Next Tuesday April 29 at 1 PM Eastern time, Arnie Herz and I will present a one hour webcast entitled “Critical Relationship Building Skills for Lawyers.” It’s one of those topics that they probably should have covered in law school, but didn’t: how to build relationships that lead to more new business.
You can even get one CLE credit if you practice in one of the 13 states listed on the site.
A shorter version of this piece appeared in the March/April issue of Law Firm Inc
When Iris Jones was appointed Chief Business Development and Marketing Officer at Chadbourne & Parke last summer, one of her chief goals was “to help lawyers look behind the curtain and understand what clients really want and need.”
When lawyers talk to potential clients, their natural inclination is to impress people with the depth of the firm’s talent and experience. But Jones points out that clients are more interested in themselves. They want to see evidence that their needs are understood, and that the law firm will be able to find the legal approach that best addresses each challenge.
Since Chadbourne is an AmLaw 100 firm with 400 lawyers from New York to Dubai, winning RFPs (Requests for Proposals) is a critical step in bringing in new business, and that’s where Jones concentrated her efforts in her first few months at the firm.
She defined a new formal “Business development proposal process” that begins the moment an attorney decides to respond to a particular RFP, and includes several steps to help attorneys see things from the client’s perspective, so they can directly address what clients really want and need.
When it comes to proposals, she says, some competitors specialize in “killing trees for spiral booklets filled with achievements and bios” as if a law firm consists simply of “order takers, flipping burgers and pushing them out the window.” At Chadbourne, marketing’s role begins with due diligence seeking insights into what the client really wants from the RFP, and what they expect to see in the winning proposal. Why is the client asking each question? Which questions are most urgent?
Staff members use LexisNexis’ atVantage and other tools to study competitive intelligence. Some marketing departments just print out these reports and hand them over “for partners to read after dinner.” At Chadbourne, business developers digest the information, and suggest how lawyers can tie it back to specific requests in each RFP.
To understand how the process really works, consider one of the first proposals Jones worked on at Chadbourne. When she read the 40 page RFP, “some of the questions were ridiculous… even Zeus couldn’t deliver everything that this client asked for.” Jones worked her way through this long wish list, to focus lawyers on the few questions that would make the most difference to genuinely meeting the client’s legal needs, and to winning the competition. Then she did a hard-headed analysis comparing what the client wanted with what Chadbourne could deliver.
In this particular case, she spotted a potential weakness: most of the lawyers who specialized in this area were located in the firm’s New York office, but the client was near their London office. In Jones’s judgment, Chadbourne’s London practice group would not be large enough to satisfy this particular client. So she recommended a joint venture with another London firm, and the lawyers agreed.
Apparently, the client did too because Chadbourne made it to the short list of three finalists. Then the client scheduled an interview. Jones conducted a dress rehearsal, in which she played the client’s role. When the lawyers started to sound like lawyers – going on at too great a length about all the possibilities – she encouraged them to find simpler answers that were equally accurate, but more directly responsive to the client’s request.
After the role plays, she made some suggestions. In once case, she thought that the best thing one particular lawyer could do was agree to be quiet at the meeting. He didn’t like it, but he did agree, and Chadbourne won the business.
This win and others helped spread the word that Jones’s new approach could bring in new business. As a result, her department was involved with 3 RFPs in the first month that she started the initiative, 8 in the second, then 22, then 35.
Why are so many law firms marketing the old way, when relatively simple changes can increase their win rate so substantially? Jones believes that it is because the economic environment has been so strong that almost any approach can win some of the time. She says that many law firms think, “The money has been flowing in for the last few years, so why change?” If that interpretation is correct, business developers can expect to see some substantial changes now that the legal profession is headed into a recession.
Value. At one level, everything comes back to price. But at a more fundamental level, the price that clients think is fair is based on their perception of value.
Lawyers typically believe that the quality of their legal work is a competitive differentiator. Clients do not. At the LMA panel, Mary K. Young put it this way: “Quality of legal work is a given, but truly responsive client service is hard to find.” It includes:
• “Solutions that achieve business needs, not legalistic responses
• Meeting or exceeding deadlines, and
• Projecting costs and managing the billing process...”
