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Feature

posted 30 Apr 2007 in Volume 2 Issue 1

The central idea

A firm that can develop a clear and market-accepted differentiation will reap major awards in terms of reputation, revenue, recruitment and client loyalty. And building a brand proposition based upon a central idea can provide huge benfits for those firms with the vision and ambition to make it happen. By Charles Doyle.

Since I joined the world of lawyers two years ago, I have been struck by their steadfast desire to avoid differentiation from other law firms. Having come from a background of brutal competition with a deep desire to find distinctive points of difference, I have found that, in the main, lawyers prefer to be at least ‘as good as’ rather than ‘different from’ or ‘better than’ other lawyers. Law firms have generally sought ‘better sameness’ rather than meaningful difference. Consequently, they have far to go in order to achieve a completely differentiated brand.

Law firm brands? I have also found some difficulty is gaining a shared understanding about the power of ‘brand’ in the business of law. Lawyers tend to perceive ‘brand’ as belonging to the world of consumer goods and not to the serious business of professional lawyers. ‘Reputation’, ‘standing’ and ‘profile’ are words that can resonate with them – but are not the concept of brand. ‘Brand positioning’ – which is core to the brand development – is an even less-relevant phrase. Having an identifiable brand positioning, which is readily understood and viewed as differentiated by clients, staff and external commentators, is seen as somewhat alien and irrelevant to professional life and work.

However, if we put to one side lawyers’ general dislike of marketing jargon, there is an increasing number of the major law firms that are starting to discover an economic need to differentiate themselves from other firms. The world of law is now more businesslike; more global and competitive than in former times. In fact, law firms have always sought brand recognition – but without using the jargon. Historically, they have attempted to build their reputations on the basis of national offices and product-centric legal practices, rather than by global industry and clients. They have traditionally gauged their success by reference to the quality of their client base, their scale of operations and offices, the number and expertise of partners, the deals and cases they handle, their positioning in third-party, validated legal league tables and, of course, their profitability. They have seldom referred to the benefits they bring their clients, but more to their capacity to offer services on an international scale (see Figure 1).

The reality is that brand differentiation, or whatever more acceptable phrase is used, is crucial to the future development of law firms and legal business. The perception of the international business community is that the best law firms occupy the same basic ground: some may be better than others in specific areas of expertise but, overall, their standing is much the same. In short, although individual law firms often believe they are distinctive, with unique personalities and leading-edge experience, the reality is that the perceived differences between them are marginal.

A positive, differentiated identity and reputation that goes beyond expertise, scale and league-table results, which is managed systematically, could give law firms a more sustainable position than they enjoy today.

To achieve this, firms need to treat their reputation, identity and market position as strategic assets. Because reputation and identity are intangible assets, their management is no less important, but much less obvious, than those of physical assets.

There is some differentiation occurring in the legal market, which is based on scale. A group of around six major international law firms, including Clifford Chance, has broken away from other medium-sized or purely national law firms. Their major point of differentiation is their ability to serve clients anywhere on the planet, wherever their clients need them to be. Their challenge going forward is to create differentiation within this group.

Differentiation: Why bother?
Many lawyers believe that their expertise is all that is needed to differentiate the firm and themselves. However, most client surveys indicate that, these days, excellence in legal expertise and delivery is now a basic expectation. It is no longer possible to differentiate from other major law firms purely on the basis of legal expertise or indeed their products or number of offices around the globe.

A lack of differentiation has many unfortunate symptoms. The most obvious is pressure from clients to discount prices especially in those areas that the clients perceive to be commoditised legal services and types of legal work.

Second, is increasingly onerous and depersonalised panel pitches, which are often reduced to the level of electronic bidding and frequently run by purchasing managers – in the belief that the major firms all have high levels of capability but a wide range of prices.

The third symptom is that firms start to experience a decreasing ratio of new business pitches to actual wins, a general decline in share of major client spend.

Similarly, the recruitment of the best talent becomes more difficult because of the lack of clarity as to the unique attractions and rewards relative to other firms.

However, the reward in being able to achieve and sustain differentiated position can be great.

Unity of purpose
One of the chief benefits of a differentiation strategy is to create a ‘unity of purpose’ based on a shared and unique view of what the firm stands for and what its ambition is. That shared articulation can give everyone in the firm a sense of identity and personality. Law firms with a deep sense of purpose tend to have more loyal staff and, as a result, more satisfied clients.

Reputation and reputation management
All businesses have a reputation. Core to the development and maintenance of reputation in the market is that the client must trust the reputation and the promises that the firm makes. Once achieved, a strong reputation increases the attractiveness of a firm and its services to clients and recruits. The question is whether one waits to see what reputation evolves through accumulated opinions or, instead, seeks to manage and influence (to the greatest extent possible) the way in which the firm is perceived by others.

We have seen how, in other professional service businesses, loss of reputation can lead to extinction or rapid decline and how swiftly this can happen. Arthur Andersen is the most iconic example. Therefore, reputation and the perceptions upon which reputation is based now need to be more actively and systematically managed, both by the individual partners and the institution of the law firm in its entirety.

