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.

I often get questions from clients about their firm’s marketing and promotion spending.   They rarely ask if they’re spending too little, but today frequently get the sense that they’re spending too much.  Unfortunately, it’s often hard to give them the right answer, because the right answer requires a lot more analysis.

The starting point is to compare business development expenditures against the firm’s overall revenue.  Typically, firms spend 1.5 to 2% of total revenue in marketing and business development, according to the Altman Weil Survey of Law Firm Economics.  Interestingly, despite the attention paid to business development in law firms over the last several years, this percentage has not changed materially.
 
But even making this comparison can be quixotic.  Many firms include political contributions, meals, entertainment and even club dues as part of their budgets.  Others include only marketing communications materials, such as websites, advertising, corporate identity and other programs. This is why it’s often difficult to benchmark business development spending.  In addition, firms that spend more or less than the 1.5 to 2% stated above are often more right than wrong.  For example, the firm that spends significant dollars to update its website might spend 4% of revenues that year, based on the sunk cost of the website, but in consecutive years show considerably less spending on recurring costs.
 
A better measure might be to evaluate the effect of the business development activities the firm has undertaken.   While almost everyone does a headcount at firm sponsored seminars, few firms conduct top of mind awareness studies to measure the effectiveness of their branding and identity programs against peer firms.  More common, but certainly not universal, is how firms measure their successful response to RFPs.  While it is difficult to directly attribute new business dollars against spending, especially compared to the ratio of business development spending compared to revenue, these are two ways of measuring the right things.

While it’s true that many law firms have rechristened their marketing director position as Chief Marketing Officer (CMO) without a fundamental change in role or expectations, many others are treating the position very seriously.  It’s likely that few other positions in law firms will undergo as much scrutiny or change as that of the CMO.

 Already, CMOs are redefining marketing into business development, which means paying greater attention to the three component parts of this process: marketing, sales and service.  In addition, CMOs are grappling with the emergence and growth of new media, further client segmentation, referral interdependence, increasing client demands and a competitor landscape the changes almost daily.

Result?  The role and authority of the CMO are more important than ever.  Unfortunately, turnover rates among even the most senior marketing professionals in law firms remain high, thus limiting the long-term value that these skilled professionals could provide.  In its first annual CMO Survey, Law Firm Inc.’s December 2007 issue played back some quotes from CMOs who sound somewhat less than enthralled:

“People aren’t able to take the level of abuse that lawyers throw at them.”

“Being a CMO is a lonely job.  You’re only as good as your last successful proposal, ad campaign, partner retreat or typo.”

“There is no leadership from partners in law firms, and too much administration.”

“It’s simply a tough, tough job where you spend a lot of time justifying your existence.”

What do law firms need to do?  First, they need to clarify their expectations of their lawyers, their business development program and their CMO.   In many firms, lawyers and even management are unaware of the firm’s marketing program and the role they are expected to play.   Second, firms need to determine whether they have the right person in place as their CMO — one who can deal cogently and decisively with ongoing change and has the respect of the firm’s partners.   Not always an easy task when there are so few benchmarks—but when all of the pieces are working together, it’s a beautiful thing. 

For years, there has been a popular opinion that law firms lag behind their other professional services brethren in marketing and business development.  Although a case could be made that law firms are catching up, they still have a long road ahead of them in some areas.  Ironically,  one of these areas—establishing an alumni association—is one of the easier and more productive strategies a firm can undertake.

Alumni associations are simply a formalized way of maintaining contact with professionals who were employees or members of the firm.   These employees may have retired, moved on to other opportunities or even been asked to leave during a downsizing phase.  The purpose of these associations is to perpetuate the firm’s culture and provide opportunities for expanding the firm’s business relationships.    By keeping in touch, law firms can maintain a bond with some of their best potential clients—former lawyers who are in a position to award business to outside counsel and know your firm’s strengths better than anyone.

But who has one?  What’s your experience?  Let me know. 

When members of your firm have been charged with developing the firm business development retreat, it is critical that the firm leadership demonstrate the importance of business development to its Partners and Associates, and not just by hiring a consultant.  When firms take the latter course, it is far too easy to ignore business development after the consultant has returned to his or her office.
 
Instead, I recommend that the retreat be only part of a suite of activities designed to focus the firm on expanding business with existing clients as well as identifying and capturing work from new clients.  The retreat would, of course, be part of this suite, but other functions could include annual client satisfaction interviews, practice group plans, attorney training, making business development part of lawyer compensation, and other issues.  Rather than imposing these issues from the top, it would be much more successful for lawyers to identify and advocate these steps themselves, ideally at the retreat.  
 
At the retreat, I would suggest an agenda in four parts:
 
1.    Overview/presentation on the current state of law firm — client
relations; how successful firms are retaining and building their client base
2.    Lawyer work group discussions based on the presentation and
suggested questions in the agenda
3.    Workgroup presentations, including recommendations for next steps
4.    Assignment of actions, deadlines and responsibilities; wrap up
 
I think this would make for a sustaining program rather than a one time event. 

In the last five years, we’ve seen a decline in the use and credibility of push tactics that use “old media,” such as print and brochures.  While both allowed the law firm the opportunity to control the message, most firms missed the chance to create a differentiable and meaningful brand. Now, third parties like bloggers are increasingly heard and are having an even greater influence on corporate, political, and even law firm reputations. 

