At a recent presentation on our Road to Revenue National Tour, a young lawyer was concerned. She said that she has a new practice and has been successful in keeping her accounts receivable to a minimum. In other words, she has been able to work, bill and get paid quickly, the three elements of my 3Dimensional Lawyer® . Her concern, though, is that her pipeline for new business seems to be empty. She is concerned that prompt payment has an impact on additional work to be lined up for her to do.
In order of priority, one needs to get the work … marketing. Then, one must do the work. Production. Next, one needs to get paid. Finance.These are the three legs of the stool. The successful lawyer/law firm must focus on collections. Less than a 90% realization/collection rate is a symbol of future trouble.
In this lawyer’s situation, she is successful in the collection phase. In fact, it’s difficult to imagine a higher success rate when you have little to no accounts receivable.
The focus, then, needs to be on marketing, getting more work to fill the pipeline. These are separate and distinct issues. Relish in your successcollecting your billings and address the marketingto attract more clients.
The Oregon State Bar (OSB) Association was at its most hospitable best. The standing room only group of lawyers shared their experiences as I talked about how to create stronger bonds of loyalty between client and lawyer. When I asked why we should care about this issue, two very poignant answers were shouted out: i) We’d like to get paid and an unhappy client won’t pay their bill; and ii) when we deal with disappointed clients, disappointed in us, not the other party to the transaction or result of the matter, our own stress goes through the roof!
Increased revenue and decreased stress, two outstanding reasons why we should care … I think the members of this audience hit it on the nail!
Next stop is Seattle … come join us if you’re in the area..
Ed Poll talks about how marketing is about differentiation. Stand out. Be remember. Be called. Get clients. How do you know if it’s working? If you get more money, more calls, more referrals. It’s all a numbers game.
Even marketing folks are concerned about the return on the investment in one’s daily activities. While some folks, yes, lawyers too, ignore the money, marketing professionals are trying to convince their management that they are important to the success of their organization, that they are responsible for a lot of new business.
AdAge says: "…Return on advertising investment has always been a priority for marketers, but in the recession it flew to the top of the list. As chief marketing officers fought to justify spending within their organizations — often via spirited discussions with procurement departments about where the dollars are going… " The Days, the subject matter of this article, I’m pleased to say are friends … and outstanding marketers who focus on providing a profit on marketing dollars spent.
Do you look at this issue? Can you determine whether the money you spend is producing a profit, is enabling you to expand in your practice area, is improving your skill as a lawyer, or otherwise contributing to the improvement of your law practice? You should. If not, you’re in the gardening, playing with the dirt rather than growing gorgeous roses for sale to others who can appreciate your skills.
Alan Weiss, a noted consultant (and my coach) said today: "… I’ve never seen happy customers when there are unhappy employees (either naturally unhappy or angry at the employer). I have seen happy employees and unhappy customers (no supervision, lazy, entitled). Always hire enthusiasm, you can teach the content.(emphasis added) … And make sure you demonstrate within the business the behavior you’d like to see bestowed on the customer. .."
Another way of saying this is what I’ve always preached: Hire for work ethic; hire someone who is passionate about their work, about making a contribution to the organization. and about focusing on the client, not themselves. The rest can be taught. Skills can be taught, attitude cannot.
"The NLJ 250 collectively employed 9,567 fewer lawyers in 2010 than it did in 2008, a decline of nearly 8 percent in headcount, with the 10 largest firms in the U.S. alone losing more than 1,000 lawyers last year. This is just the second time in the 34-year history of the NLJ 250 survey that the nation’s largest law firms have experienced a net reduction in employed lawyers for two consecutive years."
This group of law firms, the largest of which is Baker & McKenzie at 3,700+ lawyers, makes up less than 5% of the attorney population. Their growth, like all corporate growth, has its expansion and contraction phases. There are at least two questions that come to mind:
1. Is this contraction permanent? Is this contraction a reflection of the entire industry?
2. Does this contraction reflect a major shift in the way legal services will be delivered in the future?
My crystal ball does not give me the answers. But, I believe that
i) even sole and small firm practitioners felt the change;
ii) though the numbers in the survey reflect 2008 as the base year, there does seem to be a cautiously upbeat attitude among lawyers today. More lawyers are contacting me with the serious questions of how do we make our practice better, how do we grow our practice … in other words, lawyers are starting to come out from their caves, a bit shell shocked, but ready to understand the needs of clients and focus on providing solutions to their clients;
iii) it’s not the contraction that will cause the shift in the way services are delivered, it’s the continuing evolution of technology that will impact the delivery of services. And this conclusion would have been the same with or without the contraction. It’s just that, because of the contraction, we’re more sensitive to the changes. But, these changes began before 2007-2008, and they will continue after 2011.
