Build your leadership and influencing skills is the advice to BD&M professionals from our guest, Joel Barolsky, Managing Director of Barolsky Advisors.
In this podcast, Graham and Joel discuss a broad range of strategic issues affecting law firms including:
- Why differentiation is a meaningless brand strategy for national and global full-service firms
- The Bermuda Triangle of law firm management
- Why changes in the legal supply chain affect how and what type of new business firms win in the future
- Why BD&Ms need to bolster their leadership and influencing skills
About our guest, Joel Barolsky
Joel is the consultants’ consultant!
For the past 30 years he has helped law, accounting, engineering and other business advisory firms plan, innovate and grow.
In addition to heading up Barolsky Advisors, Joel is a Senior Fellow of the University of Melbourne and a former Principal of Beaton Research & Consulting. He is on the Advisory Board of the College of Law’s Centre for Legal Innovation and creator of the Price High or Low iOS pricing app.
He is a recognised thought leader evidenced by regular conference keynotes, press mentions and the global reach of his blog, Relationship Capital. Joel is a monthly op-ed contributor to the Australian Financial Review Legal Affairs section.
Joel has advised over 100 of Australia and Asia’s leading professional service organisations. Around 70 percent of his clients are repeat clients or come directly from referrals from existing clients.
TRANSCRIPT: A Legal High with Joel Barolsky
Graham Seldon: [00:00:00]
In today’s episode, I’m joined by Joel Barolsky, who is a strategy advisor and management consultant to professional services firms. He regularly works with law firms on engagements such as crafting strategy for their practice scripts and client relationship teams, auditing critical client relationships to drive profit growth, and helping firms increase their yield from their key client programs. In addition, he is the creator of the Price High or Low smartphone app and is also a regular feature writer for the Australian Financial Review on trends in the legal sector. Joel, welcome to A Legal High.
Joel Barolsky: [00:00:37]
Thanks. Great to be here.
Graham Seldon: [00:00:38]
Thank you, Joel. Before we launch into talking about the dynamic and changing legal market, can you tell our audience just a bit about yourself and how you became to be such an expert commentator?
Joel Barolsky: [00:00:49]
I didn’t set out to become a law firm strategy consultant, but when I emigrated to Australia back in 1990, my first role was with the Melbourne Business School. I was a case study writer and researcher and wrote up management case studies, which were used on the MBA. And at the school I bumped into a chap by name of George Beaton (the George Beaton) And George was teaching part time at the school (he taught marketing on the MBA program) and he and I started to work together. I did contract work for him. And actually one of 0our first assignments was with Phillips Fox, now (DLA Piper) in their offices in Elizabeth Street in Sydney. And so on and off for six years I worked with George and then decided to join his practice full time and stayed with him for for 16 years. And we started in his home in Armidale and here in Melbourne and built quite a successful practice and launched the beats and benchmarks and all the research products and so on. And really, George was and has been my mentor. I’ve really learnt the craft of consulting from him.
Graham Seldon: [00:02:01]
And he was the first in Australia to lead law firm consulting. And actually, we’ll get onto it later about how the market is. People now talk about how dynamic the legal sector is and how fast changing it. But actually, it was fast changing back in the day. Like it was just a different change, wasn’t it?
Joel Barolsky: [00:02:21]
That’s true. And there’s always been challenges and issues, you know, on and off. Sometimes they’re broad economic issues and sometimes they’re talent issues. But they’ve always been been changes. And we’ll come back to that later. But just finishing the story. And so about 10 years ago, I decided to just set up on my own and I’d been doing just that and working mostly with law and accounting firms here in Australia and New Zealand, helping them with strategy questions, where they going and how they’re going to get there.
Graham Seldon: [00:02:55]
And you’ve got a very broad practice across strategy, client relationship management strategy, pricing strategy, haven’t you? You look at the whole lifecycle of clients. Really?
Joel Barolsky: [00:03:05]
Yes and no. But I’ve seen them in the last couple of years. I’ve concentrated more and more on strategy. So, there are other people in pricing, for example, like Colin Jasper. And you know, who are specialist in these particular areas and people like Sue-Ella Prodonovich who’s excellent in marketing & BD. So there are people who are, you know, really specialised in certain areas. But the sort of my space that I like to play in is in that sort of strategy space. And try to pitch mostly to managing partners, chair of partners and in the sort of firm executive and I made a conscious choice to sort of target that C suite of law firms about three or four years ago.
