Lawyers, Student-Athlete #2 At Texas A & M, and Money

Drawing on inspiration from Warren Zevon's 1978 classic song about the cure for problems, the NCAA, a "student-athlete" at Texas A & M, and a sports-talk website inadvertently provided us all a reminder of what primarily drives buying decisions in the legal community.

It's Experience.

First, some background.  In one of many regulations regarding intercollegiate athletic eligibility, the NCAA prohibits student-athletes from profiting from their likeness while enrolled in a member institution.  This includes everything from commercial endorsements to appearance fees to revenue derived from autographs, and much, much more.  The student-athlete in question, the winner of the Heisman Memorial Trophy this season, is alleged to have received payment in exchange for autographing memorabilia for collectables dealers this past January.

Earlier this month, when reports began to surface that the student-athlete's eligibility was being investigated by the NCAA, the university immediately concluded that it was in it's best interests to utilize outside counsel.  

This was the headline on the August 5 posting on www.collegefootballtalk.com: 

 

Lightfoot Franklin has roughly 60 attorneys and is located in Birmingham.  It is a very good firm, but is probably not as well known, even to legal industry insiders, as it should be. 

The firm lists significant amounts of experience on their website, including for NCAA Compliance and Investigations.  As the firm states on their website, Lightfoot partner William King "built the practice from the ground up", and the practice was bolstered tremendously by the 2008 addition of Gene Marsh, who formerly chaired the  NCAA Committee on Infractions.  Since 2008, the firm has been counsel to numerous Universities, including Michigan, North Carolina, Georgia Tech, Penn State, South Carolina, and Southern California. Beginning in 2010, Lightfoot represented Auburn University in regards to the NCAA eligibility of quarterback Cam Newton, who later led Auburn to the BCS National Championship and also won the Heisman Memorial Trophy.  

A few days after the news broke that Texas A & M retained Lightfoot Franklin, another posting was made on collegefootballtalk.com: 

While the Jim Darnell, P.C. website does not contain the experience that Lightfoot's does, Darnell has experience, specifically with Baylor University's Basketball Program, involving the NCAA.

Both of the headlines from CFT solidified what marketing and business development professionals already know:  Experience sells.  But herein lies the disconnect with many of the law firms themselves:  According to the 2012 ILTA Tech Survey, 63% of respondents indicated that their firm utilized no experience management or tracking platform.

I believe there are three types of experience within the legal profession.  First, there is perceived experience.  This type of experience is typically part and parcel to firms with strong, well-known brands.  Second, there is visible and demonstrated experience.  This experience is frequently found on websites, in proposals, and is used as part of the pitch.  It is frequently used to differentiate attorneys and firms from competitors, and can be equally valuable as part of a broader client retention strategy, as well.  Some firms will use captured experience as part of an annual "recap" with their client, highlighting the significant accomplishments of the previous 12 months.  Finally, there is MIA experience.  This experience is at best anecdotal and is often not captured by the firm in any form other than time & billing.  Moreover, it can make cross-selling difficult in firms where colleagues are often not aware of key experience of their partners, and can potentially provide the urge to discount rates in any effort to compete with rival firms.

As the challenges continue for "big law" - whether real or perceived - it will be critical for firms of all sizes and resources to differentiate themselves from their competitors.  While there are numerous ways this can be done, it's best to start by building on the experience and accomplishments that already exist within the firm.

 

How Can A Numbers Geek Be Bad At Fantasy Sports?

I love sports.  Played them all through college.  As most of you know, I love numbers.  In a way, it's a little like (one of the many) great Jim Gaffigan bits:

Fruit?  Good.

Cake?  Awesome.

Fruitcake?  Disgusting. 

For me, it's like that.  Sports? Awesome.  Analytical?  Way too much.  Data driven?  Yes.  Good at fantasy sports?  Not even close.

So Mighty, It has to be said twice! 

I may have figured out, in part, why. 

