MARKETING

Competitive intelligence helps firms better themselves by knowing what others are up to.

 

{mosmodule module=Multi-ad box2}Competitive intelligence and the legal profession — until recently those two expressions would not have made it into the same sentence. But that is changing fast. The gathering, analyzing, and applying of valuable information about competitors is becoming standard practice among sophisticated law firms worldwide.

 
What is it good for?
Increasing complexity in the pursuit of both clients and talent are drawing firms into understanding in more detail what the competition is doing. No firm wants to be outsmarted by its peers when it comes to attracting new sources of work, new partners, or new associates. At the same time, firms are increasingly looking for competitive intelligence to teach them new ways for improving both short- and long-term performance. For example, a firm may realize through such intelligence that it is charging lower rates than its competitors; this is a significant argument in defending rate increases to clients as well as sceptical partners. Other firms benefit from adopting policies and procedures successfully implemented in pioneering firms, such as client service standards or professional development programs.

A firm’s performance is always assessed in relation to something else. If there is no timely knowledge about the competition’s performance, that comparison must be internal and historic — how did we do this year compared to the last five years? Yet, that approach lets a firm off the hook too easily, since most firms improve over time, especially at the things they manage and measure. For many areas of performance, however, the key comparison is whether the firm has done better than its competitors. Only if it outperformed them can staff and owners rest assured that their firm has actually become better. Competitive intelligence helps firms both benchmark past performance and set expectations for the future.

What sources?
Most people regard the legal sector as a relatively obscure market, in which obtaining competitive intelligence can seem daunting. This stems from the nature of its business and the way it is organized. There is little clarity about and even less comparability of the “products.” Usually, there is also no price; hourly rates are a poor substitute. And even those can vary greatly from engagement to engagement. There are no trade fairs where the industry exhibits its innovations; and no law firm has to make extensive public filings or be exposed to public scrutiny in any other form. Competitive intelligence has therefore traditionally been based on anecdotal evidence, a dangerous source, as it tends to be evidence of singular and usually extreme cases (why else would it be worth remembering?). Also, it tends to still be referenced when it is outdated, while its accuracy does not improve with age.

Yet in comparison to other professions, the legal market is becoming quite transparent and law firms are in the driver’s seat to bring about that change. Compared to accountants or management consultants, for example, some legal markets have a substantial amount of available competitive intelligence. While the English undoubtedly lead the way in terms of extensive media coverage, the U.S. legal market offers more in-depth and focused information. The Canadian market is less advanced, but comparable to the legal markets of other large economies.

Important and reliable sources of competitive intelligence are the detailed benchmarking surveys that are conducted on a wide variety of performance metrics. While participating firms will not see each others’ data, they can compare their own results line item by line item with the consolidated quartile and average breakdowns of participating firms. In Canada, KPMG and Redwood Analytics perform the two best-known benchmarking surveys. As a result, firms are able to identify areas of competitive advantage (best in class in, say, billing and collection speed) or those in need of improvement (e.g. productivity or staff-to-lawyer ratios at below average). The information can serve as hard data that partners and staff accept and which can become the basis for management decisions and subsequent implementation processes.

Beyond the benchmarking surveys, the media provides more sources of competitive intelligence through financial performance rankings (e.g. the Am Law 100 or the A-List by American Lawyer; there is no Canadian equivalent to date) and surveys on various topics such as associate satisfaction, client service, etc. Web sites and blogs dedicated to the industry add further insights.

On topics that require a broader analytical context, some firms engage consultants and researchers to conduct studies, including other firms willing to participate and share results — often on a no-attribution basis. At the same time, firm leaders and management staff use industry events, such as roundtables, breakfast briefings, and conferences, to discuss current challenges and compare notes on past experiences.

While each source may only contribute one piece of the puzzle, good competitive intelligence practice thrives under three conditions:

• Focus: Rather than trying to find out a little on a wide range of topics, effective firms define their need precisely and then dig deep for the desired insights.
• Attitude: The more professionals keen to learn of ways of outperforming the competition, the more valuable information will become available.
• Understanding: Unless a firm knows itself, it will not be able to gather much meaningful intelligence from competitors.


Given the mobility of many professionals in practice as well as management, some firms have gained considerable competitive intelligence by simply hiring stellar performers from the competition. After all, the most valuable competitive intelligence is tacit and tied to the people who created or experienced them.

Friedrich Blase ([email protected]) is a senior consultant at Kerma Partners. He primarily advises law firms in transformation projects for organizational structures, management systems, intellectual capital development, and compensation schemes.

Recent articles & video

Charter applies to self-governing First Nation’s laws, but s. 25 upholds Charter-breaching law: SCC

Ontario Superior Court rejects class action lawsuit against online travel giants

Court must 'gaze into the crystal ball' to determine loss of future earning capacity: BCCA

NS Supreme Court imputes income in child support case due to non-disclosure

Federal Court orders re-evaluation of refugee claim due to unreasonable identity verification

BC Court of Appeal upholds immunity of nurses from personal liability in medical negligence case

Most Read Articles

Canada Revenue Agency announces penalty relief for bare trusts filing late returns

Ontario Court of Appeal upholds spousal support order in 'unusual' divorce case

Ontario Superior Court awards partner share in the estate despite the absence of marriage

Developing an AI oversight system is vital for organizations: Tara Raissi at Beneva