Graham Seldon: [00:03:50]
What I think you’ve done very well (and the reason I wanted you to come on as a guest on to A Legal High) is you’ve probably become one of the most vocal consultants in Australia. I mean, you write regularly if The Australian Financial Review and sometimes quite controversially, you’re not afraid to have an opinion, are you? And we’re going to get into some of those opinions.
Graham Seldon: [00:04:09]
In a recent article you wrote called The Bermuda Triangle of Law Firm Management. you suggested that the growth in fee earner numbers, diversified service offerings, the use of new technology and changing buyer behaviour was causing an increased complexity of managing law firm business. And you specifically said that marketing and BD decisions in the firms were becoming trickier. What did you mean by that?
Joel Barolsky: [00:04:34]
Well, if I just go back to the general principle. So, when a firm is quite small, the partners can sort of sit around one table and make decisions relatively quickly. Are we going to do X, Y or Z? Let’s have a quick chat about it and off they go. Very little is codified or written down. There’s not much bureaucracy in the firm. Well, there’s no need because it’s quite small and informal and quick and easy.
Joel Barolsky: [00:04:59]
But as firms grow, so suddenly the table can’t fit everyone, or you now have two or three offices in different locations and you servicing different client sectors and have a wider range of service offerings. Well, it starts to get a bit messy. It starts to get more complicated. And you can’t just run a firm in that very informal way because typically you almost get paralyzed if you try to involve everyone in every decision. So, if you have to make a decision on car parking policy or the colour of posted notes, you’re not going to call a full partners meeting to make those decisions. Now, some firms still do that, and they’re sort of paralyzed, paralyzed democracy. But there’s this transition that firms go through from these very informal, relaxed way of working to more formalized, system wide, bureaucratized ways of working. And as firms migrate in that path, they get a bit stuck because what do they what powers do two partners give up or what are they delegated and what did they hold on to? And firms tend to over-invest in management. So there’s this period where almost everyone gets involved in decision making and partner’s time and attention actually becomes much more focused inward.
Joel Barolsky: [00:06:22]
Right. They actually have more meetings to work things through. Everything gets sort of how we’re going to work this out. How are we going to work that out and actually firms take their eye off the ball, they take their eye off clients and they take the eye off their people and they spend time in meetings. And this is this idea of the Bermuda Triangle that firms get sort of sucked into this period where they it’s just messy.
Graham Seldon: [00:06:46]
They go missing.
Joel Barolsky: [00:06:47]
They go missing.
Joel Barolsky: [00:06:47]
From the clients.
Joel Barolsky: [00:06:49]
From the client. Yeah, exactly. They just get very inward focus. And unless they have someone emerges as a strong leader and people are willing to follow or they really get to a size where people to say, look, it’s just ridiculous. We have two corporatise to a point in which people sort of feel comfortable with that. They sort of come out at the other end. But some firms are just perpetually stuck in this sort of blend of formal and informal and don’t really have strong leadership to take them through to the next stage.
Graham Seldon: [00:07:19]
Do you think that that leads them to have knee jerk reaction? So when you talk about BD marketing becoming trickier, which I really want to get into what you mean by that. Are you of the mind that because of the way law firm management is structured in these in these firms that you’re talking about do they make knee jerk reaction decisions in terms of let’s have a client relationship strategy and see how it goes and next year we’ll change our mind and do something different?
Joel Barolsky: [00:07:46]
Yeah, a little bit of that. So just what is the complexity? If you’re just servicing one client in one service line from one location with one partner, that’s fairly simple and straightforward. Life goes on merrily and there’s still a lot of that. But suddenly you say, well actually we are servicing this fairly large organization and they have broad needs. While we need to not only do litigation work, but they can do their property work and we do employment work and we can help them, you know, in a raft of different areas. And suddenly involving five, six, seven different practice areas of the firm and there’s a need for a level of coordination.
Joel Barolsky: [00:08:27]
Then you add geographic dimension to and you get another layer of complexity so that there’s complexity in managing these relationships by virtue of the breadth and scope of the relationship. And, you know, just the number of people involved, both on the firm side but also on the client side. So that as you grow and you get pope, hopefully get some of those bigger relationships which are more complicated, it requires a level of coordination, management, leadership to drive things.
Graham Seldon: [00:08:55]
And that’s probably why we’ve seen a rise in client relationship managers in-house, because they see the value of having somebody almost as a sort of support role.
