Videos

What Law Firms Can Do to Stand Out in Today’s Environment

As legal work continues to level off or stagnate, law firms must rethink their services in order to maintain profits. Law firm expert Jordan Furlong discusses the three biggest issues law firms face, what firms must consider to differentiate themselves and how to find out what clients need.

 

TRANSCRIPT:

Greg Corombos: Hi, I’m Greg Corombos. Our guest this week is law firm expert Jordan Furlong. He’s a Principal at Law 21. He’s also the author of Law Is a Buyer’s Market: Building a Client-First Law Firm. For the next few minutes, we’ll be examining how law firms are or ought to be evolving. Jordan, thanks so much for being with us.

Jordan Furlong: Greg, thank you for having me today.

Greg Corombos: Based on your expertise, what are the top-of-mind issues for law firms right now, whether it’s concern over data breaches, obviously competitiveness in the marketplace, keeping up with technology, government regulations. What’s most on their minds right now?

Jordan Furlong: At a lot of law firms, what’s most on their minds these days is pretty much what’s been on their mind for the last several years, which is how do we maintain our profitability. How do we deliver at least as much profits to our partners as last year, or at least more than they were expecting? There’s a lot of law firms where that’s still the guiding light, and that’s what really consumes everyone.

But what’s very encouraging to me is that there is a growing number of firms that are focused on much more substantive issues and much more significant issues. For me I think the three most important ones out of that list, number one law firms are quite concerned about the fact that work continues to level off or stagnate, especially coming from corporate in-house law departments to the extent that law firms are remaining profitable and pushing their profits up—it’s almost entirely driven these days—by rate increases So the amount of work coming in is either stagnant or dropping off. Obviously a problem.

The second issue is very much related to that, which is there is a growing cadre of what you would call alternative legal services providers or ALSPs. These are companies like Flex Lawyer platforms or managed legal services companies. What they’re doing is taking all that routine, straightforward work that the in-house people used to send to the law firms, but is now going to these alternative providers.

The third issue is internal to the law firms, and that is a serious concern about the succession crises. A lot of senior lawyers are getting ready to transition out of the profession out of the firms, and for a whole bunch of reasons, the firms haven’t really prepared properly for that. Sometimes it’s attributable to the senior lawyers not really prepping the junior behind them, but there are all sorts of reasons for that.

There’s a lot of balls in the air for law firms to juggle these days.

Greg Corombos: You mentioned how the legal services world is different now because of all these different options. How is the traditional law firm community responding to that and trying to win back those consumers?

Jordan Furlong: I think most law firms these days are starting with the premise that, We need to find ways to become more competitive. That’s very encouraging to me because there has been a lot of complacencies, I think, with a lot of law firms in the past. They’re looking for ways...what are the value-adds we can come up with. How can we find ways to attract the attention of clients and say, Look, you should send this work to us. Sometimes they will enter into partnerships and alliances with some of these alternative providers and say, Hey look, between the two of us, we cover the whole gamut. We can provide the clients with what they’re looking for. A small number of firms are investing in this kind of technology in process improvement themselves because they recognize, We have to become more competitive, more streamlined, more heavily relying on technology.

I think for a small number of firms, there is an interest in saying, We need to rethink everything. We need to be thinking about how are we compensating our lawyers. What are we paying them to do? How are we billing our work? How are we pricing what we’re doing? And even, what’s the right mix of partners, associates, and people who aren’t lawyers.

It has been a very good development. The last decade has been very good from the client point of view and the buyers of legal services. We’re starting to see law firms respond to that in a positive kind of way.

Greg Corombos: Jordan, let’s talk a little about your book now. One of the ways the law firm community is responding is by trying to make themselves a more attractive option to potential clients. How do you build a client-first law firm?

Jordan Furlong: It’s the manner in which clients are actually being served. A lot of the time when you’re in a law firm, you don’t really know what it’s like to receive the services that you’re delivering. But from the client point of view, sometimes that’s even more important to them than the outcome. How long did it take to get served? What was your responsiveness like? Was the budget completely blown on this? There’s a lot more to client satisfaction than simply the outcome.

I encourage law firms to build systems to track that and make note of that.

And it sounds like a crazy thing to say this, but a lot of law firms don’t even track the results that they deliver to clients. Just build a spreadsheet. Put in the spreadsheet what you promised you would do for the client, what you actually did, and what the client thought about that. That third step is critical. You got to go back to the client every time and say, Did you get what you came to us to receive? And if you didn’t, please tell us how and why so we can deliver the next time.

Greg Corombos: Jordan, how do you prove it to prospective clients or existing clients that you’re going to do better, that they don’t need to go these emerging alternatives, many of which might be less expensive to begin with. How do you actually convince them that you’re going to do what you say you’ll do.

