A recently published study looked at competitive intelligence (CI) - that is “knowledge and foreknowledge of the competitive environment refined to the point that is can be used in making a business decision” - to determine just how often law firms use CI in making decisions. The study was primarily focused on large firms with a mean size of 255 lawyers and a median of 115.

Competitive intelligence goes back to Michael Porter’s strategy models and looks at things like what clients want, what competitors are doing, trends in the legal industry, government regulations, opportunities and threats in the market place, and possible substitutes for your services - basically anything that might have some influence over how well your firm does.

It’s not enough to have a hunch about something or make a decision based on one client’s opinion. To make an informed decision, you need data. So researchers looked at things like client and prospective client profiles, client surveys, feasibility studies, branding research, and financial analysis.

What they found doesn’t surprise me much. Law firms (and these are the big guys!) just don’t spend a lot of time collecting and analyzing data. According to the study’s results, 77% of law firms do use competitive intelligence but the majority are only doing piecemeal. They may pick up bits and pieces of data through news sources or do some type of customer assessment, but they’re not focused on the bigger picture.

As the study points out,

law firms commonly undertake new lines of business and practice areas for all the wrong reasons - such as a client asking the firm to open an office in Cincinnati; because a lawyer wants to retire in Aspen, Boca Raton, Palm Beach, etc; or because everyone else seems to be opening offices in Moscow.

In effect, this is simply reactive information, not forward-looking intelligence. It’s a ‘fetch-it’ information mentality that will not advance a firm’s strategy and is not the hallmark of successful intelligence efforts in companies around the world outside the legal industry.

When done well, CI can support this process by determining:
- The extent of demand for the new service
- How that demand is being met today
- How satisfied buyers are with the current providers
- How credible the firm is perceived to be in the new area

The study was conducted by Mark Greene (O’Melveny & Myers LLP) and Leonard Fuld (Fuld & Company) and sponsored by LexisNexis Martindale-Hubbell and The Legal Marketing Association. Download your free copy here.

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