Joel Barolsky: [00:09:04]
An orchestra conductor, you know, somebody who’s actually going to conduct that. The language, I often like to use his choreographer. Yes. You know, they don’t do all the dancing, but they should choreograph it.
Graham Seldon: [00:09:16]
Sometimes they shouldn’t be dancing at all. Let’s face it. When you go into a firm and talk strategy, you go in at a high level, talk to managing partners. I’m curious to know how often does marketing and business development come up on their agenda? How high profile is it for them in terms of their future thinking about that business?
Joel Barolsky: [00:09:34]
It’s critical. Yes. Well, particularly the sense that that firms are very revenue sensitive. Yes. So, yeah, look at the cost structure and the economics of most firms. You know, most costs are fixed. You know, in the sense they’ve got their staff, they’ve got their rent, they’ve got they have professional indemnity insurance. And majority of, you know, their work working in a fixed cost business. I mean, they’re semi variable. They change from year to year, but they’re not they don’t just go change from day to day. So therefore, if you’ve got a fixed cost business, the way you try and make more money is to increase the revenue on that fixed cost. Yes, every extra dollar you earn is marginal profit. Yes. All right. So, firms are very interested in revenue. And interested in growing revenue. The market is tough. Things are becoming more sophisticated, competitive clients are getting more sophisticated. And therefore, people are looking for professional help, advice, support on how to grow revenue. Yes. And that’s where marketing and BD professionals play.
Graham Seldon: [00:10:43]
So you said it was critical. Do you think that’s changed in the 20 – 25 years that you’ve been consulting to law firms? Because if I think back to when the global financial crisis came, there are quite a lot of firms that really went hard on their marketing and business departments and made a lot of people redundant. Do you think it’s changed now? Do you think if we were to have another economic crisis, they would hold tight to their marketing business development resources? Are they valued more is what I’m asking you?
Joel Barolsky: [00:11:10]
I think you need to split the function from the people. So, the role of marketing and business development activity and the roles are critically important. How firms actually do that and the combination of using marketing and BD professionals, both in-house and consultants, or getting the lawyers and their partners to do marketing and BD themselves. So what I’m saying is that the function and the activity is critical. How they actually do it, well, that’s another question.
Graham Seldon: [00:11:45]
That’s interesting because I know that the law firm sector does rely heavily on consultants in specialist areas that we’ve talked about, pricing and things like that.
Joel Barolsky: [00:11:55]
Sorry, can I just make one more point. Just one other. You talked about long term trend. But I think one thing, if you do take a 20-year view, I think one shift is, is that I think marketing in terms of broad based marketing, communications and brand building, perhaps this has has been its relevance has toned down slightly but business development definitely has turned up. The dial has turned up. So much more targeted, more focused almost more accountable activity around building revenue is much more in vogue (as opposed to just throwing lots of money at building our brand and hope one day that will translate into more real more revenue). And so there’s this much more energy towards stuff where people can see a direct sort of ROI.
Graham Seldon: [00:12:55]
Well, let’s talk about that, because in another article you said that you thought specifically to Australian law firm, you said that you thought that 99 percent of Australian law firms were wasting their time seeking clear market different differentiation. So if they’re wasting their time, Joel, how are they supposed to compete? What are they competing on?
Joel Barolsky: [00:13:14]
Let me qualify what I said do. I’ve got a lot of flak for that. So there are a couple of qualifiers that are important.
Joel Barolsky: [00:13:25]
In the article, if you go back to it, I said full service law firms, as opposed to just any law firm. And secondly, I said there’s differentiation. Clearly, there’s differentiation in what I call strategic groups. So Tier 1 firms are clearly in their own differentiated group relative to say mid-tier firms. So it depends on which group you’re in. There are still distinctions and differentiation between those groupings. But within a grouping, so if you’re in full service tier, you’re one of 70 in Australia. So, the idea that you can find clear differentiation in a market where you’re one of 70 on factors that are really important to clients, I think you’re kidding yourselves. So I just think this idea that you’re going to find a place in the market, which is, you know, strongly differentiated on things that are important to clients. What’s important to clients? Quality advice, good service, good value, good relationships are important and easy to do business with. Every law firm says they do those things particularly well.
Graham Seldon: [00:14:37]
And they probably do do them well, actually.
Joel Barolsky: [00:14:40]
So are you going to really differentiate in a market where there’s 70 others doing pretty much the same thing? And so my view was why spend a whole lot of your energy and time trying just to be different? Right. I don’t think that’s going to get you where you want to go. If you are one of those full service middle tier firms, just this pursuit of difference is a waste of time.
