Michael D. Moberly August 20, 2014 ‘A long form blog where attention span really matters’!
The globally irreversible economic shift away from tangible (physical) asset business dominance to intangible (non-physical) asset business dominance has paved the way for law firms to offer differentiating, relevant, and client specific services related to the management, stewardship, and oversight of their intangible assets. To believe otherwise would certainly constitute an irreparable misreading of the global economic and competitive advantage tea leaves.
This post provides compelling and viable rationales why boutique intellectual property and full service law firms will find it prudent, lucrative, and produce strategically durable competitive advantages and differentiators by delivering intangible asset specific services in business clients.
Why law firms should take note…
One reason emanates from Stone v Ritter (911 A.2d 362 (Del. 2006) which would obligate company leadership, akin to a fiduciary responsibility, to achieve sufficient operational familiarity with their intangible assets to provide consistent and effective asset stewardship, oversight, and management. More specifically, keep boards and significant stakeholders apprised of the status of key, revenue producing intangible assets.
Through my lens, Stone v. Ritter legitimizes opportunities for law firms, so inclined and inspired, to acquire the relevant skill sets to enable articulation and delivery of a variety of intangible asset services to today’s more enlightened and receptive business clients regardless of sector, size, or location. The skill sets will accrue as firm differentiators and competitive advantages to help mitigate stagnating revenues.
Comprehensive intangible asset services…
Collectively, the global universality of intangibles’ and business client’s increasing recognition they are valuable contributors – underliers to company profitability and sustainability, constitutes valid rationales and positioning for motivated law firms to respectfully engage both existing and prospective clients with proposals for intangible asset services. The addition of these services produce realistic potential for a law firm to become the initial and exclusive provider of a range of long-lasting intangible asset related legal services because intangible assets are always in play, and thus relevant components to every business client’s operations, initiatives, and/or transactions they routinely engage.
In a global business environment in which 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability evolve directly from intangible assets, it’s no particular secret that conventional financial statements and balance sheets, wherein intangibles largely go unreported, under-valued, and otherwise, unaccounted for, do not provide a complete picture of a company’s soundness, its value, or its strategic and competitive advantage health and potential.
It’s an undisputed and irreversible economic fact today that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today either lie in or directly evolve from 15+ distinct categories of intangible assets ranging from intellectual, structural, and relationship capital, to reputation, brand, R&D, contracts, and hybrid (proprietary) technologies, etc.
Also emanating from this economic fact is the reality that business clients will, with increasing frequency, become fiduciarily obligated to seek legal advisory services variously related to the stewardship, oversight, management, commercialization, and safeguarding of the array of nuanced and company centric intangible assets they produce internally or acquire externally.
Original horizonal thinking and planning…
Law firm strategic planning is no longer a managerial luxury rather it has become a necessity for assuring firm sustainability, profitability, and brand. Collectively, the new realities associated with intangible asset business dominance, warrant levels of thinking and planning that permit horizontal sighted law firms and attorneys the latitude to secure the necessary skill sets to accommodate the expanding range of legal service opportunities emanating from the permanent role of intangible assets in today’s increasingly complex and globally intertwined business incubation, development, growth, and transaction environments.
Intangible asset intensive companies growing globally…
There is no other time in business governance – management history when steadily rising percentages of company value, sources of revenue, and growth potential originate, almost exclusively, from intangible assets.
The contributory value which unique and frequently company/operation centric (proprietary) intangible assets make to company’s value, revenue, competitiveness, brand, and market position, etc., are all too often, under-appreciated, undervalued, un-protected and ultimately their value becomes diluted or melds into open sources to be used by competitors..
Intangible assets are no longer mere tools to manage tangible (physical) assets. Instead, intangibles’ are frequently stand alone commodities that can be developed, positioned, and utilized to produce revenue, enhance competitive advantages, and add value to a company.
But, intellectual property and other forms of (proprietary) intangible assets, particularly intellectual, structural, and relationship capital, can advance a company economically and competitively, only so long as their control, use, ownership, value, and materiality are monitored and sustained.
However, the time frame when company’s can realize the most value from their intangible assets lies in their respective contributory value and functionality (life) cycles both of which are being compressed today, due in no small part to (a.) lower barriers to market, supply, and distribution chain entry by competitors, and (b.) rapid profits accruing to globally predatorial product/service piracy and counterfeiting operations that consistently pollute and de-value legitimate asset supply chains.
Forward looking prudence…
Staying out front of law firms’ go fast, go hard, go global business clientele is best achieved by developing and articulating proprietary and client specific intangible asset services that will accommodate the inevitable and irreversible needs and demands of current and future clients.
Adding intangible asset services to law firms’ repertoire will be disruptive…
For some attorneys and firms, delivering services specific to intangible assets will be misinterpreted as operationally disruptive to time honored conventions for delivering client services and therefore, dismissed. Respectfully, I do not believe such machinations are or should be relevant in the increasingly aggressive, predatorial, and winner-take-all professional services sector which we are in the midst.
Admittedly, not every firm’s business clients have achieved full operational familiarity with their intangible assets to articulate, with specificity, what legal services they need now and will need in the future. Through my lens, that’s a strong rationale why law firms should be tactically and strategically prepared now as the need and demand for such services rises, which it is sure to do.
Law firm re-boot, tactical and strategic speed…
Again, through my lens, what’s being proposed here is not exclusively an if or when, proposition. Rather it represents a rationale why law firms should consider re-booting themselves to inexpensively and rapidly acquire the capacity to achieve a level of professional comfort and expertise to engage clients’ about identifying, unraveling, distinguishing, exploiting, safeguarding, and monitoring the value, materiality, and risk to their intangible assets.
More specifically, while many law firms’ tactical speed, i.e., the efficiencies related to delivering client services, etc., remain important, continuing to be dismissive about firm’s strategic speed, i.e., developing proactive client services that directly reflect globally universal changes in economics is critical to firms’ sustainability. In other words, law firm strategic planning should be designed and executed so as to ‘avoid continuing to skate where the puck was, rather skate to where the puck is now and will be in the future’!
My counsel to law firms is to engage in strategic planning that includes a strong and collaborative vision that encompasses a firms’:
- organizational structure in terms of how its various practice areas and expertise can be collaboratively aligned to better address business clients’ intangible asset (service) needs, and
- become more accommodating to the inevitable and collective (global) universalities which the dominance of intangible assets produce.
In other words, attorneys’ and their respective practice areas are now obliged to consider how they may achieve a collaboratively lucrative solution insofar as providing intangible asset services. In other words, help structure the firms’ future to meet its future!
As always, reader comments are most welcome.