The pressure to discount rates has never been greater. Yet studies of complex sales like legal show that less than 10 percent of decisions are based on the value-to-price ratio:
So why has price become the cornerstone of so many conversations between lawyers and their clients? There is no question that legal budgets have become a greater focal point for companies in the post-recession economy, but it is more than that.
More people than ever before are leveraging their personal networks and publicly available information to make decisions about what and from whom to buy. These resources always have been part of the due diligence process for making purchasing decisions, but in the digital age, where people have instant access to social networks and an abundance of free online information, the influence of these factors has grown exponentially.
Just think about what happens when you get a new ache or pain. Do you call the doctor immediately? Chances are, no. First you might ask someone for their insight — maybe you post a question online, email some trusted friends, make a call or ask someone face-to-face. Once you get insight from those you trust, you will probably go online to research a potential ailment or get background on a doctor. Next thing you know, you are in the doctor’s office, sharing your self-diagnosis and inquiring about a specific remedy.
The impact of the internet on the “sales” process is fascinating. Research by the CEB Marketing Leadership Counsel across 22 B2B industries revealed that the average customer had completed more than half of the purchase process before having an initial conversation with their service provider. That means clients have already vetted their choices and face-to-face conversations often focus on specific requirements — price being the major one.
If that data holds true for the legal industry, what does it mean for lawyers?:
1) Your marketing program is no longer a “nice to have,” it is a “need to have.” Face time with potential clients is no longer a commodity, so you need to find ways to engage with potential clients long before they need your services. You don’t need to friend your clients on Facebook or have a Twitter account if that is not who you are, but you do need a robust online presence that leverages the same online channels that your clients use. And, instead of developing content that begins with you, identify topics that are focused around the needs of your clients.
2) Your brand must define you as more than a good lawyer. Your marketing must express what makes you different. This is not a new marketing concept, but it is something lawyers continually fail to do. If your website or bio is dominated by words like “Innovative,” “Client-focused,” “Responsive,” or “excellent lawyers,” it is not working. That’s not to say these things aren’t important, but it isn’t going to make your stand out.
3) If you don’t want to compete on price, bring something new to the conversation. If your prospective client has learned all about you online and wants to talk to you, be as prepared as they are. Bring something to the conversation that will give them insight into their business that they don’t already know. Make the time they spend with you valuable. If there is nothing new to talk about, all you will be left with is price.
If your marketing and business development efforts lead to conversations that show clients why you are the only person who can solve their need, price won’t matter.
Debra Baker, esq., is chair of the law firm services group of Legal Vertical Strategies. She works at the intersection of practice management, marketing and business development to help lawyers drive revenue and expand client relationships. LVS has developed a proprietary process called Insight Mapping to help law firms define what makes them different and develop strategic content marketing programs and business development toolkits that create business opportunities.
The career path for attorneys has never been more challenging. While lawyer job dissatisfaction is nothing new, rapid changes in the legal industry create uncertainties for attorneys who plan to practice law for another decade or longer.
Increased focus on profitability and changes in the law firm business model impact every lawyer:
- Service partners who rely on work from other attorneys risk being de-equitized or asked to leave their firms all together.
- Senior Associates know that the path to partnership requires building a book of business, but many lack the skills they need to do so.
- Solos and lawyers in small firms face their own challenges in trying to balance the roles of legal practitioner, client generator and business manager.
- Even revenue-generating partners realize they are only as valuable as the clients they bring in today. The pressure to remain productive is intense.
The path going forward for law firms has yet to be paved. At the same time, there are also new opportunities to rethink the practice of law in response to changing market dynamics.
Lawyers cannot afford to stand still without reacting to the changes going on around them. This is not an associate problem or a partner problem or even a law firm management problem. It is a lawyer problem. Mid-career attorneys need to start thinking about what they want their practice to look like in a decade and begin now to plan for that future. This includes:
- Clarifying why they do what they do and what their specific personal and professional goals are.
- Analyzing the market to identify and validate what their practice will look like.
