Category: Marketing

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Lawyers: Ask for the Order!

Mike O’Horo of RainmakerVT posted a great article, “Lead-generation is not the same as business-generation”.  The article notes how the whole process of marketing as most law firms do it is essentially worthless if you “don’t ask for the order” and make the sale.  Most lawyers have great difficulty with this step, and miss out on a lot of very profitable business.

In most law firms, the number of real rainmakers is less than 10-20% of the total # of partners.  Yet all equity partners are expected to bring in business of a minimum $ amount to support the growth and profitability of the firm.  Rainmakers must be compensated to a level that keeps them happy, as they are a rarity in the practice of law.  You must motivate and retain these rainmaker partners with appropriate compensation packages to ensure the future success and profitability of the firm.  The rest of the partners must be satisfied with earning less if they can’t or won’t bring in the business.

You must reward your rainmakers with bonuses or higher units of compensation to keep them motivated and bringing in new business. You’re not just rewarding partners for hours billed, you’re rewarding partners for originating work, which needs to carry a bigger weighting at compensation time.  This is where many small and midsize law firms’ compensation systems fall short in my experience.  This is rewarding lawyers for increasing sales, and really no differs from paying bonuses to the best-performing car salesperson on the lot. The sooner law firms get this, the better off they’ll be.  Since all partners will share in an increasing pie, individual partners can’t be worried a rainmaker is making more than them, when everyone benefits from what a rainmaker does.

Law firms must operate in a business-like fashion.  For decades, law firms have operated with a partnership business model protected from the ravages of competition that other professions and businesses have had to endure.  Changes must now be made quickly to become more business-like in your operations and reward partners for “asking for the order” before your competitors beat you to it and steal your rainmakers away from you.

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Guest Post: Legal Marketing Made Easy – Market To Your Existing Clients

I’m pleased to introduce Colin Ritchie of Ritchie Business Solutions from “down under” as our guest blogger for this edition.  Colin Ritchie is the principal of Ritchie Business Solutions, a coaching and consulting firm in Australia that helps small law firms to improve their profitability, cash flow and law firm valuation.

Here’s what Colin has to say about how to make legal marketing a little easier by marketing to existing clients:

Do you want to generate extra fees for your law firm but don’t want to spend a lot of money doing it?

If you do, chances are you have been looking in the wrong place for those fees, by looking to attract new clients.

Your Existing Clients are the Answer

If your law firm provides a range of services to clients, most likely you have many existing clients where you are not providing them with all of the services that you could.

When talking to law firm clients about marketing, I have a saying, being, “Before you spend one dollar on advertising, make sure that you are doing everything that you can for the clients that you already have”.

No, I’m not saying that you can’t advertise, but in many cases, I have found that all of the growth that a firm can possibly handle is literally sitting inside the existing client files in the office.

You see all sorts of fancy marketing terms for what I am talking about, such as cross selling and so on, I keep it much simpler than that.

I call it giving your client what they want and need.

Let me explain…

Most law firms do not have a client base full of lawyers. In fact for most, none of their clients, may be lawyers.

So if I asked you the question, “At your firm, who knows more about the law, your lawyers or their clients?”  It should be quite easy to answer.

So having asked that question, let me ask another, “Who is best equipped to identify the legal issues that your client may have?”

The answer once again, is obvious, YOU!!

Unfortunately at this point many lawyers get all worried about the fact that they may be seen as “SELLING” their services, so they keep quiet.

I continually have lawyers make comments to me along the lines of “If the client wants it, they will know to ask”.

But will they?

I direct you back to my original question “Who knows more about the law, you or your client?”

Surely, this approach is making the assumption that your client is as up to date about legal knowledge as you are, which is highly unlikely.

So How Do You Do It?

If you are still reading, I presume that you follow my logic and hopefully agree with it.

Let’s then look at how you can convert the enormous potential in your firm into results.

Lawyers continually tell me that a purchase of legal services is a grudge purchase. The client doesn’t want to buy it, but they have to. It is a bit like going to the dentist to fix a sore tooth.

Yet plenty of patients of dentists spend huge amounts of money buying all sorts of cosmetic dentistry to improve their smile. So even though fixing a sore tooth may be a grudge purchase, the cosmetic dentistry that has probably cost way more, is not.

It is no different with clients of law firms.

While the property conveyance is a grudge purchase, the estate planning to protect their family is not.

Give Your Clients What they Really Want

A key strategy then, is to find out what your client really wants. Depending on your client base, there is lots of information available as to what they really want and will pay handsomely for.

For example, using the estate planning example from before, does your client really want your complicated documents and strategy, or do they want the peace of mind that those documents bring? You get the idea. When you think that way, what other services may offer them peace of mind?

If you offer a range of services, there will be many additional ways that you can give your client what they really want.

What brought the client to you, is not the only way you can help them

In my experience, many firms act for a client on the matter that brought the client to the firm and then move on and look for another client.

I think this is the totally wrong approach.

As a former Chartered Accountant, most clients would come to our firm to get their tax return completed. Did this mean that that was the only service we could help them with?

Of course not.

