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4 posts from November 2008

November 26, 2008

Eight steps to a better business plan (Part 2 of 3)

In Part 1 of this series, I talked about the need for better legal business plans in the current economy, and the first step in developing them:  Identify the tactics that will have the greatest impact for your practice.  Now, on to:

Step 2 - Prioritize your target audiences.

When lawyers talk to me about marketing, they usually mean finding new clients.  But in this economy most should be focusing first on defensive marketing to protect the clients they already have.

If you think that your clients are already satisfied enough with the service you provide, you’re probably wrong.  In a 2008 survey of general counsel, Inside Counsel magazine asked lawyers to grade their overall performance with clients as A, B, C, D, or F.  42% of the lawyers thought they were earning an A.  But when they asked clients the same question, in fact only 17% earned As.  In other words, most lawyers overrated their performance.  For more data on this, see my post on The Lake Wobegone Effect.

Lawyers are not alone in overrating client satisfaction.  In his bestseller The Ultimate Question, client satisfaction guru Fred Reichheld quotes surveys showing that 80% of senior executives in a variety of industries believe that they deliver a superior experience to customers, but only 8% of customers agree (p. 117).

So the time to increase the satisfaction of current clients is now.  For a list of the top 16 ways to increase client satisfaction, see this post

After you’ve increased the satisfaction of current clients, only then should you start working on finding new ones.  That’s when the really hard work begins.  I often say that finding new clients is the hardest work you can do in a suit, because it takes so long, and it is so easy to fail.

If I were to try to go into detail here about all the steps you should follow to search for new clients, this series would probably require about 20 weeks instead of three.  For now, I will just emphasize that the search for new clients must start by defining your niche and the types of ideal clients you should focus on.  For more on this complicated topic, see The LegalBizDev Success Kit.

Step 3:  Commit to a definite number of marketing hours every week.

The best business plan in the world will produce nothing unless you put in the time to follow up, week after week after week.

In my book, Legal Business Development: A Step by Step Guide I recommend an absolute minimum of at least one hour per week if you are focusing on current clients, plus three hours per week if you are looking for new clients.  Remember, this is not my recommendation for a goal, it is my recommendation for an absolute minimum.

In most situations, I am a big believer that less is more. But with marketing time, more is more.

Step 4 - List action items that are SMART (specific, measurable, achievable, relevant, and timed).

The entire purpose of your business plan is to drive action.  Too many business plans define the general direction, but don’t get down to the level of specifying exactly what you should do. 

In my opinion, every business plan should include action items that are SMART:  specific, measurable, achievable, relevant, and timed.  Lawyers must particularly concentrate on defining action items that are achievable.   If you are only going to be able to devote three hours per week to marketing, your top action items for the week should be tasks that can realistically be completed within three hours.

Step 5 - Customize the plan’s format to your individual needs.

Everybody likes doing things their own way.  So if your practice group uses a business plan format that fails to include some information you consider vital, add to the format.

Here are some of the topics business plans often include:

• Major and minor practice areas
• Areas of niche expertise
• Top clients and referral sources
• Profile of ideal new clients
• My “Unique Selling Proposition”
• Goals:  Short term and long term
• Cross-selling targets
• Activities to market myself within the firm
• Networking activities I enjoy and time commitments required
• Associations/organizations/board memberships (e.g., industry or trade, bar, or social/community)
• A “SWOT Analysis” (Strengths, Weaknesses, Opportunities and Threats) of your practice group and your client needs

For more examples, see “The LegalBizDev Guide to Business Plans,” which will be  distributed at my upcoming webinars on December 16 and January 14.

Next week, this series will conclude with the last three steps, to convert your ideas into action.   

November 19, 2008

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.

November 12, 2008

ACC’s Value Challenge (Part 1)

With nearly 25,000 members in 75 countries, the Association of Corporate Counsel (ACC) is the largest organization in the world for corporate inside counsel.

So when ACC says that “Many traditional law firm business models... are not aligned with what corporate clients want and need: value-driven, high-quality legal services that deliver solutions for a reasonable cost,” law firms would be wise to listen.   

The quote comes from the ACC Value Challenge, a new initiative with an ambitious goal “to reconnect value and costs for legal services.”

The effort began over the summer with regional meetings in Chicago, Houston, San Francisco and New York.  On September 25, there was an official launch meeting in Washington.  (A recording of that meeting can be viewed on the web.)

The “desired outputs/outcomes” of the ACC Value Challenge include, among other things “a national dialog... A client community that supports law firm efforts to implement change [and]... Tool kits for use by in-house and outside counsel that contain leading practices, [and] management tools.”

The effort is just getting started, but they have already posted many useful tools on the Value Challenge website, including a sample survey to assess legal risk, an explanation of “Seven levels to control litigation costs” and a 95 page summary of Wal-Mart’s “outside counsel guidelines.”

The question is: how soon will law firms embrace these practices and guidelines?  My guess is that for many firms, the answer is simple: when they have no other choice.

When the Washington Post reported on the Value Challenge, they described it as “an initiative aimed at spurring corporate lawyers and outside law firms to develop alternative pricing plans, including fixed rates, volume discounts and lower rates in exchange for performance bonuses.” 

That article quoted Susan Hackett, the general counsel of ACC:  “When we started looking at this project, we were thinking, ‘How do we make people realize now is the time’ [to stop charging by the hour?]... Then the economic crisis happened. There's going to be a heck of a lot of directives for folks at the firms to lower their costs.”

Moving away from hourly billing isn’t the only way to increase perceived value, but it is certainly one important way, and lowering hourly rates is another.  But if the key to success for this program is reducing cost, you’d have to think there won’t be a lot of firms volunteering to go first.  Unless they believe that it will give them a competitive advantage.  Which some firms clearly do.  As Pam Rothenberg, managing member of Womble Carlyle’s D.C. office, said in that same Washington Post article:  “I think the financial crisis will exacerbate everybody's pain point.  There will still be firms resistant to change.  But those that embrace change will likely gain more market share.”

I agree.  In fact, I believe that in the current economy, providing more value is the single most important thing any firm can do to bring in new business. 

But what sounds good in theory can be hard to work out in a real world of conflicting priorities and demands.  As ACC’s Susan Hackett put it in an email:  “In-house counsel are going to have to define exactly what they want law firms to do, and then drive that change.  This means three things: they will need to develop the skills to figure out how to value work in a manner that’s not dependent on simply adding up time... then they will need to manage all work to the new budgets... and finally, they will have to reward firms with more work when they deliver better value and leave firms that don’t change.”

It will be extremely interesting to see how this particular initiative plays out.  As soon as I hear of any results, I’ll let you know.

November 05, 2008

Marketing tip of the month: Form a business development group

Developing new business is like going on a diet; you will not succeed unless you stick with it. 

One way to assure that you follow up consistently is to work with other people, so you can encourage each other, compare notes on what works, and maybe even develop a friendly competition about who can get the most new business.

Why not ask a few lawyers you enjoy working with to help you start an informal business development group?  Meet for breakfast the first Wednesday of every month to review and update your marketing To Do lists.  You will be much more likely to actually complete your To Dos if you know that once a month you will have to tell others what you have accomplished, and what you have not.