• Review and update all client contact lists, including “dormant” clients that you haven’t worked with in over three years.
  

• Maintain rigorous financial hygiene by recording and posting hours billed on a daily basis.  Smart phones, such as RIM’s BlackBerry products, in tandem with custom applications such as BigHand and PensEra’s TimeKM, can play a major role in the firm’s billing and collection process.
  

• Contact all potential clients whose work you did not earn to determine reasons why; carefully review and revise all presentations based on client feedback.
  

• Update your individual and practice group business development plans to reflect clients’ latest expectations.
  

• If your firm has reduced its headcount, review case assignments and quality of work produced by remaining associates (and partners).
  

• Implement training programs for business development, practice group leadership, etc., that the firm was “too busy” to conduct a year or two ago.
  

• Meet with clients for an hour or so with the sole reason of gathering feedback on quality, work product, responsiveness, and — perhaps especially — pricing.
  

• If the firm has canceled its annual retreat, reconsider.  It could be done in your offices or nearby instead of Bermuda.  But there has been no more important time to review the firm strategy in light of the current economy and client expectations.
  

• Does your firm have a plan for the up cycle as well as the current down cycle?  While things will improve in the future, most of the changes that clients are mandating now will remain in the future.  Your firm’s leverage, technology, client relations and just about every other factor will be very different than they were last year.  This will take review, planning and implementation.
  

• Use downtime to discover useful technology tools that exist in software the firm already has.  It’s estimated that firms use only 10-15% of the capabilities of software that have in house.
  

• Use Twitter, LinkedIn and Facebook to keep in touch with clients, prospects and referral sources.

Video: Biff Maddock on Law Firm Business Development in 2009

This is the second installment about The Lawyer Magazine’s Fourth Annual Business Development Conference on February 10-11 in London, which I chaired. Previous presentations focused on strategy during a downturn, especially the opportunity presented by the availability of lawyer time.  In my presentation, which focused on return on investment for specific marketing strategies, I outlined the differences between marketing sales and service, the three components of business development (see chart). I then noted the key drivers of strategic BD were demonstrated in a recent Altman Weil survey of corporate counsel: 

• 80% are concerned with outside legal costs

• 75% of corporate counsel will implement budget cuts in 2009

• 35% of that category will cut budgets by more than 10%

At the same time, US-based law firms have already experienced their largest drop in per partner profits, up to 10% in many firms.  Some firms are experiencing bad partner behavior as a result, including work hoarding, disbanding teams and internal competition.  In many firms, this has resulted in lowered commitment to strategic BD and downsizing of BD staffs. To counteract the negative effects of this behavior, I recommended that firms focus the majority of their efforts on the top 10% of their clients; segment their markets by existing or new clients and existing or new work, with a strategy for each segment; determine ROI to the extent possible for each tactic used to focus spending; be more discriminating in choosing which RFPs to respond to; measure and communicate results; and differentiate themselves by acting upon client feedback.  At Altman Weil, we have found that the latter tactic can generate up to 10 times return on investment, a number that was agreed upon by many in the audience who had conducted client surveys.    In his presentation “Client Relationship Management—Adding Value and Making a Difference,” David Pester, Managing Partner of UK firm TLT Solicitors and 2007 “Managing Partner of the Year,” made the case that clients are more discerning about buying legal services and will no longer subsidize inefficient outside counsel.  As law firms are limited in the extent to which they can raise rates and margins erode, they will be forced to become more efficient. Using a mnemonic device, Pester said that clients are looking for: 

• Cost control

• Competence

• Commerciality (knowledge of the client’s business)

• Compatibility

• Capacity

• Credibility

Pester said that client dissatisfaction with outside counsel stemmed from problems with cost, responsiveness/service delivery, perception of value, “siloed” practice areas and lack of awareness of client needs and priorities, including additional services that the firm could provide.  Added value in client relationships consisted of knowing clients, being collaborative rather than undermining the client, making the client successful and having a succession plan for handling the client’s account when the senior lawyer steps down. For those who thought that branding discussions were dead or dying in the current climate of austerity and pragmatism, Pester presented a very useful model.  He said that 30% of a high performing brand was based upon a clear and compelling promise made up of one promise, one message and one design identity.  The remaining 70% was based upon law firm behavior and the client experience that matches the brand promise.  He concluded by stating that a successful brand will be driven by the six “Cs” bulleted above.  One of the final presentations, delivered by Lance Sapsford, Head of Business Development for

UK firm Addleshaw  Goddard, included a very useful chart that contrasted law firms from other professional services firms: 

Other Professional Sectors	Law Firms
Focus on business	Focus on the law
Board level credibility	Lack board level access
Visible value	Invisible value
BD in the front line	BD as support
Understand profitability	Focus on volume
Deliver to client objectives using specialized expertise	Deliver the law
Brand	Brochures
Client feedback	Don’t need feedback

While admitting that some law firms had caught up with accounting and other professional services firms—or at least were making efforts to do so—Sapsford said that most had a long way to go.  Fortunately, good models for great client service exist in other professions and law firms just need to acknowledge that the templates are applicable to themselves as well. 

