Corona Virus and the Business Model
My regular readers know that I’m a sucker for a sexy business model. Whether it’s a cool niche practice or innovative delivery systems or a subscription service or figuring out how to leverage thyself, any departure — no matter how minor — from the same-old-same-old billable hour, sparks joy.
But re-assessing the law firm business model is no longer an optional or recreational activity. “When a crisis like the coronavirus pandemic hits an organization, owners need to assess the impact on their business model, both immediately and over the long term,” write Thomas Ritter and Carsten Lund Pedersen in the Harvard Business Journal . Ritter and Pederasen propose a helpful four step model for doing so which I’ve applied in the general context of law firms:
Step 1: Assess Customer Demand
Law firms should consider whether overall demand and spending go up or down, and whether there’s a need for new delivery channels such as pure online play. Keep in mind that even though many clients may not have previously expressed interest in online meetings, they may prefer them now having been introduced to the convenience during the stay-home orders. As for demand, the economic impacts of the pandemic are still unknown; as with the post-2008 recession, lawyers may find clients price-shopping or more willing to settle matters to conserve funds. On the other hand, what pandemic taketh away, it giveth as well: expect lawsuits to emerge involving liability for COVID, family leave procedures, insurance coverage and other similar issues which can keep lawyers busy counseling and litigating.
Step 2: Assess Impact of Pandemic on Value Proposition
Post-pandemic, clients will still need lawyers for some tasks. But not all. Some clients may have found that stop-gap measures like DIY power of attorney forms or online wills suffice instead of a full package of legal advice. Other clients may realize that an online mediation today makes more sense than a full-blown trial three years down the line even if it offers a chance at a larger recovery. Just as institutes of higher education may have to deal with competition from online learning, (the example used by Ritter & Petersen) lawyers who offer traditional, hourly, brick and mortar services may need to assess whether that’s what consumers still want.
Step 3: Value Demonstration
Can law firms still demonstrate value with courts shut down and proceedings on hold? Absolutely – by figuring out ways to resolve matters without those mechanisms, whether it’s through online proceedings or some other alternative. Or maybe it’s just keeping clients up to speed on a matter with frequent status updates and identifying other actions to help them reduce stress.
Step 4: Organizational Capabilities
Now’s the time to figure out where your employees and staff are up to task. Many times, staff balk about change – and those aren’t the kind of attitudes that you need now to succeed.
Once you’ve assessed these factors, ask whether a business model change is in order. Ritter and Petersen help there too with a Business Model Workbook. Though designed for larger companies, solo and small firms can easily adapt the exercises and examples to their own practices.
As John F. Kennedy once observed, the Chinese use two brush strokes for the word “crisis” – one stands for danger, the other for opportunity. Which one will dominate your practice? I think you know my answer to that.
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