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By Mark Smith, Director of In-house Legal Markets at LexisNexis
A big name partner moves from a prestigious city law firm to its’ biggest competitor. The first firm frantically contacts clients, agrees messages for the market place, revisits succession plans and speaks to their associates to calm fears about the reasons for the move. The second firm re-checks the restrictive covenant position, excitedly speaks to the press and existing clients, and puts an accelerated induction process in place to get the new recruit up and running as soon as possible.
In this scenario, there are many opportunities for both firms to improve their performance, critically by putting client needs at the front and centre of their activities, yet these types of move pose a more fundamental question for law firms. That question is at the heart of how firms compete and how they think about competitive advantage.
Many law firms now talk about the difficulty of differentiation, and the challenges of standing out above the competition. They speak about promises of “added value” (a free newsletter and seminar?); “partner led service” (expensive and inefficient?) and “really understanding your business” (we monitor news headlines for your company name) - all increasingly meaningless, and about how price is becoming the only way to compete.
The difficulty is encapsulated in the partner move scenario at the start of this post, because in all likelihood, the moving partner will be doing the same job in his or her new firm as they were doing in the old firm. Yes, maybe a different set of precedents, a different time recording system, possibly a different client extranet. But the way the client’s problems are solved and the service is delivered is fundamentally the same.
Differentiation means doing different things, or doing the same things differently. Without either of these things, then the claims of being a unique law firm are meaningless. Answering the question “how are you different?” requires the firm to understand how they do things, and how their competitors do things. The difference is the difference that makes a difference.
When I was in-house, I asked a law firm pitching to me how they could invest in the top quality training and knowledge management they promised, and yet still deliver very low prices. I wanted to know how they did it. The answer was that they operated at a much lower level of profitability than their competitors – while I admired the honesty in the answer, it did strike me that there were probably more sustainable sources of competitive advantage that the firm should have been considering.
So the question I challenge you to ask, and answer, is how? Go through the statements your firm makes about how it is different and ask “how?”. Look at the statements your firm’s competitors make. Are they the same? What really makes you different? If you hired a lawyer from a competitor, how different would their job be?
The actual legal advice is not the only place you can differentiate, but it’s a good place to start your investigations.
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