- Consider what changes they can make in the way they deliver legal services to better respond to changing market dynamics.
It is exciting and a little scary to be a lawyer in today’s market. Marketing, business development and practice management are no longer distinct disciplines. Those that thrive will be the ones who evaluate their careers from all three of these vantage points and develop the discipline and consistency to execute on a defined plan for long-term success.
Debra Baker is a journalist, turned lawyer, turned business owner focused on helping law firms and individual attorneys transition their legal practices to drive revenue in a rapidly changing global economy. She offers presentations, training and law firm strategic marketing and business development consulting services. For more information on how she can help your firm, contact her at firstname.lastname@example.org or call 888.322.1226 ext. 701.
I participated in the Vistage All-City event in San Diego last week where Brian Beaulieu of ITR Economics spoke about how to stay ahead of the curve in light of the economic forecast for 2014 and beyond. His view: The long-term economic outlook remains dark with the next big downturn expected in 2018. Inflation and taxation will continue to plague the economy. The ITR outlook shows:
2013 – Flat
2014 – Slight Decline
2015-2017 – Growth
2018-2019: “Nasty” Decline
So what does that mean for the legal profession?
First, it does not mean that business will go away. The greatest drivers of the economic slowdown — increased taxes, healthcare costs, the Dodd-Frank Act and other regulations, will create business opportunities for lawyers.
Second, with economic downturn comes resilience. We have already witnessed a number of industries reinvent themselves to thrive in the coming decade. This will create more opportunities for lawyers.
Third, the U.S. remains the venue of choice for litigation both at home and for global companies doing business here. There will be no shortage of need for good lawyers.
All of that said, there is an important caveat: Point Four. Law firms cannot afford to wait it out any longer. We saw what happened to many firms that failed to respond to the signs that led to the financial collapse in 2008. The signs for 2018 and 2019 are clear. Lawyers must stop putting their head in the sand and start investing in their futures.
Here are two questions every lawyer must answer today:
1) What clients can serve that you are not currently serving?
2) What new services can offer that your current clients need?
The challenges facing the legal industry are no different than any other industry that has had to reinvent itself in light of changing economic conditions. Yet firms continue to be slow to change. In the next three years firms have a window to prepare for the future. But it will requires an investment of time, resources and capital. It is hard work, but one that will come with a payoff. The question is: Are you ready to make the change?
For the last several months, I’ve been refocusing my service offerings around ways I can help law firms and individual attorneys build law practices that will be sustainable beyond the next five years.
In doing so, I realized that several books have become fixtures on my desk. Two are directly related to the legal industry. The others have a broader focus. Combined they provide compelling insights about how to respond to the changes taking place throughout the legal industry.
Here they are:
1. The E-Myth Revisited by Michael E. Gerber: For an overall framework about how to think about your law practice as a business, this is a must read. There is a lawyer-focused edition of the book as well, but I recommend starting with the original.
Favorite theme: Focus on you business, not in your business.
2. The Art of Managing a Professional Services Firm, by Maureen Broderick (with research and interviews conducted by my good friend Carol McAvoy). This book outlines insight and best practices from some of the worlds best professional services organizations with particular focus on the unique issues that make service-oriented firms different from product-based businesses.
Favorite Theme: The passionate belief that values and culture are the bedrock of the organization and that clients are the “reason for being” when it comes to professional services.
3. The Challenger Sale, by Matthew Dixon and Brent Adamson. The Challenger Sale debunks the myth that relationship builders are the most successful sales people when it comes to complex sales, like legal services. Instead, the book outlines a new framework for solutions selling focused on providing insight to clients that naturally leads them to your services. This book is important for two reasons: 1) It provides a choreography for creating conversations that lead to business opportunities. 2) More importantly, it provides insight into how organizations at an institutional level can set themselves apart from the pack when it comes to defining what their true differentiators are. It could be game changing for the legal profession.
