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5 posts from January 2012

January 25, 2012

How to find new clients (Part 2 of 2)

This list was adapted from my new book the Legal Business Development Quick Reference GuidePart 1 can be found here.

Step 5: Get more meetings through referrals 

  • See the chapters in my new book on Referrals – How to get more referrals, and Referrals – A checklist of best practices for referral sources.  If this leads to discovering other people who would be good clients, add their names to your list of ideal clients

  • If you know someone to meet with, but are unsure of how to proceed, ask others for help.  Your referral relationships are very valuable assets, and you must protect them.

Step 6: Get more meetings through cross-selling

  • Do any people who need the services that you provide buy other legal services from your firm?

  • Cross-selling sounds like a great idea, but it is a lot harder than most people think. The best way to succeed is to find a compelling reason why it is to the client’s benefit, not your benefit.  See Cross-selling – What works and what doesn’t to define next steps for your action plan.

Step 7: Get more meetings with other people you know

  • Do you know anyone who works at one of the companies on your list, or who might know people at those companies?

  • Do you know anyone you could take to lunch who could help you learn about these companies and/or their industry?  Who are the key players?  What are their concerns?

  • Ask others at your firm whether they know anyone who could help

  • Use LinkedIn and other online tools (see Social networking – How should you use it?) to look for possible connections to ideal clients through your law school classmates, former colleagues etc.  (Also see Re-connecting – Six steps to re-connect with past clients and colleagues.)

  • Research background info on the web for key contacts at target companies.  Then look for an excuse to contact each, such as inviting them to speak on a panel at your firm or at a national convention.  Or interview them for an article you are writing, and be sure to quote them.

  • Create a table listing people who could help you get meetings and how (e.g. introduce you to someone,  help understand the target industry or the target company or help identify the right people to talk to.) Prioritize the potential payoff from each, then set up lunches or face to face meetings with those people.

Step 8: Get more meetings through networking

  • Do the people you want to meet belong to particular organizations or attend certain meetings?

  • If the answer is yes or maybe, see Networking – How to increase results from networking and Networking – Three steps to prepare for a conference or networking meeting to identify possible action items for your plan

Step 9: Measure results

  • Define realistic goals, and measure results

  • Signing new business may take months or years, depending on your practice

  • Therefore, in addition to measuring new business, you should measure leading indicators so you can see progress, or lack of progress, every week, such as:

    • Time spent on business development
    • Face-to-face meetings with potential clients
    • Client responses (including email and phone)
    • Client advances
  • For more ideas, see Follow-up – Sample reports to improve tracking

  • If you consistently fail to meet the goals you set, it may be time to re-evaluate your plan

  • Does your niche have strong potential for new business?  If you now doubt this, go to Planning – Define your niche.

  • Are you willing to reaffirm your commitment?  Every lawyer needs to master the skills to grow business with current clients, but not every lawyer has the time and ability to find new clients. 

  • If you are making steady progress, go to the final step

Step 10: Don’t stop

  • After you meet with ten people, meet with ten more

  • Monitor your progress by recording the time you put in every week.  Keeping a written record will increase your chances of remaining committed to long-term follow-up. 

  • Remind yourself: It will take time to find new clients.  But when you do, the payoff could be enormous.

January 18, 2012

How to find new clients (Part 1 of 2)

This post was adapted from my new book the Legal Business Development Quick Reference Guide which is being published today.

In today’s challenging legal marketplace, finding new clients is more important than ever, and harder than ever.  But if you follow these ten steps, you will find new clients.

Step 1: Define your priorities and how much time you will devote to looking for new clients

  • Turn to the chapter (in my new book) entitled Action plan – Your two-page action plan, and fill it out to specify your personal priority for finding new clients, and the time you will devote to it

  • Before you begin working on a systematic plan to find new clients, it is important to ensure that you have the resources and commitment required to maximize the chances of success

  • We recommend a commitment of at least two to five hours per week, for an absolute minimum of six months.  If you cannot or will not make this kind of time commitment, you should forget about finding new clients.

Step 2: Make a list of new clients you would like to have

  • In the “new clients” section of the Two-page action plan, fill in the names of some ideal clients.  (Also see the chapters on Planning – Define your niche and Planning – Define your ideal clients.)

  • If you don’t know people’s names, list the companies and job titles of possible clients in your niche.  Compile a list that is as specific as possible, such as:

    • Senior partner in the Bradbury hedge fund
    • CFOs at Fortune 500 financial service companies   
    • General counsel for large biotech firms
    • Leaders of unions with at least 500 members
    • Owners of closely held businesses with 100 employees or more 
  • Remember, business development is a numbers game.  You will need a large number of prospects to get a small number of new engagements.  Over time, your list should grow.

