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September 20, 2005
Law Firms as Businesses
I attended a local networking and entrepreneur meeting this morning and the topic was pricing strategies. Throughout the lively interactive session, many people with different perspectives and a wealth of information shared various viewpoints. We discussed various pricing strategies used in different industries and which factors were important in each industry, with a goal of developing a pricing strategy for any type of business.
A couple things struck me during the presentation. The first is that I had a few nuggets to consider and implement in developing and operating my patent law business, especially about ‘value pricing’. Most of this was basic business sense, not rocket science.
The second was how foreign most of this type of knowledge is to the day to day practice of law. Most professions, including engineering, medicine, law, etc. teach the students how to perform the technical aspects of the job. In engineering school, we learn how to solve complex formulae to calculate resistance, strain, or fluid flow, but even when I was on top of my game as a design engineer, I bet I spent no more than 25% of my time doing ‘real engineering’. Most of the time was other stuff, things that related in no small part to running a business: getting parts ordered, handling suppliers, manufacturing a product, selling a product. This was at one of the largest high tech corporations.
Similarly, at law school, we are taught to ‘think like a lawyer’ (whatever that means), but there is no training whatsoever in business development, managing and operating a company, pricing, or any type of business related topics. A couple other bloggers, both of whom I really enjoy, have recently talked on this topic, including Matt Homann at the [non]billable hour and Bruce MacEwen at Adam Smith, Esq.
None of the attorneys I know talk or think in the terms of operating a business in the same way these entrepreneurs do. “Pricing Strategy” in a law firm means “my billable rate is higher/lower than X attorney at another firm.” Not “my value proposition is…” There may be talk about cashflow, but not about surveying the industry served by the law firm and developing new products, services, or methods of delivery to address their needs.
What does this mean? For me, it means that it is potentially a lot easier to compete in the patent law marketplace, with a little ingenuity and business sense. But it also means that the lawyers that are serving these clients do not understand what is making the client tick. How can the attorney do a good job of serving the client when they don’t have even a cursory understanding of how their client thinks?
Posted by krajec at September 20, 2005 01:36 PM
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Comments
I agree. If you are a true innovator in the practice of law, especially in terms of billing options, there is no real competition. The trick is to get the word out on the street, or develop an advertising campaign which distinguishes your firm from the pack. Enrico Schaefer
Posted by: Traverse City Law Firm Innovator at September 21, 2005 02:20 PM