I’ve just returned from chairing the Fourth Annual Business Development Conference sponsored by The Lawyer magazine in

London.  There were 65 business development professionals, marketing partners and CLOs in attendance at the two day program.  The focus of this year’s conference, not surprisingly, was Return-On-Investment for BD spend.  In other words, which marketing efforts are measurable and how much can we expect back for what we’ve spent?

 During my presentation, titled “Linking Business Development Activity to Tangible Results,” I listed 15 possible tactics and asked the audience to vote on the one that provided the highest return on investment.  Overwhelmingly, client surveys won.  Many claimed that, with the right follow-up, they received two to ten times ROI–and nothing else showed that kind of return. On the second day, I posed a similar question to a panel of eight GC from top corporations.  After cost control, regular communication was ranked second–and all agreed that it was the best way to identify new business at their company. The Lawyer put together an excellent roster of speakers.  My colleague Tony Williams, head of London-based and Altman Weil affiliate Jomati Consulting, said that law firm business developers had to establish coherent plans, clearly indicating activities and specific outcomes, not just process.  Each plan must have realistic and demanding targets and measures, not just “stuff.”  (“Stuff” became the catchword at the conference for random, unfocused activities that showed the marketers were doing something, anything, whether relevant to the firm’s strategy or not.) Tony also pointed out that downturns present opportunities, which became another ongoing undercurrent at the conference.  He concluded by saying that the next two years will be difficult, that discretionary spends will be limited and that innovation, drive and strategic positioning will make the difference between growth and stasis or failure.   The heads of marketing from two British firms, Linklaters and Burges Salmon, discussed the ways to handle business development in a downturn.  Picking up on the theme started by Tony Williams, reduced attorney time creates opportunities for marketing and training that may have been overlooked during busier years. Key points from their presentations included: 

• Greater and more specific market segmentation with a portfolio of products for each segment

• A clear statement of objectives that is aligned with the firm’s strategic plan

• Listening to clients and acting upon their advice

• Sensibly cutting costs where possible, such as eliminating high cost events that have no strategic focus

• Refocusing PR to the business press rather than the legal trades

• Measuring everything—and if it can’t be measured, reconsider using it

• Maintain training for both partners and associates

Paul Beattie, Senior Business Advisor for Global Marketing Projects for Norton Rose, addressed the perennial issue of top down versus bottom up marketing.  He categorized appointment of partners in charge of BD, creating a business development structure, budgets and reviews as top down, while other functions, including incorporation of allied departments (knowledge management, IT, recruitment, finance and training) into the BD mix, were bottom up.

Law firms who want to continually build upon their client satisfaction must broaden their channels of communication so that both sides can have frank and recurring conversations with each other.

For example, Altman Weil was recently hired by an East Coast law firm to conduct interviews with senior and mid-level management of one of the firm’s most important clients, a large and well-respected financial institution.  From those interviews, the law firm learned that while the bank conducted an annual review of their performance in the previous year and needs for the coming year, none of its outside counsel had reciprocated or shown any signs of doing so.  By learning about and responding to a client expectation, the outside counsel gained a significant competitive advantage and is likely to increase client satisfaction as well as market share, all on the basis of opening communication, listening and acting.

To maintain and build upon clients’ level of satisfaction, we recommend that you:

• Conduct an annual summit meeting among your key clients.  At this meeting, the client would lay out its legal needs and expectations for the coming year.  In turn, your law firm would share its best ideas for enhancing the relationship.
• Appoint an ombudsman on your staff for ongoing communication with clients.  This person would act as an independent, impartial resource who would be free and expected to identify problems and solutions to issues as they occur.
• Schedule joint strategic planning and budgeting sessions, annually if possible and required, to assure that your firm and its clients are in harmony.
• Conduct two-way evaluations, in which your firm evaluates the relationship with clients as well as vice versa.  These should be reviewed and action steps assigned during the annual summit meeting.

David Maister once said that marketing is a conversation.  These are good ways of opening and continuing the dialogue.

Now that business is down in many firms, especially at some of the nation’s most profitable firms, many partners and executive directors are taking a long hard look at how the firm spends its time and money on responding to prospective client requests for proposals, more often known as RFPs.

