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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 While sitting on a plane on the way to the ABA Techshow, I was reading the February 2008 issue of the Harvard Business Review.  An article titled, Task, Not Time:  Profile of a Gen Y Job, caught my eye.  I often hear managing attorneys lament the lack of motivation of associates.  The article in the HBR may provide a reason for the disconnect - it isn't that young associates are not motivated, but that they may respond differently than their elders to the conventions of work.  Where many look to the hours you spend at the office as a measure of productivity, the HBR article suggests that the younger generation looks more to results, or task-based productivity.

 

Many younger employees find they can complete tasks faster than older workers,perhaps partly because of technological proficiency but even more . . . because they work differently.  They spend less time scheduling and are comfortable coordinating electronically.  They resent being asked to log hours and stay in the office after their tasks are done, and the idea of face time really annoys them.  [Generation] Ys love to work asynchronously - anytime, anywhere.  One said during out research, "What is it with you people and 8:30am?"

 

Does this explanation fit with your experience? 

 

The article suggests ways to devise a better model of how to define work:

• Articulate the results you expect - and tie accountability to getting the job done;
• Make physical attendance in the office, including at meetings, optional;
• Gauge performance on the quality of work performed;
• Help managers and employees learn to measure dedication in ways other than face time;
• Use today's networking capabilities to allow employees to work from anywhere;
• Support the changes by creating drop-in centers

The above also appears to support what Chuck Newton has termed the 3rd wave law firm. 

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Paul Calthrop, writing in the May issue of the Harvard Business Review, gives all of us something new to think about regarding pricing. Calthrop is a partner in Bain & Company. His article is titled “Higher Net Price—Or Bust.”

He makes the point that lower pricing may be a viable strategy for entering a new market or launching something new, but otherwise it signals a path toward commoditization, which he says “…inevitably undermines the firm’s prospects of achieving sustainable revenue and profit growth."

For a law firm, Calthrop’s warning reinforces the importance of tracking the firm’s effective blended rate metrics. It also explains why it is so important for the firm to have strategies and tactics in place to increase its blended rate. You don’t achieve a continuing increase in the firm’s effective blended rate through price increases. It comes from increased value:

• Increasing efficiency coupled with pricing alternatives
• Moving into more valuable practice areas
• Increased specialization
• Adding new value to established services—convenience, response times, certainty, etc.
• Moving to new clients for whom your services have higher value
• Etc. Etc. Etc.

Price increases are still important, but the typical pricing increase strategy for a law firm is the annual increase to cover increased operating cost. Adjusted for inflation, it has a zero impact on the firm’s effective blended rate. Moving the blended rate can, however, be achieved through better pricing strategies:

• Multiple standard price sheets pricing higher value services at appropriately higher prices
• Targeted price increases to move underpriced services, clients and matters to higher competitive price
• Having more prices based on the deliverable versus the hours worked, i.e., Alternative Pricing

And the effective rate can be increased through improved collection and faster billing of services. Both improve realization and decrease lost revenue arising from adjustments and uncollectibles.

Managing partners need to take Calthrop’s warning to heart. If your effective blended rate is not moving up, then the firm is increasingly engaging in areas undergoing communization. Short of reinventing how legal services are provided, that will lead to an unsustainable trend of declining partner income.

For more on measuring and tracking blended rate, go to the prior post Blended Rate and Utilization Model for Law Firms.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income contact Juris National Sales Center at 877/377-3740, e-mail info@juris.com ,or go to www.Juris.com.
 

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The Harvard Business Review’s February 2007 issue included a scholarly article dealing with protecting a business’ reputation. The authors noted that firms with a strong positive reputation attract better people, can charge a premium for their services and products, and enjoy greater client loyalty. 

 

The Catch 22 is that the more important your reputation is, the more vulnerable it is to anything that damages that reputation.  So what proactive measures can you take to protect this extraordinarily valuable firm asset?  After-the-fact crisis management is not the answer.  Actions taken at that point are attempts to minimize the damage already underway. 

 

Start by assigning someone the responsibility for managing the risk. It starts by monitoring and intellectually questioning three important aspects of the risk and then mobilizing coordinated efforts through the firm leadership to head off threats that appear on the horizon.

