Competitive intelligence is a crucial tool across a range of pillars for law firms – including, strategy, sales and business development, and operations. Yet according to new research by Acuity, law firms are still failing to extract the full potential of market and competitor insights.
Any business could do with knowledge of their competitors, although this information takes on a new degree of effectiveness in the upper echelons of the legal world – where knowledge is very visibly power. Company reports, research on industry segments, benchmarking of offerings or even game-theory like innovation insights are all inputs that can deliver that much-coveted edge.
Broadly speaking, competitive intelligence works at two levels for law firms. First, strategic value: where insights are used to shape company strategy, positioning, investment portfolios and product-market combinations. Second, business development: where this actionable knowledge is used by sales and marketing teams to understand client preferences; expand into new business lines and develop actions plans.
The use of competitive intelligence is fast gaining ground, according to Acuity’s research. “The information explosion, increasing competition, rise of alternative business models in the legal market and increased focus on business development operations” are all factors that have been driving this growth, said Shivani Dogra, associate director for private equity and consulting at Acuity.
While the intention to adapt and evolve competitive intelligence is strong, the research at the same time found sizeable barriers to its uptake. For an overwhelming majority, the hustle of daily life at a bustling law firm leaves little time for in-depth market research.
Many others report a lack of adequate research staffing and skills, although these constraints are more visible among business development professionals than attorneys within a firm. Other challenges include a lack of guidance in the field of competitive intelligence, budget constraints to pursuing research, and – in a handful of cases – a lack of awareness on the need for business development.
Moving with the times
Per the researchers, working with these shackles is far from sustainable – given the rate of change and disruption in legal services. For one, clients are more demanding than ever. A far-cry from previous risk-mitigation needs, clients now seek value-adding legal services – complete with specialised market and business research. All at lower, outcome-based fee models.
And law firms that fail to meet these needs are losing out to competitors, which include alternative legal service providers that are challenging the incumbent proposition. Even the Big Four accounting and advisory firms – Deloitte, EY, KPMG and PwC – are edging into the legal services space, armed with large research teams that can deliver value for clients at competitive costs.
For incumbents, the response has been to explore new business models – including collaborations with researchers, programmers and alternative service providers. Many are investing in digital transformation and data analytic capabilities to boost their capacity to find and deliver on actionable insights.
Attorneys are getting involved too. Acuity’s findings reveal a growing incidence of collaboration between attorneys and business development professionals within law firms – to gather company information, market research and competitive intelligence, as well as to inject insider expertise into public relations.