Law Practice Management Asked and Answered Blog

Category: Strategy

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Oct 06, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 7 – Marketing

For the past six weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, partner compensation, planning, and client service blocks have been discussed. 

The seventh and final basic building block is marketing. Successful firms have an effective marketing infrastructure and program in place.  

Gone are the days when attorneys simply practiced law. Today, they face increased competition, shrinking demand for services and increasing supply of professional talent, availability of service substitutes, and marketing of professional services. Marketing can no longer be ignored if small law practices are to survive in the future.

Based upon our observations working with client law firms over the past twenty six years we have concluded that marketing is poorly understood and ineffectively implemented in many small law firms. In addition, the following obstacles are at play:

Time – There is no time for marketing or any firm developmental activities. Production is king and non-billable activities such as marketing are discouraged.

Uneasiness With Marketing – Attorneys are uncomfortable with marketing. This is primarily due to lack of understanding, training, and experience with the process.

Lack of Marketing Understanding – Many attorneys confuse marketing with advertising. Marketing is not advertising. Marketing activities can exist without any promotional components such as television advertisements, radio spots, tombstone magazine advertisements, or direct mail. Marketing is the broader process concerned with the development and delivery of legal services and is part of the firm's long range planning process. It provides answers to the questions what are we selling and to whom are we selling. It involves maintaining relationships with existing clients as well as creating new relationships with prospective clients. In fact, a major objective of many successful marketing plans is obtain additional business from existing clients.

Focus and Accountability Problems – Frequently law firms experiment with marketing and engage in isolated promotional activities not integrated with the firm's business plan with the expectation of immediate results after the one-shot activity. The firm engages in fits-and-start activities that are completely unfocused, unrelated to an overall plan, unmeasured, inconsistent and often inappropriate.

Cultural Issues – The typical culture of many law firms discourages investment in long-term developmental activities. The focus is on billable hours and production. Everything else is of secondary concern. The consensus governance model typical in law firms hinders change and timely decision-making at the firm level. In addition, effective marketing in law firms requires marketing at the firm, practice group, and individual attorney levels. This requires effective training, mentoring, follow-up, and accountability at each of these levels.

Reward and Compensation Systems – RMost reward and compensation systems focus on short-term production and discourage participation in longer term (non-billable) firm investment activities or projects.

Click here to read one of my articles on marketing

Click here to read my blog postings on marketing

I hope you have enjoyed the series. Next week I will resume posting questions and answers received from law firms. 

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com

Sep 28, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 6 – Client Service

For the past five weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, partner compensation, and planning blocks have been discussed. 

The sixth basic building block is client service. Successful firms deliver exceptional client service. They don't just meet client expectations – they exceed them. 

This is the decade of the client. Clients are demanding and getting – both world-class service – and top quality products. Many law firms have spent too much energy on developing new clients and not enough retaining old ones. For many law firms, obtaining new work from existing clients is the most productive type of marketing.

Delivering great client service is extremely important in today’s legal marketplace. More and more lawyers and law firms are competing for fewer clients while client loyalty continues to drop. It is no longer sufficient to simply be competent or an expert in today’s competitive legal environment – law firms must distinguish themselves by the service they provide. Lawyers and law firms must strive for 100% client satisfaction. Service is how many clients can tell one lawyer or law firm from another. 

Clearly, from what law firms' clients are telling us, lawyers and law firms need to improve client service by integrating a client-first service focus into everyday practice and getting feedback on performance.

Most clients can’t evaluate the quality of your legal work. What they can and do is evaluate the experience of working with you. 

Lets face it – customer and client expectations have changed across all industries. It is a buyers market and they know it. Today clients want it all – better, faster and cheaper. If you can’t provide it they will go somewhere else.

The key is to management client expectations – underpromise and overdeliver.

Click here to read my article series on client service.

I will address each of the other building blocks in upcoming postings.

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com

Sep 22, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 5 – Planning

For the past four weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, and partner compensation blocks have been discussed. 

The fifth basic building block is planning. Successful firms have a long range business or strategic plan in place.   

