In my last blog, I looked at the future and potential demise of high street law. This time, it’s the turn of the mid-tier firms.
So much lip service is paid to cross-selling. What promises to be the answer to the elusive question of how to cross-sell often degenerates into comical discussions of initiatives such as firm-wide speed dating, face-to-face partner forums, compensating, remuneration or celebration programmes. As much as I can appreciate the work that goes into initiatives like these, I tend to steer clear of those that are fundamentally flawed. But as much as cross-selling is flawed, in the professional service firm, you could argue that so too is the entire concept of marketing.
I’ll explain.
Marketing and the legal profession just aren’t natural partners. There are many lawyers out there who are pro-marketing. And there are always going to be non-believers, and those who just don’t get it. The problem is, professional marketing has never really catered for professional services. Marketing grew out of the manufacturing and consumer goods industries. Although marketing had achieved some ‘service’ utilisation in banks, airlines and insurance, the quality of academic marketing direction for professional services has been particularly dismal.
The marketing dilemma
In a goods producing organisation, it is easy to separate marketing (including sales) from production. You belong to one camp or the other. There is a division of labour. The dilemma with professional services is that there is no separation of production and marketing as with consumer goods.
In professional services, the lawyer is not only the marketer of the service, but is also the person managing the operation of the assignment. Clients buy directly from the lawyer because the service can only be meaningfully purchased from someone who is capable of rendering the ‘professional’ service. This is what the marketing academics call the ‘inseparability’ of services marketing. This leads to lawyers being extremely busy. Operating assignments, marketing the services, developing and improving the service, taking part in education and training, and administering the firm or service line.
What this inseparability has given lawyers is a power that doesn’t exist in other industry organisations. Because the development and maintenance of relationships with clients has taken place at the level of the individual professional, power rests in the hands of the professionals. Ownership and share equity has ultimately been determined by partners fiercely protecting their clients and contacts, as their influence over these relationships has determined their prospects of bringing in work. Relationships with clients create a lawyer’s own market value. Potential value which may lead to switching or setting up new firms and the threat of taking ‘their’ clients with them.
We all know that’s why cross-selling is fundamentally flawed. But what about marketing in general within professional services? Well, arising from this inseparability and the power vested in the hands of the lawyer comes the professional partnership structure. It is this ‘traditional’ structure and the organisational cultures that develop out of it that have prevented law firms from benefiting from ‘effective marketing’. Here’s why.
The professional partnership structure
The partnership structure is often seen as the root cause of not only the resistance to effective marketing, but also to change in general. Many lawyers argue that the partnership creates a collegiate environment. A consensual environment that creates trust. Partners are the shareholders of the firm. Decisions are taken together by voting or consensus. But this structure involves laboured processes. Things take time. There are also politics involved. Managing partners are often limited in their efforts to direct partners into certain strategic directions through fear of disgruntled partners abandoning ship. It happens.
Partners also often function as autonomous operating units and they serve many functions. They can sometimes have great difficulty in allowing marketers to make important strategic marketing decisions or to take on more of a strategic responsibility. Older partners can be still locked into the institutional mindset of professional governance, which can impede on marketers’ objectives to direct the firm towards more effective marketing programmes.
This partnership structure in turn impacts on professional culture. Professional culture is dominated by professional expertise acquired through years of study and training by other professionals. Culture is continued and passed on through the generations. Culture is based on the conviction of the special fiduciary relationship between the professional and the client. Professionals believe they hold an exclusive proximity to their clients and their problems and points of view. Culture promotes the notion that existing clients are thoroughly understood and their needs do not need to be researched or their satisfaction levels checked because of the professional nature of the services provided.
Minimal marketing
The inseparability of services marketing combined with the partnership structure creates another dilemma. We have noted that due to their multi-faceted role lawyers are busy people. As a direct result, what has developed over the years to ease this burden is a lawyer-driven concept of ‘minimal marketing’. Minimal marketing is a form and practice of marketing that does not detract from the time spent on dealing with clients and billing. Ok, slightly sarcastic but nevertheless true.
