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4 posts from September 2008

September 24, 2008

How to beat your competitors: The incremental advantage

To succeed at selling in any field, you need to be just a little bit better than your competition. The bad news is that other law firms are getting better at marketing, and hungrier.  The good news is you don’t have to beat competitors by much.  An inch is as good as a mile.

In the book The Power of Incremental Advantage, David Wanetik argues that in business, “seemingly minute advantages [often] spell the difference between success and failure.” 

If you like historical trivia, you will love Wanetik’s examples of “incremental advantages” that have shaped history, including:

  • If the Titanic’s crew had seen that iceberg 10 seconds earlier, the ship would not have sunk.
  • When publicly-traded companies miss their earnings estimates by one or two cents, they can lose hundreds of millions of dollars in shareholder value.
  • When people search in Google, there’s a 42% chance they will click on the first term in the list, an 8% chance they will click on the second, and an even lower chance they will click on the third item.
  • On July 20, 1944 Hitler was almost assassinated by Colonel Claus Schenk Graf von Stauffenberg.  In a meeting with Hitler and others, Von Stauffenberg placed a bomb on the outer side of the leg of a heavy oak conference table.  When the bomb exploded, several people were killed, but not Hitler.  If Von Stauffenberg had placed the bomb on the other side of the same table leg, Hitler would have died in 1944, and millions of other lives might have been saved. 
  • At the 2006 winter Olympics, in the majority of events the difference between a gold and silver medal was one half of one percent.

When Wanetik writes the next edition of this book, he will probably discuss last month’s Beijing Olympics.  Experts have offered several different explanations for all the swimming records that were set, including the depth of the pool and the Speedo LZR racer swimsuit designed at NASA and worn by Michael Phelps, winner of 8 gold medals.  But all agree that swimming records have been smashed worldwide this year because of incremental changes in the world of professional swimming.

What should lawyers do to gain an incremental advantage in developing new business?  Last year, I published an article in the Legal Marketing Association’s journal entitled “The most important difference in legal selling: Time.” So one way to start looking for that “incremental advantage” is very simple:  put an extra hour or two into marketing, every week. 

Now I know you that you are already hopelessly overbooked.  So the only way to find an hour is to “Manage your time ruthlessly” as Wanetik puts it in his book.  For example:  

  • do not pick up the phone without an agenda
  • do not be overly accessible
  • operate on your biological clock 
  • minimize email interruptions

For more tips, see Amazon for dozens of books on time management.  (My current favorite is “The 25 best time management tools and techniques”, which I have purchased for several lawyers I’ve coached.)

I especially liked Wanatik's sub-section “Don’t fall into the networking quagmire” (p. 143) which argues “networking is overrated and is most often not a good use of time” because you are likely to spend too much time talking to people who will never need the kind of specialized services you provide.

If that’s true, why are there so many seminars to teach people how to network?  Wanetik offers several explanations, including “it is easier than doing the hard work of growing your business.”  But he also notes that “for some very outgoing and charismatic people, networking works.”  In other words, sometimes networking is the best answer, and sometimes it isn’t.

When the Gallup organization studied 250,000 sales representatives over 40 years to determine what makes a great sales person, they found that different sales people succeed in different ways, depending on their personal strengths.  You need to find the very best ideas for your practice, your personality, and your schedule.

That’s easy to say, and hard to do.  You’ll just have to figure out what is most likely to work for you, try it, and track the results.  You can start by reviewing what’s worked for other lawyers, in the lists of best practices in my book and in The LegalBizDev Success Kit

September 17, 2008

The down economy, Part 6: How bad is it?

Given the recent events at Lehman Brothers, Merrill Lynch, AIG, Fannie Mae, and Freddie Mac, the economy clearly has problems.  But what does it mean for your practice?

I’ve been giving talks about the down economy at law firms for several months now, and have been surprised by how widely experiences vary from firm to firm, and even from lawyer to lawyer.  Some have never been busier, and are not the least bit concerned about the economy.  If that’s you, skip the rest of this post and come back next week.

But if you are starting to worry, and you’d like to keep track of how large firms are reacting, see Above the Law’s “layoff watch.”  Then read Leigh Jones’ recent article in Law Journal which notes that “Since October, some 338 attorney layoffs have been confirmed and reported by various news organizations at 12 law firms among the NLJ 250, The National Law Journal's annual survey of the nation's largest law firms.”