Graham Seldon: [00:15:07]
But you said in the same article that these firms need to have strong brand awareness. So how are they supposed to promote their brand if differentiation is a waste of time?
Joel Barolsky: [00:15:16]
Well, sorry for getting a little academic.
Graham Seldon: [00:15:17]
No, I really want to get into it.
Joel Barolsky: [00:15:22]
So if you deconstruct this idea of a brand, there are three broad elements that you have to think about. So firstly, there’s brand awareness. Have you heard of Firm X? Right. And that’s prompted or unprompted. So there’s a sense of awareness. Have you heard of them? Are they known in the market? If you think of three law firms, who would you think of? Yeah, right. That’s the notion of awareness and sort of top of mind or prompted. The second aspect to it is what they call associations. So. Okay. Think of Baker McKenzie just to pick an example. People think of a global firm, international long standing. There’s a set of associations linked to that particular firm. In some other firms that might. The association might be some key partners that they have, you know, some star partners or that might be a particular case that they ran. Yeah. They’re famous for running the X, Y Z case. Representing Y, you know. Yeah. Yes. Business, personality and so on. And then the third aspect of brand is what they call attitude or what could be resonance. So you might think of a brand. We are very aware of their brand strongly associated with something. But gosh, you hate them. You’ll never use them. I mean that’s sort of the feeling or the early attitude that you have towards them. And those three things are different. Is this awareness? Obviously, they relate awareness, association and attitude. So what I’m sort of saying is that I think you should focus on the awareness piece. I think awareness is still important. That helps open the door. It still helps facilitate your partners and others doing business development. People say, I’ve heard of you, you know, that you’re in the market. But, you know, to think that you can then come up with clear, differentiated associations. I’m not so sure.
Graham Seldon: [00:17:14]
So does anybody do it well?
Joel Barolsky: [00:17:14]
What happens is that the boutique firms sort of do it well, because they’ve narrowed their offering either in terms of a particular service or they specialize in a particular area. So Watson and Carney, as an example – insurance. So the focus is on a particular client industry and that type of work. Yeah, but, you know, that’s a petite firm. It’s not a full service firm. That’s not what I’m talking about. So firms that do narrow their offering.
Graham Seldon: [00:17:54]
But full service firms can really only have umbrella branding can’t they?
Joel Barolsky: [00:17:56]
Well that’s exactly my point. And so rather, spend your time one on awareness again. Get your name out there. Spend that money and effort and energy to create the awareness. But don’t try fake differentiation or come up with something or promise the world that you’re the best in the world at legal service when frankly you’re just as good as everyone else.
Joel Barolsky: [00:18:25]
And you also want to mitigate any negative resonance or negative attitudes. So if there’s any dirt, you want to at least mitigate that. You want to be at least neutral.
Graham Seldon: [00:18:37]
There’s very little authentic voice in law firm marketing. I think, you know, when you look at if you just look at the top 20 law firm websites globally, it will be very, very hard. And we were saying this 20 years ago. I mean, seriously, you and I have been in a room 20 years ago at conferences where that’s been a topic where they’ve where they’ve put up slides of law firms, but they’ve taken the branding off and they’ve said, who is it? And nobody nobody knew the difference from one to another. Why is that not an authentic voice in law firm communications and branding? And why is nobody owning who they are, do you think?
Joel Barolsky: [00:19:10]
Well, I think because it’s our training. I mean, I was trained in marketing & business development. Our training talks about differentiation as the key to competitive advantage. There two broad ways to compete, low lost or differentiation. Go back to Michael Porter. That’s our training. So we go into our roles and we then seek to apply what we’ve learned at business school or law school. The theory tells us. But I think the theory is weak when it comes to law firms. And I think that, you know, it’s inauthentic because you’re not going to get there. You’re not going. If you are one of 70 offering a full service pretty much the same as anyone else, how can you be authentically differentiated? You can’t.
Graham Seldon: [00:19:52]
Well, the practitioners will become authentically differentiated. And that’s what we’ve talked about in previous podcasts. This whole rise in profile raising of individuals through social media is beginning to differentiate.
Joel Barolsky: [00:20:03]
Exactly. So it’s at the firm level. Yeah. My view is yes, create awareness, open the door with a known firm brand. But don’t try and engineer it.
Graham Seldon: [00:20:15]
Keep it loose and authentic to what it is.