Jordan Furlong: It’s a really good question, and one of the things I say to law firms is, look, if you’re going to try to differentiate yourselves to clients, if you want to stand out for reasons of being unique or being particularly well suited for what they need, you need to understand upon what basis are they actually buying your services. A lot of law firms aren’t aware of this. It’s a lot easier to prove you are the package your client wants if you’ve had those in-depth conversations to find out what they’re looking for.

But you know what, it’s kind of a gutsy call and not every law firm is ready to do this. But I sometimes say to law firms, have a conversation with your client, find out what the work is that they’ve got to deliver, and if there is really straight-forward, basic, low-value work, say to them, you know what, you shouldn’t be giving that to us. We’re overqualified for that. We’re punching below our weight if we do that kind of thing. We can recommend three or four or five good suppliers we’ve dealt with. You should go to them for that kind of work; let us take the other kinds of work. I think it would be an astonishing thing for a lot of clients to deal with. All of a sudden you have law firm say, don’t give me work? But that goes a long way to establishing trust. Say, I’m looking out for your interests. I’m not going to try to sell you everything because frankly, you shouldn’t be getting everything from us. You should be coming to us for high-value, high-stakes, important complex work, and we can nail that work for you.

Greg Corombos: Jordan, you were very optimistic about law firms approaching the need to change. What about the places where there is some resistance? What are the most common barriers to change? Is it just the desire not to?

Jordan Furlong: Lawyers are especially conservative and risk-averse. We all are to a certain extent. Change aversion is part of the human condition. But there are many stories out there that will demonstrate lawyers are outliers even in this respect, especially averse to changing anything—we love the status quo. That is absolutely a part of it.

Another part of it, or course, is that the law firm model we’ve been running for several decades has been immensely successful from the point of view of the lawyers and the firms themselves. You look at the AMLAW 100, and yes, granted, that’s a different market than many lawyers in the U.S. and Canada are working within. But, you look at the number 100 firm in that list, and the average profit each year to a partner there is eight hundred, nine hundred thousand dollars? Which is astonishing. That is the average partner...at one firm. It’s easy to understand why people would resist wanting to make those changes, make those shifts.

What I think within law firms specifically, the biggest barrier to change tends to be the fact that lawyers within law firms consider themselves to be pretty autonomous. And this especially goes for equity partners, and doubly especially goes for any equity partner who is especially influential, powerful, a major rainmaker, or a political player within the firm. I’ve seen and heard for many people who’ve had this experience as well, all it takes is one or two people to stand up in a meeting and say, no, we’re not doing that. We’re not making that investment, we’re not going to start that campaign. We’re not going to do anything different here because I perceive that it threatens my interests. In most companies and well-run businesses, one outlier is like, well fine. That’s your opinion, you’re entitled to it. But in law firms, it takes just one opinion to stop the whole train in its tracks. I think that is an insoluble problem in a lot of law firms. I think you either have to get to the point of saying, these particular lawyers simply have to move on before we’re able to bring about the change we want to make.

Greg Corombos: Last question for you Jordan. Are their additional or special challenges for multinational firms to adjust to this new reality. Or are the challenges essentially the same?

Jordan Furlong: The challenges are very similar. There are a few extra ones. The management issue, of course, is staggering. I don’t how you would manage a firm of two thousand, three thousand, or even seven thousand lawyers. Lawyers are very difficult to manage at the best of times. And when you have thousands of lawyers across multiple jurisdictions speaking different languages, and cultures, and groups and so forth, you’re not really managing that. You’re just kind of herding it along in one direction, hoping we all get to the same point. That’s not to say it’s impossible. I know that these firms spend a lot of time and energy and money precisely on that level of management, making sure there’s cross-pollination, people get to meet their partners in their jurisdictions and so forth. It’s a significant challenge.

There are advantages, obviously, to being a multinational firm. Brand power is extensive. Your top-of-mind for a lot of people in a lot of jurisdictions. Size for some clients is still a differentiator.

But the number of clients for whom it is *the* differentiator, who will say, you know what, I’m going to that firm because it’s available in the most cities and the most countries, the number of clients aren’t all that numerous. And the number of law firms hoping to compete on size seems to be growing every day.

Last point on that. The problem with competing on size and multi-jurisdiction ability, is that they have now slowly made their way into the legal market, the big four accounting firms. And the smallest of these firms have something in the range of 120,000 employees. So if size is your differentiator, I think there is someone coming into the market who is going to have something to say about that.

Greg Corombos: Lots to keep in mind. Jordan, great to get the inside scoop on how the field is changing, and why it needs to change. Thanks so much for being with us today.

Jordan Furlong: Thank you, Greg, very much.

Greg Corombos: Jordan Furlong is a Principal at Law 21. He’s also the author of Law Is a Buyer’s Market: Building a Client-First Law Firm. I’m Greg Corombos.

Questions? We can help.

Have a specific question about a product? A CT Specialist will follow up with a custom quote along with a comprehensive assessment of your needs.

Image CAPTCHA
Enter the characters shown in the image.