Marketing legal service in a dynamic environment

Feature

posted 2 Oct 2001 in Volume 4 Issue 6

Marketing legal service in a dynamic environment

The world in which law firms seek new and represent existing corporate clients is in flux. The rules by which relationships flourished for years are changing and the means by which the firms secure business are also changing. Steve Lauer argues that firms need a clear understanding of the needs and wishes of in-house lawyers and how they seek outside legal assistance is critical.

The market for legal services has become considerably more competitive in recent years. Relationships between corporate clients and the law firms that represent them are increasingly fluid and unstable. Companies are reviewing their relationships with outside lawyers reducing the numbers of firms that they retain for most work and generally re-examining the arrangements between themselves as clients and the law firms.

A law firm is less and less able to rely solely on the continued loyalty of clients to assure it of ongoing work and assignments. 'Institutional' relationships between clients and firms are more unusual all the time. Firms must prove themselves to existing clients almost as much as to prospective clients. As a result law firms need to market their services more than ever before.

The question is how to do so effectively. Before answering that question it is helpful to explore some trends in how law departments manage the legal affairs of their corporations.

Changes in the market for corporate legal services

A sea change has occurred in the market for legal services in the United States. That change holds significant and far-reaching implications for how law firms market their services particularly to corporate clients.

The changes represent a dramatic shift in the attitude of in-house lawyers. Simply put they are beginning to assert their primacy as managers of their employer' legal affairs. In many cases they are beginning to apply management techniques to their purchase of legal services for their corporate employers. The changes are exemplified by several distinct but related developments a few of which are the following:

The development of the convergence programme exemplified by DuPont. 'Convergence' refers to a concerted effort to reduce the number of law firms with which it works and to restructure how its in-house lawyers work with members of the fewer firms remaining on its team. By doing so a company such as DuPont expects to reduce its legal services costs. Those steps also simplify a law department's management challenge.
Efforts to reduce the extent to which a company pays its outside counsel for each hour of the time that they spend on its legal matters with the total fee calculated by multiplying the total number of hours by an hourly rate. Those in-house lawyers in the US who seek to increase the use of alternative fee arrangements pursue one goal: create a more direct acceptable relationship between the amount paid for legal service and the value of that legal service in the context of the corporate activity to which it is related. While this generally results in an effort to reduce the fee it occasionally leads to an enhanced fee when the corporate client has agreed to pay its outside counsel a premium that reflects achievement by the outside lawyers of some pre-agreed upon milestone.
The use of more business-like methods of selecting outside counsel. In lieu of the traditional reliance on an attorney's or a law firm's general reputation for quality legal service corporate law departments are using tools such as requests for proposals for legal service and requests for qualifications. The goal of these efforts is to make a selection that is not only a good one but one that is demonstrably defensible.
A related but perhaps more significant change is the development of standards by which to evaluate law firms' service. Those new standards are more objective than the time-honoured practice of assuming that the quality of the legal service is reflected in a firm's renown and that a firm will deliver service of equal quality across all its areas of practice all without any acceptable or accepted data or evidence in support of that view.
Attention to the development of metrics by which to measure how well a law department is satisfying the demands of corporate management and whether it manages the company's legal affairs as well as other executives manage their respective areas of expertise such as research and development laboratories.

What do these trends mean? How might they relate to law firms and their efforts to attract business from existing and potential clients? The above-described initiatives and trends (as well as others not here addressed) are likely will have the following impact:

Law departments that follow the lead of DuPont Chrysler Prudential and other law departments that have implemented convergence programmes and significantly reduced the number of law firms handling their companies' legal work will increasingly select counsel from among the candidates on the basis of 'relationship' issues rather than on the basis of the quality of the legal work. They will focus particularly on a law firm's client service.
This does not mean that those departments will not care about the quality of the legal service. It only means that the reduction in the number of law firms will enable the law department to treat quality as an expected - even an assumed - measure. By choosing fewer firms from among those available particularly from among firms with which the law department is already familiar the department can select from firms with deserved reputations for quality legal work. The need to test the capability of a law firm for quality work is reduced and the law department can focus on those other attributes of a client/counsel relationship that can be so important to client satisfaction.
The development of objective criteria to select and evaluate law firms and lawyers will put a premium on a law firm's ability to demonstrate in its marketing how it surpasses its competitors in terms of the criteria that the selecting law department values. Mere assertions in a marketing brochure of precedence will not suffice. More specific verifiable evidence will be necessary. With that background how can and should law firms market their services?

Marketing 101

It's helpful to lay out some basic concepts. With these foundation blocks we can consider the challenge and determine how to go about meeting it.

Law is a service business. It requires dedication effort and professionalism. However to be successful one must have clients. The attorney or firm that has sufficient work to do for clients without engaging in any marketing is increasingly rare.

Marketing is the process of informing potential and existing clients of your service. Successful marketing does so in a way that leads that audience to want to retain the firm that has undertaken the marketing effort. As simple as that may sound (assuming that it does sound simple) developing a marketing plan requires that you think through several preliminary issues and steps:

Who constitutes your intended market? If your services are useful to consumers for example your challenges are very different than if you hope to be retained by corporate members of a high-tech industry that has few members.
Once you have identified your desired audience how can you best reach that group? Using the same example advertising directed toward the consumer can be effective if it utilises channels that are very different from those that you would use to reach those officers of high-tech companies who are responsible for deciding whether to retain counsel and if counsel are to be retained which to choose.
The message that you deliver will also vary with the audience as well as with the marketing channel even if the product or service being marketed is the same. Billboard advertisements for public awareness use very different message-delivery techniques than other means of reaching those same individuals. Internet sites as tools with which to market legal service are not well understood as yet. Whether and how they work is being refined but internet-based marketing is clearly different from other types of marketing. It may be effective to reach certain consumers of legal service and ineffective to reach others.

