Evolution of professional services marketing

In connection to a Legal Innovation group discussion regarding the new legal marketplace where technology is reshaping the practice, I received some truly insightful comments by Bruce W. Marcus on the history of professional services marketing: “The Bates decision in 1977 opened the profession to not just marketing, but to the then unfamiliar world of competition. The ability to compete is responsible for the substantial changes in law and accounting firm management. Technology entered the picture in the mid-80s, by which time the changes had begun. Technology has subsequently served to aid competition and productivity. The past is the guide to the future, not just technology.”

The last sentence deserves some extra thought: “The past is the guide to the future, not just technology.” Wonderfully put, isn’t it?

Bruce W. Marcus also generously provided me with a copy of his new book “Professional Services Marketing 3.0”, which I have very much enjoyed reading during the Christmas holidays. In this insightful book Bruce W. Marcus describes the evolutionary process from the U.S. Supreme Court 1977 decision in Bates v. State Bar of Arizona and the current prohibitions on outright marketing activities (Marketing 1.0) to the new era where the profession began to learn how to market firms (Marketing 2.0). But it also uses the past as a guide to the future, and describes the new paradigm in professional services marketing, and how it is changing the nature of professional firm practice (Marketing 3.0). The book provides not only an expansive description about these eras and the professional services marketing development, it also serves predictions on the future on the basis of Bruce W. Marcus’s vast experience, as well as ideas and suggestions for marketing strategies and finding different approaches for positioning. It contains a vivid and comprehensive description of how the professionals began to learn to compete by using the tools of marketing and how this lead to the nature of the firms beginning to change, with a shift from the traditionally practice-driven firms to the client-driven firms with focus on the value of the services to the client. We now also see new kinds of firms developed with a clear focus to improve client service and productivity by the use of innovative technology and new attitudes by the professionals. As Bruce W. Marcus puts it in his preface: “That’s what this book is about – how to learn to swim to shore in a churning and turbulent sea of evolution and change. How to recognize and participate profitably in the incoming tide. How to use your own resources to survive and thrive when your competitors are drowning in a sea of despair. How to find and sow the seeds of opportunity in the midst of crisis. How to survive as the future unfolds.”

In this RainToday.com’s Podcast interview you can listen to Bruce W. Marcus and learn more about the evolution of the professional services marketing, how it advanced as a result of the Internet and how a client-driven approach drives the success of firms these days.

An interesting question, going back to the discussion on technology before, is the relationship between new innovative technology and the ability to compete, in regard to the current changes in the practice of law. In connection to this discussion, Bruce W. Marcus provided these insightful remarks: “It occurs to me that a vast number of law and accounting firm marketers working today are all substantially post-Bates, which is, I think, why so many believe that the substantial changes in the practice of law seems to stem from technology alone, rather than from the ability to compete where that ability hadn’t existed before. This is not just a fine debating point – it puts the focus on technology, which changes too rapidly to predict with any accuracy. While technology plays a strong role in change, this focus makes it difficult to project future trends with any degree of accuracy. The ability to predict trends is, I believe, essential to planning.” […] “One of the first and most significant manifestations of change has been value billing, which, in its earliest iterations, had nothing to do with technology. The thinking on it was first put forward by the brilliant Ron Baker. While not yet universal, we saw the beginnings of it well before the beginning of the technology revolution in the mid 80s. Another phenomenon that began pre-technology was the growing client sophistication, which has ultimately been enhanced by technology. Technology is a tool that accelerated, but didn’t initiate, the evolution of the law and accounting firms. But as the electric saw facilitated carpentry, it didn’t invent sawing.”

It is always hard to predict the future, but one thing we know for sure is that change is inevitable. When clients seek change and a competitor takes advantage of technology to provide new innovative services in response to that, other firms will react and initiate a change of the legal marketplace. Innovation of law firms have accelerated during the last years and will most likely continue to accelerate in ways not possible to predict, especially when it comes to changes driven by new technology, which are often complex and unpredictable to make assumptions about. The innovative trend is also due to the dynamic times we live in and the economic realities law firms are facing, where the need for competitive intelligence by understanding what your competitor is doing and grasping the trends of change into improving, not imitating, is the key to survival. Even though technology may not have been the sole reason for the changes in law firm practices, it has certainly provided new ways of meeting the client’s demands and thereby providing such competitive advantages that drive changing market mechanisms.

At VQ Knowledge and Strategy Forum, which we arranged this fall, Professor Richard Susskind talked about this and made some clear predictions for the changing legal profession and that the future for lawyers could be either prosperous or disastrous – lawyers who are unwilling to change will struggle to survive, but lawyers who respond to the changes and embrace technology and new ways of providing legal services will find opportunities for new and exciting lines of business. Richard Susskind believes that the challenge to deliver more for less – clients are under pressure to reduce internal headcount and external spend, but also require more legal and compliance work involving greater risk – will define the next decade for legal services and that law firms can meet this challenge with strategies involving the innovative use of technology and a new way of identifying the real needs of the clients. Richard Susskind emphasised that law firms have to change their structure and to rethink their business completely from pricing differently to working differently. The golden age of profitability for law firms have passed. Leaders who are innovative will still be prosperous, but followers and late adapters will be dragged down to cost competing and struggle for survival.

Remember though, that “the past is the guide to the future, not just technology and while the technology is not the answer itself, it is an accelerator of the change process that started already in the 70’s with the ability to compete, as described in Bruce W. Marcus book. A recommended article that combines these two perspective is Jordan Furlong’s article from last year “How to compete on price” on why lawyers should stop following the old advice not to compete on price and instead learn how to do it in a way that sustains the business. “You can’t control what the market will pay you; but you can control, to a large extent, what you spend to compete in that market. If you ever expect to seriously offer fixed fees to the marketplace, you absolutely must start by competing on cost. Competing on price might be a necessary evil, but competing on cost can be the key to your success.”

Here is an extract from Professional Services Marketing 3.0 with Bruce W. Marcus’s explanation on the new paradigm in professional services marketing, and how it is changing the nature of professional firm practice.