Category Archives: Business

Old School Marketing – Sales Is Not A Dirty Word

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Originally Posted on Small Firm Innovation

Back in the old days, lawyers really had to hustle to get work.  Okay, that’s just like today.  But lawyers had to “sell” themselves to get clients to use them.  So what’s so different about that today?  Well, many law firms now use technology and social media to get their marketing done.  But it still requires a human touch to get the “sale” done.

Marketing is the set-up, and sales is where the real money is made.  When you’re trying to win legal work from high powered corporations with their own sales teams, you need to match them in sales skills.  The clients will push every law firm to distinguish themselves with their sales abilities to earn their work.

So once you’ve identified and qualified the buyers, you approach them for the sale and “ask for the order.”  What’s that you say?  Yes, this is “old school” marketing.  It’s been done by salespeople in every industry for decades. Don’t want to have a sleazy “car salesman” image?  You don’t have to.  Some of the greatest salespeople are actually very highly skilled lawyers who use their own special sales techniques all the time while networking with blue chip contacts.  Their clients are also great salespeople, and smart lawyers connect them with other great salespeople they know and generate great referrals.

Your clients respect the art of sales as that’s how they conduct business all the time.  Lawyers who master sales techniques are respected by their clients, make no mistake.  It’s all in the delivery.  If you have a great product, you are proud to sell it and its benefits.  Don’t focus on features, focus on benefits, and distinguish yourself from the competition.  Find out the customer’s needs, then provide them with the customized product and service they require.  Listen a lot, and cater to their desires.  Really care about your clients, and provide added value over and above what they are expecting.  These are all tried-and-true sales techniques, of course.

It’s time that lawyers really understood the language of sales and applied the concepts.  In today’s competitive legal environment, you can’t afford to be “outsold” by your competition.

Some large law firms now even have sales departments.  They’ve got the message, and they train their lawyers in sales techniques using standard sales training courses.  Solos and small firms have the same opportunity.  You can get the necessary sales training from many sources out there.

Immerse yourself in the sales culture and start regularly “asking for the order.”  Some of the most successful lawyers I know are experts at it.  Some may call them rainmakers, but the smart ones know that deep down they are really just good salespeople.   After all, the highest paid person on a car lot is the sales manager.  Now that’s a goal to aspire for!

Trends In Restructuring Law Firm Business Functions To Increase Profitability

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I’ve often wondered why so many law firms insist on keeping business functions run inhouse by lawyers, when they’d be much better off delegating or outsourcing (levering) these functions to someone who knows more about business management than they do.  This behavior can range from the Managing Partner who insists on doing the financial statements himself to the numerous lawyer-run Committees you see operating in many firms.   Many firms would get much better and faster results by having an experienced Executive Director or Administrator perform these functions for them.

Some will say that lawyers won’t listen to someone who isn’t a lawyer regarding management issues.  However, many lawyers are now realizing that they need to streamline their operations further as clients push them on the rates side and squeeze their profit margins further.  I would suggest that more lawyers need to become aware of the option to outsource these functions as well,  given the increasing demands from clients to keep costs down and provide better and faster service.  It also recognizes the need for law firms to focus on their core competency of providing legal services.

One of the main reasons to consider levering business functions is to increase profitability.  This requires that you focus on how leverage of business functions can operate in your firm to release your fee earners from administrative tasks.  Your opportunity costs can be great if you have several partners involved in management and administration functions, when they could instead be doing more productive things with their time.  Things such as getting new, highly profitable work, working on high-end files or performing high level R & D to add value to the firm’s knowledge banks and improve firm profitability.  At $400 to $1,000 per hour opportunity cost, you’d be far better off levering those admin tasks to an experienced COO or Executive Director who could do the job more effectively and efficiently.  Your “real” bottom line will grow substantially after allowing for these recovered opportunity costs .

In a recent survey I conducted with COO’s and Executive Directors of midsize and large US and Canadian law firms, I found that more firms are also looking seriously at outsourcing facilities management, document production,  systems, human resources and marketing functions.  Whole administrative departments are not only being outsourced, but are also being shared with other midsize firms.  This tactic allows midsize firms to compete for much larger files than they’d normally have  a chance at and both firms can benefit from the arrangement.  It’s just another way for firms to extend their reach to be competitive without having to merge or add extra offices, and avoid all the costs and potential heartaches that an ill-thought out merger can entail.

Orrick is an example of a firm that successfully “outsourced” all of their administrative support functions such as HR, marketing, systems, facilities management and document production to a single support center office in West Virginia.  Their global network of offices can access the admin services they need from this Global Operations Center on a 24/7/365 basis.  Through this change, Orrick has reduced administrative costs while improving the quality of these support services.

