How our law firm got saved from failure
Our law firm got resurrected by the lean startup/customer development theory advocated by Steve Blank and Bob Dorf. We were two years into our business, struggling to figure out how to make it big with a start up law firm. We were literally in the middle of the valley of death with no clue what we were doing. We looked at the statistics for early stage companies and it became obvious that if we didn’t do something we will have to close shop. The only thing, our founding partner had was a diploma from Harvard Law School, chutzpa, the entrepreneurial spirit, a ton of founder mistakes and few paying tech clients. Through Bob Dorf’s Startup Owner’s Manual we realized the good news of “getting out of the building” and started to pivot our law practice. From a one-man shop we have transformed ourselves into a lean law firm with offices on two continents.
Our first insight from the Startup Owner’s Manual was that we were not solving a real problem for potential customers and the hypothetical solution we were offering was a replication of big law firms. All that did not make sense to customers (undiscovered and un-validated of course) in the middle of a terrible recession. Coming out of big law firm Tytus did not recognize that entrepreneurship was about solving problems for real customers instead of billing and charging anonymous clients by the hour. Billable hours were not filing a need in the market and they were not getting clients excited or showing that we cared. Most clients that took notice of our law firm and just ran away in the beginning. Instead of asking about the business problem and how we can assist, we kept focused on how we can compete with other law firms in the same ecosystem niche for the same piece of the action.
We started to ask clients about what they needed and we discovered their problems through feedback. Even negative feedback, which did not result in a direct engagement, was good, because it identified what was going right and wrong. After pivoting multiple times, we realized that there is a disconnect between lawyers and global entrepreneurs that we can try to solve. For some reason most of our best clients were immigrants or clients from emerging markets. They were passionate about technology, passionate about America and passionate about getting legal things right.
Thanks to that we realized the actual problem in the market place. Most of the technology talent is outside of the US while the opportunity is in NYC and Silicon Valley. We refocused on this problem and as a firm we have tried to assist mostly foreign entrepreneurs coming to the US or US entrepreneurs trying to go global or acquiring foreign tech talent. The deeper problem that we discovered along the way was that customers did not want to hire a lawyer per se, but they want a business partner to work with them on legal issues in a collaborative manner. This did not mean barter but a new way of providing service.
Their problem was that they wanted to leverage and scale our legal experience, not see us as a transaction cost in the P&L. Our customers were willing to pay for experience and insight, not legal paper and billable time.
Lawyers talk for a living and tend to talk too much, which leads to excessive sale initiatives. With so much talk customers usually don’t understand the content and are confused about messaging. Lawyers also get confused, because they make assumptions on what clients want and forget about building a customer relationship. Most lawyers have no clue about customer discovery, customer validation, customer creation and how to build the business, which often leads to failure. A lawyer needs to understand not only the law but the customer.
Our firm also did not understand customer development and went on building a product nobody wanted. We tried selling (talking) too much instead of building relationships and listening to customers. In practice this meant trying to get an immediate engagement instead of waiting for the relationship to mature in the sales cycle. In full honesty our firm was not selling enough and it was driving Tytus crazy.
The disconnect between building relationships and lack of sales was disconcerting, until Tytus heard Bob Dorf and Steve Blank. Their main theme of “getting out of the building” in order to get people excited and build volume around your business resonated with us. We used their observation to build a better product by focusing on customer relationships and getting people excited about us as lawyers. We kept asking potential clients and leads about what they needed and what they could use us for.
Can I have your business?
Many lawyers focus too much on direct sales, while ignoring implied endorsements. A big rainmaker from New York law who mentored Tytus repeated constantly that you don’t go out to lunch with a client to eat lunch, but to ask the magic question, “can I have your business”. After discovering Blank/Dorf, we realized this was the wrong approach and was not appropriate for building a repeatable and scalable legal business. Rather, the key question and polite question during lunch was “would you recommend us to your clients”. This approach is an invitation for collaboration and sharing as well as a request for feedback, which opens doors and solidifies a business relationship. For law firms that are trying to respond to changing market needs this an excellent method of fast and agile adaptation to changing customer demands.
Would you recommend us to your clients?
On a deeper level customer development allowed our law firm to get out of the building and in front of real clients that care. The lean methodology allowed us to identify trends in the market before they happen. This is a soft MVP tactic helped our firm to expand seamlessly outside of our core network and show future clients the implied endorsement of current clients. If the endorsement does not happen it might be a signal that our law firm needs to work more on customer relationships.
Lean law firm
The customer relationship question leads to the question of how our law firms is run. We are not a large firm and don’t need to be run as a big firm. We have challenges, because we have offices in different countries and need to discuss management and customer retention. We decided to focus everything on repeatability and scale and less on function. Although we have offices in two separate countries with different legal systems, we try to problem solve and build a team around execution. We’ve established two informal policies: number one spend as much time possible with clients (outside of the firm) and number two respond quickly to client needs. For example, we try to respond in fifteen minutes to clients to remind us about the importance of customer experience and customer assurance. Staying in touch with clients helps us to directly align ourselves with the end user and to better understand their changing legal needs.