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4 posts from May 2014

May 28, 2014

Business development best practices: Prioritize relentlessly

Since business development is more important than ever for lawyers, over the next few months I will be posting occasional summaries of best practices from my book the Legal Business Development Quick Reference Guide.  This is the first and most important.

When lawyers ask us for the single most important piece of advice in legal business development, the answer is simple: Ignore good ideas. You must prioritize relentlessly.

Before we started working with lawyers, my company coached professional salespeople. Those clients spent 60 to 80 hours per week living, breathing, and acting on sales. The lawyers we work with these days often struggle to find two or three hours per week that they can devote to business development on a consistent and predictable basis.

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. This requires relentless prioritization, and constantly returning to the question, “What should I do today to increase new business?”

For example, it’s good marketing advice to volunteer for a bar association committee. It’s an easy and enjoyable way to develop new relationships that could lead to business in the future. But it is usually better advice to skip the bar association and volunteer instead in an industry organization whose members are potential clients. That way, the relationships you develop will lead to more new business, more quickly.

Even that is probably not the best advice. For most lawyers, the best place to start is with current clients. If you would have averaged an hour per week on that committee, spend it instead on your top clients. Take them to lunch. Listen. Find out what they want. Give them more. Do things for free.

But don’t make those client lunch reservations just yet, because there are no generic answers to the question of what’s best. Maybe in your unique situation the bar association would be best. Or maybe none of these three are right for you and you need to go in a different direction.

You must prioritize relentlessly and keep returning to the question, “What should I do today to increase new business?” 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.

For example, I often talk to lawyers who are writing articles or books in their marketing time. As a man who spends a lot of time writing, I obviously think that writing can be a good way to increase visibility. But there are several important caveats. First of all, writing is way too much fun for some of us, and it’s easy to write things that do not serve the central marketing purpose. Second, by itself publication is unlikely to bring in new business. To be an effective marketing tactic, writing must be used to build relationships, one person at a time. (One example: send copies of your article to key contacts, each with a short written note.)  Third and most important: you must consider what else you could be doing with that time. If an article takes 10 hours to write, what else could you do with those 10 marketing hours? Would you get more results with current clients, or by strengthening relationships with people you already know?

Another example: Before a lawyer decides whether to attend a networking meeting, she should realistically assess how many hours it will require, including preparing, following up, and even driving to and from the meeting. Suppose a particular networking meeting requires an investment of five hours. She must then ask whether the meeting is the best possible way to spend that time. Would five hours be likely to produce greater results if she instead offered a free meeting to a current client to understand what they value most about current services, and what could be improved? What about sending personalized emails to 20 people she already knows, just to stay top of mind? Or re-establishing contact with a few friends from law school who now work for large corporations?

Still another example: many lawyers put considerable effort into responding to RFPs, without any realistic idea of the likelihood of success, or even what they should do to win. According to consultant Ann Lee Gibson, typical RFP 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. Does that sound like the best use of your time?

The same type of prioritization should be applied to a firm’s marketing tactics. Consider your firm’s last marketing event. What was its impact on new business? Could the firm have achieved greater results if all that time and money had been used differently? Suppose that you outlined a step-by-step sales program to build relationships with a short list of decision makers and/or industry gurus. Or suppose you had redirected those resources to support individual meetings with people the lawyers already knew, focused on broadening contacts in a particular industry segment. Would the results have been greater?

Of course, business developers in every profession ask questions like these every day. What’s different about working with lawyers is that we must ask them more frequently and more rigorously, because lawyers have so little time.

You must start with enough planning to make sure you are don’t waste your time taking people to lunch who are unlikely to ever hire your firm or introduce you to others who will.

But once a basic plan is in place it is time to come up with a list of activities and get started trying them out. Review things that have worked in the past for you, for your partners, and for other firms. Do this quickly. Because every minute you spend planning is a minute you are not following up with clients.

Many lawyers would rather read about marketing than pick up the phone and call a client. If you are one of them, you must fight that tendency, and spend as little time as you can on studying.

Just jump right in and try something. And when you do, keep a written record of what you tried, and what worked. If you track short-term activity and results, you will be more likely to follow up consistently.

Developing new business is like going on a diet: There is no sense starting unless you plan to stay with it.

 

May 21, 2014

The most important findings from Altman Weil’s new survey

What’s wrong with this picture? 

In the 2014 Law Firms in Transition Survey which Altman Weil released a few days ago, 304 managing partners and chairs of US firms with more than 50 lawyers were given a list of legal market trends and asked “Which do you think are temporary and which will be permanent?” 94% rated “focus on improved practice efficiency” as permanent, in a tie for the number one permanent change with “more commoditized legal work.”

But when the same survey asked “Has your firm significantly changed its strategic approach to the efficiency of legal delivery?” 35% said no and 26% said it was “under consideration” (code words for we have a committee that could decide any year now).  In other words, only 39% of US firms have started to take action to deal with the most important change in their profession.

