“Thought leadership” is an overworked yet fuzzy term. It’s like “emeritus” – people know what it means generally but cannot quite nail it down. And while legal consumers value it highly, most providers—especially law firms—tend not to invest in it. Why the divergence?
Trusted Advisors and Thought Leaders
Lawyers strive to achieve “trusted advisor” status with clients. That means, among other things, that their counsel is sought and valued beyond the transactional level. Translation: clients seek the trusted adviser’s advice not only for specific cases or challenges but also for broader, systemic ones. And while a small band of lawyers earn this moniker, far fewer firms retain it. “Trusted advisor” relates more to legal judgment than expertise in legal delivery –the structure, technology, supply chain management, and process of providing legal services. This is a distinction with a difference.
When legal delivery was solely about legal expertise, a trusted advisor was the go-to source, a client’s legal consigliore. But legal practice has morphed into a three-legged stool supported by legal, technological, and process management expertise. Amalgamating those skills requires broader, more rarified expertise. That’s where “thought leadership” comes in.
“Thought leadership,” is generally associated with dissemination of informative content—either original and/or curated—that is relevant to a particular community. Thought leaders have—and share—a point of view drawn from experience. They have “street cred.” And thought leadership is a cross between scholarship and discrete marketing with a personal touch. In the legal vertical, it relates more to the structure and methods by which legal services are delivered than to the practice of law. Translation: thought leaders influence the industry while trusted advisors influence specific clients.
Why is Thought Leadership Important in Law?
It’s no longer news that the traditional law firm model is under siege. Some might argue it’s more of a series of skirmishes than an all-out assault, but most everyone agree that legal delivery is undergoing a fundamental change. And while post financial crisis austerity, technology, globalization, and other factors have fueled changes in law and other industries, law has another change agent: customer dissatisfaction with the status quo. Sure, law firms still control roughly 60% of legal spend, but that percentage erodes every year. And many signs point to the modification and/or elimination of many traditional partner model law firms, most of which are undifferentiated. Some of those signs include: growth in size, influence, portfolio, and compensation of in-house legal departments; dramatic increase in firm mergers and lateral movement; proliferation of service providers; and investment in legal technology companies.
What’s a law firm to do? One suggestion: invest in thought leadership.
Why Law Firms Generally Lag in Thought Leadership
Most law firms have responded to these changes by adopting a short-term view designed to maximize profit-per partner (PPP). Law firms–unlike in-house legal departments and service providers– usually do not retain residual equity in the firm upon departing. Their “equity” is the distribution of annual profit. That’s why most have a “the future is now” attitude. Why invest in structural upgrades when you are renting? And this short-term economic view often permeates firm practice, too. Many lawyers and firms have a transactional approach to client stewardship rather than a long-term relationship building one (many firm partners would say the same of clients). Again, that can be explained by the traditional partnership structure and the need to extract maximum short-term financial return from an engagement. Equity partners are under intense pressure to produce lest they be “de-equitized” or shown the door. Under-performers dilute PPP and also prevent the firm from luring “star” lateral partners (read: those with large books of business in search of a better deal). PPP has become the driver for most law firms, and if you live by PPP you might just die by it.
Clients have driven change in the legal market, not firms. Yes, law firms have made changes, but they tend to be internal rather than client-related. Firms have pruned the herd (often including “service partners” who are more valuable to clients than to the firm); reduced staff; cut real estate costs; and hired fewer newly minted law graduates. But understandable as this belt synching is, it does not address widespread client dissatisfaction with law firms’ sky-high rates and cost; inefficient delivery; and, most of all, lack of client-centric approach. Those are some key reasons why demand for law firms is flat when overall demand for legal services continues to rise. And it helps account for why law firms continue to cede market share to in-house legal departments, legal service providers, and an array of tech and process savvy newcomers entering the legal market. And beyond a technological and process edge over law firms, these competitors also focus on customer service and delivering goods and services on a transparent, efficient, and cost-effective basis. They are simpatico with the rhythms of business and the DNA of clients in a way that most law firms are not.
Thought leadership can relate to a broader or narrower community. For example, an individual might be a thought leader in data management but not in the broader context of legal delivery. Lawyers—and providers– would benefit from zeroing in on their differentiated skills and knowledge and put it out to their community. That means sharing, collaborating, and abandoning the zero-sum approach to the competition and the market generally. It also means taking a longer view of return-on-investment by investing in thought leadership—either directly or via the support of others. Not only will clients take notice, but so too will other providers. And in this age of collaboration, that’s a big plus.
Thought leadership is an essential tool of differentiation. And while not all lawyers—or providers—can be thought leaders—they can benefit from engaging in the broader legal community. All signs point to law—like so many other professions and businesses—becoming more collaborative. And thought leadership is an accelerant for collaboration that, in the end, may just be most lawyers’ best path forward.