Joel Barolsky: [00:20:17]
Graham Seldon: [00:20:17]
We’re a stable of amazing people.
Joel Barolsky: [00:20:19]
Graham Seldon: [00:20:19]
Yeah. And every lawyer should have their own brand person and come to Seldon Rosser to hire one. We’ve just tripled or quadrupled the market!
Joel Barolsky: [00:20:27]
That’s the point. I think that differentiation or that notion of specialty is much more than either the practice level or individual level. Yeah. And its relevance is there. But you are starting to pick an area or pick a focus or make an industry and anchor yourself.
Graham Seldon: [00:20:42]
Yes, you have to be famous for. You do client relationship strategy work with firms. I want to ask you this question. So in your opinion, do you think law firms should use lawyers in client relationship roles or do you think they should use sales and BD professionals?
Joel Barolsky: [00:20:59]
I think they should use lawyers with help from BD professionals.
Graham Seldon: [00:21:04]
Well, I mean, do you think this marketing and BD people should front clients and try and win work?
Joel Barolsky: [00:21:12]
Look, it’s it’s interesting. So if you if you look at a real life case study in the US, the D.L.A. Piper, we mentioned previously, hired in a number of ex General Counsel and in-house people to become salespeople. Right. So let’s hire people who are now have that similar role to the people we’re trying to pitch to. They will have some empathy. The chemistry lab understand the challenges. This will be perfect. And that’s my understanding I might have this wrong, is that still a work in progress experiment with some wins and some losses?
Graham Seldon: [00:21:50]
Well, some people would argue that General Counsel are not sales professionals.
Joel Barolsky: [00:21:54]
Yeah, but they’ve found they’ve hired people of particular profile for their referral and their networks and they’ve trained them up and obviously people who don’t want to pursue their legal career.
Joel Barolsky: [00:22:10]
But but the principle is that if you actually look at the nature of legal service and how clients buy it, they actually do buy people and they buy particular advisors and they’re buying pretty much horses for courses. Yeah. All right. So they might have a panel of five firms or three firms, but when it comes to this particular matter, they’ll choose this person in that firm because they know them and trust them to be their expert in that area.
Joel Barolsky: [00:22:41]
And so if you and I know that varies, but if you take that as a general premise, can a full-time salesperson really make a difference? Can they pay their way? Right. That’s the point. You can if you’re paying them $100,000, can they deliver?
Graham Seldon: [00:23:00]
No, $200,000. We’re not 1994 anymore!
Joel Barolsky: [00:23:02]
Sorry Graham. Can they generate two million dollars? Yeah. And I think not.
Graham Seldon: [00:23:13]
Well I think they do. In fact, I know they do. But here’s the thing. I think we’re agreeing and disagreeing on the same thing because I think what’s actually happening is that is that the really good BD sales people are going into the market to hear about the opportunities and then they’re bringing the lawyers along to seal the deal. Because lawyers generally don’t have time to be out in the market, networking and working out where the next opportunity is going to be.
Graham Seldon: [00:23:41]
And the other thing about salespeople, which I think is really important to mention, is that they take a whole-of-firm view so that they’re much better at choreographing a career – that whole cross selling ability, which we know a lot of fee earners don’t cross selling very, very well.
Joel Barolsky: [00:24:01]
That’s exactly right.
Graham Seldon: [00:24:02]
And so I think they do pay for themselves.
Joel Barolsky: [00:24:04]
Yes. But they can’t pay for themselves on their own.
Graham Seldon: [00:24:08]
It’s a team effort.
Joel Barolsky: [00:24:11]
And I think we agree.
Graham Seldon: [00:24:12]
Joel Barolsky: [00:24:13]
One of the things that partners really struggle with is to pick up the phone. Yeah, right. There’s some call reluctance, you know, to make that call to the prospective client. The fear of getting rejected or saying no. And a BD person can help make that call? Let’s call them. Let’s call them now. This is how we get around the conversation.
Graham Seldon: [00:24:39]
And also, they’re very good when lawyers leave. So, you know, if a lawyer has a great relationship with a client and they leave the firm, a good BD person is into the client straight away saying, we know he’s left or she’s left, but we’ve got other people. What can we do to facilitate that conversation? And I think they would do that quicker (if they’re given autonomy, which sometimes they’re not).
Joel Barolsky: [00:25:00]
Yes, they have they have fewer vested interests, you know, in that sense, they represent the firm.
Graham Seldon: [00:25:05]
They represent the firm, they take a whole firm view.
