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niche selection, choosing your practice areas

Nicheties: How to Select Your Practice Areas

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There’s certainly still a lot of apparent appeal to the general practice of law. I mean, if Abraham Lincoln did it, it can’t be half-bad, right? Well, you comb your hair, don’t you? Examine a picture of Abraham Lincoln sometime: You think he was real diligent about combing his hair? Not so much, much of the time. So, as much as it pains me to say this: times change, and people start combing their hair; and, part of that time change has produced an ill effect upon the general practice of law. Unless you’re a rural practitioner, or the ultra-local neighborhood/town square attorney, the model just isn’t tenable any longer. (And, I’d argue that, given the reach of internet marketing and the complexity of modern practice areas (among other reasons), it doesn’t even work in those scenarios any longer.) But, even if the hypothesis is that the general practice does not work any longer, it’s only just that until it’s proven; and so, this is my attempt to prove it. (Thank God . . . otherwise, this would have been my shortest blog post ever, sort of.) So, we’ll examine herein why selecting practice niches is preferable to attempting to be a general practitioner.

Now, if you’re thinking of settling upon one specific practice area, you need not limit yourself to that degree. Niche practice is representative of a whittling down of practice areas, and not necessarily the elimination of all but one. Focusing on three or four practice areas is a perfectly reasonable way to build your niche, especially if you can select practice areas that you can cross-sell, or set yourself up with referral pipelines from practitioners in other, complimentary fields. The trick is to make sure that you don’t select too many practice areas; don’t take the determination of 3 or 4 practice areas as license to choose 6 or 7 others, as well. Certainly, if something is not working, and you want to move away from that something, eventually, that’s your prerogative; however, you’ve got to be sure that you’re not working in too many areas, to the point where you’re cannibalizing your time and energy, and spreading yourself too thin to be effective, or to evince a real expertise.

There are some further reasons why it makes sense to choose a niche practice, over a general practice. For one, it’s difficult to sell everything. The message becomes muddled; and, it’s difficult for clients and referral sources to find what they need through the press of your marketing. If your focus is fixed, your clients and referral sources will be able to more easily divine your purposes, to see whether they can align their needs to your services.

Neither do referrals work particularly well in a general practice construct. Think about it: If a potential client is looking for a divorce, your referral source is not going to say, ‘You should go see Jane Doe, she does all kinds of stuff, and I’m sure she handles divorce, too’. Neither is that likely to sell the potential client on your services. The better proposition is for referral source to tell a potential client, ‘I don’t handle that; but, you need to see my friend, Jane Doe. She focuses on divorce, and does a ton of work in that arena, and does it well. Give her a call’. It’s clear which sales pitch is more impressive; and, the latter is that choice because it generates from the development of a niche practice. Of course, this does not mean that you need to reject every case that comes in that is not under the umbrella of your niche. Nike is known for selling sneakers; but, they sell other things, as well. If you’ve ever purchased Nike track pants, it’s likely that you heard of the shoes first. And, even if you’re not going to offer the service your potential client is looking for, capture the momentum by referring the potential client out to another niche practitioner who handles that area. Once you get known for some thing, or a few things, it is much easier to gain leads, and to convert those leads; half the battle is won already. Potential clients want to access attorneys they believe to be experts in the field. Referring attorneys are looking for competent lawyers to refer cases to, because it makes them look good, as well.

Another reason to focus on niches is that practice areas in modern times (due to the build-up of precedent, government regulation and court rules and the advance of technology, among other factors) are more administratively complex than ever before. At that point, the clear advantage of niche practice becomes a simple equation: fewer practice areas = more specialization = reduced risk of malpractice. You’re far more likely to have a thorough understanding of something in which you’ve immersed yourself. True general practitioners, who take on whatever cases come through the door, are continually reinventing the wheel. While it may be an exciting intellectual exercise for some, the plain fact is that it’s not efficient when legal cases are viewed as commodities, and it creates a significant risk of malpractice for attorneys (especially those with weak support systems) who are working outside of their areas of knowledge. The Gordian Knot, at least as it exists in Massachusetts, is that you’ve got to be very careful about the language you use to advertise your niche practice, lest ye be judged by the standard of an expert in the field in a potential disciplinary action. If you are looking at consciously marketing yourself as having some kind of specialization, check your local rules before doing so; Massachusetts’ are here.