Recently, Altman Weil consultants determined that the cost of responding to RFPs ranged from $35,000-$65,000 each, or between 100 to 200 partner hours in most firms.  This would be acceptable if the success rate of responding to RFPs was high.  Unfortunately, it’s more like 30%.  That’s right, 70% of responses to RFPs are rejected by the client organization.  Worse yet, “winning” typically means being placed on a list of approved counsel with no guarantee of additional work.  Most of the wins produce no income whatsoever, let alone personal contact with the firm.  One firm said their new “client” wouldn’t even return their phone calls.

In an economy where every dollar and every minute is being watched carefully, what should firms do to improve these dismal odds?  These four steps are a good start:

1. Should we answer the RFP at all?  It’s flattering to be asked and it’s tempting to respond.  But many firms should resist the temptation by first deciding whether the work adds to the firm’s portfolio, not just in terms of billable hours in revenue, but in terms of prestige, associate training, additional business from other clients and more.

2. If it does make sense to continue, what should our response be?  First, it should be short.  Second, it should be candid and focus on client benefits, not the features of the firm.  If a potential client didn’t know that you were qualified to respond, they wouldn’t have sent the RFP in the first place.  So why is it that so many firms focus on their size, offices, practice groups and educational backgrounds?  Answer:  it’s easy and it’s on the network.  In a recent round of reviewing responses to RFPs, one of the US’s largest insurance carriers found that only 2 out of 50 deserved to make the cut – they were the only ones that spoke specifically about what their firm would do to address the client’s problems based on research the firm had done prior to the response.

3. If we make the cut, who should we take?  This is more important than most firms think because it sends a signal about the firm and the way that it will handle the client’s business.  How many should we take?  (Hint:  fewer is better.)  Who should they be?  (Hint: the ethnic and gender mix at the first meeting will address client concerns about diversity better than the response to the RFP.)

4. How should we follow up?  The firm has a real opportunity to distinguish itself even, or perhaps especially, if it didn’t get this specific assignment.  By contacting the client afterwards and asking candid questions about their performance, the firm will inevitably learn to make improvements in its next presentation while building a relationship with a current or future client.

It might be small comfort to learn that few firms do the RFP dance well.  Many take shortcuts by cutting and pasting from previous documents.  In one case, one of the nation’s largest law firms, who clearly had the resources to do a better job, submitted a response in redlined form with the previous response name identified throughout the document.  When questioned about it by the potential client, a partner from the firm simply said “just take it out of redline.  It will be okay then.”

Another shortcut is either delegating the task to the marketing department or outsourcing it altogether.  While marketers typically are fine writers, they often lack the deep background and experience required to make the proposal outstanding. 

In short, to ensure success, the firm’s response team should consider:

• Is this client a strategic target or just a one-shot opportunity?
• What are our chances of winning?
• Do we have a brand that is meaningful to this client that would give us an advantage?
• Do we have a personal relationship with anyone on the client side?
• If we got the work, why did we?  If we didn’t, why not?

By going through a series of questions similar to those above, the firm should be ensured of increasing its odds of winning important and profitable business in difficult times – and even when times improve.

The concept of marketing law firms is now fairly well accepted even if the term is overused and often misused.  In some firms, marketing is understood as the entire array of business development strategies and tactics, and includes everything from broad-based advertising to retention and growth of existing clients.   It’s time to put a sharper focus on the term.

By now, virtually everyone knows that the floodgates for marketing opened up in 1984 with Bates vs. Arizona.  This decision, simply put, allowed firms to use the same media that have been available to their clients for years.  Unfortunately, many firms created a problem from and opportunity.  Faced with a  tabula rasa and endowed with sizable egos, many lawyers decided that they were better prepared than marketing people to create advertising, brochures and other collateral for their firms themselves, thus saving bags of money while spinning out product such as the world had never before seen.

Well, they got the last part right.  In a world where precedent is king, imitation truly became the sincerest form of flattery.  In a spectacular display of more is more, law firm marketing materials employed every symbol of the law as lawyers thought their clients knew it, from scales of justice to mighty Ionic pillars to jut-jawed Yalies in conference.  Thank heaven some real professionals stepped in to take the toys away before someone got hurt.

The mid-‘80s saw the emergence of professional law firm marketers, the first group dedicated to saving lawyers from themselves.  Now, virtually every US firm over 50 lawyers has at least one professional marketer—in fact, a good rule of thumb is one marketer for each 40 lawyers.  Most of the pioneers were from advertising or PR agencies and were attracted to law firms with the opportunity to (a) break all the rules, (b) show lawyers the right way to do it and (c) make lots more money.