Joel Barolsky: [00:25:09]
But on the other hand, what you’re talking about also is servicing sort of fairly large and mega clients and the return is there because of bringing in all that extra work by virtue of selling. But there are a whole lot of clients where actually the scope and the volume of work isn’t really there. I mean, it’s just actually a midsize organization with an occasional legal need. And, you know, that’s the rump of clients.
Graham Seldon: [00:25:44]
You rarely see those strategic sales BD roles outside big international firms. It is a luxury in a smaller firm. I get that. Unless it is a specialized firm, in which case it pays for them to have somebody who’s in the sector, you know, getting opportunities.
Joel Barolsky: [00:26:00]
Just one last comment on that. And again, I’m quite intrigued. Hall & Wilcox employed a chap by the name of Pete Campbell that came from Spark Helmore. And Peter’s an ex I.T. guy. He’s very much a what I call a sales engineer. So he actually facilitates a lot of relationships, particularly with insurance clients and also others, in terms of how do we add more value to our clients by bringing new technology, bringing processes, bringing new ways of working and collaborating and co-creating with our clients. And so it’s a new type of sort of salesperson, not from a marketing BD perspective, but more from a technology perspective and enabling and growing relationships. And I see a growing role of these sales engineers who are going to complement. Again, add to this relationship, can’t work on his own, he has to bring the legal experts in. And he’s not the main front to the relationship, but he is becoming more and more critical to some of the, you know, some major clients and good on them for employing him and he’s been very effective in doing that role.
Graham Seldon: [00:27:16]
It’s a good link because my next question is on your commentary on the rise of technology. And in one article, you predicted a future whereby the big four consulting firms will act as an intermediary between law firms, technology vendors and buyers of legal services. What is that prediction? Give me more on that. It’s fascinating.
Joel Barolsky: [00:27:37]
It is fascinating. And it’s and it’s an evolving sort of thesis, I suppose, or idea. But there’s this idea of the legal supply chain. So, again, just indulge me for a moment. But, if you think about it, there’s sort of there’s six elements to the supply chain and not everything follows the sequence and some start early and end early. But broadly speaking, you start out at the first level, which is the law and the justice system.
Joel Barolsky: [00:28:02]
The next sort of level is technology, legal technology, data algorithm players. The next level is law firms and law companies and alternative legal providers. The next set of stage is in-house legal and in-house legal teams. The next sort of element is the client organization so that the client, the organization sells it’s in a way consuming that legal service and getting advice around the law. And then ultimately there’s the end consumer, the general public, that’s you and I who buy that phone with terms and conditions. And, you know, it leaves an impact and not everything affects everyone. But there’s value in thinking about that legal supply chain for a few reasons. One is, I mean, the law firms have been the dominant force in that supply chain for 150 – 200 years, for for time immemorial. Over the last 20 years, it’s been a significant growth of in-house. And in a way, they’ve almost shifted some power away from the law firms towards the client organization.
Joel Barolsky: [00:29:09]
But what’s also happening now is that there’s been this massive growth of the second part, which is the legal technology data algorithm players. And many of those are quite small now but there’s more and more evidence of consolidation and more money flowing into that area. And in the next five years, some of them are going to be quite major players. So, if again, if you’re thinking big picture, you know, you suddenly got, you know, quite sophisticated, cashed up technology companies providing legal service and what they’ll try and do is leapfrog the law firms. And go directly to the client organization, to the consumer or to the in-house. You got the law firms and in-house. And so you got, you know, three sort of, you know, forced the three major players playing, playing out.
Joel Barolsky: [00:30:00]
In comes the Big Four.
Graham Seldon: [00:30:01]
As they always do.
Joel Barolsky: [00:30:03]
As they always do.
Graham Seldon: [00:30:04]
And they have very deep pockets.
Joel Barolsky: [00:30:05]
Yes, they have very deep pockets, but also a trusted brand.
Graham Seldon: [00:30:08]
And an entrepreneurial spirit. I mean, they’re not afraid to just buy something and see if it works, if it doesn’t move on.
Joel Barolsky: [00:30:15]
They can afford it.
Graham Seldon: [00:30:16]
They can afford it. Yeah.
Joel Barolsky: [00:30:17]
And really good relationships with some key decision makers, particularly CFOs. And they say, well, where do we play along here? So what’s been happening the last three to four years is that they’ve set up their own in-house legal teams. So we’ve got PWC legal and KPMG. Personally, I just don’t see them succeeding in a substantive way. It’ll just be another law firm. Yes, they’ll get cross referrals from their other relationships. And, yes, they’ll come into the mix. But, you know, are they really going to compete with Freehills and Allens and Mallesons for the really big ticket M&A and litigation work? I just can’t see it.