If you believed before, or if you now believe, that settling upon a niche is the way to go, as respects your new, or existing law firm, the question is: What niche do I choose? Well, if you’re just starting this endeavor, and you’re coming out of law school, you don’t have a lot to go on. You’ve got to think back to your law school classes, what you wrote for the law review, your more interesting internship experiences, which mentors seemed to enjoy their chosen fields most, etc. And, keep in mind that, not everything you’re going to try will work out the first time; you’ll move things around, and try new things, until you figure out what will work. Getting it right the first time is not the main thing; getting it right in the end is where you need to be at. For attorneys already in practice, it’s a different consideration, when you’ve had some real world experience. If you have been working for someone else, you’ll want to consider whether: and which of your practice areas you’ve liked best; your existing book of business yields any hot spots; you were jealous of what satisfaction your other colleagues derived from their work; certain practice areas seemed particularly popular with clients; you can get referral pipelines established, and in what areas; and, etc. If you’ve been working on your own, or as the managing partner of a law firm, you have an idea, already, of what has been working, and what has not been working. Maybe you already know, as you’re thinking of what areas you’d like to whittle down to, or which areas you’d like to settle upon, which generate more income, and which are dogs. You’ll have statistics in place to help guide your decision.

And, if you’re looking at opening new practice areas, it’s a matter of looking at potential and projected revenue, in order to make an educated decision, based on a rough approximation of your financial wherewithal. Intertwining the discussion, like a ribbon does a May pole, is the consideration that, in all likelihood, what you’re attempting to do has been done by someone else before. Therefore, part of your process when selecting down practice areas should be to address your colleagues who have entered the road before you. If your machinations are still something of a secret, you’ll want to find persons with discretion; but, it will help to sound others whose situations you’d like to emulate when you’re making business decisions of this order — and, I’ll speak more about this later.

Probably the major consideration, however, when you’re reducing to a niche is the same major consideration for the vast majority of other moves you make: money. Wu Tang is fond of the acronym ‘C.R.E.A.M.’ = Cash Rules Everything Around Me. And, don’t it appear to be the truth. So, when you’re trying to determine where (in what areas) you’d like to practice, think about the associated costs. Initially, there are several cost considerations you should address when determining your niche; and, a starting, non-exhaustive list, would look something like this: What is it going to cost you to get malpractice insurance in the niche field(s)? Some practice areas yield more claims than others; and, that, and other factors, would contribute to higher premiums for certain practice aggregations. For some examples: there are a significantly high number of claims in the family law arena by total claim percentage; it is difficult to get a policy to cover a patent practice — and, when you get it, it’ll be expensive; and, ‘moonlighting’, or ‘part-time’, policies can be difficult to get, because many underwriters don’t feel like attorneys who are not working in the full-time practice of law are invested enough in their situations to merit the extension of trust represented by an insurance policy. While the cost of a malpractice insurance policy, in and of itself, would likely not deter the lawyer from selecting a specific practice area, it does add to the total cost of the move, and therefore merits discussion. There is also the matter of overhead; and, overhead considerations can be very different for different practice areas, and even within workflows within the same practice area. If you’re doing real estate closings, for example, are you mostly working with electronic documents, or are you printing a ton? Your overhead will look very different depending on the answer to that question. If you’re not printing, perhaps you’re mostly paperless, maybe even virtual — if that’s case, your technology investment is likely not insignificant. Will you require in-person support staff? If not, How much will virtual alternatives run you? Or, if you’re doing it all yourself, how much will that cut into your billable time, and your profits? Will you require a brick-and-mortar office, or can you work from home, or a virtual office? You must determine, as well, whether you will be fronting costs for cases, and to what extent. For certain practice areas, having the funds available to front costs for cases is essential; ready examples that come to mind are medical malpractice (most especially) and personal injury.

