Law Firm Competitive Intelligence

FY 2010 Update: 52 US Law Firms Report Financial Performance

2011-03-14T12:37:00.005-05:00

Below are some preliminary basic 2010 financial performance data for 52 large US law firms, as their results have been reported in the legal and mainstream press. The firms are ordered by profits per equity partner (highest to lowest).

The American Lawyer will publish the final 2010 performance data for the Am Law 100 on May 1 and for the Am Law 200 on June 1. Before then, I will try to revise and publish here at least once more the preliminary results for as many firms as I can locate.

As always, if you find any errors in the table below or would like to add a firm’s performance data, please let me know by commenting here or at agibson@annleegibson.com.

Final point -- I realize the following table looks fuzzy, but if you click on it you will see a clearer version.

FY 2010 U.S. Law Firm Financial Performances ... Trickling In

2011-03-04T14:28:00.012-06:00

Like many law firm watchers, I’ve been gathering information about US law firms’ financial results from reports in the legal press. To date, I’ve collected the following info about gross firm revenue and profits per equity partner and am sharing it here with readers. The firms are ordered by profits per equity partner (highest to lowest).

If you find any errors in the table below or would like to add a firm’s performance data, please let me know by commenting here or at agibson@annleegibson.com. I will continue to review press reports and update these results from time to time.

Intelligence blind spots, failures and excuses

2011-02-25T09:02:00.004-06:00

Twelve days ago at this blog, I said the U.S. intelligence community’s failure to predict the pan-Arab democratic rebellion was evidence of our common, human reluctance to recognize tipping points.

The ongoing public discussion about these events invites us to consider also how blind spots and cognitive biases can lead to intelligence failures in any field, including law firm intelligence work.

Today’s New York Times offers a panel of six Sunday morning intelligence quarterbacks who trot out some reasons why the U.S. intelligence community failed to predict the pan-Arab democratic movement and its recent tipping point. Their reasons for this failure and their other comments about intelligence blind spots include some I find useful to ponder about my own work in law firm CI and a few I find merely comical:

1. The intelligence community has failed to appreciate the power of social networking.

2. The intelligence community roots out analysts with good instincts.

3. The intelligence community punishes and silences those who say the unpopular.

4. Specialists find it difficult to see broader trends.

5. Immediate challenges crowd out long-range thinking.

6. Intelligence based on inputs from those in the seat of power will fail to appreciate the power of those forces that oppose seated power.

7. Some changes, no matter how large, do not require a new or immediate response.

8. It is unwise to focus only on events in those spaces where we have invested the most; events in other spaces may affect us as much or more so.

9. A single, dramatic event can quickly convert widespread, dormant awareness into widespread, sympathetic action.

10. Foreseeing events is much easier than predicting when those events will happen.

11. Intelligence never has and cannot forecast revolutions.

12. The President did not tell the intelligence community to focus on the possibility of a pan-Arab rebellion.

Yes, intelligence work is difficult. But the New York Times panelists do little more than describe some of the many blind spots that all high-end intelligence units are expected to understand and navigate. In fact, blind spots are an old and dangerous enemy to intelligence workers.

Richards (Dick) Heuer, the legendary CIA analyst, described in the now out-of-print Psychology of Intelligence several dozen biases that afflict intelligence analysts. This book’s central tenet is that “people tend to see what they expect to see, and new information is typically assimilated to existing beliefs.” Ibid. p.153.

Although Heuer learned his craft within the CIA, the insights he shares in his 1999 classic are universally relevant to business intelligence workers, including those of us who work in and for law firms. We law firm intelligence workers don’t have to predict political revolutions. But we are expected to identify and forecast many forces and movements that will affect the prospects of individual clients, client industries, labor forces, technologies, and other factors that, in turn, will affect our firms’ own prospects.

Although our blinders and biases cannot excuse intelligence failures, when failures do occur we must try to appreciate how our blinders and biases kept us from doing a better job, to reduce their negative impact in future assignments.

We can also learn from others’ intelligence successes and failures. Stay tuned.

This is not what I meant by law firm competitive intelligence

2011-02-20T12:04:00.007-06:00

Prologue

I have long considered, lectured and written about law firm competitive intelligence from the perspective of CI prepared and used in service to the firm’s goals as a business entity. However, CI can also be conducted by law firms and its vendors in service to its clients’ goals. Today’s post addresses that use of CI by law firms.

This post also addresses the counterintelligence challenges of a post-Wikileaks world, where law firms and their vendors can be targeted by disgruntled employees, hackers and social engineers. Today’s professional culture encourages us to communicate via email, texting and social media, which are so familiar we forget they are susceptible to revelation – on purpose and through carelessness, through both legal and illegal means. Even sophisticated people ignore these dangers, as today’s post illustrates.

The events described below read like they were lifted from Stieg Larson’s “The Girl with the Dragon Tattoo” novel series. However, they were all reported during the past two weeks by the Financial Times, The New York Times, The Washington Post, The Observer, American Lawyer Media, Wired, Salon and dozens of other publications, blogs, online chat rooms and message boards.

I apologize if I have failed to insert the word “allegedly” everywhere it should appear in the following severely summarized account. Therefore, I hereby stipulate it has been alleged that …

What has been reported?

Last fall Hunton & Williams invited three data security companies (HBGary Federal, Palantir Technologies and Berico Technologies) to work with the firm to prepare a joint new business pitch for the U.S. Chamber of Commerce, a firm client. This pitch related to some of the Chamber’s political initiatives and investigations and handling of its antagonists.

H&W also invited the same three security companies to help prepare a second new business pitch for Bank of America, also a firm client. This pitch related to a BoA internal investigation into documents that Wikileaks had obtained, possibly from one or more BoA insiders, and threatened to publish on the Internet.

As these events were unfolding, HBGary Federal’s CEO, Aaron Barr, wanted to strengthen his street cred to support the H&W and other business development efforts HBGary Federal was involved in.

Barr was already hanging out online with members of Anonymous, a highly secretive, loose collective of activists and hackers. He believed he could elevate his sleuthing reputation by analyzing information on internet chat logs, Facebook, Twitter and elsewhere to identify Anonymous’s secretive leaders and key players. Barr planned to describe his unmasking methodology in a presentation at a February 2011 security conference and was able to publicize this presentation in a news story published on February 4, 2011, in the Financial Times.

For a day or so after the February 4 Financial Times story came out, Barr and Anonymous traded online insults. Anonymous then retaliated by hitting HBGary Federal’s corporate network, eventually taking down the company’s site, extracting 70,000 emails and publishing them online. To insult Barr further, Anonymous said their takedown team included a 16-year-old girl who had social engineered an HBGary Federal company IT admin into revealing another HBGary Federal admin’s logins and passwords.

Among the thousands of HBGary Federal emails that Anonymous published were those emails HBGary Federal had exchanged with H&W lawyers while the law firm and three data security companies were preparing the Chamber of Commerce and BoA pitches. Anonymous also uploaded the PowerPoint presentations the three security companies had prepared in consultation with H&W for use prior to or during H&W’s pitches.

Those PowerPoint files described the services the three companies would perform, including investigations and possible actions to be taken against lobbying groups, union employees, journalists and others whose allegiances and interests were counter to those of H&W’s clients. Those actions included developing fake personas, preparing and leaking fake information to H&W clients’ adversaries to discredit them, and discouraging commentary by journalists who are “... established professionals that have a liberal bent, but ultimately most of them if pushed will choose professional preservation over cause, such is the mentality of most business professionals.”

Where do things stand now?

1. HBGary Federal’s web site is still down.

2. Palantir and Berico have apologized for their involvement in these events and severed all ties with HBGary Federal. Palantir also suspended the 26-year-old engineer who worked on the PowerPoint presentations.

3. The Chamber of Commerce denied hiring any of the three companies or H&W.

4. Bank of America said they have never seen the presentation described in the emails, have never evaluated it, and have no interest in it.

5. H&W has refused to comment.

6. Some of those named as the Chamber’s adversaries in the hacked emails and PowerPoint files have announced their intention to file ethics charges next week with the DC bar association against three of H&W’s lawyers.

Lessons learned?

Whether the activities allegedly contemplated in the HBGary Federal hacked emails and PowerPoint files were competitive intelligence or corporate espionage or worse, they violated the Society of Competitive Intelligence Professionals’ Code of Ethics. As I have said many times before, including here, law firm competitive intelligence workers should all read that brief code of ethics, take its seven elements to heart and agree to abide by it. I now recommend that lawyers do so, too.

These events also have sobering implications for law firms’ own network security challenges. If a data security firm can be hacked and all its emails and attachments posted online, how well would most law firm networks stand up to such an assault? And if the firm’s network were breached in this way, what would be the costs to the firm and its clients and prospects? This law firm counterintelligence challenge requires not only technological safeguards, but also full recognition that lawyers and law firm employees are just as susceptible as anyone else to social engineering.

I have no doubt that everyone associated with this dog’s breakfast wishes it had never happened. Some blame the mess on security carelessness. Others see the leaked emails and PowerPoint files as evidence of ethical lapses and possibly criminal intent.

Optimistically, I view these events as an opportunity to remind ourselves, once again, of the ethical limits of competitive intelligence activities. Above all professions and industries, lawyers and law firms cannot be ignorant of or ignore these ethical limits.

Our Reluctance to Recognize Tipping Points

2011-02-14T14:11:00.005-06:00

“The past is the best predictor of the future” is one of humankind’s most reliable decision-making aids. It’s a highly useful heuristic, except when it collides with sudden changes in the status quo – what we popularly call tipping points and which can be biological, political, cultural, technological or emotional.

Today’s New York Times offers a compelling review of the two-year pan-Arab youth movement culminating in the 18-day revolution that unseated the 30-year reign of Egyptian President Hosni Mubarak. The revolution’s outcome was a tipping point that formal intelligence channels didn’t predict. “…[T]he American intelligence community and Israel’s intelligence services had estimated that the risk to President Mubarak was low – less than 20 percent ….” But according to the Times, President Obama interpreted the information differently and acted in accordance with his own analysis of events.

