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Practice Management Q & A
How Do You Differentiate Your Practice Group From The Masses?
August 2006
A common problem in practice group business plans is the failure to differentiate the practice group from its many competitors. Too many firms develop marketing plans with long lists of target "potential" clients or clients to cross-sell. Nowhere in the document or even their discussions to develop the plan do they identify key ways that their practice group is differentiable from their main competitors. There are many myths apparent in these plans:
Myth Reality These clients are currently unrepresented by counsel and will hire your law firm if they simply know that you exist.
There are few, if any, clients that your firm would want, much less those listed in your plans, which are currently unrepresented by legal counsel.
They are unhappy with current counsel and will know by meeting with your firm that your firm can represent them more effectively.
While they may be unhappy, there is significant research to support that most clients, even if unhappy, have substantial inertia with regard to changing existing relationships. As much as there is a lot of talk today about less client loyalty than in the past, most clients do not readily change counsel.
The obvious excellence of your firm relative to their current counsel will be apparent when they come in contact with your lawyers.
Most firms try to distinguish themselves with what are "neutral" factors – the quality of your work, the quality of your lawyers and your integrity. While these factors are very important, it is the rare client you would pitch that does not feel that their current counsel already meets these basic "hygiene" factors. You must have these three elements and then, differentiate your firm from the current firm(s) it uses.
Thus, one of the most critical elements for effective practice groups is ensuring that your firm identifies key ways that it is differentiable from its major competitors. What is it about your firm, its approach to lawyering, its service, etc., that differentiates it from the hundreds of other quality law firms that the client can choose from or would make it want to switch from its current counsel.
To develop the ways that your group is differentiable begins with the "assessment" part of your group business planning. [Keys to developing an effective practice group business plan were covered in this publication in December, 2004]. The business planning process should begin with an assessment of the practice group from both an external and internal perspective. The assessment is designed to help your practice group develop a realistic, inspirational and innovative plan that will set priorities and identify specific and detailed actions to achieve its goals. This assessment used to be called a "SWOT" analysis – which addressed strengths, weaknesses, opportunities and threats that were, or would soon be, affecting a practice group. However, with today's competitive and rapidly changing market, "SWOT" analyses are considered out of date and antiquated. They are not very effective because they do not sufficiently consider the market dynamics and can cause a firm to be complacent or ill-prepared.
Instead, it is important for a group to first evaluate the market and its current position – in as candid a fashion as possible. With extreme competition and difficult trends affecting many practices, it can mean failure if there is not a candid, realistic evaluation of the group – this is not the time to be superficial or pat yourself on the back. It is the time for an earnest and candid evaluation of the following:
- what services your group offers,
- what are the trends affecting these services (positively and negatively),
- who is your competition and finally, and most importantly,
- what are your group's "selling points" vis-à-vis the competition – what is it that truly differentiates your practice group.
The last two parts of this are most frequently left out of practice group assessments or are very superficially answered with responses such as "it is the quality of our lawyers that distinguishes us," or similar comments about the quality of the work. These selling points must be important to existing and prospective clients and must be provable. Characteristics such as the "quality" of your lawyers or your work are rarely verifiable through market ratings or feedback from clients that use your firm and the competitor firms. The fact is that every firm makes these same statements – and believes that they are true. Selling points that can distinguish your group are characteristics like in-depth industry knowledge, technology applications that add value to the client, market rankings or ratings of top firms, significant critical mass in an area of expertise, etc.
One of the best ways to identify factors that actually differentiate your firm is through client interviews or surveys. Ask your clients who use multiple law firms (including those who only use your firm for a small amount of their work) what characteristics distinguish your law firm from others that they use and what characteristics they seek in law firms or hire based upon; probe for meaningful details, not simply broad generalities. In particular, don't just accept terms like "entrepreneurial" or "client focused" like every firm uses. Ask them clarifying questions to determine what they mean by that. Too often, the law firm's interpretation of those terms is different than what the clients mean.
If you interview 20 key executives from among your firm's best clients (largest, greatest growth potential), along with some clients (at least five) that use you for only a small amount of their work, you will develop terrific information and, typically, some themes that actually differentiate your firm from your main competition.
