Michael D. Moberly June 12, 2014 ‘A long form blog where attention span really matters’.
Thinking strategically leads to transformational changes in law firm planning… Frequently I hear thinking and planning strategically characterized as managerial luxuries which can only occur in isolation when law firm managing partners are not consumed with a daily barrage and demands of putting out fires and mending various fences. Further complicating a law firm’s best efforts to engage in genuine strategic thinking and planning is a reality that a significant percentage of firms manage – operate their practice through quite conventional, hierarchical, and vertically siloed rule sets with substantial, if not total practice area autonomy. . Should the above be a reasonably accurate reflection of law firm management, which I’m quite comfortable in saying it is, it’s understandable why most law firms remain removed from, or worse, oblivious to the irreversibly intertwined and intangible asset dominated (global) business transaction environments in which clients’ intangible assets are routinely in play, at risk, and absent effective management. I do not believe it is a tremendous leap from the key implications found in the Stone v Ritter (911 A.2d 362 (Del. 2006), that law firm managing partners would have an obligation if not a fiduciary responsibility, not unlike their business clients, to ensure their firm achieves operational familiarity with intangible assets and incorporates same as a collaborative practice area geared toward the assets’ management, stewardship, and oversight on behalf of clients’.
Irreversible and global economic facts and business realities… So, what’s being advocated here is quite straight forward, that is, law firms that want to remain profitable and sustainable are obliged to engage in strategic planning that will pave the way for offering and delivering relevant services related to the management, stewardship, and oversight of clients’ intangible asset related services. This commences by firms’ managing partners and practice area attorneys recognizing…
- it is a global economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets which includes variations of intellectual, structural, and relationship capital, reputation, brand, and competitive advantages, etc.
- a company’s intangible assets are almost always in play and at risk in new initiatives, product/service launches, and other types of business transactions, etc.
- business client’s intangible assets are not a lesser or subordinate form of intellectual property, instead, IP is actually a subset or one category of intangible assets.
New strategic thinking and planning for law firms… Collectively, these irreversible global economic business realities warrant immediate strategic thinking and planning that allow law firms to reflect on and accommodate the range of expanded range of legal services that emanate from the permanency and dominance which intangible assets have become in today’s increasingly complex, yet intertwined business (transaction) environment. Importantly, intangible asset relevance is not limited to the legal profession, but also to the professional disciplines of accounting, valuation, security, risk management, and financial services, among others.
Misreading the global economic tea leaves… An unfortunate misreading of these economic and business tea leaves would be for any entity, law firm, or other, to assume this paradigm shift (from tangible – physical asset dominance to intangible – non-physical asset dominance) has yet to arrive. The fact is, it’s already here and for those who care to look, there has been an abundance of advance notice. For example, The Brookings Institution and Dr. Baruch Lev’s work on intangibles commencing in the mid to late 1980’s, along with comparable initiatives by the Athena Alliance headed by Dr. Kenan Jarboe, the Intangible Asset Finance Society headed by Dr. Nir Kossovsky and a host of other thought leaders like Jonathan Low and Mary Adams recognized early on the impact of intangible assets on businesses and global economies in general. Importantly, intangibles have come to be the ‘building blocks’ for most all companies’ value, sources of revenue, growth, profitability, and sustainability! For me, it is the epitome of misreading the global economic, business transaction, and competitive advantage tea leaves for any multi-service (practice area) law firm to argue that intangible assets should not play an integral role in their strategic thinking and planning!. Respectfully, I recognize that many law firms remain steeped in generations of convention and past practice that inhibits an organization on many levels, from genuinely considering such an initiative because, among other reasons, at first blush, it may appear so operationally disruptive that it could be characterized as being akin to blasphemy to conventional and time honored practices of client service offerings, delivery, and management. . One thing is assured however, emanating from these economic facts is the reality that business clients, regardless of sector, will, with increasing frequency, seek legal services variously related to the stewardship, oversight, management, and commercialization and/or monetization of the array of nuanced intangible assets they produce internally or acquire externally. But, let there be no ambiguity, law firms’ whose strategic thinking and planning do not fully explore and preferably incorporate a new array of intangible asset related services to accommodate client needs and expectations, will likely experience falling revenues and client pushback. Admittedly, not all business clients have achieved sufficient operational familiarity regarding their management, stewardship, and monitoring of their intangible assets to articulate with clarity and specificity what legal services they need today and in the future. Thus, prudent law firms will endeavor to get our front of their go fast, go hard, go global clients and prepare relevant services so the firm can create its own competitive advantages by being ‘first on the block’ to have intangible asset services readily available to accommodate the inevitable client need.
A good first start is for law firms to assess some conventions… A good first start for firms to achieve the level of (intangible asset) understanding, strategic thinking, and planning advocated here, is by dismissing any notion that intangible assets are either singularly synonymous, interchangeable with, or short term subsidiaries to intellectual property (IP) or business goodwill. Law firms that elect not to strategically delve into the obvious relevance of intangible assets to each practice area can expect to experience not only revenue stagnation, but may likely, in a growing number of instances, find themselves having to significantly downsize or possibly face firm dissolution. True, firm dissolution may not occur today or tomorrow, but as additional global universality of intangible asset regulation and oversight comes to fruition, those law firms that continue to be dismissive of intangibles will be essentially conducting business strictly in the confines of convention, and not in the context of externalities. So my counsel to law firms and their managing partners is to engage in strategic planning that includes a strong and collaborative vision that encompasses a firms’ (a.) organizational structure in terms of how its various practice areas and expertise can be aligned to better address clients’ intangible asset (service) needs, and (b.) become more accommodating to the inevitable global universalities related to intangibles. In other words, attorney’s and their respective practice areas must be fully integrated to a lucrative solution by (a.) helping structure the firms’ future to meet its future, and (b.) start annunciating and exploiting a firm’s new competitive advantages created by offering intangible asset legal services.
Paths to elevating client relationships, satisfaction, and service delivery favorables… Frankly, in 2014, and for the foreseeable future, I would be hard pressed to devise a rationale why every law firm should not achieve an intimate operational familiarity with each of their clients’ intangible assets, and incorporate same in their strategic plan as tools to…
- brand a law firm as being a leader in intangible asset stewardship, oversight, and management, which in turn will
- enhance competitiveness by providing legitimate grounds to (a.) re-engage existing clients, and (b.) engage new/prospective clients
Again, law firms that choose to be dismissive of strategic planning and do not adjust and create intangible asset relevant services should expect to experience stagnation in client relationship satisfaction and service favorables. So, it’s not a matter of when, rather it’s a matter of where and how law firms respectfully intervene on behalf of clients’ intangible assets. More specifically, while a firms’ tactical speed, i.e., the efficiencies of it service delivery, etc., remain important, being dismissive of strategic speed for developing services specific to intangibles, can confound a firms attorney’s, its practice areas, and certainly its clients. So, a law firms’ strategic plan should be designed and executed, as the adage goes, to ‘avoid continuing to skate where the puck is now, rather skate to where the puck will be’. Law firms strategically guided by aligning each service – practice area to clients’ intangible assets will most assuredly elevate their long term sustainability and revenue streams. So, it is prudent to recognize how we think, and what we think!