Editor’s Note: This story is adapted from ALM’s Mid-Market Report. For more business of law coverage exclusively geared toward midsize firms, sign up for a free trial subscription to ALM’s weekly newsletter, The Mid-Market Report.
The growing trend for both law firms and individual lawyers to narrow their service offerings has become almost unavoidable for most firms as clients increasingly seek uber-specialists for their discrete legal needs.
For midsize law firms that can afford to have sub-specialties on staff, the reward can be a go-to service offering that generates a national or international client base for an otherwise regional firm, consultants noted. But that also puts the group at increased risk of being poached by larger firms.
As legal department consultant Jason Winmill of Agropoint in Boston told MMR affiliate The American Lawyer last year, “When you need brain surgery for your child, you’ll travel across the country to find the guy who isn’t just a pediatric brain surgeon, but the guy who is the expert in the specific type of brain surgery that you need.”
While Marcie Borgal Shunk, founder of The Tilt Institute, said all firms need to respond to the call for specialization, she said midsize firms may have some challenges in getting there. How many areas can they really be experts in if they only have so many lawyers to go around, she wondered. And for work that is episodic, like antitrust, does it make sense to have one of only a few lawyers serve as that expert?
But regardless of how difficult it may be, Shunk said it’s imperative to specialize.
“I think it’s essential in this day and age to have a niche,” Shunk said. “I think it’s true of lawyers and other professions where you need to distinguish yourself from other competitors, you need to demonstrate there is something unique about you. Because there is so much noise these days, it can be pretty narrow, but anything that narrow comes with risk.”
Shunk has seen specialization work best in midsize firms when it is focused on a broad industry, like financial services, that allows for many practice areas to support it; or when a firm focuses on a few industries that still allow for some diversity of practice. Other midsize firms have gone the boutique route, focusing on just one practice area, and others still have focused on a specific geography. But Shunk said the industry approach is the easiest to implement.
Alan Tarter, managing partner of Tarter Krinsky & Drogin in New York, said his firm has taken a hybrid approach to focused practices. The firm, while considering itself general service, has both certain industries it caters to as well as niche areas of focus within broader practice groups.
“Over the past five years or so we‘ve realized that industry teams has been a very effective way of practicing.” Tarter said, adding that by knowing the industry, its rules and common issues, firms have the ability to perform services in a more efficient, economical way. “As we became larger and grew we also have a greater ability to create these sub practices.”
And some industries are better suited to use midsize law firms, Tarter said, highlighting his firm’s work with the staffing and retail industries as examples. The firm also has sub-practice focuses, such as the university technology transfer and Hatch Waxman/ANDA practices under the intellectual property umbrella, or the outdoor advertising group that falls within the firm’s real estate practice.
As competition has increased due to minimal demand growth, marketing specialized capabilities may be even more important for midsize firms, legal marketer Gina Rubel told The American Lawyer. Specialization can help smaller firms concentrate their marketing spend in a way that makes sense, making sure their marketing isn’t fragmented, she said.
Specialization is often driven by the individual lawyer’s interests, Shunk said, citing examples like craft beer, bicycle manufacturing or art. That love of the subject can make someone a better lawyer, who can see things beyond just the legal issues but also as they relate to the business issues, others have noted.
The trick with specializing is retaining the ability to be agile, Shunk said. On an individual level, lawyers who are the most successful in a niche practice are those who are constantly reassessing where their niche is heading or how they can pivot to use their skills in a new, emerging area, she said. Lawyers and firms have to be “quite deliberate” in staying ahead of where their industry of focus is headed, Shunk said.
Where specialization works best, Shunk said, is when there is a small group within the firm that works “extremely collaboratively” together, not worrying so much about things like origination credit, but rather about building a brand. Those groups can then break out of the broader, regional footprint of the firm to attract national and international clients, she said.
But therein lies the risk.
“One thing that I’ve seen multiple times—because of that, those groups become incredibly connected to one another, incredibly valuable, and therefore pursued,” Shunk said. “So I’ve seen a lot of liftouts of groups that have specialized and become nationally recognized in an area and they get scooped out by a larger firm.”
Susan DeSantis contributed to this report.