 

We are always judged by others—clients, vendors, employees, peers, competitors, etc.  What we are is determined through their eyes and not our own. The responsible individual should take steps to track through various means the three aspects of reputation risk listed below.  Report to the leadership and recommend prophylactic measures where appropriate.  The three areas are:

 

Reputation Gap: How are we perceived by those who judge us versus our reality?  The greater this gap, the greater the risk.  Action is needed to change the perception or the reality to close the gap. A failure to live up to inappropriate reputation can be as costly to the firm as a failure to live up to the reputation you previously earned. Likewise, the failure of the public to give the firm due credit and market position means it will not get the business it should have and is likely to attract the wrong prospective clients.

 

Changing Expectations: How are the standards of those who judge you (and enterprises like you) changing?  Are tastes, ethics or values changing?  Are clients changing what they look for in terms of how they relate to their providers?  What about the things they value most? Is it loyalty, responsiveness, friendliness, or other things?  Do they want to socialize or get right to business? Do they value gray hair or youth?  Do they want to do business by phone, email, or in person?  Do they expect a center city premium location?  Is convenience or prestige more important? Failure to see changing preferences in our fast-paced times can erode your reputation in a few short years.  How quickly did your law firm embrace e-mail or the growing expectations for law firm web sites?  Do your attorneys understand the expectations of the Generation X and Generation Y clients that will replace your baby boomer clients as they leave the scene?

 

Organization-Wide Coordination: Once we understand the reputation we have and want, the next question has to be, are we acting in accord with that reputation? Is every department and every individual aware of our reputation goal and performing accordingly?   Do our phone handling practices reinforce our image or bring it into question?  How about how we receive visitors to the office?  Are our communications with clients consistent with our image? Do our couriers represent us consistent with our reputation?  Do we have partners, associates, or others who aren’t on board?

 

In most firms, risk to reputation is not currently managed.  Responsibly has not been assigned.  Those who enjoy a stellar reputation should take note: their most valuable asset will always be a risk.  The first step in managing that risk is to put someone in charge.

 

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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Over the course of my career, I have been involved in 40 or so acquisitions-situations where, unknown to those affected, I suddenly had to step into the position of being their leader.  What you do in the first hours and in the following early days will determine the success or failure of the organization during your tenure.  Assuming a new leadership role with the mission of transforming the organization isn’t limited to acquisition situations. It applies equally to situations where you are moving into a new position of authority such as assuming the role of managing partner.

 

I referred to “transformation” for a reason.  No one assumes a leadership position with the mandate of preserving the status quote. No one can be a leader without leading the troops through a transformation to a new vision.

 

I was struck by John P. Kotter's view of the eight critical success factors originally published in 1995 and later embodied in his 1996 book, Leading Change.  The 1995 article was recently reprinted in the Harvard Business Review’s Best of HBR series.

 

Kotter pointed out that leaders who successfully transformed their organization did eight things right and, more importantly, they did them in the right order.  What are those eight things in order?

1. Successful leaders established a sense of urgency—a sense of crises or fleeing opportunities involving market or competitive conditions

2. They formed and encouraged a powerful guiding coalition among those in the organization with the power to lead the change

3. They created a vision to direct the change and strategies of achieving it

4. They communicated the vision continuously (frequently), teaching new behaviors by the example of the guiding coalition

5. They empowered others to act on the vision, eliminating obstacles to change and encouraging risk taking and nontraditional tactics to achieve the vision

6. They planned for and created short-term wins, reinforcing the vision through ceremony—recognition and rewards

7. They consolidated their gains and produced more change—hiring, promoting, and developing employees who can implement the vision by reinvigorating the process with new project and themes

8. They institutionalized the new approaches—articulating the connections between the new behaviors and resulting successes, and they developed the means to ensure leadership development and succession

Transformation, putting one's stamp on an organization, is a process requiring that the right things be done and done in the right order.

 

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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Somewhere along the way I’m sure someone has said to you, “Law firms all look alike.” Their promotional materials look alike and read alike. Law firm web sites not only look alike, they are organized exactly alike.

The standard image is a perfect one: attractive furnishings in attractive buildings populated by attractive people attractively dressed with attractive smiles. It is all a little too perfect—all sweetness and light. It is boring and your prospects have become too sophisticated to believe it.

