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Market or Die: A Message
To Managing Partners


By John O. Cunningham           

Law firm leaders face critical decisions in a legal services marketplace that is consolidating and changing rapidly. For law firms of every size, survival depends on transforming firm-centric models to 21st century client-centered service business models. Elevating the marketing and business development function from afterthought to strategic weapon is the key.

Count the tombstones: Brobeck Phleger; Arter Hadden; Hill & Barlow; Testa Hurwitz; Hutchins, Wheeler & Ditmar. More than 80 well-known national and regional law firms had their obits written in the past ten years, according to one recent study.

The world is changing, and the pace of change is accelerating. The population of lawyers is expanding faster than their business clients, while large corporations are merging and reducing the number of law firms they hire — a phenomenon dubbed "convergence" by consultants who are selling firms on the need to grow. Meanwhile, client-firm relationships are increasingly difficult to maintain through a barrage of company mergers, takeovers, and restructurings.

This is why the battle for clients and the battle for recognition in the legal marketplace is the single biggest concern that law firms — of all sizes — face in the war for survival.

Marketing and Business Development as Strategic Weapon

The science of marketing and business development is at the core of every battle for clients, and yet, ironically, this critical business discipline is still shunned by many lawyers who think of it as nothing more than cheap advertising and unseemly ambulance-chasing. The study of markets (aka "marketing") is what fuels the success of every mega-client that every law firm is chasing, and yet most law firms still don't really understand the marketing function.

Marketing is not just advertising and it's not a bunch of used-care sales techniques. It is the study of why your clients buy your services, what services they buy, when and how they make buying decisions, what they are willing to pay for those services, what would make them buy more, what other products or services they want from you, what causes them to defect and what causes them to stay with you. In short, it is the essential understanding of how your cash register rings.

Many lawyers are also struggling with the idea of business development programs, which are the means by which you capitalize on your marketing information and knowledge. If marketing is studying your customers to position and communicate your services to meet their needs (getting ready for battle), then business development is coming up with a plan to win those customers and get more of their business (a specific strategy and tactics for winning the war). The business development plan provides a suggested road map for how to reach clients and prospective clients, how to win them over, how to build intimacy and expand relationships with them, and how to keep them amidst the turbulent seas of change.

One of the single most effective marketing and business development tools that law firms can use is the client interview. The client interview can be as simple as an informal face-to-face visit with a client to learn how you're doing and what the client's changing needs are, or it can be a formal interview with a client, often performed by someone other than the relationship lawyer. Either way the purpose of the interview is to   determine the client's relative degree of satisfaction with the firm's service as well as satisfaction with individual's service. Additional objectives can include learning the client's service preferences, complaints, suggestions for improvement, opinions of the competition, and other viewpoints that can help to better develop the client relationship.

Despite a chorus of experts validating the importance of client interviews, law firms continue to resist them. "Many lawyers are still afraid of doing in-depth interviews," according to Paul E. Clifford, Esq. of Law Practice Consultants. In such interviews, clients are "very forthcoming and will often provide a roadmap to how to be more successful [with them] whether by getting additional business from them or having them act as referral sources," says Clifford.

"Client interviews are also a much better way not only to show the client how much you care about the relationship, but also to get the type of feedback and information that allows the law firm to 'super-satisfy' its clients," he adds.

Managing partners at some of the most successful and fast-growing firms of the past decade (places like Bingham McCutchen, Reed Smith and Nixon Peabody) understand that marketing and business development is a critical function that defines what you need to do to win the war for clients, and they have invested significant sums of money and human effort in ratcheting up client satisfaction.

Clifford, a former managing partner of Boston-based Gadsby Hannah (now a part of the national firm McCarter English) understands the financial impact of having a sophisticated marketing and business development focus — he took the firm from 38 to 79 lawyers in just a decade while raising profits per partner from $377,000 to $500,000 in one three year period late in his tenure. He says that firms can profit from marketing and business development, which "is really about putting oneself in the client's shoes — learning about the client's industry and business." He adds that "it is learning to turn the focus from 'it is all about us' to being 'all about them, the clients,' [and that means asking] what are your needs and how can we help?"  

Institutionalizing a Marketing Culture

Clifford points to another benefit of well-executed marketing and business development programs. "They not only result in a great deal of personal satisfaction for the lawyers and the marketing professionals involved in developing and implementing programs, but they also instill a sense of 'team' in the group," says Clifford.

"Lawyers begin to understand that going it alone is not the best way to be successful and that the clients want to know that there is a team in place working in tandem with the relationship partner," he asserts, adding that this process teaches many lawyers that "there is no 'I' in team."

This is one reason that many managing partners are now striving to produce a "firm culture" with a marketing and business development orientation. Such a culture not only prioritizes winning over clients, it provides more sense of a unified "team" which is the cultural glue that holds partners together when the headhunters come knocking.

But the successful marketing and business development culture has to be developed around a central mission, values and purpose, a sine qua non of long-term success documented by Stanford Prof. James Collins in his best-seller .

That is one reason that a minority of law firms on the leading edge are developing mission statements, institutional service standards, institutional training, and specialized service teams built to satisfy the needs of particular clients or industries. One senior in-house lawyer from a Fortune 500 company asserts that this institutionalization of standards and consistency from office to office is the last piece of the puzzle necessary for law firms to complete in order to fully leverage their national or global "marketing platforms."

Measuring Marketing Success

In the future, the most successful law firms will also change their measurement focus as well. Firms will come to grips with a realization that successful companies long ago reached — revenues and profits are not the proper focus, but instead are the ultimate results of a proper focus on customers.

Steve Brill developed the AmLaw 200 charts by which firms currently measure themselves, but these charts focus on profits per partner and total size. This is not a sensible internal focus for firms, and it is a ludicrous obsession in light of the fact that law firm equity and profits have no market function, unlike freely tradable stock in a public company.

The key to growing a law firm brand is not at all dependent on the market for its equity — an advantage that law firms can utilize, just as many of their best clients have by going private to escape quarterly financial pressures that miscast business focus. Growing the value of a service brand is really about attracting and retaining the best clients by attracting and developing the best people to serve them.

A marketing and business development focus also reveals that the billable hour advancement model for associates is not at all related to client satisfaction or retention, and may even be harmful. Furthermore, the pressure to bill hours seems to be contributing to greater turnover, which is an annoyance to in-house lawyers who often complain about having to re-train associates in the middle of a case or major transaction that could take months or years.

This is why a minority of firms on the leading edge are quietly changing from an internal focus on what matters to them to an external focus on what matters to clients. They are using the business science of marketing to measure things such as: client satisfaction; client loyalty; client defections; share of market; market demand; and market penetration. They are also discovering that short-term gains made only through churning of rates, churning of hours, and churning associates have a long-term cost that devalues their brand. From a client satisfaction perspective, working smarter than your competition is much more important than working harder.

As clusters of law firms start to grasp these marketing and business development issues ahead of others, they will stake out a growing share of market and they will attract more and more attorneys who want to be part of winning professional teams that are loved by their clients rather than resented as necessary evils. These firms will conquer the legal playing field and reap the rewards of serving others.  

Those who ignore the importance of marketing or see it as a box of charlatan's magic tricks will be left behind, waiting for the phones to ring in their crumbling fortresses full of fox and hounds paintings, and pining for the good old days when services rendered bills were paid without question and lawyers were all fat and happy.

July 2007.            Bookmark and Share