How to grow your practice in times of digital transformation?

Despite widespread and over-used sci-fi clichés (Forbes, Above the Law, BLF, or BBC), last time we checked robots had not replaced lawyers quite yet.

Yet it is clear that innovation and digital transformation are impacting the legal market in unprecedented ways. This article will briefly explore this process and look at how this related to competition for clients.

In our view, there are three domains where these digital transformations are taking place.

From (i) an ecosystem perspective, the incorporation of technology in legal processes have led to a host of new market entrants, experimenting with new value propositions, different business models and integrated service offerings (see also: “Legal Tech and Digital Transformation: Competitive Positioning and Business Models of Law Firms”, by Robert van Beemen, Gerard Tanja and Rupprecht Graf von Pfeil of Venturis Consulting Group).

Much has been written -and speculated- about the impact of legal process outsourcing (LPOs), alternative legal service providers (ALSPs), the Big Four and LegalTech start-ups, which are turning the once homogenous and traditional legal market into a multi-segmented, dynamic and rapidly evolving business sector.

This new market segmentation forces law firm leaders to re-think their competitive positioning and long-term business strategy.

On (ii) the product level, technology and digital innovations are revolutionizing -and yes, sometime even replacing- legal services that have been the bread-and-butter of law firms since many decades.

From contract drafting, management and review, due diligence and discovery processes, regulatory filings, compliance projects, financial regulation, to IP and patent licensing: tech-enabled solutions are nibbling away at an ever growing list of legal services, leaving law firm leadership with several existential and strategic issues to resolve.

Firms that are not re-thinking their service offering, hiring strategies, technology investment strategies and continued professional education, might soon find out that we’re not in Kansas anymore.

Thirdly, digital transformation is also affecting the way we manage (iii) the business processes that underpin the administration and management of law firms. This is obviously nothing new, but the legal sector’s traditional lack of interest for, underinvestment in and generally poor performance in terms of business management and support functions have become dramatic obstacles, preventing the bulk of the legal market players from reaping the fruits digital transformation can bring about.

Innovation and digital transformation in practice management, service delivery and “support” business functions such as finance and operations, human resources, knowledge management, marketing and business development are key to creating more efficient, cost-effective, transparent, inclusive and client-centric operations.

Changes in today’s legal “ecosystem” can only be dealt with reactively, and many AI and blockchain-style product innovations are in early stage development, and beyond the reach of most law firms, in particular the independent and mid-market firms that still constitute the bulk of today’s legal market.

But all law firms, big and small, do have an opportunity to change and improve the ways their business are run.

Yet there is relatively little appetite or strategic focus on such, more mundane, digital transformation projects, that actually require change in behavior of the lawyers themselves.

Crowded markets with intensified competition

Most lawyers still find it difficult to digest that their clients’ commercial decision-making process is ever more influenced by non-legal considerations. Yet in every GC panel, market analysis and client feedback program, across different jurisdictions, we hear the same wants and needs:

• more efficiency, transparency and predictability in terms of pricing;
• more efforts to understand the specific drivers of their business;
• more sophisticated relationship management and tailor-made knowledge sharing; etc.

Most of these client benefits can only be delivered by professionalizing and upgrading business management and leveraging the dividends of digital transformation.

The overall demand for legal services has continued to grow considerably. But this growth has been very uneven, and mostly taken place within the legal departments of corporations and government. Of course, whilst local situations may vary, market data seems to indicate that growth in private practice law firms has been nearly flat for many years.

When looking at “traditional” private practice law firms the US market -where detailed data is publicly available- we also see that the larger firms have outperformed the market significantly both in terms of revenue growth and profitability. Law firms that do not sit in that very top segment, are squeezed between the “new kids on the block” (ALSPs, LPOs, Big Four), global and domestic elite firms, and large, international law firms that have the scale and resources to invest in new technology, infrastructure and change management to spur digital transformation.

Intensified competition is a natural phenomenon in maturing markets, but this struggle for clients and talent is exacerbated by this particular market trend, and can become more brutal in times of an economic downturn.

In this crowded market, it becomes ever more important for law firms to pay attention to brand differentiation, customer experience and top-line growth, i.e. new client and business development. In the rest of this article, I will briefly discuss the opportunities for lawyers and law firms that come with Digital Transformation in the domain of reputation-building, marketing and business development.

 Legal Marketing: Transformed

Marketing is probably the business function that has been most profoundly transformed by the forces of digital technology. Indeed, even in legal, we are light-years away from the Martindale-Hubbell era, where listing your contact details in big book was about as far as legal marketing would take you.

