- ABA Groups
- Resources for Lawyers
- Career Center
- About Us
By Peter Darling
In many religions, when meditating or praying, believers chant mantras—they speak the same sequence of words, as a sacred verbal formula, hundreds or even thousands of times. Constant repetition of the words has a powerful spiritual impact and is considered a means for becoming enlightened. The sheer sound, endlessly repeated, is hypnotic, transporting, otherworldly.
Law firms have mantras, too. In fact, many have the same one for attaining new business. When asked about their marketing strategy—why a client should retain them rather than a competitor—they say these three magic things, over and over:
"We're outstanding lawyers."
"We're responsive and client-focused."
This marketing-by-mantra method, which the vast majority of lawyers use, consists of making these same three claims to a predefined group of clients. If, for example, you're a high-tech tax attorney, you repeat the mantra to all the Silicon Valley GCs and CFOs you encounter. If you can, you provide evidence to back up the claims. This is fine, as far as it goes.
The problem is that it doesn't go very far. Dozens of other firms are selling the same thing, and repeating the same mantra. The mantra is not about the client, but about the lawyers. To the client all the firms sound a lot alike, and none of them have a clear advantage. This makes it hard not only to win the business, but also to charge high rates. What you're selling looks a lot like a commodity.
In contrast, the key to real competitive strategy is differentiation—a strategy you can effect by seeing what's happening in your targets' markets and then offering distinctive services in response. Let's take a closer look at how it works.
Differentiation is all about offering something unique, for which you can charge a premium price. In the case of products this often means reinventing an entire category —like Starbucks did with coffee or Cirque du Soleil did with circuses, to name two prominent examples.
By paying extremely close attention to the needs and interests of its customer base, these companies created and dominated a brand-new market that was strikingly different from what had existed before. Strategically, this is brilliant. And it's vastly more profitable. Cirque du Soleil's tickets run from $45 to $200 per seat. Ringling Brothers charges from $12 to $73. And we all know what people are willing to pay for a Starbuck's Espresso Macchiato compared to a cup of joe at the local diner. (For more on this, take a look at the Harvard Business School Press book Blue Ocean Strategy: How to Create Uncontested Market Space, by W. Chan Kim and Renée Mauborgne. They literally wrote the book on how this concept works with products.)
Of course, reinventing products is one thing, but you cannot do the same thing in professional services. Or can you? Consider this: In products, to create a new market, you have to invent a new product. This is incredibly expensive and risky—remember the Iridium satellite phone system? Launching a new product is an extraordinarily expensive undertaking. After as much test marketing as you can afford, you have to actually build a factory, manufacture the product and see if anyone actually wants it. Not cheap.
In law, however, your market, by definition, changes all the time. Why? Because the raw material of lawyering—the law itself—never stands still. New laws are enacted every day. New court decisions get handed down. New clients thus get created constantly. It never stops. By using this fact as the basis for business development, law firms can give themselves a major competitive advantage in pursuing, and winning, new business. In other words, they can build a real differentiation strategy into business development. The trick is being able to combine the perspectives of three disciplines—law, marketing and strategy—into one panorama.
Let's consider this example. In Europe, environmental issues carry an enormous amount of political clout (debatably, far more than in the United States). As a result of this, the European Union (EU) has promulgated a series of tough new directives that deal with the presence of certain toxic substances in new electronics products that are sold in Europe. As of July 2006, anyone selling so much as an electric pencil sharpener in Europe must be in compliance with these directives. They are collectively known as the Reduction in Hazardous Substances Act (RoHS), and they ban the importation into any EU nation of any product containing, for example, unacceptable levels of lead. Which is a key ingredient in solder. Which is a key ingredient in any electronic product.
There are plenty of law firms working on product compliance issues for RoHS, and this vein of business is well mined. While keeping that fact in mind, let's turn our attention to China.
China, to put it mildly, is another enormous market for electronics, and it too is drafting restrictions on the contents of electronic products. They're essentially very similar to RoHS. But the Chinese differ from the Europeans in one important respect—the absence of a loophole for medical devices. So if you are manufacturing, say, an MRI machine, you can sell a machine loaded with toxic lead solder throughout the EU nations. But you won't be able to sell it in China. The Chinese have no such exception for your device.
