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4 posts from July 2006

July 26, 2006

How many hours per week should you work on new business?

Here’s a brilliant insight: if you devote more time to marketing, you increase your chances of getting results.

But how do you strike a balance between bringing in new work, and paying the bills by doing the work you already have? Not to mention finding the time to get home before the kids are in bed. There are no easy answers, and every consultant and service professional constantly struggles with this question.

It would be nice to know what other law firms are doing. But many firms are secretive. And others don’t even know, because they don’t track business development time meticulously enough.

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When I ask clients how much time their average partner devotes to marketing, I’ve heard everything from almost no time (“they can do it in the morning instead of reading the Wall Street Journal”) to an average of 8 hours per week and more for partners.

According to a recent survey from ALM Research and the Brand Research Company , in large firms “Business development is expected of most partners to achieve equity status.” However, “few firms have a set expectation of the number of hours a lawyer should devote to business development.”

I’ve written in the past about some of the firms that do have an expectation. When Graydon, Head & Ritchey put a new business development strategy in place, they required that each partner spend at least 200 hours per year, or about 4 hours per week, in direct selling. Direct selling included meetings with clients and prospects, but excluded such tasks such as writing articles and conducting seminars. The target for associates was at least 50 hours per year, or about 1 hour per week.

In a speech a few months ago, Paul Clifford, former managing partner at Gadsby Hannah now at Law Practice Consultants said that “to be competitive today, partners must work 2500 hours per year,” an average of 50 hours per week for 50 weeks. (He also noted that 2500 hours is on the high side, and 2200 hours is not unusual.) 1800 of those hours will generally be billable. The other 700 are “investment hours” divided into three groups: 300 hours for practice management (where that applies), 200 hours for client relationship management, and 200 hours for marketing/ business development.

In most situations, I am a big believer that less is more. But with marketing time, more is more. In my new book, I recommend minimum weekly guidelines, based on the marketing goals each lawyer selects.

I believe that for most lawyers, the first marketing goal should be to build stronger relationships with top clients and referral sources, because experts agree that this is likely to produce results more quickly than anything else. And even when it does not produce new income, it protects your most important asset: relationships with your top clients. If that’s is your primary goal, I recommend an absolute minimum of at least one hour per week.

I also talk about two other common goals in the book. If you want to get engagements with new clients, I recommend at least three hours per week. If you aim to increase visibility with new clients and referral sources, I recommend at least one hour per week.

If you go below these numbers, you will still make progress, but my fear is that you will fail to follow up on opportunties, and results will be so slow that you may give up. On the other hand, any time that you can devote to marketing is better than no time.

This material was adapted from my new book Legal Business Development: A Step by Step Guide, which will be available on Amazon in September.

July 19, 2006

Why selling is like golf

Selling is a skill that anyone can learn, like golf. Not everyone will become a professional, but everyone can play the game.

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Also like golf, selling is a lot harder than it looks. The good news is that you do not need to be great to win, you just need to be a little better than your competition.

Frankly, at the moment, you may be able to win quite a bit of new business with fairly basic selling skills. In a fascinating article in the April 2006 issue of The American Lawyer called "Are Law Firms Manageable?', David Maister wrote: “The greatest advantage lawyers have is that they compete only with other lawyers. If everyone else does things equally poorly… even the most egregious behavior will not lead to a competitive disadvantage.”

Until recently, the same could be said about selling. But these days the competitive bar is going up. According to the 2006 ALM survey, 69% of large firms (with an average of 489 lawyers) and 46% of mid-sized firms (with an average of 118 lawyers) have implemented sales training programs.

And when one law firm succeeds in training its lawyers to get new business, it usually takes the work away from a second firm. When I interviewed chief marketing officers from several firms last month for a future article in Law Firm Inc., several mentioned that most of the time, it’s easy to take business away from competitors with some basic sales tactics (e.g. offering free meetings to improve service). But when they compete with other firms that are already using these techniques, getting new business is much harder.

