Legal Business Development

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.   

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.

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.

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.

Announcing Train the Trainer workshops in December, February, and April

Do you help lawyers develop new business?  To increase your impact in these challenging economic times, sign up for our Train the Trainer workshop and learn how to adapt proven tools and techniques to your firm’s culture and needs.

Last June, we offered the first public Train the Trainer workshop in the legal marketing profession.  It sold out.  In September, we offered the second.  It sold out too.  So now we have scheduled the third, fourth and fifth sessions: by webinar December 10-11, by webinar February 3-4, and in Washington DC April 5. 

For details, download this file: Download TrainTrainerWorkshopAnnounce2008MX.pdf .  It explains why past sessions have been attended by senior business development professionals from firms with a total of over 8,000 lawyers.

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.

What clients want, according to Ram Charan

In the new book, What the Customer Wants You to Know, Ram Charan describes how the internet and the global economy are changing the way customers think, and what it means to people who sell. 

The basic issue is that clients “are under enormous pressure to deliver value to their clients and their shareholders.  They are compelled to use the newfound power of transparency and overcapacity to drive down prices...”  The result is that the traditional tools of business development – “long-term relationships... golf games, skybox seats, and theater outings...” – are losing their power (p. 4).

While Charan does not talk directly about the legal profession, lawyers have certainly seen these forces at work in many ways, including price pressure from procurement departments, the increasing importance of RFPs, and the unrelenting demand for increased value. 

To succeed in this changing game, Charan says that sellers must find better ways to help their clients.  “No longer do you measure your own success first.  Instead you measure how well customers are doing with your help.” (p. 6)  This will require a solid understanding of how your clients make money now and how they will make more money in the future. 

As Lou Eccleston, the former president of Thomson Financial, put it: “If you can’t impact the customer’s performance in a positive way, then you’re going to be a commodity product and you’re going to get commodity prices.” (p. 22)

To accomplish this, Charan says, you need to understand key clients in depth, including their opportunities, customers, competitors, and how they make decisions.  Not to mention their culture, values, goals, and priorities.

That sounds like an enormous investment of time and energy, and it is.  But in the current economy Charan argues that the only alternative is to lower your rates.  And then lower them some more, when your competitors cut theirs.

For professional sales teams, Charan recommends creating a Value Account Plan for each client that defines business benefits “in quantitative measures such as cost reduction, revenue growth and cash flow improvement, and qualitative measures such as sustainable market share and brand image.” (p. 51)

I don’t expect law firms will go that far any time soon, but the good news is they don’t have to.  In selling, you just need to be a little better than your competitors. As long as your competitors focus on maximizing the number of hours they bill associates at the highest possible rate, it should be easy to provide more value than they do.

  A digression about Ram Charan:  If you are curious about the lifestyle of super-consultants, don’t miss the Fortune magazine article “The strange existence of Ram Charan.” It calls him “the most influential consultant alive,” but you could say Charan is homeless.  If that term applies to someone who earns up to $20,000 per day for his services and spends most nights at five star hotels.  Charan does not have a wife or children.  But he does have an assistant who FedExes him a box of clean clothes every Monday, Wednesday and Friday.  “They toss in toothpaste, razors, shampoo, a shined pair of 9½ EEEE shoes, whatever he needs (‘He doesn't buy anything himself,’)... the box comes back two days later filled with dirty laundry.”  Near the end of the article, Charan told the Fortune writer that he is so tired of people asking about his home that he finally got an apartment in Dallas.  But when the writer asks when Charan will move in, he replies “Maybe never."

The down economy, Part 7: A tip for legal marketers

I was saving the post below for November’s “tip of the month.”  But when I read The Boston Globe yesterday morning, I decided that it couldn’t wait. 

Maybe it was the page one headline “Worldwide Worry.”  Or maybe it was the article that said, “All around the world, you can hear the squeal of businesses putting the brakes on expenses.”  Or maybe it wasn’t The Globe at all, just the cumulative effect of the law firm layoffs and other bad news I quoted in Part 6 of this series. 

Most readers of this blog probably agree with me that when billable hours go down, law firms should increase their business development spending to maximize the results lawyers will get from their new found marketing time.   But not everyone sees it that way.  Some partners will want to cut the marketing budget, and you will need evidence to make your case.

So the tip is simple:  Collect evidence that YOUR marketing is related to new business, and make sure everyone in the firm knows about it.

If you don’t have evidence yet, start looking today.  Do what we do in our coaching.  Whenever you hear about a new engagement, say something like this:   “Business is not a science experiment so it’s impossible to prove what caused a particular piece of new business.  But what do you think?  Did our marketing have anything to do with it?” 

If they say no, move on to the next lawyer.  But when someone says yes, verify the details, then spread the word.  Write memos.  Tell people in the halls.  Whisper in the managing partner’s ear.  Use all your professional skills to market your marketing.