Joel Barolsky: [00:30:58]
But this year in Australia KPMG have partnered with Plexus. And PWC have partnered with Law View. And globally EY have bought River View Law, which has a technology called Kim. And what my understanding of this technology is that it actually offers a platform for in-house legal to do all the things they need to do. It’s a one stop shop platform, operating platform for in-house and legal. So what it does is that it helps the purchasing of external legal services from law firms. So it helps that, you know, the transacting around that, the payment, the billing and all those reporting arrangements. The same platform helps with document management so that managing lots of contractors and doing a lot of work, it does all the reporting of of how you know, who’s doing what work within the legal team. Basically. it’s their practice management system.
Graham Seldon: [00:32:16]
So they’re buying a part of the supply chain?
Joel Barolsky: [00:32:23]
The view is if you go to the in-house legal team (and you say fast forward five years or ten years) and one of those firms becomes the Google or becomes the standard platform. And it might not be from the big four. You know, you’ve got Jodie Baker in Australia with Zakia Technologies, she’s ahead of the curve in the technology sense relative to the others. But just imagine that there’s now this operating platform that’s the standard across all in-house teams. Every law firm, in order to service those clients, has to transact or use Google, or use this platform to go in and out. So they’re not necessarily another rival law firm for the work, but they are using this platform and in effect, that platform owner will control or have access to unrivalled data. So they’ll know the pricing of every law firm. They’ll know the turnaround time of every law firm. They can get client satisfaction data. They can get costs. They’ll have an understanding of that full supply chain like no one else. Also, potentially, that platform will also be the place for technology to be plugged in. So, if you come up with a new whiz bang artificial intelligence tool around document review, it will come in and actually work within that. So this platform won’t I won’t just extend back to law firms, but potentially extend back to the to the legal technology players, too. And what’s happening at the moment is another initiative in the US – a platform operator called Rein & Court. I’m not sure if you’re familiar with that, but it’s a collaboration of law firms. That’s all the law firms coming together and say, well, let’s build our own platform for technology, because we are just bombarded by all these point solutions. We need a common set of standards and they are developing their own platform. So the law firms are doing the platform play with technology and then the clients potentially are going to develop this app. My feeling is that the clients are going to win.
Graham Seldon: [00:34:47]
Well, the clients are going to win because they’ll have better information and they’ll have the power.
Graham Seldon: [00:34:53]
And interestingly, we heard from a BD manager last week. Very interesting story about how a client of the law firm had said, we are sick of receiving updates from our five panel law firms and we’re sick of seeing it. We want you just all to work together and come up with one communication, one point of contact, which is forcing those law firms to start collaborating.
Graham Seldon: [00:35:18]
We know that other professional services sectors like engineering, for instance, they’ve always collaborated and they’ve always understood we can do this, but you can do that but we’ll sort of work together. Do you see collaboration being a major thing to affect the legal industry?
Joel Barolsky: [00:35:33]
Yeah. Look, I’m not sure whether the law firms will collaborate to that point. Remember, that competition is fierce and I think it will come from the clients using maybe a common platform and picking the ones or the pieces of the puzzle that they want. They want that they want.
Joel Barolsky: [00:35:57]
So, look, I know this is a very long answer but to me, this is fascinating.
Graham Seldon: [00:36:02]
It is fascinating.
Joel Barolsky: [00:36:03]
And I think the Big Four will actually exit being legal providers. Right. That’s my prediction.
Graham Seldon: [00:36:11]
I love this prediction.
Joel Barolsky: [00:36:13]
Because I think they’ll be conflicted.
Graham Seldon: [00:36:15]
Yes. Right. But of course.
Joel Barolsky: [00:36:18]
You can’t be both a supplier and a platform provider. Well you can but it gets tricky. You can’t be both a player and the rule maker like you can’t be the referee and a player.
Graham Seldon: [00:36:33]
So with all of that in mind, because as I’m talking to you, it’s fascinating because first of all, you have no notes in front of you, you just literally know this stuff. And you could go on for hours, I can tell. It’s so exciting. But I do want to ask you, as I’m conscious, that our audience of listening going, okay, so what’s the future for us in marketing and business development? So what do you think the future looks like for marketing & business development in the legal industry? Where would you advise your clients to invest. If a managing partner said to you, okay, we’ve got a big marketing & business department, what should we be doing? Where would you say we should be focusing on here?
