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Legal Practice Management

Rethinking “partners” for law firms: Creating an ecosystem for client value

Can building the right partners ecosystem help law firms develop the needed skills and resources to position themselves as a trusted advisor to clients?

Whether your law firm has an established presence within the legal industry or is just getting started, competing in a crowded marketplace requires more time, skill, and resources than ever before. Some of these skills and resources may lie beyond your firm’s current core competencies, or even your firm’s current service offerings.

So, how do you develop the needed skills and resources to position your firm as a truly trusted advisor?

One of the keys is building the right partner ecosystem. This does not refer to “partner” in the common law firm parlance; instead, it refers to partnering with a community in which each of the component entities amplify market share while at the same time giving each individual entity a competitive edge.

We can look to history for examples. When the information technology wave entered the world of business in the early 1990s, technology companies partnered together to create intertwined platforms as they built out complex solutions to meet client needs. The success of these ecosystems is almost taken for granted today.

ALSPs show the way

Challenges in the legal business are no different in terms of the pressure to be price competitive while still offering a quality solution and determining how to reduce overall cost. Often times, firms discover that they’ve made an inadequate investment in the needed resources to deliver a total solution to the client — this includes infrastructure, service lines, and people. As a result, the attractiveness and growth of Alternative Legal Service Providers (ALSPs) in Europe has surged and is quickly gaining traction in the U.S., as law firms leverage these potential partners to provide litigation support, investigative research, document review services, and regulatory risk and compliance counsel.

An early study of the ALSP market by Thomson Reuters, the Said School of Business, and the Georgetown Law Center on Ethics and the Legal Profession showed that ALSPs market had grown to represent $10.7 billion in 2017 with a compound annual growth rate (CAGR) of 12.9%. A more in-depth examination of these quickly mainstreamed providers reveals clearly that this phenomenon is dramatically changing how legal organizations think and approach legal services. According to a recent Dublin Business Wire study, the U.S. ALSP market is expected to grow with a CAGR of 23% thru 2025.

Yet, this is but the next step in the evolution of legal services that began before the turn of the 20th century when most law firms were solo practices or very small groups. The 20th century saw more organized law firm entities develop with the inclusion of partners and associates. As we approached the big era of technology, law firms relied on the role of a General Counsel to manage and serve as the trusted advisor to their key clients. With this added organizational complexity came the the alarming fact that the overhead cost of managing such a vast organization of resources was continuing to grow. Then there was the onset of offshore resources, the Big Four accounting firms, and even temporary staffing. The reality of this journey reminds us that the legal industry has continually transformed, utilizing ongoing positive disruption to identify ways to become more efficient and cost effective.

Today, as pointed out by the Harvard Law School Center on the Legal Profession, law firms are linking technology expertise with both internal and external skill sets as a means to be responsive to the demands of clients.

Going down the partnership path

So, what really makes implementing a partner ecosystem appealing to a law firm that is looking to grow its bottom-line profit? First, the ecosystem provides service choices that your client organizations deem as critical success factors now and in the future. This, in turn, ultimately captures new business — in other words, new competencies. Second, the ecosystem extends the strength of your skill base with enhanced offerings and capabilities, providing improved scalability. Third, your firm becomes a trusted advisor because of its ability to deliver a comprehensive portfolio of solutions to your customer while minimizing the threat of competition and accelerating business results.

When exploring what type of partnership ecosystem makes sense for a particular law firm, there are a few paths to consider, such as:

    • recruiting and engaging other firms to resell your services, which ultimately drives revenue for both parties;
    • acting as an integrator, or a general contractor if you prefer, via the collaboration of efforts to provide value in the form of a customized solution for a client; and
    • deploying embedded offerings (sometimes referred to as white label solutions), which provide smaller organizations an opportunity to do the work of larger enterprises and gain broader experiences.

Indeed, “subcontracting” services can also be a valuable way to to satisfy requests for proposal requirements that were otherwise out of your firm’s reach due to lack of existing skills or an inability to meet diversity and inclusion requirements within the organization. Either situation can create a win-win-win situation for the contracting firm, the sub-contractor, and the client.

Creating a competitive advantage

So, how can your law firm use a partner strategy to create a competitive advantage? There are seven key steps:

      1. Define a vision.
      2. Identify your strengths and gaps.
      3. Gather market intelligence.
      4. Understand the ecosystem dynamics.
      5. Create an incentive plan for your partners.
      6. Incubate potential relationships.
      7. Select the right partners.

With the successful implementation of a partner ecosystem strategy, the benefits can include a faster route to a desired solution, an increased pipeline of opportunities, and deeper skill capability without having to carry the payroll and overhead expenses. This fast-growing segment can be richly rewarding — margins are higher and revenue becomes recurring and more predictable.

More importantly, deeper client loyalty is cultivated as you become a more pivotal technology partner delivering on a range of solutions and services to help clients improve business outcomes.

When you team with the right partners, you will have access to a broad portfolio of offerings that readily integrate into your environment and a wide range of support to ensure success of all involved.


This article was written by attorney Edwin Smith

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