10 Reasons Why Law Firm Marketing Is Failing And How To Fix The Problems
by William J. Flannery, Jr.
In a buyer's market not responding to the buyer's needs is a benchmark of failure. Many lawyers and law firm marketing strategies are products looking for a market and disregard the client's needs. Symptoms of these strategies is an emphasis on selling without focus, a general lack of market research and pricing actions (lowering fees) designed to garner market share without regard to profitability. Differentiation and a focus on service are the strategies that will prove to be successful in the next 24 - 36 months. To implement any successful strategy, the firm will need to remove the impediments to implementation. These are the major impediments to the firm's success:
1. Compensation - Compensation should be designed to encourage profitable behavior. A focus on individual rewards for business generation creates an atmosphere of client hoarding and an "eat what you kill" behavior. Client origination credits are equally counter productive. Often partners inherit clients and are unjustly rewarded when they had little or nothing to do with the continued success and profitability of the relationship. Firms will need to create client-focused relationship teams and reward the members of the team proportionally to their contributions. This will mean that certain team members will be paid to manage the relationship and others for doing the work. Firms should reward individual attorneys when they assist in finding opportunities in practice areas other than their own. In marketing, the rule is: What gets compensated gets done.
2. Focus - Most firms and individuals spend time and resources trying to create demand and generate leads. This behavior is generally linked to a compensation system which rewards new client matters and does not pay for additional business from current clients. Law firm leaders should calculate where 85% of the firm's business comes from and select key individuals to manage those client relationships. The objective should be to focus on business preservation. Another important activity is to grow and expand relationships with current clients that use only a few services of the firm.
3. Skills - There is a widely held belief in law firms that it takes a certain personality to be a successful rain maker. Effective legal services marketing are skills that can be learned. New successful approaches to teaching interpersonal communications skills and marketing as a business process have been developed over the last fifteen years that can turn drought makers into rain makers. The stereotype "rain maker": out going, gregarious and "close the business" type is no longer the model that is working. This is especially true in a buyer's market. There are methodical and systematic business processes for determining buyers' needs. These approaches are far more successful with sophisticated clients. Most firms don't understand the need to train their lawyers in these new business process and communications skills. Subscribe to business and marketing journals as a way of providing new information and insights.
4. Leadership - Leaders can be defined by those who achieve objectives through the efforts of others. To be a successful leader one must have a clear vision of the direction the firm needs to be going. Leaders must be able to communicate this vision to everyone. Leaders will need to be clear about how they plan to implement the vision and be responsible for the success or failure of that vision. Too often managing partners micro-manage and lose the "big picture". Leaders need to be focused on creating a firm culture and leave the day-to-day management of business to administrators.
5. Hourly Billing - "We have no time to market, we have to bill hours." Clients are forcing change in the way lawyers bill. Hourly billing as a way of doing business is creating problems for the buyers of legal services. They cannot budget for matters effectively. They cannot manage the process without adding costs and lastly there is no incentive for the law firm to improve efficiency. When project billing becomes the norm lawyers will have more time to market and develop clients. In the mean time, the firm should develop a set of guidelines to help the partners and associates determine if it makes sense to spend time doing billable work for unprofitable clients verses the alternative which is to spend non-billable time focused on marketing to profitable clients.
6. Marketing Plans - Individual marketing plans are good except where everyone in the firm wants to do work for the firm's largest client and the efforts are not coordinated. Many consultants have discovered that lawyers like to spend time planning rather than doing. As a result, consultants have wasted firm resources developing individual, practice group and firm marketing plans. Their efforts are generally focused on the planning and drafting of a carefully crafted plan. Having completed the plan, there is little money, time and energy left for the execution. The plan generally begins to gather dust. A simple plan to focus on those clients who are responsible for 85% of the firm's revenue will be more successful.
7. Denial - "The business will continue to come to the firm no matter what." "Someone else will market for me." "I bring in $3 million now, what or why do I need to improve?" This is death wish marketing. Complacency about your firm's need to continuously improve service and the firm's marketing efforts is a prescription for lower profitability. All firms have partners who are in denial. The trick is to make a change in the way the firm's lawyers work with clients and encourage those efforts that are consistent with the firm's culture and values.
8. Infrastructure - Most firms have devoted too little resource to marketing. Many firms don't use the resources they have profitably. The firm will need to spend time and money to produce high quality proposals and presentations. Staff will need to be trained in the basics of client focused service. If the firm is large enough (15 lawyers) then a marketing or client relations director may be needed. The best way to determine the need is to measure the time the lawyers spend in non-lawyer activities devoted to client development.
9. Teamwork - Why aren't there more teams in law firms? Ego and lack of team experience coupled with the rugged individualism fueled by the competitive educational system inhibits the creation and implementation of teams. It's not a coincidence that law firms have practice groups, not teams. Client-focused teams offer the client more value and the firm the opportunity to manage the relationship profitability. Our success as lawyers has been the result of individual effort. We are reluctant to rely on other team members for success. Try team training and team exercises using real life experiences.
10. Technology - Law firm software and computer systems were not designed to provide profitability, market trends, and related client databases. Most firms use their technology as big calculators and expensive typewriters. Develop a client-focused database. You should be able to ask the system to provide: who are our most profitable clients, what do they buy, how often, who buys (G.G., business people, etc.), and are they satisfied? The best way to get the technology working for the firm is to write out the marketing reports you would like to receive and work backwards to the creation of the database. Buy desk top publishing software and create a presentation and proposal center.
These are the major impediments and they will require attention and action. Too many lawyers get caught up in the elegance of the planning process, fail to take action and eventually go into marketing denial and paralysis. The answers lie with action. We are, as a profession, reluctant to try new ideas or approaches. The reluctance is partially due to fear of failure but it is also a desire to find the perfect solution. Most of the important business discoveries were the result of mistakes while trying to find a solution to a known problem.
The best way to remove these impediments is to recognize and communicate the problems firm-wide. The debate that it will occur will be generally focused on the means, process, etc. rather than the end result. Keep asking your partners the same questions: If we don't change, what will be the consequences over the next several months? If a loss of profit, clients or partners is the result, then start working on making a change to remove the impediments to successful client development. Each individual lawyer in the firm will have to make a change and there lies the challenge. John Kenneth Gailbraith said it best: "Faced with the choice between changing one's mind and proving there is no need to do so almost everyone gets busy on the proof." As lawyers, we have been spending too much on proof and not enough on action.