Got all this? Let's review. The basic facts are as follows:
Now, let's put all this together. Pretend you are a medical device manufacturer. You're a start-up, and you've gotten your hands on many millions of dollars in venture funding to develop your revolutionary new product. Because both developing it and getting it through the FDA's regulatory obstacle course is so costly and unpleasant, you want to be able to develop and sell your device worldwide. You don't need to worry about Europe's RoHS because those regulations don't apply to you. However, China is an important market and, unlike most of the rest of the world, will not allow you to import your device under its pending version of RoHS because the device contains lead solder.
You have three options. First, you can ignore China completely as a market, which is not good, given that it's one of the biggest health-care markets in the world. Second, you can develop two versions of your device—one for sale in China and one for sale everywhere else. This is horrendously expensive and wasteful. The third and best option, obviously, is to develop a version that is salable everywhere because it meets the Chinese requirements. Suddenly, there's an enormously important reason for you to comply with RoHS across the board—and for a law firm specializing in that area, you are suddenly a perfect client.
There is, in other words, a big market for compliance assistance being largely overlooked—medical device companies. Any law firm already working in this area would find a ready market for new business if it explained the coming issues and offered its services to these companies. And one firm—Adams Nye Sinunu Bruni Becht, a small specialty litigation firm in San Francisco—is doing just that.
For years, the firm had represented manufacturers in product liability cases, numbering several medical device companies among its clients. Indeed, in Baxter v. Denton, one of the partners, Bruce Nye, had made his own and the firm's reputation when the trial court found that a chemical used in a Baxter Healthcare product did not, in fact, cause cancer, and that a declaration otherwise by California's Office of Environmental Health Hazard Assessment had to be withdrawn.
With this background in the industry, Nye attended a 2006 seminar on Europe's new RoHS directives (ironically, held at the offices of a much larger law firm Nye had just defeated at trial). What Nye learned there led to a whole new area of services for his firm. He learned that RoHS contained a loophole exempting medical device companies. Thus, those directives had no impact on Nye's medical device clients. However, some additional research revealed an interesting wrinkle—the far less-know fact that China intends to pass its own version of RoHS—minus the medical devices loophole. Nye was able to foresee that the implications of these restrictions for medical manufacturers would be significant. The bottom line? By understanding and communicating this legal issue long before other law firms, Nye has been able to pursue a market his competitors did not even know existed. It's a picture-perfect illustration of a differentiation strategy.
Why are so many lawyers unaware of the alternate markets behind many new regulations and industry trends? Well, they think like lawyers. This means they focus intensely on the situation in front of them—defined markets that they already know well. If your clients are copper companies, a new regulation concerning safety in copper mines obviously matters to them. But the essential question is this: Who else could this regulation matter to?
This question, which lawyers are not trained to ask or consider, has enormous implications. Laws have this annoying habit of being mandatory. To return to the Land of Products for a moment, consumers can buy whatever brand they want, or none at all. If you don't like a Toyota, buy a Volvo, or just keep your old car. Buying a product is optional.
However, if you don't obey laws, bad things happen. To put it in the most Machiavellian of terms, a new regulation is a product you have to buy. That makes for a very compelling marketing presentation.
Again, new laws create new clients. Some are obvious—and some are not. The lawyer who identifies the latter, and approaches them with the right expertise, has the market all to himself or herself. Think of it in terms of those old jokes about how the next big earthquake to hit the West Coast will create some very nice beachfront property in Nevada. Changes in the law have a similar effect all the time. You just have to know how to spot it.
How? In a nutshell, you've got to ask yourself three questions, from the three different perspectives cited earlier—law, marketing and strategy. So when a major new decision or regulation arises, think like this:
Simple as that. And from there, those old commodity-driven mantras will naturally fall away. You don't talk about what your firm does—you talk about what the prospective clients need. You don't talk about what they already know—you talk about what they don't know—yet. You don't talk to them about where they are—you talk to them about where they're going to be.
In sum, you don't just chant the same old stuff at them. You help them become enlightened.