Page 1 2 3 4 5 6 7 8 9 10 Next >> of 94
More Firms Crediting INDUSTRY FOCUS for 2021 Record Results!
Entitled “Leaning Into On-Fire Industries,” an article last week identified Ropes & Gray as posting double-digit increases in all key financial metrics last year, record results that Chair Julie Jones said reflect the firm’s strategic industry focus on private equity, asset management, technology, and health care and life sciences. What struck me was that the firm does work for 9 of the 10 largest Private Equity firms, a group who themselves have become more disciplined in focusing on their client industries.
One Wall Street Journal article identified how industry focused private-equity firms are gathering a larger share of the investor’s wallet, which has become critical in a crowded PE market where differentiation is increasingly important. Funds with “clear areas of expertise” have drawn more investor capital that otherwise might have gone into traditional buyout funds, claimed a report from consulting firm Bain & Co.
The Life Sciences industry has witnessed growth in the neighborhood of 30% among biotech companies going public. And this life sciences focus is particularly core to Cooley, a market leader, where the life sciences industry touches a third of the firm’s $1.5 billion in annual revenue, with 95% of its attorneys serving life sciences clients. “If you took the life sciences group out of the firm, it would be its own Am Law 100 firm,” said Christian Plaza, vice chair of the firm’s global life sciences group.
On a similar note, Goodwin Proctor attributed it’s record setting 2021 performance to a decision it made some years previous. According to chair Rob Insolia, “we decided we could not compete by simply holding ourselves out as the smartest or best M&A or capital markets lawyers. Instead, the firm decided it wanted to be among the top four in a small number of sectors. The premise was that if you understood the industry of your client as well as the client did, you could leverage off of that.” And it paid off! In 2021, the firm handled 10% more deals than its closest competitor.
Meanwhile, AmLaw 200 firm Adams and Reese posted nearly flat revenue last year as the firm's head count and equity partnership continued to shrink. Nevertheless, the firm still exceeded its financial goals by growing RPL and PEP. How? At the direction of managing partner Gif Thornton, the firm “refined its strategy on the practices we wanted to have, emphasizing leading industry practices such as construction, energy, and financial services" - and jettisoning under- performers. It consequently met or exceeded all of its financial goals for 2021.
At the other extreme, I noted one East Coast, 70-Attorney firm, announcing a reorganization, a new managing partner and a “rethinking of the tradition of organizing around practice groups” to building an infrastructure focused around client industries.
As a result, their website identifies … 28 different industries!
Are you kidding me?
Post # 933
What it Really Means for Law Firms to be Industry Focused
(Canadian Lawyer Interview)
It starts with understanding the benefits of the firm relative to how you serve clients. Numerous studies show that the number one reason clients pick a firm is their demonstrated understanding of their industry. They will often say it in words like, “I want somebody who knows my business.” What they're saying is, “Do you understand our lingo? Can you speak our language? Do you understand how I make a buck?”
Law firms do not understand the industry at a micro level. They don't know how to go granular. For example, I got appointed to an advisory board in Western Canada with a medical group of private clinics in the anti-aging, regenerative medicine field. I'm sitting in one of my first meetings with the CEO, who is concerned about litigation risk assessment, and his regular outside law firm isn't going to cut it, so he is looking for expertise in health care. He arranges a meeting with three firms. He asked them, “what do you know about BHRT?” They were squirming a little bit, and one of the more senior lawyers said, “Help us with that acronym. What does that stand for?” The CEO says it is Bioidentical Hormone Replacement Therapy. And the response from the law firm after about 30 seconds was, “Please understand, we have the largest health care group in the country.” The CEO’s response? “Thanks for coming in.”
The first step starts with looking at your client base and industries where you already have a depth of expertise. I see many firms with maybe 100-120 lawyers listing over 15 industries. Are you kidding me? Do you really think that the clients are that naive? Pick two or three. You look at the bios of some of these lawyers, and they've been allowed to list half a dozen different industries, often industries that have nothing in common with each other. Do you think that the clients are that stupid? Meanwhile, I often hear from lawyers, “we're a full-service law firm.” And I tell them, please go Google full-service law firm, you get 3.2 million results. Go Google leading full-service law. Now you're probably down to about 800,000. Your competitor is not the firm down the street. It is Google.
