Question:
Our firm is based in Little Rock. We currently have 12 attorneys. We were larger several years ago. We have lost 8 attorneys in the last five years as well as several business clients. Profitability has suffered? What marketing initiatives should we be exploring to improve profitability and increase the size of the pie?
Response:
On average it costs five times as much (dollars/time investment) to get new clients than it does to get more business from existing clients. It just makes good business sense to leverage existing relationships.
I suggest that your first priority is to circle your wagons around your existing clients and insure that the quality of your services and the quality of your relationship with the client is beyond reproach. Then look for unmet needs and additional work from existing clients. Once this has been accomplished begin targeting new business clients and cultivating relationships one by one.
Many of our clients that represent business clients have found the following (listed in order of value to the firm) to be a few of the more successful marketing tools at the firm and individual attorney level:
Firm Level:
Firm website
Solicit and respond to client feedback (Client Surveys)
Newsletters and solid marketing collateral materials
Up to date marketing database of clients, past clients, referral and media sources
Individual Attorney Level
Personal networking and relationship building by individuals
Client site visits
Seminars
Marketing through client trade associations
Speeches and by-lined articles
The national marketing investment average for law firms representing business clients is 2.5% of revenue. While marketing costs money – often the larger investment is lawyer time as much of the effort to maintain relationships with new clients and to create relationships with new potential clients occurs at the individual lawyer level.
Two sets of marketing plans need to be put in place – firm level plans for firm marketing and individual lawyer plans for marketing initiatives by each and every attorney in the firm.
Often partners in law firm that represent business clients think that they can just put in place firm level plans, invest marketing money, put the plan on auto pilot, and sit back and wait for new work to come in. Unfortunately, it is usually not that easy. It also takes client relationship building work at the individual lawyer level as well. When this is not done the results are usually disappointing.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the managing partner of a 12 attorney firm in Chicago. We have been considering whether we should develop a strategic plan for the firm. We have problems even having partner meetings on a consistent basis and those often yield questionable results. What are firms doing? Does a strategic plan make sense for a firm like ours?
Response:
According to recent surveys, 70+% of the responding law firms (ranging in size from the largest to 45 attorney firms) have formal written strategic plans. Smaller firms have a much lower experience. In our experiences with smaller law firms we are finding that fewer than 15% have formal written strategic plans. I consider success to be achievement of measurable results as evidenced by achievement of the goals and objectives outlined in the plan and actual implementation of action items. Lawyers and law firms seem to do better at planning than they do at implementation. Larger firms usually are more successful in implementation due to availability of management resources, leadership and functional governance. Smaller firms tend to have problems with implementation. In fact, we frequently recommend that a firm address other management issues prior to engaging in strategic planning. If a firm is having problems implementing day-to-day operational decisions the firm will not be effective in implementing strategic planning initiatives.
You might want to get your operational house in order first and resolve day-to-day operational management issues first and then move on to the future.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
Our firm of 16 attorneys is trying to make major strides this year in helping our firm design and implement personal business and client development plans. Should we consider hiring coaches? When should a firm consider coaching for attorneys?
Response:
The day-to-day stress of practicing law and serving clients leaves little time for focusing and investing in the future of the firm. When attorneys exhibit the following it may be time for a coach:
Training and skill development is not easy. Studies reveal that 90 percent of the people who attend seminars and training sessions see no improvement because they don't take the time to implement what they learn. Practice create habits and habits determine your future. Up to 90 percent of our normal behavior is based on habits. The key to skill learning is to get the new skill to become a habit. Once the new habit is well developed it becomes your new normal behavior. This requires practice. Unfortunately, attorneys do not have time to practice and experiment.
The coach's role is that of steward, facilitative leader and teacher. Law firms retain coaches to work with attorneys and staff, mostly on a personal level, to address problems involving lack of commitment, inertia, implementation, self-accountability and follow-up. Firms are using coaching in the following areas:
John W. Olmstead, MBA, Ph.D, CMC
Question:
For years our14 attorney firm has operated under a formula based eat-what-you kill system. We are moving toward a more subjective-based system. We have been advised that we will need a compensation committee. What are your thoughts regarding compensation committees?
Response:
The components of your compensation plan and partner buy-in will be important to the success of your program. However, how you setup and constitute your compensation committee will be crucial. In a subjective system trust is paramount. How the members are selected, who serves on the committee, how the committee operates, and other matters must be spelled out and communicated to all partners. Here are a few ideas:
The key ingredient of a successful subjective compensation system is that partners perceive the system as fair and have faith and trust in the compensation committee. The process is as important as the outcome.
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John W. Olmstead, MBA, Ph.D, CMC