Well, they got the last part right.  Many marketers found themselves in limbo, slowed by the forces of intellect, democracy and indecision in their firms—combined with lawyers’ natural tendency to expect immediate results, which rarely occurs in marketing outside of QVC and infomercials.    While some marketers flourished in law firms, many found themselves in environments that ranged from indifferent to undecided to hostile.   No wonder turnover in marketing departments averaged less than two years (and still does in many firms).

What does it take to do marketing the right way?  Unlike the early, wide open days, success is based upon clearly defining who we are, what we expect and what we received.  And I’m speaking about both law firms and legal marketers.  Both need to be in alignment; otherwise, it’s likely that firms will lose good people, often to competitors.  After all, I’m not aware of any marketing professionals becoming managing partners at their law firms, unlike many law firm clients where the path to the executive suite is often based upon success in marketing or sales.  For law firm marketers, success is often out then up.

Just when you thought you had law firm marketing figured out, now you find out that it’s not marketing any more.  It’s Business Development.

Huh?  Didn’t that go out with big hair and shoulder pads in the 1980s?  And didn’t consultants like you, Maddock, tell us to get real and call it marketing?

Well, yes and yes.  But now it’s time to consider marketing as only part of the big picture called Business Development.  Because marketing is only a third (more or less, depending upon your firm) of the process.  The other two thirds?  One is an area that lawyers do quite well, thank you.  The other—not so much.

To visualize Business Development, start by drawing a circle divided into thirds, or, if it’s handy, trace the Mercedes logo on the back of your partner’s car.  Now put marketing in the upper right, sales at the bottom and service on the upper left.  Draw an arrow clockwise around the circle, starting with marketing.  Now sit back and admire your work.  You’re already better informed than millions of lawyers globally.

[Sidebar one:  A recent survey said that this blog rated 8,900,000th among all blogs worldwide.  If you’re reading this, you deserve to be rewarded.]

In future articles on this blog, I’ll define each, talk about their roles, list the resources you need to make them work, and then summarize everything with a nice big chart.
 
[Sidebar two: My kids tell me I’m giving everything away for free.  They don’t understand business development or, in this case, blog stickiness.]

Look for part one of the Business Development Story, Marketing, in the next revealing episode.   

Here are ten things every firm must do:

1. Establish and communicate a clear and differentiable brand identity that has meaning to members of the firm, clients and prospects.

2. Differentiate the firm by adding unique value to the service proposition, including:

a. Superior work quality and management through dedicated and well-trained practice group leaders.
b. Focusing on extraordinary client service, headed by a client service manager who can act as an ombudsman for the firm.
c. Developing alternative billing strategies that provide value to the client and increased profitability to the firm.
d. Train clients in e-discovery, e-billing and other technologies before they impose their standards on the firm.

3. Market by industry service teams, rather than practice groups.

4. Focus on diversifying the client base, particularly in niche areas of strength.

5. Ask for referrals if the firm can handle additional work.

6. Network clients with other clients—both will increase their loyalty to the firm.

7. Assess client satisfaction formally and annually to clearly understand each client’s value proposition—and act upon client suggestions.

8. Conduct meaningful market research into new geographies, areas of practice, legal developments—and share the results with clients.

9. If the firm has three or more names, shorten it to one or two.

10. Seriously evaluate whether advertising, airport billboards, blogs and podcasts are meeting the firm’s expectations.

Whether your firm is ready to embark on its first or tenth formal client survey, your goal in conducting the survey is to gather feedback from clients that are important to and knowledgeable about the firm—in short, those who are qualified to voice a credible opinion that can make a difference in how you service your clients.  Asking the right people the right questions is essential to provide meaningful, actionable results for the firm.  So one of the most critical elements of conducting a client survey for a law firm is assembling the mailing list, list of email addresses or call list. 

Typically, we ask firms to build their client list by:

• Reviewing the firm’s list of clients over the past three years.
• Selecting those clients who generated the top 80% of the firm’s revenue over those three years (not 80% of the clients—this is typically a much smaller number).  You may also decide to include opportunity clients, including smaller clients that you expect to grow in size and/or large clients with whom you would like to increase your share of business.
• Identifying individuals within those client organizations with whom the firm has had contact and, again, would be in a position to provide valid feedback about the firm.
• Breaking the list down by billing attorney.
• Distributing these smaller lists to each billing attorney for their review, covered by an explanatory memorandum.

Using this process, firms typically generate a minimum of 300 names for the final survey.  If you attain a 40% response rate on the survey, you will have 120 surveys to tabulate.  Clients will also update their email and website addresses, if they have changed recently, which also can help keep your client mailing and contact information current.