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When talking about the concept, be sure to throw in the buzz word “value” or “value proposition”
Strong brands, especially in the professional services arenas, are valuable because provide customers with a level of trust. The concept of trust may seem warm and fuzzy, but it delivers cold, hard results for businesses and brands.
Need to photoshop umbrella
Compare to U.S. legal market: $235bil
Lawyers2you – another franchise type model Highstreetlawyer – network of law firmsThe co-operative – franchise type model QS – right now the biggest, biggest marketing budget, celebrity endorsed (see marketing). First mover advantage
“Loose” or “indirect” network effects: the service is not inherently more valuable (cf. fax machines), but customer confidence and bandwagon effects start doing work.
Why? Could be that large number of reviews indicates trust and popularity, but there’s something else going on. Yelp SEO -Searching “fried chicken” in Yelp will bring up only restaurants with reviews where “fried chicken” was mentioned in their Yelp reviews. Every Yelp review adds content to your page, adding keywords that improve your search performance. Does your restaurant offer great fried chicken but nobody Yelped about it? Bummer. Your restaurant won’t show up in the Yelp search results when someone searches “fried chicken.” This concept also applies to terms like “romantic restaurant,” “best restaurant,” etc.More reviews means more content. More content means more people find you. More people finding you means more reservations.
Asked big firm senior associate about this, they were not even aware it existed
As the uShip guy said, one of the most important things when looking for funding is if the partnership is a good fit.
Talk about how lawyers will be the ones most resistant to change, but that won’t stop it (stated and unstated reasons)
Non-Lawyer Ownership & The QS Business Model
Will Quality Solicitors’s Business Model Disrupt the Market for Legal Services in the United States?Business, Law, and Innovation April 18, 2012 Presenters: Robbie Carman Brian Peterson Professor: Adam Dell
Overview1. The Concept: A National Brand for Legal Services2. A Newfound Market Opportunity3. Breaking Down Quality Solicitors’s Business Model4. Will Quality Solicitors’s Business Model Disrupt the Market for Legal Services in the United States?5. Conclusion
The Concept: A National Brand for Legal Services The Traditional Model• People that need “Lottery” • Lawyers lawyers • Ask friends/family • Yellow book • Google But who? $$$
The Concept: A National Brand for Legal Services A New Model Connect to• People that Brand • Lawyers need lawyers • Familiar and trusted entity But who? $$$
The Concept: A National Brand for Legal Services What Can Branding Do for You? “You can have all the facts and figures, all the supporting evidence, all the endorsements that you want, but if at the end of the day you don’t command trust, you won’t get anywhere” Niall Fitzgerald (2001) Former Chairman Unilever; Thompson Reuters
The Concept: A National Brand for Legal Services In January 2009, Concerto Marketing and Research Now completed a study into the benefits and drivers of brand trust. The study surveyed 1000 North Americans from Consider this… Research Now’s panel of online respondents
The Concept: A National Brand for Legal Services The study found that when people trust a brand…
The Concept: A National Brand for Legal Services 83% …will recommend it to other people11. http://www.business2012.com/2012/02/build-trust-in-your-brand/
The Concept: A National Brand for Legal Services 82% …will use its products & services frequently11. http://www.business2012.com/2012/02/build-trust-in-your-brand/
The Concept: A National Brand for Legal Services 78% …will look to it first for the things they want11. http://www.business2012.com/2012/02/build-trust-in-your-brand/