Based upon our experience from client engagements we have concluded that lack of focus and accountability is one of the major problems facing law firms. Often the problem is too many ideas, alternatives, and options. The result often is no action at all or actions that fail to distinguish firms from their competitors and provide them with a sustained competitive advantage. Ideas, recommendations, suggestions, etc. are of no value unless implemented.

Well designed business plans are essential for focusing your firm. However, don’t hide behind strategy and planning. Attorneys love to postpone implementation.

  • Elements of an effective business plan should include:
    • Decision as to direction of the firm
    • Data collection and review
    • Data collection and review
    • Action plans
    • Implementation and follow-up mechanisms

    Failing to plan is planning to fail.

    Click here to read my article on the topic.

    I will address each of the other building blocks in upcoming postings.

    John W. Olmstead, MBA, Ph.D, CMC
    www.olmsteadassoc.com

    • Dec 13, 2009

    Insurance Defense Law Firm Strategy

    Question: I am a legal administrator with a 14 attorney law firm in the Chicago area. It seems that it is becoming more and more difficult to deal with insurance company clients.While we have always had to deal with low billing rates and unrealistic controls mandated by insurance companies, recent trends have reached levels that threaten the business relationship which has reached an all time low. We must now jump through even more hoops to be able to play in the insurance defense arena. What are your suggestions?

    Response: The present state of the insurance defense practice presents numerous challenges to the law firm. These challenges simply cannot be ignored – they will have to be faced head-on. The solutions are complex and will require time to sort through. While solutions can come in different varieties, they will take the form of one of two general strategic approaches.

    Reinvent The Practice – Stay In The Game

    For many firms the appropriate strategy may be to stay in the game. These will be firms that have a well-established reputation in insurance defense, where insurance defense represents a major source of their revenue, and where adequate leverage and profitability and leverage exist. These firms will not be firms that dabble in insurance work. These firms will be committed to this practice area and will focus on it exclusively. They will be innovative client-market driven firms that blend contemporary approaches with the lessons learned from the founding fathers.

    Exit Or Diversify The Practice 

    This strategy will be appropriate for firms that desire to get out of insurance defense work entirely or that desire to reduce their dependence on insurance defense work by diversifying the practice. In this way the mix of the practice can be altered. This strategy will not be easy. It will be a rough road and will take time.

    Insurance defense attorneys typically do not have the expertise, experience, or the client contacts in other practice areas such as corporate business. Another factor is perceived image. The business community often views insurance defense firms as second rate firms. Often the law firm has in essence branded itself as an insurance defense firm. This can be a difficult obstacle to overcome. Client law firms with whom this author has worked have found that it can take five years or longer to accomplish such objectives.

    Specific tactics will depend upon the firm’s size and the amount of insurance defense work in the practice mix. One of the first steps is for insurance defense firms to try to leverage their litigation experience in order to obtain the defense work from self-insured corporations and general corporate representation. In some instances it may be possible to pick up some of the general corporate representation of insurance companies. This will be a tough road.

    Larger firms will require some new blood in the firm with expertise, experience, and a book of business in the desired practice areas. This will require insurance defense firms to consider merger or acquisition. Smaller firms may be able to accomplish these objectives completely internally or with lateral partner acquisitions. Both large and small firms should begin extensive programs of continuing education in desired practice areas. Firm and personal marketing plans should place strong emphasis on creating new business relationships as well.

    Much work needs to be done by management of insurance defense firms. The process will take time, hard work, and dedication regardless of the strategic options chosen. Now is the time to get started. Click here for an article on the topic.

    John W. Olmstead, MBA, Ph.D, CMC

    Nov 24, 2009

    Getting to the Next Level

    Question:

    I am a member of a three attorney firm. I think that we know where we are as a firm, where we want to be, but we don't know how to get to the next level. Do you have any ideas?

    Response:

    Rather than following the pack – attorneys need to find ways in which their firms can "dare to be different."

    Many attorneys are providing the same service – solving the same sort of legal problems for their clients using similar tools strategies/approaches. To many clients – attorneys all look the same. What can you do to stand out?