First, I'm a diehard Packers fan.  So I watch every Packers game.  Every play.  I don't watch other games when the Packers are on.  The same goes, unfortunately, for the Brewers.  So, I'm limited in my scope.

Second, like a lot of teams, I tend to overvalue my own players - whether it's from the team I root for (Packers, Brewers), or even my own fantasy team (I'm talking about you, 2013 Matt Cain).  

The bottom line?  It's fun.  I enjoy it.  But no one should ever make the assumption that data geeks are good at fantasy sports.   

Where's Walter when you really need him?

Or that accountants are good with their own money.

Or that marriage counselors never get divorced. 

Or that....well, you get the point. 

 

 

 

 

One of my favorite team names....  

One of my favorite team names....

 

The Periodic Table Dancers, 2016

 

The 5th Annual AmLaw 200 Analysis

The 2013 AmLaw 200 was released in early June, and to borrow a line from Led Zeppelin, the song remains the same.  Numbers, data, and statistics do not subscribe to, nor push, any specific ideology, but they sure can tell a fascinating story.  

First, a quick disclaimer.  This is very much a macro analysis, and therefore will deal in some generalities.  To be very fair, there are firms that are included in various segments that are both outperforming that segment, or conversely, underperforming against their immediate segment.    While I will normally refrain from naming individual firms, it's easy to look at firms like Irell & Manella, Munger Tolles, Williams and Connolly, or Cahill Gordon (to name just a few) that are in the "bottom 150" of the AmLaw 200, but are clearly outperforming the averages for that segment.  

With that said, we'll stay with the classic rock theme and kick off the analysis with a nod to the band with a law firm name, Emerson Lake & Palmer

Welcome back my friends to the show that never ends
We're so glad you could attend
Come inside! Come inside!

Year-Over-Year Quick Observations

First, let's look at the KPI's (Key Performance Indicators) from 2012 and 2013 to see where the changes took place. 

To give some perspective of the breadth and depth of change over the past 10 years, I've included the 2003 number as a point of reference, and will address the 10 year trends in greater detail below. 

 

The collective revenue and net operating income for the AmLaw 200, followed by the breakout by AmLaw segment. 

The total collective revenue growth for the AmLaw 200 was outpaced by the net operating revenue by a little more than half a percentage point.  Total collective revenue was nearly $92 Billion, and net operating income as essentially doubled since 2003, finishing 2012 just shy of $35 Billion.

All segments posted FY 2012 revenue gains over FY 2011, with the bottom fifty firms (numbers 151-200) collectively well off the growth pace of the AmLaw top 150.

Like revenue, total headcount was up across all segments, with the bottom 150 showing the most growth.  A closer look at the numbers, however, reveals a stark contrast in growth over the past 10 years.  While the top 150 has seen considerable growth in their total headcount, the bottom 50's 2012 bump actually pushed them back over their 2003 average.

Equity Partner headcount was a different story.  The only segment showing growth was the middle 100, with top and bottom 50 each decreasing by roughly 2.5%.  Once again, the bottom 50 is back below their 2003 equity partner average. 

Profits Per Equity Partner saw a solid 3% overall gain in 2012, but the number was driven by the nearly 11% growth of the AmLaw top 50.  Since 2003, the AmLaw top 50 has doubled their PPEP, with the other segments well behind the growth curve but still posting solid gains over the past decade.  

It should be noted that this is the first year since 2009 that the AmLaw top 50 had collective growth in both PPEP and RPL.  In FY2012, the AmLaw top 50 was the only segment that saw their RPL increase over FY 2011.  As has been mentioned previously, strong Q4 collections may have contributed to the resurgence of the AmLaw top 50.  According to Mark Medice, Senior Director & head of Peer Monitor, collections for all monitored firms in Q4 2012 was up over 9% from the previous year.  Medice also mentioned that the strong 2012 Q4 collections had a substantial impact on the soft Q1 2013 revenue.