CMS Cameron McKenna in the UK is the first major law firm to outsource its entire business support function to an outside party, including IT, HR, finance, business development, communications, knowledge management, facilities management and administration services.  This is a major development/experiment and is being watched with great interest by many other firms.

Another administrative service to consider for outsourcing is the search function, such as due diligence, title search, etc.  Why firms have their paralegals do these functions is curious to me.  Paralegals should be focused on higher end legal file functions, and searches should ideally be delegated to clerical staff or outsourced to a dedicated search firm.

Another option for small and midsize firms is to outsource all of their administrative functions to companies like MCG Management Counsel Group in Toronto or Cameron Management Services Group in Calgary (no relation).  These companies can handle all of your administrative and business functions so you can focus on practising law.  I’ve heard this option works very well for some small and midsize firms.

The latest option for outsourcing administrative functions is Face2Face Solicitors in the UK, which provides franchisee solicitor firms with centralized back-office systems – including accounts, IT and regulatory compliance – and central marketing and business development, to enable lawyers to focus on the legal work.  See here for more info.

Outsourcing can done at many levels in law firms and is being experimented with in different ways by forward-thinking firms.  You can theoretically outsource any business function.  One partner I knew once jokingly suggested that he’d like to see his firm’s entire Management Committee outsourced.  Okay, that’s pushing the outsourcing concept a bit, but considering the minutiae that many Management Committees get involved with, perhaps it’s not such a farfetched idea!

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The Link Between Knowledge Management and Profitability

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Did you know there is a direct link between Knowledge Management (KM) and Profitability for law firms?  In addition, did you know that this link exists right at the top of the profit pyramid, where the impact on profitability is the greatest?  I’ve heard this link mentioned before, but haven’t heard the reasoning behind it.  Here are my thoughts on this very important concept.

So, what is behind the link between Knowledge Management and Profitability?

First, it’s generally recognized that increasing Rates can have the biggest impact on profitability.  As David Maister states in his book “Managing the Professional Service Firm“, you can increase rates through specialization, innovation and adding value. The use of properly developed KM systems can significantly increase rates in all three of these areas.

KM systems organize the information that lawyers need to develop and maintain their specialty practice areas.   KM systems also allow lawyers to innovate the way they  provide legal services to clients. Finally, KM systems add value to legal services delivered to clients.    See here for further information from KM experts such as Ann Bjork of Virtual Intelligence VQ in an article from KIM Legal magazine.

I’ve always believed that the use of KM systems has the potential to make law firms extremely profitable.  For example, the reuse of past legal work product can dramatically cut the cost of legal services and allow law firms to recover the true value of the legal knowledge they are imparting to clients.  This is done by value billing without regard to the number of hours being spent on the legal task at the time.   It’s not unethical to value bill for KM if you let the client know what you’re doing up front and give them the chance to “buy in” to a new way to dramatically reduce their overall legal spend.  At the same time, this allows law firms to expand their own profit margins by increasing effective rates dramatically.  It truly is a win-win situation for the law firm and the clients who embrace this way of doing things.

KM provides clients with exactly what they want – lower overall legal costs – while allowing law firms to increase effective rates on the legal products and services they are providing to clients.  KM allows law firms to turn legal knowledge databases into products that can reused over and over.  This allows law firms to invest for the future like other businesses, and not just build fiefdoms of partners who are only in the enterprise for their own gain.   This is where most KM initiatives usually fail, as many partners can’t get past the short-term impact to their numbers by compensation systems which are driven by short-term results at many law firms.  It takes some work to convince partners that the KM initiative will truly benefit them in the long run.  Forward-thinking Managing Partners and Compensation Committees will take into account these long-term investments of legal knowledge by partners who contribute to the development of great KM systems.  Firms can start small and simply bonus partners who provide significant contributions to the KM initiative.  See the article from KIM Legal article magazine noted above for further ideas on how to approach the KM contribution/compensation issue.

KM contributes significantly to greatly increased profitability in law firms by driving and supporting higher Rates, which is the factor that has the biggest impact on law firm profits.  I believe that once law firms truly understand this, you’ll see many law firms revisiting the KM concept.  In combination with the drive for alternative billing models which clients are clamoring for today, law firms should be able to utilize KM to help clients reduce their overall legal costs while driving their own profits higher.  In this way KM truly can be “the missing link” you’ve been searching for to dramatically increase law firm profits.

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