Nothing goes up forever, and nothing goes down forever. A straight, uninterrupted line in any direction will fail to predict the future. The simple fact that a condition continues and continues will eventually produce new events that lead to a new condition which produces new events that … you get it.

Which leaves intelligence workers with the usual questions: What are the cycles and patterns of change? When will the tipping points happen? How and where and when can we position ourselves to benefit most from events we can never completely control?

These are also some of the most compelling questions for decision makers.

The New York Times vs. Assange

2011-01-30T08:14:00.008-06:00

The New York Times's weekend magazine article, “Dealing with Assange and the Wikileaks Secrets,” by Bill Keller, The Times’s executive editor, is a delicious, dishy apologia for the newspaper's handling of Wikileaks information released last year about the wars in Iraq/Afghanistan and US diplomatic cables.

It is also a fascinating take (from one point of view, as all takes are) on how journalism continues to be as relevant as ever – in fact, even more necessary – to interpret the huge amount of information now available via the Internet in today’s tell-all culture.

Another observation I offer about journalism relates to its threatened future funding. I was so entertained by the Keller article that I purchased for $5.99 The Times’s e-book: Open Secrets -- WikiLeaks, War and American Diplomacy: Complete and Expanded Coverage from The New York Times.

My conclusions: Content is still king. Analyzed information (intelligence) is more valuable than information. Dishing always outdraws boring facts.

Two confessions

2011-01-28T11:06:00.004-06:00

First confession -- My name is Ann Lee Gibson, and I am an imperfect and intermittent blogger. Work, family, life, sleep and fun all conspire to keep me from being a daily, weekly or even monthly blogger. It ain’t ever gonna happen, and I’ve now accepted it.

Second confession -- I wanted this blog to be only about law firm competitive intelligence, hence the blog title. However, sometimes I also want to talk or vent about other law firm marketing topics that are only peripherally related to law firm CI. Therefore, I’ve decided that from now on I will unleash myself here on any law firm marketing topic I find I’m obsessing about, that has raised my blood pressure, or that tickles my funny bone.

Live with it.

And now, on to the next post.

Be more precise about uncertainty

2010-11-01T12:54:00.011-05:00

Note: The following is the latest in the current blog series about analysis and CI. It is excerpted from my new book, Competitive Intelligence: Improving Law Firm Strategy and Decision Making. You can learn more about the book and purchase it here.

The CI discipline has spawned some pithy maxims, one of which says intelligence does not predict the future. Another one tells us that intelligence need not survey every tree in the competitive forest to understand how the forces within that forest may affect our ability to perform there.

Heeding the spirit of these two maxims, intelligence analysts develop high tolerance for ambiguity and uncertainty. Consequently, intelligence reports tend to reflect these ambiguous environments by the inclusion of qualifier terms like certainly, almost certainly, highly likely, good chance, probable, likely, improbable, unlikely, highly unlikely, may, maybe, most, few, some, we doubt, we are confident, we believe, etc.

Although these qualifiers reflect analysts' inability to make crystal ball predictions, unnecessary confusion develops when analysts and decision makers fail to agree -- sometimes without realizing they disagree -- over the meaning of terms like "probable." One often-cited study about the interpretation of intelligence revealed that 23 decision makers interpreted the likelihood of a "probable" event's occurrence ranging from 25% to 91% (by Sherman Kent, "Words of Estimated Probability," in Donald P. Steury, ed., Sherman Kent and the Board of National Estimates: Collected Essays, published by the CIA, Center for the Study of Intelligence, 1994).

Other common qualifiers found in intelligence reports are phrases having to do with time, e.g., soon, often, usually, seldom, infrequent, at this time. An analyst who knows what she or he means by these phrases should replace them with more specific judgments, e.g., during 2011, before the economy turns around, by 2Q 2012. More specific opinions like these improve the intelligence and its usefulness.

Analysts must offer conclusions that are as precise as but no more precise than their analyses will permit. Therefore, a good way to further reduce uncertainty is to highlight all the qualifiers in a nearly final intelligence report. Then ask your colleagues with fresh eyes (those who did not work on the report) to tell you what these terms mean to them in more specific terms. If you learn from this exercise that the intelligence they received was not the intelligence you thought you had provided, edit your report accordingly.

Another opportunity to reduce uncertainty in intelligence reports appears as you prepare your findings to decision makers. Anticipate their most likely questions, but do not wait for the questions to be asked. Include the questions and your best answers in the report itself. By such simple means, intelligence reports can become more meaningful and useful to law firm CI clients.

CI insights are actionable, relevant, external

2010-10-29T07:56:00.003-05:00

Note: The following post is taken from my new book, Competitive Intelligence: Improving Law Firm Strategy and Decision Making. You can learn more about the book here.

If you have spent any time studying or developing CI, you will have noticed that experienced CI practitioners spend more time discussing analysis than any other component of the intelligence cycle.

While all steps of the cycle are equally important and mutually dependent, analysis turns what all firms have -- information -- into actionable insights that are uniquely relevant to your firm. If you follow all other steps in the intelligence cycle, but skip the analysis, the best your firm can hope for is to be on par with the majority of its competitors, rather than enjoying a competitive advantage.

So, what do we mean by analysis? Simply put, CI analysis is the process of drawing actionable, relevant insights from external information. All the adjectives in this definition are instructive, and you should keep them in mind as you plan and do your analysis.

Actionable - Information on its own is benign and only becomes actionable through analysis. For example, a client dossier or competitor profile that doesn't identify the opportunity for your firm to act is just static data, not intelligence. In addition, "actionable" means "forward-looking." If your firm is going to take actions in the future, your analysis has to provide insights about the future environment, e.g., new cross-selling opportunities, an emerging overseas market or the strategic direction of a potential merger partner.

It must also be said that the same information can be converted, through analysis, into different intelligence for two different firms in different circumstances that are evaluating different decision options.

Relevant - "Relevance" is closely related to "actionable" and means that as you plan and deliver your intelligence you understand the context in which the intelligence will be used, including which actions your firm can conceivably take. For instance, the identification of a potential new overseas location would be neither relevant nor actionable if your firm has just had its worst year on record, has no available funds for expansion and is losing key partners. Likewise, an analysis of new opportunities in commercial real estate work is unlikely to be either relevant to your firm's needs or actionable if the firm has just declared growth of its litigation practice to be the firm's top priority.

Obviously, the information you gather and analyze must be brightly relevant to the decisions at hand, not merely easy to obtain. Too often law firm CI practitioners rely overmuch on secondary information developed by information aggregators who sell the same information to all competitors. Too seldom, firms seek out primary sources with information your competitors do not yet have. For example, primary sources (clients, industry experts and others) can provide attitudinal opinion information (about changing needs, satisfaction, loyalty) and behavioral information (about hiring and spending behaviors, attendance, etc.). You can obtain primary information through interviews or by simply observing the marketplace.

Relevance also applies to timing the delivery of your intelligence. For example, if you were to provide one of your firm's partners with an analysis of potential cross-selling opportunities at Client X one week after that partner had pitched a different set of services to Client X, you are unlikely to get much of a response from the partner, at least not a positive one.

External - While you certainly must understand the internal dynamics of your firm to be able to provide relevant intelligence, your analysis should focus only on factors outside the firm. Law firms are notoriously introspective, so CI should be the objective voice of the external environment inside your firm. More to the point, a law firm's opportunities only take place outside the firm; inside the firm there are only costs.

New law firm CI book published

2010-10-27T08:38:00.005-05:00

As many of you know, I've recently written a book about law firm CI. It has now been published in the UK by the Ark Group / Managing Partner magazine.

My book is titled Competitive Intelligence: Improving Law Firm Strategy and Decision Making. You can learn more about the book and download sample sections here. You can also purchase it here.

This book is aimed at a broad audience -- partners and senior managers of law firms, CI practitioners and othes inside or outside law firms who want to understand how to apply CI in a law firm setting.

It takes a highly practical look at how CI is applied in firms. It also addresses how CI in the legal industry is similar to and distinct from CI in other industries, the challenges peculiar to law firms, typical law firm key intelligence topics and assignments, and more.

This report will surprise some readers when it describes how some firms are already executing the full range of CI activities as that discipline is practiced in the corporate world. As with other business disciplines once considered "not for law firms," the full spectrum of CI activities, legally and ethically executed, is rapidly being accepted by more law firm leaders.

The greatest demand in law firm CI these days is for sophisticated analysts with strong legal industry knowledge, business savvy and broad analytical skills. Without their eventual contributions, CI in law firms will not advance beyond information gathering, which, although useful, cannot offer decision makers the fuller benefits of actionable intelligence.

Whether your firm already has informal CI in-house capabilities and wants to upgrade them, wishes to engage the services of external CI consultants or hopes to learn how to utilize its existing CI resources to become more competitive, this book will help you decide where you should start.

Please check it out.

Social psychology and alpha lawyers

2010-10-25T16:33:00.006-05:00

The ABA Journal today blogged about a recently published social psychology experiment that found the apparent dominance / maturity of law firms' managing partners' faces (as rated by college students, the usual social science lab rats) correlated slightly (14%) with the managing partners' respective firms' profitability levels.

For a limited time you can download the study report here.

Even though I am a social scientist myself, I have a hard time interpreting this not-yet-replicated study as anything other than entertaining silliness. However, given that neither lawyers nor marketers are renowned for their statistical savvy (otherwise, they'd have become accountants and physicists), I'm a little worried about what some might do with this new-found information.

Below is an animated movie (created with my new favorite online toy, xtranormal) to illustrate the dangers of leaping into action after reading a headline that says, "Recent research finds that ...."

Say what?