It is time to show a little sweat and dirt. Law firms work hard for clients, and that doesn’t always mean you have time for a shower.

Michael Fanuele, a marketing consultant based in New York working with global brands, says businesses need to embrace the dark side of their business. In a short article in the October 2006 Harvard Business Review, he pointed out that people no longer trust two-dimensional images that used to work. You can’t sell fairy tales in a reality world.

I think he is on to something. Set your firm apart from the pack by showing people at work on behalf of the firm’s clients:

• In the field working up a sweat
• Working late, dim light, uneaten sandwich
• Real vs. perfect people
• Bad hair day
• Waiting for the outcome with client
• On the go with BlackBerry® and reading materials
• Etc.

Being in the legal services business is about working hard on behalf of your clients. It isn’t all sunny and nice—often, it isn’t even neat.

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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For a blog site dedicated to ideas and techniques for the financial management of the law firm, a surprising number of my posts talk about marketing and sales (rainmaking, if you prefer). I do so for good reason. The surest way to increase partner income is by adding new profitable clients and matters.

There is always a lot of talk about what makes a good rainmaker. The July/August 2006 Harvard Business Review is a special issue dealing with sales. It includes a reported conversation with G. Clotaire Rapaille, a noted psychologist and anthropologist. Rapaille makes an observation that may surprise you. According to Rapaille, it is not the attorneys’ sales successes that drive them, but the value placed on the struggle.

If you follow Rapaille’s advice, you would celebrate the struggles of your rainmakers rather than their successes. His advice is to hold “meetings where you give a [rainmaker] the gold medal for rejection. It may sound ludicrous, but this is the way to get fire in the belly of your [rainmakers].” The point is, reward pursuit, not the just the “kills” of hunt. Celebrate the hunters to motivate those that have not yet joined in the hunting. By showing that you understand how hard it is, by celebrating the efforts including those that failed, you invite others to try. You can motivate existing rainmakers and encourage others to become rainmakers by creating a culture where it is not a failure to come home empty-handed if you hunted well.

Rapaille’s insight is well worth your consideration. The reluctant attorney may avoid rainmaking activities because of a perceived stigma associated with lack of success. Celebrating the effort fosters perseverance and, in the end, achieves greater results.

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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Here is a lesson worth learning. According to the Harvard Business Review, Clayton Christensen, a Harvard Business School professor, has hypostatized that most organizations make products that are too good, too expensive, and too inconvenient for many customers.

Peter Drucker recognized the same tendency in discussing the weakness that market leaders invariably develop over time. They continue to add features to satisfy marginal segments of the market, opening the opportunity for a competitor to enter the market at 20% of the cost with a product that satisfies 80% of the market.

What is important for the law firm is that this tendency isn’t limited to tangible products. Services are susceptible to the same condition. I should add that the reference to “too good” doesn’t refer to quality, but instead addresses the tendency of products to become “over-featured”. For the law firm, this is the equivalent of “over-lawyering”—applying complex solutions to simple situations.

Granted, there are times and issues where law firm clients want their lawyer to pull out all the stops. However, the majority of clients, business and non-business types, view their law firm experience as too inconvenient, overly complex, excessively lawyered, and too expensive. We hear the same mantra over and over again from law firm business clients: “We want a law firm concerned about lowering our legal cost.”

Clients are not looking for services at a cheaper price. They are looking for services appropriate to the situation, services that cost no more that the situation requires. Of course, they also want a court system that is faster, convenient, and predictable. They want a tax system that is simpler. They want less regulation. Unfortunately, we are never going to get back to just 10 Commandments, but that doesn’t stop the customers for legal services from wishing for simpler times. It is the very complexity of our legal systems that creates the demand for law firm services. Nevertheless, never forget that those same clients come to you to make things less complex, less inconvenient, and less expensive!

If you accept our Harvard professor's theory, then law firms face opportunities and risks that are merely different sides of the same coin. Law firms can reap significant rewards if they make the solution to the customer’s legal needs simpler, less expensive, and easier for people to get. They risk losing business to providers (including alternatives to the law firm) who invent convenient, simple, and less expensive solutions. Look at TurboTax for a perfect example.

