Be Bold. Now.
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The meek may ultimately inherit the earth. But history suggests that, in the meantime, meek marketers will waste a lot of time, money and energy and miss out on the opportunity awaiting those with the vision and courage to take bold, defining action. By now all but the most resolute of ostriches have accepted that the law firm business has undergone great change. But the language of the current marketing debate suggests that many participants still don’t appreciate the degree. The word “change” understates the situation to distortion. It is like saying that banking has “changed” from long teller lines and limited retail hours to instantaneous, 7-by-24, on-line, global transactions from home. The legal service industry isn’t changing. It is being reborn. After a while, any similarities between what it was and what it will become will be incidental. Doubters need only consider the economic and cultural sacred cows of the legal services world that clients have already made extinct or are fast on the way to putting on the endangered species list: hourly billing; seven-year partnership tracks; total discovery; associate leveraging; and highly-paid partners without clients, and many others. Reluctant Marketers In the face of this, law firms have reluctantly embraced “marketing.” But they resist doing it in a serious way. Too many marketing efforts are constrained by law firms’ historical desire to be just like the other firms in their respective categories. But think about your clients’ corporate marketing behavior. Depending on their position and market, they invest from 3% to 10% of gross revenue trying every imaginable way to differentiate themselves from competitors, to get noticed and remembered by potential buyers. Research shows that sizable corporations use dozens of law firms each, that they receive marketing or sales contact from hundreds more each year, and that established firms are all perceived to be so highly competent that ability-based distinction is virtually meaningless. That means that most firms are voluntarily trapped as one of hundreds or, perhaps, thousands in a very large and, therefore, meaningless, category: “capable law firms.” No matter how cleverly packaged they may be, all versions of “we do great legal work” perpetuate this trap. Buyers believe that almost everyone does great legal work. In their seminal work, “The 22 Immutable Laws of Marketing,” corporate marketing gurus Al Ries and Jack Trout tell us that buyers think of sellers in categories. To lead a category, you must either be the first to offer a product or service, or contrast yourself with the leader. After a hundred-odd years, the “first law firm” claim would be difficult to establish and, even then, available only to one firm. The only other categories right now seem to be flavors of “Largest” (largest overall, or largest in geographic- or service areas). The rest of us must redefine ourselves in contrast to the category leader, or create a new category which we lead by default. History shows that in all markets, such differentiation is a continuum. Categories continually divide into new subcategories, which in turn subdivide, etc. Dilettante Marketing Undertaking a single tactic, such as updating a brochure, is not marketing. Neither is hosting a few me-too seminars, getting lawyers occasional publicity, or running a handful of ads. This dilettante approach may consume fewer dollars, but it wastes all of them because, other than making the lawyers feel like the firm is doing something about marketing, it produces few results. Sidebar Characteristics Of Effective Marketing Systemic endeavor with clear, measurable goals of shared importance and value Given sufficient time and funding to accomplish the stated goals Sticker Shock Understandably, first-time buyers of marketing services balk at what it costs to do things right, particularly in major markets where media is very expensive. The problem is looking only at the cost side of the equation. In absolute terms, a half-million dollars is a lot of money, but is it reasonable in pursuit of a multi-million dollar payoff? Firm leaders entrusted with decisions about marketing investments are usually very experienced lawyers who have no difficulty understanding why their clients would willingly invest a half-million dollars in a business venture projected to yield $5 million in additional revenue, or spend a similar amount litigating to protect a $10 million market segment. These days, 200-lawyer firms are $50-75 million businesses, with most of them intent on growing 10% per year. That’s $5 million in expected annual revenue growth. In a market oversupplied with law firms, how can one expect to grow without real investment? “Sticker shock” (borne of too-narrow analysis) causes many law firms to move cautiously, making small investments in individual tactics of limited effect. Marketing is essentially communicating with an identified group of people who possess common characteristics that suggest the presence of a condition or need that our services can improve or fulfill. To be effective, communication must be bold or interesting enough to get noticed,In communication, the whole is absolutely greater than the sum of its parts. No tactic, even if well-executed individually, works as well as an integrated effort. The Good News The new legal services market is wide open. Research shows that, with the (qualified) exception of the New York M&A market, the leadership position in virtually every practice-based category is available to own. And practice-based categories are only the most obvious layer. The new subcategories haven’t even been suggested yet. The Bad News Sooner or later, more law firms will begin to act in a serious way. How long can your firm safely wait? It depends on your confidence in your crystal ball and your appreciation for the 4:2:1 economic geometry of category positions. This means that over time, the category leader has twice as much business as the second position, who in turn has twice as much business as the third place firm, after which the category fragments into small shares. It costs the first firm about half as much to achieve market leadership as it costs the next firm to be second and get half as much business. When the telecommunications industry was reborn following the breakup of the old AT&T there emerged a cadre of huge winners, and many others who “coulda, shoulda, woulda.” Likewise, the legal services industry winners, who will control the most desirable and profitable segments of each category, will be those who acted early, boldly and shrewdly. It has been said that those who ignore history are condemned to repeat it. The market is wide open now, but in less than 10 years this market, like banking, computers and accounting services immediately before it, will consolidate and stratify. Then, it will really get difficult and expensive to try to change the pecking order. It is much easier, and far less costly, to capture a position in a wide open market, with few obstacles, than in a cluttered one. Sidebar: Is Your Marketing Effort Either Bold Or Serious?
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