Originally published in Legal Information Management, Vol 4, Mar, 2004, pp13-16.

Arthur Weiss, AWARE & Legal Information Management Page 1 of 6

Should I spy with my legal eye or is there a better way?
Lawful Competitive Intelligence for Legal Professionals
Introduction
The need to monitor competitor activity and anticipate competitive actions is a standard activity
for most businesses. In order to succeed and grow, firms need to understand what rival firms are
doing, and furthermore what is happening in the overall business environment. However unlike a
manufacturing company, or a high-street retailer, or indeed many other businesses, obtaining
intelligence on competitors is not so easy for professional service firms.

There are a few reasons for this.

First, there is still an assumption among some practitioners that professional services firms
should be above the normal commercial realities that impact most other businesses. Although this
is now less of an issue as the rules that prevented the full marketing and promotion of law firms
were relaxed, the practice of marketing, including marketing and competitor research, is less
developed in many law firms than in other business sectors.

The second reason relates to the characteristics of a professional service business. Unlike firms
supplying tangible products with a fixed price and a measurable quality, the law firm charges for
time, and this will vary depending on the work involved. Law is also a people business, so
measuring quality is much more difficult, as the outputs can vary depending on the individual
doing the work, their experience and knowledge, and even on their mood or what else is
happening in their lives. There are exceptions conveyancing, will-writing and the like, which can
be fixed price with a standardised output, but in the main, comparing law firms on two major
marketing parameters, price and quality, is difficult.

A third reason that can make finding information more difficult relates to the typical structure of a
law firm. Limited companies have to file accounts, and will give out press releases following each
product modification, perhaps including technical specifications and other details in their
brochures. In contrast law firms are partnerships, and there is no requirement for them to declare
their full accounts. They are beholden to their partners rather than their shareholders, and so can
legally keep a lot more information secret.
What is Competitive Intelligence
There are several definitions of competitive intelligence or CI, as it is commonly abbreviated. All
link the concept of collecting information on the firms external business environment, interpreting
and managing this information, and using it as an input into the firms decision making process,
so as to reduce the risk involved in strategic and tactical planning. For example, the Society of
Competitive Intelligence Professionals (SCIP http://www.scip.org) defines competitive
intelligence as the systematic and ethical program for gathering, analysing, and managing
external information that can affect your firms plans, decisions and operations. Where some go
wrong is to limit the definitions to competitors only, ignoring the wider environment within which
businesses operate.

Although monitoring competitors is part of competitive intelligence, restricting the effort to this
alone is dangerous as it ignores other key components, namely the need to understand how the
firm fits into its environment and what is changing in that environment that could impact the firm.
Originally published in Legal Information Management, Vol 4, Mar, 2004, pp13-16.
Arthur Weiss, AWARE & Legal Information Management Page 2 of 6
This obviously does include the actions of competitors, suppliers and customers but also looks
wider at regulatory changes and their impact, and the threats posed by new entrants and
substitute services.

Within the UK legal profession, restricting research to a study of other UK based law firms would
be extremely short-sighted. As business globalises, so does the need for global law firms one
reason for cross-border mergers between firms. For a corporate law firm, it is now essential to
look beyond the UK. The merger of a competitor firm, with, for example a US law firm could give
the competitor an added attraction for corporate clients, resulting in a potential loss of business
for other firms operating without the same global reach.

However just looking at other law-firms globally is insufficient. There is a need to look much wider
at the overall business environment. Currently, in the UK, there is a move to further deregulate
many aspects of law practice. The so called Tesco Law will potentially open up legal services,
allowing in banks, building societies and even supermarkets who would be able to offer various
legal services from probate to accident compensation claims. Thus, potentially, competition could
come from many non-traditional areas, cherry picking the high-margin business for many legal
practices. Ignoring the implications of such moves would be foolhardy, and firms should not be
taking a wait and see attitude but instead should be considering how to compete in such an
environment. Another example that impacts all law firms are Lord Falconers suggestion that
there should be an external regulator for legal services, removing the self-regulatory functions of
the Law Society (The Guardian, 25 July 2003). Such changes are liable to transform the practice
of law within the UK, impacting fees, procedures, service and processes for many firms.
Competitive Intelligence what it isn!t
It is important to emphasise that competitive Intelligence does not involve spying, or espionage.
Information is only gathered from publicly and freely available sources (although the information
found does not necessarily have to be published, and often is the result of interviews with experts
and others familiar with the competitor). The key emphasis is the analysis and interpretation of
the data where information from a number of diverse areas is combined to form a picture of what
is happening. In contrast, espionage involves illegal and unethical practices where the express
aim is to obtain confidential material. In fact, often the same intelligence could have been
obtained using ethical approaches. For example, it is not necessary to obtain a confidential
strategic plan showing how a particular firm had plans to open up an office in a new location or
start up in a new practice area. Instead, recruitment advertisements, press-releases,
management interviews, and industry rumours could convey the same information and are a lot
easier to obtain.

