Reinventing The Law Business: Another Word About Competitive Advantages In The Law Business

Managing partner Bruce Stachenfeld talks about the importance of "innovation by collaboration," and how it can help law firms succeed in a competitive marketplace.

In my previous article I wrote about Professor Michael Porter at Harvard Business School and applied his definition of competitive advantage to law firms. To refresh your recollection, or if you have not read the prior article, his definition is as follows:

Competitive advantage depends on offering a unique value proposition delivered by a tailored value chain, involving trade-offs different from those of rivals, and where there is a fit among numerous activities that become mutually reinforcing.

I recently discussed this with Jay Bernstein, who heads the real estate capital markets practice at the Magic Circle law firm of Clifford Chance. Jay has been an instinctive believer in Porter’s principles for many years; however, he adds an interesting twist that I thought was worthy of a follow-up article on this important subject.

Jay describes his practice in general as one that would make Mr. Porter proud; namely, he looks for unique, different and innovative areas of the law that he and his teammates at Clifford Chance can own. However, although he is often an instigator in thinking of these ideas, he has found that “collaboration” among colleagues with different areas of legal experience is the key to the most successful “innovations.” Indeed, Jay could coin the phrase as an inspirational phrase for us lawyers:

“Innovation by collaboration”

As Jay described this to me, I found myself realizing that it has been the same at my firm as well. I may think of a new idea; however, often the first thing I do with it is walk into my tax partner’s office to see if it “works” or, more often, if it could be tweaked to be made to work, or, even more often, if a new idea can be spawned from the original one that would work even better.

Interestingly, as I peel away the onion of this thinking, the first irony is that typically companies seem to lose their innovative skills as they get bigger; however, it would seem that the reverse “should” be true in law firms – for the reason that the bigger the law firm gets, the more lawyers there are to collaborate with. And then the second, even greater irony is that this rarely happens and it seems that law firms, and lawyers, hardly ever actually innovate in this manner; instead, they often follow the herd by seeking to be the best in a pre-existing area or, playing it “safe,” by developing expertise in established areas.

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As one thinks deeper on the application of “innovation by collaboration,” it is a beautiful explication of Porter’s definition in that:

The innovation is “to come up with ‘a unique value proposition’”

The collaboration is “the fit among numerous activities that become mutually reinforcing”

And the ultimate goal is to come up with areas of legal practice in which the lawyer, the practice group, or the law firm itself can truly have a competitive advantage.

I believe, very strongly, that lawyers who apply Porter’s principles, as modified by Jay’s suggestion, will succeed quite well in the increasingly competitive landscape of today’s legal world. I also believe that those who do what everyone else does will ultimately find it tough to succeed in the legal business.

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Bruce Stachenfeld is the managing partner of Duval & Stachenfeld LLP, which is an approximately 70-lawyer law firm based in midtown Manhattan. The firm is known as “The Pure Play in Real Estate Law” because all of its practice areas are focused around real estate. With 50 full-time real estate lawyers, the firm is one of the largest real estate law practices in New York City. You can contact Bruce by email at thehedgehoglawyer@gmail.com.