Jones went on to say that law firms are notoriously secretive and that the true number could be much higher.  Even so, he put a positive spin on these figures, and argued that “Even if stealth layoffs are... [two or] three times the reported amount, the number of attorneys ushered to the exits in the last 10 months is relatively small.  Attorney layoffs since October equal about 3.5% of the total number of attorneys at the 12 law firms confirming layoffs.”  And of course the vast majority of firms have not reported any layoffs at all.  That’s why Jones titled the article:  “About those law firm layoffs? It isn't that bad.” 

I disagree.  I think it is that bad.

I am amazed that law firms have acted at all.  Law firms are known for many things, but speedy action is not one of them.  Maybe you’ve heard the joke:

What does a law firm do when the building catches fire?

They form a committee to study fire extinguishers.

I’ve watched firms spend years debating small decisions.  Whenever powerful partners disagree, the matter gets tabled until the next meeting.  No one wants to lay off people they have worked with, whom they like and respect, and whose families depend on them.  So when I hear that 338 attorneys and a large number of staff have been laid off, I am astonished at the number of important decisions that have already been made.  Especially given that the larger economic picture remains cloudy. 

And these layoffs are not the first storm clouds on the legal horizon.  Consider the large firms that have failed in the last few years, including the 300 lawyer firm Altheimer & Grey, the 400 lawyer firms Testa Hurwitz and Arter & Hadden, and the 700 lawyer firm Brobeck, Phleger & Harrison, founded in 1926.

And what about the fact that it’s getting harder to become an equity partner? At AmLaw 100 firms, the percentage of equity partners declined from 28% to 25% between 2000 and 2006.  The reasoning behind this trend was summarized in The American Lawyer (May 2007, p. 127): “Tenure is dead.  Produce (at an attractive rate) or perish.”

Put it all together, and I say this is an excellent time for lawyers to prepare for the worst. 

How should you do that?  By paying more attention to the needs of the people who can help you if things do go downhill:  your clients and your colleagues.  By making sure that the lawyers who refer work to you know how much you appreciate it.  By insuring that your clients are not just reasonably satisfied, they are raving fans.  It’s called marketing.

Exactly how should you begin?  The answer depends on your practice, your personality and your schedule.  One way to start is to review best practices from other firms to pick the ones that apply to you.  For details, you can surf the web, or start from books and CDs, such as my LegalBizDev Success Kit.

If you’d rather just jump right in, set up a free meeting with a top client or referral source.  Next week’s post will provide some advice on one way to do that.

That meeting will be good for your practice, whether the economy continues down or heads back up.

Note: The week after this item was posted, Heller Ehrman dissolved.  The firm was founded in 1890 and had 570 lawyers.

September 10, 2008

The down economy, Part 5: Defensive marketing

When lawyers talk to me about marketing, they usually mean finding new clients.  But most of them should be focusing first on defensive marketing: protecting the clients they already have.

For one thing, there’s the economy.  This series about the down economy started last January (see Part 1, Part 2, Part 3, and Part 4), and there is no sign that it will end any time soon. 

On July 3, the Wall Street Journal Law blog predicted that in 2008 many lawyers will be lucky to match last year’s revenue.  As long as they are not going backwards, it’s a win.  Or, as the headline put it:  “Flat is the new up.” 

Similarly, in an August article in The American Lawyer, Dan DiPietro wrote: “Early this year, in a joint advisory issued by Citi and Hildebrandt International, we projected that profits would increase by 3 percent to 5 percent. Based on the six-month results and our sense of the dynamics in the market, we now believe [that profits per equity partner] will be flat, or even down by as much as 10 percent, in 2008. The top-tier firms will have an even tougher year, with profits down by 5 percent to 15 percent.”

When Business Week published a piece titled “The Bear Starts Mauling Lawyers” in its August 18 issue (p. 58), I thought:  OK, now it’s official.  When general news magazines start writing about the specific impact on lawyers, then you know things are getting serious.

The Business Week article mentioned Cadwalder “pink-slipping 96 attorneys” (15% of its lawyers), Thacher Profitt cutting 60 lawyers so far this year (25% of their lawyers) and Sonnenschein laying off of 37 lawyers and 87 staff.  It also predicted that the downward trend will continue.

When the economy goes down, clients are pressured to cut all of their costs, including lawyers.  And when lawyers see their billable hours go down, their motivation to find new clients goes up.  Some will get desperate enough to try things like cutting their hourly rates and experimenting with value-based pricing.  Some will even offer introductory services for free. 

And who will they be making these offers to?  Your clients.  Now, perhaps your top clients have worked with you for years.  You’ve sat through many a ballgame together, and they know in their hearts that you are not just the best lawyer on the planet, but also a heck of a human being. But do you think they might be just a little tempted to give another lawyer a try, if they could save a lot of money?  How about if their boss was pressuring them to cut costs?

