The Voice of the Client: Nano Business Development

For smaller law firms, this trend will continue. Technology and the Web allow firms with less than 50 lawyers to be “big” in terms of their reach and volume of their voices. For larger law firms, continuing this approach is a recipe for failure. The most successful firms have shifted away from stockpiling information and shouting from the rooftops. They are now using intelligence from their investments to have direct conversations with the people most likely to retain them for their next matter ” one person at a time.

Technology for BD Versus Marketing

Research by the Redwood Think Tank shows that at large law firms, up to 90% of profits come from just 20% of their existing client bases. Profitable law firms are starting to pay the most time, attention and money on retaining, expanding and duplicating their successes with this sub-segment of clients. Traditional investments for generating revenue such as websites, newsletters, branding and events centered on marketing. Today”s investments are being diverted to business development, which is quietly understood to be sales (even though law firms cringe at the use of the word).

The successful, sequential formula for business development uses business intelligence, competitive intelligence and identified networks and then exponentially increases their value by adding relationships as a factor in the equation. For large law firms, this is where their technology tools should be focused.

Past Is Prologue

Whether law firm leaders want to admit it or not, the clients you have had for the past three years will look a great deal like the clients you will have for the next three years. Marketing can sometimes be something a firm may aspire to, but the proprietary data firms possess in their time and billing systems exhibit its reality. This Client DNA is the cornerstone of the use of technology to enable fruitful business development. Profiling your clients by profitability, consistency and volume of work allows you to shrink the actual world in which you have influence into a manageable size.

Firms should identify the clients that have the most potential for growth, but this will not always be your “top 10/20/30″ list when measured by revenue. Many clients with high volume and consistency are the same institutional clients that hammer the firm for discounts and pay at lower realization rates. Some high-revenue clients are extremely inconsistent due to the cyclical nature of the work done for them, so they are prime targets for cross-selling.

Each of these types of clients must have different strategies for growth, and, for the most important ones, an individualized approach. That is why it is critical to utilize your tools to shrink the world of opportunities down to 150-200 possibilities. Interestingly, this client profile will also work very well as the blueprint for the most likely 150-200 prospective clients of your firm.

Research Clients, Not Markets

After the world has been made smaller, you can begin to research what is important to its citizens. Many firms make the mistake of performing competitive intelligence on all of industry. However, unless they are planning on opening an ancillary market research company, the benefits of this approach are limited. First, use internal business intelligence to find out who is important to your firm. Second, learn about how those clients operate as businesses. Third, conduct research on the issues, trends, regulations, competition and other factors critical to those clients.

Your clients may be paying you to know what keeps them up at night and not what keeps the whole world up at night.

Think Small and Connect

Every one of your clients has multiple people that affect their decisions on what law firm to retain for the next matter. Like it or not, this is becoming more of a matter-by-matter decision instead of a year-to-year one. Identifying, using and maintaining offline and online social networks to maintain contact and find new avenues of approach to the decision-making process is vital.

Increasingly, clients are turning to a small group of trusted advisers to make mission-critical decisions. These advisers might include their accounting firms, financing sources, consultants, insurance brokers and multiple members of the management team. The closed-loop relationship between corporate counsel and relationship partner has been infiltrated by outsiders. Large firms must accept this fact and use social media tools to create a non-linear, networked buttress to retain and expand their most important clients. Small firms are working very hard to use such tools to make Big Law irrelevant and highly replaceable.

Relationships Are the Last Mile

One of the most common reasons that there is a lack of return on investment (ROI) on technology is the unwillingness to take action on all of the information collected. Law firms are notorious for collecting, indexing and discussing information and what it might mean, but they do not act upon it. Business development is an academic exercise up until this point, and the tools have done nothing but help create a list of possibilities. Eventually, someone has to pick up a phone and take action. Companies don”t hire lawyers. People do. All of the efforts up to this point should be to allow a single lawyer to identify a single person by name and start a conversation with him or her. This may turn into a relationship if you talk about the right topics (see market intelligence) and match it with the right services you know your firm has done before (see business intelligence).