There are also differences (though not substantial or overly costly ones anymore, given the rise of the internet) in the way that practices are marketed. Very broadly speaking, it’s a different game when you’re marketing an elderlaw practice, versus when you’re marketing a business law firm focused on entrepreneurial clients. Depending on specific marketing choices you make in those categories, you’ll be laying out different amounts of cash, and time. You should create and manage a marketing budget to get a handle on your costs. This all counts toward your overhead. There is also a cost associated with learning particular practice areas, into which you’d like to shift, if you don’t already know them. You’ll have to attend CLEs, and access CLE materials, all of which will cost you money. If you’re lucky enough to find an attorney to shadow, who has experience of a practice area, although that time spent is invaluable, it’s still spent time, and not time that you’re billing. As you’re developing your knowledge, and practical skills, in a new area, you’re also more likely to discount your services, because it will take you longer to craft a quality representation (and, specifically, certain documents) than it would for a more seasoned attorney in the field; charging a fuller rate would be unfair to the client (who is not paying for an apprentice), and would not allow you to be competitive in the marketplace, at first. There is a definitive cost to this sort of skills acquisition — one that should be factored into your choice of niche.

I’ve alluded to this just above, in the context of marketing; but, it is essential to create and maintain a budget for your practice, in order to assure that you are not met with significant cost overruns; and, this is particularly true when you are engaging a new endeavor, and are unaware of some of the hidden and associated costs that may ride with your new strategy. Although, it’s not as simple and true as a basic mathematical equation, there are certain things that you can do to keep your costs under control, as you engage a new niche; however, you have to have some intelligible idea of what those potential costs will be, first. Of course, there is a brighter side of the money street: you’ll be able to generate revenue from your new niche(s) — hopefully sooner, than eventually; and, preferably more, than less. But, in order to effectively predict what sort of income your new/revised practice may bring in, you’ve got to get a handle on some factors respecting how you make money. For starters, you’ll need to know how and when you get paid. Much of this will be governed by the fee agreement upon which your client engages you. Will you be paid on an hourly basis, upon a contingency or by a flat fee, and in what denominations? Or, will you create a hybrid arrangement based on certain of these options? Will you unbundle your representation? Is there a statutory or rules-based fee applied to your work? Knowing how you get paid, will help to determine when you get paid, and how often. Not only, then, will you be able to arrive at a more accurate forecast of your revenue, you’ll have a better understanding of how it flows in; and, that ‘how’ question also contemplates the ways in which your clients will pay you. You’ll likely take cash, and probably checks. How about credit cards? You should also take retainers, where you can — especially as that is the only guarantee that your client will pay you. Certainly, it will help to have some idea of what you will get paid, as you embark upon the narrower path. Revenue projection is a difficult thing to manage; and so, we’ve posted some tips on going about it, here.

If you view yourself as a lawyer who is also a savvy businessperson, the money question circulates around everything, including the forthcoming points; however, I believe that the remainder of this discussion merits coverage mostly disentangled from the monetary considerations. Whatever practice areas you decide to access, you won’t be occupying that market space all by your lonesome. So, in order to trump your competition, you’ve got to know your competition. Think about which firms you’re competing with, and where. Is geography one of your main challenge points? Or, do clashes occur over target clients, regardless of where they reside in your jurisdiction (and, perhaps because your online access options are so effective)? Are you marketing in certain spaces that are already occupied by your competitors (do they have larger, more colorful advertisements than you)? You can only begin to craft your marketing posture when you know what your competition is doing . . . Only then will you be able to steal what they’re doing well, and improve upon what they’re doing poorly. Part of this is understanding your client base, and what they want, and need. Jeff Lantz, of Esquire Interactive, makes this point in a recent podcast episode of mine, in the context of website development. Everything is harder in a vacuum; and so, it makes sense, when you’re engaging your market research, to make use of your existing contacts, including your mentors. Just as you would shadow an attorney experienced in a particular niche practice in which you were interested, you should try to sound your contacts in that area about what the competition looks like.

Certainly, some lawyers will be reticent to supply any information, and you’ll only get half the story from others (since, after all, you’re liable to become a serious competitor); but, in toto you should be able to acquire enough useful information to supplement the market research you do on your own. This will give you a better idea of what you’re getting yourself into.

There are a number of levels to the idea of a niche practice. Many practitioners (probably the majority) will shed down to two or three or four practice areas. (In fact, many general practitioners mostly practice in a few areas, anyway: they’re just afraid to advertise that fact, since they’re concerned over missing that one big case in an area for which they don’t advertise; or, if they’re looking for referrals out, that’s probably a more legitimate excuse.)