2010-10-25T08:42:00.005-05:00

I'm blogging again, thanks to Russell Lawson who emailed me and said, "Just do it." The following is the first in a series of posts on the topic of analysis -- that much too mysterious process that converts information into intelligence.

Last week, as often happens, I was on an airplane. I was seated next to a nice man, an intelligent man.

Early in the flight during light conversation, he proffered the news that young people are spending too much time looking at computer screens instead of books and that their brains are being rewired in new ways. Studies were proving this to be true, he said.

"Oh," I said, "What do the studies say is happening to their brains?"

"I don't know," he responded, "but it can't be good."

Several hours later, he offered me more information. "I read an article recently that said 80% of Americans did not read a single book last year."

"Wow," I said. "How many Americans used to read one or more books a year?"

He frowned and said, "I don't know."

The above anecdote suggests an autumn meditation for law firm CI practitioners and their clients: What would improve your own firm's decision making -- more information or more analysis?

CI Pro Interview with Emily C. Rushing

2009-04-22T07:26:00.003-05:00

Name: Emily C. Rushing
Title: Competitive Intelligence Specialist
Firm: Haynes and Boone, LLP
Since: September 2008
Profiles: You can find Emily at LinkedIn and Twitter.

Q: What is your job description at Haynes and Boone?

A: My role is primarily focused on developing and reporting strategic business and competitive intelligence. I support the Business Development and Marketing Departments, the CMO, the firm’s attorneys, and, most importantly, firm management.

Q: Who are your typical CI clients at Haynes and Boone?

A: My clients range from associates to the Managing Partner to marketing staff. My primary clients are the Business Development Managers who coordinate with me on behalf of their respective practice groups.

Q: What are three common KITs you’re often asked to address?

A: Topics for our intelligence frequently include: 1) profiling competitors’ practice areas and clients, 2) identifying business development opportunities for the firm among existing clients and developing strategic targeting programs, and 3) developing intelligence in preparation for business development meetings with existing or potential clients.

Q: How is the intelligence function organized at your firm? To whom do you report?

A: I am the firm’s only CI professional. I am directly supervised by the Director of Business Development, indirectly supervised by the CMO, and my role is situated within the Marketing department.

Q: What experience or training prepared you most for the CI work you do now at Haynes and Boone?

A: My years as a research specialist with King & Spalding were good training for the CI work I do for my current firm. I also developed technical skills with various softwares during my time working as a consultant and freelance technical librarian.

Q: What formal CI training have you had?

A: Very little CI-specific training. I studied social sciences and statistics in college and went on to achieve a Juris Doctorate and Master’s of Library and Information Sciences. These are highly analytical areas of study, and I feel that the training I received in those programs were wonderful preparation for my career in CI.

Q: Where do you go for ongoing CI training and mentoring?

A: Since accepting this position, I have attended webinars and tried to expose myself to the basic literature. I also have been mentored by colleagues via professional organizations like SCIP and SLA’s CI division, for which I am very grateful. From librarian to CI professional isn’t as jarring a transition as lawyer to librarian, but has required some adaptation.

Q: What specific adaptations have you found necessary in your transition from librarian to CI professional?

A: The most helpful adaptation I have made has been to change my patron/client focus from transaction-oriented (retrieve article, locate book on shelf, instruct on research techniques, build bibliography, perform catalog search) to results-oriented (find and understand the client, prepare for the meeting, get the business, maximize the relationship). My new, CI perspective looks less at the question "What is the patron asking me to give them?" or even "What do we need to know?" than it looks to the question "What should we do and how can intelligence help us make a better decision?" Once I really understood my present role in terms of the latter phrase, rather than either of the first two phrases, CI made sense to me and I was able to more smoothly transition from a research practice to an intelligence practice.

Q: What do law firms most often misunderstand about CI? What should they know about CI that you’re afraid is often misunderstood?

A: There is some misunderstanding about the process of developing KITs and CI. It is a two-way street, and a successful CI program requires that management and decision-makers share information with the CI professional. For CI to simply generate a report on a set of data or research into a particular topic is not a successful use of CI. CI must be actionable and must help inform management’s decisions, but that requires that management perceive CI as an integral part of the decision-making process.

Law Firm Economic Cycles Part IV

2009-04-20T09:14:00.016-05:00

Here’s my fourth and final post in a series offering findings from analyses I performed last fall as my law firm clients were considering how best to respond to the economic downturn. Seven months later, some of my findings from last fall look like a big duh, although others still offer useful insights. (For more details and caveats about this series, read the past three posts at this blog.)

1. Many firms will return to a single equity partnership tier.

In the nineties, law firms created non-equity partnership tiers as a tactic to elevate their profits-per-partner performances. The number of non-equity partners in law firms grew in the 2000s, those ranks filled by reliable technicians who did good work and supplemented labor gaps unmet by the associate talent wars.

As a result, many firms now have expensive, middle-aged legal work forces with reduced appetite and aptitude to become equity partners. These non-equity partners supervise associates, a useful function, but one that has an unintended consequence of blocking mentoring of associates by partners who are business owners, a distinction I think is important. It’s interesting that law firm associates’ widespread and vocal dissatisfaction with their professional lot coincides with their greater insulation from equity partner mentoring.

Although few firms have yet announced taken they will action to eliminate completely their multiple partnership tiers, I have long heard firm leaders talk about their desires to return to a smaller, single equity partnership structure for a variety of reasons. Therefore, I view some of the late 2008 and early 2009 partner downsizings as not only housecleaning and paring of practices, by efforts to reduce these non-equity partnership tiers.

2. Legal marketing and business development functions will continue to evolve.

During the recession of 1990-91 and through the nineties, law firms began to engage marketers and marketing methods from other industries. This first wave of professional legal marketers focused on basic marketing services—promotional events, marketing communications, public relations, and branding. Marketing services have expanded over the years to include sales and sales support, decentralized marketing support for practice and industry groups, market research, in-house client feedback programs, and key client programs.

I predict that in the current downturn law firm marketing will undergo a second renaissance. Marketing contributions that were valued 15-20 years ago probably will not make a big difference this time around.

Going forward, competitive firms will double down with even more professional sales support and coaching, key account management, and much more sophisticated competitive intelligence functions. These skill sets will help firms to acquire, expand, and defend their best client relationships. These functions will also help firms add badly needed rigor to their business planning function. Strategy, long pooh-poohed by most firm leaders, is finally seen to be important at both practice group and firm-wide levels. During this global recession and the new-world recovery to follow, law firms now need the early-mover and better execution advantages these functions offer.

And with print journalism on its last legs, law firms’ traditional PR programs will have no choice but to embrace Web 2.0 tools and activities to support the firm’s and individual lawyers’ institutional and personal brands through digital promotion and virtual word of mouth.

Conclusion: Recessions Offer a Chance to Step Forward

Recessions offer opportunities for a law firm to emerge stronger than its competitors. Certainly, a law firm is obliged to do whatever it must to survive in the short term. But the greater challenge for law firm leaders and their advisors is to find and take those positions (invest in resources) that will take advantage of changes wrought by the recession and the eventual recovery. Firms that will be stronger after this recession are those that find and tap new opportunities at the intersection of otherwise disconnected areas of expertise, where change is happening that they can exploit. (USC business school professor Dick Rumelt describes this approach to successful strategy in an excellent McKinsey Quarterly interview.)

The changes this recession introduces to law firms are nearly limitless—energy and environmental changes, client industry changes, political changes, legislative and regulatory changes, dramatic changes in communications and news channels, as well as changes in the legal talent pool, law firm structures, fee arrangements, business processes, and legal technology.

Lessons from the 1990-91 recession tell us that fifteen to twenty years from now, at least a fifth of today’s “leading law firms” will no longer be around, having dissolved or been acquired by stronger firms. Many others will have fallen one or more quartiles in the rankings that matter most—firm revenue, revenue per lawyer, and profits per equity partner. But still others will have ascended dramatically, having done what firms like Latham, Orrick, Dechert, Goodwin Procter, and Quinn Emanuel did in the last fifteen years—finding and tapping new opportunities at the intersection of otherwise disconnected areas of expertise, where change is happening that they can exploit.

Law Firm Economic Cycles -- Part III

2009-04-16T21:11:00.013-05:00

This is my third post in a four-part series that offers findings from analyses I performed last fall as my law firm clients were considering how best to respond to the economic downturn. Seven months later, some of my findings from last fall look like a big duh, although others still offer useful insights. (For more details and caveats about this series, read the past two days’ posts.)

5. In this recession, many law firms will be dissolved or acquired by stronger firms.

I maintain a list of “weakest link” law firms—those that are nearing or have passed a tipping point in terms of falling lawyer headcount and net operating income (these two metrics seem to be as good or better indicators of potential law firm dissolution or fire-sale acquisition compared to more arcane metrics). Right now, my weakest links list contains the names of nearly a dozen US law firms among the Am Law 200, the dissolution or acquisition of which would improve the health of competing firms, in some cases dramatically.

As with earlier recessions, this one will drive some law firms to failure and weaken other firms that will fail after the recession ends. US regional markets that are particularly stressed include Atlanta, Boston, Ohio, and the San Francisco Bay Area. During and following this recession, we can also expect to see failures or acquisitions of three or four New York Am Law 100 and 200 firms.

Firms that grew rapidly in recent years, spending or borrowing heavily to fund their growth, will suffer extra pressures during this recession. Those pressures will be hardest to withstand at firms where large blocs of partners have been together only a short while.

These forecasts should not shock anyone. Of the Am Law 100 firms listed in reports describing 1989’s financial performances, twenty no longer exist. Eight were acquired, and twelve have dissolved (see Table 2 below).

