Dave Harris says that law firms need to ‘Extreme Target’ to compete with accountancy practices. It is all about the data and the technology handling it
The UK legal arm of PwC is soon expected to have a turnover of £50m in legal services fees. Fast track to 2019 and the prediction is that the organisation will rank among the top 20 legal services providers globally with a revenue of around $1bn. The other big three accounting firms also have similar aspirations. It makes sense for them and others in that sector – given that they are well ensconced in the corporate world already, offering legal services in addition to what they already provide is a logical next step. Culturally too, they are a natural fit as they follow industry standard business practices.
Already, traditional law firms are beginning to feel the pinch and anecdotal evidence suggests that win rates for work aren't as healthy as they used to be due to ever increasing competition. Additionally, corporates are substantially reducing the size of their legal panels. Only recently, Shell reduced the number of firms on its global legal panel from around 250 preferred advisers to just six.
Furthermore, as the 'rule of law' expands into other regions, law firms recognise that growth will come from emerging markets. A recent survey of marketing and business development professionals in law firms across EMEA and APAC substantiates this – 62% of law firms are actively targeting international growth. Accounting practices also see the potential of emerging markets, and already have an established presence in many of the regions.
It is widely acknowledged in the business world that what sets top performing firms apart is a top notch service, but also an exceptional 'end-to-end client experience' as opposed to a siloed, scatter-gun service approach. They are adept at 'extreme targeting'. The firms that really succeed are the ones that really, really focus their efforts.
Extreme targeting, huh?
Often, law firms respond to pitches, tenders and requests for information over and over merely because it's there in front of them; or continue to pitch for the same or similar types of work despite the fact that they don't ever actually win it. Also typically, law firms tend to measure against the win rates of the work after its been won or lost, regardless of whether the work was truly the right 'fit' for the firm in the first place.
A more detailed and in-depth analysis before responding to the tender could possibly reveal that the firm has no meaningful engagement with the potential client; its business development department is regularly sending out newsletters and other content to various key contacts, but the click-through rates are negligible; any attempts to reach out to contacts have resulted in cursory dealings and no one from the company has ever attended any of the firm's events. Clearly, the law firm doesn't have relationships with the 'right' people in the organisation and isn't igniting any particular interest. In this event, this exercise would have provided a chance to review the engagement efforts and re-adjust the focus accordingly for the future. However, the reality is that the Business Development department is likely working flat out to develop relationships with multiple widespread corporates and the outreach is based on a broad-brush approach. With fee earners involved in a number of the activities, lawyers could be spending valuable billable time on potential opportunities that are unlikely to convert to business.
On the other hand, by adopting 'extreme targeting' – ie identifying the firm's truly top prospects based on 'extreme qualification' – ie an organisation in which the firm has the strongest and widest number of contacts at the right levels, across geographies, who engage via all types of communications from end to end and present the possibility of the best/most profitable type of work – is a better use of resources and offers a much higher probability of success in winning the work. The message here very clearly is 'less is more'.
Accurate revenue predictions
With this level of analysis based on business and relationship-related data, law firms will be able to greatly improve revenue forecasts. Powerful historical data, such as data on which sectors the firm has the most experience in, its strongest regions across the globe, which competitors within those industries and geographies does the firm tend to win/lose against, what is the most profitable price level for the different types of work undertaken, at what level do the strongest contacts exist, which of those contacts are prone to inviting the firm to pitch for any upcoming work, etc. all offer vital intelligence that the firm can use to its advantage before it engages.
Contrary to the 'finger in the air' approach that many firms take, prioritising new business targets based on quantifiable data enables firms to set strategic goals and new business targets that are ambitious as well as realistic and achievable. Ranking new business in this manner also allows fee earners and business development professionals alike to truly focus on understanding the client's challenges and priorities and presenting a viable solution to the prospect, which then has a higher probability of success. In the longer term, it ensures delivery of a better client experience, which in turns encourages a higher retention rate.
Technology can help turn pursuits into wins
However, access to data is a major challenge for law firms. Without it, getting a complete picture of clients and the overall new business pipeline is perhaps one of the biggest challenges that law firms face in supporting their growth plans. Often, because there are multiple business development teams across geographies using different systems – the disparate data sources and processes makes it difficult to track, manage and monitor activity. More crucially, it becomes near impossible to map the business development initiatives back to the larger strategic goals of the business.
Firms need to adopt technologies that bring all the data together, establish consistent business development processes across the firm (globally), and overlay analytics via dashboards that provide a complete picture of business development efforts and outcomes. This data is then exposed to all those who come into contact with the firm's client. In this manner, law firms have insight into the opportunities being pursued, their potential risks alongside a big picture view of the new business pipeline. Consequently, they will always know in real-time what's being pursued, by whom, what approaches are working, what the firm is winning/losing and whether the organisational resources are being deployed optimally to achieve the strategic business objectives – and ultimately create a repeatable process. Firms need to make the strategic switch to 'extreme targeting'.
Dave Harris is a Principal Consultant, LexisNexis Enterprise Solutions