For more than 20 years leading up to the onset of the Great Recession in 2008, law firms enjoyed a perfect storm of growing demand, and the pricing power that went with it. Since that global economic reset, legal service has been challenged by the kind of fierce competition that corporate clients have long faced.
In an ideal world, your firm sells a unique product, and there are few or no other players in the market. Then, your pricing power is likely to be substantial. As a lawyer, you are the firm’s product. How unique are you?
If you identify yourself as a “litigator,” “Employment lawyer,” or any of the other typical legal service labels, you forfeit any chance at uniqueness. Here’s an example:
1.3m US lawyers
75% private practice = 975,000
35% litigators = 340,000
Even if you limit the competition to BigLaw (250+ lawyers):
1.3m US lawyers
16% in Biglaw = 208,000
35% litigators = 72,800
Swamped in a Red Ocean of competitors
You’re one of 73 thousand litigators. This is what the authors of Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant meant by competing in a Red Ocean, where cutthroat competition, fighting over a greater share of limited demand, turns the water red.
A Blue Ocean is a market where there is no competition or much less competition. It means searching for an emerging problem with which very few lawyers associate, and for which the impact is so significant that solutions for it have no pricing pressure.
Relatively unexplored and untainted by competition, blue oceans are vast, deep and powerful in terms of opportunity and growth. You’re better off searching for ways to gain "uncontested market space" rather than competing with similar firms and lawyers.
"Our study shows that blue ocean strategy is particularly needed when supply exceeds demand in a market," Blue Ocean co-author W. Chan Kim explained in an article on Forbes. "This situation is applying to more and more industries today and will be even more prevalent in the future." It absolutely applies to legal service.
"The lesson here is that the best defense is offense, and the best offense…is to make a shift and create your own blue ocean. Imitation is not the path to success, especially in the overcrowded industries most companies today confront."
The lawyer version of a Blue Ocean
Unlike the examples shown in the book, you won’t be creating an entirely new product or industry. Your blue ocean consists of the emerging problems that your clients and prospects will face unless they’re outliers.
In law, you’re the product, and you can reinvent yourself by associating yourself with emerging problems. At right is a sampling from some of the largest US industries to stimulate your thinking
If you’re unfamiliar with these issues in your client’s industry, resolve now to get better educated about what will influence their future.
(Remember that the Challenger is the most effective selling style, and if you’re to apply those successful principles you’ll have to know their business as well as, and preferably better than, they do.)
How do I exploit my Blue Ocean?
Companies exploit Blue Ocean strategy by creating temporary monopolies, where competition is not as harsh as in more mature businesses.
For lawyers, thought leadership creates the perception of unique insight that’s hard to come by. In the right client and project combination, thought leaders have a competitive advantage over at least 80 percent of other firms in the same industry. Given how few lawyers will invest the time and put forth the effort to do this in a sustained way, it’s fair to assume that you could enjoy an even greater competitive advantage over them.
Being a thought leader leads to a unique selling proposition that stands out. Clients and other industry stakeholders associate your brand with visionary thinking and leading edge knowledge. Buyers can’t help but wonder why the firms and lawyers they’ve been using aren’t teeing up progressive thinking like yours. That’s the weakness that can open up an opportunity for you to begin owning the client’s future, ultimately leaving the competitor trapped in the client’s past, facing the price pressure you’ve escaped.