Law Firms Realizing What They
Don't Know Can Hurt Them
Charles Toutant
New Jersey Law Journal
01-09-2006
As larger, full-service firms expand their IP departments, the firm wants to glean empirical data on how to make sure its name will stay high on the lists of corporate counsel needing such work.
The solution: market research. Lerner David has been scouting for a vendor to conduct a survey of users of IP law firms and to question respondents about their opinions of Lerner David and their inclination to hire it for future matters.
Corporate America wouldn't think of launching a new flavor of toothpaste without doing market research, and the idea is slowly growing among law firms faced with ever-increasing competition.
About 40 percent of the country's 300 largest do some form of systematic client research, up from 25 percent five years ago, according to a study by BTI Consulting of Wellesley, Mass.
Larger firms have long conducted secondary market research, obtaining reports and articles about clients and client industries as well as competitive intelligence about law firms.
The most common sort of primary research at law firms -- client satisfaction audits -- is starting to take hold at large and midsized outfits.
Less common, but also catching on, is "branding" research, which asks users of legal services about their impressions of specific law firms. While some firms aim such research broadly, the most common method asks existing clients about a firm's image as well as mundane variables, such as whether lawyers return calls promptly.
Behind the growing interest in branding research is the mounting inclination of corporate legal departments to cut the number of firms they use, says BTI President Michael Rynowecer.
The coalescing of legal work favors large, departmentalized firms. "As things become more and more competitive, as law firms are merging, as smaller and medium-sized firms have to compete with larger firms, those firms are doing more market research. And they have to," says Deborah Addis, a Boston marketing consultant who advises smaller law firms.
Lerner David is a case in point. The firm has only one office but serves clients across the United States and some in foreign countries. What the partners need to know is what about the firm best serves existing clients and how that translates into a marketing campaign to find new business.
"Many of the big-box law firms now offer IP, and they do so in an assertive way," says attorney Bruce Sales, a member of the marketing committee. "We do not want our expertise to be lost amongst the big firms. We want our expertise to be out there when people are deciding who to use."
Sales also hopes to learn how his firm's casual atmosphere resonates with clients, many of which are Fortune 500 companies. The study might show clients expect their law firms to be a little more button-down, he says.
Sales expects Lerner David will get good client reviews, but its goal is to get the unvarnished truth. "I think many of us expect some self-validation, but number one, we need to know if our assumptions are accurate, and number two, we do not have a seat-of-the-pants view about the way to market ourselves," he says.
SOME FIRMS GO IT ALONE
So why haven't more firms latched onto branding research as a strategy tool?
A sampling of New Jersey firms contacted had a common reason why they don't do market research through an outside specialist: They think they can do it better themselves.
Marcia Jeffers, the chief marketing officer at Sills Cummis Epstein & Gross, says the Newark firm's librarians, marketing department and paralegals research client companies and industries by obtaining articles and reports. Lawyers solicit client feedback as part of the normal course of business. And Jeffers and the partners collect information about their competitive environment by reading legal periodicals and speaking with clients and counterparts at other firms. "I'm always asking questions, to the point where I might be a pest," says Jeffers. "If you're reading between the lines, you can tell what the trends are going to be."
Pitney Hardin in Florham Park likewise relies on its own intelligence gathering. Marketing director David Woods says the firm recently instituted a formal system of client satisfaction interviews -- done by members of the firm's executive committee. Woods says the firm can keep tabs on the state of the marketplace without help from outsiders. "If you're talking to clients, sharing information with others, conducting client interviews like we do, you will learn those things in the market," he says.
But law firm consultants say the information gathered is only as good as the questions that are asked to get it and the analysis to which it is subsequently put.
David Maister, a Boston-based consultant, calls market research "a wonderful postponement project" because lawyers tend to dither after a sheaf of statistics lands on their desk. He says a lawyer's time is better spent reading trade journals from a client's industry, to better understand the challenges it faces.
"When it comes to professional businesses like law firms, it doesn't help me to know 67 percent of clients think this or that in the aggregate," Maister says. "When you're a law firm, what you need to know is what's on the mind of individual clients."
Part of the resistance to market research may be fear. A firm that commissions a branding study runs the risk of learning its reputation is not as strong as it thought -- or worse, that it has no reputation at all among would-be clients. Consultant Rynowecer says his company's research shows that only 20 percent to 40 percent of a target group of clients have an opinion of a given firm. "That's usually a fairly significant surprise to the law firm," he says.
"There are all sorts of illusions law firms can hold," adds Joseph Altonji, a principal in the Chicago office of Hildebrandt International. "You can't do clear-headed thinking if you have a lot of fuzzy notions that don't match the facts."
Altonji says market-research naysayers tend to be those who don't want outsiders questioning their clients or who object to the cost of hiring researchers, but that resistance is "rapidly fading."
Firms that have lost a major client or seen significant attrition in their client base are good candidates for bringing in a market researcher, says Rynowecer. It's also a good time to hire a market researcher if the firm's clients require it to submit to an inordinate number of "beauty contests" to get work, he says.
Addis says market research shouldn't be the only source of information for law firm decision-making but should be one input to test assumptions or answer specific questions, such as whether a firm should open an office in a new location.
Firms need to find a balance between trusting their own instincts and consulting external sources before making strategic or marketing decisions. "I think if [a firm's partners] have been doing what they're doing for some time, their instincts are probably pretty good, but they have to process their gut instincts in a systematic way," Addis says.
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