Today’s competition for clients can involve the use of social media, digital platforms, CRM systems, websites, blogs, podcasts, SEO, email marketing tools, client portals, online legal directories, etc. A jungle where many lawyers, who are often already disadvantaged by an uneasy relationship with the technology and the idea of “selling”, can easily get lost in the woods.

I share a couple of key trends law firms and individual business lawyers need to take into account when exploring and adopting such new technologies in their Marketing and Business Development functions:

Digital Transformation has changed Marketing from a massive, one-way “broadcasting” model, into a much more interactive, client-centric model. This two-way, personalized and conversational model creates enormous challenges for law firms that don’t necessarily have sufficient data points or the right digital infrastructure to approach each prospect individually. Think online chatbots answering individual client queries, instead of traditional, indistinguishable corporate websites.

It becomes important for law firms to put much more thinking in their organizational design, and work on segmenting their client base and prospective markets to create dedicated teams who can approach (prospective) clients with appropriate content, highly specialized service offerings and joined-up relationship information.

Many firms have started tinkering with a “sector” approach, but usually just end up listing all general business sectors in which they are active because of misplaced FOMO (“Fear of missing out”). Winning firms are firms that have the ability to focus and make clear choices on where and how to compete.

From an institutional perspective, it is thus crucial to have an integrated approach and look at the entire buying cycle or “client journey” of your clients. Marketing and Business Development is not about promotion only (via email campaigns, or content on websites and social media); it should also deal with the other phases where you will manage (prospective) clients.

Those touch points might include competitive bidding processes (pitches and proposals), client acquisition (conflict checks, engagement letters), and client relationship management activities (client hospitality, knowledge sharing, client feedback programs). Trying to integrate all those touch points and phases, and build collaborative teams that don’t get stuck in their silo’s, is surely a herculean task.

But you simply cannot create an overwhelming client experience, or identify business development opportunities when you don’t see the full picture.

Marketing and BD teams should be heavily investing in solutions that link up clients (profiles and contact information), professional experience (credentials and track record), business plans and marketing initiatives of the teams and partners of the firm. Think unified Client Lifecycle Management solutions instead of a dozen, obsolete, ever crashing and completely outdated excel files holding your client’s information.

Content is King, context is queen. Having a clear and sophisticated content strategy is the cornerstone of any successful digital marketing strategy, particularly for professional services firms with undifferentiated service offerings. Demonstrating your expertise through high-quality content will inspire confidence in your target audience and naturally position you as thought leader on the subjects that most matter to them. Your ability to draw attention and generate business leads is today’s real precursor of increased revenues.

Law firms are by their very nature content-rich habitats, but they often lack professional “miners” that can transform such legal know-how in attractive content marketing projects. Once you have identified suitable topic and developed your content, make sure your audience can engage with it. Define and describe your target audience with archetypes or personae, and adapt your content to the different channels and platforms you will use to get your campaigns across

LinkedIn has rapidly become the world’s most important platform for professionals. In Mexico alone, it has over 13 million members, with a very high penetration in the professional services and legal sector. It is by far the most trusted social platform, focused on added value content that helps users grow professionally. Reputation built through networks has proven to be a more decisive factor than perceived quality when clients are deciding which Firm to use.

The network offers enormous opportunities for awareness and reputation building, growing your online professional network, and for engagement opportunities with your target market. Individual lawyers ignore the platform at their peril. In-house legal marketers should definitely look at how LinkedIn, via its professional sales solution “Sales Navigator”, can boost their ability for prospecting, segmenting, and nurturing meaningful business relationships.

In conclusion, innovation and digital transformation has radically changed the way we market our services and develop new business. In the past 20 years, legal marketing and business development has moved on from “inappropriate professional conduct” to an essential aspect of private practice and necessary ingredient in today’s highly competitive markets.

Digital marketing technology offers a bewildering range of options to position and grow your law firm or personal law practice. Successful adoption and integration of digital marketing practices will require organizational change, much more than the pure acquisition of technology.

It will also have to carefully balance the need to successfully engage with your target market, and necessary precautions on topics such as attorney ethics, client confidentiality and data privacy. But when done right, it can transform your law firm or private practice by generating more connectivity, client centricity and securing future growth.

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This article was written for the magazine IUS ACTUAL in August 2019, published by the BMA Capítulo Nuevo León, and can be downloaded here.