Program Review: Senior Leader SIG: Using Business Analytics to Define Your Firm's Competitive Edge

Big data, when embraced, is a powerful tool that can be used to identify business needs and opportunities. Gathering data from traditional and online sources inside and outside your firm can help you understand your firm/practice better and identify opportunities and priorities.

Big data is a mix of different information that draws from a variety of sources. Big data is used to identify trends, relationships, and dependencies from large sets of information that can be used by firms to identify opportunities and create a guiding path to follow.

When big data is used for business analytics, your firm can be pointed in the direction of opportunities and differentiators. While business analytics help you understand the landscape, it does not give you the answers. While it is not perfect, it can be used to look for patterns and identify a firm’s competitive edges.  In March, the LMA Capital Chapter Senior Leaders Group had a conversation with Wendy Bernero, co-founder of Bernero & Press, a management consultancy that helps law firms maximize their client and market opportunities about using our firm data. She walked attendees through techniques to define their project and develop their analytical process to identify their firms’ competitive advantages.  

Define Your Project:

Identify what you are trying to achieve and map out how you plan to do it.

Goal and objective

Before starting your project think about what your goals are and what answer are you trying to achieve.

Information collection

When gathering data answer these questions:

·         What data do you want to collect?

·         Where can you get that data from?

·         Who gave you that information and what was their objective with the information? Did they understand what you were trying to do and what question you were trying to answer?

·         Share with your information source what you are trying to achieve. Ask if your request will help you reach your goal or if there is something else you should be thinking about.

Data instructions

 

·         Give clear instructions.

·         Request the information in unlocked electronic files in Excel format.

·         If confidentially needs to be protected, instead give clients numbers and industry codes.

Pathways to success

 

·         Define success.

·         What are the metrics you need to track? These may be qualitative and quantities.

 

Conduct Your Analysis:

Analyze your information at the practice and sub-practice level.

Internal analysis

The goal is to understand the most profitable revenue generation successes and avoid focusing on less profitable areas.

·         What are your revenue sources and capabilities?

Core practice strengths

·         What is your firm’s market position and how does the market perceive your firm?

·         What are market buying preferences?

·         How do companies make buying decisions?

·         What is the current economic climate?

Current market opportunities

·         What are your firm’s current market opportunities?

Future market opportunities

Conduct an economic scenario analysis.

·         What are the market, global, political and government trends?

·         Are their new market competitors?

Competitive advantage

Identify sources of competitive advantage.

·         Use the information you gathered to understand your firms core competencies and opportunities.

·         This analysis can be used to give your firm a competitive advantage either by charging premium pricing and providing greater value through differentiation or charging discount pricing for the same value.

Data Analysis Tips:

  • When analyzing your data, do not focus on the client group level, but the client and matter levels, with the ability to roll-up to the group level.
  • When studying your data look at the accrual revenue total, the working timekeeper department and practice allocation. Start with each individual lawyer and then roll up their data to their primary practice assignment.
  • Look at granular practice levels, not corporate work, but M&A and capital markets.
  • Include profitability metrics at the client level, use realization as proxy if needed.
  • Conduct client-level analysis for clients that show high levels of multi-disciplinary provision of services.
  • On a practice level look at imported work versus exported work.
  • Look at the number of practices servicing your client and their level of “stickiness” to your firm.

Identify Your Competitive Edge And Opportunities

Identify client value by listing the primary services offered by a practice group and rate each service by its strength of capabilities, investment required for top tier status, uniqueness, fee sensitivity, and projected legal demand this year and in three years.

Then conduct a reality check on your identified competitive advantage:

  • What types of clients value the identified service (size, sector, entity type)?
  • Who are your top five clients using this service?
  • What are your three most significant matters?
  • What is your firm’s capacity/size compared to peer firms (greater, same, less) and what is the projected demand for the next few years?

 

The Senior Leaders' SIG is an invitation-only series of focused, educational and networking programs for more experienced members of LMA’s Capital Chapter. The Capital Chapter’s Senior Leaders’ SIG offers in-depth, group discussions among our more experienced members on business development, market trends, advanced marketing and communications, team management, and other strategic issues facing our industry. Please also note that in order to participate in Sr. Leader SIG events, individuals’ LMA memberships must be in good standing. For more information on the Capital Chapter’s Senior Leaders SIG contacts: Corey Garver or Meggan Maromonte.

By Helena Lawrence, Sr. Marketing and Business Development Manager, Orrick for the March/April 2016 Issue of the Capital Ideas Newsletter

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