Law Firms: Use Competitive Intelligence to Make Better Business Decisions
What do the top firms have in common? Competitive intelligence, or CI. Rise above the competition by using a program for collecting, analyzing and managing outside information.
In the increasingly competitive environment for legal services, most law firms recognize the need to make intelligent business decisions. Decisions made in a vacuum – based on (often faulty) internal assumptions – do not fill the bill. Truly intelligent business decisions are made within the context of a law firm’s external competitive environment.
The way to accomplish this is through the use of competitive intelligence (CI) – a systematic and ethical program for the collection, analysis and management of outside information.
CI can be gathered from many sources – including public records, publications, the Internet, surveys and personal interviews. This information can be used to win new clients, cross-sell to existing clients, evaluate merger and acquisition opportunities and decide whether to add a practice area or open a new office.
“Long accepted as essential in the corporate world, CI is gaining a higher profile among law firms,” said Jillion Weisberg. “Currently, about 75 percent of firms claim to conduct some sort of CI. Most of these law firms, however, are using CI on a strictly tactical basis – to reactively aggregate information on a case-by-case basis. Only the top 25 percent are tapping the full value of CI – proactively for strategic decision-making.
“According to Thomson research, CI is most often the responsibility of a law firm’s marketing department or library – or a cooperative effort involving both,” said Weisberg. “So far, only the largest firms have created and staffed a dedicated CI function.”
Weisberg is a business development executive with The Thomson Corporation (www.thomson.com). Among other products, Thomson offers Firm 360, a high-value CI monitoring tool that compiles legal, financial and business content and combines it with analytical and report-building tools. Weisberg shared Thomson research in a presentation to the Rocky Mountain Chapter of the Legal Marketing Association, held May 8 th at The Oxford Hotel in Denver, Colorado.
CI functions – basic to strategic
As a result of its research, Thompson recognizes four categories of law firm CI efforts – ranging from the most basic to the most sophisticated.
At the “basic aggregator” level, a marketing or library staff person (in response to a specific request) uses free public or basic research products to compile readily available resources. “This raw data would be distributed to the attorney ‘as is’ – without additional summary or analysis,” said Weisberg.
At the “aggregator” level, a marketing or library staff person supplements basic research with data gathered from some mid-value resources (like Hoovers or Dunn & Bradstreet) – and perhaps a few high-value resources (products that can track the actual legal activities of clients and competitors). “At this level, some of the aggregated data would be summarized into a report that is more useful to a busy attorney,” said Weisberg.
At the “reactive analyzer” level, a dedicated marketing or library staff person uses basic, mid- and high-value resources and provides a report that includes analysis of what the data mean within the context of the requesting attorney’s goals. “Efforts at this level are sophisticated, but limited to a specific, time-limited opportunity – like a response to an RFP,” said Weisberg.
At the “proactive analyzer” level, a dedicated staff person – who is familiar with the firm’s strategic goals – continuously gathers and analyzes CI using a combination of basic, mid- and high-value tools. “This senior-level person proactively identifies goal-related business development opportunities, analyzes them and brings them to the attention of the firm,” said Weisberg.
Six ways to use CI
According to Thomson research, law firms commonly use competitive intelligence in conjunction with six business development activities.
When helping attorneys prepare for a meeting with a potential client, marketers and librarians at most law firms will be asked to prepare materials that describe the firm and its capabilities, create a business and financial overview of the target company, coach the attorney on presentation and sales skills and identify firm capabilities that are potentially important to the prospective client.
“The most sophisticated firms will supplement these efforts by using higher-value CI tools to access court dockets, transactions and court cases to determine the potential client’s and potential competitor’s actual legal activities – reported by issue and geographic area,” said Weisberg.
When helping attorneys prepare a response to an RFP, marketers and librarians at most law firms will manage the process, provide a tailored overview of the firm’s capabilities, provide input on the make-up of the team and compile the firm’s record of relevant legal work in the prospective client’s industry.
“The most sophisticated firms will also use higher-value CI tools to determine the legal activities – past and present – of the potential client, as well as the relative strengths and weaknesses of the firm’s competitors,” said Weisberg.
When helping attorneys identify prospective clients, marketers and librarians at most law firms identify major companies in a particular geographic area. “The most sophisticated firms will use higher-value CI tools to narrow this search to companies within defined industries and companies that are major consumers of legal services that the firm has targeted for development,” said Weisberg.
When helping attorneys identify cross-selling opportunities with key clients, marketers and librarians at most law firms examine internal records to identify areas where the firm earns fewer revenues and come up with a plan to get more work in those areas.
“The most sophisticated firms will use higher-value CI tools to analyze external resources containing the actual legal activity of key clients in order to identify areas where the firm does little business – but where there is significant legal activity,” said Weisberg. “The firm will look at the firms that are currently doing this work – and approach their cross-selling efforts with these competitive strengths and weaknesses in mind.”
When helping attorneys evaluate a potential merger or practice group acquisition, marketers and librarians at most law firms gather information regarding any overlap of major clients and the work reportedly done for these clients. “The most sophisticated firm will use higher-value CI tools in this process – to confirm the stated experience of the candidate firm or group,” said Weisberg.
Finally, when helping attorneys decide whether to open a new office or launch a new practice area, marketers and librarians at most law firms gather information on the size and growth potential of the target market, as well as information on the other law firms in the market and their stated capabilities. “The most sophisticated firms will use higher-value CI tools to analyze the actual legal activity and competitive landscape within the potential geographic or practice area,” said Weisberg.
“Obviously, intelligent and successful business decisions by law firms are not made within a vacuum,” said Weisberg. “They are made on the basis of competitive intelligence – within the context of a law firm’s wide-ranging external competitive environment.”