Twenty 1989 Am Law 100 Firms That No Longer Exist

A. Eight Firms Were Acquired
1. Brown & Wood
2. Hale and Dorr
3. Hopkins & Sutter
4. McCutchen, Doyle, Brown & Enersen
5. Rogers & Wells
6. Rosenman & Colin
7. Shaw Pittman
8. Winthrop, Stimson, Putnam & Roberts

B. Twelve Firms Have Dissolved
9. Arter & Hadden
10. Brobeck, Phleger & Harrison
11. Coudert Brothers
12. Gaston & Snow
13. Graham & James
14. Heller Ehrman White & McAuliffe
15. Johnson & Swanson
16. Keck, Mahin & Cate
17. Mudge Rose Guthrie Alexander & Ferdon
18. Pettit & Martin
19. Shea & Gould
20. Thelen, Marrin, Johnson & Bridges

6. Stronger firms absorb failing firms’ best assets, producing even stronger firms.

As in the past, many lawyers in firms that will fail or falter in the next few years will remain in private practice. An acquired firm’s strongest assets (lawyers) with the best strategic fit will be retained and assimilated, or they will find even stronger new homes.

Newly acquired and unhappy groups and practices at unsteady firms will be fair game for poaching firms with the resources to invest in new talent.

Odds are also strong that a Magic Circle firm and a top-tier New York City firm will soon find more reasons to merge than to stay single. If I had more courage, I would name here those two firms I fantasize will tie the knot.

Coming soon:

Tomorrow’s post concludes this series and addresses coming changes in:

7. Law firm partnership tiers

8. Marketing and business development functions

Law Firm Economic Cycles -- Part II

2009-04-15T09:42:00.016-05:00

This post continues the serialization begun yesterday of findings from analyses I performed last fall as my law firm clients were considering how best to respond to the economic downturn. To help them, I parsed US law firm performance data, particularly those from 1989-1996 to identify precursors to and impacts of the 1990-91 recession on law firms’ financial performances.

As noted yesterday, I have long since shared the insights gleaned from my analyses and their early warning benefits with my own clients. Therefore, it’s now appropriate to share them with a larger audience. Which brings us to today's post.

3. Higher-end firms suffer longest from recessions.

Partners at firms with the highest-end practices should manage particularly downward their expectations of an early recovery. A severe recession’s impacts are generally felt longer by the most profitable law firms, which rely on a stream of complex, high-value deals and, therefore, must wait longer for that level of economic activity to reappear and stabilize.

Evidence of the long-lasting effects of severe global recessions on highest-end law firms is offered by their performances during the early 1990s. After 1989, seventeen of that year’s twenty most profitable US law firms failed to produce profits per partner (PPP) higher than their 1989 PPP during at least four of the seven following years.

Overall, the most profitable law firms suffer the longest recession impacts. For example, twelve Am Law 100 firms failed to produce higher PPP for all seven of the years following 1989; these firms included Cahill, Cravath, Davis Polk, Gibson Dunn, Kaye Scholer, O’Melveny, Paul Weiss, and Skadden. Eight more Am Law firms failed to exceed 1989 PPP for six of the following seven years; these firms included Kirkland, Latham, Milbank, Wachtell, and Willkie Farr.

4. Lower-end firms tolerate recessions better and recover from them faster.

The data also show that those firms that generally feel a deep recession’s impacts for the shortest time are less profitable firms with low billing rates and the lowest profits per partner. Even in depressed times, day-to-day legal work does not subside.

Note: The two findings described above are brightly demonstrated by the data in a chart (click here) that I simply was unable to figure out how to include here (I welcome any advice and help from readers about how to do this).

Law Firm Economic Cycles – Part I

2009-04-14T09:45:00.014-05:00

For the next few days I will be serializing here some findings from analyses I did last fall as my law firm clients were considering how best to respond to the economic downturn. To help them, I parsed US law firm performance data to identify precursors to and impacts of previous recessions on law firms’ financial performances since the late 1980s.

Because I have long since shared the insights gleaned from my analyses and their early warning benefits with my own clients, it’s now appropriate to share them with a larger audience. Seven months later, some of my findings from last fall look like a big duh, although others still offer useful insights. All the findings endorse the good advice offered in December 2008 by Bruce MacEwen at http://www.adamsmithesq.com/ that we all should “read fewer newspapers [and study] more history.”

Last fall, I found strong parallels between the current recession and the 1990-91 recession. I remember 1991 well because it was the year I first entered the legal marketing scene. At that time, I lived in California where the economy was suffering terribly from overextended and failing banks and S&Ls, tanking real estate prices, rising unemployment, high oil and gasoline prices, a US war, stock market losses, and plummeting consumer confidence. Therefore, one focus of my research last fall became: What happened to the legal services industry (specifically big law firms) during and after the 1990-91 recession that can help us appreciate how our industry will be affected by the current recession? Here’s some of what I found.

1. The highest increases in large law firm revenues presage recessions.

My review of all Am Law 100 performance data since the late 1980s shows that those years in which the Am Law 100 firms’ total revenue increased by the greatest percentage (compared to the previous year’s performance) were in each of the three years preceding the appearance of the three recessions since 1984. Those banner total revenue increases occurred in fiscal years 1989 (17.8%), 2000 (17.0%), and 2007 (13.6%).

Apparently, an economic tide that lifts law firm revenue so high cannot sustain itself. This pattern announces that a downturn is imminent, due to imbalances in the marketplaces that feed large law firms.

2. Recessions can hurt large law firm performances for a long time.

Based on Am Law firms’ performances in the early 1990s, I foresee that the current recession’s impacts on large law firms, particularly on partner profitability, will be felt for four years or longer by most firms. This forecast is based on how long it took many firms to recover after the 1990-91 recession.

As noted earlier, 1989 was a banner year for Am Law firms. Eighty firms were included in the Am Law lists for all eight fiscal years 1989 through 1996, and I took special interest in those firms. From 1990-1993, more than half of those eighty firms produced profits per partner no higher than they had enjoyed in 1989 (see Table 1 below). The second year of the recession saw even more firms failing to exceed their 1989 PPP levels. It was not until 1994—four years after the recession began—that more than half of the Am Law firms in this sample finally produced partner profits beyond their 1989 levels.

It is possible that large law firms may indeed recover faster from this current recession than from the one in 1990-91 . This time around, firms have more quickly pared troublesome practices and unneeded resources, actions that law firm leaders were slower to take in the early 1990s. However, most firms and their partners must still prepare for multiple years of lower profits per partner.

Note: A fuller description of the research summarized above and in future postings is provided in a chapter I contributed to Leigh Dance’s new book, Bright Ideas: Insight from Legal Luminaries Worldwide. For more information about this book, which will be published in May 2009, please contact Leigh.

Coming soon:

Watch here for future posts re “Observations about Law Firm Economic Cycles,” e.g.:

3. Higher-end firms suffer longest from recessions.

4. Lower-end firms tolerate recessions better and recover from them faster.

Director’s Cut – Four Law Firm Scenarios

2009-04-13T06:08:00.006-05:00

The scenario planning workshop provided by Outward Insights and Ann Lee Gibson Consulting to senior marketers at the 2009 LMA annual meeting got strong interest and good reviews.

Given law firms' growing interest in scenario planning, I have posted on my Web site the four detailed possible futures we designed for use during the workshop.

Even if you aren’t ready to do full-on scenario planning, do yourself a favor and read these four possible futures in which your law firm might soon be operating. Some are outrageous, some are grim. Each might (or might not) come to pass.

Then consider:

What actions and positions should your firm take today to succeed in each of these possible futures?
Which actions / positions, taken now, would predicate your firm’s success in the majority of these scenarios?
What early warnings would signal when / if each of these possible future were coming true?
What other actions / positions should you take ASAP when it looks like one of these scenarios is coming true?

If this sounds like something you, your law firm, or its practice groups should learn more about, give me a call. I’ll point you to more resources and try to answer your questions.

Four Possible Futures for Law Firm Scenario Planning Workshop

2009-03-29T08:00:00.008-05:00

LMA'ers will be tweeting at #LMA during sessions of the upcoming 23rd LMA annual meeting at Gaylord Conference Center on the Potomac. Therefore, LMA has asked speakers to share some of their materials with those who will be following these tweets. Good idea! And so ...

On Wednesday morning, April 1, Bill Fiora (of Nixon Peabody), Ken Sawka (of Outward Insights), and I (Ann Lee Gibson Consulting) will lead a three-hour scenario planning workshop for senior legal marketers.

Below is a summary of four possible futures we have developed for participants' use during the session. Working in small groups, they will identify core and contingent strategies for success under different scenarios, identify early warnings to recognize when scenarios are "coming true," and challenge their own and others' assumptions and strategies.

Each of the following scenarios describes a possible future for the legal industry intersecting somewhere between two dimensions: (1) timing of economic recovery (early 2010 vs. 2011-12) and (2) legal services delivery models (aggregated vs. disaggregated). The scenarios are summarized below.

Note to workshop participants: You will receive and work with scenarios that are much more detailed than the following summaries.

Scenario #1 -- The Great Pretenders describes a world where economic recovery begins in early 2010, the earliest anyone now hopes for. Global M&A activity, one of the earliest indicators of the recovery, surges as market-leading companies and those with large cash reserves acquire competitors and suppliers weakened by the recession. The strong are eating the weak and getting even stronger.

In this world, law firm leaders feel they have made it through the tough times and look forward to life as they once knew it. The recession was tough, but it encouraged necessary discipline and weeded out the weak. 2010 promises to produce the most law firm mergers and acquisitions ever recorded.

Scenario #2 -- Shattered! describes a legal industry dramatically altered by a perfect storm of events that created a PR nightmare for BigLaw. In this possible future, the recession’s impacts on the legal industry pale in comparison to other events that also grabbed the public’s attention. Inside BigLaw, the survivors of the 2008-09 layoffs still suffer from depression and guilt. In 2009, a runaway bestseller and a summer HBO TV series set the stage for a Wall Street BigLaw disaster fueled by debauchery and hubris. One of America’s most respected law firms has been brought very low, rocking New York society and BigLaw to its core. Law firms may never be the same.

