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Monday
Oct012007

Strategic Marketing for Law Firms

Our litigation support practice is very simple. Client gets problem. Client calls lawyer. Lawyer calls us. We and lawyer work together to solve problem - or minimise the harm. Client pays invoice. All we need to do business is a reputational problem that involves both the law and the media and for the law firm (or the client) to know that we exist.

But working with mid-tier law firms as clients is a very different matter and far from simple. Pendry White, our strategic marketing consultancy, is doing well acting for a whole range of services companies. At least four of these are accountancy firms, two of which are global networks and one of which is a Big Four global practice where we work in two jurisdictions. But in three years, we don't mind admitting that it has proved a lot more difficult to get the ear of the middling sort of law firm. Why is this? 

Some of it may be down to us. Perhaps we need to focus our own pitch more on the specific needs of this tranche of law firm. But something niggles about this sector - we are good at we do, we have no problems working with litigators and no problem talking to lawyers in the language that they understand. Lawyers will often be very frank about what is missing in their lives.  And yet the sale won't be closed - not only for us but for anyone. They just won't purchase external communications.

There are some good safe specialists and we share Lord Chadlington's view that the more competition in communications the better. Knowledge of what it can do can only increase the market for it but there is an instinctive suspicion of our black arts in any community that thinks its conditions are stable. We only come into our own when external pressures force governments, businesses and practices to confront their own mortality.

Most communications companies find law firms difficult and unrewarding. In my own career, I have acted for at least one different law firm in some capacity every five or so years since ever I can remember and I have to say that no type of client was more satisfying to work with and more unsatisfying to work for. This was not the fault of the lawyers who were generally delightful.  The problem always lay in the nature of the profession.  More of this below ...

But law firms are about to go through the same major changes that accountancy and audit did some decades ago. Some are going to face their own mortality. We are going to see consolidation and ever more niche specialisation. Consolidation means merger and acquisition.  Value in these transactions is going to be partly derived from strength of branding.

We are going to see the introduction of tougher management and financial controls in a profession that has lived well on high hourly charges and an unquestioning customer base. Competition (except at the very highest levels of the game) will eventually drive down prices and profitability. Survival will depend on getting rid of dead wood and commoditising some services (such as conveyancing or employment law). Lawyers are not alone in this. Pendry White believes that it will also have to adopt this approach to survive - although, I can assure you, there is no dead wood in our shop!

The psychology of partners, even in LLP-status firms, often drives the relationship between a firm and its marketing function. A great deal of sales and marketing is about use of language, especially the simplification of language so that a customer is reassured that he is in control of his purchase. Lawyers feel that they have been trained to be masters of precision and of the actual denotation of words. But sales and marketing practitioners are more interested in the connotation of words and will even promote imprecision so that as many customers as possible can be hooked into a brand and its values. Lawyers find it hard to let go. Above all, they find it almost ethically wrong when complex arguments are boiled down to imprecise essentials. They resent seduction by the salesman's cynical use of low level emotion. Meaning matters to both skill-sets but what is meant by meaning can be very different.

Alongside this psychology of language - equivalent to the old-style accountant's psychology of numbers which at least left room for the communications specialist to claim some equal status - lies the psychology of individual expertise within the firm. A partner is not used to being challenged in his or her field.The Senior Partner is primus inter pares and not fully the boss of the shop. On the other hand, communications in business as in politics is not a democratic virtue. The basic demands of communications - a single coherent message, the brand value, the corporate identity book, the single voice speaking in a crisis - are essentially authoritarian. External communications, to be successful, requires a strong Leader within an organisation able to impose his or her will until he is ousted - when his or her external adviser tends to go too.

From the point of view of an external consultant, a partnership structure can mean wasted time and excessive compromise. He finds that he is squeezed between the parsimonious attitude of partners to any 'overhead' expenditure that does not have immediate or very tangible benefits and the time taken for decisions that are controversial or complex because 'everyone has to be brought on board'. External communications is labour-intensive and external consultants also charge their time by the notional hour. So lengthy discussions on what the communications professional considers to be professionally self-evident cut into internal budgets that are always likely to be lower than those of shareholder- or customer-driven corporations.

