Tech Guru Explains Best Law Firm Marketing Strategies
“Some major firms, even some of the world’s outstanding practices, may collapse over the next ten years unless they embrace various new technologies,” said Richard Susskind.
Who is Richard Susskind, and why is he saying terrible things about lawyers?
Predictions like the one above led a National Law Journal article to award Richard Susskind the title “Prince of Darkness.” Susskind elaborated on his theories before a large and attentive audience during the keynote address at New York Legal Tech 2001. Susskind’s talk and his newest book have lessons for both lawyers and law firm marketers.
Susskind is a British lawyer, academic and consultant with an impressive resume. He has an even better prediction track record. His 1996 book, The Future of Law, predicted that information technology, or IT, would result in radical changes in the practice of law.
The book captured the imagination of many key decision-makers inside and outside law firms. Many of its key predictions have already come true, and others now appear likely enough so that sophisticated readers treat Susskind’s newest batch of predictions with respect.
His newest book, Transforming the Law: Essays on Technology, Justice and the Legal Marketplace, is available now from Amazon.com.
Eyes on the Prize
Susskind has a favorite story, one with a lesson for lawyers and legal marketers:
[O]ne of the world’s leading manufacturers of power tools takes their new executives off on a course and then present them at the first session with a slide of a gleaming power drill. They say to the assembled executives? This is what we sell isn’t it?’ The executives look rather hesitatingly around one another but then collectively say? Yes, of course, this is what we sell.’
Wrong answer. The trainers then put up the next slide, which is a picture of a hole in a wall, and explain:
It is not drills we sell. This is what we sell, because it is holes in walls that our customers want, and it is your job to find more competitive, creative and imaginative ways, and indeed profitable ways, of giving the customer what they want.
Susskind’s point is that too many law firms are selling power drills, while what clients really want is holes. Lawyers (and many law firm marketers) think they are in the business of selling billable hours, or depositions, or legal briefs, or an intangible, “advocacy.”
The problem is that these are not necessarily what clients want. They want “solutions,” i.e., for their legal problems to go away, or better yet, for them not to appear in the first place.
Whoever can provide “solutions,” whether law firms or “professional services firms,” will have a big advantage. “Professional services firms” are what we used to call accounting firms before they got ambitious.
Susskind, whose career has included large accounting firms as well as for law firms, doesn’t much care about the identity of the entities offering such solutions:
If accountancy firms manage to create a business from which first-rate legal guidance can be delivered at a reasonable cost, then I would welcome this as much as I would welcome similar success from a major law firm.
A Fence, Rather than an Ambulance
The need to listen to clients and find out what they want is a key Susskind theme:
Where a managing partner of a firm might express the view that some proposed new service does not fall within the scope of his or her business, I am always interested to hear if clients would like the law firms they instruct to provide such a service.
Listening to clients can lead to new markets for new types of services. Susskind likes to point to the existence of automatic teller machines as an example of a new product line. ATMs did not originate as a replacement for other services.
Banks never operated 24 hours a day, seven days a week. ATMs are a new form of service and a new profit center for banks. Law firms need to be looking for new products (and new profit centers) of their own.
Susskind provides one example of a new product:
Many clients say that they wish that those who were supporting them were more proactive – in the sense that they want their needs to be anticipated in advance. Clients say they want legal risk management rather than legal problem solving, or they want dispute avoidance rather than dispute resolution or, as I like to say, they want a fence at the top of the cliff rather than an ambulance at the bottom.
Another new product: spinning off technology branches to become new profit centers. This is already a trend in the U.S., with Holland and Hart and Womble Carlyle being two of the first firms to go this route. Susskind recommends that research and development efforts be insulated from law firms because they are “not a culture in which creativity will flourish.”
Another result of listening to clients is law firms are becoming more “market-facing.” Susskind suggests that instead of structuring your law firm (and your marketing) around traditional branches of a law firm (tax, property, finance, litigation, etc.), law firms should organize (and market) themselves on the basis of “business episodes.”
In other words, decide what events prompt businesses to hire lawyers, and organize teams (and your marketing) around them. If you do it well, this approach will have the added advantage of blunting a key marketing advantage of MDPs: the cross-disciplinary teams they bring to bear on client problems.
Susskind believes that,
High value, complex, socially significant legal work will still be delivered by legal advisers, by lawyers acting in a traditional consultative an advisory fashion. I think there are inefficiencies in the current system and that the whole consultative, one-to-one advisory service will be streamlined by the use of modern computer technology. But in this limited area, I do not think that we should expect any major changes in the services that are offered and the services that are delivered.
On the other hand, lawyers who deal in routine and repetitive legal work (which includes more than you might imagine) face rocky shoals ahead, in the form of possible “disintermediation,” or “cutting out the middleman.”
Susskind believes that technology will make much of this work,
systematized and eventually commoditized, by which I mean that services will be available online across the Internet alongside the innumerable other services that will be available in society.
In other words, sophisticated computer software can replace many lawyers. In other cases, it does not replace lawyers but provides a new type of legal service (and a new profit center for the law firm providing it). Here are some examples:
- Next law
Is an online service that analyzes legal issues related to data protection and related regulations in multi-jurisdiction e-commerce ventures. It was developed by Clifford Chance, a leading London law firm.