The Concept: A National Brand for Legal Services 50% …will pay more for its products and services11. http://www.business2012.com/2012/02/build-trust-in-your-brand/
A Newfound Market Opportunity The Legal Services Industry in the U.K. BIG FRAGMENTEDU.K. Legal ServicesMarket1 Approx. 10,000 firms2 Vast majority < 25 solicitors2 £11,890,000,000 £13,110,000,000 Survey: 72% U.K. partners believe “substantial” consolidation necessary3 Top 50 Law Firms The Rest 1. http://www.law.com/jsp/law/article.jsp?id=1202504293111&UK_Top__Law_Firms_Post_Best_Growth_Figures_Since_ 2. http://www.palamon.com/press/index.php?read=73 3. http://www.legalweek.com/legal-week/analysis/2159583/partners-believe-fragmented-legal-industry-set-intense-merger- run
A Newfound Market Opportunity New Legal Ethics Rules Lawyers prohibited from forming partnerships with non-lawyers Old Non-lawyers cannot have Rules ownership interest in law firm Managers and See ABA Model Rule 5.4 entrepreneurs with business expertise Non-lawyers can own up can now “run” law to 25% of law firms1 Legal Expressly authorize firms Services creation of “Alternative Act of Business Structures1 2007 1. http://www.sra.org.uk/abs/
A Newfound Market Opportunity What does this mean for the consumer? Better Lawyers Managers Outside Technology Capital Greater Access
Analysis of Quality Solicitors’s Business Model Unit Economics High Low Specialized ServicesClient’s Perception of Client’s Price Client-Tailored SensitivityMatter’s Importance Services Standardized Low High IMPORTANT: Perceived Value ≠ Profitability •Simple task, efficiently delivered many times = $$$$$$ •Complex task, inefficiently delivered one time = (-$$$$)
Analysis of Quality Solicitors’s Business Model Unit Economics Law firms can be cash cows because once a certain threshold is passed additional revenue can be generated very cheaply Break-Even Point Gross Revenue Profits Other Overhead Compensation & Benefits Hours Billed
Analysis of Quality Solicitors’s Business Model Unit EconomicsUnit Economics Estimates AssumptionsQS’s ROI = 25% Revenue – Generates £ 250m per year – £1,250,000 per firm, annually (av.) – Spends £200m per year to generate • # of Locations in 2011 = 2001 that revenue • Enterprise-wide gross revenue = £ 250m1This Number Will Go Up Costs – Marketing costs will decrease as – Compensation = 50% of costs2 brand gains notoriety • Total salary spend = £ 500,000 – Efficiency will increase over time - Associate = £ 50,0003 - Partner = £ 100,0003 – Large pent up demand the “little - Average office has 6 associates and 2 guys” under utilize legal services partners 1. http://www.legalweek.com/legal-week/news/2131113/law-firm-innovation-award-qualitysolicitors 2. Stephen Mayerson, Making Sense of Law Firms, pg 418 (2006). 3. http://www.law.com/jsp/tal/PubArticleTAL.jsp?id=1202489360193
Analysis of Quality Solicitors’s Business Model Recruiting Law Firms ClientWhat Network Feedbackdoes QSlook for? Reputation Firm must commit to highest levelWhat of customer servicemust law On average, commit 5% of allfirms revenue to QS1commit?1. http://www.lawgazette.co.uk/news/private-equity-takes-stake-qs
Analysis of Quality Solicitors’s Business Model The Competition Corporate Legal Services like…Franchise-type Brands Online Legal Networks like… like… Small Big Law Firms Practitioners like… like…
Analysis of Quality Solicitors’s Business Model Competitive Advantages Consumer peace of mind Brand Power “One less choice we have to make” 1 Internal training department with emphasis on “soft” Economies of skills Scale Huge marketing advantage giving unparalleled access to untapped markets Gain control of consumer trust and confidence First Mover Switching costs – late entrants must invest extra Advantage resources to attract away from trusted brand1. http://blog.qualitysolicitors.com/2012/02/06/and-theyre-off-the-race-to-capture-the-consumer-is-finally-underway/
Analysis of Quality Solicitors’s Business Model Competitive Advantages Service Brand Visibility Innovations Strength Market Prominence (Dominance?)