To win in this tougher environment, law firms must change the very way they do business and, according to panelist Leigh Dance it requires firms to:
• “Prepare to be one step ahead: measure and prove your value proactively
• Improve transparency in budgets and estimates and allocation of resources
• Demonstrate and promote efficiencies
• Offer value added services free”
Wait a minute. Did she say free? Yes she did. LMA panelist Norm Rubenstein also talked about the competitive benefits of offering “a host of unbilled products and services dedicated to relationship development, including CLEs, intellectual property, and loaned staff.”
Predicting the future. These are hard pills for law firms to swallow, since what is free for the client comes straight out of the partners’ profits. Why give away something for free, if you don’t have to?
As Nobel prize winner Niels Bohr famously put it, “It is very hard to predict, especially the future.” It is human nature to deny that there is a need to change. The experts may be wrong about the future payoff from free services, but you can be 100% certain that you can increase profits per partner in the present by avoiding free giveaways.
Over the next few years, we’ll see who’s right. I side with the many observers who think that these critical trends will continue to transform the legal profession:
Past |
Future |
| Clients are loyal |
Clients look for the best deal |
|
Social relationships are critical |
Value relationships are critical |
|
Process can be hidden |
Process must be transparent |
|
Price is a given |
Price is constantly re-negotiated |
|
Value is assumed |
Value must be proven |
Some lawyers will refuse to accept this argument until it is too late. Who wants to believe that firms should spend much more on client satisfaction? And maybe spend much less on season tickets, expensive dinners, and golf junkets?
So some lawyers will continue to operate as they always have, until the day that they lose the large clients who have been paying the rent. Then there will be weeping, gnashing of teeth, and calls to the business development department. But it will be too late. As Steve Barrett, the Chief Marketing Officer at Drinker Biddle put it, “Once you lose the trusted advisor role, it can take five years to get back in.”
This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development." To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.
Process. Very simply, general counsel are being held accountable by their management, and their management is being held accountable by shareholders. In this type of environment, it is professional suicide to award business to people simply because they take you to Giants games.
In the 2007 LMA panel, Norm Rubenstein talked about the pressures inside counsel are feeling for both accountability and transparency. Among other things, he recommended that law firms help inside counsel “measure and communicate the value that the inhouse legal department provides the rest of the company.”
“[Another] thing that’s different these days,” according to Iris Jones, Chief Business Development and Marketing Officer at Chadbourne & Parke, “is that clients demand to be much more involved in decision making. There was a time when clients expected lawyers to handle matters for them, and were not as involved in the details. The client’s role was simply to pay the bills. Now clients are looking for efficiency, cost savings, and value added.”
Price. Sooner or later, this discussion must turn to price, since that is so often at the heart of the matter. In a recent survey of large law firms and their clients, Inside Counsel magazine reported that “Most of the friction between law firms and their in-house clients can be traced back to costs.” Just 7% of lawyers think law firms make too much money, but 43% of clients do. 74% of lawyers say that law firms are actively seeking out ways to reduce legal costs. They’re not doing very well, because only 11% of their clients agree. Worst of all, 42% of clients (and 6% of lawyers) agree with the statement “most law firms pad their bills.”
In its 2008 Client Advisory, Hildebrandt notes that clients are increasingly pushing back on firm rates and billing practices, as seen in “the widespread use of RFPs for legal services, the growing client perception that some types of legal work previously thought to be highly complex (like project finance) have now become routine and should be priced accordingly, the involvement of corporate procurement departments in outside counsel selection, client insistence on multiple year rates or other kinds of rate freezes or discounts, and the ongoing patterns of ‘convergence.’ (page 6).”
What should law firms do to control costs and meet client needs? One thing is to manage budgets to assure that there are no surprises. In the 2007 LMA panel, Mary K. Young noted that in-house counsel are increasingly expecting:
• “Projects to be assigned in segments
• Bills that match the projected segments
• Early consultation when circumstances warrant a change from a forecast.”
Then there are the matters of rates, and of hourly billing, which could easily lead to an article many times longer than this one. In this context, we will limit the discussion to one quote from the DuPont legal model web page: “DuPont is interested in results, not effort. Our long-range goal is to move away from hourly billing where feasible. We believe hourly billing is a disincentive to efficient service, and we welcome opportunities to structure fee agreements that provide for incentives and that reward results rather than time devoted to a matter.”
