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6 posts from January 2008

January 30, 2008

The first thing lawyers should do in a recession

Business_week_4 I was not planning to write about the economy this week.  But then I saw Business Week’s special report on the current “market reckoning” (February 4, 2008 issue, p, 26).  It explains how “We’re at the beginning of a long arduous process of figuring out how much of the post-tech bubble prosperity was real, and how much was the result of a credit induced frenzy.”  The article says that American spending has exceeded earnings by about $3 trillion since 2001, and quotes a variety of expert opinions on just how bad things may get as a result.  All seem to agree that at an absolute minimum there will be some sort of painful correction.

Now nobody likes to hear bad news and it’s human nature to ignore warning signs, so maybe you think it’s way too early to consider the implications of a legal recession.  If that’s your view, see the 2008 annual Client Advisory issued by Hildebrandt and Citi Private Bank on Monday, which they described (p. 18) as "Our first ‘downbeat’ Client Advisory since we predicted the economic slowdown of 1998."  They concluded (p. 10): "It would be prudent for leaders and managers of law firms to assume that the current economic slowdown is likely to have a detrimental impact throughout 2008."

You want more evidence? See:

Of course, some lawyers won’t believe any of this bad news until they begin to see their own billable hours get squeezed.  When they do, the first reaction of some will be to suddenly start looking for new clients.  Wrong answer.  They should start by protecting the clients they already have and start doing it now.  Your clients will be feeling pressures of their own, and your competitors will be coming after them.

So that is the first thing every lawyer should do in a recession:  protect your work with current clients.

And how do you do that?  Consider what other firms are doing, quickly pick out an item or two that fits your practice and personality, and give it a try.   Here are five of the best steps to increase client satisfaction:

  • Schedule a free visit to a client’s office, to discuss the client’s business needs, or free monthly meetings or telecons "off the clock."
  • Conduct a formal or informal client satisfaction interview.
  • Ask the client what needs to be improved—responsiveness, timeliness, and/or value—and brainstorm together about how to accomplish this
  • Improve communication about the business implications of legal matters.
  • Promote efficiencies to reduce cost, and tell clients about them.

If you want more ideas that fit your practice, see last summer’s post The top 16 ways to increase client satisfaction, or see the complete list of over 40 ideas in The LegalBizDev Success Kit.

Do you think this is unnecessary?  Are your clients already completely satisfied with the service you provide?  Are you sure?  In a 2007 survey of general counsel, Inside Counsel magazine asked lawyers to grade their overall performance with clients as A, B, C, D, or F.  62% of the lawyers thought they were earning an A.  But when they asked clients the same question, in fact only 19% earned As.  In other words, more than 2 out of every 3 lawyers overrated their performance.

So even if you think your current clients are happy enough, it would be wise to make them happier.

Once that is taken care of, then budget some time looking for new clients.  Start by accepting the fact that it takes a long time to develop relationships.  As my first sales coach said to me many years ago, “You can’t make the corn grow faster because you are hungry.”  But the journey of a thousand miles does not begin until you take that first step, so it might as well be today. 

And if you get tempted to cut back on marketing when times get tough, consider Hildebrandt's conclusions (Client Advisory, p. 13): "The competition to win and keep clients is intensifying notwithstanding the downturn, and firms would be well advised not to be ‘penny wise and pound foolish' in this area."

January 29, 2008

And now a word from our sponsor: Upcoming presentations

If you hate it when bloggers promote themselves overtly, please skip this post.

On Tuesday, February 12, at 2 PM Eastern, I will be offering a webinar through the Legal Marketing Association called “Six ways to help lawyers increase results from their limited marketing time.”  This was one of LMA’s highest rated webinars last year, and it has been updated to include research on the best ways to find new clients.  Details appear on the LMA web page

On Wednesday, February 20, I will be giving a presentation in Washington, DC on the same topic, but aimed at lawyers instead of business development staff.

And if you like the idea but can’t make either time, you can always buy The LegalBizDev Success Kit, http://www.legalbizdev.com/products.html.  That way, whenever you can find a few minutes, you can listen to an audio recording on this topic, and much much more.

And if you'd prefer to start with something free, listen to my interview with Cole Silver in the free resources section of our web page.  It is part of his Raindancing Expert Audio Series, which also includes interviews with Tom Kane, Gerry Riskin, Pat Lamb, Larry Bodine, Catherine MacDonagh, Harry Beckwith, and many others.

January 23, 2008

Business plan tips and formats

If you already have a solid business plan, please don’t read this week’s post.  Use the time you save to follow up with clients and prospects.  When it comes to legal marketing, every second counts.

For everyone else, I’ve said it before and I’ll say it again:  If you don’t know where you’re going, you’ll never get there.  Efficient business development must start from a plan.   