Lawyers have to be more sensitive to technological changes and how these changes can improve their efficiency and mode of delivery. Clients certainly are and they are looking for those lawyers who can reduce their legal costs (not necessarily hourly rate). Thus, even the decades-old billing and pricing models will be subject to pressures that mere conversation failed to impact until now.
As Oprah said yesterday while interviewing the President and First Lady, "… keep your eyes on the prize." Know what you want in your practice. Know what your clients want from you … what is the ultimate solution they are seeking by engaging your services? Stay focused and you will have happy clients … happy clients pay their bills … happy clients refer their colleagues and friends … While doing good, you will be able to do well.
Only a short time ago, we believed that non-lawyers would be able to participate in the ownership of American law firms. The pressure, so we believed, would come from the British Empire. Australia already allows this and it will soon be permitted in England. But, not the U.S. … until now.
The District of Columbia permits non-lawyer ownership to the extent of 25% interest in a law firm. And, now, North Carolina has a bill before its Senate that would allow 49% non-lawyer ownership.
One argument is that law firms have expanded and are now very large organizations. In order to grow, they need additional capital … and capital is best raised in the capital markets, not from individual partners of law firms … and that means non-lawyer ownership. While large law firms are looking more and more like their corporate clients, it is still a stretch to suggest that law firms should raise outside capital.
Do law firms need to grow? Why can’t corporate clients’ interests be served well by smaller regional law firms? Why does the corporate law firm have to be as large as the client? We saw unions grow in both size and power in response to corporate and management growth and power. And we now see unions fighting to stay alive. Will that also happen to large law firms of the future? Will technology enable small groups of lawyers to be effective in large corporate representation?
Some argue that the rules of professional conduct wouldn’t bind non-lawyers in matters of confidentiality and charging reasonable fees. Further, the very independence of lawyer’s judgment might come into question. But, the rules have been bent, if not changed or discarded entirely, when large firms’ economic interests were at stake. So, it will be fascinating to see who argues on which side and how this issue develops.
Is it possible that this issue will finally cause the break up of the mandatory (integrated) bar association into State licensing agencies on the one hand and voluntary bar associations on the other hand … with the latter being the home of sole and small firm practitioners banding together to serve their own economic interests?
In today’s L.A. Times, a doctor talks about her reaction to meeting a patient in an airport restroom. The patient was out of context and the doctor was taken aback, at first not recognizing the patient. She concludes by suggesting how much she learned about the patient by seeing her in her own environment, the place where she works. As a consequence, she starts to think about how her future treatment of this patient will be altered.
How often do we, as lawyers, see our clients in their habitat? What kinds of information might we gather, mostly unspoken information, that would dramatically alter the advice we provide? In many cases, quite a bit! Yet, not many lawyers take the time, unbillable time, to visit our clients to really get to know more about them, their work and family environments, and the possible impact on the clients of the advice we provide.
Like the doctor writing the article, I suspect our approach would be somewhat different. And, perhaps more important, the connection the client has with us would be dramatically different! That bond, needless to say, would result in better representation and more referrals. Interested?
I recently wrote in my LawBiz Tips Ezine about how law schools continue to churn out new graduates even as demand for them drops, and cited a New York Times article on this issue that concluded:“Today, American law schools are like factories that no force has the power to slow down – not even the timeless dictates of supply and demand.”
Now it appears that the law of supply and demand has not been repealed after all.The Wall Street Journal reports numbers from the Law School Admissions Council showing that the number of law-school applicants this year is down 11.5% from a year ago to 66,876. The figure, which is a tally of applications for the fall 2011 class, is the lowest since 2001 at this stage of the process, which is almost 90% completed.
The reasons aren’t hard to understand.Firms increasingly prefer to hire lateral attorneys who have already had on-the-job training and books of business, rather than new graduates who don’t understand “The Business of Law®” and will take years to begin returning a profit on the investment made in them.And from the student side, the realization that going six figures into debt to get a J.D. degree that offers no assurance of gainful employment is not exactly a smart idea – especially for those whose main motivation to attend law school was to make the supposed “big bucks” available rather than to pursue a legal career.
So who is hurt most if the law school bubble does burst?We can only hope it will be the law schools themselves, who continue to pour huge resources into “gaming” the law school rankings so that they can move up from number 19 to number 17 and thereby (they presume) entice more students to enroll.When the housing bubble burst, it was – and continues to be – the financial geniuses at the banks who were left holding the bag.Are law school administrators any smarter?