Favorite Theme: Once you eliminate “innovative,” “customer-focused,” “solutions-oriented,” “market leader,” “great people,” “trusted,” and “rich history” from the list, defining the specific set of capabilities that truly make you different can lead you to a pretty dark place. But then you can roll up your sleeves and set about the hard work of identifying real capabilities that only you can offer.
4. End of Lawyers? by Richard Susskind. Susskind offers up his prognosis about where the legal profession is heading as a result of globalization, technology and commoditization. It’s a slow read and you may not agree with all his conclusions, but the book makes you come to terms with the fact that the practice of law is going to change and offers one perspective on what it means for lawyers.
Favorite Theme: Most lawyers act like ambulance drivers showing up at the scene after something bad has happened. What clients really want is for someone to help them avoid that bad thing from happening in the first place. This is a huge market opportunity.
5. Networking is a contact sport by Joe Sweeney. A great book to rethink the way you approach relationship development and networking. Sweeney takes a purposeful approach to building relationships — both in terms of how he does it and whom he targets.
Favorite Theme: Networking is about seeing what you can do for others, not about what you can get.
Lessons from a judicial rock star: How business development is like preparing for a Supreme Court argumentAuthor: Debra Baker
U.S. Supreme Court Justice Sonia Sotomayor officially has reached rock star status with the crowds she is attracting for her book tour around the release of her memoir, My Beloved Life. I had the privilege of listening to her speak Sunday night at the University of San Diego, where she offered the perfect mix of wit, wisdom and inspiration to a standing-room only crowd.
She spoke for about 20 minutes but spent much of the time answering audience questions, one of which was about preparing for arguments before the Supreme Court. Her advice: “Engage us in a conversation.”
She explained to the crowd that when a case goes before the Supreme Court, the justices are prepared. They have read every piece of paper relating to the case and they understand the arguments. So to go before the court and engage in argument is not effective. Instead, the key is to listen to the judges and try to understand why they are asking the question that they have posed. Then, draw upon the arguments that you have made in the papers to address that concern. Have a conversation with them.
This advice bleeds into business development as well. Clients don’t want to know how smart you are or how successful you’ve been. They want you to listen to what they are saying and provide insight that will help them address their concerns. In doing so, you will demonstrate all of your other qualities. It is conversation, not validation, that prospective clients want from you.
Take it from a judicial rock star.
Referrals are the primary source of business, but a strong network and the ability to build great relationships will not be enough to build your book in the coming years. The buying behavior of those who purchase legal services has changed and the way lawyers pursue new business must change too.
For any lawyer that has had formal training in business development, the concept of “solution selling” should be familiar. Lawyers are solution sellers. They don’t sell products; they solve real problems. The key to successful solution selling is the ability to develop a rapport, ask the right questions, and listen; so you can then go back and find a unique “solution” that fits the specific needs they have identified.
For decades, this approach has been the hallmark of law firm business development, but that has changed if the findings of the Corporate Executive Board’s research on the sales process holds true. The book based on the CEB research, “The Challenger Sale,” debunks the myth that the most successful sales approach is based on relationship building. In the book they compare five types of sales representatives (yes, lawyers do act in the capacity of a sales rep.): Relationship Builders, Lone Wolves, Challengers, Hard Workers, Reactive Problem Solvers. The findings? When it comes to high performers in complex sales, only 7 percent of them are relationships sellers.
Hard data to swallow for a profession where likability, trust and knowledge are fundamental to providing the highest level of representation. But when you consider the changes taking place in the market — particularly since the financial collapse in 2008 — the data makes sense when it comes to the purchase of complex legal services. Here are three reasons why:
- Time: Who has it? It takes time for relationship builders to find out all the information they need to know in order to provide a solution to fit their clients’ needs. This time is precious to the buyer and they don’t want to spend it educating their lawyers. If in-house counsel or the c-level suite are going to invest their time, they should be the ones getting the value. Tell them something about their business that they do not know.
