Embracing the Product Imperative
How often do we hear commands like “Innovate or die!” outside of the legal industry?
Product companies and even other professional-services firms are asked — perhaps even required — to “innovate,” largely in deference to the healthy paranoia they recognize drives all great businesses to higher levels of success. The legal industry, however, is in the very early innings of experimenting with innovation. Professional-services firms in general hate to invest ahead of revenue as compared with their product-company brethren — and to the extent that real innovation necessitates what are viewed to be distracting allocations of capital, law firms have been loathe to do much of it. We can also point to the DNA of lawyers themselves: they are risk-averse and typically want to see proof of concept before experimenting with any new business practices. Given the unique realities and history of the legal business, why is it now that we are seeing firms experiment with their business and operating practices? More importantly, how can later-adopter firms do their own form of innovation without operating on the bleeding edge?
Law firms are currently innovating across multiple dimensions of their business — product, internal processes, incentive structures, communication, etc. The below example areas are but a few faces of noteworthy law-firm innovation:
Practice Group Organization/Positioning/Definition
Law firms are great at projecting a marketplace identity that reflects their internal managerial priorities rather than the external realities of the markets and businesses they want to serve. Do businesses really think of themselves as “anti-trust businesses” or “complex commercial litigation businesses”? Of course not. As a general proposition, companies want to work with lawyers who are business peers as much as legal specialists; a law firm’s org chart should reflect this intersection. Firms that present an array of cross-disciplinary capability focused on particular industry sub-sectors resonate in the market place. A great example of this is the web site description of the Duane Morris “Franchise & Distribution Law Practice” which basically states loud and clear, “If you’re a business with any kind of complex supply or distribution chain, we ‘get’ you . . .” Duane Morris has put together a cross-disciplinary team to focus on this business demographic, including anti-trust, RE, corporate, and other regulatory practitioners.
Cross Disciplinary Products/Capabilities
While there’s nothing really groundbreaking in firms that hold out an integrated cross-practice capability to the market, there is relatively little promotion of cross-disciplinary capabilities between law firms and other business-services providers/consultants. Law firms should look for opportunities to partner with industry-specific resources in executive recruiting, strategy consulting, accounting, commercial insurance broking, lending, and other areas. Firms might consider doing business with these providers by creating jointly developed and integrated “products” and assessments, and teaming up on some promotional activity to establish relationships with prospect businesses.
Become a Front-End Resource
Why should strategy consultants, risk management consultants, commercial insurance brokers, investment bankers, and other business advisers have a monopoly on the C Suite’s ear during the corporate planning process? Business people believe that legal issues are but symptoms of underlying (and more important) business issues — in many respects, legal issues don’t have freestanding importance to many clients. Lawyers should try to spend more time understanding the core activities of a business across all functional pieces of the business; i.e., ask for and review the business plans for each of these functional areas. Exhibiting an interest in this information is “attention getting” in and of itself, but law firms can do much more here in the form of risk prevention measures, compliance regimes, audit processes, and training. Another great example of a law firm focusing on the “business front end” is the M&A practitioner who becomes the quarterback of a post-acquisition integration process once the client has closed on a business acquisition. Normally the lawyer would leave the closing table and move on to the next dragon, thereby leaving the client to rely on the Bains and Accentures of the world to quarterback the post-acquisition integration process. This is a real opportunity for the lawyer to lead and maintain client relevance.
One Word: Products!
Many of the world’s most sophisticated non-law firm providers of professional services develop and promote productized versions of their wisdom to their market. Few could argue about the situation-specific, complex, and sophisticated nature of McKinsey’s work with Global 1000 executive management, yet even McKinsey markets some products to its prospect population.
Like other high level business-services providers, law firms should embrace the product imperative for a number of reasons, namely:
- Pricing usually takes the form of a single one-time fee; clients like the certainty
- Products = lots of reusable knowledge in the minds of clients. “If a law firm is willing to move away from the open-ended billable hour to support a fixed-price product, then it must be very facile with the legal substance and confident in its own understanding of the scope of this project”
- There may be no better way to signal a firm’s expertise in a particular area than by creating a product that speaks to such area. The existence of a product is a form of self-validating (and perhaps transcendent) expertise in an area
- Products speak to the presumed needs of a particular market, and therefore express a deeper understanding of discrete industries and company types.
So Product Up!