Competition is fierce.
As cost pressures from clients intensify, as new service providers emerge, and as new technologies are deployed, it is unwise for any firm to avoid thinking about how it should work differently. (Richard Susskind, Tomorrow’s Lawyers)
In The Globe and Mail article “McCarthy Tetrault’s Tracie Cook leading firm’s radical transformation”, Jeff Gray discusses McCarthy Tetrault’s attempt to modernize. The firm has instituted:
- new billing practices;
- open-concept floor plans;
- reduction in 200 support staff; and
- has established a client service innovation team.
“The moves have come as the sector grapples with new competition from global players and changing demands from clients, who want more efficient services and more predictable bills.”
Although the containment of costs is important, law firms must move beyond superficial reforms to establish a deeper competitive advantage in 2016 and beyond. In Tilt: Shifting Your Strategy from Products to Customers, Niraj Dawar argues that to gain a competitive advantage we must address the costs and risks associated with buying our product (legal services).
You get answers by asking what costs and risks you can reduce for your customers in their search for, purchase of, usage of, and disposal of the kind of value you produce, not how you can generate more economies of scale.
Dawar states that to uncover the hidden costs and risks, we must ask:
- What are the hidden costs that your customers incur in buying and using your product or service?
- What are the hidden risks that your customers incur in doing business with you?
- Why do potential customers not buy from you (what are the costs and risks that prevent potential customers from doing business with you)?
When companies solve the reason that customers do not buy from them, they are able to maintain their margins. Dawar provides the example of Hyundai. Hyundai noticed that people were worried about losing their jobs so they refrained from purchasing new vehicles. In response, Hyundai offered a no-penalty return policy. This policy removed the disincentive for purchasing cars. As a result, more people bought Hyundais, and the company realized increased profits.
Similarly, by uncovering the hidden costs and pain points in the interactions between law firms and their clients, law firms can refine the way they deliver legal services and gain a more meaningful and lasting competitive advantage in 2016 and beyond.