CREATING DOMINANCE

Dominance is an integral aspect of strategy.  Strategy, whether in war, sports or business is about how one can place themselves in a competitive position that gives them an advantage over competitors.  If that position can be made so overwhelming by one competitor that others are effectively taken out of effective competition, that competitor is dominant.  Dominance wins.  The game is over.  Everyone else is playing for second place or lower. 

While the importance of dominance may seem like a pretty basic concept, it is amazing how few businesses “get it.”  Management will devote immense amounts of its planning efforts on internal operational issues that may produce important and positive results yet do little to contribute to their companies’ dominance.   A law firm’s strategic focus is often on compensation systems and organizational structure.  That may be important stuff, but in my book, it’s not strategy.  Strategy is about winning.  It’s not just about doing well in comparison to competition – its about winning by a couple of touchdowns.  It’s about being dominant.

But some law firms’ strategic plans talk about “establishing a position of dominance” or “being pre-eminent” in an area of practice, an industry or a geographic area. These are precisely the kind of market-driven, externally focused goals law firms should set for themselves. The obvious questions then are how does a firm go about creating dominance and how does it know when it has achieved dominance?

Is There Such a Thing as Dominance?

Some law firm managing partners might argue that the legal marketplace is so fragmented that no single firm could realistically gain dominant market share.  That is, if we were to consider a large American city to be a market, it might very well have 30,000 lawyers in private practice with total annual client billings of more than $4 billion.  For a law firm to possess a 10% market share, it would have to gain locally generated revenues of $400 million. At an average revenue per attorney of $400,000, this would mean the firm would need 1,000 lawyers in that city alone.

In reality, however, the entirety of legal services purchased in a geographic area is not a marketplace. 

For there to be a market, there must by definition, be competing sellers for the work available.  Large corporate firms don’t do plaintiff “slip-and-fall” work or domestic relations.  Small consumer firms and solo practitioners don’t handle securities offerings and anti-trust cases.  Therefore, a marketplace is really a multi-dimensional matrix of factors that may include geographic area, practice discipline, industry and client type.  The good news is that the law firm gets to decide the markets in which it wishes to compete.