ABA Journal

The New Normal

Choosing your law firm’s optimal markets

By Jordan Furlong

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Jordan Furlong

Jordan Furlong.

I think many law firms historically acquired their clients first and their markets second. Somewhere early in a firm’s genesis, one of its lawyers landed a client and performed the assigned tasks well; impressed, that client hired the lawyer again and recommended the lawyer to a similar client, which also retained the lawyer, and more followed.

In a sense, the lawyer “backed into” a market by virtue of doing good work for one client that led to other opportunities in the same area. (Little wonder so many senior lawyers insist that “the only marketing I need is doing good work”—that’s exactly how they entered their markets in the first place.)

Since the traditional law firm was essentially a convenient vehicle for the preferences and interests of its most influential lawyers, those preferences and interests (what the lawyers were qualified to do, what type of work the lawyers wanted to engage in, where the lawyers could make the most money, and so forth) dictated the firm’s activities. The law firm was effectively “carried backwards” by its lawyers into its markets, and there the firm remains to this day.

In the new legal environment, that sequence will be reversed. Law firms will choose their markets first and their clients second, and their lawyers and other personnel will follow behind.

Deliberate market choice

As lawyers’ influence within law firms begins to wane and the firms themselves start to assert more institutional control over their destiny, there will be a dawning realization within the industry that no other type of company allows its salespeople to select the markets in which it operates. The legal services environment will be crowded with increasingly competent providers offering ever-more enticing advantages, so law firms will need to be more careful about where they try to sell their services.

“Where can we be most successful? Which markets offer us the best chance of profitable operation?” These are the types of questions that law firms, as commercial entities increasingly independent of their lawyers, will ask themselves.

In this way, the deliberate choice of a market will come to supersede the acquisition of a client in the firm’s strategic sequence of events. That’s not to say that the acquisition of skills and experience in a given area won’t serendipitously open the door to a new market, of course; that can and will still happen. I just wouldn’t make that happy circumstance the foundation of your market activity.

Law firms in this new environment will revolve around buyers and those buyers’ markets. Accordingly, firms will have to undertake an honest, clear-eyed, and rational assessment of precisely which markets they wish to be active in and why.

Are we in the right place?

At this point, you might be thinking, “Great. Here’s a list of all the markets in which our firm currently operates. That’s done. Can we break early?”

Unfortunately, it’s not that simple. The correct answer to the question “in which markets should our firm operate?” isn’t “the markets in which we operate now.” That’s just a restatement and forward projection of your firm’s annual report, and it’s insufficiently rigorous for what we need to accomplish.

“The markets we serve now” isn’t just an insufficient response — it’s also a potentially harmful one. Your firm might be one of those described above that “involuntarily” entered its markets on the backs of its equity partners. That process often occurred gradually, over the course of years or decades, stretching back to some very different economic environments than the one we now occupy and the ones coming our way. The lawyers who first chose the markets your firm currently serves might have long since relocated to a different firm, been appointed to the bench, or shaken off this mortal coil.

The status quo is a terribly strong and persuasive force that anchors people and organizations in their current habits; that goes double for law firms and their change-averse, precedent-loving lawyers. But ask yourself: Are the markets your firm entered 10, 20, or 50 years ago still the right ones for your firm to serve? Are they the markets that you really want to serve? Are they likely to still be the right markets five or 10 years from now? Law isn’t the only sector whose community is experiencing rapid and accelerating change; you can‘t count on your firm’s current markets remaining stable or even particularly recognizable.

Basing your firm’s present and future markets on its past choices and practices prevents your firm from taking a hard, fresh look at what its markets ought to be, what they could be, and what the firm would like them to be. Don’t simply assume your firm’s existing markets are the right ones. Initiate a process by which you can make fully informed decisions about the markets you consciously choose to serve — now and in the future — and then mobilize your firm to achieve that outcome. Let the markets you choose to serve dictate the type of firm you develop, not the other way around.

If you’re launching a new firm, this step is absolutely essential. If you’re leading an existing firm through a process of change, this step is still critical to your discussions about what kind of firm you want to be and whom you intend to serve. Conduct this process once, and then review it at scheduled intervals in the future. But don’t skip past it or try to finesse it, because your firm’s ultimate success will stand or fall here.

This is an excerpt from Law Is A Buyer’s Market: Building a Client-First Law Firm, published March 2017 by Jordan Furlong, a legal market analyst and consultant who forecasts the future development of the legal services environment. Click here more information and a selection of testimonials.

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