These comments are excerpted from an interview with Tim Wilbur of Canadian Lawyer Magazine. Read the entire interview here - https://www.canadianlawyermag.com/resources/practice-management/patrick-mckenna-on-what-it-really-means-for-law-firms-to-be-industry-focussed/365532
5 Ways Law Firm Leaders Can Prioritize Strategic Thinking.
I don't know if you have consciously noticed, but we are all becoming far more reactive than at any other time in history.
For example, it would seem that you can no longer hide behind voicemail or email because both colleagues and clients will now simply send you a text and then look for an immediate response. We are becoming the text-messaging generation.
Today, if you are like many law firm leaders, you are caught in a tidal wave of 24/7 communications from your partners and direct reports for quick responses to their requests. At the same time, other lawyers, staffers and, of course, clients want your input, require your approval or request your participation in meetings or discussions.
For almost any law firm leader, keeping busy and focusing on the urgent is seductive. Many confide to me that they continue to find themselves more and more distracted. So is it any wonder that you are not being as strategic or thoughtful as perhaps you would prefer to be? Yes, you may be busier than ever before, but perhaps far less effective.
Read more at: https://www.law360.com/articles/1476694
A Special Thanks to Those Graciously Endorsing My New Book
To these 6 professionals I extend my most sincere thank you:
• It’s All About Industry: New Book Makes the Case for Major Change;
Book Review by Steve Taylor, Of Counsel Newsletter, March 2022
“In Industry Specialization, McKenna strongly recommends that law firms make the change to organizing by industry, while offering readers stellar practical advice, candidly delivered. He covers everything you’d want to know about this approach, from conducting industry group meetings to building expertise on the issues that clients truly care about to tracking trends within economic sectors, and much more. McKenna’s style is, frankly, refreshing, as he fluidly combines splashy writing with quotes and anecdotes from scholars and his own sophisticated insight.”
• How Can We Stand Out in a Highly Competitive Legal Market?
Sua Han, Legal Practice Intelligence,, March 2022
“An excellent eBook that provides the best tips on how to position as thought leaders, effectively monitor trends, explore industry's revenue and growth potential, and much more!”
• Industry Focus Is a Path to Premium Rates — Even When Unconventional
Dan Packel, American Lawyer, March 2022
“All this aligns with the arguments in a recent e-book from law firm consultant Patrick J. McKenna on industry specialization. Of the many reasons McKenna lists, I was most struck by his case that a focus on specific sectors can help firms earn premium rates.”
• What Celtics Legend Larry Bird Can Teach Law Firms About the Big 4
Michael Rynowecer, The Mad Clientist, BTI Consulting, March 2022
“You can also read internationally recognized management consultant Patrick J. McKenna’s complimentary guide (https://bit.ly/3KrrXwf) on industry focus. This is one of the clearest and most practical documents I have seen on the subject. This is your playbook — and he wants to help you win.”
• Lawtomatic Newsletter, Professor Gabe Teninbaum,
Assistant Dean of Innovation at Suffolk Law in Boston, February 2022
“Patrick McKenna has a terrific new book, "Industry Specialization: Making Competitors Irrelevant", that is available for free at Legal Business World. There are two things I especially liked about it: first, he's been helping law firms become more effective and efficient for a long while, and he shares several anecdotes in the book that support his theories. Second, it's actionable: there are concrete steps that anyone can take once they've read it.”
• How Industry Specialization Can Help Law Firms Get Ahead,
4-page Interview with Aebra Coe, Law360, February 2022
“According to McKenna, most law firms fall short when it comes to industry specialization. ‘For too many of these firms any pretense of having a real industry focus is simply a list of industries displayed on their website, without any recognition that perhaps the clients can discern the difference,’ McKenna said in an interview with Law360 Pulse on the new book.”
Are You Investing in Any NEW Emerging Practices?
Developing some new micro-niche practice requires a different mindset and a unique skillset. Here are 10 questions to consider:
• Is the client NEED real?
It is not uncommon to get excited about some potential new opportunity without really knowing what is involved. Take the Agri-Business Industry where there are 50+ companies in the high-growth Vertical Farming micro-niche. A good test is to create three hypothetical engagements – describe what critical business PROBLEM you would solve, which lawyers might be involved and how much you might charge. If your answer doesn’t make sense to you, it probably won’t make sense to some prospective client either.
