Are law firms ready for the collaboration and partnership-building that will be necessary to generate new business, cut costs, and offer better client service as they enter the Age of the Ecosystem?
For years, the tech economy has relied on digital ads to acquire new customers at a low cost. This model allowed businesses to micro-target their audience with tailored messages while the ROI was easy to measure and justify for data-driven marketing teams.
Over the past few years, however, there has been a growing feeling that the digital economy is over-heated. Thanks to a boom in tech investments, too many companies with too much cash chased too few customers’ attention. That has led to price increases; and, with that, unsustainable customer acquisition costs. In addition to that, digital ads have become less effective due to adblockers and privacy regulations. People are less generous with their consent as they’ve grown tired of the overload of digital ads. Some even argue that microtargeting never really worked.
This dynamic has led to the rise of the partnership model and what is sometimes called the Age of the Ecosystem. In this situation, organizations end up pairing with others to accomplish solutions that neither may be able to tackle on their own. For instance, modern companies can’t rely solely on inbound or outbound marketing to secure leads and maintain a sustainable growth rate. Instead, they’ve directed their attention to what is usually referred to as near-bound marketing.
The idea then is to leverage these partnership teams to build, nurture, and expand an ecosystem around the company.
Partnerships for law firms
Of course, law firms don’t have a problem with the digital ad economy. They never relied on it in the first place, and in many countries, firms must comply with strict marketing regulations.
Nevertheless, my recent experience building a partnership team has taught me how even law firms can benefit from the Age of the Ecosystem to better generate new business, cut costs, and offer better client service.
The Big Four audit & accounting firms have shown how powerful this model can be with their popular one-stop shops that now mix legal advice with compliance and accounting services that offer clients a more holistic service at a lower cost. Firms don’t have to offer all these services in-house as a PWC does; rather, they can cultivate an ecosystem around them, via outside partnerships, that includes many of these capabilities.
Many law firms already have cross-border partnerships in place by which they refer clients to each other. A German law firm probably doesn’t have legal expertise in Australian jurisdiction and vice versa, so these international partnerships and collaborations have already proven to be beneficial for firms and clients alike. It’s just not streamlined, professionalized, and leveraged to its full potential — yet.
Every day, we can see situations in which partnership models among law firms and legal tech companies might flourish. In the past few years, law firms have spent too many resources trying to develop their own tech solutions. And while it may have been good for marketing or public relations, few firms succeeded because developing user-friendly technologies is not within a law firm’s expertise. This thinking also is based on a misunderstood assumption that legal tech is made for lawyers. As a result, many law firms have spent too many resources implementing legal tech solutions instead of using legal tech to improve their client service in the first place.
By teaming up in these partnership models, law firms and legal tech companies can work together to provide excellent legal services: Legal can offer the content; and tech offers the process.
Three different partnership models
Inspired by the near-bound movement, I see three potential partnership models that could be interesting for law firms to pursue.
First is the referral partnership, which is suited for smaller law firms. In its essence, this is a simple commercial partnership in which the law firm acts as a reseller of a tech solution or just advices clients to use a specific solution. This partnership becomes more powerful if the firm can leverage it to add value to their clients, either by being in charge of implementation or by using process tools to offer their expertise through legal content, negotiations, oversight, etc. Nevertheless, this is an easy way to get started because there is a low barrier to entry.
The second model is the integration partnership, which works best for medium-sized law firms. This model is an expansion of the referral partnership that now has the law firm integrating multiple tools with their core digital platform or simply with each other. In this model, law firms build tech stacks of interconnected tools for their clients, covering such areas as contract management, data protection and compliance tools, board room solutions, and more. While it may be a more expensive solution and requires more technical expertise, the value is also higher.
Finally, the third model is the strategic partnership which is mostly for larger law firms. Under this model, law firms and tech companies would partner up to co-develop, co-launch, and co-market new solutions for the clients. Think of it like the Alexa and Spotify partnership. By co-launching, the two separate entities created a synergy that made both products so much better. I see great potential for law firms and tech companies to explore similar models.
The possibilities are endless, of course, as there are multiple variations to all these partnership models. I’ve worked with variations of all of them and seen great benefits for all parties.
Wisely, law firms and their tech-savvy partners should get together and embrace the Age of the Ecosystem.