It's important to note the correlation between the drop in RPL for the bottom 150 and their collective increase in revenue.  More than anything, that clearly indicates an increase in the number of producers, not production.  For the last few years, this has affected the AmLaw top 50, as that segment saw their revenue and headcount increase while their RPL and PPEP declined.  As we'll see below in The Most Impactful Trend, the bottom 150 needs better business development production and service from all attorney timekeepers, as their market is by far the most complex in the business of law.  

A Decade of Trends

As mentioned above, the overall collective revenue of the AmLaw 200 continues to rise, climbing 84% since 2003 to an all-time high of nearly $92 Billion.  Only once in the past 10 years has there been a dip in revenue.

As strong as the revenue growth has been, the collective net operating income has been even more impressive, increasing 98% since 2003.   

 Total Revenue and Net Operating Income, FY 2002 - FY 2012.

It is also not surprising that the number of Billion dollar per year firms has increased as well, and over the past decade we've seen a 900% increase in the number of firms generating more than $1 Billion per year in revenue, with 4 of those firms topping $2 Billion annually.  This can be explained, in part, because of the number of lawyers generating revenue.  In 2003, the average size of these 20 firms was 1,153 attorneys.  In 2013, the average size for these firms was 1,773 attorneys, a 54% increase in 10 years.  Only two of the billion dollar firms - Sullivan & Cromwell and Wilmer Cutler - are listed on the AmLaw 200 as having fewer than 1,000 attorneys.  

The number of law firms with more than $1 Billion per year in total revenues, FY 2002 - FY 2012. 

Overall, the average headcount for AmLaw 200 firms has increased 29% in the last decade.  The AmLaw top 50 have seen their firms grow nearly 40% during this period, whereas the bottom 150 has seen more modest growth, growing at roughly half the top 50 pace (19.6%).   Mergers, geographic expansion, and lateral hiring increases are all factors in the trends on both ends of the spectrum.  As we saw above, the average size of a firm in the bottom 50 of the AmLaw 200 has stayed relatively the same over the past 10 years.

The average AmLaw 200 firm size, overall and by segment, FY 2002 - FY 2012. 

The trends around Equity Partner growth continue to be more stable for the bottom 150 compared to the top 50.  While the growth of the top 50 is roughly 17% since 2003, or slightly less than half of their overall headcount growth, the bottom 150 are also increasing their Equity Partner numbers at half the pace (9.8%) of their headcount growth (19.6%).  Overall, the AmLaw 200 has seen the number of equity partners increase 13% since 2003 against overall headcount growth of 29%.

The average AmLaw 200 Equity Partner headcount, both overall and by segment, FY 2002 - FY 2012.

After three consecutive years of declining Revenue Per Lawyer (RPL) trends, the AmLaw top 50 bounced back in a major way in 2012.  As noted previously, this is due, in part, to stronger than normal collections in Q4, according to Mark Medice from Peer Monitor.  Since 2003, the AmLaw top 50 has seen their RPL grow 51%, while the bottom 150 have seen a 36% increase in RPL.  The collective AmLaw 200 average for the last 10 years is 40.4%. 

The  AmLaw 200 Revenue Per Lawyer (RPL) average, both overall and by segment, FY 2002 - FY 2012.

In terms of Profits Per Equity Partner (PPEP), the AmLaw top 50 have an advantage here, as well.  Since 2003, this segment has grown their PPEP an astonishing 93%, although not at the same level of consistent growth that some might prefer.  The bottom 150 have seen their PPEP increase nearly 60% during the same period, but with fewer peaks and valleys of the top 50.  Overall, the collective AmLaw 200 has seen PPEP rise nearly 72% since 2003. 

 The AmLaw 200 Profits Per Equity Partner (PPEP) average, both overall and by segment, FY 2002 - FY 2012.

So.....to recap the past 10 years of AmLaw 200 data: 

  • Total Revenue:  up 84%
  • Net Operating Income:  up 98%
  • $1 Billion + per year firms: up 900%
  • Law Firm Size: up 29% 
  • Equity Partners: up 13% 
  • Revenue Per Lawyer Average: up 40% 
  • Profits Per Equity Partner Average: up 72% 

By contrast, the Fortune 500 have seen their revenue rise 72% over the past decade, while their total profits, skewed by several years of declining profits in the years preceding FY 2002,  rose slightly less than 1100% over the past 10 years.  While the AmLaw 200 has been very successful in generating profits for their shareholders over the past decade, the Fortune 500 has been without peer.