• Do you have EXISTING expertise and experience or would you have to build capability?
Your new opportunity should largely involve adapting existing knowledge and skills to a slightly different application. The test is, if you won an engagement today, could you deliver or would you need to acquire additional, perhaps lateral expertise?
• Is this a service that clients will BUY?
You serve the Insurance Industry and have developed some experience with Cyber Liability Insurance (300+ Businesses in $4 Billion market). Test your intentions with a basic client question: “We’re building a capability in ___; would that be of value to you?”
• Can you protect a FIRST-MOVER position?
Are there sufficient barriers to entry, making it difficult for other firms to jump onboard after you have pioneered the emerging practice?
• Is your TIMING right?
Your new service offering can be appealing but the market may not be ready. 120-lawyer Ellenoff Grossman became a leader in the micro-niche known as SPACs that they pioneered, but it took a number of years before they gained traction.
• What is the LIFE expectancy of this emerging opportunity?
Is this a practice that has a shelf life (3D Printing) or is it related to a specific event (remember Y2K) or could it just be a passing fad (NFTs)?
• Is the market SUBSTANTIAL enough?
Can you secure enough volume to make it legitimate? Will this niche grow into something substantial that can be accessed, or will it always represent a small
• Can you successfully MARKET the offering?
Your new offering will need to quickly acquire visibility, credibility and a loyal client base.
• Will the firm SUPPORT your effort?
A new offering to create a game-changing micro-niche will need leadership support as it may need to share resources and competencies with existing practices.
• Are you prepared to JETTISON the niche if it doesn’t work?
Firms creating an emerging practice should set benchmarks for success within a reasonable period – which means being able to decisively double down on successful niches and jettison those that don’t take root.
What Makes Focusing on Industries SO Difficult.
Understanding your Client’s Industry is the single biggest differentiator among law firms according to 5,000 interviews with top legal decision-makers, reported by the BTI Consulting Group. YET, we still have a problem. Many lawyers don’t get it . . .
• Lawyers do NOT understand Industries.
The Legal 500 was seeking submissions for its US Ranking of law firm practice and industry groups “to help in-house lawyers and legal teams find the right advisors.” Amongst the list of Industries in which you could enter included “Environmental” and “Native American Law.” Important areas to be sure, but are these really industries, especially when you cannot help but add “Law” to the title? Then their categorizations go on to include “Media, Technology and Telecoms” . . . all lumped together as one industry?
• Industries that mature are comprised of a number of granular levels.
If you are a player in the Construction Industry, recognize it is comprised of 4 different Sub-Industries (TIER 2) like Special Trade Contractors; and those various Sub-Industries include 51 different Segments (TIER 3); and then there are numerous Micro-Niches (TIER 4) like 3D Printed Prefab Homes. So, listing yourself as an expert in the Construction Industry without going deeper, guarantees – that prospective clients are shopping elsewhere!
• What label you attach to your industry team actually matters.
Some law firms combine Health Care and Life Sciences as if they were the same industry. They are two very different groupings. The Health Care Industry is comprised of 4 Sub-Industries (like Hospitals and Health Services) and 89 different Segments; while Life Sciences has 5 Sub-Industries (like Biotechnology and Pharmaceuticals) and 143 different Segments. And there are all kinds of TIER 4 Micro-Niches in both Industries capable of providing lawyers highly lucrative opportunities. Anyone name a firm specializing in Anti-aging and Regenerative Medicine, a multi-Billion dollar market niche?
• Some areas of lucrative opportunity may defy simple industry categorization.
The “Internet of Things” (IoT) is about connecting millions of digital objects, from trucks, refrigerators and hydro meters to the Internet. Data gleaned from the sensors and systems applied can then be used to monitor, control or redesign business processes. There are four expanding segments: makers and installers of physical sensors; connection providers (landline, wireless, telecoms, etc.); storage and security hardware and software (server farms, the cloud) to hold on to and encrypt all the collected data; and data analysis software. Networking titan Cisco Systems Inc. believes IoT represents a $19-trillion (U.S.) global market and predicts that 50 billion devices will be connected to the Internet in 2022.
So, any interest in better understanding industries?
