A new way of analyzing law firm brand positioning can illustrate a powerful case for building a more differentiated approach to the legal market
Law firms that carve out a distinctive place in the minds of buyers have the potential to drive exceptionally strong demand growth. The challenge is, however, that few law firms are willing to put boundaries around how they approach the market, especially when it comes to defining the types of work or clients that they are seeking.
Fears of missing out on opportunities or alienating rainmaking lawyers trap some firms in the ambiguity abyss — that largely undifferentiated position of saying, We are a full-service firm that’s able to meet the complex needs of sophisticated clients.
Our analysis of the last 15 years of law firm brand positioning, recently reviewed alongside law firm financial data, has produced a compelling argument for law firms to build a differentiated approach to the legal market.
A differentiated approach
There are four ways to think about segmenting and differentiating a firm’s approach to the market:
- Expertise — We are smarter than other firms in this area of law.
- Client type — We understand this kind of client better than other firms (e., public vs. private companies, start-up vs. mature companies, etc.)
- Geography — We offer strength in a defined geographic region.
- Sectors — We can navigate the dynamics of this sector and are well-positioned to serve all client needs in this space.
While law firms need to consider each of these factors as part of their strategic plans, competitive advantages are created when one factor is considered the key strategic priority that then informs the other three. Let’s look at this concept in action.
Case Study 1: A sector-focused approach to the market
Law firm ABC has a clear sector-focused approach to the market and is heavily entrenched in the technology sector — from traditional tech companies to fintech and e-retailers, this firm serves them all.
The good news for Law firm ABC is that their stated strategy is strongly corroborated when looking at our research of more than 2,300 General Counsel and senior corporate law department leaders. (Sadly, this isn’t always the case, which may indicate a poorly executed strategic plan.)
When looking at the types of companies that keep Law firm A top-of-mind, nearly 70% of those senior legal decision-makers are from organizations in a tech-related sector. This, unsurprisingly, also means a large proportion of these companies are based on the West Coast of the United States.
More proof of Law firm ABC’s effectiveness in executing this strategy comes when assessing the firm’s ability to gain access to new work or generate more legal demand.
Our Market Insights team undertook a conversion analysis, which involves looking at what proportion of legal buyer respondents who name a law firm top-of-mind then go on to say that firm is the one they consider hiring for different types of legal work. In other words, how well does a firm convert mindshare into market share.
Law firm ABC is twice as effective at turning awareness in new work with legal buyers in the technology sector compared to all other sectors combined — an impressive proof point that underscores how the firm’s focus in this sector is more than just lip service. And the firm’s financial performance? When looking at demand (billable hours), this firm has nearly 50% higher demand growth than the average firm over a three-year timeframe.
Why differentiation works
Of course, lots of factors go into a law firm’s ultimate success, and brand differentiation is one of the levers that law firms can control. In the case study above, Law firm ABC uses a sector-focused strategy to differentiate itself from other firms in the (extremely crowded) market.
And Law firm ABC is not a one-off example.
Our ongoing research with General Counsel shows that many outside law firms identified by clients as having deep sector knowledge earn, on average, 43% of their clients’ external legal spend — that’s nearly 2.5-times the typical firm.
With lack of time being one of the most pressing issues that General Counsel and other law department decision-makers face, a differentiated brand helps buyers quickly understand how your law firm can help them — rather than trying to figure out if yours would be the right firm to call in a specific situation.
For more on how your firm can differentiate in various ways, check out our latest video, which digs deeper into understanding the various ways firms can differentiate — and measure the success of their approach to the market.