Driving Growth and Sustenance in Competitive EconomiesBithika Anand
Higher Brand Loyalty, Stronger Client Relationships and Brand Positioning for Better Sustenance and Growth
The Indian legal Industry is going through a phase of re-organization. With growth rates dropping to single digits across the globe (Including India), most firms have recognized that a larger market share, consolidation, deepening client relationships and enhancing loyalties are the way forward for a better growth.
The legal departments at the same time are expanding their teams (handpicked from law firms) to reduce dependency on external lawyers and are being very selective in using assistance from law firms.
All of the above, along with growing competition, is pushing law firms to be competitive, proactive, efficient and value-driven. Hence, sustenance is becoming a major challenge for most law firms in India. The firms with higher loyalties and stronger client relationships are drawing better purchase.
Higher loyalties and stronger client relationships are the result of steady investment in building relationships, understanding what the client wants, correct brand positioning, and ensuring quality delivery consistently and efficiently. Therefore, it is important to learn more about the client, its business and competition, and the market in which it operates.
Regrettably, not many firms undertake the effort to understand more about their clients; the ones that do couple it up with innovation and promptness to create a differentiation. Knowing one’s client is also important to understanding whether their loyalties are transaction-based or relationship-based.
A transactional client is looking for best value and best deal. Their decision-making is based on services, convenience and price. They contribute to the bottom line but cannot be relied upon for sustenance and, most importantly, building one’s brand. Most clients will happily to go competitive firms for better deals. However, this is not to say that they can never be converted into a relationship-driven client. Once they start finding value beyond price consistently, it can pretty much become a relationship-driven client – which is exactly what any firm would want, as they value the trust, loyalty, and commitment to a specific brand more so than finding a great deal.
These types of consumers are more likely to stick with a specific brand that they have been using and have built trust in and are exactly the kind of clientele every business wants to have.
As routine legal work becomes more commoditized, what law firms offer is becoming less important to legal buyers. The clients are looking for law firms whose partnership helps them shape strategy and assists in achieving business objectives. This is where a strong, differentiated brand comes into play.
A brand with stronger brand positioning can build and sustain goodwill, providing the extra edge over the competition during evaluation and keeping the relationship strong during rough patches. When you have the right brand position, it becomes the driving force behind the firm. Conversely, the firm struggles with a weak brand positioning.
The India Story
The Indian legal marketplace has been more volatile over the past few years with senior partners leaving for independent chamber practice, partner movements, and more firms mushrooming – all of these, thereby, adding to the competition and reducing revenues for firms.
Therefore, it is all the more important to remain differentiated in a competitive market like India to ensure consistent growth as “me-too” firms may have a seat at the table but only the distinguished ones get the winning hand.
Talent Retention: A Big ConundrumBithika Anand
With the rise of the new East, emerging economies of Asia are undergoing a tremendous transformation. With the continued inflow of foreign direct investment and major policy changes, businesses are flocking to capture the opportunities presented by increased customer base.
This is intensifying the competition for talent and leadership – a trend that is cutting across all sectors including legal.
With shorter career progressions (associates getting promoted to partnership in just six to seven years), expectations are growing higher. This coupled with unclear growth path for seniors – post becoming partners – is making it increasingly difficult for the mid-sized and small law firms to retain their performing assets (lawyers). The buoyant legal-talent market is just adding to it. All these factors are seriously affecting the competitiveness, sustainability and growth of the mid-sized and smaller law firms in India.
While almost every firm identifies retention as a major challenge for them, only a few have started addressing this issue. There is a huge gap in managing expectations and aligning them towards the interest of the firm.
Realizing this gap, some firms have started engaging professionals to coach their lawyers and partners in a bid to retain their talent pool by helping them realize their progression and role in the growth of the firm. However, the focus is more on pressing and tactical priorities – immediate talent retention – and much less on long-term solutions.
Pinpointing a problem is only the first step to finding solutions. Some firms have started taking steps including reduced-hour schedules, alternative work arrangements, mentorship programs, steering committees, etc. However, most firms that have implemented such programmes feel that changing the firm’s culture has yielded better results than changing business models or billing requirements.
Respect, transparency, and a fair playing field are important in any organization. With lawyers increasingly having options to practice law in a way that fits into their lives (whether in a traditional firm or in an alternative practice model), it is all the more important to ensure that they feel valued and are appreciated for their contribution and good work.
Talent management and leadership development have been pretty low on the priority list of executive committees at law firms. With the Indian legal market going through an important phase (as the talks of liberalisation gain grounds every passing day), the key to growth will be managing the turbulent tides of talent scarcity, employee expectations and leadership shortage. Hence, more than ever before, law firms of all sizes need strong, guiding hands to steer them through rolling waves of change.