  • The process of developing new business is based on planning a series of smaller steps to the sale.  (See the chapter on Advances for background.)   If you already know what your desired advance for any or all of the clients in your list, fill in the To Do list on page two of the Two-page action plan.

Step 3: If you can easily arrange a face to face meeting with someone on the ideal client list, do it

  • Set up a face-to-face meeting or a lunch to learn about their business and their needs

  • Do not try to sell your firm in the first meeting.  Spend the time getting to know the person, and what matters to them.

  • Listen at least 50% of the time.  For examples of what to talk about, see Meetings – Checklist to increase results from your next meeting.

  • Make sure that your value proposition can be stated quickly and succinctly, and is adapted to the interests of each person you meet.  See Elevator Speech – Six steps to create or improve your elevator speech.

  • Keep asking yourself:

    • Why should these very busy people talk to me? 
    • What value can I provide immediately?
    • How can I help these people?
    • What can I give them for free?

Step 4: After you meet with each person, set a goal for how often you should be in contact with them in the future to stay “top of mind”

  • After every meeting, ask yourself: Will they buy?  Will they buy soon?  Will they buy from me?  See Qualifying – How to avoid wasting time with the wrong people.

  • If they are likely to buy soon from you, set a plan for regular follow-up and meetings

  • If you think they will never buy from you, and never help you to sell to others, take them off your lunch list.  But keep sending holiday cards, just in case you’re wrong.

  • For everyone else — all the people who may buy some day but won’t buy soon — plan to keep in touch about four times per year so that they will think of you when they need legal services.  See Follow-up – A checklist of best practices for keeping in touch.

Next week’s post will describe six more steps.

Announcing my new book on legal business development

The second edition of my Legal Business Development Quick Reference Guide is being published today.

Lbd-qrg-front-cover-graphicLike my Legal Project Management Quick Reference Guide, the book is designed for the needs of the busy attorney.  A lawyer need not read it from start to finish but can open it nearly anywhere and find useful business development ideas that are relevant to his or her practice.

This new book will help you develop business more efficiently by focusing on the activities that are most likely to produce immediate and practical results for your practice, your personality and your schedule.

Part 1 of the book describes the “Top ten ways to increase results from your limited marketing time” including prioritize relentlessly, start with current clients, listen, and plan advances.

Part 2 is organized alphabetically to make it easy for you to find exactly the information you need, just when you need it. It includes tools and checklists for everything from the best ways to increase client satisfaction to a list of 67 questions to get a conversation going. It also summarizes marketing experts’ latest thinking on such key topics as alternative fees, defensive marketing, and social networking. 

“This Quick Reference Guide is just what busy attorneys need – a well-organized, well-thought out roadmap to business development actions that are easy to implement. The content is organized to give information on demand, so that professionals can easily find tips and techniques when they need them,” says Despina Kartson, chief marketing officer of Latham & Watkins.

According to Mark T. Greene, chief business development officer of Waller Lansden: “Jim’s Guide is concise and clear, and every section is worth reading. Best of all, it serves as a great reference. When someone new to my team needs to learn about an aspect of legal business development, I point them to a section of Jim’s Guide.”

This second edition updates and combines material from two books which have been used by thousands of lawyers:  the LegalBizDev Desk Reference and Legal Business Development: A Step by Step Guide.

The price is $79.95 plus shipping ($10 in the US, $30 outside the US), with volume discounts of up to 50 percent on orders of multiple copies. The book can be ordered now by email (sales@legalbizdev.com), by phone (800-498-7246), by fax (917-386-2733), or by mail (LegalBizDev, 225 Franklin Street, 26th floor, Boston, MA 02110).  An excerpt from the book and an order form can be downloaded from our web page

January 11, 2012

Legal pricing (Part 4 of 8): Value pricing basics

In the first post in this series, we noted that the two pricing strategies of greatest interest to law firms are cost-plus and value pricing.  Almost all law firms currently use variations on cost-plus pricing, as we described in Part 2 and Part 3 of this series.  But anyone who has ever heard of the ACC Value Challenge knows how important perceived value is to clients today.

If you have thought about applying value pricing with your clients, you have probably read about the work of Ron Baker.  His most recent book, Implementing Value Pricing: A Radical Business Model for Professional Firms, provides an excellent overview of the theory of value pricing, and how it applies to accountants, lawyers, and other professional services firms.

As Baker defines it (p. 233): 

The word value has a specific meaning in economics: ‘The maximum amount that a consumer would be willing to pay for an item.’  Therefore value pricing can be defined as the maximum amount a given customer is willing to pay for a particular service, before the work begins. This is not to suggest we can capture one hundred percent of maximum value, but rather that we have the potential to access some of it utilizing strategic pricing.

