Give Your Law Firm a Competitive Advantage by Understanding This Process
Summary: Learn the purpose of business intelligence in a law firm and four basic rules on how to use it successfully.
Business Intelligence (BI) is rapidly being utilized and acknowledged as a critical weapon in the strategic arsenals of modern law firms. In a nutshell, Business Intelligence is a research process that enables law firms (or any business) to increase its competitive advantage by intelligently using available data in decision-making.
In the past, Business Intelligence occurred on an ad hoc and informal basis in the legal industry. Before the proliferation of a legal trade press, the Internet (and competitor's websites), and market intelligence services, information about clients, prospects, and competitors was likely gained on the golf course, at bar association functions, or through the occasional press release issued by a law firm that was an early adopter of marketing.
Now a cottage industry has sprung up to support the burgeoning efforts of law firms to understand how to remain competitive, profitable and viable. As evidence of this, within the past year there have been numerous conferences and seminars aimed at teaching law firm management how to appropriately develop and use Business Intelligence, and a number of products and services are being offered to aid firms in their quest for actionable intelligence.
A look at the trends impacting law firms makes it obvious as to why law firms need as much information about clients, competitors and prospects as possible to succeed. There are forces impacting any law firm's ability to get and keep clients and talent, the key ingredients to remaining profitable and viable. Included among these factors are:
The sustained growth and consolidation of the legal market in the past several years – this means that there are stronger and larger competitors offering unparalleled depth and breadth of services;
Clients are becoming much more sophisticated consumers of legal services and are therefore demanding more of their service providers – firms are responding by seeking ways to differentiate themselves from the crowded field;
Due to technology advances, clients have much more information at hand about the real cost of legal services and are consolidating their work to fewer providers who are willing to offer favorable fee and rate arrangements in exchange for loyalty; and
There is an ongoing war for talent and law firms are increasingly focused on professional development, practice development, and client relationship management as ways to become the most attractive options for top lawyers.
The cycle of business development has shortened and has become more of a "number's game."Firms can no longer rely on a few key rainmakers to bring in enough business to sustain the entire firm. Law firms have to have a larger and more constant pipeline of prospective work, and business development is the responsibility of the many and not just the few.
These are but a few of the key trends, but they should be enough to convince even the skeptics that there is a need to have the information at hand that will enable a firm to develop, implement and achieve a focused and effective strategy for remaining in the game.
For years, law firms have had the tools, systems and processes in place to gather and analyze internal intelligence. For example, firms have long been able to pull data from their billing and accounting systems that allowed them to compare lawyers, assess hours and rates, and look at other processes necessary for internal management of people and resources. But now, with the advent of Business Intelligence tools and systems, law firms can look outwardly and assess the marketplace factors that affect their business. To enable this external view there are a number of relatively new tools and systems on the market, such as:
Market intelligence products: Many companies have launched market intelligence products that allow a look at legal trends in areas such as litigation or corporate and securities. For example, law firms can reveal legal activity and trends by company, industry and law firm, thus assessing the activity of their competitors, the targets in specific industries, and the trends in substantive practice areas.
Business information websites: Sites such as Hoovers, Dossier and Thomson Financial offer in-depth information about thousands of companies for a fee. Using these resources it is easy to learn about a client or prospect, including a profile of their business, names and contact information for their key personnel, financial information, and more.
Websites and the Internet: Perhaps the greatest boon to Business Intelligence gathering is the information freely and widely available via the Internet. Law firms spend millions of dollars each year updating their websites with as much information as possible that will be useful and of interest to their clients and prospects. Of course, this information is also useful, available and of interest to their competitors. Search sites, such as Google and others, also provide a wealth of Business Intelligence.
Business Analysts: Because the list of resources that assist in Business Intelligence is lengthy and growing daily, and because it is easy to become mired in too much information, many firms are hiring professional business analysts to support their practices and firm management.
Just having all of this information is not enough, however. Business Intelligence involves two components – gathering the information and using the information intelligently. Therefore, before embarking on widespread data gathering, it is important to have goals clearly delineated. In fact, that is the first and most important rule of Business Intelligence – know the questions or business issue to be addressed before beginning data gathering. Otherwise, Business Intelligence can become prohibitively expensive and overly time consuming. Then, once the plan is focused and the research conducted, it is possible to filter out irrelevant information and evaluate the remaining data in the context of the law firm and its environments.
For a law firm, Business Intelligence takes many forms and is used for many purposes. Some of the most common include:
Identifying and targeting prospective clients;
Seeking ways to expand relationships with existing clients;
Targeting prospective lawyers for lateral hires;
Finding targets for mergers and acquisitions and then analyzing these opportunities;
Researching industries and providing data to inform the client team, industry team and practice group plans;
Making decisions about expansion by looking at geographic and industry factors; and
Launching new service or product offerings.
Finally, there are a few basic rules and critical success factors for firms engaging in Business Intelligence activities. While it is probably best to hire professional researchers who are skilled in conducting Business Intelligence, it is also a good idea for law firm managers to understand some of these basic yet essential factors, including:
Using Business Intelligence is not a short term or inexpensive proposition. Firms need to continuously engage in gathering and using intelligence and be willing to make the investment for the long-term.
It is a good idea to learn about the myriad of useful tools now available to make the Business Intelligence process easier and more readily available. Know the choices available and which tools will accomplish which goals.
As with other key initiatives it is best to start with a pilot or prototype project, build some successes, communicate these successes and grow from there. That is the best way to gain acceptance and agreement for the time and financial investment in Business Intelligence.
And most important of all, use Business Intelligence wisely – don't just gather data for the sake of gathering it or because it is the trend du jour in law firms. Rather, understand the power of having and using actionable intelligence.
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