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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From experience, I can tell you that anyone who has gone through media-style training with its emphasis on staying on message is likely to tell you that it changed their life.  The skill makes you more effective as a presenter when performing before any size audience and when dealing one-on-one. Professional training will increase a firm’s success at business development. Law firm partners and associations will be more effective lawyers and businesspeople.  And without professional training, you are at the mercy of the media and at risk of bundling a crisis situation.

 

Two weeks ago I had the opportunity to be involved in a project to coach a group on effective communication and presentation skills.  This was aimed at improving sales, rainmaking, and results, but professional training makes all the difference in the world when it comes to dealing with the media or when engaged in crisis communication. Of course, world-class litigators would not be world-class litigators without these same skills.

 

The project gave me the opportunity to work with Aileen Pincus, President of The Pincus Group, Inc.. The Pincus team members are specialists in media training, crisis communications, and presentation skills.  The coaching project covered two days.  The first was devoted to developing your winning message and honing it down to the core value propositions that would win the day with your particular audience. The second day belonged entirely to The Pincus Group and was focused on developing one’s skill to stay on message but included an ample dose of presentation skills. 

 

Throughout the day, participants were videoed, coached, and re-videoed by Pincus. As the day progressed, the efforts of the coach to get the participants off message increased.   The improvement in the participants’ skills for remaining on message and for communicating in a powerful and effective way progressed remarkably throughout the day.

 

While it is the combination of the coaching and the video process that makes for an effective skill development environment, Aileen Pincus also drilled participants in basic presentation skills. For example:

 

• Use power words.  Don’t equivocate, soften, or waiver.  

• Offer opinions, clearly and interestingly stated. No fence sitting.

• Winning speech is positive and empowering

• Engage listeners with examples and explanations.

• Reward audiences with what’s in it for them.

 

Accomplishing your purpose through effective communication requires preparation, practiced presentation skills, and staying on message.   You must start by knowing your audience, knowing your purpose, and knowing the message that will accomplish your purpose. Then you must stay on message. 

 

If you are looking for ways to increase the effectiveness of your firm’s professional team, take a look at The Pincus Group. Dollar for dollar, it is one of the best investments you can make and it will generate more partner income.  For more information, visit the Pincus Web site or call Aileen Pincus at 301/938-690 or reach her by e-mail to apincus@thepincusgroup.com. 

 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Did you know that there is an organization devoted to selling law firm services?  Not marketing, mind you, but sales—one-on-one business development…rainmaking!

 

LSSO, Legal Sales and Service Organization, was formed in 2003.  You can become a member for $595 with annual dues thereafter of $495. Members gain access to LSSO resources for legal professionals who recognize that business and client development skills must be cultivated to successfully sell legal services and retain clients.  Its RainDance Conferences boast a stellar faculty of sales and services experts with the experience and insight to help attendees develop competitive, effective sales and service strategies and tactics.  You can register for the June 12-14 conference being held at the Four Seasons Resort and Club in Dallas, Texas by going to the organization’s web site.

 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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While mega firms have sufficient access to the talent pool to pursue their “move up or out” model for associates, midsized firms have a greater need to retain and develop their younger attorneys.   This means there is need for constructive rather than destructive performance evaluations to guide the associate’s development as a well-rounded attorney.

 

Unfortunately, doing performance evaluations doesn’t come easy for most midsized law firm partners.   It is one thing to express your opinion to other partners about a given associate’s performance.  It is another thing to give helpful counseling to the individual with an objective of enhancing their career prospects.

 

One helpful tool is the man/woman job overlay.  Take a standard letter-size sheet of paper to represent the job—the traits and skills required for a fully competent incumbent individual such as:   

Professional Competencies

Writing skills

Work Ethic

Interpersonal Skills

Client Relations

Client Management

Business Development

Compliance with firm policies and procedures

Overlay a second sheet of paper representing the associate’s performance. Explain that the associate‘s current performance fulfills that portion of the job obligations covered by the second sheet of paper.  It is only the uncovered portion that represents the improvement needed to completely fulfill the expectations of their current position, or the position to which they hope to move.

