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January 02, 2008

Cross-Selling (Part 3 of 5)

Legalmanagementnovdec07 This week’s post is based on the first half of an article I wrote for the November/December 2007 issue of Legal Management:  The Journal of the Association of Legal Adminstrators (page 58).

“Cross-selling” new services to existing clients sounds easy.  After all, everyone agrees that it is much easier to develop new business with people who already know you than it is to find new clients.   And most large clients use multiple law firms, so there should be a lot of low hanging fruit, just waiting to be picked.

Some law firms have indeed reported great success with cross-selling.  For example, in Part 1 of this series, I described a successful approach at Goulston & Storrs and Part 2 described a project at Winston & Strawn.

But not all firms have had success, and some of the best known experts in legal marketing are quite negative about traditional approaches.  When Bruce Marcus wrote about the topic in his widely read Marcus Letter, the subtitle of the piece was “Cross-selling?  It’ll never work.”  Tom Kane, author of the Legal Marketing Blog and co-founder of the LegalBizDev Network, says: “In over twenty years in legal marketing, I’ve seen cross-selling work, but rarely.” 

In the BTI Consulting Group’s 2007 report, Benchmarking Law Firm Marketing and Business Development Strategies, the section on cross-selling was titled “Achilles Heel for Law Firms.”  When BTI interviewed 120 Chief Marketing Officers and Directors of Business Development at leading law firms, they found that only 4% of law firms rated themselves as highly effective in cross-selling (nine or ten on a ten point scale), and 77% thought they were ineffective (rating themselves six or lower on the same scale). 

Why the gap?  Why do some firms succeed at cross-selling, while others fail?  And what can legal administrators and law firm managers do to increase the chances of success?

According to research conducted by Mark Greene, now the Chief Marketing Officer at Nixon Peabody, “The best way [for firm management] to motivate attorneys and to increase cross-selling is to address four factors: compensation, control, competence, and communication.”

Each of these “Four C’s of Cross-selling” can create barriers that firm management must work hard to overcome.  Compensation is the most obvious factor:  attorneys are unlikely to share their clients unless they believe that they will be fairly rewarded for a referral.  Worrying about losing control is just human nature, and it can be difficult for management to create a collegial atmosphere in which people see the benefits of sharing.  Client relationships are every lawyer’s most valuable asset.  Nobody wants to put their most valuable asset at risk, and cross-selling inevitably means sharing relationships and giving up some control. 

If lawyers doubt the competence of their colleagues, the barriers become almost insurmountable.  Some of the answers lie in the kind of communication that occurs when administrators organize retreats, lunches, and practice group telecons.  Effective communication will inevitably lead to a deeper understanding of what colleagues do, and what they are best at.

Does this mean that firm management should resolve all problems with the four Cs before encouraging lawyers to cross-sell?  Not at all.  If firms postpone cross-selling until the compensation system is ideal, most will have a very long wait.  So while you are working on the four Cs, it is also a good idea to advocate that lawyers cross-sell as much as they can in the short term by applying best practices from other law firms and other professions.  More about how in next week’s post.

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