The Basics of Law Firm Competitive Analysis
A lawyer, who wants to run a successful law firm, must realize that he is also running a business. Most attorneys don’t like to think of themselves as businesspeople, but as providers of a service. Regardless of how you choose to describe your practice, having one means being in competition with other firms. It would be great if being the best lawyer in your field was enough to bring in client after client. The fact is that having a law practice means that you are going to have to compete to keep clients coming through the doors.
If you don’t know what the competition is doing, then your law firm needs to do a competitive analysis.
Big law firms might spend thousands of dollars trying to find out what the competition is doing. This is because large law firms understand that knowing what the competition is up to is just as important as anything else they can do for their practice. Smaller firms may not have the financial resources to go out and hire a top marketing firm to perform a competitive analysis. Nevertheless, there are still ways that you can analyze the competition without spending too much of your hard earned money.
What exactly is a competitive analysis?
A competitive analysis is a series of steps that lawyers can use to determine the strengths and weaknesses of current and potential firms who might be after the same clients that you are. Lawyers are usually very good at competitive analysis because it combines their research and analytical skills. Here are the steps to doing a basic competitive analysis. If you would like get more scientific, the web offers a variety of matrices and formulas that lawyers can use to track the competition.
Figure out which firms you are competing with. Do a basic search for lawyers in your city who work in the same area of law that your law firm does. Look up other firms in legal directories. Get a list going of which firms may potentially be competitors.
Sometimes the firms you think are your competitors really are not. Make sure that you know what type of clients your firm wants to pursue. Then determine whether or not the firm that you are analyzing is after the same pool of potential clients? With new technology, many attorneys are setting up a home base in one city, while most of their clients are in another. Some attorneys who are highly specialized may also have clients from all over the country or around the world. Just because there is a firm down the street who appears to practice in the same area of law that your firm does, isn’t necessarily a sure sign that they are competition for your firm.
Get to know the competition. Once you have figured out who your competition is, it is time to get to know them. Go to their websites. What do these firms say about themselves? Try to learn the basics. How many lawyers do they have? Do they have multiple offices? Where are they located? Visit law.com to see how their firm is ranked. Search for them using key words to see if their website has a high listing on the popular search engines.
Additional questions to ask include: Who are the key attorneys in their firm? What are they doing to get recognized for their work? Do they do their own marketing or do they outsource? Is it working for them?
Create measurements for success. Think about what qualities a law firm in your geographic location and area of law will need to do in order to be successful. Then measure other firms based on these factors. Make a list of the strengths of the other firm and their weaknesses in these areas. Next, think about how your firm is similar to theirs and how it is different. One of the hardest things for lawyers to do is to articulate what sets them apart from the competition. Looking very closely at other firms, examining their marketing, and the cases they’ve handled in the past will help you to find the areas where your firm excels and their firm doesn’t. Keep these things in mind as you market your firm.
Create a plan for gaining a competitive edge. There may be some things that the other firms are doing that your firm may never be able to do better because of a lack of resources. Don’t focus your energy on those things. Instead, focus on the area where your competition is not doing well and think about how you can grow your firm in that area. For instance, if they rarely have repeat clients it may be because they don’t know how to treat clients well. This can become your edge; it can become what your firm is known for.
When the competitive analysis is complete you should have a clear idea of who your top competitors are. You should be able to explain what they are doing well and where they need to grow. Not knowing what firms you’re competing with is like running your firm with your eyes closed. Be informed about the other law firms in your area. Chances are, they are well informed about you.
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EmailLaw Firm Marketing Strategy: Lawyers Are Good People Too
Here’s an interesting story told to me by my firend Max:
Danny is a lawyer and he and I have been friends since grammar school.
He never intended to be a law firm marketing guru but the way he has built his practice has shown me that an attorney can develop new business in his own unique style.
We’ve experienced many of life’s ups and downs together and have literally arrived at maturity simultaneously. When it came to choosing a career back in high school we both had our sights set on becoming attorneys. For a while we thought we’d like to open our own legal practice together but it wasn’t long before we decided that wasn’t a good idea. The reason is, I’ve wanted to pursue a career as a criminal trial lawyer and Danny wanted to devote his energy to a more compassionate endeavor.
