8/12/14

Let CI Be Your Guide

Someone asked me recently why I think more and more law firms are creating CI roles or increasing their CI capacity, encouraging their BD and Library staff to work more closely so forth. I didn't really have a good answer on the spot, "cause it makes good business sense, or because market competition and consolidation is increasing" seemed all to obvious and do not address this specific moment in the evolution of the modern law firm.  Last month, I participated in a webinar presented by Ann Lee Gibson, long time law firm CI consultant as a part of the IntelCollab webinar series and unknowingly, Ann Lee answered the question in part.  Her presentation was titled How Competitive Intelligence Helps Professional Services Firms Succeed, and you can view the entire presentation here.  The focus wasn't specifically on law firms, but by not focusing, certain things became clear.  To begin the various US based professional services firms are compared  by revenue, number of employees and number of professionals.  According to the data, law firms had the highest revenue in 2013, but also the greatest number of employees (costs) but NOT the highest growth rate, nor does the profession represent the largest number of businesses in the professional services.  Furthermore, when compared to Accounting firms, the 2013 data  points out that 75% of revenue in law firms comes from 53 firms, whereas in the Accounting sector that same percentage of revenue is drawn from four firms.  So putting on the CI analyst hat here, what do the numbers tell you? Not surprisingly, especially if you follow any of Toby's posts, law firms are running inefficient organizations, with leverage issues as a result of the many many owners. I am not the economist so won't get into the numbers except to say that law firms are increasing CI as way to minimize the impact of the figures.  But even forgetting the economics for a second, you can see from the literature, the blog posts and the new titles that are popping up all across law firms that something is happening.   

Twenty, even 15 years ago firms only had to worry about appeasing clients, doing good work and getting more work from the same or other clients. Few firms were concerned in any systemic way about their competitors and even fewer were thinking about clients in terms of their needs and wants. Today, that landscape has entirely changed.  Clients are driving change at firms by demanding attention be it through: AFAs, LMP, LPO, and/or e-billing. Add to that the growing impact of technology on both the business and practice of law, industry consolidation nationally and internationally, growing in house legal teams, changes to the ownership rules for law firms and firms are forced to be more competitive.  How a firm chooses to be more competitive can (and does) come in varied forms.  Some are shrinking administrative costs and reducing overhead by creating pools of assistants rather than the traditional 1:1 of firms, shrinking headcount or budget for things like KM, Marketing and Library services. Others are taking a different approach choosing to focus on understanding their clients, their markets, their competitors and their own business savvy better.  That's where CI enters the mix and helps to set the course.  CI is a strategic endeavour in understanding the market condition, the forces of pressure and their impact while also being tactical in informing RFP responses, filling the pipeline and providing colour in addition to background information.  CI, when done well can be the centre point for collaboration and competitive advantage within in a firm. 
There is no denying that the legal industry is changing. The speed of the change depends on where you sit, what you see, and where you want to go, but no one can deny that as the legal industry ship is steering in a different direction, and firms are realizing the power of CI as the compass to help navigate the waters. 

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4 comments:

Ann Lee Gibson said...

Thank you for writing about my CI presentation for Aurora WDC in your blog post above. I would like to clarify that the “75% of revenue” stats you referenced are with regard to the 100 largest US law firms and the 100 largest US accounting firms – not with regard to the total US legal services and accounting services industries.

I agree wholeheartedly with you, Toby Brown, and many others that law firms can and must improve the efficiency of their legal services and other operations. But I would not draw the same conclusion you do about “law firm inefficiency” from the facts presented on Slides 5 and 6 of my presentation. It’s true that, in FY2013, 53 law firms generated 75% of Am Law 100 revenue and only four accounting firms generated 75% of the top 100 US accounting firms’ revenue. But, as we know, a major distinction between the legal and accounting professions and the two industries they form is that law firms are prohibited from representing clients that have competing legal interests. Similar rigorous conflict of interest restrictions do not weigh on the accounting profession. As a result, law firms (worldwide) are a uniquely unconsolidated industry and, if conflict of interest restrictions continue, will remain so. The idea that four highly efficient law firms – or ten or twenty highly efficient law firms – could attract 75% of Am Law 100 revenue will not occur under any future scenario of improved law firm efficiency.

Finally, the link provided in the post above to my presentation deck appears to be broken. Therefore, if your readers would like to receive a copy of my slide deck or to discuss it further, they may email me at agibson@annleegibson.com.

Zena Applebaum said...

Thanks for the clarifications Ann Lee. I wholly agree, and was simply making the point that even with 53 firms the industry is highly competitive. There are numerous distinctions between the professions, efficiency is just one :)

Zena Applebaum said...

Oh, and I fixed the link too!

Ann Lee Gibson said...

Thank you, Zena! And thanks again for the blog. :)

 

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