It is all about innovation and reinvention. Clayton Christensen calls it “disruptive innovation” and suggests that there are three key strategies:

• Make it easier and simpler for people to get what they need
• Provide good enough solutions to those with low-end requirements and risk
• Remove barriers to consumption

If you are looking for a breakthrough growth strategy, start brainstorming about these three strategic directions. For example, what are the barriers to consumption? What keeps clients from being able to solve their own needs? What keeps people and businesses from seeking legal advice and services? What tactics could your law firm use to remove those barriers among its targeted clients? There are fortunes to be made by those who invent solutions to those barriers.

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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Yesterday’s post was a reminder that when hiring new talent, the firm needed to look for candidates who have the personality and fire in their belly to bring new business to the law firm. While those traits are needed by the law firm, it turns out that they are not that important in the minds of your existing clients. Perhaps a better way to say it is that the client is looking for more than just a personality.

Most mid-sized law firms are in the B2B business. B2B, of course, is the new age shorthand for an enterprise (a business) that provides services or sells products to other businesses. Law firms are viewed as businesses by their business customers.

The April 2006 Harvard Business Review reports that a Zurich, Switzerland team carried out extensive research to determine the difference between what customers wanted in a company's representative and what the providers looked for while recruiting new team members.

Customers placed considerable value on whether the provider’s representative understood the customer’s business and industry; whereas, industry knowledge was near the bottom of the qualifications that providers looked for when recruiting.

Philip Kreindler and Copal Rajguru with Infoteam Sales Process Consulting in Zurich said, "Our survey suggests that vendors would be wise to put industry and subject matter expertise ahead of social skills when it comes to recruitment." The point was made that instead of learning industry subject matter on the job, the ideal candidate brings that knowledge with them.

That characteristic is usually available to the law firm only through lateral hires. But in that regard, it is clear that knowledge of industries targeted by a law firm should be high on the list of qualifications when searching for a lateral prospect.

The question this raises is: "Does industry and customer knowledge trump relationship building skills?" I’m not sure these are separate skills. Relationship building requires one to have an honest and sincere interest in the other party. To acquire customer and industry knowledge requires that interest, and the more you know, the more interested you become in contributing to both.

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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 An article in the April 2006 Harvard Business Review titled “Growing by Cutting” caught my attention. 

 

It was a slightly different view than the 80/20 rule that has been around almost since the advent of modern management.  The 80/20 rule states that in just about any activity, 20% of that activity produces 80% of all the value. The remaining 80% of activity, for all practical purposes, is a drag on the rest. From an accountant’s standpoint, when costs are fully allocated, 80% of a law firm’s clients are likely to be losers.   

 

The 80/20 rule is a useful management concept, but those who latch on to it as a management mandate take its implications to the extreme with unintended negative consequences. 

 

I believe firmly in the “rule of the fewest”.  When you consider your objectives, the rule of the fewest implies that you should not have any more clients than necessary to achieve your objective. You should not have more legal professionals and support employees than necessary to accomplish the objective.  Nor should you spread the firm over more practice areas than necessary, etc.. Why? Because “things” create work, friction, overhead or whatever. The more “activities” you are involved in, and the more “things” you have involved in those activities, the more wasted energy and cost you incur.

 

However, we have all seen the consequences in the consumer world when management latches on to the 80/20 rule to minimize inventories and maximize profits. Thanks to the internet, we now have a nearly unlimited number of sources to choose from; however, the choices they offer are all the same.  In the apparel industry, if you are outside of the center area of the bell shaped curve because you’re are a little too round, too tall, too short or too thin, you are out of luck when it comes to finding your size.

 

The fact is law firm clients (even the unprofitable ones) begat even more clients. Professional work creates valuable reusable work product and experience when the work itself is done at a loss—Etc. Etc Etc. 

 

So while the 80/20 rule is a useful concept and the rule of the fewest is even better, a firm that decides to grow its profits by chopping off clients, offices, and talent may just wind up with a smaller firm and a smaller future.  So be careful when applying the concept—consider carefully the ancillary or indirect value of activities (values that may not be apparent to the accountant) before you start chopping.

 

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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