Biglaw, Boutique Law Firms, Small Law Firms

Power Niche Marketing: A Great Example Of A Power Niche

If banks can pull off Power Niches in their non-innovative and highly regulated industry, surely you can too.

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investment banking bank money finance advice financial advisor adviserYou think you have problems being a lawyer or a law firm?  But consider how truly awful it must be to be a plain old bank?  It is one of the most boring businesses there is. And worse yet, the government has regulated all of the innovation out of this industry, and for a good reason. Basically, because the government is guaranteeing deposits, it doesn’t want innovation or creativity. It just wants banks to do what banks do, which is take in money and lend it out under highly regulated standards.

How could anyone follow Peter Drucker or Michael Porter or develop a Power Niche in such an industry?

My point – to be obvious here – is that if banks can develop Power Niches, then certainly we can as lawyers.

Watch….. I will start with Citigroup.

Citigroup is a great example. It is a huge bank, but can anyone reading this really distinguish it from JP Morgan or Wells Fargo or Bank of America?  Well, I guess you could remember that they all had different scandals and different degrees of misery during the global financial crisis, but otherwise there really is no way for the rest of us to know what is going on. They are just too big. So here is with Citi did……

What Citi did was pick a narrow segment of the business world — namely, us lawyers and especially the Biglaw firms. Citi reasoned that the major law firms have a lot of partners earning a lot of money and this would be a great place to get a lot of customers – not to mention referrals. They also did some background investigation and found that large law firms almost never fail to pay back their debts.

Then Citi staked out its Power Niche by saying that they were going to devote a great deal of focus to lawyers and major law firms. This meant:

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They would learn everything they could about the legal world.

They would put on seminars where industry experts could come together and teach managing partners about managing the law firms.

They would assemble data from all the major law firms on profitability and other key metrics and make it available to their customer base.

They would offer advantageous terms to their law firm customers and the lawyers.

Effectively, they would put their vast empire of financial service business lines behind servicing the law firms.

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They would become a “go to” player in helping major law firms succeed.

And much much more…..

So what happened?  A classic Power Niche developed. Today Citi counts 85 percent of the Am Law 200 law firms as customers. It’s very difficult for other banks to challenge them in this niche since they are just too established. They not only know everything about how law firms are run, but they also know everyone in the industry as well.

As managing partner of my own (small-sized) law firm, I met with them a couple of years ago. Strangely, I felt sort of foolish that I was not working with them. Instead, we work with JP Morgan (which treats us extremely well, and I have only good things to say); however, how could I not be part of the Citi law firm machine?  At a minimum, I would miss out on critical data about my industry.

Interestingly – the “industry” that Citi is – brilliantly – focusing on is the legal industry and not the banking industry. Whether I like it or not, they are using their vantage point to know more about my industry than even I do!  And this is always the case when one builds up a Power Niche.

This is “so” obvious, in 20/20 hindsight. But think what they faced when they started. Focusing on lawyers probably sounded dumb to everyone. People probably said things like this:

Banking is banking. It is exactly the same for a law firm as an accounting        firm or pretty much any personal service industry.

This is a purely random idea that has no point to it.

Why lawyers – why not doctors or dentists?

And I am sure there were many more naysayers.

Another anecdote concerns Signature Bank. They were founded in New York City in 2001. Now you might think New York City might be a wee bit competitive in the banking industry – just a wee bit. But, somehow they are one of the fastest growing banks in the New York market and I think the second largest by lending volume in 2016. I ran into a business development fellow from Signature at a party a few months ago and asked him how they were doing it.

It took him three seconds to answer:  “we focus on niches.”

I smiled……

Finally, another banking Power Niche story illustrates my point. I have a friend at another major bank and all he focuses on is dentists. They are “killing” it in this niche he tells me.

So, if banks can pull off Power Niches in an industry as non-innovative and highly regulated as banking – surely you can pull it off in your industry.

And, can you see how simple this was to do?  All they did was chop up the industry “of their customers” into segments – or “niches” – and then created power in these niches. And – voilà – Power Niches!

Earlier: Power Niche Marketing: Always Start With Peter Drucker
Power Niche Marketing: Moving On To Michael Porter

Bruce_StachenfeldBruce Stachenfeld is the managing partner of Duval & Stachenfeld LLP, 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 more than 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. Bruce also writes The Real Estate Philosopher™, which contains applications of Bruce’s eclectic, insightful, and outside-the-box thinking to the real estate world. If you would like to read previous articles or subscribe, please click here.

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