Oct. 7, 2015 – Water, coffee, and travel agencies.
Lawyers who understand these three industries will be better positioned to evolve in a changing marketplace.
How? By recognizing value migration, says Michael Moore of Moore’s Law LLC and a professional coach who specializes in helping lawyers and law firms.
The concept of value migration is that “value in a market moves, migrates, from outmoded business models to more current business models.”
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“There’s a number of changes going on right now … not just in legal services, but in markets in general,” says Moore.
For instance, “very few of us, if any, use travel agencies anymore … because of the Web, and all sorts of issues there.” Value migrated in a negative way away from that industry.
Conversely, says Moore, “if I were to have asked you 10 years ago, even 5 years ago, ‘I’ve got this great business idea, I’d like you to invest in it: I’m going to take water, I’m going to put it in a plastic bottle, and I’m going to put a fancy picture of a cool mountain on the top, and I’m going to sell it for $4 a bottle.’ … We would have thought that was a ridiculous business plan, but look at what’s happened.”
Value migrated positively towards bottled water.
The coffee industry has evolved in a similar way, led in particular by companies like Starbucks.
“The same thing is true with the Starbucks concept. I’m a gold card member of Starbucks just like many other people. I use Starbucks all the time. I can make the coffee at home for pennies, but I have the Starbucks experience so I go there and I spend $4.50.”
These lessons of value migration apply to lawyers and the practice of law as a business.
“In professional services what we see is value is beginning to migrate and so if law firms are going to continue to be successful they need to pay attention to this concept.”
Client Service, Expectations More Important Than Ever
So how can lawyers and law firms evolve along with the market?
“First and foremost, we need to pay attention to client service and client expectations,” says Moore.
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Read “Profit is Not a Four-letter Word: Lawyering in the New Age,” Wisconsin Lawyer, February 2015
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Read “Succession Planning: Where Will Your Firm’s New Leaders Come From?,” Wisconsin Lawyer, February 2014
Untying the Gordian Knot: Law Firm Compensation
Stymied, Alexander the Great “untied” the impossible Gordian knot by severing it with his sword. Although law firm compensation can be one of the most difficult puzzles in law firm management, solving it need not invite similar rash action. This article reviews the most common compensation systems, how each of them rewards specific behavior patterns, and why effective compensation systems must be aligned with a law firm’s culture and values.
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Lawyers need to recognize that clients are savvier than ever, often “approaching law as a commodity.” Moreover, “clients consider most lawyers to be all the same but for the price of their services, and so we need to pay attention to the fact that there are multiple ways now to deliver our services to clients that will satisfy the client expectations.”
“It is key that we understand our markets and our clients and how our services can best fit those client needs – certainly [don’t] take clients for granted.”
While managing client services and expectations is important, lawyers should also recognize that their law practice is a business. And the economics of doing business matters.
It begins by asking: “Will the market value the service at that [price]?,” says Moore.
“More than ever it’s important that we identify our cost structures.” Law firms must better understand what “services [should] be sold for in the market so that we create a profit.”
Leadership Development a Necessary Component
Navigating this evolving marketplace will also require leadership. And many law firms are currently not doing enough to develop those skills, especially in younger lawyers.
“Altman Weil Inc., which is a significant law firm consultancy, did a survey recently where they found that the majority – over fifty percent – of law firms do not have a succession plan in place,” says Moore. “Eighty percent of the people involved found it to be too difficult.”
And because it is “a difficult topic to deal with, difficult thing to pay attention to,” says Moore, “we’d just rather not.”
This means lawyers are not paying attention to their firm’s future, which simply isn’t a realistic option. “If we don’t pay attention to the changes that are going on, we then run the risk of getting swept aside by the market.”
“The majority of lawyers are very good at developing young lawyers to learn the law, to practice law, to do all that, but not so often are we good at developing leaders,” says Moore. “The skillset that young leaders need and how senior people can develop those skills and how we focus on that” is crucial.
“Even if you’re a smaller firm, these still may be relevant issues going forward for the future success of the firm.”
