X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
You would think that law firms would have long ago seized on market research as a basic business tool. Lawyers, after all, are often stubbornly risk-averse in their decision-making � and market research is, if nothing else, a risk-management tool. It’s simple enough: Whenever you have more information, you can make more controlled decisions with less risk. Market research is, broadly, the systematic gathering, recording, and analyzing of data relating to the marketing of goods or services. It is part and parcel of how most corporate clients do business, often with highly sophisticated management tools. No law firm has fully embraced this kind of approach to running their business � much less such highly information-driven philosophies as the Six Sigma paradigm, in use among many Fortune 100 companies. Yet as the marketplace has forced law firms to adopt professional business models, we have finally seen them begin to employ research techniques, with varying degrees of sophistication, to manage decisions in four essential areas: • Price. Thus far, only a very small number of firms research rate sensitivities in their markets and solicit attitudes on nonhourly alternatives. How much demand is there for value versus hourly models, and will marketing the firm’s flexibility in this area be a competitive advantage? • Place. Firms explore new cities for possible branch offices. Will there be enough demand, few enough competitors, and sufficient desire to try new providers to support a separate office, or should the work in these markets be handled out of existing offices? • Promotion. The more advanced firms test market reaction to their established or evolving brand identity. Has the firm’s brand as, say, a collegial high-tech service organization, featuring close partnering relationships with entrepreneurial clients, penetrated the consciousness of the marketplace? Has the firm’s advertising campaign communicated this brand? • Product. Some firms considering new ancillary services or new legal practice areas have adopted standard new- product feasibility tools to learn how much demand exists for the new services, and how well this demand is currently being met. As law firms mine these “4Ps,” they move a little closer to the business sensibility of their corporate clients in terms of business practice. The extent to which a progressively business-oriented approach will decisively change law firm cultures remains to be seen. They may become less flat, gradually starting to look more like corporate hierarchies. They may invest larger percentages of gross revenue in marketing, including market research. They may finally define their target markets and the best way to penetrate them. This is a tough change for a partnership, but one that the market may force on the most competitive firms. Once you begin to act like a corporation, sooner or later you begin to think like one. RESEARCH COMPONENTS Different kinds of research provide different kinds of information. Often, one kind of research is useless without another. For example, primary research gathers original information. Secondary research uses existing resources. Law firms must do both. They must delve into public records to collect key information about cities where they contemplate opening branch offices: the number of companies based there, the number of major law firms, etc. But they must also do primary research to gather feedback from industry leaders in each city on, say, how these businesspeople perceive large national or global legal service providers, or what new legal needs they may be anticipating if and when they grow beyond the home turf. That kind of research may be qualitative, if it informally probes the perceptions of key buyers. But it is essential to also collect quantitative data. Otherwise, we are left with a mass of opinion that’s subject to varying interpretation as to both its meaning and what, if any, responsive action is called for. Let’s say, in a formal telephone survey of 100 GCs, we include a series of questions asking them to rate firms on attributes that, in previous qualitative research, were informally described as important. We achieve data that, because it’s quantified, can be acted on. It’s one thing when, in a qualitative study, a general counsel says that large law firms “understand my company fairly well.” It’s quite another thing to learn from a quantitative survey that your firm merits only a 5 on a 0-to-10 scale while your biggest competitor averages 7.3. For large law firms that want to be more competitive, such a mediocre performance result should be an irresistible call to action. Research can also be either strategic or tactical. Strategic research looks at general populations (e.g., all health care institutions in the Southeast). Tactical research supports plans to market goods and services to specific prospects, often unearthing financial performance data, executives’ biographic information, and past legal proceedings. Both can be very useful � tactical research drives sales and improvements client-by-client, while strategic research helps the firm allocate resources to where the impact will be broad or even firmwide. NEW FRONTIERS Ideally, these four types of research (and many others) should all be employed to best manage risk in firms considering new pricing models, scouting new offices, marketing new products, or testing brand perception. Yet the research purview for law firms can and must expand beyond the 4Ps. Along with the 4Ps, let’s consider five “frontiers” of law firm market research. While there are likely many more that law firms can usefully explore, the following five are especially urgent research opportunities at this stage in the development of the legal marketplace. 