To date, there’s been a lot more talk than action along these lines. However, the Hildebrandt 2008 Client Advisory (p. 17) does note that “project pricing...has become a growing trend in Europe and Asia even for complex transactional matters such as M&A work.” The billable hour isn’t going away any time soon, but any firm that can offer alternatives is likely to benefit in the long run.
Next week, this series concludes with a discussion of value, and the future of the legal profession.
This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development." To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.
We now interrupt our five part series on legal value for a brief word from our sponsor.
Have you heard about the LegalBizDev Train the Trainer Workshop in Boston June 5?
The first legal business development event I ever attended was a RainDance Conference organized by the Legal Sales and Service Organization (LSSO). (The 2008 RainDance Conference is in Boston May 6-8; hope to see you there.) I got into a conversation with Beth Cuzzone (one of the founders of LSSO, and the Director of Business Development at Goulston & Storrs) who explained that law firms were building large internal staffs and they needed more tools and standardized approaches so that each firm did not have to reinvent the wheel. One thing that law firms really needed, Beth said, were “train the trainer” programs.
As you may know, train the trainer programs are a standard operating procedure in most businesses because they:
• improve the quality of teaching and coaching
• achieve results more quickly and effectively
• present concepts and techniques more clearly
• make sure that new learning “sticks”
• reduce the time required for effective coaching
• assure consistent coaching
• prepare coaches to handle problem situations
• assure a professional team image
When Beth told me that legal business deveopment lacked train the trainer programs, it sounded like an entrepreneur’s dream. My company had 20 years of experience developing and delivering train the trainer programs for financial institutions and government agencies. Here was a multi-billion dollar profession that needed our expertise, and not a single competitor that had ever conducted a public program like this.
I later learned that it would be a rather long dream since law firms move so slowly. But now Tom Kane and I are finally offering the profession’s first public train the trainer workshop, on June 5 in Boston. This one day workshop will enable coaches to help lawyers get more new business more quickly, by using The LegalBizDev Success Kit.
In-house legal business development professionals will review tactics and practice using tools to save lawyers time and increase results. It is designed for experienced professionals who already know what lawyers must do to increase business, but have trouble getting them to do it.
For the agenda and details, Download TrainTrainerWorkshopLX.pdf.
Our regularly scheduled programming (Part 4 in my series of posts) will resume tomorrow.
Loyalty. For lawyers, the reduced importance of client loyalty first became apparent with the rise of the DuPont legal model. In 1992, DuPont established a “convergence process” to increase efficiency, reduce the number of law firms they used, and to work only with firms who treated DuPont as a strategic partner. Within a few years, DuPont had reduced the number of law firms it used from 350 to 42. To put it another way, DuPont stopped working with 308 firms. If loyalty counted for anything, it wasn't much.
By 2006, Business Week (9/18/06, p. 42) estimated that this approach had saved DuPont “$100 million...through automation, outsourcing, and reducing the number of outside law firms it uses.”
DuPont has publicized their success, and even set up a web page with everything other companies need to get started on this process, including a 5 page downloadable RFP template (at www.dupontlegalmodel.com). Variations on the DuPont model have spread widely, and now RFPs and competitive bids have become standard operating procedure at large law firms.
Some competitions have been even tougher than DuPont’s. A few years ago, when Tyco applied the DuPont model, they started out with 167 law firms handling product liability cases. By the time they were done, they were using just one firm: Shook Hardy Bacon. And we know loyalty was not a factor in the decision, because they had never worked with the winner before. They won by proposing an approach that Tyco judged as the best price and the best value. As Edward Schechter, Chief Marketing Officer at Duane Morris, summed it up in a 2005 panel at the New England Legal Marketing Association, very simply “The DuPont model is changing the profession.”
Relationships. Even in an age of convergence and RFPs, some rainmakers swear by the personal relationships they have been cultivating for many years at baseball, football, basketball and hockey games, not to mention all those steakhouse dinners. There is no doubt that in the past, social relationships have made a big difference in keeping clients happy and in getting new business. But there is also no doubt that in the future, the importance of social relationships is headed down.
In a panel at the 2007 national meeting of the Legal Marketing Association, Mary K. Young and Norm Rubenstein (of the Zeughauser Group), and Leigh Dance (ELD Project Marketing International) described “Ten client buying trends and how to leverage them into wins for your firm.” Many were related to value and cost.