Still, we attended college together and were admitted to the same law school where we remained fast friends and fervent study buddies. When it came time to prepare for the bar exam we devised a really cool review system and were constantly quizzing each other. The informal study partnership paid off big as we both passed the bar on the first try. In keeping with my own goals, I landed a job as a public defender almost immediately after passing the bar. Danny got hooked up with a consumer advocacy group and did a lot of pro bono work in his first job as an attorney.
As we became more absorbed in our own careers we sort of drifted apart – not completely – but it was clear to both of us that it was now time to actually walk the walk and mature into competent attorneys. Even so, we did stay in fairly close contact as our careers blossomed.
Danny was never exactly certain as to what he wanted to do once he became an attorney. He used to say that he’d offer his services to people in need and that Providence would point the rest of the way. Well, it seems that’s exactly what has developed.
Danny has ended up with one of the fastest growing law practices in the state. And it happened almost by accident.
In the first year after passing the bar Danny found himself doing a lot of legal work for nursing home patients. As a volunteer for several advocacy groups devoted to allowing senior citizens to live with dignity and pride, Danny found that he enjoyed going to bat for people who had almost literally fallen through the cracks in our social system. Danny received national notice when he exposed a nursing home that was operating illegally and worse yet, negligently. After identifying a high incidence of accidents at one particular nursing home, Danny arranged for an elderly friend of his to be admitted to the facility in a sort of undercover mission. And the plan revealed many instances of neglect and abuse which ultimately resulted in the nursing home to lose its license to operate.
With the attention he received around this achievement Danny was offered several positions in private law firms. One of the offers was almost too good to be true. The senior partner from a well-established firm in town approached Danny and offered him a partnership in the firm. But that was just the beginning. The firm wanted to develop a division solely devoted to senior advocacy law. The partners in this firm were well aware that Danny was the regional go-to guy when it came to advocacy for senior citizens and they wanted him to develop this division within their firm. Danny accepted the offer.
One of the reasons Danny was chosen as a partner is that he’d made many influential contacts as a freelance advocate for the elderly. When I heard that he’d been offered the partnership I wondered if he’d be happy working for a large firm or if he’d want to continue the bootstrapping solo attorney act. I was both touched and honored when Danny called and asked that we get together to discuss his options.
When we talked I was actually surprised to learn how Danny felt about the offer and how he might fit into the firm. He was all for it. I somehow thought that he enjoyed being the underdog advocate. That wasn’t the case at all. Danny explained that his primary goal was to help the elderly with any legal matters they might need. But he immediately added that he eventually expected to be well compensated for the help he offered. He said that it comes down to offering excellent service and relief to those in need in exchange for earning a good living from his efforts. He also said that had been his ultimate goal from the beginning.
Danny told me he realized that there were many attorneys out there acting as advocates for certain groups only for selfish reasons, mainly, to secure clients along with power and influence. The distinction between such mercenary motivation and what he’d been doing was what was in his heart, which was truly wanting to help. But having made that distinction he went on to say that he didn’t choose a career in law to end up a pauper.
He explained that from the beginning he’d set out to systematically become known as a friend to seniors and then capitalize on it. I teased him saying that it was he who sounded a bit mercenary. He smiled and said that it might appear so but because his heart was in the right place and that so many had been helped or in some cases literally saved, that he wasn’t at all mercenary but a true advocate. Knowing Danny as I do, I really must agree.
What Price Would You Pay to Be Completely Free?
Imagine a world where you were completely free of any financial concern. You would wake up every day and not have to worry about paying the mortgage or rent. You wouldn’t have to worry about car payments. You wouldn’t have to be concerned with those pesky credit card bills that multiply like rabbits in heat.
Suspend your disbelief for a minute and think about what it would feel like to have all of those worries taken away.
