Law Firm ‘A’ versus Law Firm ‘B’ – the consequences of ignoring online engagement.
I attended a very good seminar called “Flourish and Grow Your Practice” last week. I was chatting to a law firm during the break and explained my “Law Firm ‘A’ versus Law Firm ‘B’” theory. Okay not the most exciting title but there you go. I did touch on it in an earlier blog but thought I would expand it out here.
Let me set the scene. There are two law firms in a similar geographic area.
Law Firm ‘A’ – traditional firm with 100 year + history, 25 partners, multiple offices including one in regional city centre.
Law Firm ‘B’ – smaller firm, 5 partners, 25 year history, one office
Old world – ‘A’ seems to have the upper hand.
New world – ‘B’ could have the upper hand
How can that be? Allow me to explain.
‘B’ decides to deploy DirectLaw online legal drafting technology. ‘A’ decides not to or at least didn’t have the time to consider it. ‘A’ thinks they are far too big and established to be under threat.
‘B’ starts to attract new clients over the web but also creates greater margins by incentivising some of their existing clients to engage online with them. Clients from ‘A’ see that ‘B’ offers a choice of engagement – face to face, on site, over the phone and commencing drafting online.
‘B’ recognises that shifting drafting (where the client submits an initial rich content draft via the web) for some of their clients to online, securely, reduces their cost to serve, increases their margins, keeps them in control of ‘the process’ and gives clients a choice of price and engagement.
Keep thinking about that word ‘choice’ it is very important for clients.
‘B’ has created a virtuous circle; (cost reduction + increased clients = more margin to expand firm and attract more clients).
Clients of ‘A’ start to migrate to ‘B.’ They like the pricing, they like the choice.
‘A’ takes a “me too” stance and a year or two later decides to deploy the same tech thinking that they will instantly catch ‘B’ up and in that clients will return. But they don’t. Why? Because the clients have no incentive to. ‘B’ is providing them with what they want. To attract clients ‘A’ needs to up their marketing to create awareness and take up (cost) and/or undercut ‘B’ (more cost).
‘B’ has exploited their strategic advantage and has pulled away from ‘A.’
‘A’ has a higher cost base, (those city centre offices are now starting to look very expensive especially as clients of ‘B’ don’t need them). ‘A’ is in a vicious circle (high cost base + competitor deploying advanced tools) and all because they didn’t spend time in recognising the strategic opportunity (and low cost) of online deployment.
But it goes further.
‘B’ uses the same tech to target, (time and price sensitive), small start up’s. Their online technology means that that they can serve this market cost effectively. ‘A’ didn’t deploy the technology for this so struggles to cost effectively serve this market. ‘A’ has to wait until the start up becomes a significant SME. Problem is those start ups who have become big SME’s have been served by ‘B’ since, well, start up. SME has no need to ‘change horses midstream.’ Firm ‘B’ has been looking after them for years, through the tough times (start up) as well as the good (expanding SME).
So are you ‘A’ or are you ‘B?’
The future is not about being necessarily big, but about being smart.
That’s my theory, I would welcome your thoughts and feedback
I think the same holds true for the adoption of web 2.0 and social media generally… many of the large firms are busy getting the IT department to block social networking sites or installing new software like http://www.teneros.com/socialsentry/ to monitor all of their employees’ social networking accounts whilst the smaller firms are busily adopting the technology and using it to develop their business.
Thanks for the comment Jon. Beggars belief in my opinion.
Great news for small to medium size firms though.
You may have read that I had a colourful conversation with a partner who actually said “we are the 2xxth biggest law firm, we are not under any threat, the small firms will be wiped out.” Professionalism kicked in so I let that go, but in fact he inspired me to create ‘A v B’ so not a complete waste of time.
Trouble for large firms is they think they are in control, they are not. The market, esp today can break just about anything and shape it how it wants.
Agree with both of you.
From my City days I still keep in touch with a lot of people working there and almost without exception they have their heads stuck in the sand when it comes to the wider implications of IT, especially social media.
Ok, the big firms still have very impressive knowledge bank resouces and experience in-house, but this competitive advantage will slowly be eroded, especially considering the greater value that smaller firms can produce.
I picture some of the people I used to work with, stuck in their physical offices, only principally communicating with a few people in the same building. They are not constantly developing themselves and learning through online media. If I was operating a fast growth company I know who I would prefer to instruct.
Jonathan thanks for the comment. What started off as a phone call with a partner of a large firm turned into a ‘theory.’
Problem is the early adopters, those who see the risk/reward will be the winners here. There risk will be the initial cost of starting up a DirectLaw platform but at £400-£500 a month it won’t exactly break them.
It is, I have to say, bordering on delusional to suggest that being big will make you ‘safe.’ Whilst I am not suggesting that large firms will be wiped out they will have to adjust to the inbound work, new work, whatever you want to call it looking at and finding alternative homes. Then that vice like grip will tighten even further if brands start to deploy. Suddenly that high cost base is starting to look less an asset more a liability.
Who do you think brands will want to engage with. ‘Old world’ ways or dynamic ‘new world?’
To re-iterate my point to Jon Bloor, effectively the genie has left the bottle.