Nor does the legal profession produce 'hot' stories. The most interesting developments in law are often arcane. Firms can be reluctant to tease out any political or social implications in case they alienate their clients. Some strong personalities are figures of note and some specialisms like libel lawyers can tell a tale that is of direct interest to the media but the views of a strong specialist are not always branded with the firm's needs in mind. He or she is still trading on their star status and that status can move with the lawyer from brand to brand.

Client confidentiality also limits what can be said.  Our litigation support practice has its approach down to a fine art. Lawyers and PR work closely to craft settlement statements that kill further media speculation but leave sufficient 'wiggle' space to enable the client to defend itself later if someone fails to keep their side of the bargain. But this is always driven by the client's needs. Most clients of most law firms in most situations want their affairs kept private and, if there is an announcement to make, they will want to make it. Lawyers' statements often read like tombstone advertisements and the firm is reduced to promoting itself through advertising, newsletters and seminars that are in danger (without creativity) of suffering from 'me-tooism'. Sponsorships are often centred on corporate hospitality rather than brand awareness.

There is nothing wrong with much of this. You do what you can. But it does mean that in-house communications and marketing personnel find little job satisfaction in handling (in a caricature) a dull brief for a highly politicised group of highly intelligent but experientally limited people who are parsimonious. This can result in a sector that contains few communications stars, who are largely operating in the top London firms or in specialist consultancies, and has a very high staff turnover as in-house marketing personnel get frustrated and move on quickly when 'swimming in treacle' becomes too much to bear.

But this is now, and things will change.  Competitive pressures will require strategic marketing input.  Strategic marketing input requires centrally directed management. Partners will either be isolated as specialists or have to adjust to a greater differentiation between their professional skills and what is necessary for the brand/firm to prosper. A radical increase in cross-selling, the Holy Grail of the services sector, may be too much to expect. The personality who becomes a lawyer is not suddenly going to become a salesperson.  As a result, the practitioner is going to have to cede power to a management that will demand much more strategic thinking and greater reinvestment in marketing.

But this change does seem to be taking an inordinate amount of time. It has been predicted for some years and yet little seems to have happened. Why is this?  Our theory is a theory about market pressures. So long as clients are willing to pay high prices for services, there is no incentive to change. In cases involving business and property transaction, legal fees are regarded as what you have to pay to assure yourself greater capital gains in the future. Similarly, the shift to Government by regulation has allowed lawyers, as much as accountants, to free ride a fundamental shift in the management of capitalism that started with the Reagan-Thatcher liberalisation. 

But now we are moving into a period of credit squeeze and we are probably drawing close to the point where regulation is reaching its limits for national business. Corporations are going to start to look at service costs (including marketing costs) as a whole, much as they looked twenty years ago at production and employment costs. New technologies and the stabilisation of Government regulation are also likely to permit a surprising degree of commodification of basic services that we have tended to think of as 'professional'. 

Suddenly, after a long gestation, mid-sized law firms are going to be interested in management, in consolidation and in economies of scale. Many of the largest are already most of the way there and very distinctive brands have emerged at the level of Clifford Chance, DLA Piper and Herbert Smith. The sheer scale of their operations and the numbers of deals emerging out of globalisation have permitted reinvestment without cutting into partner income. Our concern is more with the mid-sized national and regional firms facing one or more of several challenges - an aging partnership, lack of clear differentiation from near-rivals, the weakening of traditional family and local client-bases, niche players (sometimes breakaways) stealing away their most profitable practice areas - and the eventual commodification, despite the rear guard action of their friends in Parliament, of many of their main product lines

Strategic marketing for law firms may be about to go through a new surge of growth.

http://www.pendrywhite.com

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