout.  Instead, they look a bit like a gaming company – endless funky cubicles surrounded by glass boardrooms for team work as needed.

Clearspire believes it has perfected the law firm business model by ensuring individuals stick to their core competencies.  For example, it has divided the firm into three disciplines: Law, Admin and IT.  These areas are run as separate units, and then collaborate as needed to run the firm as a whole.  (I`m over simplifying due to space limitations, and would encourage you to visit the websites of all of these firms to find out more about their innovative approaches).

The culture of an organization can often be gleaned through their recruitment marketing. In those materials, these firms all seem to share the desire to attract those unafraid of practicing differently than in the big firms, of feeling passionate about the law again, of connecting more with the clients, and of feeling better about where they work. Big firms say these things, too.  The difference is in how the two models operate to prove these aspirations.  Clearspire explains their views on this on their site.

“The big law firm model has failed to evolve over the past century. The focus on partner profits accounts for the gross misalignment of interests found within traditional firms…Attorneys and firms are continually at odds over billing quotas, rainmaking pressures and the absence of work-life balance – the byproducts of an economic model that leverages people and time rather than technology or business processes.”

The site goes on to explain how Clearspire believes the big law firm model accounts for itself.

“Within the typical firm, partner profits account for more than 30% of the balance sheet. Another third supports lavish office overhead. The remaining third pays the salaries of the firm’s lawyers who actually do the client work. In sum, nearly two thirds of the firm’s hourly rate offers little direct value to the client.”

Reality check: staff, IT and marketing costs also account for a sizable portion of the typical law firm budget, and I doubt that most partners would feel they provide little to no value to a client.  But I get the idea that Clearspire would prefer there was a better correlation between client value and service costing and I think most clients would agree.

I love the determined innovation of the new law firms referenced above because I believe their actions honestly stem from a purpose of providing better services to clients.   A business exists primarily for the purpose of selling its product or services to a consumer.  Big firms have often been described as operating more like “clubs”, in part because some of them seem to be focussed foremost on providing a comfortable environment in which the partners can practice.  In such environments, client focus is at best a secondary goal.

New law firms are reversing this order, winning market share and ironically, seem to be more successful in creating a meaningful career environment for their lawyers while doing it.

For more information on Heather Gray-Grant’s services, please go to www.heathergraygrant.com

 

Author: Colin Cameron

Founder of Profits for Partners, Management Consulting Inc. We provide strategic profit-focused advice to professional service firms based on 25 years of executive management and consulting experience. I am a management consultant, chartered accountant and former COO of a major Vancouver, BC law firm. My specialties are profitability improvement, strategic planning, firm governance, partner compensation, financial management and operations management.

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