 

 

The overlay will cover most of the original sheet of paper, emphasizing that only small changes are needed to round out performance.  The discussion can focus on the positive steps that need to be taken by the individual being evaluated.

 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com

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Before you jump, give a lot of thought to why you want to start your own firm. As one speaker asked, “Do you really just want to get away from where you are?” If that is the case, find another law firm to join. Because once you embark on your own, what you do and how you spend your time will change drastically, and your work hours are more likely to increase than decrease.

The biggest challenge has to do with business development. It is in the business development area that success stories are separated from the “also ran” and failures. David Maister wrote: “What you do with your billable time determines your current income, but what you do with your nonbillale (investment) time determines your future.”

Vision is important to success, but what is the focus of your vision? It can’t just be about money. It has been said that the only business with a mission to make money is the Mint. The rest of us have to deliver a product or service. Vision is about having a unique value proposition—something that sets you apart from the pack. It is something that gives you a competitive advantage. Even then, you need a shtick and a niche—a tactic for achieving your vision or objective and a narrowly defined market where you can secure a dominant position.

Here are examples of a shtick:

• A language other than English
• Knowledge about a particular region, country, or industry
• A unique office space, address, or proximity
• Credibility as an expert, author, or lecturer
• Business, professional, political, civic, religious, social, or cause group contacts
• Internet visibility—blogs and virtual law practice strategy

Why do you need a niche–a tightly drawn market–to achieve and maintain market leadership or dominance? A firm that establishes a level of dominance in even a small niche marketplace has an incredible advantage. What makes this exciting and opportunistic is that you get to define the market and then go after it. Defining your niche means applying multiple criteria like that listed below to carve away those clients and prospects you will not pursue in order to concentrate on those remaining.

• Geographic
• Industry or Consumer type
• Problem or Need
• Specialty

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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The most profitable firms don’t have the lowest cost structure. That was one of the findings from a recent Juris, Inc. survey. Top performing firms had higher per-head operating expenses and a higher ratio of non-fee earners to fee earners. Full survey details will become available later this month.

The findings provide more evidence that it pays to focus on revenue rather than cost reduction. That is not to say that profitable firms spend recklessly. While costs per head are higher, the firm’s total cost as a percentage of revenue was lower due to higher revenue per partner and per head.

Cost cutting campaigns will not move a law firm into the category of a top performer. If you want to increase profitability, you need to concentrate on increasing revenue rather than focusing attention on reducing expenses. You should pursue business development as well as opportunities to increase productivity, effective rate, and realization. Eliminating amenities, downgrading facilities, reducing personnel, holding back on salary increases, and reducing administrative staff is likely to cause more harm than gain.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Hard work and long hours limit the income of law firm partners. How can that be? While it may appear counterintuitive, it is really simple. The owners of a service business make more money when they can leverage off of the work of others. In order to do that, you have to have the work for them to do. You have to give them the work to do. And, you have to find, hire, and train them.

A new survey of mid-sized law firms is confirming what we frequently found when working with individual midsized law firms. Partners are logging more billable hours than their associates. Law firm partners are hoarding work rather than handing it off to others. Rather than bringing in new business or training others, they are piling up their own billable hours.

It gets worse. Not only are many mid-sized firms not fully utilizing their existing associates, but partners are not investing enough time in business development or recruiting and mentoring talent. Where AmLaw 200 firms have about three associates for every partner, midsized firms average only a 1 -1 ratio.

The result is what you would expect. Midsized firm partners make less income than their counterparts in larger law firms.

If working long and hard hours actually reduces income, why do partners do it? Why do they hoard the work?

Why shouldn’t they? If a partner’s distribution is based largely on their individual production, what else would one expect?

It is time to rethink partner compensation in the midsized firm. Consider rewarding partners for nothing more than a hygienic level of production. Additional rewards would then come from bringing in new business and handing off work to others. Consider the merits of a compensation system that includes the following four elements:

1. Personal production up to a maximum hygienic level

2. Bringing in new business (based on fee revenue for the initial eighteen-month period)

3. Associate billings on clients’ work under the partner’s control

4. A subjective element based on relative performance in such categories as:

• Recruiting
• Mentoring
• Associate survey
• Administrative staff survey
• Public relations
• Playing by the rules
• Client satisfaction surveys
• Etc.

