Week 3 of my “How Innovation Diffuses in the Legal Industry” class focused on the crucial role of consultative sales and established distribution channels in the diffusion of innovation. The success was entirely due to our guest lecturers from Thomson Reuters, pictured above.
The value of this class, however, will not make sense without first providing some real-world context. So let’s start there, circling back to diffusion theory and how Borstein, Thorkildsen, and Stroka are, in fact, “change agents” as defined in Post 020.
For the Week 2 wrap-up, see Post 032.
February 2014: Meet-up of legal start-up entrepreneurs
One comment I never forgot came from David Perla [Week 2 guest lecturer], who scoffed at the notion that Thomson Reuters, Lexis, Wolters-Kluwer and other serial acquirers were not a significant part of the innovation ecosystem. Perla stated emphatically that some of the smartest business people in the legal industry worked inside Thomson Reuters. “They definitely have some brilliant people that understand how business works; how people make decisions; how to lever off brands and established customer bases to build up dominant businesses.”
Perla, who was long gone from Thomson Reuters by then, was warning the audience not to get arrogant, overestimating our own creativity and underestimating the acquirers’. As the co-founder and active operator of a legal industry start-up, see Post 004, I had, by February 2014, consumed enough humble pie to not want any additional helpings. I didn’t understand Perla’s observations at a deep level, but I stored them away in my mind for possible future use.
March 2016: Chicago Legal Innovation & Technology Meetup
Fast forward to the spring of 2016, where Dan Linna, Dan Katz and others are running another iteration of the Chicago Legal Innovation & Technology Meetup (this one in the shadow of the ABA TECHSHOW). I’m on a panel with Joe Borstein, who is running sales for Thomson Reuters legal managed services unit (formerly known as Pangea3). I remember saying to myself, “This Borstein has better intel on the legal start-up market than anyone I’ve ever met. And where in the world did he come up with these slides? They’re gold.” In addition to being funny, Joe also had a knack for simplifying the complex. People liked listening to him.
July 2017: Chicago/Milwaukee Regional Meeting of CLOC
Fast forward again to July of 2017. I’m attending the Chicago/Milwaukee regional meeting of CLOC. Paul Stroka, Director of Legal Solutions at Thomson Reuters, was paying for lunch and arranged for some educational programming, including an overview of emerging legal technology from his colleague, Rebecca Thorkildsen.
Two things stuck in my mind from that meeting:
- Paul Stroka had a wonderful light touch, doing whatever he could to facilitate a higher-value meeting for CLOC members, never once engaging in anything that felt like a sale pitch.
- Paul’s colleague, Rebecca Thorkildsen, was the single most knowledgeable person on legal technology that I had ever met, providing useful framework after useful framework for understanding the bewildering arraying of technology that was now coming into the marketplace.
And then the lightbulb goes off — “This is what Perla was talking about. These are extremely knowledgeable professionals who are growing business units at Thomson Reuters.” Thus, before the meeting ended, I asked Paul and Rebecca to come to my “How Innovation Diffuses in the Legal Industry” class at Northwestern Law in the fall, and, if possible, include Joe Borstein.
Consultative Sales — what it is and when and why it works
In the anecdotes shared above, the common theme is consultative sales. Borstein, Stroka, and Thorkildsen are subject matter experts who are sincerely focused on listening, educating, building relationships, and problem solving. This is a relatively expensive “long-game” approach. Yet, its underwriter is Thomson Reuters, a legal information giant that deeply understands the economics of sales and distribution through decades of selling books, practice guides, and online subscription services.
To boil it all down, consultative sales works best when (a) prospective clients are struggling to understand their own business challenges, often due to significant or rapid industry changes, and (b) your products provide the best solutions to a reasonable subset of those challenges. Although your educational and problem solving efforts will sometimes point prospective clients toward another vendor, they are sure to come back to you when they need your specific product. Moreover, they will refer you and your product/service to their industry peers.
It should be obvious that this wonderful long-view approach is unavailable to fledgling legal start-ups who need sales and reference clients before they run out of cash. In many respects, today’s legal industry is similar to the automotive industry circa 1905: There are hundreds of small car builders who rightly believe that cars are the future — it’s just not going to be their car. This is because the industry inevitably must consolidate into a smaller number of dominant companies that can simultaneously focus on both quality and cost while building a sales and distribution network that can handle the complexities of warranties, service, parts, and repairs, etc.
