By: Andrew Razeghi

March 7, 2003, Miami Daily Business Review, Palm Beach Daily Business Review, and the Broward Daily Busines Review

Quipsters love lawyers. Consider: "An incompetent attorney can delay a trial for months or years; a competent attorney can delay one even longer."

Lawyers' analytical bent not only leaves them open to gibes, it hinders their ability to create a competitive advantage for their firms by thinking strategically. That's no laughing matter. It prevents a firm from singling itself out from the pack.

In my experience working with law firms on creation of strategy, I've found that there are several conventions in the business of law that hinder strategic thinking. They include beauty contests, billable hours, and the half-day, off-site retreat. Those traditions aren't going away anytime soon, so I propose looking at them anew, as examples of ways that firms can start thinking strategically.

In the absence of uniqueness, many law firms compete not on the basis of strategy, but on price and personal relationships. The problem is that, in the absence of a compelling reason to select a particular firm, clients will keep pushing fees downward, and margins will continue to come under pressure.

That price sensitivity exists in other industries, but successful businesses have moved past it. We have witnessed it in food service [Starbucks coffee], consumer packaged goods [Gillette razors, Bounty paper towels], and -tellingly - professional services [McKinsey consulting]. In each of those cases, customers evaluate their purchasing decisions on much more than price.

World-class corporations seek strategic insights that differentiate them from their peers. Law firms need to do the same. To begin, law firm managers should ask themselves these questions:

* What are you really selling? How is it unique?

* What are your clients really buying - solutions, peace of mind, insurance?

* What events or strategies would make the beauty contest a thing of the past?
 
The billable hour

Asked how they can expand their business, lawyers usually say something like "Give me more associates," or "Bring me more deals" [or cases]. The billable hour makes it easy.

The billable hour is merely a method of charging for services. The point is to focus first on client needs and preferences, market trends, and competitive shifts - and then to think about how to bill.

Convene a group of your clients, or visit with them one-on-one, and start asking questions in a new way. Improving a relationship with a client depends on learning such things as these:

* What are your clients' business goals?

* What can't your clients do today that they wish they could do?

* What are your clients' "points of pain" - the things they dislike about the legal profession? How can these things be challenged, modified, or improved?

* What do your clients expect from progressive business lawyers?

How these questions are asked is just as important as the questions themselves. The goal is to create a well of insights that can be used to create a unique strategy to win and retain each client's business. Therefore, firms should speak to clients about strategy issues not through surveys, but face- to-face, using a structured forum.

I favor a process called "brand interaction mapping." Simply put, that is a facilitated dialogue between law firm managers, their clients, and their strategic partners [for instance, investment bankers with whom the law firm works on the client's transactions]. It's the questions that make the difference. General survey-type questions are good for finding ways to improve operations, but they seldom deliver strategic insights.

On the other hand, strategic interview questions yield much richer answers. Examples include such questions as "How would you rather pay for legal services?" or "What can't you do to expand your business today that you wish you could do?" These questions give the client freedom to say such valuable things as "I want a la carte offerings after the discovery process is finished" or "I want to be able to choose different fee packages for different expected outcomes."

Begin thinking about your clients not in terms of practice area or industry, but in terms of purchasing behavior and needs. Most great marketing organizations intentionally segment their market by purchasing behavior, not by product or service line. That allows them to tap into their customers' unarticulated needs and provides the fodder for strategy innovation.

Law firms can do the same thing. For example, some clients might be "emergency users," who come to the firm in crisis mode. Their needs are different from those of "peace-of-mind users," who are attracted to the firm's reputation. To begin this process, ask yourself:

* What initiated your firm's relationship with the client? Is it the same reason the client works with you now?

* Under what circumstances does the client engage you? What does this tell you about its needs?

For instance, when people are asked why they bought cellular telephones, they usually say they did it for security reasons. But after the purchase is made, people use the cell phones for very different things. Armed with this insight, telephone companies have introduced an array of additional cell phone services - and created new revenue streams.
 
The retreat

Because law firms explicitly value time, there is a natural incentive to have associates and partners bill as much of it as possible. That leaves little time for professional development and strategic thinking. Therefore, firms arrange their infamous annual half-day, off-site strategy retreats.

It's usually a colossal waste of time. No firm can create strategy in a half day, or even a full day. Not only is the time insufficient, the contributors are isolated. There are typically no clients at such retreats, or any investment bankers, accountants, and other professional advisers that law firms work with. Therefore, the retreat often devolves into a feel-good exercise.

Wouldn't it be better to have 20 attorneys thinking about strategy for four hours a month for 10 months? Who are those who make things happen? Who are the thought leaders in your firm? What if you gave them the chance to think strategically as a part of their job? Create a "strategy network" within your firm - a web of business thinkers with a structured forum in which to think about the business of law, not the practice of law. This network should not just include senior partners and rainmakers, but new partners and senior associates too.

Strategic thinking is best done in small groups over multiple sessions. Focus on the production of outcomes, not documents. Here are some approaches that provide a smarter alternative to the half-day retreat:

* Deep-dive strategy sessions. These are comprehensive quarterly meetings, typically no longer than a day, that address specific strategic issues. Title the sessions based on well-defined outcomes - for example, "New Offerings" or "Business Development." They should be structured: Prep work should be assigned in advance, and the sessions should be led by a rotating group of facilitators from both inside and outside the firm. You may want to invite clients and/or topic-area experts to participate in sessions, when appropriate.

* Executive coaching. Use this technique to manage the firm's constraints on non-billable time. In it, a trained strategy coach works in-depth and on an individual basis with lawyers on a predefined agenda. The goal is to help lawyers to organize ideas, flesh out strategic opportunities, and navigate the nuances of organizational politics. Coaching is best done with an organized curriculum, in short increments of time - two hours per session, once or twice a month, over the course of a year.

* Curriculum-based training. This involves expanding upon a firm's existing professional development programs. For instance, a firm could design, develop, and add a business-of-law module into its existing new-associate and new-partner training programs.

* Topic-based luncheons and breakfasts. Invite outside experts, advisers, and clients to such sessions to talk about their needs. The law firm trains its lawyers while exposing its clients to new ways the firm can serve them.

Getting started is easy. Law firm leaders just need to make the commitment to start a new conversation with new people about new ideas. Which firms will become the strategy leaders in their marketplace? Which will clients think of when they think of proactive law firms? Who will get the credit for killing the lawyer jokes?

Andrew J. Razeghi is managing director of StrategyLab Inc., a Chicago-based marketing strategy firm. He teaches strategy at the Graduate School of Business at Loyola University Chicago and conducts research on marketing strategy and innovation at Northwestern University's J.L. Kellogg School of Management.