The Most Impactful Trend?

The most telling trend, however, is the revenue share between the top 50 and bottom 150.  Since 2003, when the AmLaw top 50 firms garnered 52% of the total AmLaw 200 collective revenue, the AmLaw top 50 has increased their share of total revenue to nearly 59% in 2013.  While on the surface this may not seem like a huge over the past decade, what has happened is that the market share gap between the AmLaw top 25% (AmLaw top 50) and bottom 75% (bottom 150) has quadrupled, moving from a 4% gap in 2003 to 16% in 2013.

The share of total AmLaw 200 revenue by segment, FY 2002 - FY 2012. 

More than likely, this trend will not be ending anytime soon.  Over the past decade, the average firm size has increased at twice the pace for the AmLaw top 50 firms (40% to 19.6%) compared to the bottom 150.  Mergers and high-value lateral moves will continue bringing immediate revenue into the AmLaw top 50 firms.  

The bottom line is that a majority of the firms (the AmLaw bottom 150) are getting a decreasing share of an increasing market, and have been for the last 10 years.  Can many of the AmLaw bottom 150 continue to survive?  In a traditional business environment, the answer is no.  In the business of law, the answer is not so simple.  There will be some firm attrition, but the reality is that even the bottom 150 have seen tremendous revenue and profitability gains over the last decade.   Furthermore, as discussed earlier regarding the App Economy, there will be "new business" revenue opportunities that will continue to develop.  With the amount of profitability generated by the Fortune 500 in recent years, spending on R & D and M & A should continue, increasing revenue opportunity for outside counsel.

In a complex market where the majority of firms are competing for a piece of the steadily decreasing overall share of the rapidly increasing revenue, firms must generate unique differentiation to create their competitive advantage.  The question many firms must now answer is who (or what) are they attempting to create differentiation from?  For example, I'm one of many people who feel the greatest threat to the company atop of the Fortune 500, Wal-Mart, is Amazon.  It is a "concessionary" business model that many consumers are embracing - In exchange for waiting two days for a product to be delivered, consumers are realizing a much lower overall purchase price.  The business of law is experiencing this trend, as well.  Both Rocket Lawyer and Legal Zoom have seen tremendous growth in their revenue.  In 2012, Rocket Lawyer attracted more than one million paying customers, generating $28 million in revenue and capping a whopping three-year growth rate of 775 %.  According to FastCompany.com, Legal Zoom's revenue is north of $200 Million, which would place Legal Zoom at number 139 (at minimum) on this year's AmLaw 200.  Axiom Law is generating revenue in excess of $130 Million (2011 data), has an impressive list of clients, and even with 550 attorneys, is likely generating substantial margins.  Axiom just landed another round of outside capital, and recently just handled all aspects (not just the due diligence) of a transaction for a large client.  Finally, keep an eye on Clearspire as well, which boasts former ACC President Fred Krebs as an advisor.    
 

Looking into the crystal ball, and armed with the last 10 years of KPI trends, what are your predictions for the business of law over the next decade? 

 

The App Economy's Potential Impact on Law Firm Revenue

Many observers of the business of law have opined that “there is no new business; only the taking of market share from other firms.” (Count me among them.)

What an incredibly shortsighted view.  As somewhat of a "techie" myself, and known Apple fan, I should have known better.  

In fairness, there is an element of truth to the statement.  The spend on outside legal counsel continued to rise, but primarily from the same sources.  But as we'll see, the cause and effect from innovation is driving new channels for revenue growth for law firms.