If you read the entire 131 page report (which can be downloaded for free), the good news is that there are many signs that law firm leaders increasingly understand that the world has changed and they must adapt.  The bad news is that so few have started doing anything.

If you are a regular reader of this blog you will not be surprised to learn that the first section I turned to was on legal project management.  I LOVED Altman Weil’s conclusion (p. viii) so much that I will quote the whole thing:

Invest in Legal Project Management

Perhaps no other long-term initiative will do more to support staffing innovation, pricing innovation, efficient delivery of services, improvements in margin and reductions in overhead than true project management training. It’s important to distinguish between a one or two day seminar which will not produce much long term value, and a systematic, hands-on approach that instills fundamental operational change. Firms that give their people the right kind of tools and training in this area will create new efficiencies for clients, improve profitability of matters, and create significant competitive advantage.

This underlines a point we have been writing about for years: traditional training to educate lawyers to understand LPM will not change behavior, any more than understanding how to run a marathon will enable you to complete one.  Behavior change requires practice, whether it’s through the kinds of coaching programs we offer, or other real-life hands-on approaches.  The point is, you need to do it, not talk about it.

This conclusion has also been supported by our research on Client Value and Law Firm Profitability, which will be published in a few months.  When I interviewed managing partners, chairs, and senior partners and managers from 50 AmLaw 200 firms, here’s what the managing partner of one firm that invested heavily in LPM education had to say:

I think project management probably will have the longest-term positive impact, but it’s been the biggest challenge, because it’s something that hasn’t been easily absorbed by a lot of the lawyers. When busy lawyers start scrambling around, the inefficiency creeps right up.

A few years ago, traditional training in LPM became the rage in a number of firms.  Several got to put out some great press releases describing themselves as leaders of the new LPM movement. But from everything we have heard, this education had little impact on the way anybody practiced law.  What has worked is one-to-one coaching, as described in my book Legal Project Management, Pricing and Alternative Fee Arrangements.  (A free copy of the chapter on LPM case studies can be downloaded from our web page.)

Does it matter how quickly firms move to increase efficiency and provide greater value?  In our study 85% said that firms that move more quickly in providing value will gain a competitive advantage.  Some respondents thought this was a life and death matter.  As one managing partner said:

I think the firms that are most effective are going to do well, and I don’t think everybody will survive. In the last several years, there have been several firms that went away. And I believe that’s going to continue.

A senior partner at another firm put it this way:

I think the market’s going to shake itself out. I think firms that can’t deliver more value will fail.

If that’s not scary enough, there’s more.  I have saved the most frightening news for last. 

In my opinion, the most revealing question in Altman Weil’s entire research was one that was just added to the survey this year for the first time: “Which of the following is a greater driver of decision-making in your law firm in 2014: Long-term investment in new pricing and service delivery strategies to lock in your most valuable clients or short-term profitability to lock in your most valuable partners?” An astonishing 44% are looking inward at their own partners rather than outward at their clients.

As Tom Clay, the primary author of the Altman Weil survey, noted in our research report:  “If a law firm cannot attract and retain good clients, nothing else matters.” At a moment in history when so many clients are demanding more value, it can be business suicide to focus on partners before clients.

The obvious explanation is that with all the lateral movement between firms, management is afraid that if they don’t focus on partners first, big rainmakers will jump ship and take their books of business with them.

But forward-looking firms are taking a longer view.  In our study, one chair noted that in his AmLaw 100 firm some rainmakers were the very people who were slowing down progress.  As he put it:   

To be perfectly honest, some of the partners in our firm who don’t get it, don’t want to get it. They’ve got a big book of business, and they would prefer us to just leave them alone. Law firms get very nervous about this, because they worry that these big, bad actors are going to take their big, bad book of business and go elsewhere. I say “Don’t let the door hit you on the butt on the way out,” because that’s not the culture that we’re trying to build. As long as we continue to reward bad behavior, we’re going to continue to get bad behavior.

Full disclosure: LegalBizDev is a strategic alliance partner of Altman Weil.  More disclosure: I began praising their annual surveys several years before we formed that relationship.

May 14, 2014

The most critical issues in legal project management (Part 3 of 3)

Assign tasks and manage the team

Like communication, management is not a strong point for many lawyers:

We did an internal survey where we asked, “How do you communicate caps and fixed fees to your team of associates?” Some said by email. I think only about 10% of them said that they actually talk to the group, get them together on a call, and explain the project. It doesn’t really happen. And when you don’t manage things well, it affects more than just the profitability. It affects the associate’s confidence in working with you in the future, because they get their time written off since they weren’t told the parameters.

