The document discusses the importance of law firms conducting market research to understand their competitive position. It notes that firms typically only rely on internal financial measures and legal directories for insights, which provide limited information. To make effective business decisions, firms need more detailed data on their competitors, client needs, and how clients perceive different law firms. The document recommends that firms commission their own market research through independent surveys of both clients and decision-makers to gain accurate insights into specific market segments. This will allow firms to develop strong business and marketing strategies based on facts rather than assumptions.

1. Business school
Market research
Assessing Your
Competitive
Understanding the market in which you operate is
essential to making effective business decisions.
Kevin Wheeler examines how assessing the
market can help you to understand clients and
areas of potential growth
M
ost law firms only rely on their internal financial
measures to assess their performance, including
chargeable hours, hourly rates, utilisation, fees
billed, work in progress, recoveries and profits.
Coupled with the many sources of comparative financial data
for law firms, including those produced by The Lawyer, Legal
Week and PwC, firms are then able to benchmark their financial
performance against that of their peers.
However, this analysis tells firms very little, if anything, about
the competitive dynamic of the legal markets in which they
operate. The legal market is not homogeneous – it is comprised
of many different market segments, often with different firms
competing in each. For example, the market for the provision of
legal services to Europe’s leading private equity houses is very
different to that for the provision of private client legal services in
the North East of England. Clifford Chance is a major player in the
former and Dickinson Dees in the latter.
At this level, firms need to have additional market insights if they
are to make effective business decisions.
For each market segment in which they compete, firms need to
know:
● Who are our main competitors?
● What relative market shares do firms have?
● How strong are firms’ relationships with key decision-makers?
● How effective are firms’ marketing and business development
programmes?
● Which firms are winning the most new business and why?
● Which firms are perceived to be market leaders?
● How are clients’ needs changing?
● Which firms are developing new products and services in
response to these changing needs?
● What pricing strategies are firms operating, and which firms are
© Gettyimages
perceived to offer the best value for money?
8 LawBusinessReview.co.uk February 2011

2. Business school
Market research
Firm’s
Position
“Firms need to recognise that to
produce robust plans they will
have to supplement what little
market information is available
with their own commissioned
research”
This article sets out how firms can go about commissioning
market research to provide answers to these and other questions.
Why competitive insight is important
In the article “Finding Formulas” (LBR, July 2010), the importance
of understanding how a firm is positioned in its key markets
was discussed. Without an accurate assessment of the firm’s
Kevin Wheeler competitive positioning, business and marketing planning runs
the risk of being based on flawed assumptions, which usually leads
to poor decision-making.
In the legal sector, because there is relatively little publicly
available market information, firms often undertake this
assessment based on anecdotal market information and partners’
“gut feel”. Partners can often tend to view the world through
rose-tinted spectacles and overestimate how strong their market
position is, so this analysis is usually wrong.
Firms need to recognise that to produce robust plans they will
have to supplement what little market information is available
with their own commissioned research. Although the immediate
reaction might be that this will be expensive, highly focused
pieces of research can be cost effective and, ultimately, taking the
wrong business decisions because the firm did not have access to
reliable market information is going to cost the firm a lot more in
the long run.
What about the legal directories?
The reason why so few law firms commission their own market
research is due in part to the existence of legal directories.
Partners feel that directories give them all the competitive
insight they need, making further research unnecessary.
February 2011 LawBusinessReview.co.uk 9

