Taking Client Intelligence To The Next Level: Addressing Supply Chain Issues

July 9, 2014

OLYMPUS DIGITAL CAMERAEver since Toyota pioneered the zero-inventory approach in the 1980s, companies have focused on a “just-in-time” strategy that prioritizes knowing exactly when inventory shipments will be needed and doesn’t arrange for them to arrive a moment before that.

This approach reduces expenses and risks associated with inventory. However, it also means that most of today’s companies are completely dependent on their supply chain lines, which are actually quite fragile.

Consider this very real possibility: Company A orders exactly the number of widgets it needs for its new product and arranges for them to arrive at its assembling plant just as production is about to begin. The widgets are manufactured in time, but the transportation company that has been contracted to take them to the plant is crippled by new regulations on how many hours truck drivers can log each week. Slowed-down shipments mean not enough widgets have arrived by assembly time. Thus, the product launch must be delayed and investors and consumers are unhappy.

Possibilities like this are ones companies actively seek to mitigate, and that interest in reducing likelihood of supply chain disruption presents a new and very real opportunity for law firms.

Supply chain disruption can have any number of causes, of course, from natural disasters to material shortages. A law firm cannot control those, but what it can do is advise companies as to the possibility that a litigation matter or regulatory development could interfere with a party somewhere along the supply chain.

Clients need this kind of counsel for several reasons:

  • They are in the here and now: Large companies may have internal resources to track business risks. However, most companies do not have this luxury and are focused on present day issues and running the business.
  •  General counsels need an ally: In-house counsel, corporate executives and owners look to their outside law firms more than ever to help them stay on top of the changes and risks associated with regulatory changes, potential litigation and understanding how these issues affect the future.  The lawyer who helps with this crystal ball information is always in a strong position.
  • They may not have the right toolbox: Law firms that use client intelligence and business development tools are in the unique position of having legal knowledge, capabilities and education coupled with very insightful instruments. Most clients do not have the right tools, nor the trained legal staff to identify and remedy possibly troublesome situations.

To become the kind of counsel that can provide clients with valuable supply-chain advice, law firms should do several things:

  • Review litigation history to develop a concept of what the recent past has looked like, lawsuit-wise.  Law firms can examine similar companies and use current awareness and information to offer a litigation risk forecast. Prevenative is always less expensive than curative.
  • Provide an assessment of how companies along the supply chain are positioned to deal with any potential regulatory or  litigation matter. Are they adequately funded or dangerously off-balance financially, well-positioned to defend themselves or unable to prevent being dragged into lengthy, expensive litigation? It can also use its legal expertise to monitor the regulatory environment and keep its clients apprised of any potential trouble brewing.

In order for a law firm to become this kind of business partner, it needs to have a few things:

  • Contextual knowledge: Knowing everything about a client is great, but attorneys have to know about that client’s competitors, too. No company exists in a vacuum. Client Intelligence tools can and should be used to gain a better understanding of a client’s wider industry and business climate.
  • The ability to provide a reasonable forecast: Guessing will not do anyone any good. Business development resources have to be engaged to create an informed picture of what may be in store.
  • Knowledgeable recommendation ability: Once a law firm has alerted its client to a potential issue, it has to take the next step and identify what options the client has to avoid or remedy the issue. Failure to identify potential future paths leaves the client better informed, but no less certain of what to do next.

Firms struggle today as they continue to look for ways to differentiate themselves from the pack.  Providing this value-added information to clients is one way that a firm can begin to stand out.