Lucrative Emerging Industry Micro-Niches I’m Watching
If your firm serves clients in any Industry, get GRANULAR and dig deeper to examine what experience you already have and what opportunities exist to explore numerous, potentially lucrative micro-niches like these:
• Health Care – FEMTECH
My research indicates that there are 800+ FemTech companies; tech-enabled, consumer-centric solutions addressing women’s health. FemTech provides a wide range of solutions to improve healthcare for women across a number of female-specific conditions, with estimates for FemTech’s current market size range from $500 million to $1 billion. Forecasts suggest opportunities for double-digit revenue growth.
• Transportation – AUTONOMOUS MOBILITY
One very fast growing niche is automated vehicles, developed for both private use as well as being trialed for commercial transit. We now have driverless (and flying) cars, freight trucks, drones, airplanes, boats and so forth. Road regulations, insurance and laws will need to be adapted. There will still be accidents, and therefore, who's liable when self-driving vehicles make a mistake is a question that’s being debated.
• Financial Services – BUY NOW, PAY LATER (BNPL)
As the Covid-19 pandemic drove unprecedented levels of e-commerce shopping, “buy now, pay later” (BNPL) — saw a huge boost while credit card balances dropped to their lowest point since 2017. Currently, BNPL still reflects a small portion of the overall spending on payment cards (including credit, debit, and prepaid cards), an industry that sees roughly $8T in annual spend volume. But BNPL startups — including Affirm, Klarna, and Afterpay — saw record-setting amounts of funding and deals in 2021. This micro-niche is expected to grow 10-15x to top $1T in annual gross merchandise volume by 2025.
• Renewable (Green) Energy – HYDROGEN
Hydrogen is the most abundant material in the universe and produces close to zero greenhouse gas emissions when burnt and is likely to become the de facto clean energy source in long-range, high-usage transportation and stationary markets. Think trucks, ships, planes, forklifts, and data centers. Air Products announced intentions to build a $4.5 billion blue hydrogen production facility in Louisiana while Mitsubishi committed to developing widespread hydrogen infrastructure across the U.S. Fresno-based Yosemite Clean Energy produces greener hydrogen and natural gas from farm and forest wood waste.
• Manufacturing – AUGMENTED REALITY
Augmented reality is a technology with vast potential in a variety of manufacturing-related fields. AR headsets and goggles allow technicians and engineers to overlay schematics and assembly instructions overtop the real world. Consider an automobile at a certain stage of assembly. Assemblers equipped with AR can see detailed, “exploded” views of the car within their field of vision.
The Mindset of a Good INDUSTRY FOCUSED Lawyer.
In-depth expertise in your clients' industry inherently attracts more interest in your advice and counsel, but there are some other things to keep in mind.
• It's about Providing Total Business Solutions and NOT just Solving Legal Problems.
The best don't just offer advice on legal questions; they are able to connect their expertise and the counsel of their industry focused colleagues to help the client achieve a total turnkey solution. Clients expect you to know your business, but what really matters to them is how much you know theirs. You should be able to articulate specifically how your solutions can help the client achieve the success they are striving for.
• Get to Business Solutions of Value, by Digging Deep.
You should be aware of problems your clients face that you can help them with and get involved EARLY in shaping solutions. This is when you can offer some of your most valuable advice. You cannot be shy or reluctant to explore with your client the tangential issues that go beyond the scope of some current legal matter. That would be like a Physician who only treats your headache, but neglects to examine any contributing factors. While you may not want to be viewed as fishing for further work, if you stop advising your client because it is not within the expressed scope of their current need, don’t be surprised if they look for someone to provide more holistic counsel.
• Share Your Thinking.
Lawyers are taught how to devise the best remedy to the legal problem, but don't always see the value of sharing the thought process that goes into formulating a proposed course of action. Yet the evidence is clear that a trusted business advisor is valued for their thinking, not just their answers. What does an industry focused mindset entail? It starts with a deep curiosity that leads to a habit of continuous learning. To complement your strong analytical skills, you recognize the need to appropriately frame the problems or opportunities you're trying to provide counsel on, in a broader context than the limits of your expertise. You are driven to determine not simply what needs to be done from just a legal perspective, but what ultimately needs to be accomplished — with your success defined not by how well you performed, but by the outcomes you help the client achieve.
• Give your Clients What They “NEED.”
Some mistake client service as giving clients what they want. That's the order-taker mindset. Trusted Industry focused advisers are more concerned with giving clients what they need. Sometimes, this may involve some persuasion – but persuasion based on deep industry knowledge. You don't help the client achieve success without being willing to push back at times and argue for a better way. It's hard for clients to learn to trust your point of view if you shrink back from it whenever the client is thinking otherwise.