Joel Barolsky: [00:37:09]
I’ve thought about the answer to this question, and and I think I’m going to answer it differently to perhaps what you thought. That’s making a big assumption. But anyway. And I don’t think it’s actually in the content area or a specific aspect.
Joel Barolsky: [00:37:28]
I actually think it’s about I think it’s about leadership. And actually where I would invest is actually getting my BD people and all of them at all levels, not just sort of the head leader to become much more impactful as individuals. Right. To become true. True leaders and influencers in the firm and potentially with clients. And so building their own confidence, their own ability to have have impact in meetings, to persuade to influence to shape behaviour and opinion.
Graham Seldon: [00:38:08]
And to have knowledge.
Joel Barolsky: [00:38:10]
That comes with knowledge. But it also comes with a whole set of behaviours and beliefs and skills and a sort of a self-awareness. Right. So it’s strange. But I think if I was going to invest money in marketing & BD, I’d be running leadership programs and providing coaching and support for my marketing BD people to step up to three notches and become much more powerful influencers.
Graham Seldon: [00:38:43]
Taken in isolation, that answer is obvious and I would agree with you. I think we’ve we’ve had on the podcast in the past, you know, commentary around the hierarchical structure of law firms. And we opened this podcast with talk about the Bermuda triangle of management so we can see all the reasons why that’s not happening. As maybe fast as it needs to happen. But I think I support you in that the firms that are doing really well and utilizing their BD really, really well (when I talk about doing well) their utilization of BD & marketing is because they they trust it. They have they have a high regard for the skills that those people have and they are investing heavily in their own knowledge because as you’ve just already demonstrated in this last half hour, there is so much going on in the legal industry. And one person couldn’t know everything (well, you do). But one person couldn’t know everything. You know a lot because you’re a consultant so you’re out there every day talking to different businesses.
Graham Seldon: [00:39:43]
It’s your job to know the landscape. That’s what makes you good at what you are. It’s very hard when you’re internal, when you just got one firm to focus on. But actually, I think that, you know, the firms are doing well are those that are saying that they’re BD people go out and find out more and then bring that knowledge back.
Joel Barolsky: [00:39:59]
So there’s clearly that knowledge piece. But there’s also a personality piece and that, you know, is challenging for everyone. But basically your role in marketing/BD is you have to influence without authority. Right. You’ll never have authority in these firms.
Graham Seldon: [00:40:15]
Joel Barolsky: [00:40:16]
The structure won’t give you give you that power. Right. And so yes, the leadership will either support you or not, but irrespective, it’s a two way street. The firm needs to support you and respect you and involve you. And you say firms that are doing that are doing well. But the the marketing BD people need to step up too. And they need to become much more powerful, know develop the gravitas. You know, we talk about lawyers having gravitas while they’re the marketing and BD people need to have gravitas. They need to walk in the meeting and command a place in the room and not just be wallflowers or note takers or observers, which I do see still a lot that they you know, they are very subservient, but it’s, you know, very respectful of partners and so on, which is fine to a point. And it’s time to lean in. And again, there are gender issues in a lot of cases is typically most partners in law firms. All three out of four are male and probably three out of four BD people are female. So there are gender issues and all of that. But it’s complex.
Joel Barolsky: [00:41:30]
And there are multiple dimensions to this. But if you can get your BD & marketing people (who have the core training to have this knowledge), But bringing their common sense to relationships, to branding, to marketing, to this whole function. But in a confident and assertive way, where they’re leaning in, I think that’s where the real opportunity is. And so investing in BD coaches or coaches for coaches and, you know, building that leadership capability is where I’d be spending my time.
Graham Seldon: [00:42:19]
Thank you so much. The message, lean in and step up, I think it’s what we will take away from that for the BD community.
Graham Seldon: [00:42:25]
Joel, you are fascinating. And thank you so much for coming in and talking to us and sharing your knowledge. For people who don’t know Joel or he wants to hear more about Joel then I would recommend that you go to his website where all of his articles, all the controversial articles are still there. I read them all over the weekend. And they can contact you directly. And we’ll give the contact details later and they’ll be on our website.
Graham Seldon: [00:42:50]
Thank you for coming in. I look forward speaking to you again.
Joel Barolsky: [00:42:53]
Thanks for the opportunity.
Graham Seldon: [00:42:54]