With those concepts in mind you should develop a marketing plan. The absence of a plan would make success much less likely because of the likelihood of an unclear or ill-defined message for the appropriate audience inconsistent approaches or diffuse efforts. This is particularly true for a firm of several lawyers who are trying to market their services as a group.

Lawyers understand the need to approach litigation on behalf of a client with a clear idea of that client's objectives and a good understanding of how the law and the facts might help or serve as a hindrance in achieving those objectives. Similarly success in marketing requires a rigorous or at least intelligent and reasoned application of the above concepts over time in a consistent fashion.

Applying those concepts

How do those ideas apply to law firms? What characteristics of their marketing approaches and plans would law firms design to reflect those concepts?

Who are the law firms' 'consumers'? For many law firms corporations and other business entities are potential clients. Many businesses have in-house attorneys who are responsible for the legal affairs of those businesses and ultimately responsible for determining whether to retain outside counsel and if so who to select. Focusing on companies that have in-house counsel you can begin to determine how to try to reach that group.

For a law firm in-house counsel represent an educated audience one that is capable of assessing the qualifications of outside counsel more specifically than companies that do not have attorneys on staff. This fact is significant for several reasons. It suggests means by which to reach that audience and it suggests the type of marketing message to use.

Reaching in-house counsel

Marketing a law firm's service is a challenge because legal service often is needed in the context of situations that have negative or undesirable implications. Many business people hold less-than-flattering opinions of lawyers. And they certainly don't enjoy litigation and the time and effort it requires of them.

The challenge varies of course with the particular specialty of the firm. A law firm may have members who are expert at assisting clients to complete transactions with complicated legal structures. That speciality can be marketed in a positive way as a professional service that helps business do deals and implement a business plan. One difficulty for a firm with such a practice is making its strengths in that area known to those in the real estate industry in such a way that those in that industry who select outside counsel will select that firm. Discovering the most effective way that firm can reach that target audience is probably one of the most important challenges involved in marketing that firm.

A litigation practice presents different challenges. Litigation is often unexpected (whether offensive or defensive). Probably more often than not it is associated with unpleasant memories or issues in the minds of corporate executives (even when the corporation is the plaintiff). Accordingly many people do not try to anticipate their need for trial or litigation counsel until the need actually arises. Law firms cannot easily market their skills at litigation and trial without reminding the audience of the usually unpleasant nature of that endeavour.

In-house attorneys are suspicious of hard sell tactics. They consider themselves (and they are) informed consumers of legal services for their employers. That many of them were once outside counsel themselves adds to their insight into the purchase of legal service. That scepticism bodes ill for a law firm that expects a general marketing brochure to suffice as its marketing initiative.

The significance for their employers of the matters that in-house attorneys must entrust to outside attorneys makes them sensitive to the need for the best legal service that those employers can afford consistent with the value of the matter in question. The need to keep costs under control however means that in-house attorneys must look at the anticipated cost of a legal assignment when making that assignment.

What does all this mean? First do not expect that standard brochures will make the sale. Even as supplementary items that you might send to a prospective client they may have little impact on the decision by that prospective client whether to retain outside counsel and if so which one.

More effective is information that is helpful to in-house attorneys. For example a well-written article on a substantive topic might be filed for later review if the issue is not of immediate concern. By demonstrating expertise and command of a subject area that is or might be of interest to an in-house lawyer in her or his work managing the corporation's legal interests you can demonstrate the ability to support that lawyer in a very meaningful fashion that cannot be conveyed in the course of a brochure or similar piece.

A demonstrated sensitivity to the concerns of in-house counsel that are not strictly limited to the quality of the legal arguments made is also well regarded. The importance of budgetary discipline for in-house lawyers makes it imperative from their perspective that outside counsel share an appreciation of the importance of that discipline.

In-house lawyers often rely on references and recommendations by other in-house counsel whom they trust as to appropriate reliable outside counsel. Those who are members of associations of in-house attorneys value the opportunity to call other members for such assistance. Anything that can serve the same purpose as such a telephonic reference can be valuable for the in-house attorney and for the law firm so recommended. Thus an existing client who is willing to comment favourably on the record about a law firm or an attorney and how that firm or attorney has demonstrated the skills and perspectives that are so important to law departments can be a valuable element of a marketing plan so long as it does not sound too staged or contrived.

The services of lawyers are difficult subjects of marketing efforts. An understanding of how in-house counsel identify and select outside counsel and an appreciation of the pressures and considerations that are important to their success as in-house attorneys are very valuable elements of a law firm's successful marketing plan.

Publication of substantive articles on issues of interest and concern to in-house counsel can be effective as demonstrations of substantive competence. Leveraging the favourable opinions that existing clients hold is a potentially valuable means of demonstrating to possible clients that the firm serves its clients well and by extension would serve them well were they to become its clients.

Carefully developed marketing plans that incorporate techniques and tools such as these should be very effective. Planning and execution of such plans cannot be a haphazard or undisciplined effort.

Steve Lauer is a US consultant on the management of corporate legal services by law departments and on relations between in-house and outside counsel. He can be reached by e-mail at steven.a.lauer@home.com and by phone at (973) 763-6340. He is also executive vice president deputy editor and deputy publisher of The Metropolitan Corporate Counsel a monthly journal for in-house lawyers. He can be reached at the paper by phone at (908) 654-4840 and by e-mail at lauermcc@cs.com.