Agree or disagree with my observations?
PLEASE share your experiences.
Dealing With Partners - Who Do NOT Want to Play on an Industry Team.
I received the following question from a firm leader:
“When one attempts to organize their firm into a few chosen Industry Teams, how do you handle partners who do not want to work in industry teams or feel neglected because their personal practice doesn’t seem to fit?”
The merit of having an industry focus is that it forces firms to concentrate attention on a few selected industries – preferably those in which you have a position of recognized strength. This means that lawyers in other practices can feel left out. How you deal with those partners may determine the success of your commitment to industries.
The initial reaction from any partner who doesn’t feel included is often to withdraw from communication, boycott selective meetings, or even delay performing certain activities. They are attempting to gain credibility for their position by demanding management’s attention. As crass as it may sound, your best approach is to treat them as you would a pouting child. Continue to invite them to participate in firm activities, but don’t offer sympathy. It is important to CONSTANTLY communicate and DEMONSTRATE how the success of any industry group will benefit everyone – in terms of additional referral work and overall profitability.
At some point you can probably expect some partners to attack the basic logic of focusing on industries. Any assumptions made in the creation of your reorganization, any statistics or financial information may all be challenged. In the extreme, the credibility of those on your Management or Executive Committee may be brought into question. Arguing toe-to-toe rarely works. Your best approach is to express confidence and offer partners the opportunity to review any of the factual information used.
> It is also powerful to share real commentary (questionnaire or video interview feedback) from your firm’s ACTUAL clients, citing the importance of their lawyers having an industry focus.
In some extreme circumstances, practice groups aggrieved by the focus on industry teams may attempt to become obstructive by failing to cooperate and share information, disregarding basic procedures and scheduling conflicting meetings, events and activities. Fortunately, such obstructionism is so extreme that it does not occur very often. When it does, it is usually short-lived. This is because it is so obviously counterproductive for the firm that it fails to gain attention or sympathy for the position of those involved.
In the best of all circumstances, it won’t take long before visible client-sharing occurs between the industry team receiving strategic attention and any practice that is not. This is, of course, what your reorganization was envisioned to create.
In fairness, I should note that there are firms in which none of these disruptive behaviors occur and everyone realizes that driving the firm to focus on client industries is in everyone’s best interests.
Are Your Rates in Keeping with INDUSTRY Standards?
In the typical corporate legal department, matters exceeding $1 million in outside legal spend account for about 61% of the total sent to outside law firms in any given year. A new Wolters Kluwer report showed notable differences in rates paid by different clients – based on that client’s INDUSTRY:
Financial Institutions $ 620 / hour
Industrials 566 / hour
Consumer Service 523 / hour
Health Care 519 / hour
Tech and Telecom 513 / hour
Consumer Goods 430 / hour
Insurance 229 / hour
That said, I’m always curious as to how much attention is paid to client fee sensitivity. For example, here are a FEW QUESTIONS to ponder when next contemplating fees with your clients:
- What is the business purpose of the engagement? (if the objective is to correct or remediate a problem, the client may be more price sensitive than if the desired outcome is the realization of a gain)
- Where does this engagement fall within the corporate hierarchy? (engagements that have board of directors or c-suite visibility are less price sensitivity)
- How important is it for your client to realize a successful result? (results that have small impact on a client’s profitability tend to be more price sensitive)
- Who’s paying the bill? (matters where the client’s cost is shared by another company or insurance, or are subject to court or agency review tend to be more price sensitive)
- How difficult is it for your client to find a competing firm with the expertise to do this work? (the more SPECIALIZED the matter, the less fee sensitive)
- How well does your client know what other law firms charge for the services being sought? (clients without a point of reference tend to be less fee sensitive)
- How much importance does the client place on having a high name recognition firm and are you such a firm? (price sensitive clients tend not to care about prestige)
- Was the client the first to initiate the conversation about fees? (if the client initiates fee conversations or offers a fee agreement, it is a sure sign of high price sensitivity)
TAKEAWAY: I found these differences in rates paid between Industries quite interesting. Do you know what they are within your firm?
Page 1 2 3 4 5 6 7 8 9 10 Next >> of 94