Practice management | Realising brand value for law firms

Does your firm’s brand contribute strongly to the business behind it? Odds on that the answer to this question may well be ‘no’. Or perhaps a nonchalant shrug of the shoulders, or maybe a comment that it is reputation that is important for legal services rather than brand which applies more to consumer goods. Law firms’ apparent disinterest in branding is reflected in the 2012 Brand Directory league table which ranks the top 500 global brands according to value. Although there are several global powerhouses in the legal market, there are no law firms listed in the directory, although other professional services organisations such as PwC, KPMG and Deloitte make the grade (placed 57th, 80th and 89th respectively).

So why exactly are law firms at odds with the powers of branding, and in the current competitive legal landscape, is it high time that changed? In essence, a brand is a promise of what to expect from a firm, and a firm with a high brand value ensures that its message is consistent and it delivers on the promise. A strong brand can add worth to a company as the success of Apple, Google and Microsoft demonstrate (brands which have huge commercial value). Law firms are quick to assert that their most valuable asset – their people – doesn’t easily lend itself to being packaged up and sold on a ‘brand’ basis as technology is, but that assumption is now being challenged in light of the introduction of ABSs on to the scene.

Individualism in law

?While the legal industry is adept at protecting and preserving intellectual property, the value of law firm’s own brand is often overlooked– with firms doing relatively little to cultivate their brand. An important factor behind this can be found in partnership deeds – which won’t allow partners to receive or make any payment for the ‘value’ of any individual, sometimes named, partners when they join or leave a firm.

Most successful lawyers have carved out and continue to maintain their own personal brand (or reputation), with consistency, strong client relationships and clear communication all placed at the heart of their customer service. However, a firm’s brand identity is often passively left to evolve with little serious consideration behind it, resulting in an amalgamation of its partners’ attitudes – both good and bad – shaping its actual brand personality.

As a result, members of the general public often struggle to name a law firm, as a YouGov survey in 2009 revealed when it showed that more than 60 per cent of the public could not name a single law firm despite over three quarters (78 per cent) using a solicitor before. It will be interesting to see if this changes as more alternative business structures enter the market.

As the Legal Services Act (LSA) is already starting to alter the legal and wider business environment, it is becoming more essential that law firms’ attitudes towards their own brand value shifts.

New challenges?

This development presents a twofold threat to the legal community – they must either maintain a competitive edge over the expected slew of businesses which will start offering legal services under an ABS structure, or else preserve their professional integrity in tie-ups with private equity firms or umbrella structures such as the QualitySolicitors network. In addition if they consider becoming an ABS themselves then the value of the firm’s brand comes into the equation.

The legal profession is certainly concerned that well-known brand names such as Eddie Stobart (see box) will capitalise on their well-honed brand values when it comes to their extension into legal services. While people can be overwhelmed by the legal process, it is thought they may be more willing to engage with a brand name with which they are already familiar, even if this is a mightily simplified process akin to selling groceries.

Adding to this already congested market, the consumer-focused brands now entering the industry are in a position to not only maintain a more competitive cost structure, but to also use their brand to openly promote their value-for-money; something that law firms struggle to match.

Merging businesses and brands

As well as new names entering the market, the introduction of ABSs also sees law firms enter into tie-ups and mergers with non-legal entities such as private equity firms or umbrella organisations such as QualitySolicitors or RocketLawyer. As with any merger, these new arrangements force law firms to examine the value their brand brings to the party and it is vital that any firms entering into negotiations with non-legal organisations are able to put a number on what they bring to the table in order to avoid making a bad deal. But unlike mergers where both parties are law firms, this scenario sees the non-legal organisations enter negotiations with an advantage; they are generally more experienced and comfortable in calculating the value of their brand and could potentially gain the upper hand in negotiations as a result.

It is still early days to see how mergers with non-legal organisations may affect law firms but there is a real danger that, in ignoring issues of brand value for so long, law firms could be unintentionally swallowed up or damaged by entering into a relationship with a non-legal brand. For instance, poor trading figures, redundancies or other crises at the partner company in an ABS will inevitably also affect the reputation of its affiliated law firm. The reputational damage is likely to be

much higher if the law firm’s brand has been absorbed in the ABS, limiting its future prospects of operating as a stand-alone company.

Therefore it is essential law firms take an extensive look at their own brand value and other intangible assets before entering into an ABS arrangement. Using an IP due diligence and valuation, firms can form an impartial view of their brands and in the course of that very process, will also come to understand how strong their brand actually is.

Brand capitalisation?Law firms have undoubtedly upped their business development game as their marketplace has become increasingly crowded – but issues of branding are commonly waved away as insignificant or irrelevant, and this needs to change.

As the wider economic climate remains uncertain, many law firms could benefit from becoming ABSs and it is expected that mid-market law firms, especially high street and regional firms, will capitalise on the chance to grow with a non-legal partner in tow.

While UK law firms have some way to go before they compete with the likes of Apple, Microsoft, and Google for brand recognition, they should start looking clearly at solidifying their brand image to at least increase the number of people able to recognise the name of their firm.

For law firms planning to capitalise on ABSs, and those that are fighting back against non-legal organisations, identifying the value of their brand is crucial.

 

SUPER-BRAND GOES LEGAL Transport firm Eddie Stobart, which announced in May last year that it would enter the legal sector, is one such organisation that seems to be capitalising on brand value alone to make its new venture a success.  Hailed as a UK super-brand, it is ranked ahead of global companies BP, Vodafone and O2 and its Channel 5 documentary, Eddie Stobart: Trucks & Trailers has helped the firm build up a dedicated fan-base. Clearly Eddie Stobart is in a strong position to leverage its brand value with its legal service which promises to connect firms to barristers, bypassing solicitors.  This is just one example of the many changes expected in the market as more ABSs emerge. The legal marketplace has already become hugely competitive and overcrowded with traditional law firms alone, making it tougher to win business, offer a differentiated and individual service as clients struggle to choose between many semi-identical offerings.