Parsing the Value of Law Firm Brand Rankings

Editor’s Note: This post is written by a strategic consultant to law firms who is a principal at Edge International.

By Jordan Furlong, Principal, Edge International

So the annual index of law firm brands in Canada has been released by Acritas. You can tell Canada has a small legal market when the 14th-ranked firms in the entire country — and that’s actually a pretty good position, when you put it in that context — come tied for last in a brand survey. It’s really a little unfair to those firms lower down in the ranks, but I suppose that’s the nature (and at least part of the appeal) of lists like these.

Norton Rose Fulbright , which held the coveted “100” position at the top of this list in 2013, lost the lead spot to Blake, Cassels & Graydon in 2014. Now, in the 2015 rankings just released, Norton Rose has pulled back into the pole position, with Blake second, followed by McCarthy Tétrault, Stikeman Elliott, and Fasken Martineau. All five of these firms are excellent, so it’s hardly a surprise to see them all appear high on the list. The firms behind them are all pretty good, too. When you’re talking about the most prominent law firms in the nation, the differences among most of them, if we’re being fair, are pretty slight.

But what’s the effect, and the utility, of law firm brand lists like these? From my perspective, aside from making the people in one firm’s marketing department very happy today, and filling everyone in the other departments with varying degrees of dread, it’s a little difficult to say.

The survey itself is sound, both statistically significant (249 corporate counsel from Canada, 107 from elsewhere, with “senior responsibility for buying legal services on behalf of organizations with annual revenue of more than $50-million”) and correctly sourced (clients are precisely the right people to ask about law firm brand, owing to the famous Latin maximpecunia loquitur:“money talks”). But take a closer look at what’s actually being ranked here.

According to Acritas’s press release, the index “recognizes the law firms which clients recall as top of mind, those they most favor, those they consider for top-level work and which firms they use most for their high-value work.” The first three of those criteria do not concern actual services being exchanged for actual money. They relate to brand awareness, positive impressions, and consideration for certain kinds of work.

Now, those are obviously all very nice things to have; but they don’t look much like cash on the barrelhead. While we can assume these features lead to more paid engagements, that’s all we can do: I haven’t seen much data demonstrating that high brand awareness, in and of itself, correlates with (never mind brings about) retainers for paid work. The primary utility of brand surveys like these, frankly, is to be used in marketing campaigns by the highest-ranked firms, which campaigns in turn are used to buttress the firm’s brand with clients, so they can score high next year as well. All of which looks like a pretty self-perpetuating process to me.

The fourth criterion does involve law departments’ choice of counsel for work — specifically, “those firms they use most for theirhigh-value work.” (Emphasis added.) Again, that’s clearly a good thing: high-value work invariably pays well, lends prestige, engages lawyers intellectually, and (perhaps best of all) is most resistant to client budget and timing pressures, given that the stakes are very high and the client generally doesn’t have much room to maneuver or complain about cost overruns. With clients pressing firms harder all the time for discounts, flat fees, fee caps, project management, and so forth, it’s a great relief for firms to land files that remind them of the good old days when they could just work, bill, repeat.

That’s where the real value of these rankings lies for law firms: it increases their odds of getting this sort of work on a regular basis. But as I’ve written before, there’s two inherent problems with law firms’ preoccupation with bet-the-company work.

The first problem, a long-standing one, is that companies don’t tend to bet themselves every day: those that do have larger worries than their legal spend (cf. Jerry Seinfeld’s famous detergent-ad observation: “If you’ve got bloodstains on your clothes, maybe laundry isn’t your biggest problem”). There’s only a limited amount of high-level work to go around, and everybody’s fighting for it. It might be great work, but the acquisition costs are very high and getting higher.

The second problem is more serious: bet-the-company work is not as steady, manageable, and potentially profitable as “run-the-company” work. This latter type of work — regulatory compliance, employment and labor, mid-level commercial, business immigration, etc. — is the daily-generated legal ephemera of modern corporations, and its volume is always growing. Law departments are searching for ways to handle run-the-company work on a systematic, cost-effective basis, and they will throw scads of money at any provider that can deliver a solution along these lines (if you want to know who those providers are, take a close look at what accounting firms are doing in Europe and the UK right now).

Simultaneously, corporate clients are doing their best to reduce their bet-the-company legal work, largely because the risks and exposure these situations create are unacceptable. One of the reasons why litigation is in free-fall at many North American law firms is that a growing number of corporate clients will do anything to avoid running up the legal bills and potentially devastating outcomes associated with protracted litigation. Bet-the-company work is a luxury good in what is becoming an increasingly down-market industry. Your law firm might love doing this work — but it had better realize that such work is getting thinner on the ground all the time.

This is especiallya proposin the Canadian legal market. The collapse of the global price of oil has brutalized the economy in this country, to an extent many Canadians don’t yet realize. When the Governor of the Bank of Canada says to expect “atrocious” growth levels in the first quarter of 2015, everyone within earshot needs to snap to attention. To the extent the Canadian legal market has been insulated from the same forces that have rearranged corresponding markets in the US and UK, that insulation has worn out. Luxury goods of all kinds are going to become less visible and less viable here.

So congratulations, of course, to those law firms that have done well enough to impress their clients and stay top-of-mind for high-value work in the future. But take careful notice of precisely what it is you’re being ranked for, and whether “high-value” work, great as it is, does or should constitute the majority or even the entirety of your business development strategy. The most effective law firm brands are those that reflect a complete alignment between what a law firm wants to sell and where clients want to buy it. Brand survey rankings are nice; successful brand alignment is the key to survival.