The Radio Shack Bankruptcy and what it can teach law firms
First, a disclaimer: I typically despise blog posts/comments like these for a few reasons.
- They seem clickbait-ish
- Your law firm is not like any other business. It’s not. It’s completely different. In fact, for the most part, law firms are absolutely horrible businesses and you can’t compare them to a mom and pop place.
- This will only work with transactional based small firms for the most part.
- The thoughts below do not mean that this will work if you do crap work. It will not. You need to do amazing work for your clients. But amazing work may make you someone’s associate in a few years if you don’t pay attention to what the market is telling you.
Having said the below, I think there are some lessons that small law firms need to extrapolate from this.
Figure out what your clients want and give it to them, and do it conveniently, and do it better than all the others.
If your law firm has one of these, you’ve got problems. If you’re talking about how “zealously” you advocate, then…stop. Lawyers are constantly thinking that the same things that worked for them yesterday, will work today and will work tomorrow. That’s complete bullshit. You need to change the way you practice to compete. RadioShack is filing Chapter 11 because they didn’t adapt quickly enough. Instead, they spent massive amount of money on focus groups and changed their name to “The Shack”,which, while super cool for the youngsters, did nothing to alleviate the main issues that Radio Shack had. Amazon was and is an 800b gorilla sitting on Radio Shack’s chest and beating them senseless. They also happen to be cheaper and supremely better at delivering a product people wanted. Instead of hiring branding firms and buying massive amounts of network time, Radio Shack could have partnered with this guy, this guy, and, most recently, this guy and delivered products to their customers within hours in NYC and within a shorter period of time elsewhere. Great PR, too. They didn’t, and that’s exactly why you’re going to be able to buy double AA batteries at RadioShack in a few hours.
Lesson for lawyers-Don’t just say you’re going to “innovate” (an utterly meaningless word that gives me a rash) by rebranding yourself. Figure out what it is your client wants and how they want it delivered and give it to them that way. And what’s your next client going to want? And the one after? (1) Do they want you online access to their file? (2) Do other attorneys do that? If the answers to (1) is Yes and (2) is No, then why aren’t you doing that literally right now? Literally right this second. I guarantee you someone else is.
Cut your F%@king overhead
“Screw the internet. You know what we should do? We should build more stores.”
-Radio Shack (RIP)
No. No, you should not. RadioShack was doomed because every single dollar they made went to overhead and they had no money leftover. They couldn’t compete with companies that were doing it quicker, and cheaper, because the others were relying on cheap labor and no physical stores. Does that absolutely suck? It does. Will it continue? It will. And while the sharing economy will likely mean you and I were be carpooling together soon and staying in the same AirBnB when we travel on business, there’s not much you can do. If you’re a small firm, every dollar is important. Every dollar. Can you track your PPC campaign on Google and see if it’s resulting in clients? If the answer is no, cut it until you can. Do you need that ad in the yellow pages (seriously, if you still have an ad in the yellow pages…) Can you rent out most of your office space to others to create a co-owrking space? If yes, then do it, because these guys are doing it really well already. Look at every single goddamn dollar that leaves the firms coffers and figure out if it’s being spent on something YOU NEED. Not want, but NEED. Huge distinction (which my accountant had a long talk with me about….please see my Kickstarter page for ways you can help). About 18 months ago, I decided I was a big shot and left an office at Regus (where I essentially didn’t pay any rent because the other tenants became clients) and moved into my own office space. Sick views of the East River!! I pay close to $60k a year on rent (I know, I fainted too). Most of my Bankruptcy and Real Estate clients never come in. Everything is done online. I’m an idiot for making the move. Do not let your ego take control of your wallet.
A small caveat here-don’t just go crazy and start working from Starbucks because it costs nothing. You’re likely only going to meet crazy people and people who are in line to go #2 in the bathroom, so that’s really not going to drum up much business. Instead, spend wisely. Co-working spaces for a few hundred bucks, where you can meet AND SPEAK TO OTHER HUMANS.
Realize whether something is working or not and adapt
The guys over at “The Shack” didn’t turn the ship quickly enough. You don’t have that problem. You can turn on a dime in most cases. If your numbers are going down, look to potential partnership opportunities. If you are pressing your “Blackberry” with your index finger, perhaps it’s time to bring in someone who knows how to compliment that zeal for the old fashioned with some new developments in leveraging technology to reduce waste. If your assistant is coming in late and you don’t need him/her, maybe it’s time you call someone else. The point is to realize what’s working and what’s not. To constantly track. And to act, before it’s too late.
Again, I’m not a believer that a law firm should be considered a “business” in the same way a toy store is. There are huge difference. For the most part, you are the product. Having said that, it doesn’t mean you can’t realize that the world is shifting, and whether we want to or not, we have to shift with it.