First, let's flash back, all the way to 2007.  The mortgage bubble burst, in such a big way that some might think it was a stunt from a Jerry Bruckeimer movie.   The Sopranos departed, and Mad Men entered.  No Country For Old Men ruled the box office.  The Dixie Chicks, fresh off of being exiled from country music radio, roared back with their Grammy-winning album, "Taking The Long Way".  The Police reunited to play the Grammy Awards, The Mighty Mighty Bosstones released "Medium Rare", and Rush gave their hardcore fans the outstanding "Snakes & Arrows".  OK, so maybe the last two were only important to me.

Oh, and Apple released a phone.

The Definitive Disruptive Innovation

Apple's release of the iPhone was, in the understatement of the year, a success.  But it wasn't an immediate success, at least for investors.  

Apple's stock closed June 29, 2007 at $122.04 per share.  However, not long after the launch, for two weeks between August 3rd and August 17th, AAPL dropped 15%.  The following January, even though the iPhone was cemented as a success, AAPL's shares dropped 37%, and this was before the 2008 credit crunch.

The iPhone was the very definition of a "disruptive innovation".  How disruptive?  In 2007, many of us carried Blackberry devices, the product of Canada-based Research in Motion.  RIM's share price on June 29, 2007?  $66.66 per share.  As of May 29, 2013, RIM was trading at $13.01 per share.

Apple, which share price closed at $122.04 per share on June 29, 2007, is trading now at $443.88 per share, but was once over $700 per share in the past year.  

Nokia was at $23.63 when the iPhone launched.  As of this writing, they are sitting at $3.60 per share.

Like all great disruptive innovations, there will be challengers.  And for Apple, that was Google's Android operating system, and in particular, Samsung's Galaxy phones.  Shares of Samsung Electronics are trading at more than $1300 at the time of this writing, and the Galaxy phones are now a strong threat to the iPhone's market share.

The iPhone led eventually to the IPad.  Google's Android platform now includes tablets as well, and both the Barnes & Noble Nook and Amazon Kindle are multimedia tablets.

How much have we - and will we - continue to rely on smartphones and tablets compared to the traditional desktop and laptop models?  Venture Capital firm Kleiner Perkins provided this predictive analysis late in 2012:

KPCB Smartphones Tablets.jpg

But what has made the iPhone, and subsequently, the Android platform, so popular?  Maybe the answer is in how we leverage the technology.

The App Economy Begins

Ah, yes.  There is an app for that.

How much has that terminology changed our lives?  Well, who can remember when we used to install software on our computers?  Now, even programs like Adobe, or MS Office, Apple's iWork, and more are considered "Apps".

Apple's iPhone gave birth to "The App Economy".  

What's so important, especially for law firms, about the App Economy is that it has lowered the barrier to entry compared to traditional software.  No longer is it critical to be based in the Silicon Valley, or in Seattle, in order to be get software to market.   Capital investment is also minimal, especially compared to traditional software.  Add all of this up, and it's a new, quickly emerging market that will need significant legal advice.

How big is this market, which is still very much in the infancy stage?  Here's a slide from a recent law firm retreat that I did where I discussed the emergence of the App Economy as part of a broader discussion on strategy framework:

app economy slide.jpg

I mentioned above the geographical diversity of the App Economy.  Washington, D.C. based South Mountain Economics, LLC has a great study on this, which can be accessed here.  Two of the metrics they produce tell a great story about the impact of the App Economy by state.

First, they looked at the App Economy jobs per state.  As they write in their report:

At a time when state and local governments want to rejuvenate their faltering economies, the App Economy offers real potential. No one is saying that app-related employment is big enough yet to provide widespread growth. But remember that innovation-driven job growth can happen very rapidly.

Not surprisingly, California and Washington lead the way.  But notice the other states where the App Economy is bringing jobs, development, and innovation:

south mountain table 1.jpg

The second metric that South Mountain Economics brings to the table is perhaps my favorite - The App Market Intensity.  Here's their description of this metric:

That’s the percentage of App Economy jobs in a state as a percentage of total jobs, indexed to the national average. The higher the App Intensity, the bigger the share of App Economy jobs in that state. In other words, App Intensity measures the importance of App Economy jobs to a state.