Business development happens one person at a time. Don”t let technology get in the way of that fact. The entire ROI of your technology process and tools is hinged upon whether or not it can help identify the one person who is ready to buy, and for that reason will buy your services over another”s.

Technology Baked into Strategy

Some firms spend too much time worrying about their CRM strategy, knowledge management strategy or general technology plan. These strategies are all subservient to the one that is being championed by the managing partner at the annual partners” retreat. For example, if the head of the firm is proclaiming that you must increase realizations rates to 94%, grow your top clients by 10% and open an office in China, then that is your technology strategy. For business development technology investments, this becomes even more important, since many high-billing partners see it as useful, but optional. Attach technology to it to become a strategic priority, and do not make it stand on its own. Act like a large firm instead of a large, small one

Technology investments for small law firms help them broaden their reach, create virtual leverage and increase their productivity. For large law firms, it must help them “see around corners” for their clients to help them avoid problems. It also must help the firm itself be more predictive on where it will get its next matter. This means that while small law firms may continue to use technology to look big, large law firms need to use it to think and act small.

As Vice President of Performance Development at LexisNexis, Darryl Cross is responsible for sales training and performance enhancement for a 1,500-person national sales force in the legal, corporate, government and academic sectors. He may be reached at 630-945-0752 or via e-mail at [email protected].

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There has always been a technology arms race underway in the legal industry. The participants include law firms of all sizes, corporate clients, judges, law schools and even the infrequent average consumer. Law firms in particular usually are a step behind the latest technological advances since they are reticent to impose sweeping changes on their risk-averse and preservationist lawyer populations. When advancements do occur, it is frequently a reaction to an outside request such as the ability to file documents with the court electronically, or clients requesting online access to their documents and bills in real time.

Most firms began in the late 1990s to make investments in technology platforms that allowed them to be more proactive about how they ran their businesses. These investments included document management, client relationship management (CRM), advanced financial systems and time capture software. The common thread was using technology to collect, index and retrieve mountains of data and share them with internal and external audiences. However, sharing is usually all that occurred. Lawyers and managers ruminated on data with genuine curiosity, but action was not the final result. This has begun to change since the legal industry crash in 2008-2009 though the ability and willingness to make hard decisions based on accumulated knowledge is still in its infancy.

Likewise, firms heavily invested in technologies to enable marketing and business development efforts. The main goal was to collect and distribute enormous amounts of data and try to reach as many potential clients and prospects as possible. Little thought was given to who should be targeted. Casting a wide net by informing the planet of your capabilities and dedication to clients was sure to catch a few fish that were big enough to keep.

For smaller law firms, this trend will continue. Technology and the Web allow firms with less than 50 lawyers to be “big” in terms of their reach and volume of their voices. For larger law firms, continuing this approach is a recipe for failure. The most successful firms have shifted away from stockpiling information and shouting from the rooftops. They are now using intelligence from their investments to have direct conversations with the people most likely to retain them for their next matter ” one person at a time.

Technology for BD Versus Marketing

Research by the Redwood Think Tank shows that at large law firms, up to 90% of profits come from just 20% of their existing client bases. Profitable law firms are starting to pay the most time, attention and money on retaining, expanding and duplicating their successes with this sub-segment of clients. Traditional investments for generating revenue such as websites, newsletters, branding and events centered on marketing. Today”s investments are being diverted to business development, which is quietly understood to be sales (even though law firms cringe at the use of the word).

The successful, sequential formula for business development uses business intelligence, competitive intelligence and identified networks and then exponentially increases their value by adding relationships as a factor in the equation. For large law firms, this is where their technology tools should be focused.

Past Is Prologue

Whether law firm leaders want to admit it or not, the clients you have had for the past three years will look a great deal like the clients you will have for the next three years. Marketing can sometimes be something a firm may aspire to, but the proprietary data firms possess in their time and billing systems exhibit its reality. This Client DNA is the cornerstone of the use of technology to enable fruitful business development. Profiling your clients by profitability, consistency and volume of work allows you to shrink the actual world in which you have influence into a manageable size.

