18. October 2019

Client segmentation in the law business

As a rule, lawyers assume that their clients’ requirements and expectations elude standardisation. They believe that each client has to be treated individually in every respect: from the client approach and the identification of the matter to be dealt with to service provision and invoicing. This attitude towards clients is undoubtedly honourable, but it also romanticises the relationship between lawyers and clients and often gets in the way of efficient service provision. What do I mean by this?

Creating customer segments is the be-all and end-all in marketing. This principle does not merely apply to companies in general, but naturally also to law firms.

What would be meaningful segmentation criteria in our business? Now, a common way of categorising customers in segments is their affiliation to a certain industry. Many, particularly larger-size business law firms have created industry or sector groups, for instance for banks, insurance companies, pharmaceutical companies, media companies or real-estate companies. Of course, it is also conceivable that clients can be segmented according to criteria other than their affiliation to a certain industry. A distinction could be made, for example, between companies quoted on the stock exchange, privately owned companies and family businesses. A segmentation according to geographical criteria is also imaginable.

Once a law firm has opted for a sensible segmentation that satisfies its requirements, numerous advantages will beckon:

  • Advertising the law firm’s services will become simpler and, above all, more specific, and its client approach more direct and more precisely aligned with the addressees’ requirements.
  • The lawyers in the firm have an opportunity to concentrate on individual client segments. They get much better acquainted with the clients of their segment and their requirements, thus becoming specialists for individual client segments.
  • You will remember: in one of my earlier blog posts, we discussed the fact that clients attach enormous importance to lawyers understanding their business. This is precisely what is achieved by specialisation in client segments!
  • Specialisation in client segments makes a crucial contribution towards the law firm’s visibility and towards a clear-cut strategic profile. This make the law firm look attractive in clients’ eyes, which ultimately has a positive effect on fee calculation.
  • The service provision processes in the law firm can be tailored to the individual client segments’ requirements, thus becoming leaner and more efficient. This has a positive impact on throughput speed of the work to be done on the mandate and reduces “production costs”.
  • The training of young lawyers in the law firm can be specifically oriented towards client segments’ requirements, which enables them to follow a steep learning curve and will result in a shorter development time from associates to really productive colleagues.

So you see: let yourself be inspired by other industries and create client segments! It’s worth it!

About the author
Prof. Dr. Leo Staub is a Titular Professor of Business Law and Legal Management at the University of St. Gallen. He also is one of the Directors of the Executive School of Management, Technology and Law of St. Gallen University where he chairs the division "Law & Management".