Sectors all the rage
Before the world turned upside down, sectors were becoming “the thing”. Two thirds of the AmLaw 100 boast a sector focus on their web site. But from our research we can see that firms’ approaches vary markedly. As with many other things, COVID-19 may prove to be a fire that burns up the chaff and leaves only the real things standing.
Flaky and Savvy
Let’s contrast two firms. We’ll call them “Flaky” and “Savvy”. In both cases their web sites claim a sector focus. And in both cases, the list of sectors has some overlap (though the list of sectors in Flaky’s case is twice as long). Both firms have sector plans and a generous marketing and business development budget.
In both firms, many partners are sceptical. Their natural sense of belonging is to their practice area – and sectors looks like yet another demand on their time. Marketing and BD professionals have a challenging time making the case for why sectors matter.
In the case of Flaky, sector focus is largely about promotion. The firm advertises in trade journals, its media relations agency has done a good job at getting partners on trade conference platforms and they have an energetic social media campaign addressing “industry issues”. A growing number of partners see sectors as useful – and the profile raising is a welcome boost to their business development activity. Nevertheless, sectors have the feeling of being an optional extra.
When Acritas shows them their Sharplegal research, there’s some good news. Their levels of awareness have climbed in many of their sectors. The spend is working.
On the other hand, measures of how likely they are to be considered for instructions and how well they understand their clients have hardly budged.
Meanwhile, Savvy has taken a different approach. Their sector focus is all about understanding the client and getting close. Their start point is segmentation. Much of their investment budget goes on analysing their client base; making sure the billings system and CRM are able to report fee income and work type by sector. This produces a list of sectors where the firm genuinely has competitive advantage.
Savvy then undertakes further research to see which of these sectors offers the greatest opportunities for the firm: looking at trends in regulation; consolidation; supply chains; sustainability and so forth. A list of priority sectors emerges. Savvy identifies key clients and prospects in each of these sectors and invests further in research and relationship management to really get under the skin of these clients – their common issues – as well as factors that are unique to that client. Client teams meet regularly and there is a big drive to share client and sector knowledge and work collaboratively across practice areas and offices.
When Acritas reports to this firm, they too have shown increases in awareness in their chosen sectors. But the biggest climbs have been in satisfaction with the firm’s service: improvements in all KPIs especially business understanding and relationships. And a marked uplift in the firm’s share of wallet.
COVID-19 – the fork in the road
Then from nowhere – along comes COVID-19. It’s a fork in the road.
As business commentators and economists start to talk about recovery plans and “the Next Normal” it is becoming rapidly clear that different sectors have been impacted in markedly different ways. Their viability, demands for legal help, and ability to pay, require firms to be able to respond accordingly. Our firms need to be able to evaluate their exposure to each sector, quantify the risks – and to direct investment to those sectors that offer the best chances of renewed revenue.
Meanwhile having come to the fork in the road, the leadership of both firms are focused on reducing spend. Which fork will they, or can they take?
For Flaky, it means marketing budgets are slashed. No more ads or media relations agency. Conferences are no more. In short, sectors pretty much disappear from the firm’s agenda. Sceptical partners gratefully return to their old ways. But the firm finds itself very poorly placed to evaluate its exposure to different sectors – or to start to direct investment to “New Normal” opportunities.
Savvy on the other hand is much better placed. Its investment has been made. The firm’s systems can identify the clients in each sector and start to model the impact of demand for services according to the sectors and the recovery demands of each. The firm finds it can start to migrate lawyers away from shrinking demand and re-direct them to capitalising on expanding opportunities. The ability to draw on sector knowledge makes this migration more feasible for lawyers making the transition. For clients of the firm, they immediately benefit from the thinking and insights the firm is sharing – helping each client better weather the storm and plan for life on the other side.
Too late to choose?
We are coming to the fork in the road, but in reality, there are not many Flaky or Savvy law firms. Most firms are a hybrid. The moral of the tale is that it’s not too late to work out which fork to take – to direct the firm’s energy and investment to employing a sector focus that equips the firm for these times.
We have an evaluation tool that you can use to assess how close you are to a “Savvy” model. If you’d like to take the test, let me or your regular Acritas contact know. We’d be happy to arrange that.
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