Does that sound like price gouging? It’s not. As Stanley Marcus (former president of Neiman Marcus), put it (p. 22):  “You’re really not in business to make a profit, but you’re in business to render a service that is so good people are willing to pay a profit in recognition of what you are doing for them.”  

In cost-plus pricing, cost is known before you set the price.  In value pricing, you start with the price the customer is willing to pay and control your costs to meet that price. 

Baker sums up the difference in these two diagrams:

Cost-Plus Pricing

            Services  » Cost »  Price » Value » Customers

Value Pricing

            Customers » Value » Price » Cost » Services

Baker feels strongly that value pricing should be embraced by lawyers, and that timesheets and hourly billing should be eliminated. 

His web page bio begins with the mission statement:  “To, once and for all, bury the billable hour and timesheet in the professions.” Chapter 17 of his book Implementing Value Pricing is titled “The Deleterious Effects of Hourly Billing” and describes numerous disadvantages including misalignment of interests, a focus on effort instead of results, hoarding of hours, leaving money on the table, and diminishing the quality of life.  Chapter 18 explains why timesheets should be eliminated.  Its title indicates the strength of Baker’s feelings on this issue:  “Why Carthage Must Be Destroyed”.

Baker (p. 160) also emphasizes that value pricing can sometimes produce far more revenue than the hourly approach.  He gives the example of an accounting firm that was engaged to develop an exit and management succession strategy which produced substantial tax savings. Initially the CPA billed at standard hourly rates, but at some point he said to the client “I don’t believe hourly rates [are]… appropriate [in this case]…  You tell me what all the value of this is to you… I know I will be happy with whatever you come up with.”  Ultimately he was extremely happy, because the total payment was “a little bit over $1 million.” 

By then, he had stopped tracking time on this engagement, so it is impossible to say exactly how much he would have gotten on an hourly basis.  However, he did say his prices had “skyrocketed” and reading between the lines our guess is that hourly rates would have totaled less than $100,000.

Any lawyer would love the concept of value pricing if it meant that she could get paid 10 times what she would earn for billing hours.  And many law firms see value pricing as a ray of hope in a troubled marketplace, an opportunity to increase profitability at a time when there are unrelenting competitive pressures to charge less.   

Baker notes that “These types of engagements are certainly not the rule in any firm, they are the exception.  Nonetheless, they do arise, and when they do it is critical to recognize the value you are creating and to utilize innovative pricing strategies to capture it.” 

Companies like Apple have become very profitable by creating consumer perceptions of value, and pricing products like the iPad and iPhone accordingly.  But there is only one Apple, and there are dozens of companies like Dell, HP, Samsung, Lenovo, and Asus who find themselves competing on price.

A small number of the most profitable law firms in the world have been using value pricing for years, just as Apple has.  But they are at the top of the profession and specialize in “bet the company” work.  If a client is defending a billion dollar law suit, or acquiring a powerful rival, or being accused of a white collar crime, she will care much less about the price than about the outcome.

When Jim Durham published The Essential Little Book of Great Lawyering, he estimated such “bet the company” matters at only about 5% of all legal work.  The rest he classified as important matters (65-70%) or commodity work (25-30%). In the six years since Durham published this book, all signs are that legal commodity work is growing, and “bet the company” and “important” work are shrinking.

In my new Legal Business Development Quick Reference Guide, I’ve written about the traditional marketing implications of these three different types of legal work, as summarized in this table:

Type of legal work

Value’s significance in marketing

Relationships’ significance in marketing

Bet the company

High

Low

Important

Medium

High

Commodity

Low

Low

But the world is changing, and when it comes to getting new business, the marketing significance of providing value is going up, and the importance of prior relationships is going down.

A few weeks from now, we will post Part 5 of this series, discussing the nuts and bolts of Ron Baker’s eight steps to implementing value pricing.  We will argue that the problem with value pricing is an expectations gap.  Law firms want to believe value pricing will lead to higher prices and profits.  Sometimes it can.  But in most cases these days, when legal clients say “value” what they mean is “I need to pay you less.” 

 

This post was written by Jim Hassett and Matt Hassett.

January 04, 2012

Tip of the month: Do something extra for a key client

Legal competition is increasing, and no relationship is safe.  Focus on defensive marketing and help protect your top client relationships by doing something extra to make them very very happy.  If you are not sure what to do, see the “Checklist of best practices to increase satisfaction” in my new book.

The first Wednesday of every month is devoted to a very short and simple tip like this to help lawyers increase efficiency, provide greater value to their clients and/or develop new business.