This was the grudge purchase that they had to buy, if not from us, then from another firm.

In most cases they simply didn’t know how else we could help them.

I suggest that for law firms it is no different.

The property conveyance may be the grudge purchase that brought the client to you, it is now up to you to educate them on the services that you can provide that they really do want.

If you can do this and do it well, you will not only unlock the enormous potential that exists in your firm, you will develop a group of happy clients who will happily refer you other clients who want the same thing.

ACTION STEP

If this approach resonates with you, why not read more. I had an article published in the January 2013 edition of the Law Council of Australia’s Law Management Journal called “Seven Simple Marketing Strategies for Small Firms. This article expands on this approach of marketing to your existing clients. You can read this article by going to the following link here.

AUTHOR

Colin Ritchie is the principal of Ritchie Business Solutions, a coaching and consulting firm in Australia that helps small law firms to improve their profitability, cash flow and law firm valuation.

You can visit their website at www.ritchiebusinesssolutions.com.au and while there, subscribe to receive their free fortnightly small law firm blog by going to the blog tab and providing your email address.

 

Win-Win Alternative Billing Strategies – Part I

This is the first installment of a three part series based on my presentation on “Win-Win Alternative Billing Strategies” at the CBABC Sixth Annual Branch Conference in Las Vegas November 18-20, 2011.

Current Situation

Alternative billing has been done in conjunction with commodity work for decades in Canada.  Fixed fees are common for personal services commodity legal work such as residential conveyances, wills, etc.  However, alternative billing is not common for most business law and litigation work in Canada. Canadian law firms are not proactively offering alternative billing to their clients either.  And clients aren’t happy about that!

Alternative billing is growing rapidly in the US and Europe, however.  Large clients are pushing big firms to offer alternative billing and they’re getting price discounts of 20% +.  This is what’s coming to Canada soon as well.  So you need to get ready for how to deal with that.

The New York State Bar Association “Report of the Task Force on the Future of the Legal Profession”, published in April, 2011, has a set of recommendations on alternative billing, and it predicts that alternative billing will be the dominant form of billing in the future in the legal industry. Clients are pushing for it, and Bar associations are supportive.

The Association of Corporate Counsel (ACC) is going to be setting up shop in British Columbia and Alberta soon, so it’s coming very fast.

What Do Clients Want From Alternative Billing?

Clients want lawyers to provide more value for money.  Legal chargeout rates have risen dramatically in the last decade, and clients want a price rollback!

Clients also want more predictability in legal costs.  They want fixed fees.  They want to be able to budget their legal costs as close as possible in order to satisfy their CEO’s desire to reduce overall legal costs.

Clients want law firms to share the risk when working for them.  At the moment, clients have all the risks under hourly billing.  Clients want to pay for results, not hours spent. If results aren’t achieved as planned, law firms should be sharing the downside as well.

Many clients are looking for lower overall legal costs.  Legal costs are spiralling out of control, and clients are fed up.

What Do Law Firms Want From Alternative Billing?

Law firms want to maintain or enhance profitability when doing alternative billing.

Law firms want to manage risks, and may prefer not to take on all the risk, but are willing to share risks with the client.  But the risks are a spectrum, and there is a different price all the way along the risk spectrum.  The more risk, the higher the risk premium, just like a stock portfolio.  The higher the return, the higher the risk.  Clients are willing to pay a premium for less risk as well.

Law firms want to retain clients, so they need to offer alternative billing, as clients are looking for it now.  And you want to offer alternative billing before your competitors offer it and steal your clients away.

Law firms want to satisfy clients, and alternative billing offers ways to satisfy clients even more than you are now!

Value Pricing – Part I

So what’s your unique value proposition?  What do you offer that no one else offers for the same value as you do?  Many firms do not focus on this question, and it’s the most important question you need to answer, because it’s the first question a client will be thinking about.  Why should I use you instead of your competitors?

You will need a unique value proposition in order to succeed with alternative billing.  If you don’t, it’s just about price, and that’s a losing game in the end.  You have to distinguish yourself from your competition in order to price at a premium and achieve profitability with fixed fees.

Ron Baker is a CPA who has been talking about the concept of value pricing for over 30 years.  He is the real guru of alternative billing.

Ron presents the formula: Value = Customer Profit minus Price.  What this means is that Value equals the impact your legal work has on a client’s profit less the price of your legal service.   Everything you do for a client will have a positive or negative impact on a client’s bottom line.

Some of the value you provide will be in the form of a tangible benefit, eg. hard dollars recovered or saved, and some will be intangible benefits such as enhanced reputation eg. client gets public financing with the help of your law firm’s blue-chip reputation.

The document “51 Practical Ways To Add Value” on the ACC website is an excellent overview of how you can add value for clients.  It is from a large firm’s point of view, but many of the points are relevant for small firms as well.

For example, ask the client what their strategic plan is. Many clients are very impressed by firms that actually talk to them to find out what their company goals are.  From there you can find out what the client values, and organize your legal services and resources in a way that can truly benefit the client.  And when you start thinking about the client’s profits before your own profits, then you really add value.  If you can help the client become more profitable, your profits will flow naturally as a result.