Penny Wise, Pound Foolish? Are Firms Being Short-Sighted?

QUESTION #1: Is it realistic that firms with billed/collected hour targets over 1,800 can "require" or even expect any significant, meaningful business development efforts over time from most lawyers? According to statistics, only around 20% of qualified new business leads are ever even followed-up upon by lawyers/professionals. In almost every instance, following-up is crucial to closing the business or getting it in the door. Is there simply not enough time in the billable hour business model?

QUESTION #2: Can this follow-up job be "delegated"? Yes, it can. But, it is ethical, professional and tasteful to do so? Arguably not. First of all, very few prospective clients will hire a lawyer or other professional service provider without having met them and developing at least a minimum level of rapport, trust and/or confidence (unless they come highly referred by another trusted source). Second, having non-lawyers follow-up with prospective clients with the intent to develop business is an ethical violation of the ABA Rules of Professional Responsibility and the corresponding rules in every state. Third, is a person who will not be doing the work or involved in the work the best person to follow-up? To answer that question, put yourself in the client/prospect's shoes: would you like a person not actually involved to be 'selling' you? Finally, is the firm willing to compensate appropriately qualified personnel for this time-consuming and critical role? Most firms do not. Instead, they look to the least expensive person possible whom they hope will be qualified and able to do the task, then overwhelm them with many other responsibilities and hope for the best.

QUESTION #3: How relevant is realization? In the last five years, most firms have seen an exponential increase in the total number and actual percentages of discounts they give clients/prospects off their "rack" or standard hourly rates. Discounts can now amount to up to 20% of a firm's total hours produced and up to 30% off the standard rate amounts. So, "rack" rates are becoming increasingly irrelevant. The only number that really matters to boost the bottom line is what is actually collected -- or what the client is willing to pay. Is this increasing irrelevance of realization another symptom of the decline in the billable-hour business model?

QUESTION #4: What keeps you up at night?

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Hot Legal Issues

Within the multi-layered cyclicality of the global economy and resulting changes in industries and business, legal problems evolve and surface in waves. Recently, some hot areas I am observing include:

1) Subprime and prime lending institutions, loan portfolios and borrowers – These matters have a downstream effect on legal services, offering opportunities for transactional lawyers, real estate lawyers and sometimes resulting in complex commercial and financial related litigation.
2) Privacy and security in Internet technology and communications – These types of cases are increasing at both state and Federal levels, are affecting businesses and consumers and often require new or updated policies and/or procedures.
3) Insurance coverage – Certain states have seen a dramatic rise in such claims due to particular natural disasters. However, as a generality insurance coverage claims are on the rise due to increases in denials and rescissions across-the-broad.
4) Diverse lawyers – Particularly, qualified lawyers of color or varied ethnic origin have unprecedented opportunities to obtain outside counsel work from Fortune 500 companies with strong diversity hiring policies.
5) International ADR – Global business is generating not only opportunity of global proportions, but also lawsuits involving numerous, multi-country jurisdictions and the associated expense. Companies are turning increasingly to ADR solutions, a trend which is expected to continue into the future.

The above are just five examples of what’s hot. What’s hot in your practice area?

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Mastering the Sales Process for Lawyers©

This seminar to be held Thursday, October 4, 2007 at the Westin Detroit Airport (allowing for easy same-day travel). Experience the opportunity to pitch General Counsel from Dow Chemical and ThyssenKrupp U.S.A. This program is filling up quickly. To see what past attendees have to say about this program, for more information or to register, please click here.

Elephant in the Room! Two Key Obstacles to Effective Law Firm Business Development

Commitment and Approach – Given steady revenue growth in recent years, too many firm leaders continue to consider the business development process as secondary and/or non-essential to the practice of law. Maybe they think that organized client development is not that important to building the practice and/or is not a priority given so many demands on available time. Too many firms continue attempting to “delegate” business development or try to “get it off the plate” by hiring someone to handle it, which can be referred to as the “throw a person at the problem” approach. Too often, the person hired is not given the necessary authority, responsibility and/or budget to produce any measurable results or to build any significant, meaningful program. Instead, many are relegated to some variation of being a “party planner” (which is a necessary and important function, but is only one component of the entire business development process). In addition, firms that hire marketers or business developers with no or little law firm experience must allow for a learning curve to get them up to speed on the practice of law, which often means mistakes and/or oversights. Too often, that person loses patience, is unable attain internal credibility, may not be supported by leadership and/or cannot build enough political capital – and thus leaves the firm. Then, the firm’s entire business development effort must be re-built from scratch (which can be referred to as the “re-invent the wheel” or the “stop-start” approach). Commitment and approach are also an issue at the grass roots level where too many lawyers/professionals invest only in a short-term or one tool effort to develop business. Maybe a litigator who is less than 100% billable will conduct a seminar, but then when the plate of work is once again full, drops the ball on all contacts made at the seminar and necessary follow-up. . The same thing happens to in-house marketers often because they are pulled in so many different directions within their available time.

Attitudes – Closely intertwined with an unproductive business development commitment and approach (at the firm, leadership and individual practitioner levels) are issues related to attitude. Recent studies by BTI Consulting found that lawyer arrogance has not dissipated along with the reduced stature of lawyers in business and society in general. Arrogant behavior is ego-boosting, making people feel superior to others. Unfortunately, too many lawyers think they are better than the competition, an attitude that perpetuates arrogance. In addition, as Scott Turow wrote in his article entitled “The Billable Hour Must Die”, published in the ABA Journal, August 2007, “America is ambivalent about lawyers. They see us as too often self-seeking, manipulative and greedy”. Lawyering is a profession, yet remains at its essence a service provider function where each and every lawyer is in service to the client both internally and externally. Unfortunately, too many lawyers seem to forget that simple fact. Amazingly enough, a small number of in-house marketers also act arrogantly, behaving in self-seeking and in less than courteous, professional ways (perhaps mirroring their lawyers’ behavior or firm culture?). Unfortunately, almost all arrogant attitudes and behaviors (except those emanating from the VERY best – which are very few) negate most efforts to build sustainable, productive relationships and a book of business over time. The foundation of developing business starts and stops with relationship building and a display of arrogance, self-centeredness and/or manipulative behavior makes it is very difficult to initiate or sustain positive, productive relationships with prospective clients and referral sources. It stands to reason that those responsible and accountable for developing business – rainmakers, firm leaders and in-house marketers alike - should set the standard high for professional, courteous and respectful behavior towards others at all times.

What is the commitment, approach and attitude like at your firm?

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