As Thomson Reuters knows as well as Ford or General Motors or Chrysler did back in the day, in addition to projecting stability to your client base because of your size and client base, there are tremendous economies of scale to selling. That is why Thomson Reuters can afford to field an A-team of seasoned lawyers (Borstein and Stroka) and MBA consultants (Thorkildsen) to educate the market.
Example of educating the client
I specifically asked the Thomson Reuters crew to walk the class through materials they use when interacting with prospective clients. Below are three key slides presented by Rebecca that beautifully illustrate the value and power of consultative sales, particularly in a crowded and confusing marketplace like legal circa 2017. Note the three slides below have a contract/transaction focus. The next section touches on litigation.
Here’s the basic set-up: Imagine you are a legal operations professional working in the legal department of a large global company. The goal of the company is to grow and prosper economically — and for 365 days a year, that requires the company to form and execute contracts. Obviously, because of the scale of the business, those contracts become an enormous management challenge.
In 98% of all cases, the legal department lacks the time (and often business training) to understand their challenges within a broader system framework. Note how Slide 1 divides the world into legal and business drivers (left side) and provides an lifecycle framework for overall contract management (right side).
The purpose of Slide 1 is to help the client identify, organize, and ultimately prioritize their internal pain points. The legal professionals, after all, want to impose order on their massive workload and feel like they are delivering consistent value and quality to their business unit. It is a good sign when a prospective client asks for your slide deck, as it means you’ve connected with a real problem.
Again, if you are a legal department operations professional, you are constantly being pitched by a bewildering array of technology vendors. Invariably they ask themselves, “What do all these company do? And how do they relate to one another?” Slide 2 places the vendors into categories based on functions and features. With this one slide, you know where to focus your time.
What is remarkable about Slide 2 is that Thomson Reuters products are mixed in with competitors but not in a way that makes them identifiable. Let the customer react and talk and, over time, a large number of good fits will be revealed.
Slide 3 uses a similar approach. However, now it’s organized in a way that maps onto the department’s legal functions and workflow.
If Rebecca Thorkildsen spent an hour or two with you, sharing company materials and helping connect your problems to potential solutions, most professionals will reciprocate by buying from Thorkildsen’s company when the need and product(s) are a strong match. Why? Because the problems never end and they want access to her expertise in the future. That’s the Thomson Reuters’ long game.
The careers of two ex-litigators tell an important story
While Thorkildsen has a tremendous command of legal technology, particularly in the contracting space, Joe Borstein and Paul Stroka shared some personal experiences from their time as lawyers that were (a) useful in understanding the arc of the broader legal market, and (b) the personality and mindset of someone who is likely to be good at consultative sales.
Borstein told the story of cutting his teeth as a litigation associate at a major law firm where he was put in charge of managing a team of several dozen professionals on a massive document review for a bet-the-company case. Although the work was generating tens of millions of fees for the firm each year for several consecutive years, the process was highly inefficient and plagued with quality control issues. “From the inside, it was obvious that the system was broken. Friends of mine at other firms were drafting business plans for new ventures. There was no way the status quo was going to last.”
Then came 2008, which had a massive effect on the client-law firm relationship. If you recall from Post 032 (featuring Pangea3 co-founder David Perla), the financial crisis was Pangea3’s breakout moment. By the time Borstein joined in early 2011, the company had a marquee list of large corporate clients. Although the entire sales team had, by then, written off law firm customers as a “hopeless cause,” Borstein persuaded Perla to let him try. “I was convinced there had to be people who had my experience — who were worried about quality, meeting deadlines, and damaging the firm’s reputation. Further, it wasn’t the right kind of work for brilliant people from great law schools.”
Much to the surprise of his peers, Borstein’s approach ended up cracking the code for law firms. “It’s still a tougher sale,” said Borstein, “but law firms are now an established part of our client base, and it’s growing.”
Like Borstein, Paul Stroka’s experience inside BigLaw made him skeptical of the business. “As an entry-level associate benefiting from the salary wars of the mid-2000s, I couldn’t understand why my salary kept going up even though I didn’t know anything useful yet.” As he switched firms and focused on labor & employment litigation, he was troubled that success as a partner looked like having a base of clients who got sued a lot with cases that lasted a long time. “Litigation is usually a miserable experience for clients on both a cost and emotional level,” recalled Stroka. In his ninth year of practice, Stroka concluded that “I needed to be in a place where I was working to make some of those problems go away.”