Plans can be short or they can be long, but all should target a particular group of potential clients, and list tasks that will help to build relationships with them, and to get new business.  Many lawyers seem to have trouble developing plans that make the best use of their limited marketing time, so I recently participated in a panel on this topic with Betsy Huntley, Director of Marketing at Choate, Hall & Stewart; Philip Austin, Director of Client Service at Nixon Peabody; and Allison Nussbaum, Manager of Business Development at Goodwin Procter.  Our session was called “How to help lawyers develop better business plans, and assure follow-up” at the 2007 New England Regional Conference of the Legal Marketing Association.   

To prepare for the panel, we compiled a few sample business plan formats to hand out at the presentation.  If you are looking for new ideas on how to organize your business plan, Download business_plan_handouts.doc to review five business plan formats and tips for success.

Betsy Huntley began the panel by summarizing her observations from over 20 years of experience leading law firm marketing programs at a large, multi-office law firm, an IP boutique and several mid-size general firms.  At every one of these firms, getting lawyers to commit to business plans was an important step in success.  She talked about the power of written goals and cited research showing that the link between written plans and success goes far beyond legal marketing.  One classic psychological study measured personality in college, and then followed people over several decades to see what traits were related to later success.  At graduation, only 3% had written goals for their lives.  A few decades later, the net worth of this select subgroup exceeded the total networth of the other 97%.  Planning pays.

Next to speak was Philip Austin.  Like many legal business developers, he started his career working in sales at a large accounting firm.  Philip noted that when he first switched to law firms, he was surprised that having a written plan wasn’t universally accepted.  “If you think about it, it’s a bit absurd.  How can you run a multi-million dollar business without a plan?”  These days, Philip tells younger partners to think of their practice as an early stage, venture-backed company.  “Think of the senior partners as backers who are investing in your success and your future.  You need to make an argument for the next round of financing.  The business plan is your case to your investors, and your roadmap to success.”

Then Allison Nussbaum talked about her biggest challenge as the primary business development person at a firm with over 800 lawyers:  getting lawyers down to the tactical level.  Many lawyers seem more comfortable with big picture strategies than they are with day to day tactics.  She also talked about the three most common tactics:  cross-selling to other partners, cross-selling directly to clients, and “shaking the trees” in your personal network.

Allison’s emphasis on tactics was a perfect transition to my talk about the format of a one page action plan designed to answer the critical question “What should I do today to increase new business?”  I talked about my recent article in the Journal of the Legal Marketing Association, arguing that the most critical factor in legal selling is time, and about lawyers’ need to prioritize relentlessly to get the maximum results from the time they do have.  Finally, I talked about the importance of measuring results since, as management guru Tom Peters put it in a classic article: What gets measured gets done.

The rest of the session was devoted to discussions with the audience about what works, and what doesn’t.

From my perspective, one of the most interesting results of this session was what happened afterward.  The four of us were chatting about how much we had learned from talking to each other to prepare for the panel, and someone said:  “We should organize regular meetings like this.”  Organizing is my favorite activity, so I volunteered.  The end result was that we formed a new invitation-only, discussion group called the Boston Roundtable on Legal Business Development for the largest firms in Boston.  While there is no shortage of legal marketing groups, as the legal profession has grown it has gotten harder for senior business development managers to find a local forum to discuss critical issues with their peers.  Our first meeting will be held at Choate on February 6 to discuss “How to Track Business Development Opportunities, Activities, and Results.”  In a few weeks, I’ll tell you how it went.

January 16, 2008

Cross-selling (Part 5 of 5)

Escaping_the_pricedriven_sale_book In the new book Escaping the Price-Driven Sale, Tom Snyder and Kevin Kearns argue that changes in the economy are making cross-selling “more and more compulsory” (p. 122).  Although the book was written for sales professionals by two leaders from Huthwaite (the company that created SPIN Selling), it has many important implications for the legal profession.

One reason that cross-selling is so important these days is that “it costs five to eight times more to acquire a new [client] than to retain a current one” and that “if a [client] relationship is not advancing, then it will soon be retreating” (p. 129). 

Another is that “the consolidation of corporate America is not unlike the Cold War arms race – it grows and accelerates in response to the competition” (p. 123).  Clearly, lawyers have been swept up in this trend toward ever larger firms. And every time two law firms merge, it opens up important new opportunities to cross-sell to each others’ clients. 

However, the number of law firms who talk about cross-selling services is far larger than the number who actually succeed, in part because so many lawyers fail to look at things from the client’s point of view.   

The most fundamental idea in this book is that to succeed in today’s economy “sellers have to create value by providing insight” (p. 17).  The authors argue that powerful forces of commoditization are driving prices down in every industry around the world.  The best way to “escape these price-driven sales” is to develop “business acumen” and focus on how the solutions you offer increase clients’ revenue, margin, and/or profit (p. 75).  Have any law schools started to offer courses analyzing how legal tactics affect clients’ financial performance?  According to Snyder and Kearns, that is exactly what lawyers will need to do to succeed in the future. 

