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October 22, 2008

Down economy, Part 8: What to do if your revenue goes down

Last January, I wrote a post entitled “The first thing lawyers should do in a recession.”  Now that the recession is really here, it’s time to think about the second thing to do, and the third.   This week’s post reviews a total of six steps lawyers should take when their revenue is headed down:

1. Plan for the worst
2. Commit at least two to five hours per week to business development
3. Track the time you actually spend each week
4. Start with defensive marketing to protect your current clients 
5. Increase the efficiency of your search for new clients
6. Don’t stop

Step 1. Plan for the worst

In the October 13 issue of Business Week (p. 108), Jack and Suzy Welch advised business owners to “Plan as if the downturn will be longer and harsher than you think... In a rocky environment, timidity can be very risky...”  It may be human nature to expect things to get better, but that’s not good business practice.  In terms of marketing, planning for the worst means you should assume that competitors will be trying to take away your clients, and that when you look for new clients it will take a long time. 

2. Commit at least two to five hours per week to business development

One fundamental law of marketing is that if you spend no time, you will get no results.  The best business development plan in the world will produce nothing unless you follow up, week after week after week.

As you begin a business development program, it is important to be realistic about the number of hours you will spend.  The amount of time you budget will determine what you should do, and what you should not.  It may make sense to fly to another city to meet a former client if you can average ten hours per week, but if you only plan to average two hours per week this is unlikely to be the best way to spend them.

When we coach lawyers, we insist on a commitment of two to five hours per week.  In this economy, you’d be foolish to put in less.  The more, the better.

Step 3. Track the time you actually spend each week

The road to hell is paved with good intentions, so you will need to track the time you actually succeed in devoting to business development, each and every week.  You may be tempted to track hours once a month instead of once a week.  Do not succumb to this temptation. 

In our coaching, we often recommend that lawyers work with their admins to maintain a simple spreadsheet keeping track of the totals, every single week.  That makes it much easier for lawyers to correct their course when they inevitable fall behind.

4. Start with defensive marketing to protect your current clients 

I’ve written several posts in the past about the current need to increase defensive marketing, and exactly how to begin with current clients.

Every lawyer should take these steps as soon as possible.  Even if the recession has not affected you, other lawyers are feeling the pressure, and they are coming after your clients.

5. Improve your search for new clients

This is by far the hardest item on the list, and could easily be the subject of another ten or twenty posts.

If you only have a few hours a week, it’s easy to waste them on the wrong activities.  For example, I have started hearing about lawyers who are using their newly non-billable time to scurry around responding to RFPs, without any realistic idea of how to win.  In my post on RFPs - When and how to compete , I quoted Ann Lee Gibson’s view that typical win rates across the legal industry are “very small, probably no larger than 5%.”  In other words, unless you know how to win the RFP game, 19 times out of 20 you will lose.

More generally, as I explained in my post on why lawyers should ignore good ideas, “Lawyers are much too busy to spend time on ideas that are only good.  To maximize the chances of success, each individual must focus on the very best ideas for their practice, their personality, and their schedule.”

The most efficient way to find the best ideas is with professional help.  Your firm has probably spent a lot of time and money building an internal marketing department.  Don’t just use them to order basketball tickets and collect resumes for your RFP responses.  Sit down with a marketer you trust and ask what they think would work best for your practice.  You don’t have to follow their advice, but it’s silly not to ask.

And if you want still more advice, consider a professional coach.  I know just the place to find some great ones

6. Don’t stop

According to Citibank, in the first six months of 2008 average hours billed per lawyer dropped 5.5 percent. Why not devote those extra hours to developing new business?

I often say marketing is the hardest work you can do in a suit, so don’t expect instant results.  But if you stay with it, prioritize relentlessly, and follow professional advice, you will get new clients.  Maybe not as many as you’d like, or as soon, but you will get them.  Who knows:  maybe the down economy will be a blessing in disguise.  Maybe you’ll find that you’re not only good at this, you actually like it.  The way the profession is headed, the best way to protect your future is to increase your personal book of business.

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