Over the long run, the legal market is basically a zero sum game.  Every time one lawyer wins a new client, another lawyer loses one. 

And if the economy is not challenging enough, there is also the matter of business development sophistication.  Your competitors have been getting more serious about marketing for quite some time.  Law firms may not move quickly, but once they get started they are hard to stop.  When the Legal Marketing Association was founded in 1985, there were only a handful of members.  Last summer, there were 2,700 members, and today there are 3,100.  More law firms than ever are using satisfaction interviews, client teams, sales training, coaching, and more.  As the 2008 Hildebrandt Client Advisory (p. 13) summed it up:  “The competition to win and keep clients is intensifying notwithstanding the downturn.”

Are you worried yet?  If you are ready to invest a little time and money into defensive marketing to protect your top clients, exactly what should you do? 

This blog is full of advice, and so is the rest of the web.  If you don’t have time to search the internet, go visit your marketing department, or hire a coach, or consider getting started with our books and CDs.

Or you could skip all the reading and just call your top client to arrange a free meeting to learn more about their business.  It should be at their office, and it must be free.  When we coach lawyers to do this, they often end up with new engagements.  Because sometimes the best offense is a strong defense.

September 03, 2008

Women Rainmakers…What’s Different, What Isn’t? Part 2

This concludes the article I published in the August issue of Of Counsel, the Legal Practice and Management Report.

Pillars of Success

When discussing the success of the WEB program, and others like it, the question is raised: “What’s different for women rainmakers?” The best data comes from the groundbreaking research in this area, “LSSO’s Women Lawyers Study: Sales and Business Development Issues,” which was directed by Catherine Alman MacDonagh of the Legal Sales and Service Organization (LSSO) and analyzed by Marcie Borgal Shunk of the BTI Consulting Group.

For the first time, based on a survey of 426 women lawyers (published in The Complete Lawyer ), “four guiding principles of success” for female rainmakers are clearly identified:

1. Have the right attitude: “a certain optimism, an element of persistence, and an ability to be resilient.”

2. Take the lead: Women lawyers with leadership positions, both inside and outside the firm, generated more new business.

3. Invest time wisely: “Every hour dedicated weekly to developing existing clients and attracting new business yields female attorneys nearly $30,000 in additional origination revenue, regardless of category (equity partner, non-equity partner, counsel or senior associate).”

4. Know the power of client service: Women lawyers who agreed with the statement “client service has no impact” on new business reported far lower annual originations (less than $600,000) than those who believed that “client service differentiates” (more than $800,000).

Power of Positive Thinking

To me, the most interesting principle is the first one: the attitudes of successful female rainmakers, especially their optimism. It’s easy to see why optimism is important. Would you hire a lawyer who seemed unsure of herself ?

A few years ago, I wrote a book called AdverSelling that summarized key principles used by sales professionals. Chapter 7, titled “Be optimistic and credible,” opened with a quote from Teddy Roosevelt: “Whenever you are asked if you can do a job, tell ‘em, ‘Certainly I can!’ Then get busy and find out how to do it.”

Many lawyers, both female and male, find pessimism easier than optimism, perhaps because their job often requires anticipating all the things that can go wrong. But researchers have consistently found that, in sales, optimism is linked to success.

In the 1980s, for example, Metropolitan Life Insurance commissioned psychologist Martin Seligman to identify the characteristics of successful insurance agents. At that time, half the agents that Met Life hired quit in their first 12 months, and 80 percent left within four years.

The researchers expected to find that the ones who quit sold less insurance right from the start. In fact, they found that, in the first year, sales were quite similar for the agents who later quit and for those who stayed.

What was different was the way in which they interpreted their failures.

The sales agents who were successful in the long term were consistently optimistic. When they lost a sale, they never said it was because “selling life insurance is hard” or “I’m no good at it.” Instead, every unsuccessful sale was an exception: “that guy was too busy” or “they just happened to be eating when I called.” The salespeople who lasted were always convinced that success was just around the corner. And so it was.

Last fall, when I was working with Latham’s WEB group, several female rainmakers raised the idea that this type of self-confidence, even arrogance, seems to come easier to men than to women. For many reasons, I would prefer not to speculate about male/female differences. But I am looking forward to the day when LSSO publishes follow-up research on male/female differences, and whether firms are perceived as doing enough to support female attorneys. (MacDonagh is currently leading the design of LSSO’s next women lawyers’ survey, which is expected to launch this summer.)

In the meantime, are business development tactics likely to become more gender-specific? It’s too early to tell, but one thing seems certain: The influence of female decision-makers is continuing to grow in corporate America, and so too is the influence of female rainmakers at law firms.