Their very definition of cross-selling stresses the importance of starting from the client’s perspective, “partnering with your colleagues who sell different…services to produce desirable outcomes for the client…. The proper mindset [for cross-selling] is not ‘I’ve got a truck full of [services] and I want to sell them all to you.’  Rather it’s a mindset that thinks in terms of customers with a splendid array of needs, all of which must be communicated within the seller’s [law firm]…so that the [firm] can meet as many of those needs as possible (p. 134).”

The book reviews several barriers to cross-selling, starting with one that is close to every lawyer’s heart:  risk aversion.  No one wants to risk an important relationship, so the first step in cross-selling is always to answer the question: What’s in it for me?  Of course, ideally there should be a financial answer, an origination fee for helping to bring in the business.  But whether your firm compensates lawyers properly or not, cross-selling also has a second advantage which may be just as valuable in the long run:  when you succeed in meeting client needs, you increase your own perceived value, and strengthen your relationship with the client. 

How do you do that?  Before anyone talks to a client about the firm’s capabilities, the lawyers involved must communicate with each other to identify opportunities for the client to increase revenue, margin or profit by consolidating some or all of its legal work at a single firm.  The discussion with clients should not begin until you can realistically explain “why it is a better bet for the client to bring all his business to you (p. 138).”

This will take time, effort, and analysis.  Quite honestly, I prefer action to analysis, and I think that as a group lawyers spend too much time analyzing business development possibilities and too little time following up.  But when it comes to cross-selling services, the analysis step is absolutely critical.

Traditional approaches to selling are based on building relationships.   Relationships will always be important, but these days providing value is more important.  So every lawyer who wants to cross-sell must begin by figuring out what’s in it for their clients.

January 09, 2008

Cross-Selling (Part 4 of 5)

Lawyers are not the only ones who have ever tried cross-selling, and they are not the first to fail.  Has your bank ever approached you about adding a credit card or a retirement account to your checking and savings?  Chances are that if they did, you said yes only if you saw direct and immediate personal benefits. 

In a Huthwaite white paper entitled “Why cross-selling fails,” Matthew McDarby argues that campaigns are often built on “flawed business logic”:  vendors want to take advantage of the high value consumers place on existing relationships.  But consumers often don’t value the relationships as highly as their vendors think they do.

So one key to cross-selling success is to understand the situation from the client’s perspective.  Cross-selling should not be approached as a way to generate more business for your firm, it should be a way of helping your clients to run their businesses.

How can lawyers identify the best opportunities to help clients run their businesses?  By listening.  By asking about the problems and opportunities that face the client, and considering how the firm might help.  When lawyers ask the right questions, and actively listen to the answers, they often uncover legal needs that the client is not even aware of.

Larry Smith of Levick Strategic Communications recommends that cross-selling should be integrity-based and always put client needs first.  He suggests that lawyers begin evaluating each new opportunity by asking themselves three questions:

  • “Would you hire the guy you’re pitching?
  • If so, can the client still do better elsewhere?
  • Do you know enough about the client’s situation to presume that the cross-sell will be valuable to the client?”

And when lawyers decide to approach their partners to cross-sell services, they must  ask not just what’s in it for the client, but also what’s in it for the partner.

Like every other kind of selling, cross-selling is ultimately based on personal relationships, which must be built slowly, one person at a time.  So a lawyer must first identify a partner whose capabilities could fit well with his own, take her to lunch, and gradually follow up to build the relationship and find joint opportunities.

Marketing staff and administrators can help lawyers understand that the most effective strategy is always to give before you get.  They must focus first on what they can do for partners, and expect to have benefits come back later.  This won’t work every time, but it will work more often than anything else.  Here are a few questions lawyers can ask themselves to get started:

  • Which partners are most likely to be interested in exchanging client leads?
  • Which of our firm’s capabilities are the strongest?
  • How could these capabilities help my clients?
  • Which of my clients are most likely to be open to more help from our firm?
  • What’s the benefit to my client of giving more work to our firm?

Once a lawyer decides to approach a particular partner, the next steps include all the things they should do in selling to a client:  ask lots of questions, listen fifty to eighty percent of the time, genuinely look for mutual opportunities, and then offer help.  Ideally this will lead to a meeting to introduce the new partner to the client and listen some more (not spend the time telling them all about the new lawyer’s qualifications).  Listening for opportunities is the best way to get a foot in the door, even if it’s a very small matter

Once they’ve gotten some new business, most lawyers will reciprocate and introduce others to their own clients.  And when cross-selling works, firm management can have a major impact on future efforts simply by getting the word out.  Nothing succeeds like success.

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.