1. On-campus recruitment. For all the good work of recruiting directors over the years, law firms are only guessing at what students are looking for. Some firms operate on a few glib assumptions. They assume that offering salaries and perks matching their competitors’ will draw enough qualified first-year associates (especially if you also talk up how “collegial” your firm is). Some firms see the first-year market as too susceptible to economic fluctuations to justify formal market research in any event. This short-term attitude, reflected in recent cutbacks to summer associate programs, fails to apprehend the next inevitable “sellers’ market.” There will come a time when the demand for grads will intensify. The firms that have a sense of how Harvard or Chicago law students perceive them, or a sense of what students in regional markets think of regional law firms, or a sense of the kind of training top candidates are looking for, will gain a head start on building 21st century infrastructures. 2. Lateral recruitment. Today very few firms conduct effective market research to support the recruitment of senior associate or partner prospects. Most firms don’t think to go beyond their social contacts, work contacts, a little publicity, reliance on headhunters, or flaunting impressive profitability numbers reported in the legal press. Research based on professionally conducted off-the-record interviews can define with specificity which lawyers are viewed as the very best by the corporations you want as clients. Instead of just identifying the lawyers who need a change, you will find those most attractive to the buyers of your services. 3. Competitive intelligence. The average law firm manager probably understands what only one or two direct competitors are up to. Even then, they’re short on specifics, and much of what they “know” is dead wrong. They have no idea how effective the competitors’ branding campaigns have been, or how these competitors may now be approaching major client targets, or how much targeted growth they’ve planned and in what areas. 4. Merger due diligence. Some firms employ scientific market research to scout prospective merger partners. Yet, astonishingly, the number of failed mergers, as well as the number of utterly ill-fated merger negotiations, suggests that these courtships are carried out without much more hard information than profitability and revenue numbers, or potential client conflicts. Nowhere are the stakes higher, or the need greater, for professional research that will unearth marketplace perceptions about prospective merger partners, the strength of their existing client relationships, and even pertinent internal issues. Corporations rarely embark on important mergers without employing market research to evaluate customer loyalty, brand value, and general perceptions as part of their due diligence. 5. Client Satisfaction. Firms have been toying with this idea for years, but either backing off for internal political reasons or doing it all wrong. Yet there can be no more probative research than an assessment � conducted by a disinterested third party � of where and why crucial client relationships are in danger (often with no visible symptoms), where new business can be mined (i.e., informed cross-selling), and what small but significant changes in the working relationship can head off problems before they occur. But there’s a crucial hitch. Firms that do client satisfaction research must be prepared to correct every problem uncovered. Without a follow-up plan, and a collective will to implement the plan, bad market research is worse than no market research, especially where client perceptions are concerned. Follow-up plans can not only correct problems but also lead to new marketing initiatives. One firm, researching why it was not effectively cross-selling its estates practice, found that clients just hadn’t gotten around to thinking about it. So the lawyers implemented a program of initial contact calls followed up by easy-to-answer lists of questions. After that, the rest of the estate-planning process was almost automatic. These estate lawyers were conducting client satisfaction research, but their research was also all about product, one of our basic 4Ps. Right now, law firms strategize their approach to these five frontiers almost wholly based on anecdotal information: “My hiring partner tells me the students at Stanford like having access to Mac as well as Windows computers.” “My headhunter tells me the project finance guys at Smith & Jones are looking for more back-up in Asia.” “I hear our competitors are taking a booth at the ACC conference.” “The GC at International Dynamics sounds happy enough, doesn’t he?” The next great step for law firms is to formalize and institutionalize research that will provide harder information on an ongoing basis. Firms have been managing business risk on a hunch. Imagine having research that cost-justifies an action plan and all the billables inevitably expended in implementing that plan. There’s a powerful final benefit to the kind of expanded market research we are suggesting. From a marketing standpoint, the medium definitely becomes the message. In other words, the very fact that you are conducting this research shows how committed you are to understanding the needs of your markets, whether they are clients or prospects or potential recruits. When you take the research seriously, you are taking them seriously. And they will know that your firm understands business. Mark T. Greene, Ph.D., is managing director of the Brand Research Co., based in Washington, D.C. His company provides strategic market research to professional service firms, often working in tandem with branding firm Greenfield/Belser Ltd. He may be reached at [email protected].

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.