Eight steps to a better business plan (Part 1 of 3)

For many lawyers at large firms, last year’s business plan was simple:  bill more hours, then raise rates.  Those were the days.  But the economy has changed everything, and this year’s business plan will require more thought. 

If your revenue has already started down, you know that you need to re-think your approach to marketing.  And even if it hasn’t, you still need to adjust your approach, because hungry competitors are coming after your clients.

Every lawyer needs a business plan, because if you don’t know where you are going, you’ll never get there.  In this series of posts, I will explain eight steps that will not only help you to write a better business plan, but also increase the chance that you will follow up and implement it successfully.

Step 1 - Identify the tactics that will have the greatest impact for your practice.

I’ve written before here and here about the fact that successful lawyers never have enough time for marketing, and must prioritize relentlessly.  You must place the highest priority on tasks that are most likely to yield the type of clients you want to work with, and the types of matters you prefer to focus on. 

One key issue in prioritizing is the proportion of your marketing time that should be devoted to relationships vs. visibility.  Of course, if your time was unlimited, you would work on both.  But your marketing time IS limited, and every minute spent on one of these will not be spent on the other.

In my opinion, many lawyers spend far too much of their time on visibility – speaking, writing, attending events – and far too little on leveraging the relationships they already have, especially with current clients.

The ideal proportions will vary from one practice to another.  In The Essential Little Book of Great Lawyering, Jim Durham distinguishes between three broad categories of legal work:  “bet the company” matters (which he estimates at about 5% of all legal work), important matters (65-70%), and commodity work (25-30%). 

If you focus on commodity work – a category that seems to be growing – once you guarantee a basic level of competence, price is everything.  If you specialize in being the low bidder, you need to minimize the time you spend on relationships or visibility, because the less time you spend on marketing, the easier it will be to lower your billable rate.

At the other extreme, if you are fortunate enough to have a significant amount of “bet the company” work (which tends to be the most interesting and least price sensitive), visibility is very important.  For this category, and for many types of litigation, there is little repeat business, and it is hard to predict who will need your services or when.  Clients are not looking for the most pleasant lawyer or the one who returns phone calls most promptly, they are looking for the one who will win.  Therefore, marketing should stress visibility and keeping your excellent reputation “top of mind,” so that the day they need a lawyer, they will think of you.

In contrast, in the largest category – important work – relationships are everything.  As Durham put it: “When you are doing important legal work your expertise and competence must be sufficient (but need not be exceptional), and the billing rates or projected costs for the work must be within the range of client expectations (but not necessarily the lowest). Beyond that… your success will be determined by the actual experience a client has working with you.” (p. 18)

So the first step in formulating your business plan is to have a firm grip on the type of work you want, and the tactics that are associated with success in that arena.  Next week, I’ll talk about Step 2:  Prioritize your target audiences.

For more details, attend my webinar “Eight Steps to a Better Business Plan” on December 16 or January 14.