How can you expect to keep up, if legal sellers become more sophisticated year after year? It’s going to take more time and money. Most lawyers find it is more efficient to hire sales experts as coaches and collaborators, rather than to spend the time to become sales experts themselves. Tiger Woods has a coach, and more and more legal rainmakers do as well.

Can you really expect to compete in this arena if you are not a born rainmaker? Yes. Everyone can. As noted previously in my posting about Gallup’s research on 250,000 sales people, the idea that “a great sales person can sell anything” is a myth.

Natural ability is overrated, and each person must learn selling skills that fit their practice and their personality. This notion is so important that I’ve decided to revise my list of the top six facts every lawyer must know to develop new business. When I publish the Legal Business Development: A Step by Step Guide in September, the revised list in Chapter 3 will read:

Fact 1. You must start with current clients
Fact 2. Selling is a learned skill
Fact 3. You must ask the right questions
Fact 4. You must define advances
Fact 5. Selling is a numbers game
Fact 6. It’s all about relationships

(The fact I deleted to make room is “There are many ways to sell,” which is included in the idea of selling as a learned skill.)

July 12, 2006

Will selling make you happy?

Your competitors are trying harder to take away your clients (for example, see my posting on ALM’s recent survey of 157 law firms). So if you care about financial security, you should spend more time on business development.

But what if you don’t care about financial security? What if your investments in California real estate in the 1970s and Microsoft stock in the 1980s made you independently wealthy. Even then, you may need to sell more, if you want to be happy.

For the book True Professionalism (p. 24), David Maister asked lawyers to classify their clients into three categories:
“1. I like these people, and their industry interests me
2. I can tolerate these people, and their business is OK – neither fascinating nor boring
3. I’m professional enough that I would never say this to them, and I’ll still do my best for them, but the truth is that these are not my kind of people, and I have no interest in their industry.”

Do you want to compare your situation to industry averages? Before you continue reading, stop for a moment and ask yourself what percent of your clients fall into each of these three categories.

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Maister has found that most professionals report that 30-35% of their clients fall into Category 1, 60-65% into Category 2, and 5-20% in Category 3. Which leads him to ask the question: shouldn’t you be spending more of your life working for clients you like on things that interest you?

How would you find those clients? By going out and finding them.

As Maister puts it: “The better you are at marketing, the better the chance you have to work on fun stuff, and the less trapped you become in being forced to take on work and clients you don’t truly enjoy.”

Similarly, in the book The Happy Lawyer (p. 12), Larry Schreiter, an attorney in Seattle for almost 30 years, notes that:

“One out of three lawyers reports being dissatisfied with his or her working life.
A majority complain of too little time for themselves or their families.
Lawyers are four times as likely as the general population to suffer from depression, the highest rate found among 105 occupations.”

Schreiter’s book suggests a number of solutions. One is to attract more clients you’ll enjoy, who “present you with the opportunity to function at a peak level of professionalism… genuinely appreciate your services…[and] cheerfully pay your fees promptly.” His book includes a number of exercises to first define what “YES! Clients” look like for your practice, and then find more of them.

So even if you don’t need money, if you want to be happy at work you should consider investing more effort into developing new business.

This material was adapted from my new book Legal Business Development: A Step by Step Guide, which will be available on Amazon in September.

July 05, 2006

CRM (customer relationship management) for law firms

Some law firms are beginning to follow the example of professional sales organizations, by tracking the “pipeline” of all the prospects who may ultimately become customers, including how many people are at each stage of the process (sales cycle). Like many things, this proves easier in theory than in practice.

The metaphor of a pipeline reinforces the idea that relationships take time to build. If you want business to consistently flow out of one end of the pipe, you need a steady stream of new prospects flowing into the other end. Generally, complicated and expensive products, including legal services, have long pipelines.

If the sales process is seen as a pipe, it’s a leaky one, since most prospects never buy. For this reason, some experts prefer the metaphor of a sales funnel, wide at the top with a large number of new prospects, and narrow at the bottom with a few sales.