Other lawyers will settle upon one practice area, like family law — which would be a broad choice. Still others, fewer the further we ride this chain down, will focus on a super niche within an already-specific practice area. The example I most often use is that of Chris Milne, a local attorney who concentrates in drafting special needs trusts. There are other examples out there, certainly; but, the point is that, a hyper-focused practice can be successful, as well, if you can isolate a significant, unmet need — otherwise, you won’t get very busy. But, if you can isolate and service that significant need, there is tremendous value in being the go-to-person in that discrete area. Will Hornsby, staff counsel for the American Bar Association, gave an interesting presentation on this topic of practice niches for one of our Lunch Hour Legal Marketing webinars during our last program cycle. You can access the Powerpoint and audio, here.

In the end, when you’re developing a niche practice, you’ve got to take the longview. While it is very difficult to turn away clients, and as it seems counterintuitive, while you’re supposed to be growing your practice, in the long run . . . it may be just what you need to do.

. . .
Liner Notes
Now, Jimmy Buffett — he found a niche, and ran with it. He’s created an entire industry of himself based upon this laidback, island persona . . . because who wants to work anyway. Am I right?
But, it wasn’t always this way. The loyal Parrotheads and parakeets did not always follow James around to various latitudes, like new age Deadheads. Jimmy Buffett’s initial forays into popular music did not yield anywhere near the commercial success of his second career. Jimmy Buffett’s first couple albums were, in fact, country records, upon which he certainly sounds almost unrecognizable as compared to his latter day self. I mean, there are hints of the late period Buffett; but, it’s a very inconsistent sound to what you’ll hear at a Jimmy Buffett concert these days. You’re more likely to find a pedal steel guitar than a steel drum on an early Jimmy Buffett record. I actually like the original Jimmy Buffett sound better than what he developed to sell records; but, you won’t be surprised to hear that, if you’re a regular reader of this blog: you’ll already have known my predilection for country music. If you’d like to hear what I consider the exemplar of early period Jimmy Buffet, take a listen to ‘Rockefeller Square’ from ‘High Cumberland Jubilee’. Buffett’s late period sound became known as ‘gulf and western‘; but, for me, it’s a little bit too much ‘gulf‘, and a little too little ‘western‘.
But, I suppose that all things come full circle. So it is that the eventual singer of songs you know by heart, such as ‘Cheeseburger in Paradise’, ‘Fins’, ‘A Pirate Looks at Forty’ (check out the great Jack Johnson cover, too), ‘Mañana’, ‘Little Miss Magic’, ‘Margaritaville’, and more . . . has become the muse of choice for modern country music. These shenanigans all started when Alan Jackson covered ‘Margaritaville‘ (with Buffett), and then collaborated (again with Buffett) on ‘It’s Five O’Clock Somewhere’. (It is.) From there, the floodgates opened, to the point where Buffett’s influence on the most popular, modern country artists is clear – listen to Zac Brown Band’s ‘Toes’. Even my dog Brad Paisley (who is nothing else, if not his own man) gets into the act, having recruited Blake Shelton for ‘Don’t Drink the Water’. (Why do country singers love traveling to Mexico so much? Aren’t they afraid of becoming drug mules?) And, that was after Shelton released his own ‘Some Beach’. Hell, if any artist is, Kenny Chesney is the modern day Jimmy Buffett. ‘Life On a Rock’ is pretty much a Jimmy Buffett album — which is not to say I don’t like a solid derivative effort: ‘Pirate Flag’ and ‘When I See This Bar’ are particularly good songs from that record.
Maybe it’s because Jimmy Buffett and country artists share some of the same mainline themes (drinking, causing trouble, going on vacation, livin’, lovin’ and losin’), or maybe it’s something else . . . but — it’s clear to me that Jimmy Buffett has achieved more of an influence over country music having left the genre, than he would have been able to accomplish staying in.
(Still, I can’t bring myself to hate on him for selling out. He absolved himself from many sins by teaming up with the immortal James Taylor on a song that is as long as it is haunting: ‘False Echoes (Havana 1921)’. . . . But, wait: JT sings about Mexico, too. What am I missing here? I mean, other than a brick of cocaine hidden in a Bible?)

CATEGORIES: Client Relations | Law Firm Management | Law Practice Startup | Marketing | Planning | Risk Management

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