ALM Research recently released the 2008 Law Firm Business Development Practices Survey, which targets two "tiers" of law firms:  those listed in the AmLaw 200, The Global 100, and the NLJ 250 (Tier 1) and those not listed (Tier 2).   Though the survey is mostly focused on large firms, the average number of attorneys for Tier 2 firms was 85, within the higher range of the mid-market. 

Business development is difficult to assess in mid-size firms simply because many don't track it.  However, firms do see the importance.  In the 2007 Law Firm Economic Survey by LexisNexis, 25% of respondents claimed business development was the best strategy to improving profitability, second only to increasing rates.  Likewise business development is one of the 5 highest rated factors for financial growth in the ALM survey.  The extent to which these activities are tracked and measured will determine the extent to which firms can gauge the effectiveness of their methods.

Some other key findings:

• More firms are dedicating resources to business development that are separated from a marketing role;
• Budgets for business development have increased over the past year;
• Around 50% of respondents employ client interviews and surveys (the highest rated business development activity among respondents);
• Just under 50% employ "client service teams" focused on clients who generate the most revenue;
• Over 50% receive some sort of sales training;
• Nearly a third of Tier 2 firms reported that they were "not sure" if revenues increased, decreased or remained flat in the past year.

The last finding listed is surprising.  If your firm is not tracking revenues, there is no way of knowing whether your firm is in trouble financially or not.  Further, you can't accurately forecast if you don't benchmark.   The importance of measuring performance can't be emphasized enough. 

The above is just part of the findings of the survey.  To purchase the survey, visit the ALM Research site by clicking here.

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The Harvard Business Review is rapidly becoming my other magazine I read cover-to-cover (the other being The Economist).  In the March, 2008 issue there is a short article related to Web Retailing that I believe is a good example of why attorneys need to be spending more time blogging.  Andreas B. Eisingerich and Tobias Kretschmer surveyed online customers on what drives them to purchase from a retailer.  What they found is that online customers do more research and are more likely to purchase from a retailer that engages them than one who simply tries to sell product.  They found that "exploiting consumers' desire for engagement is the single dominant driver of superior shareholder value for e-commerce companies."

". . .[Providing informational content] helps customers search for solutions, invites them to think of all the ways the core products might add value to their lives, wins their loyalty, and entices them to buy."

How does this translate into an endorsement of blogging?  It is no different than creating a brochure or newsletter - it helps clients understand the law of their particular interest or need.  It drives them to seek you when they need someone to represent them regarding related subject matter.  Blogging is a continual dialogue, with very little in the way of up front cost (other than the pain involved in updating content regularly).  Not only does blogging display the expertise of your firms and lawyers, it is a mechanism to drive business development. 

To determine how blogging increases revenue (ie, to measure performance), you must track how clients come to you.  Make sure your business software can track source of business.  With a blog, you can provide downloadable content and require registration to download.  This also helps in determining source of business.  You can determine a lot from who visits your site as well.  You can capture location, frequency of visits, what pages they visit, what they download, etc.  All of this is valuable information for business development purposes.  For example, if your area of expertise is Estate Planning and you write a post related to a new law that fundamentally changes how investment vehicles are treated that increases hits in a specific geographic location by 30%, then you can surmise that the public in that location is interested in this topic; thus, you can focus advertising or public speaking opportunities to get your firm's name out as an expert in the area - not only for those reading the blog, but also those who aren't online. 

As clients become more web-savvy, it will be the law firms with a strong web presence that will dictate the standards by which other firms compare.  Providing information for your clients is good - providing updated analytical content written by attorneys in their specialty places your firm in a position to engage current and potential clients and drive superior shareholder value.

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Law is famously known to those who practice as the "jealous mistress" (I'm not sure how well this analogy works with the growing number of women attorneys).  The phrase adds a new dimension when used in association with virtual reality.   Davis, LLP, a Canadian firm made the focus of the cover story in the March 2008 Canadian Lawyer (New Frontiers), has set up real estate in a virtual world called Second Life.  Second Life, an online place where, according to the article, over nine million people live.  Second Life's own website claims the number is closer to thirteen million.  Thirteen million!  From there, two resident Davis, LLP attorneys can talk to prospective clients and recruit new lawyers. 

Says Pablo Guzman (PabloGuzman Little, for those reading this in a virtual coffee shop), an attorney with Davis:  "Lawyers go where their clients are or where they think they can get clients.  For us, Second Life is a great marketing tool and a recruitment tool." 