Competitive Intelligence also differs from traditional market research in the techniques and
approaches used, although there is a considerable degree of cross-over. Market research is
essentially tactical in nature, and looks at customers and the characteristics of the market. As
such, it can also look at competitor activity but the focus tends to be short-term. The Chartered
Institute of Marketing defines market research as the gathering and analysis of data relating to
market places or customers; any research which leads to more market knowledge and better-
informed decision-making" (http://www.cim.co.uk). The key emphasis is on the immediate market
rather than the wider business environment and competitor activity in general.
The Competitive Intelligence Process
With the onset of online systems and the Internet there has been a flood of information available
to organisations on their competitive environment. Within the legal profession, many firms have
Originally published in Legal Information Management, Vol 4, Mar, 2004, pp13-16.
Arthur Weiss, AWARE & Legal Information Management Page 3 of 6
launched sophisticated web-sites, containing their news, backgrounds on partners, areas of
practice and more. Yet, in this wealth of data there is also a danger. Competitive Intelligence has
to inform decision-making. Collecting information for its own sake is a valueless task. Just
because some fact or other appears interesting does not mean that it has a value in aiding
business decisions. Rather than focus on the information that is available, the CI analyst needs to
identify the internal information needs of the business. By knowing what information is needed,
the task of finding and collecting it becomes a targeted rather than a serendipitous process.

Identifying an organisations intelligence requirements is thus the first stage of the CI process.

Essentially, there are three categories that should be considered.
Intelligence needed to support or reduce the risk involved in a strategic decision.
In this category, the CI analyst needs to gather information that is specific to the particular
decision. This could be due diligence information prior to a merger or partnership with another
firm; or an investigation into the background behind a competitor announcement.

Intelligence needed to prepare or forewarn the firm of any adverse market situation or
to alert the firm for any forthcoming opportunity that it could take advantage of. In
essence this is an early warning system and the aim is to anticipate what could happen so as
not to be surprised if it does happen. Preparing for the impact of the Tesco Law would fall
into this category.

Intelligence needed to benchmark the firm against key competitors and to keep up-to-
date with their activities. This links competitive intelligence to the firms knowledge
management processes. The firm needs to have a good understanding of itself, and its
strategic direction. This however is not as straightforward as it would appear, as it is important
to be objective and to avoid making false assumptions about ones own situation. Many
companies over or underestimate their true capabilities. As Don Quixote said to Sancho
Panza Know thyself, which is the most difficult thing to know that the mind can imagine. If
thou knowest thyself, it will follow thou wilt not puff thyself up like the frog that strove to make
himself as large as the ox. (Cervantes, Don Quixote, Ch xlii). So one immediate role for
competitive intelligence is to provide an objective perspective on the firm in comparison with
its industry peers. To do this, the firm needs to look at rival firms and objectively assess their
capabilities, strengths and weaknesses, comparing them with their own firm and the industry
as a whole.

Pricing and Postioning
By identifying key areas to look at, the CI analyst can be much more focused and spend time
collecting information which will focus just on these areas. Typical questions will include aspects
such as pricing how should we price our services; practice areas which practice areas
should we focus on and expand ; clients who could we win as a client.

For each question or intelligence requirement, further questions should be asked:

How much will it cost to obtain the information?
What could it cost not to obtain the information?
When should the information be obtained?

Of course the answer to the second question should be higher than that of the first, as otherwise
any intelligence gathered will not justify the time, money and effort involved.

Originally published in Legal Information Management, Vol 4, Mar, 2004, pp13-16.
Arthur Weiss, AWARE & Legal Information Management Page 4 of 6
Following the identification of the key intelligence requirements there are a further four steps in
the competitive intelligence process, although the fourth involves the decision maker rather than
the CI analyst as it involves using the collected intelligence as part of tactical or strategic
planning.

Step 1: Collection

Intelligence can come from both primary and secondary sources, and both should be used.
Deciding on appropriate sources is thus a key element of the collection stage. One rule of thumb
that can be used to find sources is to think why the required information is likely to be available.
Understanding reasons why the information would be publicly available should lead to a
realisation of the likely sources for the information.

Secondary sources will include online news and legal databases from providers such as Lexis-
Nexis, Thomson and other data providers. The competitor web-sites will also include information
which can be valuable partner biographies, numbers, practice areas, locations and press
releases for example. Offline sources include both the national and the legal press. The latter will
be particularly useful for clues that a particular law firm is looking to expand or enter new practice
areas clues to such activity will include job advertisements as well as news stories.

Primary sources include client interviews, journalists who may have written stories on law firms
and ex-competitor employees.

In many cases, primary sources will be the only way of obtaining certain categories of information.
For example, obtaining data on competitor fee rates is more likely to come from interviews with a
mixture of clients, ex-competitor employees and similar contacts than from any published
documents (although some market surveys may include typical fee rates for certain types of work,
and press sources will often include the total value of major contracts won). Nevertheless, even
where primary research is the main information source, secondary information sources can help
corroborate the information gathered by providing contextual information.