In my view, the most interesting trend they discussed was the growing influence of procurement professionals. Over the last ten years, procurement professionals have substantially increased their influence at large corporations, by becoming extraordinarily skilled at reducing costs throughout the supply chain. The good news for lawyers is that they were among the last to get squeezed. The bad news is that the squeezing has just begun.
“Procurement managers tend to look at legal service purchase like buying widgets,” said Dance. And the way to get the best price on widgets is to force suppliers to compete more directly by issuing RFPs. Anyone who has worked in legal marketing for the last few years will attest to the radical growth in the number of RFPs, and in their importance.
Are social relationships still relevant to new business? Of course. They always will be. It’s human nature to want to work with people you know and trust, especially in a sensitive and critical profession like the law. The smaller the client, the more important these social relationships are likely to be. But every time a client professionalizes the buying process, the value of social relationships goes down just a little bit more.
Next week, I will have more to say about process and price.
This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development." To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.
Last week, I introduced the idea that trends in five areas—loyalty, relationships, process, price, and value—are transforming the legal profession.
The same trends are affecting many other businesses due to the pressures of an increasingly competitive global economy. Indeed, in the last twenty years most other businesses have already felt these trends far more than lawyers.
Last summer, a reader of a Business Week column (Aug 13, 2007, p 92) by Jack and Suzy Welch (of GE fame) asked, “Is customer loyalty dead?” Their answer: “Not dead, but different. Time was you could ‘earn’ a customer’s loyalty with tickets to a big game... [and] a few nice dinners.” Those days are over, according to the Welches. In “today’s fierce economy” there is a greater emphasis on price and on a “two-way approach” in which sellers are “fervently committed...to making your customers win big in the long haul, rather than just meeting their immediate demands.”
Sales gurus have been preaching the benefits of these types of client partnerships for more than 20 years, starting with two classic books: Robert Miller and Stephen Heiman’s Strategic Selling (1985), and Neil Rackham’s SPIN Selling (1988) which summarizes his twelve years of systematic research on over 35,000 sales calls. (For details, see my post “What lawyers need to know about SPIN Selling.”)
In 1994, when Larry Wilson published another book along these lines (Stop Selling, Start Partnering), he compared the changes in the business climate to “churning white water,” which is harder and harder to navigate due to globalization and the growing client perception that everything is a commodity. He began that book by arguing that all companies need to think differently about service and create “powerful relationships with your best clients (p. 1).” Selling is not about pushing services onto clients, Wilson said, but about “trying to understand and help clients solve their problems.” Value is in the eye of the beholder, so the only way to provide it is to genuinely understand what clients want and need, by asking good questions, and acting on their answers.
And that challenge just keeps getting harder. Last year, Tom Snyder and Kevin Kearns wrote in Escaping the Price Driven Sale that “Brand allegiance is virtually nonexistent in today’s hypercompetitive market.” They argue that to succeed in this environment, sellers must learn how to have a positive impact on one or more of five crucial financial measures: revenue, cost of sales, margin, expense, and/or profit. In essence, the seller must learn so much about the buyer’s industry that he can demonstrate problems, solutions, and opportunities before the buyer becomes aware of them. There’s nothing easy about it, but this approach will allow sellers to resist commoditization and charge a premium price. Indeed, this is the only way, as the title of the book puts it, to “escape the price driven sale.”
Are the harsh trends which have been transforming other businesses for the last 20 years really coming to law firms? Next week, I’ll begin to review the evidence for the first two areas: loyalty and relationships.
This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development." To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.
A few weeks ago, I had lunch with the general counsel at a Fortune 500 firm, and we got talking about some of his best, and worst, experiences with law firms. Maybe it was just the questions I asked, but he seemed to have a lot more experiences in the worst category.
His central message was that “Social events and personal relationships just don’t matter like they used to. These days, if a firm wants a steady flow of new business, they must deliver value.”
In a transparent world where every GC is held accountable for results, and you’re only as good as what you accomplished last week, golf outings and tickets to Yankees games just don’t have the power they used to. This GC’s best relationships were with firms that delivered value, that were open and honest about anticipating cost, and that sought his advice on tactics, so that he could choose the best course based not just on legal strategy but also on their financial implications.