    Marketing is about more than just promoting the firm to get clients. It is also about deciding on:

    1. What services to offer, where, and to whom? Sometimes less is more – by focusing on fewer areas of practice. Just because a law firm focuses on say three areas of practice – doesn't mean that it does not handle matters in other areas. It just means you are building you brand around the three core areas. These are the areas you primarily promote, speak about and write about. Broader geography?
    2. Pricing. Not just the amount to charge but how to charge. Clients are asking for budgetary certainty? Get creative.
    3. Delivery and producing the service. Are you doing all that you can using technology, staffing, work processes, etc. to minimize the cost of producing your services? If you are – aggressively promote it. Office location, client site visits, etc., all come into play here. 
    4. Promotion (which can include advertising, e-newsletters, newsletters, websites,
      networking, seminars, press interviews, social networking on the internet, etc.)

    Effective marketing requires a mix of the above elements in your plan and then effectively communicated.

    Many attorneys suffer from random (unplanned) acts of marketing or business development. To be effective you need to be well focused, have a plan to focus the firm's efforts, and be disciplined and make excellent use of your professional time. Often the largest marketing investment is not advertising or the cost of other marketing vehicles – it is the cost of you non-billable (or investment) time.

    A business/marketing plan (10 pages or less) for the firm can do wonders.

    Sit down with the other attorneys in the firm, do some brainstorming away from the office, and put a plan together. Then work the plan.

    John W. Olmstead, MBA, Ph.D, CMC

    Nov 17, 2009

    What Can We Do To Be Different

    Question: During a recent firm meeting one of our partners asked what the firm could do to be different than every other law firm. What are your thoughts?

    Response:

    Creating a competitive advantage that is sustainable over time is difficult at best. It is so easy for your competitors to copycat your recent innovations. Clients of law firms advise us that they hire the lawyer – not the firm. However, this only partly true. The firm – its image – its brand – provides a backdrop for the individual attorneys marketing efforts as well – makes marketing easier – and provides backup and bench strength that many clients require before retaining a lawyer.

    In general the law firm is faced with the dual challenge of developing a reputation (brand) at both the firm and the individual lawyer level. In general – client delivery practices and behaviors that are part of the firm's core values and have been burned into the firm's cultural fabric are the hardest to copycat.

    Areas in which you can consider differentiation strategies:

    John W. Olmstead, MBA, Ph.D, CMC

    Oct 01, 2009

    Are These Good Times to Innovate and Dare to Be Different

    Question:

    We have had recent discussions in our partner meetings as to whether in these challenging economic times we should play it safe or to step out and innovate.

    Response:

    As far as the economy – several legal industry sources are advising that the economy may be turning the corner for law firms.  According to a PricewaterhouseCoopers Survey – the Worst of the Recession is Over for Law Firms. http://bit.ly/VUEbM. Hildebrandt also recently announced an improvement in the Peer Monitor Index. http://www.hildebrandt.com/Pages/default.aspx.

    While all of us need to be cautious concerning playing games of chance and gambling with our professional practices – this is an excellent time to re-examine business models and approaches of the past. Many large and small firms alike are doing just that. Clients are looking for more value for their fee dollars and better client service. Firms that are daring to be different are experimenting and exploring:

    This recession may have been more that just another recession – it may have been a management lesson for us all – resulting in permanant structural changes to how legal services are produced, delivered, and consumed.

    John W. Olmstead, MBA, Ph.D, CMC

    May 14, 2009

    Strategic and Long Range Planning in Solo and Small Law Firms

    Question: I am a solo attorney with no other personnel at the present time other than virtual employees. I hope to add a staff member later this year or early next year. I am frustrated with the success of my practice and feel that I am lost and have no sense of direction or plan for the future. I have been to seminars that talk about the need for a long range plan but it seems that the mechanics of the process is geared to firms that have other partners. How can I best go about long range planning?

    Response: Long range (strategic) planning is hard to do by yourself. It is not just the plan that you end up with that is important – it is the planning process itself – done over an extended period of time – that yields out-of-the-box-thinking and real results. Brainstorming needs to take place and you need to work on your plan over say a four to six month period of time.