- Complexity of Doing Business: The traditional solution selling model makes a significant presumption — that buyers know what they need. That is not always the case. The increasingly complex regulatory environment, the need for enhanced due diligence, and sheer volume of potential legal issues facing businesses today is daunting. In many cases, corporate buyers of legal services don’t need lawyers to fill an existing need; they need lawyers to tell them what they need.
- Risk Adversity: With the issues facing companies, buyers are increasingly risk adverse. Legal solutions are typically complex, time consuming and expensive. Decision-makers no longer are willing to make a unilateral decision about who to hire. The decisions are more consensus driven than ever before. The larger the organization, the more people involved in the decision-making process.
Do you have what it takes to provide clients what they need to be successful in the coming year?
Do you have what it takes to build a $1 million law practice?
As law firms become more business focused in response to economic, technological and other market forces impacting the practice of law, the ability to generate business is increasingly important.
Whether it’s $1 million, $10 million, or $250,000, most of us have a number that signifies success. Many lawyers don’t achieve this number because they lack the tools to do so or mistake financial return for purpose.
Numbers are important. They make goals tangible and provide metrics for measuring progress. But numbers alone are not good enough. There must be a business vision and a defined plan behind the number to achieve success.
Why do you do what you do?
A number is a great metric, but it is not your business purpose. Understanding why you do what you do provides the vision, values and motivation for reaching your goals.
Many people – including myself at one time – have underestimated the value of defining their purpose. They have mistaken their number for their why, making their quest for money passionless at best and unsustainable at worse.
The most successful lawyers have a defined reason for choosing the law as a profession and are able to use that motivation to achieve financial rewards.
What will you do to you achieve your business purpose?
To achieve your business purpose you need a means to do so. At a very tactical level, your “what” is the legal work you do in exchange for money. But there are strategic considerations as well.
From an internal standpoint, you need to determine what you need to do to reach your revenue goals:
- How many matters do you need?
- How many clients do you need?
- What resources and processes do you need to provide these services?
From an external standpoint, you need be able to identify and leverage business opportunities. This requires an understanding of a number of factors:
- How much demand exists for what you do?
- Who needs these services?
- How much are these services worth?
- Who else provides these services and how are you different?
The analysis will depend on the environment in which you work. There are different issues depending on whether you are a senior partner, a mid-level associate, or a solo practitioner. Yet armed with the right insight, you can realistically assess whether your number is attainable and, if not, adjust accordingly.
How will you do it?
This is the roadmap for achieving your purpose. The roadmap includes systems and processes that will allow you accomplish your “what” in an efficient and profitable way. Internally, you need an organizational plan that will allow you to provide your services efficiently and profitably. Externally, you need a marketing and business development plan that will drive business to you.
And then you have to take action. This is the hard part, but when you understand why and know exactly what you need to do, reaching your number not only becomes possible, it is achievable.
Over the last year, I’ve been analyzing my work with law firms to apply the lessons learned and improve the services I deliver to clients. In doing so, several themes emerged that impact — in some shape or form — nearly every client I have ever worked with:
1) The marketing function — whether handled by professional marketing staff, paralegals and secretaries or the attorneys themselves — typically has little coordination, resulting in “random acts of marketing.”
2) Business generators — the attorneys in the firm who bring in the business — typically work in silos, alone or in a small group, with little coordination in building a pipeline of potential work that meets the broader needs of the firm.
3) The so-called “marketing and business development being a continuum” is fractured, creating a gap between the two functions. This prevents firms from maximizing their investment in awareness, credibility and lead generation activities and makes revenue generation activities less efficient and more time consuming. Most often the gap is the result of a lack of alignment between a firm’s business vision (if one has even been defined), understanding of client needs (if an assessment has even been done) and talent management (the tools the firm provides to help attorneys become better business developers).
I started calling this the Law Firm Marketing Dilemma. Visually, it looks something like this:
If this diagram resonates with you, I would recommend taking three steps to make 2013 the year your firm overcomes the law firm marketing dilemma.