Firms should identify the clients that have the most potential for growth, but this will not always be your “top 10/20/30″ list when measured by revenue. Many clients with high volume and consistency are the same institutional clients that hammer the firm for discounts and pay at lower realization rates. Some high-revenue clients are extremely inconsistent due to the cyclical nature of the work done for them, so they are prime targets for cross-selling.

Each of these types of clients must have different strategies for growth, and, for the most important ones, an individualized approach. That is why it is critical to utilize your tools to shrink the world of opportunities down to 150-200 possibilities. Interestingly, this client profile will also work very well as the blueprint for the most likely 150-200 prospective clients of your firm.

Research Clients, Not Markets

After the world has been made smaller, you can begin to research what is important to its citizens. Many firms make the mistake of performing competitive intelligence on all of industry. However, unless they are planning on opening an ancillary market research company, the benefits of this approach are limited. First, use internal business intelligence to find out who is important to your firm. Second, learn about how those clients operate as businesses. Third, conduct research on the issues, trends, regulations, competition and other factors critical to those clients.

Your clients may be paying you to know what keeps them up at night and not what keeps the whole world up at night.

Think Small and Connect

Every one of your clients has multiple people that affect their decisions on what law firm to retain for the next matter. Like it or not, this is becoming more of a matter-by-matter decision instead of a year-to-year one. Identifying, using and maintaining offline and online social networks to maintain contact and find new avenues of approach to the decision-making process is vital.

Increasingly, clients are turning to a small group of trusted advisers to make mission-critical decisions. These advisers might include their accounting firms, financing sources, consultants, insurance brokers and multiple members of the management team. The closed-loop relationship between corporate counsel and relationship partner has been infiltrated by outsiders. Large firms must accept this fact and use social media tools to create a non-linear, networked buttress to retain and expand their most important clients. Small firms are working very hard to use such tools to make Big Law irrelevant and highly replaceable.

Relationships Are the Last Mile

One of the most common reasons that there is a lack of return on investment (ROI) on technology is the unwillingness to take action on all of the information collected. Law firms are notorious for collecting, indexing and discussing information and what it might mean, but they do not act upon it. Business development is an academic exercise up until this point, and the tools have done nothing but help create a list of possibilities. Eventually, someone has to pick up a phone and take action. Companies don”t hire lawyers. People do. All of the efforts up to this point should be to allow a single lawyer to identify a single person by name and start a conversation with him or her. This may turn into a relationship if you talk about the right topics (see market intelligence) and match it with the right services you know your firm has done before (see business intelligence).

Business development happens one person at a time. Don”t let technology get in the way of that fact. The entire ROI of your technology process and tools is hinged upon whether or not it can help identify the one person who is ready to buy, and for that reason will buy your services over another”s.

Technology Baked into Strategy

Some firms spend too much time worrying about their CRM strategy, knowledge management strategy or general technology plan. These strategies are all subservient to the one that is being championed by the managing partner at the annual partners” retreat. For example, if the head of the firm is proclaiming that you must increase realizations rates to 94%, grow your top clients by 10% and open an office in China, then that is your technology strategy. For business development technology investments, this becomes even more important, since many high-billing partners see it as useful, but optional. Attach technology to it to become a strategic priority, and do not make it stand on its own. Act like a large firm instead of a large, small one

Technology investments for small law firms help them broaden their reach, create virtual leverage and increase their productivity. For large law firms, it must help them “see around corners” for their clients to help them avoid problems. It also must help the firm itself be more predictive on where it will get its next matter. This means that while small law firms may continue to use technology to look big, large law firms need to use it to think and act small.

As Vice President of Performance Development at LexisNexis, Darryl Cross is responsible for sales training and performance enhancement for a 1,500-person national sales force in the legal, corporate, government and academic sectors. He may be reached at 630-945-0752 or via e-mail at [email protected].

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