3. Business school
Market research
offering, and help you to ensure marketing
“Make sure that you research both and business development strategies are
correctly positioned to achieve maximum
the users of legal services as well relevance and impact.
There are a number of stages involved
as those decision-makers who
in commissioning a successful market
assessment study to gain such insights,
which will in turn allow your firm to
have influence over which law create a defined market proposition,
develop profitable services and improve
firms their organisation uses” the bottom line.
Define your market
While the quality of the research process that underpins Be precise about the “market” you want to assess.
these publications has undoubtedly improved over the Consider where the bulk of your firm’s business comes
years, the insights provided are not as detailed as those from at the moment, and/or where you realistically have
obtained through commissioning a piece of research. The opportunities to grow. Focus your research budget here
directories certainly do not provide answers to the and do not dilute the power of the research by trying
list of questions posed above. At best, they provide to canvass the whole world. If your firm
an indication of the main players in a particular operates in a handful of key areas and
market, ranking firms in bands rather than budget is tight, develop a rolling programme
providing accurate data on market penetration undertaking one research study a year, so that
and market share. each area is covered every three to four years.
The other main source of market insight
available to law firms comes through the various Who to survey?
syndicated market research studies available To provide a reliable overview of your competitive
for purchase in the legal sector. While these can position, the research must be based on a
give a firm a good overview of its positioning in the representative sample of the market that you have
legal market with reference to questions about profile, defined. This means going beyond your own clients and
usage, reputation, strength of relationships with decision- contacts. It can be tempting to use in-house marketing
makers, impact of marketing, pricing strategies and so on, databases for this type of project, but that will provide a
their weakness is that they often fail to provide insights for the skewed result, unless you know for certain that you hold
smaller firms whose market shares are low, meaning that they records of all the relevant industry players. If you only measure
frequently fail to register in studies geared more to the major awareness of your brand among people who already receive
organisations, for example FTSE 100 companies, and the larger communications from you, you may overestimate your position
firms that act for them. relative to your competitors.
Some sector-based syndicated studies are starting to Use an independent, comprehensive business list to sample
emerge in the legal market and they may be relevant to certain from and you will obtain a far more reliable picture of where you
firms. However, if your firm is interested in understanding the stand.
market for legal services provided to “niche” segments, such Make sure that you research both the users of legal services
as a Yorkshire-based manufacturing companies or hi-tech as well as those decision-makers who have influence over
organisations in Southern Germany for example, you will have which law firms their organisation uses. Usually these are the
to commission your own research to provide these insights. same, but with the increasing involvement of procurement
departments in the selection of external law firms you would not
Commissioning a study want to overlook these in any market assessment study. Also,
In these challenging economic times, law firms face ever operational staff, such as HR and property directors, often have
greater pressure to retain and grow fees and profits from considerable autonomy from the in-house legal department
existing clients, while at the same time attempting to maximise when it comes to appointing legal advisers, so their views will be
opportunities from new ones. important.
Your firm may have an understanding of its relative market
position – and fee income and profit per equity partner figures
What to ask them?
may provide a measure of success – but are there aspects of your
Key elements of a market assessment study include:
existing clients’ perceptions and behaviour that you need to
● Awareness, usage and perceptions of you and your main
understand in more detail? Do you know how potential clients
competitors.
view your firm’s brand and what could you do to encourage them
● Buyer needs and expectations.
to instruct your firm?
● Satisfaction with current sources of supply, against those
Market assessment research can help you to focus on the
needs and expectations.
competitive strengths and weaknesses of your service within
● Issues/changes that will affect buyers in the future.
your target market, identify opportunities to improve your
10 LawBusinessReview.co.uk February 2011

4. Business school
Market research
With this information, you can plot
where you currently stand (against
the competition, and against market
“The legal sector is slowly waking up
expectations) and prioritise where
action needs to be taken to ensure to the competitive benefits of having
you are meeting market needs as
effectively as possible, now and into deep and accurate insights into
the future.
Other question areas you can clients’ needs and their perceptions
of different law firms. As we come
weave around this core might include
– how decision-making structures
work, how often buyers change
suppliers and what “push” and “pull” out of recession, law firms looking
factors influence this, and what
kinds of marketing and business
development activity buyers are
to grow are advised to invest in this
exposed to and what has most impact. important business activity”
How to do it?
As noted above, the research must be
representative in order to provide you with a reliable set business and marketing plans on fact rather than gut feel or
of results. This means that any method of data collection anecdote.
that would potentially skew the findings should be It is quite possible that while some of the results
avoided – potential clients who don’t know much about confirm what you already suspected to be the case, others
you (yet) are as important here as existing contacts, so may run counter to internal beliefs regarding your firm’s
an online survey that some recipients would have no brand position and/or your clients’ priorities.
interest in and see no value in completing will not be If the research has been done properly, then the
robust. findings will reflect the reality of what the market is
Equally, you will not be able to measure thinking, and should be accepted as such.
awareness and perception levels accurately if It can be helpful to get buy-in from key
your name is connected to the approach up internal stakeholders like the managing
front. partner (who will be responsible for acting
An independent telephone survey will on the results afterwards) from the start,
often produce the most reliable results, to ensure that they are in a position to
introduced anonymously (your identity take ownership of the outcomes.
as the research sponsor can be revealed You should also consider sharing edited
towards the end of the interview, at which highlights of the research with existing and
point more detailed perceptions of your potential clients, as part of your ongoing marketing
strengths and weaknesses specifically can be explored). activity. The study’s respondents will already have been
With firms looking to save money, there has been a tendency promised such a document as an incentive to them taking
among law firms to take market research projects in-house. part in the research.
This may work in relation to gathering, say, client satisfaction The fact that you have been prepared to invest in finding
feedback, especially if the interviewer is somebody from the out what the market thinks and needs, and to take business
firm not involved in the day-to-day provision of services to decisions on the back of this, will carry its own PR value.
the client. However, for this sort of market assessment survey
where you are trying to gather feedback on your competitors, Wake-up call
and often from non-clients, an in-house approach will not In all other industries, commissioning market research to
work. understand how an organisation is positioned in its key
Decision-makers will not be prepared to divulge this markets is recognised by management as essential.
sensitive information without having the “buffer” of an The legal sector is slowly waking up to the competitive
independent market research house involved and their benefits of having deep and accurate insights into clients’
anonymity protected. needs and their perceptions of different law firms.
As we come out of recession, law firms looking to grow are
What to do with it? advised to invest in this important business activity.
The results from a market assessment study should be used to
map out where you currently are, where you want to be, and Kevin Wheeler has been advising law firms on all aspects of marketing
what needs to be done to get there. and business development for 16 years both in-house as a marketing
Taking a systematic approach like this to understanding director and now as a consultant. He can be contacted at kevin.wheeler@
your competitive position will enable you to base your wheelerassociates.co.uk
February 2011 LawBusinessReview.co.uk 11