Where to start:
1) Business Vision and Marketing Alignment
Does your firm understand what its business vision is? There is no shortage of evidence that shows that the most successful and profitable professional services firms are those that have a clearly defined vision, culture and values. All too often, firms skip over this important question and dive right into tactical planning. Don’t. If you don’t define the end goal, you will never reach it.
2) Adding Value to Clients Beyond Tactical Execution
Conduct a client audit. Start by understanding your client base. Who are your clients? What do you do for them? Where are you most profitable? What are their similarities? What are the trends, needs, drivers impacting them? Beyond the legal matters your have done for them, look at the business challenges they have. What are the themes? Where are the missed opportunities? Again, this is not a superfluous exercise. You can’t market to prospective clients you don’t understand.
3) Define and Develop a Talent Management Strategy for Business Growth
What do the attorneys and professional staff need to support your business objectives? This starts by understanding your talent strategy — the way in which you want to utilize associates and professional staff. Once you know the goal — be it identifying future firm equity partners, leveraging associates to handle the tactical aspects of the law, creating business generators to tap into a new market demographic, or focusing a business model on the use of paralegals to provide greater cost efficiencies — you can identify the communication and training needs to help them achieve their goals.
With a defined vision, clear understanding of client needs, and a talent management strategy to attain them, you then have a starting point for focusing marketing programs and collaborative business development efforts that will generate greater consistency and overall return on investment.
The legal industry is famous for lookie-loo marketing. They watch what their neighbor does and say we should do that too. The problem with this approach is multifold. First, there are only a handful of firms that see the return on marketing investment time and resources that they want. Second, it assumes all firms have the same needs.
Before trying to copy your neighbor in pursuing business development,consider where your firm sits in the market and use that as a starting point for pursuing a business development strategy.
Not sure where you fit in this progression? Considering which of the four marketing stages reflects your firm.
If the old adage about understanding you have a problem is the first step to fixing it holds true, the same can be said about addressing these common marketing and business development challenges. By understanding where you fit in the market, you will be taking the first step toward taking the guesswork out of your marketing program.
Despite the financial downturn and increased competition, it continues to surprise me how few lawyers effectively use competitive intelligence to evaluate market opportunities. Lawyers instead look for opportunities where they have found them in the past, wait for opportunities to find them, or engage in random acts of marketing without clearly identifying who they are trying to reach.
The greater the understanding of the market, the greater the ability to identify new opportunities and to articulate your unique value to existing and prospective clients.
A simple framework for identifying market opportunities are to look at four trends in the context of your current practice:
Economic climate. A strong economy contributes to legal needs driven by opportunity – deal flow, investment, joint ventures and strategic alliances. Businesses can use litigation as a strategy to protect, not just defend. In weaker economies, opportunistic legal activities still exist, but fewer businesses are positioned to take advantage of them. Often the legal issues that do arise are necessity deals and litigation, viewed as expenses and subject to significant price sensitivity.
Regulatory environment. Regulations add to the complexity to running a business. Heavily regulated industries and regions increase demand for legal services. On the counseling side, legal services are tied to risk aversion and will be considered in most cases as important and necessary expenses. Litigation can be high-risk, bet-the-company type matters, such as a multi-district, class action lawsuit alleging violation of a statute, or a single claim that could result in having a key brand pulled from the market. At the same time, increased regulations can also lead to more nuisance litigation.
Industry Trends. Industry trends can create or deter demand for legal services within specific sectors. Niche issues that impact a particular industry provide lawyers an opportunity for legal specialization. Industry trends that lead to demand also provide law firms an opportunity to be more targeted in their marketing and business development efforts.
Geographic Trends. With increased globalization, geographic trends are important to understand even when evaluating the legal services market of a single region. Businesses inside that market do not limit their business to a given region, so their legal needs bleed into other geographies. Additionally, the competitive landscape is not limited to the attorneys within the region.
Understanding the impact of these factors on the markets they serve in order to assess what type of work in their areas of expertise will be in demand. It will assist firms in identifying common characteristics among businesses with specific needs that can be used to more effectively target and market the practice.