One of my blog readers and I were exchanging thoughts around Rate Exception Management and he raised a great point that we haven't discussed directly yet...the new competitive forces facing law firms.
One of the biggest competitors to Law Firms? - Their clients. I talk about it all the time with our Corporate Legal clients, but not too much with law firms - and I have no idea why!
It's a tough question: How can today's law firms increase profitability when their clients are increasingly becoming one of their top competitors?
Drivers For Decreased Utilization of Outside Counsel
Corporate General Counsel know that using their in-house team effectively (for the highest strategic value and highest risk legal services) for their corporation is ideal. Not just because it's more cost-effective. They look to leverage the innate understanding in-house teams have about the company's strategic objectives and their more visceral understanding of appropriate risk profiles for their organization. General Counsel often believe these key factors can contribute to better, faster and more aligned results with less overall effort. Although this perhaps has always been true, it's risen rapidly to the forefront of their minds over the last 3-4 years as a result of:
Economic conditions and pressure on them to lower the unit cost of legal
Globalization of their corporation's business and the new complexities it brings
Innovative options for either automating or outsourcing transactional, repetitive tasks (e.g., e-discovery reviews)
So how are law firms going to succeed in maintaining profitability when their clients become increasingly effective competitors?
By showcasing depth of expertise, value and calculated return-on-investment
Through the ability to nimbly move on a firmwide basis towards the ever-changing 'gaps' that get opened up due to the rapid market and legal changes impacting clients
Via intelligent and proactive marketing, leveraging experience and successes for deeper client penetration and cross-pollination into similar prospects
With packaged service offerings that provide budget and value certainty to clients that would not be achievable internally
By demonstrating excellence through efficient and streamlined business operations
As we work with law firms to manage their business on an enterprise basis (as opposed to the more traditional siloes), we empower them to make intelligence-based strategy shifts across the firm based on real-time information in a predictive, not retrospective manner. And, because processes are codified, but maleable, these strategic shifts can be very quickly 'embedded' into the daily operations of the law firm. It is true enterprise agility - and it's a must, not an optional component of any viable law firm today.
Of course, law firm management has the added challenge of managing not just the business change, but the serious cultural and mindset change that is magnified for them due to their corporate make-up. As a result, law firm executives identify the areas of change required, and then wrestle with how to introduce those changes without prompting the feared diaspora of partners which can quickly snowball into shutdown. See our blog post on "Behavioral Modification: A Real Law Firm Management Strategy” to learn how BPM helps firms do both at the same time.
Thanks to our blog readers for adding so much great fodder to this conversation - Keep the comments coming!