Now here’s a prediction to go with the tip:  The more sales training and coaching your department does, the easier it will be to find evidence that it is working.  It’s easy for lawyers to see the link between a piece of advice and new business that comes in the next week.  It’s much harder to see the link to an ad, a press release, or a web page upgrade that happened weeks or months ago.

That’s one of the reasons Mark Greene, the chief marketing officer at Nixon Peabody gave this advice when we spoke together on a panel at LMA New England a few months ago:   “I recommend that in a down economy firms put at least as much stress on sales and sales coaching as they ever have.”  (For more, see Part 2.) 

And if you want to increase the proportion of time you spend coaching, or get more results from the coaching you already do, here’s another tip:  consider LegalBizDev’s internal certification program, our external coaching programs and our other products and services.  If you’d like to know more, email us or give me a call at 800-498-7246.  

Marketing tip of the month: Meet with a top client to discuss the economy

What are you going to do this month to increase new business?

How about meeting with a top client to ask how the economy is affecting their business?

Explain that there will be no charge for your time, and make sure they understand you are giving them something for free.  Why free?  Because they are such an important client, and because you want to provide more value.

Ideally, meet face to face in the client’s office (not yours) or meet for lunch.  If that’s not practical, schedule a telecon “off the clock.” 

Go in to the meeting with a two or three central questions, and a few extras.  (For sample questions, see previous posts in this blog, my book, or The LegalBizDev Success Kit.)

Then listen and learn.

Do not try to direct the conversation to legal needs.  Your client will take care of that, if she wants to go in that direction.

At an absolute minimum, you will increase client satisfaction and accomplish some defensive marketing.  And you might even walk away with some new business. 

How to beat your competitors: The incremental advantage

To succeed at selling in any field, you need to be just a little bit better than your competition. The bad news is that other law firms are getting better at marketing, and hungrier.  The good news is you don’t have to beat competitors by much.  An inch is as good as a mile.

In the book The Power of Incremental Advantage, David Wanetik argues that in business, “seemingly minute advantages [often] spell the difference between success and failure.” 

If you like historical trivia, you will love Wanetik’s examples of “incremental advantages” that have shaped history, including:

• If the Titanic’s crew had seen that iceberg 10 seconds earlier, the ship would not have sunk.
• When publicly-traded companies miss their earnings estimates by one or two cents, they can lose hundreds of millions of dollars in shareholder value.
• When people search in Google, there’s a 42% chance they will click on the first term in the list, an 8% chance they will click on the second, and an even lower chance they will click on the third item.
• On July 20, 1944 Hitler was almost assassinated by Colonel Claus Schenk Graf von Stauffenberg.  In a meeting with Hitler and others, Von Stauffenberg placed a bomb on the outer side of the leg of a heavy oak conference table.  When the bomb exploded, several people were killed, but not Hitler.  If Von Stauffenberg had placed the bomb on the other side of the same table leg, Hitler would have died in 1944, and millions of other lives might have been saved. 
• At the 2006 winter Olympics, in the majority of events the difference between a gold and silver medal was one half of one percent.

When Wanetik writes the next edition of this book, he will probably discuss last month’s Beijing Olympics.  Experts have offered several different explanations for all the swimming records that were set, including the depth of the pool and the Speedo LZR racer swimsuit designed at NASA and worn by Michael Phelps, winner of 8 gold medals.  But all agree that swimming records have been smashed worldwide this year because of incremental changes in the world of professional swimming.

What should lawyers do to gain an incremental advantage in developing new business?  Last year, I published an article in the Legal Marketing Association’s journal entitled “The most important difference in legal selling: Time.” So one way to start looking for that “incremental advantage” is very simple:  put an extra hour or two into marketing, every week. 

Now I know you that you are already hopelessly overbooked.  So the only way to find an hour is to “Manage your time ruthlessly” as Wanetik puts it in his book.  For example:  

• do not pick up the phone without an agenda
• do not be overly accessible
• operate on your biological clock 
• minimize email interruptions

For more tips, see Amazon for dozens of books on time management.  (My current favorite is “The 25 best time management tools and techniques”, which I have purchased for several lawyers I’ve coached.)

I especially liked Wanatik's sub-section “Don’t fall into the networking quagmire” (p. 143) which argues “networking is overrated and is most often not a good use of time” because you are likely to spend too much time talking to people who will never need the kind of specialized services you provide.

If that’s true, why are there so many seminars to teach people how to network?  Wanetik offers several explanations, including “it is easier than doing the hard work of growing your business.”  But he also notes that “for some very outgoing and charismatic people, networking works.”  In other words, sometimes networking is the best answer, and sometimes it isn’t.

When the Gallup organization studied 250,000 sales representatives over 40 years to determine what makes a great sales person, they found that different sales people succeed in different ways, depending on their personal strengths.  You need to find the very best ideas for your practice, your personality, and your schedule.

That’s easy to say, and hard to do.  You’ll just have to figure out what is most likely to work for you, try it, and track the results.  You can start by reviewing what’s worked for other lawyers, in the lists of best practices in my book and in The LegalBizDev Success Kit.