Analysis of Quality Solicitors’s Business Model Network Effects Number of Users Indirect Network Direct Effect Network Effects Consumer QS Market Complementary Trust/Ratings Share Services Positive Feedback Loop Number of advertisers & partners
Analysis of Quality Solicitors’s Business Model Technology - Yelponomics1 As we might expect, higher ratings leads to higher reservations Additionally, more reviews, not taking into account ratings, leads to more reservations. Why?1 http://blog.launchcopilot.com/2011/04/25/yelponomics-what-really-drives-yelp-reservations/
Analysis of Quality Solicitors’s Business Model Technology – Web Enabled Document Assembly Powered By: Answer Questions Client Pays A Online Fixed Price Attorney Reviews Pre-existing Document
Analysis of Quality Solicitors’s Business Model Branch Growth1, 2600500 500400300 220200 170100 0 0 1 Aug-04 Feb-05 Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 1. http://www.lawgazette.co.uk/news/private-equity-takes-stake-qs 2 http://www.guardian.co.uk/money/2011/apr/03/uks-first-chain-high-street-lawyers
Analysis of Quality Solicitors’s Business Model Turning Heads Last fall, Quality Solicitors secured investment from European private equity firm, Palamon Capital Partners. While the exact amount was kept confidential, Palamon’s investments usually range from €10m to €80m.1 Palamon €1.1bn funds under management1 Capital Experience operating in fragmented professional services Partners markets (specifically, dentistry and financial services)1 Overview1. http://www.legalweek.com/legal-week/blog-post/2118742/qualitysolicitors-secures-private-equity-backing-deal-silence- critics
Will the QS Business Model Disrupt the Market forLegal Services in the United States? Catching the Next Wave of Innovation Clayton M. Christensen Vijay Govindarajan • Harvard Business School • Dartmouth – Tuck School of • Disruptive Innovation Theory Business • Reverse Innovation Theory
Will the QS Business Model Disrupt the Market forLegal Services in the United States? Disruptive Innovation Theory11. Seeing What’s Next: Using Theories of Innovation To Predict Industry Change, Clayton M. Christensen
Will the QS Business Model Disrupt the Market for Legal Services in the United States? The Motivation/Ability Framework and Regulations1Motivation Determined By:•Market Size/Growth High•Competition Looking The•Economics of Opportunity For A•Business Model Hotbed•Industry Attractiveness Target MotivationGovernment Levers:•Taxes•Competitive Policy Looking•Rate Regulation The For Dilemma Money LowAbility Determined By:•Resource Availability•Market Access Low HighGovernment Levers: Ability•Standards = Legal Ethics Rules 1. Seeing What’s Next: Using Theories of Innovation To Predict Industry Change, Clayton M. Christensen
Will the QS Business Model Disrupt the Market forLegal Services in the United States? Application to the Legal Services Market QSWill Unlock The Huge Potential Of An Underserved Market With Low Expectations – Must be cost-conscious – Must be high quality but it’s easier to do simple things well – QS brand gains high visibility gains big market share in “low tier market” The US Will Change Its Ethics Rules – If UK ABS firms are successful then US firms will want in more pressure to change rules – As experience builds and technology advances ABS firms will move up the chain of customers Eureka! = Disruption – Eventually ABS firms will figure out how to do complex work far more cheaply than high priced incumbents
Will the QS Business Model Disrupt the Market forLegal Services in the United States? Amplifying Weak Signals The Small Things that Indicate Big Changes– ABA Heavily Considering Allowing ABS1– Jacoby & Meyers Sue State of New York Challenge Constitutionality Of No Non-lawyer Investment Rule2– North Carolina Senator, Fletcher Hartsell Proposes A Bill That Would Allow Minority Non-lawyer Ownership (49%)3– Many Large Law Firm Partners Unaware of Changes or Unconvinced That They Will Have Any Effect On Them1. ABA, Issues Paper Concerning Alternative Business Structures, April 5, 20112. http://www.lawcrossing.com/article/7527/NY-Court-Upholds-Ban-on-Non-Lawyer-Investment-in-Law-Firms/3. http://www.abajournal.com/news/article/nc_lawyer_and_lawmaker_introduces_bill_that_would/
Will the QS Business Model Disrupt the Market for LegalServices in the United States? Conclusion - European countries now allow Outward non-attorney ownership/investment in law firms1 Pressure -Globalization of legal services industry1 - Increasingly Expansive and Complex Regulation of Private Conduct = Greater Demand for Legal Services by Normal People1 Inward - Lack of Access to Good Attorneys Pressure Due to Cost1 - Lack of Knowledge About Which Attorneys Are Good11. http://www.nytimes.com/2011/10/29/business/selling-pieces-of-law-firms-to-investors.htm