Typically, your differentiation will be based on one of seven types of "competitive capabilities" illustrated in the chart below. "Service range" means your breadth and/or depth. Do you have more lawyers in the area than your competitors? Do you have more lawyers who have deep expertise in narrow specialties within the practice? "Technical expertise" can be based on specific knowledge that is critical for this practice. For example, in intellectual property practices, it is important to have lawyers with certain scientific or engineering fields. A lawyer who also had a medical degree would differentiate a practice focused on life sciences or even medical malpractice. "Service delivery" means is there a way that your firm's service is delivered that is distinguishable in ways that matter to clients. For example, this does not mean that your practice group provides "quality service" since most firms are perceived as doing that. Instead, it means activities like using technology to enhance the transaction's progress or knowledge management to save clients money, educate them or streamline a process that affects the client's results.
"Client relationships" refers to the breadth or depth of the typical relationships your firm has. Major law firms often have institutional relationships with clients that their firm has represented for years – regardless of which lawyer is currently managing the relationship. Smaller law firms often have "trusted adviser" relationships with one or more key executives but do not have very deep relationships with others in the organization. These relationships are frequently vulnerable when there is turnover in top management, often through retirement, death or acquisition. "Segment expertise" refers to a firm having deep expertise in a particular industry or niche. For example, in the health care industry, a firm might have significant expertise in long-term care institutions. "Geographical capability" refers not only to offices a firm provides to service its clients but a firm can have capability in an area without having an office if the firm has experience handling matters in that jurisdiction that distinguishes it from other firms. Last, "cost/price" is a competitive capability for some firms. They frequently market themselves as "just as good as X firm but less expensive." Some firms want to be the low cost provider and are highly effective in doing so. Many firms however end up competing on price because they fail to differentiate their firm from other firms on the basis of the other six competitive capabilities described above.
The bottom line is that a practice group should be able to identify three to five differentiators for its group vis-à-vis its primary competitors. If not, its group plan should be working on developing ways that it can be differentiable. We describe it as what is the group "famous" for, rather than what is the group strong in because it causes the lawyers to be much more discerning in describing themselves. It is hard for lawyers to admit they are not strong in anything and yet, they may not be at all distinguishable from their primary competitors.
As a result of the need to differentiate, practice group plans should be "business" plans, not marketing plans, in order to be effective in today's market. This distinction is not just a matter of semantics. The bottom line is that it is not effective anymore to identify target clients and then, try to let them know how good your firm is or that you want their business. Instead, you must be able to differentiate your practice group (or the practice areas under your group) in terms of how you recruit and train, how you manage people and work, how you use technology in a way to add value to the client (in addition to the ways other firms use it), what new services or products you are offering and more. Without this, we find that most law firm marketing is perceived by clients as "fluff." In order for marketing to be effective, it is necessary for the practice group to have a differentiable market position that can be held out to the potential client in a verifiable, demonstrable way.
Marketing activities in a group business plan are very important but are not sufficient by themselves. They must be based on a foundation of practice management activities to truly differentiate your practices if they are to be effective. Practice management activities in plans include steps like: increasing the group's critical mass or capabilities through recruiting of laterals, enhancing the group's training of associates by the use of training checklists or experience tracks, developing new products or services, developing in-depth industry knowledge (where you are known as one of the top firms that understands or deals with a particular industry's issues), using knowledge management to manage work or otherwise add value to clients in a way unlike your competitors, recruiting lateral partners to build greater critical mass, etc. A rule of thumb we look for is that most practice group plans should be at least a 60-40 mix of practice management activities vs. marketing activities, in order for the marketing piece to be effective.
Conclusion
The key to success is in differentiating your practice group from the dozens, if not hundreds, of firms offering the same service. It is not a complex process but it does require rigor and candor to avoid the common pitfalls and myths that result in failed marketing efforts and ineffective group plans.
About the Author
Susan Raridon Lambreth is a consultant with Hildebrandt International who concentrates on practice management issues and heads the Hildebrandt Institute Practice Group Leader Training Workshops. She can be contacted at 800-223-0937, ext 220.