Thirteen million people.  I wonder if there are internet cafes in this place?  Would logging into the internet there peek back into reality, or look into infinity?

The world within the web doesn't end with Second Life.  Besides this blog, myriads of other lawyers are following Kevin O'Keefe's lead in starting blogs (www.lexblog.com). Vendors such as LexisNexis (Martindale Hubbell's blog) and Thomson West (westblog.net) have taken advantage of the running online dialogue.  And now a consortium of marketing consultants and lawyers have created the webspace known as JDSupra.com, where attorneys can share work product (documents) and market their services.  And, of course, there is Facebook.

But what is this "Web 2.0" anyway?  According to Tim O'Reilly, the term was coined at a conference brainstorming session after the dot.com crash.  Contemplating the future of the internet, the name was given as a way to mark the next generation of tools on the web.  For example, Web 1.0 used Brittanica Online for encyclopedic information; Web 2.0 uses Wikipedia.  Web 1.0 used personal websites for running online dialogue; Web 2.0 uses blogs.  Web 1.0 used creepy AOL Chatrooms; Web 2.0 uses creepy virtual worlds ("creepy" in a mystifying sense).

Thirteen million people.  In one large online world.  Can you afford to avoid real estate in this vast empty space?  I have not visited this world of Second Life, but I can only expect that there is no housing market crash or credit tightening going on - but then, I am probably wrong.  Surely virtual life imitates "real" life?

According to Mr. Guzman, Second Life "is not necessarily somewhere were we can practise law, because we do not practise law in cyberspace".   Perhaps not now.  But with thirteen million people walking like virtual zombies in a world conceived by code sentries, it surely is only a matter of time when independence is claimed, wars are fought, and lawyers are brought in to restore justice. 

The IRS isn't waiting for attorneys to set up shop.  Accoring to a May, 2007 CNN story, the IRS wants to tax profits made while inside Second Life.  The currency , the Linden, has an exchange rate and can be converted to US Dollars.  Where there is money, there is potential for disagreement.  And need for contracts.  And perhaps a lawsuit ensues.  

The pieces are there for the ability (dare I say need?) to practice law.  Maybe that comes with Web 3.0.

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You may have seen the commercial:  The banker bumps into his client who tells him that he is taking his business to LendingTree.com.  The banker, surprised, says, "But we've been your bank for 20 years."  To which the client replies, "Oh, since your bank is in the network, you get a chance to compete too.  And, so you know, I am pulling for you."  With a condescending slap on the arm, he finishes: "Good luck, buddy."

The idea, of course, is that the competing banks will give the client the lowest price and thus the best deal.  Relationship means nothing.  Is that truly representative of the way business works?

I don't think so.  Any marketing professional will tell you that client development is nurturing and maintaining relationships.  Without relationships, you can't hold on to business.  However, there is no denying the rise in competition in gaining legal services based on price.  The key, I believe, is to prove that the value of your firm is better than the value of another firm.  How you do that will prove to be the difference between increasing your client base and losing opportunities.

Here are some ways that your firm can show value:

• Showcase your talent.  You have superior talent - make sure others know.  Have attorneys write articles, speak at seminars, write blogs - market their talents to the widest audience.
• Never Eat Alone.  Attorneys should be entertaining clients and prospects whenever they are not doing billable work.  Industry conventions, meetings, etc, should always have representatives of your firm in attendance.
• Highlight your commitment to quality service.  Take a page from value-billing firms:  highlight in your bills the fact that calls were returned promptly, how much you saved the client, and how much you appreciate their business.  Don't take their faith in you for granted.
• Don't wait for your client to fire you.  You don't want to be that banker.  Don't wait for your client to tell you they are shopping.  Conduct surveys and follow up - if a client has an issue, correct it and make sure the client knows you corrected it.
• Justify your high fee.  Don't devalue your services:  JUSTIFY IT.  Case studies, testimonials, high value cases, have them all available for clients to read.  Don't be afraid to talk about your rates.  Explain what goes into them.  Many clients lament fees because they don't know what the dollar figure represents.  Explain, with confidence, the investment you have in technology that gives your firm a competitive advantage to better represent them and helps contain costs so that you can be more efficient.  Show how the investments you make have a direct effect on the quality of services you provide.  Make sure they know what the fees represent:  the culmination of dedication to the highest quality legal services by someone who cares about them personally and professionally.