As a result, the legal industry is reversing its bigger-is-better trend. Dozens of start-up law firms, prospering mid-sized and regional firms, mega-networks of telecommuting lawyers, and new legal vendors leap into the breach. It’s possible the growing economic recovery will allow BigLaw to repair its embattled reputation and rule again, but one thing everybody understands is that for the first time in a long time BigLaw has many serious competitors.

Scenario #3 -- The Big Chill is a future where the hoped-for 2010 recovery has not appeared and does not seem imminent. All governments and economists now agree the recovery will not appear until 2011 or later. Federal stimulus plans have dramatically slowed home foreclosures, but failed to thaw banks’ lending practices. The only bright spot in the corporate legal services market comes from the huge corporate M&A deals being struck in pharma, transportation, real estate, and energy at enormous fire-sale prices.

Corporate legal clients have much smaller legal budgets, but still face an overwhelming burden of legal issues, including bankruptcy, financing, litigation, and regulatory changes. In response, all firms survive by cutting costs to the bone and learn to compete on price. The largest companies discover they have no energy to deal with scores of smaller firms. The exchange of large amounts of commodity work for law firms and the BigLaw promise of safety for corporations becomes the two-ingredient glue that keeps big companies with big law firms. It is a painful time, particularly for legal vendors. Competition becomes cut-throat, pitting firm against firm—and in a surprising twist, some firms against some clients.

Scenario #4 -- Davids vs. Goliaths sees corporate legal clients having a radically different response to the continuing economic deep freeze. In a world already full of risk, they see little extra risk in moving from one law firm to another. All relationships are up for grabs. Some clients cancel their convergence programs, turning to procurement agents or consultants to deliver the best combination of price and expertise on each matter.

The legal industry is rapidly disaggregating. The fiction that big firms could develop and benefit from economies of scale is now seen for the naked emperor it always was. In BigLaw, some of the biggest rainmakers decide they’d rather not share their pie, and form their own boutique firms. In fact, new firms of all kinds are sprouting up all over. Technology vendors reorganize to provide turnkey services and compete directly with firms. Many law firms outsource everything but their most core legal services. Clients are buying legal services directly from India and China. The only certainty is that this is a time for pragmatists, not purists. Everyone who hopes to survive this era is now brutally scrutinizing their beliefs, styles, processes, and goals.

Taking Off the Blinkers--with Scenario Planning

2009-03-18T18:06:00.004-05:00

A loud conversation is going on via legal periodicals, the blogosphere, Web 2.0 sites and at legal conferences about whether BigLaw is dying—and, if so, what other delivery models will fill clients’ needs and thrive. Although I’m enjoying the larger conversation—and enjoying watching the bets and side bets being made and taken—I’m also dismayed at the blinkeredness of some debaters.

Many, perhaps understandably, consider this topic solely from the position where they’re heavily invested and from which they see no possibility to reposition, even if they wanted to do so.

Too few on either side of this debate seem unable to suspend their lobbying efforts long enough to intellectually consider the possibility that their “put it all on red” bets may not be the winning ones.

And too few demonstrate the capacity to consider a variety of possible futures, none of which have come to pass yet and on none of which any of us should bet the farm without first exploring what other futures would look like and how our beloved strategies would fare there.

Worst of all, too many smart people—people who ought to know better—are not only behaving as though what’s happening today will continue forever, but also like none of our competitors (those stupider than us, right?) will change anything they’re doing in response to today’s and tomorrow’s events. To me, this behavior sounds like the kind of shortsightedness that helped get us into this current mess.

However … for those legal marketers, practice group chairs, and firm leaders who would to take time out to explore some alternate futures and consider how firms of various kinds might best position themselves to thrive in those possible futures—I invite you to consider scenario planning.

In fact, I invite you to attend this year’s Senior Marketers Program prior to the upcoming 2009 annual conference of the Legal Marketing Association, when the entire morning will be devoted to an interactive scenario planning workshop. The program will be held on Wednesday, April 1, at the Gaylord National Resort and Conference Center. Only ten seats are left. The price is wonderfully recession-priced at $395 for LMA members who will attend the LMA conference and at $595 for those who wish to attend only the Senior Marketers Program. Registration and program details can be found here.

CI Pro Interview with Christopher Batio

2008-09-29T16:50:00.011-05:00

Name: Christopher Batio
Title: Assistant Director for Business Development and Competitive Intelligence
Firm: Crowell & Moring, LLP
Since: January 2005
Profiles: LinkedIn

Q: What is your job description at Crowell & Moring?

A: I oversee all business development activity, including proposals, pitches, lateral biz dev planning, biz dev tools, and CI. I also do some training in biz dev planning for young attorneys and am developing a presentation on effective ways for lawyers to use online networking.

Q: Who are your typical CI clients at X?

A: My typical clients are practice group chairs, supervising client partners, young partners and counsel building their book of business, and lateral attorneys working to transition business to Crowell & Moring. I also work with non-attorney professionals in our Public Policy Group and International Trade Consulting Group. When we are trying to win significant new business or retain a long-time client, I am usually at the center of things.

Q: What are three common KITs you’re often asked to address?

A: KITs we often deal with include: 1) developing data on competition decision makers, 2) identifying competitors and their strengths and weaknesses, 3) identifying potential lateral attorney recruits, and 4) developing data on client issues to suggest cross-selling opportunities.

Q: How is the intelligence function organized at your firm? To whom do you report?

A: Our CI function rests within our Marketing and Business Development Department, but we often work with our Library Research Services Team for support. I report to the Director of Marketing and the CMO of our firm.

Q: What experience or training prepared you most for the CI work you do now at Crowell?

A: While managing proposal teams for KPMG and GE, I worked to analyze more than 300 different companies during competitive pursuits. This experience helped teach me more than any other about how to glean useful information from public sources and then analyze it to develop meaningful CI.

Q: What formal CI training have you had?

A: I have read extensively on CI since I first began doing professional services marketing in 1998, focusing on material by Leonard Fuld and Ben Gilad. I have also attended seminars run by Fuld & Company, Ann Lee Gibson, and SCIP over the years.

Q: Where do you go for ongoing CI training and mentoring?

A: Ann Lee Gibson (of course!) and my boss, José Cunningham.

Prudence and analysis

2008-09-29T15:16:00.004-05:00

Lately I’ve been thinking a lot about analysis, both in terms of competitive intelligence and in terms that affect me directly—like investment decisions, career management, whom to vote for, how my industry will be affected by the events on Wall Street and in Washington—things like that.

Anyone who has a passing acquaintance with competitive intelligence knows that analysis lies at its heart. Analysis is everything CI professionals do with information they gather to identify patterns and produce intelligence their decision-making clients use to improve their decisions.

With these issues on my mind, a paragraph in a recent New York Times column by David Brooks, "Why Experience Matters," caught my eye:

“What is prudence? It is the ability to grasp the unique pattern of a specific situation. It is the ability to absorb the vast flow of information and still discern the essential current of events — the things that go together and the things that will never go together. It is the ability to engage in complex deliberations and feel which arguments have the most weight.”

Hmmm, I thought, this sounds like analysis. In fact, I like very much Brooks’s definition of prudence as a synonym for analysis. His prudence is no Nervous Nellie of a virtue, but sagacity, shrewdness, intellectual discipline, and good judgment rolled up into one helluva risk-minimizing Athena-like attribute.

Brooks goes on to posit that prudence is acquired through experience. He says one gains experience through personal involvement and the study of history. He says prudent leaders have the ability to build and test models “… and apply those [models] to current circumstances to evaluate what’s important and what’s not, who can be persuaded and who can’t, what has worked and what hasn’t.”

I don’t recall seeing anywhere any better description of analysis and decision-making. I’m only surprised it came in the form of a political column. (Memo to self: Keep inspecting those assumptions.)

Finally, these connections among prudence, experience, and analysis also inform another ongoing argument I have with myself: When law firms build and staff their CI units, should they (1) hire CI professionals from other industries who have strong analytical skills, but no legal industry experience or (2) reassign people within the law firm to this unit who have strong industry knowledge and experience, demonstrated analytical instincts, but no CI analytical training or experience? Although this is a topic for another column, I already think the best answer will not be a simple “either-or” one.

Heller to dissolve tomorrow

2008-09-25T15:54:00.003-05:00

According to a brief article published by The Recorder at Cal Law sometime after 1:00 pm Pacific time this afternoon, partners of the Bay Area-based law firm of Heller Ehrman will vote to voluntarily dissolve the firm tomorrow, Friday, September 26.

CI Pro Interview with Jan Rivers of Dorsey & Whitney

2008-09-24T09:41:00.006-05:00

This is the second in a series of interviews I’m conducting with CI professionals who work in law firms. My goal is to understand better their backgrounds, skills, reporting structures, contributions, and outlooks.

Name: Jan Rivers
Title: Competitive Intelligence Liaison
Firm: Dorsey & Whitney LLP
Since: 2002
Profiles: LinkedIn and Law Libraries Ning

Q: What’s your job description at Dorsey & Whitney?

A: I conduct competitive intelligence for the firm’s marketing and strategic initiatives.

Q: What’s your formal educational background?

A: My undergraduate degree was in mass communications, with other undergrad work in international relations. I also have a Master’s degree in Library Science.

Q: Who are your typical clients at the firm?

A: My typical clients are Marketing and Business Development, firm management and operational departments, and practice groups. I work with everyone from financial analysts to the management committee to recruiting personnel to practice heads to marketing directors to partners and associates. This is across all offices.

Q: How is the intelligence function organized at your firm and to whom do you report?

A: The CI function is part of the firm’s Information Resources Center, formerly known as the library. I report to the Director of Information Resources and have a dotted line relationship to the Marketing and Business Development department. I attend both groups’ meetings and both have input on my performance review, etc.

Q: What experience or training has prepared you most for the CI work you’re doing now?