    A strategic plan is different than a business plan. A business plan is a firm startup plan and often used for evaluating whether to startup a business and for securing financing or capital. Typically the audience is primarily external. A strategic plan is for internal use and thus is more of an outline of the firm's mission, vision for the future, long range goals, objectives to be measured in the short term, issues and obstacles that must be confronted, strategies, and specific action items with timelines and milestones. The plan should be short 10 pages or less and should have an implementation focus. Accountability should be part of the plan.

    We have numerous solo and sole owner law firm clients that have successfully implemented long range strategic plans. Often we have worked with our client firms on such projects as a part of our six month business coaching program. In this way we are able to do a little each week with the client and serve as an accountability partner.

    Click here for an article on planning

    John W. Olmstead, MBA, Ph.D, CMC

    Apr 08, 2008

    Change

    Question: I am a legal administrator with a midsized firm in the southwest. Our firm has recently lost two major clients and we have not acquired any new major clients for many years. Other problems regarding failure to innovate also exist. I am concerned that if the partners do not change their ways that we may not still be in business in the next few years. The firm need to change. Where do we start? How can I teach old dogs new tricks?

    Response: This is a common problem being reported to us by several of our clients. Institutional clients are now shopping for legal services. They are looking for innovative solutions to their problems. They are looking for law firms that they can partner with and that becomes in essence a part of their team. The old ways of conducting business is no longer working with institutional clients. Law firms need to rethink their business and perhaps reinvent their practices. This will not be an easy task for many law firms. Change does not come easy and it cannot happen unless the firm sincerely desires to change and do things differently. In many cases law firms cultures will need to be changed to a client orientated model. This will take time and patience. Legal administrators will play an instrumental part in this process. The firm may want to start by getting out of the day-to day management rut and begin a process of long term strategic planning. Only then will the roadmap to change be able to be formulated.

    John W. Olmstead, Jr., MBA, Ph.D, CMC

    Jan 21, 2008

    Management Ideas for 2008

    As you begin 2008 here for getting started.

  • Take a serious look at the firm's present position in the marketplace. Review financials, compare against financial ratios, compare with both firm past history and against law firm benchmarks. Examine how well the firm is competing. Is the firm too dependent on a narrow base of clients? Is the practice at risk? Conduct a client survey and obtain client feedback both on firm performance as well as possible unmet needs and opportunities. Consider a comprehensive management review.
  • Formulate business goals and develop a strategic business plan as a roadmap for the future.
  • Design and simplify business reports designed to measure the goals identified in the strategic business plan. Strive for a one page summary as the primary report.
  • Require all timekeepers in the firm to submit personal one page business plans which in addition to outlining goals for the year provided fee revenue goals with an element of stretch. The goals should have a stretch component but yet be realistic and attainable. These plans should be approved by the Executive Committee, Managing Partner or the Partnership.
  • In all of our client engagements we typically discover that the root cause of most problems is poor internal and external communications. Poor client service, staff competency and morale, interoffice conflict, and client defections typically can be traced back to poor communications. Work on improving internal communications with firm personnel and external communications with clients and prospective clients. Yes, you have to have meetings now and then. Devise systems to improve communications and implement properly. If a meeting is required – conduct it properly, use agendas and take minutes. Use your email systems. Match the richness of the communication method with the nature and depth of the message to be communicated.
  • Improve relationships with your clients. Studies show that each year 'lack of responsiveness' has been the number one reason for client dissatisfaction.
  • Find ways to focus the firm and foster accountability from all.
  • Undertake a few projects at a time that can be realistically accomplished. Delegate tasks across the firm. All firm personnel should have marketing responsibilities – from the receptionist to the senior partners and everyone else in between. Databases must be maintained, newsletters and articles written, presentations given, clients to be wined and dined, etc. There is work for everyone.
  • Law firms must adopt management structures that enables the firm to act decisively and quickly. Structures that do not support such a culture must be replaced.

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