What other ways can attorneys build and maintain relationships with clients so that they don't shop around for the lowest price?

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There has been some discussion in legal blogs regarding the use of social networking tools such as Facebook as a marketing tool.  Kevin O'Keefe notes the potential of Facebook as a growing force for lawyers and businesspeople.  Larry Bodine writes [w]hy lawyers can't ignore Facebook for networking.

 

The Birmingham Post (UK) writes of a reason why there should be caution in using Facebook.  In an article titled Facebook May Blow Up In Your Face, several potential "minefields" are noted:

• Facebook is for personal use only:  In its terms and conditions, it states in the first sentence under User Conduct:

"You understand that except for advertising programs offered by us on the Site (e.g., Facebook Flyers, Facebook Marketplace), the Service and the Site are available for your personal, non-commercial use only."

• In the terms and conditions, every user agrees not to register for more than one user account, not to register a user account on behalf of another, or register a user account on behalf of any group or entity.  
• You can be banned from Facebook for a violation of terms, subject to "final and binding arbitration" under Delaware law, likely in California.
• Facebook has a license to do whatever it wants with content you provide.  In theory, you could upload a photograph and Facebook could sell it without you receiving a penny. If you write lengthy notes about business related issues, these could be turned into a book by Facebook for its gain, not yours. Relevant wording from terms and conditions:

"By posting User Content to any part of the Site, you automatically grant, and you represent and warrant that you have the right to grant, to the Company an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to use, copy, publicly perform, publicly display, reformat, translate, excerpt (in whole or in part) and distribute such User Content for any purpose, commercial, advertising, or otherwise, on or in connection with the Site or the promotion thereof, to prepare derivative works of, or incorporate into other works, such User Content, and to grant and authorize sublicenses of the foregoing."

Bodine cites Joshua Fruchter, in a more recent post, citing methods of using Facebook as a marketing tool.   Particularly in regard to posting copyrighted content, this should be re-assessed.

Bodine and O'Keefe promote Facebook as a networking tool.  Facebook does have a section for businesses called Facebook Pages that serves this purpose.  However, there is no pre-screening process to ensure that the entity is in fact who it states it is (read:  Wikipedia-ish).  There is  an additional terms and conditions (which incorporates the original terms)  that doesn't negate any of the above concerns (apart from allowing commercial use).   If you plan to utilize this tool, make sure you follow the guidelines of Facebook's terms and conditions. [poll=7]

 

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I had a chance to catch up with John Remsen, Jr. last week and asked him about the economic outlook for law firms in 2008.  Like many, he believes we are in the midst of an economic down cycle that will affect how law firms perform in 2008.

•  Partners need to push work down to associates so they free up time for marketing and business development.  Most compensation systems tend to reward the opposite behavior.
• With this time, they should go visit top clients to thank them for their business, and learn about their issues and concerns.
• Invite clients into the firm to discuss industry trends and opportunities.
• Resist the temptation to cut marketing expenses.  Most of your competitors are cutting back so you have a chance to stand out and solidify your position as the economy improves.
• Make sure that marketing and business development activities sustain themselves consistently, in both good times and bad. 

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Paula Black knows graphic design. John Remsen, Jr. knows marketing. The author of The Little Black Book on Law Firm Branding and Positioning has teamed up with Remsen to create The Little Black Book on Law Firm Marketing and Business Development.

The layout of the book has the trademark of a graphic artist - plenty of variation of font, paper type and thickness. This is no dry business book!

The content is, of course, what matters. The book takes a mixture of survey findings, anecdotes from several managing partners representing mid-sized firms, and a simple formula for marketing success:

Build a plan;
invest in the plan;
implement the plan;
measure the results.

John Remsen founded The Remsen Group in 1997 to help bring effective and cost-efficient marketing and business development programs to commercial law firms of all types and sizes. The Remsen Group provides services ranging from developing firm-wide marketing plans to helping firms plan firm retreats. The Remsen Group also organizes and presents the managing partner forum.

For more information or to purchase the book, click here.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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According to the new Managing Outside Counsel Survey by ACC/Serengeti, inhouse corporate counsel are projecting a rate increase of 5.3% in 2008. That's the good news. The better news is that last year, they projected an increase of 4.8% but rates were actually increased 6.0%! This is in line with most firms who plan to increase rates (between 5 and 7%).

The reports were posted in a recent article in The Law Marketing Portal.

