Friday, April 12, 2013

The Single Best Way to Ensure Your Firm's Continued Growth

Organic growth vs. inorganic growth- which is the better fuel to assure your firm's continued long term success?

First, let's make sure we have the same definitions in mind.

"Inorganic growth" is the result of mergers, acquisitions, practice group lift outs, rate increases, lateral attorneys and other 'managed growth' initiatives. These tend to result in episodic growth spikes which are hard to duplicate consistently and reliably- though several firms have done just that.

"Organic growth" results from improvements in business development efforts, higher demand for your services, better selling skills among attorneys, capturing a leadership position in emerging issues, and improved clarity in the firm's value proposition (or its competitive advantage). It is growth that is unforced and naturally occurring and which results for improvements in the operational efficiency of the organization. Inorganic growth tends to be more evenly upward trending than the more episodic growth spikes seen in acquisitions. The latter also tends to be gentler on the cultural fabric of the firm, the morale and the practice mix of the firm.

In my mind, the single best way to grow the firm over the long run is through the improvement of the business development skills of the firm's attorneys. And where better to start that long term focus than among the ranks of the associates. Associates not only fail to get this training in law school, but too often practice leaders and mentors are too busy to help them or have little incentive to put an associate's learning ahead of their own billable requirement. While many of the Big Law firms have long since come to this realization and instituted associate training programs, many firms still have not.

Group Dewey Consulting's Business Development Skills for Associates training provides opportunities for associates to develop and hone their business development skills in a highly interactive, safe and pleasant environment. The program focuses on individual skills development and uses guided role playing, discussion and case studies to identify the best and most practical solutions to the myriad of business development challenges that associates routinely face. It is based on the premise that every associate can be a rainmaker once they identify the specific tools and techniques which work best for their individual personality, practice and capabilities.
Associates will learn to:

·        Understand their ‘business development comfort zone’ and how to maximize the effectiveness of the tactics applicable to their preferences

·        Make use of practical and dynamic skills which will provide them with competitive advantage

·        Have a better understanding of their position within the firm, their role in building the firm’s future and the business and client development techniques which can assure their success

·        Develop practical plans and action steps to achieve their business development goals

·        Create structure and consistent behaviors which routinize business development activity within their daily lives

·        Be empowered to initiate and consistently maintain productive client development behaviors

·        Gain confidence in their business development skills and capabilities

·        Be able to build deeper and more productive relationships internally, in the community and with clients

·        Gain greater camaraderie and teamwork among the associate ranks
Check out the full course description and key topics at the following link to Scribd here.

And as always, if I can help you develop your 'minders' and 'grinders' into 'finders', please don't hesitate to call 502-693-4731.

Thursday, April 11, 2013

Manage All Seven Revenue Generating Strategies

It's always good to refresh your memory of the ways in which a practice can increase its revenues. More importantly, you should have a plan in place to manage the improvement of revenues using each strategy. Yet so few law firms or lawyers do.

First, let's review the seven main ways to increase revenues.

1. Add new capabilities or experience.
2. Attract new clients.
3. Increase referrals.
4. Reduce client attrition.
5. Increase rates and fees.
6. Add attorneys.
7. Increase leverage.

Interestingly, most firms, if they have plans at all, only have them for one or two of these revenue producing strategies. Yet each strategy deserves its own plan.

Plans need not be complicated rituals or documents. A simple list of the activities that you commit to doing to improve revenues through each strategy can suffice. A list of the activities to, for example, increase referrals, might look like this:

  • Map out the people I come in contact with each day and determine who can refer work to me.
  • Ask to speak at the next Chamber of Commerce presentation.
  • Identify three non-competitive local attorneys and schedule lunch with them.
  • Create a marketing piece entitled 'why refer our firm'
  • Join a referral group
  • Identify community leaders and professionals and take one of them to lunch each month.
  • Refer an existing client to another attorney or professonal each week.
As the saying goes, those that fail to plan, plan to fail. Don't fail at driving revenues on all seven cylinders.

If you'd like to talk about increasing your practice revenues, give Eric a call at 502-693-4731. You'll find that I am an eager resource and that it costs nothing to talk.

Wednesday, April 10, 2013

Discounts are ‘Proficide’

As I’ve mentioned before, discounts are not a cost of doing business, they are a cost of not doing business well. One result of discounted fees is the pressure it puts to reduce costs or increase volume in order to offset the lost profits.

In product sales, discounts are taken in order to stimulate demand. Higher demand means more volume, which off sets the reduced price. But in services, discounts rarely generate increased demand of the services. There are a finite number of problems to be solved. Cutting your rates simply solves the problem for less profit. In fact, a McKinsey study shows that, on average, a 1 percent cut in the selling price reduces overall operating profits by 8 percent, all else being equal.