This metric really shows the impact of the App Economy in markets other than California and Washington.  

south mountain table 2.jpg

This is an economy that literally sprang out of nowhere.  For law firms that did 5 year strategic plans in 2006, or even 2007, there is a good chance there would have been no focus on this market.  

Newton's Laws of Motion and Porter's Five Forces

But there is also a chance that the growth in App Developers has also led to the growth in start-up development companies turning to companies like LegalZoom for formations, patent filings, and more.  Fast Company magazine puts LegalZoom's 2012 Revenue near $200 Million, and other companies, such as Rocket Lawyer and BizFilings.com, are also making an impact on the web.  Rocket Lawyer, based in San Francisco, utilizes a subscription model plan, geared specifically to smaller businesses.  

For many law firms, the boom of the App Economy, and subsequently, the boom of the developers and start-up companies, should be a welcome sign for new business potential, from general corporate transactional work, to IP, Real Estate, M & A, Employment, and more, especially in markets outside of California and Seattle.  There are a number of App developers in every major U.S. legal market, and, not surprisingly, many developers in markets with little market complexity, like my base of Oklahoma City.

And I believe we are just scratching the surface of the App Economy.  The complexity of the apps will grow as the hardware capabilities continually increase along with the wireless infrastructure and, hopefully, the data plans.  

Newton's Third Law of Motion (For every action, there is an opposite and equal reaction) can easily be applied, especially in applying it to a paradigm shift in technology innovation.  For every new innovation and opportunity, there are new competitive entrants and obstacles.  This leads directly to Michael Porter's Five Forces, and in particular, both the threat of new entrants and the threat of substitutes.  The App Economy has given birth to new opportunities for revenue growth as well as both new competitors and substitutes.  

And if you are wondering, there is an app for that.  

Competing On Intelligence

Originally published in Strategies, The Journal of Legal Marketing, issue no. V15.N02

April is a great month for sports fans. It begins with the NCAA Final Four, followed by the start of the Major League Baseball season, the NCAA Frozen Four, the start of the NBA and NHL playoffs, and finally ends with the NFL Draft. April also marks the month where statistical analysis and intelligence may have the greatest impact on both the onfield and financial success of professional teams.

Peter Drucker’s famous quote — “If you can’t measure it, you can’t manage it” — has slowly evolved into a “Moneyball” strategy that is now employed in various degrees by virtually every professional sports team.

Therefore, it is not surprising that the legal profession — which throughout the past 10 years has seen the collective revenue of the AmLaw 200 rise nearly 80 percent to roughly $90 billion — is now driving strategy with intelligence and analytics. But while the overall revenue is rising, the share of that revenue that is going to the “bottom 150” (numbers 51-200) of the AmLaw 200 continues to decline, from 48 percent of the total revenue in 2003 to slightly more than 42 percent in 2012. This means that 75 percent of the AmLaw 200 is getting a decreasing share of an increasing market, which creates the most complex of competitive environments.

Throughout the past decade, as technology continued to develop, law firms have been increasingly embracing various forms of intelligence. There are five basic points of intelligence that firms can use to power their strategy, limit exposure to risk and drive revenues: market intelligence, which includes the litigation, deal and IP aggregators; relationship intelligence, which is driven mainly by the relationship strength metrics generated by enterprise and customer relationship management (ERM & CRM) systems; internal intelligence, which primarily consists of experience records and knowledge management; financial intelligence, which consists of both external financial market intelligence and internal profitability analysis; and finally, social intelligence, gleaned chiefly from listening platforms and other social media monitoring programs.

Like a “Five Tool Prospect” in baseball (hits for average and power, has great speed, plays great defense, has arm strength), each of the Five Points of Intelligence are valuable on their own, but when combined with the other points, can be very powerful. Competitive intelligence, commonly referred to as “CI,” is often mistaken for both “commoditized information,” as well as “client intelligence.” Information such as dated news articles, company profiles on public companies, as well as historical representation trends for litigation, IP and M & A transactions is fairly easy to ascertain, and is readily available to the market. It is when this type of information is generated without any analysis or suggestions on how to leverage the intelligence that it becomes good-to-know, commoditized information.

