Law firm competitive intelligence (CI) is an important part of effective legal practices and a large contributor to how many firms differentiate themselves today. However, despite its importance, numerous firms are still on the fence about CI. Research by Acritas shows that while 82% of firms have headcount for CI, only 52% have active formal CI functions.
Understanding law firm competitive intelligence
Most definitions of competitive intelligence will mention that it includes the collection of information from various sources, information that is then analyzed and used to make decisions.
In firms where CI is not active, this is usually because its value is misunderstood, and it is seen as simply the collection of information. If this is a roadblock in your firm, a culture shift is required for CI to move from a ‘nice to have’ or ‘not important’ to a ‘must have’.
But why is it important to invest in law firm competitive intelligence and does it influence the continued success of your firm? Here are five reasons why having a CI unit matters:
- Clients want firms that understand the business
The shift in legal services demand over the last decade has challenged firms to become more agile and creative in their approach.
Today, clients are searching for firms that can deliver teams of experts in different practice areas. This ‘group counsel’ approach has also sparked a ‘shop by project approach’, as clients search for firms that can deliver the right set of skills and experience for a certain project, at the right price.
For clients, this approach allows them quick and easy access to counsel that is uniquely tailored for their business needs. Having access to competitive intelligence strengthens a firm’s positioning in this new market space as firm experts are equipped with the best information to address unique client needs.
- Clients want firms that understand their industries
Competitive intelligence as a function to better service clients involves collecting valuable information on industry trends, issued trends, inventions, rules, court decisions, regulations, legislation and law.
For highly competitive client’s, access to informed counsel is critical. Legal experts with a depth of knowledge and insight into the driving forces within the client’s industry can enhance the client’s competitive advantage and help them adapt to market dynamics.
- Effective competitive intelligence helps shape firm strategy
Understanding of the various dynamics within the industries your firm is focused on enables it to adapt quickly. By continuously leaning on competitive intelligence, your firm strategy remains relevant. For example, how well is your firm equipped from a technological perspective? Are your tools helping or hurting performance?
CI can help you determine your firm’s strengths and weaknesses and course correct to address market and client needs by capitalizing on the strengths and remediating your weaknesses.
- ROI of competitive intelligence can be measured
While CI is the collection of information, the act of analyzing and acting upon that information for your firm’s benefit is what matters most.
To establish the impact of competitive intelligence in your firm, it’s important to make feedback an integral aspect of your CI cycle. This way your firm can determine the usefulness of the competitive intelligence, whether it was appropriate or complete, and if it can be improved upon.
The Competitive Intelligence Process: Competitiveintelligenceblog.com
In addition to your feedback process, competitive intelligence ROI can be determined by answering a set of basic questions, such as:
- Which units in your firm make use of CI?
- What kinds of assignments does each unit request?
- How does each unit value CI as a resource?
- Is CI applied?
- What is the cost of managing a CI unit?
- What profits and cost savings can be attributed to your CI unit’s contributions?
Law firm competitive intelligence can make a tangible difference. It gives legal practices a stronger foothold with clients as provides firms with the necessary information to address new market challenges that clients face. Effective competitive intelligence can also be measured for ROI and assists firms to align the strategy with market changes, making them more competitive and attractive to clients.