A: I think my experience at Arthur Andersen prepared me the most for the CI work I do at Dorsey. I was with Andersen for six years before joining Dorsey, lastly as a manager in the Risk Management Services Group. Prior to that at Andersen I was part of the AskNetwork, a business unit within Knowledge Enterprises. We were a research, database development and information resource procurement group serving external, as well as internal, clients and were on the practice side of the business, not the support staff side. The corporate experience was invaluable not only from the research side, but from the operational side as well. We had to bid for work, estimate large research and database development project costs for clients, etc. I was a team leader and manager in the AskNetwork, thus was involved in the team’s operations, strategic planning and other initiatives. It was like being on the management team of a business, which has been great experience for understanding what drives business and strategy. I also have a communications/ journalism background, which has been helpful in knowing how to write and put together reports.

Q: Where do you look for professional inspiration and mentors?

A: For ongoing CI training and mentoring, I go to both the Special Libraries Association's Competitive Intelligence Division and to the Society of Competitive Intelligence Professionals. I also go to the American Association of Law Libraries' Competitive Intelligence Caucus (disclaimer: I'm a co-founder). Additionally, I network with a number of other law firm CI professionals.

Q: How would you describe the future of CI in the legal industry?

A: I think that CI will continue to gain momentum and will not be seen as a "nice-to-have" capability, but as a necessary one. This is already happening, but it will accelerate as more firms establish a CI function. CI will eventually become a distinct unit within law firms co-existing alongside Marketing/Business Development, Information Resources, and other departments. Some firms are closer to this than others, but as the function further develops and becomes a standard part of firm operations, it will move into a more formalized structure of its own.

It's hard to accept intelligence that breaks your heart.

2008-09-22T13:29:00.018-05:00

It must be very difficult to accept intelligence that foretells your demise or says your dearest strategies and models have failed. That’s the situation in which the major investment banks found themselves in the last few weeks and where many commercial banks also find themselves. It’s also the situation some US-based law firms are in now.

As most readers from law firms know, two Bay Area-based firms, Heller and Thelen, are visibly struggling with “you’re probably not going to make it” warnings, as they seek to find merger partners.

Eleven months ago I prepared a report for a client that was considering expanding in the Bay Area, which included this statement:

At least half a dozen large Bay Area law firms are showing signs of stress. If one or more of these firms were acquired or dissolved, the health of the remaining major firms practicing in the Bay Area—in San Francisco and the Valley and even beyond—would improve. Such change(s) would make a dramatically positive difference for a few firms.

Heller and Thelen were among the six stressed firms I reviewed, although they were in trouble for different reasons.

Over the years, Heller did many things right and built an admirable brand with a strong culture. Following the tech bubble, the firm was quick to jump on the life sciences bandwagon in 2002-2003. But in 2004 and 2005 the firm’s revenue and profit trends faded. The firm responded with partner de-equitizations, staff cuts, and other cuts and lowered expectations. If the firm made any strategic changes, those weren’t visible from the outside, although considerable business development flogging was evident. Still, “work harder, build revenue, cut costs, and de-equitize partners” is not a strategy.

Nearly three years later, after seeking and not finding a merger partner, Heller is considering dissolution, among other options. Their candor on this point is refreshing and, although deeply depressing to loyal Hellerites, will probably ensure that Heller’s best remaining legal DNA mates with the best possible other legal DNA at other firms.

Thelen, another Bay Area firm whose brand is less burnished than Heller, is regularly losing partners and groups while they seek a merger partner—their third. The firm has already squandered opportunities to grow and diversify through mergers it initiated with two New York-based firms, Reid & Priest and Brown & Raysman, but both mergers resulted in little permanent gain. Thelen’s growth strategy, to expand beyond its old-economy practices like construction law into financial, IP, and other practices, was upended by internal West Coast vs. East Coast rivalries. The West Coast winners were merciless, and the East Coast losers fled, as did some West Coast partners who found more peaceful places to practice law.
Memo to file: Collaborate, don’t compete, to achieve post-merger assimilation.

The Bay Area is not the only US geographic market that would be healthier with fewer corporate law firms; Atlanta, Boston, and Philadelphia have long been too crowded. And now it seems New York will experience law firm mergers and failures too. Obvious NYC candidates for hastened demise are firms that have lost big clients and will see double-digit percentage losses in firm-wide revenue and that have a very high transactional to litigation capability ratio.

Bruce MacEwen, the estimable law firm economist who blogs at www.adamsmithesq.com, reminded readers on Sunday that the most basic strategy key intelligence topics now apply: What are your firm’s strengths, and how much does the marketplace need what you have to offer?

Fortunes, careers, and reputations are made in exciting times like these. And hearts are broken, too.

The death of i-banks and the future of law firms that served them

2008-09-22T11:10:00.007-05:00

It’s a brave new world this Monday morning. The last two large Wall Street investment banks left standing, Goldman Sachs and Morgan Stanley, disappeared over the weekend. And if they didn’t exactly disappear, they’re no longer i-banks either.

On Sunday, Goldman Sachs and Morgan Stanley agreed to become bank holding companies, which are subject to much more stringent regulatory oversight by the Federal Reserve. This oversight will significantly increase their financial transparency. The change will also reduce the banks’ abilities to take big risks and make huge profits. They’ll have to put more of their own money into deals they put together. When borrowing large amounts of money to invest themselves, they’ll likely pay more for that money. Going forward, they won’t be able to invest nearly as much in non-financial companies as before.

What do these changes, effects, and possible unintended consequences mean for Wall Street law firms that evolved to fit i-banks’ needs and benefitted enormously from their success?

To address this very large question, let’s look first at what the changes are likely to include. Under the rosiest scenario, where the Federal Reserve’s actions and interventions have the desired effects, there’s considerable agreement that:

1. Credit will gradually become more available, and financings at all levels will move forward again.

2. No one will use the R word, but thawing credit doesn’t alter the fact that the U.S. is in an economic slump (the S word), a condition that will last who knows how long.

3. The bloodletting in the financial sector is not over; more banks will fail, in the US and abroad.

4. Profits in the financial sector will be down near-term and probably much longer.

5. At some point, investors will begin loosening their grip on record levels of cash and start investing again.

6. US markets are in a bear market, although global markets will reverse sooner.

7. Short-selling has been “temporarily” banned in some markets (I’m keeping the air quotes for now), and it’s rumored these bans may be extended.

8. Consolidation within the financial sector will continue, yielding near-term deal work.

9. Regulatory expansion in the financial sector will be a huge boon to the legal industry.

10. Litigation involving the financial sector and those who work there will be huge, with expected benefits for big litigation shops.

11. Bankruptcy and business reorganization work will be abundant.

One law firm success theorem says firms should serve sectors that are highly profitable. The no-longer-i-banks are not the highly attractive profitability destination they once were. That leaves hedge funds and private equity, and regulators are already headed in those directions. That leaves the big global banks, which, for the next era, will rule.

Sooner rather than later, human ingenuity and greed (in service to the urges humans have to compete and survive) will produce new financing models and instruments that investors will find seductive. Paradigms will shift. I do not believe there is any way regulatory agencies can guard against this kind of creativity. Smarter people will always outplay dumber ones. I’m not saying greed is always good, but I am saying greed (in our lifetime) is inextinguishable.

What is truly astonishing to me is that the intelligence world is relatively quiet about all these events. Why were so many people, companies, industries, and experts of all kinds (including lawyers) caught so flat-footed?

What do you think about all this? What do you think is likely to happen to Wall Street law firms—both near-term and long-term? Which legal practices will profit from these events? Which are endangered? Which new practices might emerge? What kinds of law firm mergers might these events precipitate? Which firms might fail and shockingly so?

The power of myths to (mis)interpret dramatic events

2008-09-18T06:40:00.003-05:00

I enjoy and appreciate the work of financial analysts and journalists who write for The Wall Street Journal, The New York Times, and other such periodicals. I also find it hard not to sneak a peek at the comments passionate readers post at the papers’ online sites. These comments sometimes offer psychological insights into how investors might respond to market events and other times are just good for a hoot.

On days like yesterday, when the Dow dropped 449 points following the $85 billion Fed bailout of A.I.G., one would think the economic events themselves would offer readers all the drama they could handle. It turns out that’s not the case. Yesterday, drama queens of all genders chimed in by the hundreds to comment on the events of the day. They reminded me that everybody fancies themselves an analyst who yearns to share their findings and influence decision-makers.

While reading their irate, simplistic, cynical, obsessive, hectoring, lecturing, and occasionally insightful comments, I also pondered the power of myths to explain and interpret frightening times and to give comfort. In the reader comments I read I saw the financial market meltdown and theoretical solutions explained most frequently in terms of good vs. evil; redemption through failure; redemption through sacrifice; the great savior; the hero’s journey; purification through disaster, et cetera—and I do mean et cetera!

One of several conclusions I came to at the end of a long day, spent trying to get a handle on what these financial events might mean for the legal industry, is that neither analysts nor decision-makers are immune from the influence of mythology to interpret dramatic events.

Although analysts might be justified in (and get away with) harnessing the power of myths when presenting actionable intelligence to decision-makers, we must guard against letting myths influence the hypotheses we test and the evidence we gather and consider (or fail to gather and consider).

Sometimes we really will find something new under the sun.

CI Pro Interview with Bill Fiora of Nixon Peabody

2008-09-16T07:43:00.006-05:00

This is the first in a series of interviews I’m conducting with CI pros who work in law firms. My goal is to understand better their backgrounds, skills, reporting structures, contributions, and outlooks.

Name: Bill Fiora
Title: Manager of Competitive Intelligence
Firm: Nixon Peabody LLP
Since: October 2007
Profile: LinkedIn

Q: What’s your job description at Nixon Peabody?

A: My job here is to help the firm spot new growth and business development opportunities, in terms of geographies, client industries and within existing client relationships.

Q: Who are your typical CI clients at the firm?

A: My clients are the firm’s management committee. My assignments don’t come from individual partners.

Q: How did Nixon Peabody recruit you?

