Comment: Three reasons why law firms need more research
by George Beaton*
Three are at least three reasons why law firms need to use more research in making decisions. In this context research refers to fact gathering, analysis and interpretation of law firms’ markets, clients, competitors and staff.
Strategy The first reason firms need more research is to inform the decisions that constitute their business strategy.
Countless hours go into innumerable pages of analysis to support discussions at partnership planning conferences. To what end? Decisions will be made – but that’s the easy part. The saying that strategy is 10% inspiration (i.e. formulation) and 90% perspiration (i.e. implementation) is apt for partnership-based cultures, the problem is firms are all too frequently not very good at the first, formulation, or the second, implementation.
Why? In no particular order, partners tend to collude and thereby avoid tough issues; they are excessively internally focused; they are characterised by hubris and unwarranted confidence (because they usually lack strategic benchmarks); they too often plan wwith the lowest common denominator (i.e. the weakest link) in mind; they have an aversion to saying no; they tend to follow the herd (believing it’s safer and conveniently ignoring the fate of lemmings); they have a bias for intuition rather than factual evidence; and they focus on the short term.
So what do savvy firms do to overcome these blockers? One of the solutions is to use hard evidence. Professional people are rational thinkers. Facts persuade, especially when they are independently sourced and on point.
Clients The second reason firms need more research is to understand their clients more deeply.
Listening to a recent presentation by an esteemed colleague reminded me just how wrong the conventional way of thinking about what clients really value can be. Tristan Forrester was quoting extensive Beaton research conducted with thousands of clients of law firms.
Our research shows clients unequivocally regard price and value as positively related. That is, higher fees signal higher quality. Price is social proof of a firm’s market position and quality. Yet this doesn’t mean a firm can charge as much as it likes; there is another factor in the mix.
A firm and its practitioners will be rated well on cost consciousness if clients believe their money is being spent, in Tristan’s words, “as though it was the firm’s own”.
Yet our research consistently shows the weakest link in managing clients’ perceptions of value is poor cost consciousness. This applies to all types of client, all professions and all work types.
Trends And the third reason firms need more research is to understand trends in the environment that pose both threats and opportunities.
Many forces are transforming clients’ buying behaviour, service delivery and the competitive landscape. And most of these forces are adverse for conventional law firms. What will be left for these firms to deliver in their traditional ways? It will be work of a trusted adviser nature, constituting probably no more than 20-30 per cent of work they currently perform. The result is traditional equity partner profits will fall as online service delivery innovation takes hold.
Scanning and sensing the environment–both are forms of research–prepares firms for the beneficial and adverse changes before they strike with full force. Surviving a tsunami requires preparation, early warning and determined action. It’s no different for law firms. Preparation and early warning require sound intelligence and informed interpretation–exactly what good research delivers.
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