Sectors - are you making it or faking it?

By Steve Blundell, June 5, 2018

Having a sector focus has become all the rage. Our analysis of AmLaw 200 firms’ websites reveals that no fewer than 118 of them claim to have a sector or industry focus. But our research also shows that the popularity of this strategy conceals the fact that among these firms we have both 'makers' and 'fakers': The makers are those who are truly employing a sector focus to get closer to their clients. We measure their success through our Sharplegal research and we can readily demonstrate the positive impact that their sector focus has. Clients in their chosen sectors feel significantly more positively about that law firm and score the firm more highly on a raft of measures than clients outside the sector. 

By contrast, the fakers have leapt on a band wagon. Someone has bundled their clients together in some grouping around industries and put those sectors on the website. That exercise has done nothing to enhance the clients’ experience of the firm or to help the firm stand out from the pack. 20 of the AmLaw firms reckon they focus on more than a dozen sectors. Whilst that may be true, it’s more likely an indicator that the firm is faking it.

So why the rush towards sectors? In large measure because the major firms are finding it a growing challenge to be close to their clients and their clients’ strategy. The legal market has seen massive consolidation over the past decade, both globally and within jurisdictions. In 1980 the then largest law firm in the world boasted 51 lawyers[1] and today the biggest, Dentons has 7,500 lawyers[2]. 

The increase in scale has been accompanied by a substantial rise in specialisation. The general business advisor has all but disappeared in many global firms, to be replaced with ‘client relationship partners’ whose role is to orchestrate an ever-expanding range of services delivered through a matrix organisation of practices and offices.

Clients may welcome that depth of specialisation and benefit from negotiating fee rates on a global basis. But, there are downsides to this increase in scale and specialisation: the easy ability of the single trusted advisor to understand the intricacies of his or her client has become immeasurably harder. Our new breed of specialist often becomes remote from the client’s business and its strategic thinking.

A sector focus, properly executed, can help the firm and its relationship partners to achieve a much deeper understanding of the client’s business and the dynamic of its market. It can also help the team to speak in the language of the client as opposed to legal jargon and technicalities.

That takes a lot more investment and skill than the “fakers” have employed.

So if you are guilty of faking it – or suspect that some of your industry groups might be, we’d gladly run the Acritas ruler over your firm and its client base and tell you how things stand.  More to the point, our Advisory business can work with you to ensure that your sector focus is real and that they create a real competitive edge for your firm.

 

 

[1] The Lawyer Statistical Report, American Bar Foundation, 1985

 

[2]  http://www.legalweek.com/sites/legalweek/2017/09/25/the-global-100-2017-...

 

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