Sector specialisms… more than skin deep? (first published in Legal Week, November 07)
7th November 2007
A recent article in Legal Week argued that as all law firms advertise a sector strategy nowadays, sector specialism is no longer a real point of differentiation.
Indeed, on one hand, from the perspective of an independent observer, it could look as if every leading law firm in the UK has a sector group claiming expertise in manufacturing, financial services, technology etc.
However, from the point of view of the client, there will be a small number of potential legal advisors on his or her radar that stand apart from the crowd as recognised experts in their particular industry. They move in the same circles, speak the same jargon and deliver real added value because of their connections, understanding and insight regarding issues facing that industry and their business.
Amongst the national firms, Osborne Clark is firmly established in my mind as the expert in marketing law as they have a regular column in my monthly Marketing Magazine. Pinsent Masons stand out for their commitment to the technology sector via their award-winning journal “Outlaw” and Trowers Hamlin are recognised as an integral part of the social housing sector.
A number of niche boutiques clearly punch above their weight due to a single sector focus. Firms that come to mind include Hamilton Pratt which specialises in franchising, gambling gurus Harris Hagan and The Projects Partnership which has a clear focus on projects and partnerships in the public sector.
These recognised sector specialists are the first ones that conference organisers call when they need a relevant speaker or sponsor. They are also the ones that come to the mind of journalists when they need a comment on how new legislation will impact upon an industry.
Achieving a position as a sector expert undoubtedly helps to get you onto pitch lists ahead of generalist competitors.
The advantages to the client are obvious. Imagine that you are the managing director of a software business and you would like to sell the company. Given the choice between two corporate lawyers, one of which specialises in the technology sector and a generalist. Who will appear equipped to do the job best?
- The one with a network of contacts amongst banks and VCs interested in technology companies?
- The one with a portfolio of technology clients and contacts that he knows are looking for acquisitions?
- The one who understands the nuances of the software industry, such as licensing arrangements and IP protection?
- The one who has completed several similar transactions before?
Every industry has its own characteristics, peculiarities and jargon and an advisor who is not familiar with your business will be on a learning curve. This represents a cost to clients and a potential risk.
The advantage to the law firm is that it enables them to focus limited business development resources to achieve maximum impact. Gone are the days of the ‘spray and pray’ approach to marketing. By focusing your efforts on a defined group of target organisations, it becomes easier to measure current market share and monitor your return on investment by how much you increase fee income from that particular sector.
It is a simple exercise for any firm to analyse its client base and proclaim a ‘sector specialism’ on their website because they have several clients in a certain industry. However, this is a long way off achieving a recognised position as ‘first choice’ of adviser in a particular sector.
The challenge for the ambitious firm is to leverage this experience and build upon it to develop a position as a recognised expert in its chosen target markets. The long term objective is to build a multi-disciplinary team that truly understands their sector and as a result can deliver real added value through true insight, analysis and forecasting. The ability to predict future client needs through being close to clients and understanding their market environment enables a firm to achieve a position as a “thought leader”.
It is easy for the marketing team to produce a sector brochure. Then, is there really enough commitment and industry knowledge throughout the firm to produce a regular sector-focused newsletter or e-bulletin with relevant articles from all departments? Is there enough commitment to continue production in the long term?
Finding the time for marketing and business development activities is usually difficult and getting under the skin of an industry requires a real investment of time and energy.
Fee earners in a sector team will need to be prepared to make time to read and contribute to relevant sector journals, join and get involved with trade or professional bodies, attend and volunteer to speak at industry conferences and seminars? Junior team members will need support, encouragement and access to the sector budget.
It is important to take account of a sector approach when developing the firm’s HR strategy. Candidates with relevant industry experience will add greater value particularly if they have worked in-house at any time. Client secondments strengthen client relationships and also deepen understanding of their operating environment.
In a large firm the concept of a multi-disciplinary team does not always fit well with the traditional departmental structure of a law firm, and it is essential that the heads of department buy in to the sector strategy to make it work.
There may be a natural conflict between the head of the employment team, who would prefer to produce a single generic employment update that can be sent to all clients, and several sector leaders who are asking the employment team to produce a number of sector specific briefings.
A business in the hospitality industry will have a casual, seasonal, possibly foreign labour force with a different set of problems to the highly skilled team at a software business. A university with spin-out activities will have a different set of employment problems from a charity which is staffed by a large number of volunteers. Demonstrating an understanding of these differences would help set an employment team apart.
Equally, the head of department may not be keen for a team member to spend a whole day attending a particular trade exhibition or conference where they would certainly enhance their understanding of the issues affecting that industry.
The major accountancy firms realised the merits of sector strategies around 15 years ago and given that many other professionals, now have well-established sector specialisms, there are obvious benefits in developing a network of intermediaries with common interests in developing a particular market, working together to host joint events yields, pooling resources and sharing contacts.
One area of thought leadership that the accountants still appear to lead on is that of research and analysis within a sector. A quick glance at KPMG’s site today (28 October) shows a survey of senior litigators’ thoughts on electronic disclosure – a topical issue that clearly demonstrates that they have their finger on the pulse of issues affecting the legal sector. On the Deloitte web site home page you can download a pod-cast relating to their Annual Review of Football Finance 2007, an innovative way of promoting their expertise in the leisure sector.
Undertaking research and analysis at this level is undoubtedly a major commitment in terms of fee earner time and this is probably why we see so few similar examples in the legal sector. However if a firm is serious about developing a position as the “adviser of choice” in an industry, then it needs to be prepared to invest and align its resources in order to earn that recognition.Back to Blog
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