Law firms can use the market intelligence platforms in a variety of ways to serve a variety of purposes. For business development, benchmarking the legal activity of clients or prospects against their industry or key competitors is a great way to identify potentially valuable trends, create powerful questions that engage,and demonstrate knowledge of both the client and their market.

Firms are also able to gather valuable insight into litigation and transaction representation patterns, which assist in helping to understand, in part, why clients buy. Are individual firms representing the client in multiple practices and through multiple office locations? Are the attorneys based in high cost markets performing rather commoditized legal work? Are smaller firms with limited capacity handling the repeatable, basic transactions
and matters, while the larger firms handle the more valuable, complex matters?

When professional sports leagues expand, there will often be an “expansion draft,” allowing the new teams to “draft” players not specifically protected by their current teams. As law firms begin to expand their footprint, intelligence becomes a key aspect of this strategy. Several of the intelligence platforms now feature the ability to create custom groupings of companies, firms, attorneys, investment banks, etc., allowing users to perform targeted macro analysis.

For example, the Houston market has seen a surge in new office openings in recent years as firms look to primarily expand their energy practices. In an effort to identify potential threats to both key clients as well as key talent, a firm could load their top 50-75 clients into one CI report, and then filter the results only to the firm that is expanding into Houston. This will help identify which of the firm’s key clients are also represented by the rival firm in various markets and practice areas and may also indicate the firm’s attorneys that are currently representing those clients that may be lateral targets for the rival firm. Conversely, firms can use those key client lists to identify potential markets for expansion as well as their own lateral target lists.

When professional athletes become “free agents,” they are free to sign with any team they’d like, and teams are hoping they’ll bring with them the assets and production to “outperform” the contract value. For law firms targeting laterals, and hoping for a similar result, it is important to leverage intelligence when evaluating the scope of representation in a book of business. Rather than concentrating solely on the attorney and  their representation of particular clients, focus on the attorney’s firm and the firm’s representation of the client. The greater, and deeper, the firm-client  relationship, the higher the counsel switching costs for the client, and as a result, the lower the portability of representation.

Game plans and scouting reports are a staple of sports. Teams will look for ways to create favorable mismatches, aligning their strengths against their opponent’s weakness. Law firms are able to do this as well, especially for firm, practice, industry or client team plans. By using intelligence platforms to identify historical needs, as well as the prior or current representation, firms can align their strengths and experience to effectively approach opportunities.

One of the oldest traditions in sports is attempting to steal signs, especially in baseball. In a sport where failing 70 percent of the time throughout a career will get you into the Hall of Fame, a batter knowing which pitch is coming no longer has to account for variable change, and now has the advantage. The rise of digital publishing, as well as social media, such as blogs and Twitter, has helped create the social intelligence function, which is driven by “listening platforms.”

While the traditional market intelligence platforms aggregate primarily historical events, such as lawsuit filings, patent applications or M&A transactions, the idea behind listening platforms is to discover what is about to happen. While this sounds more like something from a  government spy movie, law firms that can react the fastest to emerging market opportunities often benefit from their speed. Gone are the days of the big eating the small; it’s now the fast that eat the slow.

Finally, professional sports teams are always looking at pricing. Tickets for athletic events in New York and Los Angeles will be more expensive than in Milwaukee and Oklahoma City for the same event. It’s similar for law firms. Rates tend to be higher, on average, in certain markets. Financial intelligence tools provide firms with the ability to benchmark rates by timekeeper, industry, practice, market and more, while also  understanding the costs associated with delivering those services. This intelligence is critical for firms in a number of ways, both from the assessment of which opportunities to pursue to the creative structure of fee arrangements.

The use of intelligence in the legal profession is not that much different from the use of scouting reports in sports. Like athletic teams, law firms are constantly looking for a competitive edge that provides a clearer path to success.