Other findings:

• Predominance of hourly rates – alternative billing fee arrangements (surprise!) aren’t taking hold with in-house counsel.
• Little client oversight – 75% of in-house counsel aren’t managing outside counsel.
• “Convergence” is going away – 75% of in house counsel aren’t consolidating the work to a few firms.
• Cutting fees is not the top client priority – No need to devalue work performed with mark-downs; Corporate clients are more concerned with Sarbanes/Oxley and high profile trials of corporate executives.
• Few corporate RFPs – 76% of in house counsel didn’t issue a Request for Proposal last year. A reason given was the poor rate of firms responding – there’s a lesson to be learned here . . .
• Spending on firms is up – this year on average, companies devoted 38% of their revenues on outside legal spending. Can we thank Sarbanes/ Oxley for that too??

The news isn't all good. Nearly half of in house counsel reported that they terminated relationships with outside counsel last year. Why?

• Failing to perform to client expectations.
• High costs (likely related to perceived value rather than rates considering what in house counsel expect).
• Poor work product or results.
• Poor Communication and personality issues.

What can you gain from this survey? There is nothing here you shouldn't already know and the complaints can apply equally with any client, not just inhouse counsel. There is likely a correlation with poor communications to the other complaints from a client. A client is more likely to complain about expectations, results, and costs if they aren't receiving adequate communications. To the extent you don't regularly update your clients, this survey is a reminder that clients place a premium (literally and figuratively) on communications. Make sure all the attorneys at your firm regularly update their clients on the status of their matters.

For more information on this survey, visit the Serengeti web site here.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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Ross Fishman is a smart marketing guy. I have mentioned him in several prior posts (for example, the posts Marketing 101 and Getting Agreement to Change).

Writing for the FrontLines section of the December issue of the Law Practice, Ross again demonstrates that there is magic in applied Marketing 101. Working with a 20-lawyer law firm in Salinas, California, Fishman turned a marketing problem into a winning business strategy. The problem was a limited marketing budget. Ross’ solution was to narrow the firm's marketing efforts to a single industry. In this case, the farming industry, which just happened to be the dominate industry for the area. All of the local law firms handled some agricultural clients, but no one had ever targeted the industry. With Fishman’s guidance, the Salina law firm did. Fishman turned a limited marketing budget into a winning business strategy—targeting a narrowly defined delimited market with a strategy to dominate it. For more on the benefits of such a strategy, see the prior post Importance of Market Position for Law Firms.

I don’t want to steal all of Fishman’s thunder. You can read the case study starting on page 8 of the December issue of Law Practice.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

 

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Last week I wrote about some responses to the 2007 Remsen Group Managing Partner Survey (part of the Juris 2007 Law Firm Economic Survey by LexisNexis (the Survey)) related to managing partners' strategic perceptions of profitability. I wrote about two of the strategies: increasing fees and cutting costs. However, 25% of managing partners felt marketing and business development was their firm's best way to achieve higher profitability, second only to increasing fees. That is a substantial number, especially since those same respondents reported that only 3% considered marketing and business development when determining partner compensation. It appears there is a disconnect here.

If you believe that marketing and business development is an effective strategy to achieve higher profitability, it is in your firm's best interest to provide a financial incentive to increase marketing and business development activities.

So, how would you compensate for marketing activities? Utilize your accounting system to record non-billable work that is targeted to specific marketing activities. Some Juris clients create specific codes representing marketing activities and require a certain amount of time be allocated to these activities each month. Just as the firm budgets for billable hours, they budget for marketing hours. And your compensation formula, to the extent you use them (63% of those surveyed were using either a strict or mostly formula-driven compensation system), should include non-billable business development and marketing hours. Only 4% of those surveyed placed considerable weight to non-billable hours in their compensation formula.

Requiring non-billable time as part of your compensation formula is an incentive to focus on marketing activities. It doesn't, per se, achieve higher profitability. Marketing efforts must also be targeted and measured, just like any other performance metric. However, it is a lot easier to determine whether your business is being generated by word-of-mouth or by marketing efforts if you are tracking the hours you spend marketing and have a paper trail of activity that leads to new business.

Michelle Golden has a great post on developing a marketing plan here - she even includes a downloadable sample marketing plan spreadsheet. John Remsen also has a good article on marketing plans here. Look here, here, and of course here for other ideas on how to integrate marketing into your practice.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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