- Blue Flag
Is an automated online service developed by Linklaters & Alliance, another London-based law firm. It analyzes complex situations and delivers legal advice, without the intervention of a human lawyer. The services are not cheap: a one-time initiation fee of around £125,000 (about $182,000) for the first year and an annual flat fee of around £40,000 (almost $58,000) for each subsequent year. However, it can be a great deal for a client, who might previously have paid £125,000 to have a live lawyer research the laws and regulations of all the European Union nations’ laws on just one of the topics covered.
The website of the Edinburgh law firm Morton Fraser boasts of its “Commodity Legal Services”:
Makes it sound like a legal superstore, doesn’t it? We carry out high-volume legal transactions at low unit cost, so, yes, we stack ’em high and sell ’em cheap. Are we talking your language?
Your law firm is not really sorry to lose the low-paying work? That’s understandable, but remember that the firm doing “commodity” work efficiently and cheaply may look more and more attractive when it comes time to select a firm to handle more lucrative jobs.
Susskind’s attitude toward disintermediation?
[T]he law and legal institutions are no more there to provide a livelihood to lawyers than ill-health exists to provide a living for doctors. If deployment of the Internet can result in a quicker, better, more widely available or cheaper service than that offered today, and then I support legal disintermediation wholeheartedly even if its effect is commercially detrimental to some lawyers.
The Latent Market for Legal Services
The “latent market for legal services legal services” has two parts. The first is commercial clients who could benefit from legal services but are not presently being served. One way of reaching these clients is with automated “expert systems” that don’t necessarily replace lawyers but supplement them and bring new business (and new profits) to a law firm. Here are two examples:
- Blake Dawson Waldron
, a leading Sydney, Australia law firm, developed Virtual Lawyer-Advertising, an “expert system” that makes a preliminary determination whether the terms of an advertisement violate the provisions of any Australian rule relating to advertising claims.
- Davis, Polk & Wardwell
is developing the “Global Collateral Project.” It analyzes cross-border financing transactions. Clients enter information about a proposed transaction and can then retrieve the analyses the firm has made of similar transactions. This “preliminary analysis” would be supplemented by customized legal advice from the firm.
The other segment of the “latent legal market” is consumers of moderate-to-low income who could benefit from legal services, but presently avoid lawyers for a variety of reasons, including high fees and fear of high fees. Susskind notes,
The new technology gives an opportunity to provide a form of legal guidance which is the type of information which the consumer of legal services really needs. It will be possible for guidance to be provided rather than raw information. The user will be able to outline the particular circumstances and, rather than being overwhelmed by a flood of cases and statutes, will receive practical guidance.
This segment of the legal market is already being served by businesses like U.S. Law.com and MyLawyer.com. These businesses, which focus on legal problems of interest to the middle class, may not seem very threatening to the typical large firm today. However, Susskind notes:
[L]awyers who reject online legal services for their current level of performance or dismiss some of the application areas in which they operate (such as divorce) as indicative of their irrelevance are missing a vital signal. Today’s low-key online services will grow in strength and sophistication; and indeed are poised, I believe, to disrupt the entire legal marketplace.
Leveraging People vs. Leveraging Knowledge
Time and again, Susskind came back to a key theme: the “Big Five” represent a danger to conventional law firms because in many ways they operate more efficiently. Nowhere is this clearer than in their differing approaches to knowledge management.
It will be difficult for law firms to compete effectively, not just because of the technology gap, but more importantly, the cultural gap and the different business models.
Law firms make money by “leveraging people,” i.e., throwing more people (and more billable hours) at problems. Though they may protest to the contrary, most large firms are not really interested in operating more efficiently.
They make more money by having five associates write the same memo for five different clients during the course of a year than by having four associates update and customize the existing memo. As Susskind notes,
Whether for fear of having their work product criticized or by dint of distrust of colleagues’ ability to reuse their work, many lawyers are reluctant to share their knowledge.
By contrast, the professional services firms have a culture that takes pride in “leveraging knowledge.” They embrace knowledge management initiatives not just as a marketing tool, but as an integral part of their operations. Many clients are becoming disillusioned with large law firm practices, and find the leveraging knowledge approach more attractive. This is one of the reasons Susskind predicts,
By adopting and exploiting online legal services the global accounting firms may come to dominate the international legal marketplace.
In his new book, Susskind described an evolution in attitudes toward his past predictions. For the first few years, most lawyers reacted with disbelief, expecting,
Adjustments at the periphery of their world rather than the fundamental transformations that I was predicting.”
Beginning in 1999, he began to see very different attitudes:
The skepticism gave way to genuine interest, and crucially, the posing of one central question? how should our firm respond to the Internet revolution?
Still, Susskind knew he had his work cut out for him at Legal Tech. As he says in his book,
It is not easy to convince a roomful of millionaires that their business model is ultimately misconceived, or that their practices face greater threats to prosperity than ever before.
Knowing the challenge, he stepped up to the plate and gave it his best cut. To this observer, he knocked the ball out of the park with a Mark McGuire-type moon shot. It will be interesting to see how many law firm managers and marketers are receptive to his message.