Negotiate changes of scope 

In light of the problems with communication and management, it is not surprising that when the moment comes to negotiate a change of scope, many lawyers have problems:

We have people who recognize that the scope of a project has changed, but you would think they were 15 years old again and asking a girl to a dance. They never get around to making the phone call.

As far as negotiating changes of scope, there is enormous room for improvement. When something has gone bad, there is tremendous reluctance to have that discussion with the client.

When scope changes, the first thing you’ve got to think about is talking to the client and making sure that you’re on the same page as to what’s changed. That’s an area we still struggle with.

This widespread problem goes directly to the bottom line, as seen in these comments, the first from a managing partner, and the second from a CFO:

In the real world, almost no project is defined in advance so clearly that there is no need for changes. And it is in that need where the law firm’s expectations about profitability and return get thrown out the window. So if you’re not really careful on a management level about how the assignment changes, you very quickly go from, “Yup, we’re going to make money on this engagement” to “How much am I writing off again?” It is that time of year when I get the memos from people that say “Time for the write-offs.” And it’s astonishing to me, first of all, how many there are. And when you ask people why it happened, invariably, the answer is, “Well, we started out doing X, but really, it turned out the client wanted Y.” And unless you deal with the client up front about how those changes are going to be negotiated, you have that kind of mission creep all the time, and it’s costly.

We had a small criminal engagement on a fixed fee, and we went over it. I saw it and didn’t deal with it in a timely fashion, and we ended up with a lot of extra time. The original fixed fee was based on some local lawyer doing a lot of the leg work, which he didn’t do. We stepped in and did it instead. We won. But we never communicated that the other guy didn’t do his job and that we did the work, so we ate the money.

Identify and schedule activities

You can’t plan a project until you know exactly what needs to be done. One C-level executive highlighted the problem:

Identifying and scheduling activities: that’s where I feel like we immediately fall off a cliff. Even if we do the budget down to the level of timekeeper and task code, I know very few people who out of the gate start managing the case that way. Instead, people say, “I’ll monitor how we do against the overall budget, and if I start to see that we’re eating up too much of the budget too quickly, I’ll stop, and maybe I’ll go back and dig into this stuff.” A lot of it is backwards looking, where once they’re off track people ask what happened. And then we dig into the task codes and find a motion that they budgeted X hours for. We say, “Look at all the hours.” Then they realize the problem, but it’s too late because they’re not doing it in real time.

Assess risks to the budget and schedule

Lawyers specialize in assessing and managing legal risks, but when it comes to risks that affect time and money they are not nearly as effective. One senior partner used a football analogy to stress the importance of this type of planning:

Years ago, when Bill Walsh was still the coach of the San Francisco 49ers, he had his thing where he scripted out the first 25 plays of every game, which he stuck to no matter what. If they were down 21 to nothing, he still stuck with the script until he got through the first 25 plays, because he found that then people panicked less. Those were the Super Bowl years. I just think that in litigation sometimes we are much too reactive. A project manager would help us be much more proactive. They would allow us to resist the temptation to say, “Gee, we’re really busy on this case right now. Let’s just bring in another timekeeper to bill 40 hours,” and then that timekeeper falls off, all of which has inefficiencies.

Manage quality

If a client sees that the drive for efficiency leads to an unacceptable drop-off in quality, he will find a new firm. In the words of two managing partners:

Making sure we keep the client happy on quality is still, in the end, the highest requirement.

If you can’t manage quality, nothing else matters. But, it’s not sufficient. That’s the new paradigm that lawyers need to get through their heads. Quality is not enough, and it’s not a tool for getting better client value.

Meanwhile, many lawyers are still married to the perfectionism they learned in law school:

We’re focused on delivering the highest quality, and we are turning over every stone. I think it should be about delivering just enough quality. We’re not there at all, because we’re just trying to deliver the highest quality, at some level, without caring about the cost. We haven’t gotten to the part where we don’t turn over every stone.

It is going to take time for some lawyers to get the message:

I can’t believe I’m going to say this, but if anything we need to get better at focusing on what we need to do to meet the clients’ business objectives, not what we need to do to make ourselves feel good that we’ve just produced the greatest brief in the history of the law. And that is a monster hurdle to get over with successful lawyers at a top firm. Isn’t it amazing that you could produce a world class brief, and if it’s due at midnight tonight, you’ll work right up till 11:55, and you will be ready to file it and everybody will be high-fiving. But if at the last second, somehow there’s an extension for two days, you will work the next two days to try and make what was perfectly good, if not great, even better. That is what many lawyers do. It sometimes has absolutely no value to the client, but that’s what they’ll do.

May 07, 2014

Tip of the month: Commit to a definite number of marketing hours every week

The best business development plan in the world will lead to nothing unless you put in the time to follow up, week after week after week.  We recommend an absolute minimum of one hour per week to increase the satisfaction of current clients, plus another two to five hours if you are looking for new clients.

 

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