For each new matter, his company selects a law firm based on their expertise, their history working together, the amount at risk, and their billing rates. Several times, he returned to the idea that there are a number of firms that do excellent work, but their prices are too high for routine work. So he relies on the high priced firms strictly for cases with a great deal at risk, and “bet the company” matters.
I was not surprised that his stories kept coming back to money, and discussions of the potential return on investment. But I was surprised at how many firms he had worked with who did not seem to understand this very fundamental point. They just wanted to maximize revenue in the short term, and did not consider how much better they could do in the long term if they paid more attention to giving clients what they want and need.
Some of the firms he talked about always wanted to win the case. They couldn’t care less how much it cost, as long as they won. “It’s easy to get carried up in the moment with the need to win,” he said. “But sometimes we’d be a lot better off if we settled sooner.”
Other firms have a reputation for producing a blizzard of paperwork, to overwhelm the other side with the cost and difficulty of pursuing a case. This can be a very effective strategy if you just want to win, but in many cases “it works better for the law firm than for the client, because we have to pay for them to produce all that paper.”
A few firms are notorious for spending weeks, months or years preparing for a case, and then routinely “suggesting settlements on the courtroom steps.” In many cases, it seems they could have settled much sooner and avoided much of the preparation cost.
This GC’s comments reflect some significant changes, which are still developing momentum. Over the next few weeks, I will write about trends in five overlapping areas that are changing the way lawyers do business: loyalty, relationships, process, price, and value.
This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development." To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.
A few months ago, a lawyer I’ve known for a long time asked me about his New Year’s resolution. He wanted to develop more new business in 2008, and was looking for advice to help him succeed. My answer was simple: Ignore good ideas.
Lawyers are much too busy to spend time on ideas that are only good. To maximize the chances of success, each individual must focus on the very best ideas for their practice, their personality, and their schedule. For example, it’s good marketing advice to volunteer for a bar association committee. It’s an easy and enjoyable way to develop new relationships that could lead to business in the future. But it is probably better advice to skip the bar association and volunteer instead in an industry organization whose members are potential clients. That way, the relationships you develop will lead to more new business, more quickly.
Even that is probably not the best advice. For most lawyers, the best place to start is with current clients. If you would have averaged an hour per week on that committee, spend it instead on your top clients. Take them to lunch. Listen. Find out what they want. Give them more. Do things for free.
But don’t make those client lunch reservations just yet, because there are no generic answers to the question of what’s best. Maybe in your unique situation the bar association would be best. Or maybe none of these three are right for you; you need to go in a different direction.
Since established lawyers never have enough time for marketing, they must prioritize relentlessly and keep returning to the question: “What should I do today to increase new business?” You must place the highest priority on tasks that are most likely to yield the type of clients you want to work with, and the types of matters you prefer to focus on.
For example, I often talk to lawyers who are writing articles or books in their marketing time. As a man who spends a lot of time writing this blog and many other things, I obviously think that writing can be a good way to increase visibility. But there are several important caveats. First of all, writing is way too much fun for some of us, and it’s easy to write things that do not serve the central marketing purpose. Second, by itself publication is unlikely to bring in new business. To be an effective marketing tactic, writing must be used to build relationships, one person at a time. (One example: Send copies of your article to key contacts, each with a short written note.) Third and most important: you must consider what else you could be doing with that time. If an article takes ten hours to write, what else could you do with those ten marketing hours? Would you get more results with current clients, or by strengthening relationships with people you already know?
What’s the best way to come up with the best list of activities for your unique situation? Review things that have worked in the past for you, for your partners, and for other firms. Quickly. Because every minute you spend planning is a minute you are not following up with clients. You can start from the lists of best practices in our LegalBizDev Success Kit.
Full disclosure: if you buy the Success Kit, I will make money. You will too.
Do you think managing partners will use the internet to seek advice from their peers? Managing Partner magazine is about to find out, through their new Leadership Advisory Board, announced today Download leadership_advisory_board.pdf . If you are a managing partner and would like input from leaders at Alston & Bird, Baker & Daniels, Dickstein Shapiro, McGuire Woods, Nixon Peabody and other firms, contact Patrick McKenna. (Full disclosure: I have nothing to disclose here, and no relation to this program. I just think it’s interesting and valuable.)
