The law firms that will prosper in the future will be those that exhibit three characteristics: they will put purpose before profit, they will offer a distinctive service and they will build a culture to sustain this distinctiveness.
Having resisted disruption for longer than anyone could have anticipated, professional service businesses of all kinds are under significant pressure. Technology is disrupting established models; clients are wise to how legal firms make money, General Counsel know exactly where the value resides and it’s increasingly easy to measure the subsequent effectiveness of any advice given – it can’t be blamed on poor clients or poor execution.
To many clients and potential hires, Law firms seem increasingly undifferentiated. They have the same skillsets, make similar claims about themselves, look the same and the people all seem to have worked for the same firms. As one General Counsel told me, “Simon, when I take their business card off the table, I cannot tell one apart from the other”.
Against this backdrop, what should a firm do? The answer can be found in a simple question that is often difficult to answer.
What matters most?
Firms need to understand what matters most both to their clients and their people. And for the avoidance of doubt – the answer is never just money.
We are moving from an era in which profit was (very often) the sole focus of a business towards one where purpose is becoming more and more important. As Simon Sinek commented: ‘Increasingly people don’t just buy what you do, they buy why you do it’.
Purpose drives action
Here’s an example of what I mean. Back in 2012 the US was grappling with the arrival and consequences of Hurricane Sandy. The storm resulted in 85 deaths, caused widespread destruction to property and left 8 million people on the east coast without power for several days. Businesses chose to respond to this in different ways.
The clothing retailer American Apparel chose to offer customers a 20% discount for a rather generous 36 hours. American Apparel saw the worst Hurricane for a century as a retail opportunity! Contrast this with the behaviour of the detergent brand ‘Tide’ – this business sent mobile launderettes into the worst hit communities, helping people to wash their clothes free of charge. Ditto ‘Duracell’ they deployed mobile charging points, enabling communities to recharge their mobile phones and helped people to stay connected. Significantly both ‘Tide’ and ‘Duracell’ are brands owned by a purpose driven business – P&G.
P&G’s purpose is to: ‘Touch and improve more consumers’ lives with more P&G brands and products every day’.
A business that is purpose driven instinctively knows how to respond in a moment of crisis. How many legal firms have a clear purpose? How would your firm respond in a moment of crisis?
As a post-script to this story, American Apparel filed for Chapter 11 bankruptcy in 2014. In that same year, Procter & Gamble delivered $7bn in cash dividends to its shareholders
The $ value of Purpose
Daniel Pink the behavioural economist recently commented: ‘When the profit motive gets unmoored from the purpose motive, bad things happen.’
That includes the destruction of financial value. According to UBS, the recent ‘Dieselgate’ scandal is likely to cost VW around $43bn in fines and reparations.
Employees are also seeking meaning in their work. The best firms offer their employees a degree of autonomy, the opportunity to develop their skills and competencies and a sense that what they are doing actually matters.
Senior partners paid millions might find the pursuit of profit sufficiently motivating but for many (especially younger) employees, a salary alone isn’t sufficient motivation to excel.
Evidence also suggests that businesses that consumers see as more meaningful generate more value. A 2015 study by Havas Media Group showed that on average such businesses gain 46% more share of wallet and outperform the stock market by 133%. This matters because just like consumers, professional buyers use the vendor’s reputation as a shortcut to reducing risk and simplifying their selection.
How to be purposeful
Developing a good purpose requires consideration of three factors, the customer, the financials and the societal impact of your business BUT the key to unlock purpose is to keep focused on what matters most to the customer. Think about a car manufacturer, one of the biggest issues facing society is poor air quality. It affects the lives of their customers and car companies are financially penalised for toxic emissions. Nissan has invested in electric vehicles. By building better, efficient, and more environmentally friendly cars, they positively impact air quality, reduce financial penalties and, above all, provide innovative, cost-effective cars for their customers.
So how do you build and sustain a distinctive business? We believe this is achieved by using your purpose to manage with intention. You have to be a business prepared to stand up, stand out and stand firm.
IBM is a great example of a business that ‘stands up’. It was founded in 1911 with the stated purpose of using: ‘Information technologies…to benefit mankind’, over 100 years later it is one of the most successful technology and consulting businesses in the world. Having a clear purpose that transcends a single product or a pursuit of profit has helped the business stay relevant and adapt to changing technology.
How many law firms can be confident that they have something that that will help them maintain a continuing relevance?
Metro Bank is a great example of a business ‘standing up’. While all of the UK high street banks are ostensibly saying the same things and offering the same types of services. Metro Bank has launched in the UK with a clear purpose, namely to get you to LOVE your bank. It has then brought this to life by focusing on what matters most to its customers. Flexible opening hours, free coin counters, processes designed to be fast and flexible, staff encouraged to say ‘yes’ as a reflexive action. And it is working. Metro Bank now has £6.6 billion in deposits and £4 billion in loans. Significantly it also expects to spend less than £60,000 in advertising this year. Its customer experience is driving growth faster than advertising could.
Take a look at the Magic Circle Law Firms and see how many of them are genuinely saying something different about themselves? How many of them are offering a distinctive service? How many of them are talking about themselves? How many are offering up bland insights or lazy observations about their clients? How many are potentially open to disruption by new hungry competitors prepared to focus on what really matters to clients?
Firms need to be prepared to be distinctive. As Robert Stephens of the Geek Squad commented: ‘Marketing is the tax that you pay for being unremarkable’.
Timpson the shoe mending and key cutting business actively recruit ex-prisoners. They have turned out to be among the most loyal and effective members of staff, they are appreciative of the opportunity and know that giving great customer service is the best way of building the business.
Homeserve the emergency domestic insurance company have decided to focus on delivering ‘good’ as opposed to ‘fair’ outcomes to holders of their policies. This has challenged the industry convention and led to distinctive outcomes.
One engineer visiting the home of a 90-year-old man (in order to fix his tap) realised that the man hadn’t been able to take a shower for 2 years because the shower was also broken. Although not covered by the policy the engineering sought approval for the parts and fixed the shower in his own time. How did that engineer feel when he left that house? What will be the lasting legacy of that action?
How many law firms are encouraging their firms to be distinctive and to go-beyond what is deemed the industry standard? Are you focused on what matters most?
We think that the future of law will belong to those firms that have a clear purpose, those that understand what matters most to their clients and their people. Additionally, it will be those firms that take their purpose and use it to drive a distinctive and sustainable culture that will survive and prosper in the long term.
Your best years could be ahead of you.
This article was originally published by The Global Legal Post.[starbox]
Found this interesting? Try these…