Step 2: Conversion

A single item of information has little value. However linked to other pieces of information, the
value multiplies. Combining information from different sources allows a picture of what is
happening to be constructed. At its simplest this conversion, or analysis involves the bringing
together of disparate pieces of data into a coherent whole a bit like putting the pieces of a
jigsaw together. Often however, more in-depth analysis can provide deeper meaning. By
understanding trends and patterns, it is often possible to anticipate future actions. Thus, if a firm
recruits a new partner who had experience in an area where the competitor was weak then an
assumption can be made that the new partner may be expected to build up the weak area.
Conversely, a new partner for a practice area that had been viewed as strong could indicate
expansion plans perhaps requiring further investigation.

Step 3: Communication

Effective CI should involve a two-way process. Although the CI analyst needs to disseminate the
gathered intelligence to the decision maker the decision maker, should also provide feedback to
the analyst. This helps the analyst to determine the accuracy and usefulness of the intelligence
which can then aid future collection and analysis steps.

Originally published in Legal Information Management, Vol 4, Mar, 2004, pp13-16.
Arthur Weiss, AWARE & Legal Information Management Page 5 of 6
In fact, communication is the secret ingredient of the CI process. It is estimated that the majority
of useful intelligence within organisations is already held somewhere within the firm. The problem
is that the people with the relevant information dont pass it onto the people who need it. Instead,
the information gets lost until it is too late, and then surfaces with a standard excuse nobody
asked me! To resolve this, the firm needs to emphasise that any information about the
competitive environment should be passed to a central point, where it can be stored and brought
out when needed. In fact, the first part of any intelligence collection task should be to check what
is already known and this is where the titbits of information gathered and stored over time get
used, assuming, of course, that there is a working knowledge management system that will allow
for its retrieval.

Step 4: Intelligence utilisation

Intelligence that is gathered and ignored has no value. Even worse, it can start a cycle where the
analyst providing the information doubts their own efforts, leading to less effective CI collection in
the future. Hence, at the start, when identifying the firms intelligence requirements, a key
question has to be what will we do with the intelligence when we have it. If the answer to this
question was nothing then no further work should be done. However lets see what comes up
can be a valid answer, assuming that actions could be taken for certain results. Doing nothing,
because nothing is needed can be a valid decision. For example, if the key question had been to
confirm, or deny a rumour, then it is possible that
actions will be taken for only one answer and not the other (i.e. if the rumour was false then
perhaps no response would be needed). Curiosity alone should not be the reason that
intelligence is collected. The CI process is fuelled by curiosity about the competitive environment,
but satisfying curiosity should not be the only output.

Counter-intelligence

As well as collecting information on the external environment, it is also crucial to protect ones
own secrets. There is a culture of information provision in some organisations, where by trying
to be open and transparent, too much information is provided. When looking for information, a key
question is why will this information be available. The opposite question should be asked when
releasing information, namely why should this information be made available. Information should
only be released if it is legally mandated, or if it serves to improve client and supplier
relationships, gain new clients, improve market position or reputation, attract the best staff, and
similar reasons that benefit the firm. Client areas and Intranets should be password protected and
designed so that only those with legitimate passwords can enter. Non-disclosure agreements
should be de rigour for anybody likely to come into contact with sensitive information whether
they are temporary staff, external consultants, vendors, etc. The key rule to remember is that
once strategic information has entered the public domain control has been lost.

What are the benefits for law practices

A law firm does not operate in isolation from its environment. To succeed and grow it needs to
attract and keep clients, and to make money. To do this, the firm needs to differentiate itself from
other law firms. This can be through the service and expertise offered, the type of customer
served, its location, and so on. Unless the firm knows how it differs from its competitors it will be
unable to create and preserve the differences that lead to its success. The competitive
intelligence process is a legal way for law firms to find out what other firms are doing right or
wrong, and to learn from these incorporating the best in their own strategic and tactical planning.
CI also enables firms to anticipate changes in the environment so that they can prepare
Originally published in Legal Information Management, Vol 4, Mar, 2004, pp13-16.
Arthur Weiss, AWARE & Legal Information Management Page 6 of 6
themselves, taking advantage of opportunities and protecting against threats to the firm and its
future.


___________



Biographical Details on Author:

Arthur Weiss, is a management consultant specialising in competitive intelligence and strategy. In
1995 he set up AWARE - offering clients consultancy on information sources, marketing analysis
and competitive intelligence. Arthur has lectured and published papers and articles on both CI
and marketing related topics, in a variety of publications. He is a Chartered Marketer with the
UK's Chartered Institute of Marketing and a member of the Association of MBAs and the Society
of Competitive Intelligence Professionals. He is married to Susy - a graphic artist, and has two
children who alternate between making him very proud and very irritated. Arthur can be contacted
at a.weiss@marketing-intelligence.co.uk or via AWAREs web-site at http://www.marketing-
intelligence.co.uk.