Really?  Law firms?

In the political arena, CNN has had to rely on YouTube.com to frame questions for the Republican and Democratic contenders as a means of continuing to appear credible and relevant to the Millenial Generation.  In the law firm world, sites such as www.betterlegalprofession.org publish law students’ and first-year associates’ opinions on matters that are important to them, including diversity and pro bono, bypassing the filters  that law firms use to project the most positive image of themselves.

According to the New York Times, which ran the story on October 29, the Stanford Law students who developed this website said that “Firms that want the best students will be forced to respond to the market pressures that we’re creating.”

In a parallel development, the growth of credible, peer evaluated rating systems in the UK, Canada, the US and elsewhere give buyers of legal services as well as law students and laterals more objective options to evaluate law firms and their lawyers.

These are all symptoms of changes in client needs and behavior.  The impact on lawyers and their clients is too significant to make the wrong choice of firm.  Lawyers need to recognize that they control less and less of the message and that push marketing is  being shoved aside by the voice of the consumer.

Whatever happened to boutique law firms, the ones with a single focus on intellectual property, environmental, labor and other practices?  In an age of specialization, you would think that boutiques would still be turning clients away at the door like a trendy club in SoHo.  Just as the club scene is ever changing, client demand for law firms is relatively fickle as well.

In the last five years, IP firms alone have gone through significant change, either by being absorbed by a general practice firm, merging with another specialty firm or dissolving.   A similar picture exists with other types of boutiques.  Why?

Picture a boxing match between Rocky Boutique and Apollo Convergence.  If you’re for knowledge of trends, government mandates and the world of science, you’ll root for Rocky.  On the other hand, if you’re all about efficiency, cost savings and knowing my business, Apollo is probably your man.   Does one have to win?  Can’t we all just be friends?

In the real world, the difference between winning and losing is much harder to define.   I think we can agree, though, that firms that expand existing client relations, capture profitable new business and enhance profits per partner are going to be the winners at the end of the match.   How does that happen?  How can I make it happen in my firm?

To answer those questions, we need to go back almost 15 years to the earliest convergence programs, especially the program developed by DuPont.  Prior to the establishment of the DuPont Partner Law Firm (PLF)  program, law firms defined the value proposition (here’s what we’ll do for you, based on our experience and expertise, and here’s what you’ll pay for it).  DuPont and others had the foresight to recognize that   by streamlining the number of firms used (typically smaller local firms and boutiques), they could reduce headcount  in the law department, drive down their internal costs and rotate the value proposition by 180 degrees.  Now clients called the shots and many of them began to confirm their belief that the value they received from their firms needed redefining.

There’s conclusive and measurable evidence for this.  The overall decline in the number of boutiques is one measure.   Another metric is client satisfaction with their law firm.

Fifteen years ago, Altman Weil began conducting client satisfaction surveys for law firms.  In the course of gathering satisfaction data, we quickly realized that clients were generally more satisfied or much more satisfied with the boutique firms that they used, even though these firms were generally more expensive than general practice firms that had similar expertise.  Because boutique firms performed so much better—70% of clients were completely satisfied with their boutique firms, ten points higher than their GP firms–we decided that comparisons were unfair and even irrelevant, so we kept separate databases for each rather than making comparisons.

Flash forward to the present time and the situation is completely different.   The market has clearly matured.  Sophisticated buyers of legal services recognize that law firms can be grouped into three or four tiers and within those tiers there is little difference in quality, expertise or pricing.  The factors that do make a difference are service, knowledge of my industry, knowledge of and respect for the people in my law department or business and brand recognition of the firm.    

And it shows in our surveys: now boutiques fall ten percent behind GP firms in complete satisfaction.  Don’t forget, these figures are averages.  In some cases, less than 40% are completely satisfied with their boutiques, a perilous figure.

How did this happen?  Boutiques have continued to focus on their craft while GP practitioners have emphasized service factors.  In some cases—especially IP—boutiques have become marginalized as Chief Legal Officers set the legal direction throughout the corporation.   In addition, GP firms have the edge on locations, pricing flexibility (especially if they capture a large part of the client’s business), range of services and brand recognition.  The latter has become increasingly important and is the number one reason why firms are chosen, acceding to our client surveys, even more important than the firm’s specialty.
 
So, how can boutiques compete and win in this very different environment?

• Continually assess client satisfaction though surveys, interviews and client audits.
• Offer a sales and service training program to partners and associates who have or show the potential for generating business
• Identify a service ombudsman within the organization to manage the ongoing client satisfaction program, including personal or telephone interviews annually to measure client satisfaction and opportunities.
• Recruit a full time sales person to provide potential clients substantive reasons why they should select your firm.
• Improve brand recognition by deciding who you are , who you aren’t and the reasons why clients should hire your firm.  Make these statements simple, accurate, important and consistent throughout all of the firm’s communication channels.

As the legal world of buyers and sellers has changed dramatically, boutiques have been slower to recognize and embrace change than GP firms.  By looking at the firm as clients see it and focusing on the service factors important to clients, boutiques can return to their places of honor and respect in the legal market.