A similar study of more than 500 companies across a mix of industries shows a similar impact. A one percent improvement in fixed costs (a reduction in fixed costs) creates an operating income improvement of 2.3%; a 1% improvement in volume generates a 3.3% increase in operating income; and a 1% improvement (reduction) in variable costs generates a 7.8% income improvement. Now, what does a 1% increase in price do? It generates a whopping 11.1% improvement in operating income! That’s right. You can lower your fixed costs, increase volume and lower your variable costs and none of those efforts will have the same effect on your bottom line as will increasing your prices!

Assuming these ratios hold for law firms, if your firm’s gross margin percentage is 40% and you reduced your rates by 10% to win work from a client, you will have to increase the number of hours you bill by 30% in order to maintain the same gross margin percentage.  Kind of helps to explain why ‘bill padding’ occurs in some firms. (See New York Times Article). There simply isn’t the inventory of hours, let alone the tolerance of many clients, to allow for such a drastic increase in hours.

Well marketed law firms don’t compete on price. They compete on work product quality, innovation, specialization, client service, geographic reach, culture, technology, attorney morale and a host of other competitive advantages. Well marketed law firms and practices provide value and set their rates and fees based on the value delivered. And they stick to those rationally set fees in the face of competitive pressures. Poorly marketed law firms are lazy. They don’t recognize that a client’s request for a discount is an acknowledgment that the client doesn’t understand the full value of the firm’s solution. And, because they lack the training to demonstrate value, they senselessly reduce their rates and fees to win a new client. And, whether consciously or not, dip into their equity pool of profits.

Discounting is ‘Proficide’.
If you'd like help avoiding 'proficide', give Eric a call at 502-693-4731. You'll find I'm an eager resource and that it costs nothing to talk.

Tuesday, April 9, 2013

“We strive to be vague”

In the 1976 Film The Outlaw of Josey Wales, Lone Watie, the old Cherokee Indian chief tells Josey about an Indian Leaders’ meeting with the Secretary of the Interior. The Secretary told them how ‘civilized’ they were and encouraged them to ‘endeavor to persevere’. Lone Watie and his Indian leaders were struck by the vagueness of such a phrase. They “thought about ‘endeavor to persevere’ for a long time. And when we had thought about it long enough, we declared war on the union.”

It’s one of my favorite scenes from the movie. I love how the ‘white man’s language’ can come off as immensely vague and non-committal. After all, what does ‘endeavor to persevere’ mean? It means, ‘try to get through whatever it is you have to get through’.  That’s pretty wishy washy advice, not at all a compelling statement of support.

Lawyers may be the best at writing in vague terms. Take for example the ubiquitous use of the word “strive” on law firm websites, a personal pet peeve of mine. “We strive to give our clients the best legal advice”. “We strive to be committed to client service”. What does ‘strive’ mean? It means you try. Good for you! You are exactly like everyone else ‘trying’ to do what’s right. ‘Strive’ is one of those loop holey words that won’t come back to bite you. So, it gets used a lot. “Hey, we only said we’d try. We never said it was what we do”.

Professionals who don’t take a stand, who don’t make a compelling commitment and who don’t follow through on their commitments, are destined to go through their careers swimming in the pool of mediocrity and under-achievement. Eliminate those wishy washy, loop holey words from your vocabulary and make compelling statements backed by a commitment to do as you say. I don’t want a doctor to ‘try’ to fix what ails me. I want her to cure me. I want my lawyer to fix my problem, too. Not just ‘strive’ to fix it.

If you’d like me to strive to fix problems, don’t hesitate to call at 502-693-4731. You’ll find I’m an eager resource and that it costs nothing to talk.

Monday, April 8, 2013

Don't be Afraid to Show Your Warts

As professionals, we always want to put our best foot forward. We want to be perceived as highly professional, disciplined, objective and unshakable. We never want to 'let them see us sweat'. It's a good image to have. Clients want these qualities in their lawyers.

Most of the time.

We're all human with our own faults, anxieties, dreams and unique talents and interests. You often see those qualities in your clients but do you let your clients see those qualities in you? Probably not.

Building a relationship requires sharing common experiences. It requires two people to connect on an emotional level. For someone to take a risk on using your services, they must first like you as a person- no matter how qualified your resume.

In building relationships, people need to see your 'realness', your vulnerabilities and your 'humanness'. People gravitate toward others who are interesting, who have varied hobbies or who have gained unique experiences. People want to 'connect' with people that are like themselves or are like the people they aspire to be.

Being authentic doesn't require you to divulge your deepest and darkest secrets to your prospective client. Instead, authenticity is about showing your 'humanness'- showing ways in which you are unique and genuine. It also means that you should not try to hide the fact that you are not perfect. No one is. Show your warts. Few people can relate to someone who tries to act perfect. But we can all relate to someone who has a few flaws like ourselves.

It goes without saying, if you'd like to talk about your warts, give me a call at 502-693-4731. You'll find me an eager resource and that it costs nothing to talk.