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Technology created a market opportunity for law firms
But not in the way you might have expected
Even though technology’s impact is felt by law firms, all of its focus thus far has been on the actual law work. There has been surprisingly very little innovation in sales and marketing. In today’s newsletter I talk about the implications of that trend, the market opportunity it creates, and a few ideas you can put into practice. But first:
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This week I read a pair of articles that made me think about where things are headed in the law firm ecosystem. The first, Competitive Moats explains why constant innovation is ultimately what matters. The second, When Content Creation Goes To Zero, discusses how AI will impact content creation. Both articles, importantly, rely on the central assumption that businesses ultimately do only 3 (very important) things:
Acquire customer to buy stuff
Distribute that stuff
The one thing that jumped out at me, as these 3 themes apply to the law firms, is that innovation is all tied to (1). The two big B2B tech trends of the past 10 years, cloud & AI, both relate to lawyers creating work product. For example, the tech has helped accelerate the process of collaborating on documents (e.g. contract management), storing data (e.g. doc management), or finding evidence (e.g. e-discovery).
As creating legal work product becomes cheaper and easier, it stops being a way to differentiate your firm. That’s why so many successful solos and small firms have sprouted up—they can provide work product that’s just as good as the big firms, at far lower rates, because they have less overhead. Competition for business is fierce.
What about (2) customer acquisition and (3) distribution? Well, law firms still approach sales the old way—relationships and connections.There hasn’t been much change since 20-30 years ago at all. Which is very different than in, say, the highly competitive tech startup scene where there’s constant innovation on customer acquisition (e.g. digital marketing, social media marketing, etc.) or distribution (e.g. splitting cold callers & closers, creating signature events, etc.)
All this leads to an unprecedented focus today by law firms on sales. Firms can’t really grow revenue by building a better mousetrap, and their marketing playbook is exactly the same as everyone else’s—so they try to hire the best mousetrap sellers. The rainmakers. And this is exactly what firms have been doing these days, paying enormous compensation packages for proven rainmakers, and doing whatever it takes to keep their own.
Personally, if I was a law firm, I’d consider leveraging technology to innovate on customer acquisition and distribution. A few ideas:
Use social media to build previously inaccessible relationships. In the past you’d have to go to conferences to meet GCs and CLOs or go through gatekeepers to ask for appointments. Which was expensive and time consuming. Nowadays you can use LinkedIn or Twitter to engage with them directly. You can create content, engage via comments, and send cold messages. Doing this methodically, for half an hour a day for a year, will yield far greater results.
Use tech to run an owned community built around a practice area. Many legal tech companies have formed their own communities and signature events around a target persona. There are a wide range of chat tools, online forum platforms, etc. that you can use to manage communications in a time-efficient way. Hell you can even use Substack’s chat or threads feature! Eventually the community becomes a powerful marketing engine and an asset on the balance sheet.
Leveraging a dedicated sales staff that focuses purely on revenue. While the rest of the business world has already done this—law firms still haven’t. The person bringing in the work is still often the same person who does the work. By leveraging staff to focus purely on sales, and can be made accountable to specific revenue targets, you can grow much more quickly.
All of these ideas are used by technology companies, especially those that sell to corporate legal. So it all works. It’s just a matter of which law firm is open to innovating on sales and marketing. I would love to see who does it first.
What I’m Reading
The American Lawyer published an interesting article about law firm tech adoption in this economic climate, and there were some notable quotes in the article from my friends David Wang of Wilson Sonsini and Zach Abramowitz of Killer Whale Strategies. If you’re a legal tech person who sells to law firms, you definitely want to check it out.
Community roles continue to pop up left and right in the legal tech market. I wrote about this last week, but this week another contract management company (who shall remain nameless) announced a fundraise, which led me to look them up on LinkedIn and find that they have also hired a head of community. This serves as more proof to me that community engagement is critical to powering sales and revenue for all types of companies—although it remains to be seen whether it would work for law firms.
The legendary Tom Goldstein, founder of SCOTUSBlog and Supreme Court litigator, announced his retirement this week. Longtime readers of this newsletter may remember my profile on him from last year, where I described how Goldstein used legal “salesmanship” as a fourth year associate to build out a lucrative practice and media company.
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In fact, I was a recent (second time) guest on his podcast, where I discussed sales, social media, and memes. You can check out the full episode here.
For all of my criticism about Biglaw, they are outstanding at distribution. They build trust with large corporate clients, appear on pre-approved law firm panels, and stay top of mind through legal updates. Some of them have been doing this for over a hundred years, so it is very difficult to compete against, if you try to take the same approach.
The SDR/AE model—which splits sales staff between cold calling appointment setters and “closers” who handle the rest of the sale, has been around for over two decades. Salesforce famously used it to build a gigantic business in the early aughts.
“Elite firms once viewed as immune to competition, like Wall Street’s Cravath Swaine & Moore and Davis Polk & Wardwell, have ditched their strict seniority-based pay systems to keep their stars and help recruit new ones.” Source.
For more on this, check out this legal intelligencer article about lawyers and social media called “You’re Going To Miss Out, How To Mine Social Media For Clients Without Alienating Your Firm.”