ith so much uncertainty over the impact of Brexit and the possibility of a further Scottish independence vote, what remains certain is the increasingly competitive nature of the legal services market. In order to remain competitive, many commercial law firms, in addition to practice areas and technical expertise, actively promote their knowledge of industry sectors.
A review of the websites of the 20 largest law firms in Scotland indicates that in addition to listing expertise in practice areas, such as banking and employment, 75% of these firms also promote a sector or industry focus in areas such as energy and financial services. This sector initiative is explained in marketing materials or websites as, for example: “We empower our clients to achieve more, through our deep sector knowledge”; and “What really sets our firm apart is the unparalleled depth of expertise we offer across all our sectors”; and finally, “Our sector teams deliver services to our clients globally.”
Why has this approach become so commonplace among all professional services firms, what are the benefits and risks of adopting a sector focus, and does it truly offer added value to clients?
These questions and others will be answered in this and the associated article to be published next month. In these two articles, I have evaluated both the conceptual and practical aspects of undertaking what some have described as a niche marketing strategy, and assessed the potential benefits and likely challenges of implementing such an approach.
A niche market has been defined as a “small market consisting of an individual customer or a small group of customers with similar characteristics or needs”. In practice, the concept of niche utilises many aspects of marketing theory, such as segmentation, targeting and positioning, with leading marketing experts suggesting that “Businesses must understand which client segments they can best serve, identify targets and have a clear position in the market.”
It is not easy to pinpoint when this type of approach became commonplace, but it is clear that niche marketing is now well established in legal practices. It is likely that the original intention was to help differentiate a business from its competitors, but as this approach is now so widespread, the opportunity for differentiation has diminished.
When you examine any industry sector such as healthcare, however, it becomes clear that the sector must be more fully analysed. Many types of organisations fall within the broad description of healthcare, but a care home operator is very different from a pharmacist or veterinary practice, and if you are looking for customers with “similar needs or characteristics” the sector must be categorised into different sub-sectors.
Evidence of expertise
Further, in a time when clients are increasingly sophisticated in their approach to buying
legal services, and industry information and law firm reviews are so readily available, lawyers must be able to provide convincing evidence of their sector expertise. While a law firm can easily suggest that they know the market within which their clients operate, it is critical that their knowledge is deep, authentic and genuine.
A popular example of demonstrating expertise is undertaking speaking engagements at sector conferences or events. These events not only generate an opportunity to get in front of your target audience to build trust and rapport, but the fact that somebody from your firm has been selected to speak at an industry conference helps position them (and your firm) as a thought leader.
After the engagement, be sure to continue to follow up with those you met. This will allow you to continue building relationships and keep your firm top-of-mind when a need for your services arises.
Benefits and risks
Even if differentiation is no longer an easily-achieved outcome, there are a number of potential benefits that can be derived from this type of marketing strategy, both internal and external. The external benefits that can arise are:
- Building stronger client relationships and achieving higher client retention
- An opportunity to start more conversations and build new relationships
- Increased sector knowledge and therefore an opportunity to offer greater value to clients
- New or improved rankings in Legal 500 and Chambers
- Competing more effectively with other law firms
- Recover higher fees as your sector expertise and contribution is more valued.
The internal benefits that can arise are:
- Lawyers develop a clear picture of the sectors and sub-sectors where they are most successful
- More time is spent identifying and building relationships with important contacts and influencers
- Prospective clients are clearly identified and marketing efforts are focused on these opportunities
- Lawyers are motivated as they enjoy enhancing their expertise and value to clients
- Working in sector teams encourages working and collaboration across practice areas
- The lawyers are encouraged, motivated and have a reason to build new contacts.
So what are examples of non-legal advice that demonstrates your immersion in the sector? In my experience, this can include:
- Sharing sector reports and information in newsletters or posts
- Identifying new business opportunities and introducing your contacts to clients
- Arranging and hosting sector networking for specific groups and inviting relevant speakers
- Supporting the relevant membership organisation by referring new potential members
- Writing testimonials for client websites or recommendations on LinkedIn
- Delivering sector related training to their leadership team.
There are of course challenges in implementing this approach effectively. It needs strong leadership and a clear vision that must be communicated across the firm. It must have buy-in and support from the management board. The firm must establish teams with real knowledge and expertise; they must be credible and promote their specialisation effectively.
There are some risks, such as a lack of credibility with clients as there is no depth of understanding of the chosen sectors; or that the sector approach is poorly managed leading to an unsuccessful implementation.
Questions to ask yourself before you launch are: is there are internal champion; does this accord with the firm’s growth strategy; what fees can you recover; what is your real expertise; how will you compete and take this to market; and do you have the required internal skills and resources?
In this issue
- FAI Rules: a guide to the consultation
- Saying sorry – is it enough?
- Repairing obligations for common parts
- Journal reader survey feedback report
- Reading for pleasure
- Tax: is your firm paying over the odds?
- Opinion: Judith Robertson
- Book reviews
- President's column
- Altered deeds? Mind the rules
- The clouds gather
- Turning points: employment law into 2017
- Policy and the public interest
- Above the minimum
- Where code meets custom
- Child orders: mind the gap
- EU law, a family affair
- People on the move
- Information age?
- The limits of free web access
- Tenant farming: the new guidance
- Insolvency: cross-border clashes
- Foul play on the agency front
- Scottish Solicitors' Discipline Tribunal
- Comm prop and the Holy Grail
- Leisure – the serious side
- New anti-money laundering support
- Law reform roundup
- Brexit: helping to shape the outcome
- Transition to Lockton – your questions answered
- Expertise plus: promoting a sector strength
- Paralegal pointers
- Time to look back – and forward
- Everything comes...
- Ask Ash