Many small companies have gone out of business due to their failure to build a sales pipeline. The principals of the business are so busy meeting the needs of one or two large customers that they never find the time to look for new customers. Then, when the day inevitably comes that the large customer’s needs decline, they suddenly need to find new business. But since it takes time to build relationships, this new business can’t be found fast enough to support the existing staff. As sales consultant Don Schrello said to me when I ran a company that faced this problem: “You can’t make the corn grow faster because you’re hungry.”

Sales managers often talk about pipeline management and pipeline reporting, as they try to manage the process to insure a predictable flow of business. One mark of a sophisticated sales organization is its knowledge of sales metrics, the numbers that allow you to track a sales pipeline, and the ratios between them. A business that needs to stay in touch with 10 prospects for every sale must use very different tactics from a business that needs 100 prospects per sale or 1000.

One way to track these metrics is with CRM (Customer Relationship Management) software. Law firms are increasingly using CRM systems such as LexisNexis InterAction. According to its web page, InterAction is used by more than 300 law firms “including over 60% of the AmLaw 100.” The web page provides an excellent summary of the argument for the software, and for CRM:

“Relationships that result in referrals and new business are key to a law firm's long-term success. Having access to the right information, when and where it's needed, is critical. [A CRM system] simplifies cultivating and managing the type of relationships that keep clients coming back from one matter to the next. How? By making it easy to store and quickly retrieve valuable Relationship Intelligence, such as client profiles, matters, notes, and activities. Even… ‘rainmaking’ information like who knows whom, who knows what, and who knows how, can be accessed quickly with ease.”

How well do CRM systems deliver on this promise? The answer is controversial, to say the least. It is difficult to find an unbiased observer, since buying decisions and careers may hinge on the answer. But professional sales organizations have been working with CRM for much longer than law firms, and their experience is instructive.

When sales managers talk freely among themselves, they tell stories of some CRM systems that have achieved great success, and of others that were colossal failures. In some cases, companies have spent $100 million and more to implement a CRM system, and then abandoned it.

The difference between success and failure has little to do with the technology behind the systems, and everything to do with the people and organizations that use them. A CRM system will only succeed when an organization convinces its members to use it properly. According to an article in Law Practice Today , law firms may find this especially difficult:

“Law firms, in particular, provide difficult hurdles to the successful implementation of a CRM program. First and foremost, it takes time -- and non-billable time at that -- to learn the system, maintain client information, and participate on client teams. Lawyers who are busy with billable client matters often won't see the value in investing time in CRM. In addition, lawyers tend to jealously guard their clients, and can be loath to cede control of the client relationship in the fear that a colleague may cause a problem. Finally, a lawyer may resist sharing client information, knowing that clients who are more integrated into the firm's other practices are less easily mobilized should the lawyer jump to another firm.”

Even in other industries, managers have reported mixed success in using CRM reports to predict future revenue and work flow. It’s easy to come up with a prediction, but very hard to be accurate.

Oracle is one of the largest sellers of CRM systems, and uses management “dashboard” reports to run their own company. But, according to Business Week (2/13/06, p. 51), even Oracle has trouble motivating their sales force to feed in the proper information:

“Although all of Oracle’s 20,000 salespeople use dashboards [CEO Larry] Ellison says some 20% of them refuse to enter their sales leads into the system. Salespeople don’t want to be held accountable for a lead that isn’t converted into a sale.”

Generally, sales organizations have found CRM systems and pipeline reports to be notoriously difficult to manage, due to problems with the quality of the data that people feed into the system. CRM only works if users can be convinced to constantly update their data, each time something changes. Many organizations have found that it’s “garbage in, garbage out” when sales professionals are reluctant to share information about prospects. Many are “too busy” to be bothered with the routine updates required for timely reporting, and some are too optimistic about the probability of future business.

The issues are complex, and it will be interesting to see how the legal profession uses CRM systems ten years from now. I predict that firms that use CRM reports primarily to meet management needs are fighting an uphill battle. The system will work only when lawyers can be convinced that it is in their own personal interests.