It is this feeling, it is this hope, and it is this dream that motivates most entrepreneurs to start a business. An entrepreneur understands that the road ahead of him may be rocky at times. But in spite of the knowledge that a challenging path lay ahead, this sense of freedom helps the entrepreneur press forward. This feeling of a liberated destiny is so powerful that it propels the entrepreneur forward into the lion’s den of risk at breakneck speed. Freedom looms on the horizon – full speed ahead.
Most attorneys focus on the law and not on the dream of freedom associated with building a law practice. The attorney spends years and years learning how to think critically. They learn how to analyze problems and break them down into manageable parts. Attorneys spend the early years of their career assessing risk and then they graduate to giving advice to clients on avoiding it. They have a sense that something may be ahead but the picture is so uncertain that it is difficult for them to visualize a path toward freedom.
So how does an attorney leverage the training, skill and knowledge he has acquired and still embrace the entrepreneurial spirit that is necessary to build a practice that creates financial freedom?
There are three steps an attorney must take to make the transition from practitioner of law to entrepreneur.
First: Run Your Business Like a Business
You work in the field of law to make money. You may have other motivation or a higher sense of purpose but job one is bringing home the bacon. If a business loses site of this fact they are destine for terrible consequences.
In order to make sure you make a profit, you must choose your work and your clients carefully. Good businesses select good clients. This is critically important when it comes to developing a law firm (especially a solo or small practice). Clients will command a good deal of your time and expertise and they should pay well to avail themselves of your resources.
In an entrepreneurial business, like a law firm, cash is king. Get paid in advance. Put in place excellent cash management practices. Complete monthly financial statements- even in the early days. This is a habit that will serve you well as your firm grows.
Only spend money on things that can be measured. Challenge yourself to find a return on investment from each outlay of cash, no matter how small. Even some of the seemingly intangible expenses should contribute to your financial well-being. If it doesn’t pay off, don’t invest in it.
Second: Spend 80% of Your Time (or more) Developing Business
If you truly desire financial freedom you must become an expert at business development. You need to be able to find new clients and deepen your client relationships. This is the single most important aspect of your business. If you have no clients, it does not matter if your are a great attorney.
It is no coincidence that the richest attorneys are the attorneys who are experts at business development. They find a niche and then they dominate their market. It is a simple idea but it takes savvy to pull it off.
No activity in a law firm has a higher value than business development.
Remember that any problem that you can write a check to solve, is not really a problem at all.
Third: Hire the Best to Handle the Rest
If you are adept at originating client work and deepening relationships, you will be able to afford the best and the brightest lawyers to work with your clients. Hire smart people. Compensate them well and get out of their way.
Create standards and practices that you team can follow. Develop processes and procedures that work. Teach these processes to the people that you hire. Have everything documented so that there is little guesswork necessary.
Set up foolproof systems to keep in touch with your clients. Make sure that you never stop the communication process. Every month you do not keep in touch with a client you run the risk of losing that client to someone else for their next matter. If you lose touch with them for 10 months or more, you can expect to lose them forever. Frequency of contact increases trust.
Not-So-Common-Sense
It might seem like following this process is commonsense. It really isn’t. Most attorneys hang a shingle on their wall, join the local chamber of commerce, and push their way into meeting new people they hope will become clients. This works for a handful of people. Then they live off of the referrals they receive from those clients for years and years – sometimes forever. And some of those attorneys live a comfortable life.
But those are the folks who have forgotten about the dream they once had. They have forgotten about the dream of having no bills to pay and the freedom to come and go as they please. They have forgotten about the promise of a destiny they control.
The dream of freedom is closer than you think. If you embrace and cultivate the entrepreneurial spirit in your law firm you will make more money while you pursue your goals in life.
The question you must ask yourself is:
“Am I willing to take the risk?”
Don’t Practice - Play To Win
If you want to make a real living as an attorney you need to stop practicing.
You read that correctly.
Practice does not make perfect. Practice makes you poor.
Wake up.
You don’t have a “firm”.
You don’t have a “practice”.
You have a business.
You have a full-blown, pay the bills, make you rich, give-you-the-lifestyle-you-deserve business.
The sooner you embrace that reality, the sooner you stop killing yourself and start making some real money.
