Should Clients Hire Law Firms Offering an “Industry Focus”?
You might be thinking the obvious answer is “YES!” or I wouldn’t be sitting at my desk at a new firm called “Uplink Legal” writing on this topic. But the answer is not quite so simple. In this first blog post, I’d like to explain the inception of Uplink Legal and the strategy behind its market positioning to help clients and potential clients better understand the services we offer. Prior to the launch of Uplink Legal, I conducted an extensive amount of research and analysis on trends in the legal industry. Several analysts have suggested in recent years that law firms need to evolve by adopting an “industry focus” as opposed to the traditional categorization of legal services in terms of broad substantive legal areas (such as corporate law, real estate, or intellectual property). This approach resonates with me and is part of the reason I am confident that Uplink Legal is poised for success. However, I think firms (and clients) must delve deeper than merely buying into a focus on specific “industries”.
Several reasons and strategies for adopting an “industry focus” have been proffered by legal industry analysts. One major advantage for large law firms is that an “industry focus” may lead to greater opportunities for cross-marketing and overall firm revenue growth. This may be true in some cases, but it’s also well-established that regardless of whether a law firm has an “industry group” tailored to a client’s core business, in-house counsel (those most often responsible for hiring the law firms) are still keenly aware of each law firm’s substantive strengths. Further, in-house counsel often purposefully spread work among multiple law firms, based on each firm’s substantive strengths, relationships with specific attorneys, or as a risk-aversion and pricing strategy. It’s not unheard of for even highly regarded law firms to dissolve in the current rapidly changing legal marketplace, and in-house counsel don’t want to “put all their eggs in one basket”, so to speak. And in terms of pricing, allowing one firm to take over too large a share of a company’s legal work may restrict in-house counsel’s ability to keep abreast of pricing trends and keep costs down by encouraging healthy competition for legal services. Finally, some in-house counsel have openly voiced that when large firms attempt to cross-market based on the benefit of an “industry focus”, the marketing pressures are, to be blunt, an annoyance.
Nonetheless, if a large law firm adopts an “industry focus” well, it can lead to better knowledge across practice groups of a particular industry’s needs and intricacies. The degree to which a well-executed “industry focus” benefits a law firm may be dependent on what industry is the subject. Some industries require specialized legal knowledge in and of themselves and have substantive laws which necessarily make an industry focus especially valuable – for example, the “health care industry”. Other industries may not require as great a degree of substantive legal differentiation, but can benefit from an “industry focus” approach because it’s helpful for lawyers to “talk the talk” of the industry, be aware of current business developments, or have a network of industry players to draw from to aid clients in deal-making. The telecom industry is largely within this second category; apart from its specific regulatory laws, much of the legal work in the telecom industry is not substantively different than any other industry. For example, if a law firm is engaged by a telecom carrier to close a corporate acquisition, the carrier may feel more comfortable engaging a law firm that understands its business, or can adeptly handle ancillary tasks which require industry knowledge (such as helping document a portfolio of existing telecom leases or cover industry-specific terms in the deal) – but the core of the legal work in this instance is no different than a corporate acquisition in any other industry. Finally, there’s a third category where law firms may attempt to have an “industry focus”, but such focus is no different than the substance of the legal work – for example, it seems unnecessary for a law firm to establish a “real estate industry” focus group if the firm already has a real estate practice group. Sure, internally, such efforts might boost cross-marketing and education, but if cross-marketing and education weren’t lacking within the firm in the first place, it would not be necessary to establish industry focus groups that closely align with substantive practice areas.
But there’s yet another challenge emerging to the “industry focus” approach that I think hasn’t been adequately covered. And this is, how do you really define an “industry”, particularly in the current global and conglomerating business market? The most obvious example is Amazon. If you’re a large law firm, you’d love to do work for Amazon; that’s a no-brainer. But what “industry focus group” are you going to use to market your services to Amazon? The “everything” focus group? Amazon may be the glaringly obvious example of this conundrum, but telecom, utility, and media are quickly becoming intertwined (AT&T’s pending acquisition of Time Warner being one example). And high-functioning corporate clients tend to have very specific definitions of their “core business” which might include future goals for the company’s evolution or may not necessarily align with a broad “industry group”. Most companies succeed based on market differentiation, not by viewing themselves as “just another industry player”. I’ve struggled with this challenge myself in trying to define the “industries” that Uplink Legal will work within – telecom, communications, utilities, transportation, media, wireless technology – all could be areas where my expertise will benefit clients, but even now, before the real onslaught of 5G and automated vehicle technology, it’s hard to pin down one term that encapsulates Uplink Legal’s focus. So instead of touting an “industry focus” per se, Uplink Legal’s mission statement defines what we do in concrete terms: we handle the real estate-related components of wireless technologies. This mission statement may very well need to evolve as technologies evolve, but for now, it’s the best way to describe our specialization.
My perspective is that much of this current talk about the essentiality of moving to an “industry focus” is largely semantics and a trending marketing tool for big firms. Notwithstanding this perspective, I believe that a client receives added value by hiring a firm that truly understands its business (including any specialized substantive legal concepts which are unique to the industry), can “talk the talk” of the client, and maintains a reputation and relationships within the industry. But to have true meaning and value, the “specialization” cannot be too broad and cannot be at the expense of the core substantive legal skills that are critical to providing good work product. Therefore, Uplink Legal’s mission statement is relatively narrow. We can articulate what we do best, and we’re not seeking to gain work beyond that scope. That would not be beneficial to either me or my clients.
With respect to Uplink Legal’s specific niche, there a mere a handful of lawyers in the country who specialize in the intersection between real estate and wireless technology (and make no mistake, there are several out there who are excellent – there are four or five that I see regularly at industry conferences who go the extra mile to gain an intimate understanding of the industry and also come from a strong substantive legal base, and probably some others who stay engaged with the industry even if they maintain a lower profile). But the other handful who claim this specialty tend to (1) understand and cater to the communications/emerging wireless technologies industries, having the ability to "talk the talk", OR (2) be general real estate practitioners who hold themselves out as offering valuable (i.e., high-priced) services to industry clients, but lack a thorough and up-to-date understanding of the technologies. I firmly believe that my prior success and the future success of Uplink Legal are built upon genuine strength in both areas.
To illustrate, an "industry expert" lawyer might fully grasp what a client needs technically in terms of locating an in-building telecom system within a high-rise building, but might not have the greatest capacity to negotiate with a sophisticated office building portfolio owner due to lack of background on general office leasing practices and standards. On the flip side, a general real estate practitioner might be well-prepared to negotiate with said office building portfolio owner, but could overlook or lack the in-depth understanding necessary to negotiate and advocate for a communications industry client's needs. So, to circle back to our cover graphic for this post, there’s usually a “fool” (for lack of a better term) in each deal who either doesn’t understand the technology or the unique goals of a wireless industry player, or one who lacks a full (or even a basic) understanding of the legal concepts involved in the negotiation.
My solid background in both traditional real estate and the communications industry make me (and those I will add to the Uplink Legal team going forward) uniquely positioned to offer value-added services to clients. By "speaking both languages", having an arsenal of options and solutions gleaned from both the communications/wireless technology and real estate perspectives, and using a business-oriented approach, my goal is to help clients achieve their goals and minimize risk efficiently. And along those lines, stay tuned for my next blog entry, “Minimizing Risk in Wireless Technology-Related Real Estate Matters: How Much Due Diligence is Really Due?”.