I’ve always thought that law firms missed out on a major opportunity to take advantage of Multi-Disciplinary Partnerships (MDP’s) over the years. The current economy, the recent changes in British Columbia’s MDP guidelines and the coming UK regulation changes re: Alternative Business Structures (ABS’s) may be a great opportunity to get the ball rolling again.
In the 1990’s, the MDP discussion was very hot as law firms reacted to the possibility that accounting firms might steal their legal business as they developed global MDP consulting firms. In some cases, this led to law firms expanding into national and international legal firms to prepare for battle with the accountants. The opportunity was there for law firms to capitalize on global MDP consulting business as well. Alas, Enron came along and the accounting firms sold off their consulting subsidiaries due to conflicts with their audit client base. Law firms then quickly forgot about the MDP issue and went back to focusing on their core legal business.
However, it’s now possible for law firms in most countries to build their own MDP’s to gain market share from global consulting firms and accounting firms. The British Columbia and UK regulation changes simply highlight this potential even more. The downturn in the economy provides a perfect opportunity for law firms to gain market share in previously unexplored markets and gain from the potential synergies of combining legal practice with other professional disciplines.
Will law firms be proactive and take advantage of the huge opportunity they have available to them now? Let’s hope so.
To get lawyers thinking about sales, the first step is to set up a system that rewards them for sales. Not a revolutionary idea, but one that many firms don’t implement or implement poorly.
You need to entrench sales and marketing in the culture of the firm. Sales is not a dirty word, it’s what lawyers must do to become partners, build a great practice and make the firm financially viable for the long term.
By simply setting up a tracking system for sales, you get lawyers’ attention. And when you use the system to start impacting partners’ compensation, they quickly change their behavior and get down to business. In some firms, there are partners who simply do sales and very little legal work. They can be the most highly paid partners in the firm. They show the way for entrepreneurial young partners, who quickly see the benefits and build their own practices and become great partners.
Some will say that tracking and origination credits systems can be divisive and encourage internal competition. There are certainly management issues in making a sales tracking system work properly, but these can usually be easily handled. The pros dramatically outweigh the cons in most cases. Most firms with sales tracking systems already in place would never go back.
Track origination credits by clients and matters. In this way, you will encourage new client development and generate business from current clients. Studies show that 80% of your business is generated from current clients. And encourage sharing of origination credits between lawyers and within practice groups to promote team sales efforts. This will help institutionalize clients, resulting in longer-term retention of clients’ business and greater stability for your firm.
I’ve seen sales tracking systems in action that produce stellar results, which have helped make their firms extremely profitable. For many firms, this is the key to really unlocking your partners’ business generation potential.
I would suggest one simple killer strategy that firms should being doing already, which is even more critical during tough economic times. Interview all your top clients and find out what issues are “keeping them up at night”. Then help your clients focus on these issues and resolve them. They’ll thank you for it with more work and market share. This strategy will also help you avoid losing your top clients to other hungry firms approaching them during this period.
Tough times like these lead to many opportunities for smart firms. Another great strategy is to pick up star partners from your competitors in lucrative practice areas you want to grow. These folks are available now since it’s slow, and not normally available in regular economic times. When the economy returns, your new star partners will help your firm dominate your market space and greatly enhance future profitability.