Why limit the new business reward to eighteen months? The objective is to keep generating new business, not to compensate for revenue the firm already has. Compensation for retaining existing business is earned by performing as the control partner responsible for work supervision and the client relationship. A fifth element can be added, if needed, to encourage a partner to hand off control to a new or different partner. Similar to origination, the partner handing off work could get origination equivalent credit for the first 12 to 18 months following hand off.

By limiting earnings for personal production to a “hygienic” level, partners will no longer be incensed to pile up billable hours at the expense of making rain and devloping the skills of their associates. The short eighteen-month origination credit period keeps the pressure on “new” business development rather than continuing compensation for prior successes. Origination credit under the above approach is never handed off. Once someone has been paid for new business, it becomes property of the house. By basing compensation on associates' fees, the emphasis is shifted from personal production to developing and using the professional skills of associates.

The firm gets a bonus out of the new approach. The firm gains a farm team out of which the future partners and leaders of the firm will come.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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Joey Asher, the author of Selling & Communication Skills for Lawyers, writes about the effectiveness of a telephone call to generate business in the March issue of The American Lawyer. In “Cold Calling for Lawyers” Asher notes, “Businesspeople have long known the telephone is the most powerful business development tool ever invented. Nothing more effectively puts you in contact with people who can hire you.”

Asher isn’t suggesting that lawyers become telephone direct marketers. In fact, he doesn’t want you to ask for the prospect’s business. The key is to use the phone to begin a relationship. Asher recommends that you devote two hours each week to prospecting by phone. What are some of the reasons to call?

• Extend an invitation to lunch
• Invite to serve on a panel
• Interview for an article you’re writing
• Ask if they would like to receive the firm’s newsletter
• Invite to a presentation
• Invitation to a social event
• Invitation to join an association
• Offer to send a memo on an issue that should be of interest

Use your imagination. And use the phone to begin relationships that may untimately lead to new business for the law firm. Asher concludes“Cold-Calling For Lawyers” by saying, “These calls start professional relationships……stay in touch with your prospects, and you’ll get plenty of business.”

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Recently we were asked to provide advice to a young firm that was the product of a break off. The group had been a part of a law firm acquired by one of the mega firms. After a short time the group decided to separate and form their own partnership.

After a couple of years, per partner income was still well below the earnings level the partners had been used to prior to break off. Some of the partners felt that the solution was for the firm to add one or two laterals for a quick fix.

A review of the numbers quickly disclosed that the firm’s production or utilization was well below norms. The firm just didn’t have enough business for the resources on board including partners, associates and paralegals. Our advice to this particular firm was to stick it out a little longer without adding laterals.

The partners are engaged in the great American dream. They are investing “sweat equity”—sacrificing current income to build something of value. They are almost there. Given their capacity each new source of revenue drops to the per partner income line. The best solution is to continue to concentrate on building their book of business one client at a time. Yes, they need to kick business development up another notch but what they need most at this time in the life of the firm is a little more patience. They should forego “quick and easy fix” solutions, which are never that “easy” and seldom “fix” anything.

Based on the experience of others, it is unlikely that the lateral’s book of business will move in mass to the lateral’s new professional home. Overestimating client portability appears to be the standard rather than the exception. The very fact that this previously highly compensated group of partners now finds itself with inadequate income is one more confirmation of the tendency is to overestimate the amount of business that will follow an attorney. Second, lateral additions are small acquisitions. The addition of new personalities and the stresses of assimilation and integration are distracting to day to day business operations and can render a fatal blow to the firm especially one in the early fragile phases of its life.

Another “quick fix” alternative proposed by one of the existing partners is to reduce the firm’s professional staff including the number of partners. Doing so is a law firm’s equivalent of factory closings. It is a bad choice unless it becomes essential as a survival move.

Most of the time there is no such thing as an easy or quick fix. Success takes time and investment. In the case of a professional service business that investment often involves sacrificing immediate personal income for future benefit.

When are laterals the right thing to do? How do you find them? What are the risks involved? How do you make them a success? We will explore those questions and report on related best practices in some of my post over the next two weeks.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

 

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