At the time, Pangea3 didn’t have an open sales position. But Borstein was impressed by the persistence of a Chicago litigator who keep messaging him on LinkedIn and requesting a meeting. Eventually Borstein flew Stroka to New York City to see if opportunity might be knocking. “It is very hard to find people who are good at this job,” said Borstein. “We make rain by listening to problems and finding good fits. Paul has that very rare skill set.” Interestingly, Stroka commented that he has become a much better problem solver since joining Thomson Reuters, because that has become the primary focus of his job.
I pressed Borstein on the rainmaking point. He explained that outstanding BigLaw rainmakers use this same problem solving sales approach. However, they are constrained because the clients end up wanting them to also do the work. “In these big cases, the big-producing partners are pulling all-nighters with the associates. Law is the only business where the salesperson actually has to do the work. That is an enormous constraint of their model.”
An “ugly” but important slide
My original impressions of Borstein, Stroka, and Thorkildsen were strongly reinforced by their visit to my class. They have a tremendous grasp of the market, owing in part to their lengthy legal industry work experience, but more importantly because of the time they devote to visiting clients, reviewing data, reading industry press, and connecting with others in the industry. This enables them to produce work product that dramatically simplifies a very complex and rapidly changing industry.
A good example is Slide 4 below, which Borstein described as “ugly but profound.”
Slide 4’s key takeaway is that the historical bi-lateral relationship between law firm and client is now being supplanted by a collaboration among multiple parties. Obviously, Thomson Reuters has positioned itself as a technology and alternative legal service provider (ALSP), see Post 010 (discussing the rise of managed services), but that doesn’t make the graphic any less useful for understanding industry change. And note, Thomson Reuters senior leadership likely saw this more than a decade ago.
There are legions of high-IQ people in law, but the vast majority of them are very busy trying to hit this year’s revenue targets, leaving precious little white space for fact-gathering and reflection. This dynamic gives a company like Thomson Reuters an enormous advantage in seeing and understanding the big picture.
Borstein and Stroka commented that what has happened in the litigation realm over the last decade — with, for example, predictive coding, legal process outsourcing, and the rise of managed services — is about to happen in the transactional realm. That’s too big a topic to cover here. If you want the same education, invite them in for talk.
Thorskildsen is a lawyer, right?
It’s time to wrap this post up and connect it to diffusion theory.
Rebecca Thorkildsen is often asked where she went to law school. She replies, “I didn’t go to law school. I have an MBA.” Fortunately, when that question gets asks, it is usually because Thorkildsen has impressed someone with her command of complex, law-related materials or her excellent, organized communication style. During class, Borstein observed that it shouldn’t matter whether a professional working with lawyers has a law degree, “but often it still does.”
Thorkildsen explained that after graduating from business school in 1995, she joined Arthur Andersen as a consultant. “One of my first assignments was to help implement an email system inside a law firm. The next assignment was with a corporate legal department. In the consulting world, that can quickly turn you into an industry specialist.” Thorkildsen subsequently joined Baker Robbins, a technology consulting firm focused on legal clients, which became part of Thomson Reuters in 2000.
The connection to diffusion theory
As noted in foundational posts 020 (on change agents and opinion leaders) and 024 (crossing the chasm), consultative salespeople are often the key change agents within an industry. In most cases, two personal attributes are threshold requirements for effectiveness: (a) cultural similarity with clients (referred to as homophily) and (b) credibility in the eyes of clients. The observations and experience shared by the Thomson Reuters team certainly corroborate the theory.
Yet, this insight has deeper significance for the legal industry. Specifically, it suggests that crucial non-legal innovations related to legal productivity, such as data, process, and technology, will tend to diffuse faster when the communication channels are lawyer-to-lawyer, even when the underlying content is entirely non-legal. Some might call this snobbery or prejudice, but according to diffusion theory, it’s just a recurring feature of any social system, including law.
Finally, below is a diagram from Post 020 that ticks off the factors that enable a change agent to be more effective at accelerating innovation adoption. Isn’t it obvious that the consultative salespeople at Thomson Reuter hit them all?
For additional analysis for these seven factors, see Post 020.
What’s next? See Mark Chandler Speech from January 2007 (035)