Minimal marketing has developed over time because of a number of historic barriers to more effective approaches to marketing. We sometimes forget the dark days when the professional associations erected stringent rules against ‘commercial’ activities such as advertising, direct solicitation and referral commissions. We also forget professional standardisation, good practice and control of legal service provision have all had their effects of limiting effective marketing techniques. It’s these things that have led to professionals not thinking of themselves as businessmen or there being financial motivations involved over and above providing a proper service to their clients. It’s these historic barriers that have led to the creation of ineffective marketing infrastructures.
Marketing responsibilities have often been relegated to junior partners. Marketing departments have been created that don’t manage more effective methods on their behalf, but go some way in supporting lawyers in their minimal marketing efforts. You see, the circle becomes ever more vicious. Minimal marketing has bred minimal marketers. Marketing departments disguised as business development departments. Marketers recruited on the basis of their ‘interpersonal skills’ and their ability to get along with partners, and not as professionally-trained marketing practitioners.
Whereas in consumer product organisations, auditing, planning, customer insight and market research are at the heart of marketing activities. In professional services, the marketing-slash-business development department is a one stop shop for tender and pitch material production, database development, brochures and client networking. Marketers are often isolated. Accountable to all partners. Scared to make marketing decisions. Reluctant to do the internal selling job that is needed to make the positive headway to introduce more effective marketing tools such as research, intelligence and analysis. This true substance of effective marketing is never seen. There is then the resultant ambiguity in what benefits marketing can therefore provide. Hence minimal marketing prevails.
The need for change
The legal profession has been sheltered from change for some time. The traditional relationship between professional and client has been strong. A deep understanding and interdependence between two parties. But things are changing. Clients are becoming more sophisticated. Clients are increasingly questioning the values and benefits of the professional services received. The market environment is changing fast. The profession is about to become de-professionalised.
It’s difficult to ‘blame’ lawyers for the general status and application of marketing that has developed over time within law firms. To a degree, it is through their own professionalism that effective marketing has failed. But law firms are suffering from minimal, low impact marketing due to historic barriers. The traditional partnership structure is antique. It’s cumbersome at best. It’s history and it needs to move on. Too much power is in the hands of too many partners. It inhibits timely decision making. It’s anti-competitive. It makes marketing decisions too slowly, rendering it cumbersome. The culture that this breeds is going to stifle progress in a marketplace that is already seeing new, and more dynamic, entrants. There’s no room for minimal marketing any more. Clients are more sophisticated and demanding than ever before. Clients that demand value. Value billing. Valued service.
This is where in most organisations, marketing makes the difference. Marketing is the organisation’s interface with the environment. Marketing should understand the wider operating environment. Be able to identify new markets. Estimate the magnitudes of threat and opportunity. Disseminate demographic, economic, technological and cultural trends. Understand size, potential growth, seasonality, price sensitivities of customer bases. Marketing should be the forefront of the organisation. Helping decision makers with strategic direction. This is effective marketing. But it’s not widely practised in law firms.
The future lies in developing new and innovative services to meet the needs of clients. The future lies in moving away from what could be deemed a self-serving partnership model to becoming more a client-orientated model. The successful firms of the future will be the ones that understand that their professional practice is not shaped by some abstract concept of professionalism. It’s by understanding client needs and re-shaping the professional partnership to meet those needs. The real challenge of the future for firms is to build a structure that creates a competitive advantage. A competitive advantage derived from a structure that creates value.
The future structure will be driven by outside investment and the public ownership of law firms. It will be driven by non-lawyer governance that brings a variety of management experience to a firm, and, more importantly, a universal acceptance of the role of marketing as integral to the success of the firm. Firms need to give marketers the strategic responsibility to develop competitive intelligence procedures to stay competitive. They need to use marketing to understand the process of change. Allow marketers to keep the firm relevant and responsive to changing needs of the marketplace.
Initiatives such as cross-selling will continue to elude most firms unless their partnership structure partnership and culture change. Until the denial around the structural and cultural defects in some of our largest law firms erodes. Until the process of decision-making by partner consensus changes. Until the individual ‘rain maker’ is stopped being lauded and celebrated. Until the conflict of interest is resolved between partners’ individual interests in holding onto their clients, and the firm’s interest in ensuring client potential is maximised. Until firms go beyond just maximising minimal marketing, and becoming truly effective.