Client relationships and decision making
When considering a law firm to service their needs, clients go through a sequence from being aware of the capabilities and reputation of the firm, to actively considering them to pitch for their work. Consider the normal cycle that clients go through in choosing a professional services firm to instruct. A strong institutional name can create awareness and should enable a partner to be considered by the client by dint of belonging to the organisation. To become preferred and to win instructions requires the individual partner’s business development and legal skills. Both the firm’s reputation and the individual partner can also help to create the emotional attachment that leads to client loyalty. A combination of the institutional name and exceptional, individual client service and delivery is needed to transform the client into a loyal, repeating buyer of legal services. A true test of the strength of the reputation is the extent to which it magnifies the power of the individual partner in the market, in excess of his or her own individual efforts.

Revenue growth
The greater the loyalty and trust factors in the clients’ minds, the less likely they are to place work with competitors and to put the work out to tender. Not only does this have the effect of reducing the discounts and improving recoveries, it can also increase the flow of new work. A strong and distinct reputation, increasing revenue and rising market share are inevitably linked.

For international law firms, for example, there will be a price premium for being able to work on complex, cross border, multi-jurisdictional deals in a consistent way, with outstanding quality, under the auspices of a powerful global name.

Recruitment and retention
A major and often overlooked benefit of a clearly articulated and distinct sense of purpose, is the ability to retain current, and to attract future, talent. Firms with a differentiated business and culture are often perceived as the ‘go to’ places and are able to recruit and retain the ‘right’ people.

How to differentiate the brand
The first task on the journey to creating and sustaining differentiation is to uncover a central-positioning idea that captures the timeless essence, the unique characteristics and the enduring personality of the law firm. Positioning is how the firm wants to be perceived by its target audiences relative to competitors. It combines current perceptions held by the firm’s target audiences with their future expectations of service and delivery.

Without a deep and shared understanding of this central- positioning idea, brand projects designed to implement change to the ‘look and feel’ of the law firm are doomed to remain at the cosmetic level. Finding this central idea and what it stands for is essential to the development of a differentiation programme. It can be a long and painful process – especially among private partnerships with a historic sense of the ‘sole practitioner’ – to arrive at a shared and agreed central idea. Once achieved, however, it becomes much easier to communicate in a meaningful way with specific audiences, such as clients, staff, potential recruits, media and public authorities. Brand-development tools and techniques should only be used when guided by a single positioning idea that provides both context and guidance to all such implementations. Unfortunately, many law firms have attempted to promote their brands through expensive promotions without any real sense of their central-positioning idea.

A set of simple questions that need to be answered in order to determine positioning can be found in Figure 2.

The elusive central idea
The most important step is to have this central idea about the firm, which is both inspirational but grounded in reality and which rallies the majority of partners and staff. It should be focused on the ‘benefit derived’ rather than ‘declared capability’; and founded on an active positioning statement (about others) rather than a passive comment (about ourselves).

Service delivery
The way in which law firms deliver services is as important as the legal expertise that underpins the service. The memory of the service delivery often outlives the memory of the content. Service delivery has to be aligned against the central idea of the firm: client-relationship-management activities, the style and content of legal documents and behaviour (internally and externally) reflect and reinforce the understanding of the law firm. In a professional-services organisation, reputation and service delivery are inseparable. The institutional name of the law firm and the individual reputation of each partner and practice area need to be mutually reinforcing, not mutually exclusive.

The way in which partners deliver core legal services and products cannot be managed as a discrete activity from the development of the firm’s reputation and standing. Therefore, each partner has a day-to-day role in that development, which will require instruction, guidance and support.

Organisational structure
Most large law firms are organised in the same way and this often determines their external positioning. Many are based on ‘practice areas’ in specific geographies – rarely industries and clients. This often leads to an internal focus and positioning, rather than one which is relevant to external audiences. It can often lead to inconsistency as each geographical practice promotes the firm in different ways and with different messages.

Engaging partners and staff
A major challenge that all marketers in law firms face is to involve the partners in the articulation of positioning ideas and their implementation. The behaviour of the partners, and those who support them in the delivery of services, is critical in demonstrating the reality of brand positioning. This is often known as ‘living the brand’.

Recruitment
Overall differentiation and reputation strategy should focus on recruitment of talent as much as developing positive perceptions with clients. It is as important to build an attractive impression of the firm in the minds of future talent as it is with clients. Influencing the supply of talent is as vital as influencing client demand.

Influencing the influencers
A powerful positioning should also seek to influence those who can influence both those audiences – for example, journalists, commentators and former employees and partners.

Delivering the message
The central-positioning idea must be embedded in every document and communications channel used by the law firm – for example, media boilerplate, pitching documents, publications, website and training materials. The communication of these ideas has to be done consistently and globally.

Physical environment
The places in which lawyers and staff work, and where clients and recruits visit, must also reflect the central idea. The physical environments of law firms are often anonymous and don’t communicate any unique personality.

I do believe that any law firm that can develop a clear and market-accepted differentiation will reap major rewards in terms of reputation, revenue, recruitment and client loyalty. While much of what has been recommended is unfamiliar to law firms, the prize for being the first law firm to create a proposition based upon a central idea is immense and certainly within the grasp of those with the vision and ambition to make it happen. ?

Charles Doyle is global head of business development at international firm Clifford Chance. He can be contacted at charles.doyle@cliffordchance.com

Figure 1: How to avoid differentiation - examples of self definitions of major law firms

Figure 2: Questions to determine brand positioning