Librarians are Uniquely Positioned to be at the Heart of This Growing Trend
By Eric Dewey, Principal at Group Dewey Consulting
Companies that run into legal issues, more often than not, had warning signs which provided clues to these developing problems. Warning signs are, almost by definition, easy to see in hindsight. The challenge is in accurately forecasting which of the many unusual business activities of a business, over time, are reliable predictors of future problems. Fortunately, several industries have worn a path that law firms can use to help them develop these financial forecasting skills. If law firms stay informed and pay close attention to these clues, they can gain a competitive business development advantage, learn a company’s business more deeply, and provide distinctive value to clients and prospects. And librarians are well situated to be at the heart of this growing trend among law firms to gather rich data about their clients.
What types of legal needs can these clues reveal?
- targets for acquisition by another company or investment firm
- an appetite for an acquisition
- a need to raise capital
- regulatory investigations or compliance issues
- potential bankruptcy
- possible sale of key assets
I’ve dubbed these techniques Forensic Business Development Research (FBDR) but only to emphasize the importance of getting behind the numbers and trends to reveal the less obvious developments occurring within a company. But in truth, all we’re talking about here is a heightened level of business analysis performed consistently over time by people who understand the powerful locus where legal strategy meets company strategy. When you understand a company’s business so well that you can help them avoid problems or find solutions they didn’t anticipate, you’ll contribute to the firm getting premium rates and deep client loyalty.
“What Keeps You Up at Night?”
With today’s ubiquity of data and information, it is no longer enough for attorneys to ask a busy client, ”What keeps you up at night?” Clients have neither the time nor interest to educate their outside counsel on information which is readily available on the internet, in investor call transcripts, or in the footnotes of restatements. Clients are responding to the firms who are not just better educated in the client’s businesses but to those law firms that offer a different, yet thoughtful point of view. Providing extraordinary value means telling the client something about their business, their industry, the marketplace, or their competitors that they didn’t know. To be successful today lawyers must shift the conversation from “What keeps you up at night?” to “Let’s discuss how you can sleep better.”
While many would call for business classes in law schools to prepare lawyers better for these discussions, I believe the key is in training numerous populations in the law firm, including most importantly the research professionals in the firm, the librarians, but also paralegals, accounting staff, and the marketing professionals. If the client drives the success of the law firm, then everyone in the firm should have at least a basic understanding of the language they speak.
Forensic Business Development Research requires a monitoring of numerous events and activities including:
- financial indicators: changes in cash flows, debt ratios, and contingent liabilities, put into context either as compared to a competitor set of companies, against historical performance, in light of what the relationship attorney knows about the company, or sometimes in the context of simple common sense
- management practices: creation of new positions or changes in the duties of key executives, departures and arrivals of key executives or board members (and the reasons behind these moves), changes in accounting firms or negative accounting firm or investor comments, or the sale of flagship assets or operations, among other factors
- operational changes: the loss of a key supplier, alliance, or partner; a change in business strategy or marketing strategy; or significant changes in product quality and service levels
- competitive moves and market conditions: the market itself can change and cause significant stress on the business. New competitors entering the marketplace or other alternatives can quickly upend a market as we have seen with Uber and Lyft and their impact on the taxi industry.
It often requires monitoring over a long period in order to detect trends or slowly developing issues. In addition, training should include how to understand a company’s business model, how to identify its value proposition, and the fundamentals of good strategy. The process is not foolproof, of course. However, even if the process does not reveal early stage problems or creative solutions, monitoring and analyzing the breadth of factors will nonetheless provide greater business intelligence and insights on the monitored clients and prospects, a distinctive advantage in today’s hypercompetitive legal market.
About the Author:
Eric Dewey, MBA is a principal at Group Dewey Consulting, which offers business development training and coaching, opportunities research, and independent lateral client book due diligence and integration planning services for law firms. Dewey holds an MBA from Ohio University and professional certifications in financial services and commercial real estate marketing.