A: I could see that the function was very well positioned in terms of my having an impact on strategic issues and being able to focus on analysis, rather than on information collection.

Q: How is the intelligence function organized at your firm and to whom do you report?

A: I report into the Market Intelligence function, which at Nixon Peabody includes competitive intelligence, market research, and industry teams. I report directly to the Director of Market Intelligence, and she reports to the firm’s Chief Marketing Officer.

Q: What are some common key intelligence topics you’re asked to address?

A: Essentially, I try to figure out where our key client industries are going, what their areas of growth are, and where our firm might consider being in the next three to five years, both in the US and abroad.

Q: What experience or training has prepared you most for the CI work you’re doing now?

A: I’ve been working in CI so long it’s hard to say. My first intelligence job was with the CIA, where I worked for six and a half years. Then for ten years I was a CI consultant, helping companies establish and improve their CI capabilities. Through all that I’ve been able to see or learn quite a few best practices, traps, and key success factors.

Q: What’s your formal educational background?

A: I majored in government and history as an undergraduate and have a master’s degree in international affairs.

Q: What formal CI training have you had?

A: Very little, actually. The last formal CI training I had was when I was working for the federal government. Since then I’ve been delivering more training than I’ve been taking.

Q: What’s been your involvement in the Society of Competitive Intelligence Professionals (SCIP)?

A: I joined SCIP in 1995. Since 2003, I’ve been a member of SCIP’s national board, first as a member-at-large and the last two years as SCIP’s treasurer. I’ve also served on the steering committee for a local Boston chapter. I’ve written articles for SCIP’s publications and presented at most of SCIP’s annual conferences and at chapter meetings on topics like analysis and dissemination. The dissemination aspect of CI is something I care a lot about, making sure CI deliverables are relevant, succinct, and forward-looking, not just summations of what’s already been published.

Q: Where do you look for professional inspiration and mentors?

A: These days, most of my mentors aren’t in the CI field, but do strategy work in corporations or specialize in information delivery methods, visualization, and writing techniques. I’m spending less time these days learning how to get information and more time learning how to present information in ways that will have an impact on decision-makers. They include visual designers, professional writers, psychologists, and people like Edward Tufte. I also study how consulting firms like McKinsey, BCG, Deloitte, and leading business publications present information and analysis visually.

Q: What aptitudes do you think are necessary in a good CI professional?

A: You’ve got to have an insatiable curiosity and be comfortable with ambiguity. You must also be able to write very well, which is probably the most underappreciated skill in business.

Q: How would you describe the future of CI in the legal industry?

A: I think CI definitely has a bright future in the legal industry as law firms get larger, competition intensifies, and our clients' global business issues become even more complex. This has already happened in the larger accounting and consulting firms, which established sophisticated CI functions when their industry went through similar changes. Right now, CI is a hot topic in law firms, but only those firms that approach CI in a serious manner and position it as a strategic function will see a competitive advantage. In time, those firms that try to do CI halfway or on the cheap eventually will go back to business as usual.

Coming soon – real live law firm CI pros!

2008-09-14T15:17:00.005-05:00

Competitive intelligence can be a lonely business. Those law firm CI pros who started their careers in government agencies or law enforcement bring to this discipline a security consciousness that can be intimidating. Their tendencies toward secrecy and isolation can rub off on the rest of us. Secrecy can also provide cover for those new to CI who are faking it until they can make it, a time-honored upward mobility tactic.

In 2008, it’s not much of an exaggeration to call law firm CI professionals pioneers. CI is not a new discipline, but law firms are just beginning to understand the CI function and how to obtain CI’s greatest benefits. In fact, today’s law firm CI field reminds me of law firm marketing 20-25 years ago, when marketing wasn't a new field, but law firm marketing certainly was.

As an old-time law firm marketer and in the spirit of Web 2.0 transparency, I want to help budding law firm CI practitioners and those who need to learn how CI can benefit law firms meet some real law firm CI pros.

Starting tomorrow right here in River City (this blog), I will interview law firm CI professionals who are willing to answer some basic questions. Over time, we’ll learn how their backgrounds, job descriptions, and reporting structures vary. Later, we’ll learn more about some analytics they use in their jobs.

SCIP offers CI training in fall 2008

2008-09-03T15:02:00.001-05:00

I’ve long believed law firm CI workers should belong to the Society of Competitive Intelligence Professionals (www.scip.org). For many years I’ve been a member of SCIP and think it’s a great organization for education, mentoring, and networking.

SCIP has some good programs coming up in the next few months. A couple of good courses for those new to law firm CI will be on tap next week in the Washington, DC area:

CI 101® and CI 202™
September 8-9, 2008
Westin Hotel, Alexandria, VA

Starting and Managing a CI Function (New!)
September 10-11, 2008
Westin Hotel, Alexandria, VA

European Summit 08
October 20-22, 2008
Crowne Plaza, Rome, Italy

Financial Analysis Courses I through IV
December 2-5, 2008
Hilton Old Town, Alexandria, VA

For fuller listings and descriptions of SCIP’s 2008 fall training offerings, visit SCIP’s Events Calendar.

Never, ever ignore a decision-maker’s psychology

2008-08-29T10:21:00.004-05:00

Yesterday afternoon I got lucky.

At 4:01 pm CDT yesterday, after watching Intrade’s gyrations as GOP VP predictive market investors had Romney and Pawlenty positions fighting it out for the lead, I commented on this blog that a decision-maker’s psychology is critical to their decisions:

"I am reflecting on how decisions reflect the decision-maker’s psychology. If you were McCain the Maverick, who would you choose? The market leader or an outsider / outlier surprise?”

This morning’s news that Senator McCain has chosen Alaska Governor Sarah Palin as his running mate in the upcoming Presidential election is a reminder to us all that we ignore a decision-maker’s psychology at our peril.

This reminder is especially important to law firm competitive intelligence professionals who support their firms’ business development efforts. CI professionals working in law firms should be able to develop psychological profiles of prospective clients, particularly those who make the final hiring decision.

And please don’t anybody freak out—developing psychological profiles is a common CI function. Heck, my mother and four sisters do this countless times each day. It’s also how Mrs. Marple solved all those mysteries.

More forecasting with predictive markets?

2008-08-28T07:50:00.005-05:00

Earlier this week, I posted about the possible use of predictive markets to develop competitive intelligence, citing InTrade’s and InklingMarkets’ early warnings that Senator Biden would be the Democratic VP nominee. These tools were brought to my attention by Tom Davis at Cygnus Associates

Late last night watching the Democratic Convention, I heard CNN report that the presumptive Republican nominee, Senator John McCain, has settled on his pick for a VP running mate. So I trotted over to Intrade to look at the action on Republican VP front-runners. During the preceding 24 hours, Governor Romney’s stock had fallen $20, from $65 to $45, but had started to crawl up again. His price was almost twice that of the next-highest contender, Tim Pawlenty, who was at $24.20.

This morning at 7:30 a.m. I see that Romney’s stock continued climbing overnight and is now up $13.50 at $58.50. In other words, the market predicts there’s a 58.5% chance he will become the nominee. Since midnight, Pawlenty is down by $2.20 to $22.00.

I’m not sure if this is CI or just political obsession, but stay tuned.

Social Media—in Law Firms and in Life

2008-08-27T16:04:00.007-05:00

Although this blog focuses on competitive intelligence, some readers have noticed that the subject of social media (social networks, blogs, listservs, wikis, sharing of photos and video, etc.) has already made a frequent appearance here.

Social media, circa 2008, is a boiling hot topic. A few days ago, Jayne Navarre put up an excellent post over at http://legalwatercooler.blogspot.com about WilmerHale’s four associate blogs. And earlier today the Legal Marketing Association published a report, Humans Seek Connections: The Case for Online Social Networking for law firm marketing and business development.

If you liked the WilmerHale blogs idea, then run, don’t walk, over to www.mashable.com and be inspired by 35+ Examples of Corporate Social Media in Action that are beautifully illustrated by SnapShots. At least half of those examples could be lifted and installed nearly as-is in many law firms to great effect.

For aiding my ongoing education in social media, I thank the team at DuoConsulting, whose links I clicked to discover the 35+ Examples and the following interesting results of the first statistically significant longitudinal study on corporate use of social media conducted by the University of Massachusetts Dartmouth Center for Marketing Research. The study compares the use of social media by Inc. 500 companies and Fortune 500 companies:

39% of Inc. 500 companies have blogs, compared to 11.6% of Fortune 500 companies

In the past year, 20% more Inc. 500 companies started blogging, compared to 3.6% more Fortune 500s

44% of Inc. 500s think social media [are] very important to their business/marketing strategy, compared to 25% last year

Inc. 500s are most familiar with social networking, while wikis have seen the most growth in terms of familiarity

77% of Inc. 500 companies report using at least some social media tool

One possible prophecy based on these findings is that because mainline Fortune 500s are slow to adopt social media, corporate law firms that serve them will also be slow on this front. Yet I will wager that even if your grandfather’s law firm hasn’t yet adopted these tools, the law firm of the future (which all Am Law firms will start mimicking in about 45 minutes) is already embracing them. Social media tools, applied intelligently, can help law firms:

Create legal knowledge
Develop competitive intelligence
Assimilate new lawyers
Strengthen multi-office legal teams
Build who-does-what-where directories
Cement client relationships.

Perhaps you wonder why I’m such an evangelist about social media when I’m no expert and still have so much to learn about it. Perhaps it’s because over twelve years ago, while hanging out on an online writers bulletin board, I met the man who is now my husband. For the next two months, while living 700 miles apart, we traded more than 50 personal essays on everything from poetry to gun control to family values. (Today those essays would be called blogs.) Readers who know Del and me know that our decision to marry was one of the best decisions of our lives.

I urge everyone to learn more about social media. Participate in social media. Use your common sense. Teach others. Relax and let what you learn there inform your decisions—whether those decisions are about which friends to spend more time with, whom to do business with, or whom to marry.

