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You Claim to Have Industry Practices - But Who Are You Kidding?
I see law firms list “Industry” but when you examine their website particulars there is little there of much substance. They list what legal services they may provide to the BROADER industry, but they do NOT identify any specific sub-industry client groupings where they have expertise.
Here are 10 examples of growing Billion Dollar niches worth identifying:
• TECHNOLOGY – Digital Forensic Services. ($2 Billion)
Companies recover, analyze, investigate digital data found in encrypted and erased files; often to help solve cybercrimes.
• MANUFACTURING – 3D Printing & Prototyping. ($2 Billion+)
Automatic construction of physical objects using additive manufacturing technology.
• INSURANCE – Cyber Liability Insurance. ($3 Billion)
Companies protect business/working professionals lost income/liabilities related to business interruptions, network security, internet liability, electronic communications, intangible assets and online content liability.
• LIFE SCIENCES – DNA & DNA Forensic Laboratories. ($3 Billion)
Provides DNA paternity testing, DNA forensic services, veterinary DNA testing, ancestry tracking and services related to human genetics.
• RETAIL – Cannabis Equipment & Accessory Stores. ($3 Billion)
Operators in this niche sell cannabis-related equipment and smoking accessories; but do not include cannabis sales.
• SOFTWARE – Speech & Voice Recognition. ($4 Billion)
Speech recognition signifies the ability of a machine to understand/carry out spoken commands by interpreting articulated words.
• INDUSTRIAL SERVICES – Hazardous Waste Collection. ($4 Billion)
Includes hazardous waste collection services; radioactive waste collection/hauling services; hazardous waste transfer stations.
• FINANCE – High Frequency Trading. ($6 Billion)
Financial securities trading firms/individual broker-dealers using high-speed market data/sophisticated analytics to identify temporal supply/demand trading opportunities.
• UTILITIES – Solar Power Generating Facilities. ($11 Billion)
Operators own/operate solar-power-generating facilities in the form of either photovoltaic panels or solar thermal power stations.
• HEALTHCARE – Ambulatory Surgical Centers. ($30 Billion)
Operators provide emergency services, including setting broken bones, treating lacerations, tending to patients who have suffered injuries due to accidents/trauma.
Each of these lucrative niche opportunitie$ (and there are so many more!) involves hundreds of potential clients and millions in revenues. So see if you can find one competitor in your market footprint that claims to be serving any of these sub-industry clients?
Fostering A Skill Building Culture: Start by Learning From your Clients
It is trivial to observe that most new learning happens while professionals engage in various client matters. What is not trivial to point out is that far too many firms fail to capture and disseminate much of that knowledge. It never gets leveraged and used to the benefit of outperforming competitors. One advantage that should accrue to any well-managed group, is the value that each professional can bring to clients as a result of the accumulated knowledge, wisdom, systems, methodologies, and experiences of the colleagues on their teams.
As a leader, you need to instill a passion and curiosity within each partner to identify a specific skill or special interest, identify what they do not know, and what is new out there that addresses some particular pain point that more clients may soon need to solve. Then, at least once every month, have each partner pull out the list of client work and assignments that they have been working on and examine each. Allow time for each member to make a brief presentation. Because everyone knows this is coming, each is subtly forced to reflect on his or her experiences and is more likely to convert the knowledge gained from those experiences into a shared resource. Invite discussion, ask questions, provide critical feedback and examine how and whether the activities described benefit others in the group.
Start by asking each partner, in turn, to identify and explain to the group any particular client matter that . . .
To Read this entire article: https://www.nationalmagazine.ca/en-ca/articles/legal-market/law-firms/2022/fostering-a-skill-building-culture
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.
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