Big Data and Value Creation: Putting Client Feedback into Action

The following is an excerpt from a presentation by Debra Baker, CEO and Founder of Law Leaders Lab, given at the San Francisco Legal Marketing Association Technology Conference held October 16, 2014 at the Nikko Hotel.

Law Leaders Lab recently published our first research report focused on value creation in the context of legal services. One finding revealed that while lawyers tend to define value in terms of inputs – how much time and how much effort they put in (How can we bill more hours?). Clients think about value in the context of the business outcomes those legal services deliver.

The executives we interviewed were clear: In a world where the line between the law and business is increasingly blurred, lawyers are not doing a good job of articulating their value in the context of business outcomes.

I don’t know about you, but I’ve sat in multiple legal marketing conferences where respected colleagues say that lawyers cannot differentiate themselves. That lawyers all do essentially the same thing. That the best lawyers they can do from a marketing perspective is to try to be memorable.

I’d like to turn that axiom on its heels and argue that no two lawyers are the same. That even those with the same amount of skills and experience on paper do not approach the practice of law the same way. Our approach to the practice of law are informed by our individual experiences. That’s because the work lawyers do is knowledge work. It comes from the way our minds work, and no two lawyers are alike.

Our challenge, therefore, is not how to be memorable. It is how do we uncover, understand and turn that knowledge into a competitive advantage. It’s this Big Data that presents the greatest opportunities for lawyers.

It should be no surprise that the corporate world has already figured this out. HBR discussed the shift in corporate strategy in an article published last year titled, “When Marketing IS Strategy.” In it, the authors explained how business strategy traditionally focused on upstream activities like sourcing, production and logistics. But today, strategy has moved downstream, focusing on activities aimed demonstrating cost savings and risk reductions.

It is these marketing activities focused on value creation and finding sources of competitive advantage that are emerging as the drivers of corporate strategy.

Law Firms are no different. For decades, law firms have been selling upstream activities like document creation and document review. They sold this the “stuff” you could touch and feel at a premium and they threw in the knowledge work for free.

Like the corporate world, however, these low-value activities are now being outsourced or commoditized. But lawyers have still not figured out how to sell the high-value knowledge work.

Unless law firms rethink their business strategy, legal services – the knowledge work — regardless of how important it is – will continue face unwanted price pressures. It is a lose-lose for everyone in the legal profession.

Law Firm Marketing must take center stage. It is no longer about providing a better service – being a great lawyer or a best in class law firm – your focus needs to be on the needs of clients and how you position your services relative to what is important to them.

We do that by leveraging the knowledge of our attorneys, not to educate clients about what lawyers do, but to identify business insights lawyers have about their clients that they can’t get anywhere else.

So how do we do this? Let’s start with an example Harvard Business Review used from the corporate world that is about as far away from legal services as we can get: An explosives company.

The customers of this company were rock quarries who blasted rocks for use in landscaping and construction.

The needs of these customers were pretty simple – they needed to blow things up. What they wanted from their supplier were explosives that met their specifications at the lowest cost, so it was very difficult to create a competitive advantage around anything but price.

The explosives company, however, knew that blasting rock was not as straightforward as it appeared. Factors such as the location, depth, diameter of the holes, even the weather effect the performance of a blast so the quarries had no guarantees about what results the blasts would produce. The company also realized that its quarry customers harbored unspoken anxieties about handling its explosives without accidents.

The explosives company realized if it could systematically reduce even some of those costs and risks, it would provide significant new value for its customers – something far in excess of any price reduction that a competitor could offer.

So the company collected data on hundreds of blasts across a wide range of quarries and found surprising patterns that helped them understand the factors that determine blast outcomes.

Over time, they developed strategies and procedures that greatly reduced the uncertainty that, until then, went hand in hand with blasting rock.

They could now predict and control the size of the rock that would result from a blast and could offer customers something its competitors could not – guaranteed outcomes of its blasts.

If an explosives company can take a commoditized product and turn it into something of significant strategic value, just think about what your law firm could provide for clients to address their concerns about costs and risk. Think about how powerful your marketing program could be if you could help your attorneys uncover, leverage and use the data inside the firm to create a competitive advantage.

So how does this translate to law firms? In my early days of law firm consulting, much of the work I did was in the area of client relationship management.

One of my law firm clients worked with an insurance company and handled the majority of their California litigation. As any of you who have lawyers working in the insurance space, you understand how price sensitive this market is. Not surprisingly, the insurance company was concerned about the amount of money it was spending with the firm and was considering lower cost providers.

I was asked to help the law firm mine data about the firm’s experience to build a business case the lawyers could present to the company as to why they should keep the litigation centralized with their firm.

We learned a couple of things during this process:

1) The firm had 10 years of data about the client’s litigation in California. By mining it, the firm was able to identify trends, compare outcomes and demonstrate its track record of success.

2) One of the data points we collected was key contact – in this case the claims agent assigned to each case. In doing this, we uncovered a trend we hadn’t previously considered: The average tenure of a claims agent in this sector was something like 18 months, which met the company could not easily capture the same data that the law firm could.

This provided a wealth of opportunity to make the case to the client for keeping the work in-house, but we also realized something else. By pulling the same history on other clients in this industry, the firm had 10 years of data on litigation involving this particular sector of the insurance market – when combined, it represented 85% of litigation impacting this sector in California.

Suddenly, the firm had insights about litigation risks and outcomes that no other law firm could provide. In the immediate term, the law firm was able to use this data to defend its client relationship. From a broader perspective, the law firm now had the opportunity to use this data to help develop a competitive advantage across the entire industry. The data could be used to  (1) predict and create avoidance strategies, (2) offer training to claims agents, (3) use these trends as the foundation for a content marketing strategy – all powerful competitive advantages in a highly price sensitive market.

What’s more, as the data is used to attract new clients, the firm continues to collect more data, making the value of the insight increase over time. This offers a type of competitive advantage that is extremely powerful.

If you think of most competitive advantages – say technology for example – they are very powerful to first movers but they tend to fade as competitors start to catch up. When you develop a competitive advantage based on data, the advantage actually gets stronger over time because every new client offers the opportunity to gather and strengthen the existing knowledge bank.

Obviously this discussion only scratches the surface of how law firms can use data to differentiate law firm services from others in the market. But it is clear that we as marketing professionals must drive this conversations.

For law firms to be successful, we as legal marketers must help our attorneys rethink the way they create, deliver and communicate the business outcomes our legal services provide. We do that by shifting the question away from “How can we bill more hours?”  and instead ask, “How can we deliver better outcomes to our clients?”

The key to delivering outcomes is Big Data. By uncovering the unique legal knowledge inside our firms, we can create competitive advantages and develop a marketing strategies to educate clients about aspects of their business that our clients cannot get anywhere else.

Done right, we can draw upon the knowledge-based data inside our firms to clearly differentiate ourselves from competitors through the way we package our services, build our business cases, and develop marketing programs that lead clients to our services and give clients a reason to keep coming back.

Posted on November 11, 2014 in Disruptive Technologies, Lab Insights

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