Two-thirds of Am Law 200 have CI units

2008-08-26T07:08:00.004-05:00

A recent survey of Am Law 200 law firms reveals that nearly two-thirds (64%) of those firms now have CI units, more than I had realized.

The CI units at these firms report to:

Marketing - 59%
Library - 33%
Marketing and the library - 8%

Consistent with surveys I’ve seen over the last three years, this latest information comes to us via Law Firm Inc.’s sixth annual survey of law firm librarians. A couple of cogent articles about the survey findings and librarians’ CI roles appeared recently in that publication, both reported by Alan Cohen:

Survey: CI on the Rise at Firm Libraries
Survey Says Librarians Like Their Jobs but Are Displeased With Vendors

The articles spotlight librarians’ enthusiasm for competitive intelligence work, although their CI role is growing slowly: CI took up 9% in library staff time in 2007 compared to 7% in 2006.

The survey also reports that at those firms responding to the survey the CI group reports to marketing at 38% of the firms, to the library at 21% of the firms, and to both marketing and the library at 5% of the firms. I assume the other 36% of firms responding do not have CI units.

If I interpret these findings correctly, this means approximately two-thirds (64%) of Am Law 200 firms now have some kind of explicit CI unit. That’s more firms than I’d imagined had taken the CI plunge.

As the saying goes, “First quantity, then quality.”

I’ll take that challenge!

Paranoia and law firm CI

2008-08-24T12:58:00.023-05:00

I guess it was bound to happen.

In tomorrow’s issue of The National Law Journal you can read a "Special to ..." article called "Competitive Intelligence: What are lawyers' limits?" written by the marketing partner of the Texas law firm Winstead. She proposes that it's time for state bars to start providing regulatory oversight of lawyers' and law firms' competitive intelligence activities.

The article expresses the opinion that lawyers and law firms may not have sufficient judgment, ethics, and morals (yes, morals—read the article) to develop and use competitive intelligence. Don't miss the parts about stalking prospects' children's MySpace pages and Sunday School classes to gain mysterious business development advantages.

Because context is always important, it’s worth noting that the author, who is her firm’s marketing partner, appears to be the only lawyer at her firm who does not permit her photograph to be published on the firm’s Web site.

Now on to the article itself.

The author was apparently motivated to write this article in part after reading a basic CI primer I wrote that was published in the March 2008 issue of the ABA's Law Practice magazine, "How to Create and Use Competitive Intelligence: 45 Tips for Law Firms." What's not clear from the The NLJ author's article is what, if anything, about the 45 Tips piece raised an alarm.

The author comes a bit late to the CI conversation, stating that “At least one vendor offers a software program that compiles legal, financial and business content combined with tools to create informative and tactical reports.” Actually, off the top of my head, I can think of more than 30 vendors providing this kind of content to law firms.

She then urges that lawyers and law firms refrain from using all information that is publicly available to build competitive intelligence, implying it’s not only unsporting, but unethical:

CI research on a target client can be generated legally, yet yield information that a target wants to keep confidential: the value of homesteads or mortgages, payments and standings, criminal history, religious affiliations, school affiliations, civic affiliations, taxes and more. It is a murky area requiring more attention, and many disagree on what is ethical and what is not.

After worrying about the shadiness of those who troll MySpace sites, she goes on to pose one of the oddest key intelligence topics I’ve never thought of before: “Should cancer patients receive letters from estate planners because lawyers can buy wig vendors' client lists?”

To which, after ROTFL, I loudly answer, “Of course not!” I could also pose, as could anyone with a creative streak and time on their hands, about 400 other horrifying, hilarious, and completely bogus red herring key intelligence topics no law firm in the world would ever investigate. I must also admit that I had no idea lawyers could buy wig vendors' client lists.

She then suggests that the new influence of competitive intelligence in law firms may lead to the weakening of lawyers’ moral fiber:

Experts agree it is unethical to misrepresent one's status or position to obtain information. But what about failing to identify yourself in a public place when others around you are talking about a competitor's proprietary information? Is an act of omission (failing to identify yourself) in the gathering of CI unethical? Is taking advantage of someone else's mistake unethical? What about misrepresenting intent versus identity in gathering CI (saying you are conducting a legal industry survey when you are really only interested in gathering CI regarding a particular subject)? These questions highlight the dichotomy between moral conduct and current ethical
standards.

It seems clear to me that the above so-called moral questions have confronted human beings (including lawyers and investment bankers and husbands and wives and lovers) ever since the appearance of the cocktail party. But by mentioning them here, the author seems to suggest that law firm advertising really was the gateway drug that has now led us to these queasy CI crossroads.

The article concludes with a call that “law firms should take the lead” in getting state bar associations to start regulating lawyers' and law firms' CI activities:

Ideally, as they have done with advertising, each state's bar association or other regulatory body should create a code of ethical conduct relating to the generation and use of CI. In the interim, each law firm should consider the creation of its own clear ethical standard or perhaps, at a minimum, require their professionals to join SCIP and adhere to its ethical code.
Undoubtedly, if individual lawyers and law firms are not proactive in this regard, then at some point in the future, the public disclosure of one lawyer's offensive CI research methodology or use will cause the profession to address these issues publicly — but only after the reputation of the legal profession has been damaged once again.

Here, finally, is something I agree with. Anyone who works in a CI position should join SCIP, thereby requiring them to agree to SCIP’s code of ethics. I and many others (thousands of us working in CI, actually) have said and done this for years. And to any law firm that wants to go SCIP one better, I say, Go for it!

But surely getting state bar associations involved to oversee law firms’ CI activities is overkill, to say the least. And even if they did get involved, how would they oversee lawyers’ and law firm employees’ participation and behavior at:

Facebook and other social networking sites?
Blogs?
Parties, restaurants, and ballgames?
Airports?
The steps of churches, synagogues, and mosques?

More problematic is the question of who and why and under what circumstances someone would decide to file a competitive intelligence grievance? And what evidence would constitute proof of a CI offense?

At the heart of this article is a fully expressed apprehension about the financial and societal transparency that information aggregators and the Internet now offer anyone with basic research skills. The article also grieves, understandably, at the erosion of privacy some of us who are older (including me) used to enjoy.

But although I appreciate and sympathize with these discomforts, I cannot support the conceit that lawyers and their employees will behave professionally and appropriately only when their good taste, common sense, and morals are even more highly regulated by local state bar associations.

I look forward to everyone’s comments on this one.

Predictive markets = skin in the game

2008-08-23T00:27:00.007-05:00

This isn't a political blog. But this past week's deliberations about the VP picks offer us an opportunity to think about how markets and events can be predicted.

(Note that this post is being written before the Democratic vice presidential choice has been officially announced.)

This past Tuesday, August 18, I received an email (as some of you may have also) from Cygnus Associates, a company that designs and deploys "predictive markets for business." The subject line read: Predictive Markets Signaling Biden as Obama VP Pick.

This subject line referred to predictions made by markets like the real-money market at InTrade and the paper money one at InklingMarkets. On Tuesday last, Biden was selling at Intrade just below $50 with volume up sharply on both markets, meaning real bucks were saying there was a 50% chance Biden would be Obama's VP pick.

At the time of this post, it's four days later and just after midnight on Saturday morning, August 23, an hour or so after ABC news reported a Secret Service detail has been sent to cover Senator Biden. His price on Intrade has now risen to almost $99 and to $94 on Inklingmarkets.

In other words, Senator Biden is as close to a sure thing as it's possible to be before the event happens. And there were strong early warnings earlier this week that he was a sure thing.

So how might predictive markets be useful for law firms that want to make better decisions? First, consider that both voting and investing money (whether real or paper) are two ways in which people communicate what they want for their future. Second, voting and investing (betting and re-betting) require individuals to gather, synthesize and distill all the information they have into intelligence. Predictive markets pool that intelligence and perfect the crowd's wisdom.

No one knows for sure what's over the horizon or what the next new thing is. But when we put some of our own skin into a game, we're more likely to participate in important ways that shape the game's outcomes. And that's certainly something every law firm's leaders would like to see all partners do -- participate more.

CI and LinkedIn redux

2008-08-22T18:20:00.001-05:00

Last week, the Marketing the Law Firm newsletter published an article called "LinkedIn: A Competitive Intelligence Tool." Because the article was repurposed on law.com it got more coverage than it deserved.

The gist of the article was: "Look at the fascinating competitive intelligence that can be harvested from the information that lawyers display on LinkedIn!"

To which I say: Phooey!

The patterns the author thinks she found (and, for some reason, values) in the LI data she reviewed could have been investigated much more accurately by reviewing law firms' Web sites, Martindale data, and LexisNexis and Thomson info-aggregator tools.

I won't pile on much more, since the article's been appropriately excoriated by Jayne Navarre and others on the Legal Marketing Association's listserv and at The Legal Watercooler, where an anonymous commenter aptly described the article as "CI numerology." What a wonderful term of art that is, and one I plan to borrow.

But more frustrating than the overreaching interpretations in this article is that it continues to confuse law firm readers by suggesting that any of this mess is intelligence. It's not. There's nothing that a firm would or could or should do as a result of discovering any of these patterns she claims to see.

Information strives to answer the question: "So what does this mean?"

Intelligence strives to answer the question: "So what does this mean we should do?"

Time for a law firm CI blog?

2008-08-22T16:48:00.000-05:00

For some time I've thought it's time we had a blog on competitive intelligence that serves the business development and growth needs of law firms.

I'm a likely candidate to blog on this topic, since I work in the area of law firm CI. But for years I've thought of myself as an unlikely blogger, with the usual objections:

1. I'm too busy (true)

2. I'm afraid I'll look foolish if I publish something I haven't fully thought through (will surely happen)

3. What if nobody cares (that would surely eliminate concern #2 above)

So how's about I just hang out here and don't tell anybody about this blog until I get the hang of it.

Sounds good. Let's go.