Robservations…
I’ve had many conversations in the last few months with law firm principals who are fed up to the back teeth with the pervasive nature of the “doom and gloom” content increasingly flowing into their worlds from all angles…social media, commercial organisations providing services, and even their own professional organisations.
I’m certain I don’t need to elaborate…you’re all subject to it every working day.
As you’re aware, the basic thrust is that you are about to be disrupted out of relevance, even existence, unless you change everything about everything, totally re-invent yourself, ditch your current pricing approaches and client base, and spend lots of time and money you may not feel you have!
Interestingly, many of the pundits are stressing that the pace of all this change is accelerating, so the message is react faster than you may have thought you needed to or get ready for the wipe-out!
Don’t get me wrong! Yes, there’s a lot of change happened in the past few decades particularly, and there is a lot happening now, and to happen in the near future, but not only is it by no means all doom and gloom, if you get distracted and lose focus on what really matters you risk being a very big part of your own problem.
For most of you, your key skill is the ability to communicate clearly to concerned clients what the best options for them are, what the likelihood is of each potential outcome for them, and what they’ll be likely to need to invest in legal and other fees in each scenario.
The world we live in is getting more and more complex, and there is still a huge, and growing number, of suitable clients for you prepared to pay a reasonable fee for that kind of assistance, and always will be.
The focus has to be to professionally demonstrate to clients and potential clients of the types you want that you do have that crucial skill.
That process is multi-faceted and covers every aspect of your behaviour and communications.
It isn’t about a new logo and letterhead, unless your present situation in that aspect of your overall branding is very poor.
It is very much about the substance of what you show your clients, current and prospective, and referrers, you do, consistently, and exactly how you can help them in their particular situation.
If your content demonstrates a real understanding of their business or the challenges of their life the chances of making the right impact on the reader or listener are excellent.
In essence, if you are observed to consistently provide clear, relevant, helpful quality, information freely, it is easy for clients to recognise who they should talk to when they have a substantive challenge or opportunity confronting them that they perceive they cannot handle on their own.
The bottom line? The more things change, often the more the fundamentals remain the same.
While being aware of the potential assistance to you advances in technology etc. offer, make quality time to check and double-check that you are aware of the continuing fundamentals, and that the complete arrowhead of your practice is aimed at, and flying directly into, the heart of what you need to be doing.
What you need to be doing is staying relevant, genuinely helping people with their lives and businesses, for a very rewarding practice, financially and in all other aspects.
KMS Common Sense Law Firm Marketing… short sharp thoughts from the trenches…
Relationship Marketing and other alternatives…
Few lawyers are trained marketers, and sadly many never will be much good at marketing, no matter how much training they get, and how much time allocation they are given in their WorkPlan.
One critical consequence is that they may spend most of each year with not nearly enough paying client file work to do. They do not have a “healthy backlog” no matter what the outward appearances.
They are typically…”Reasonably busy I guess…could always do with a bit more”!
The shortfall may not seem that bad, or that important, but it is, because it will erode most, if not all, of your profit.
The maths, and the reality, is pretty simple.
Most small-medium firms that do make a profit (and there are thousands that don’t) fall in the range 1%-15% of Revenue as profit after allowance for reasonable salary for owner Principals.
A very simple example to demonstrate the huge impact of ineffective Marketing…
A Family Lawyer with a WorkPlan allocating 6.5 hours/day to potentially billable Client file work and 1.5 hours/day to FirmTime, including Marketing.
Even at $365/hour hoped for recoverable value, around $126,000 in opportunity cost has been allocated as investment in FirmTime, a good slab of which is intended for Marketing to assist in keeping new work coming in to support the 6.5 hours/day ClientTime average.
If the lawyer cannot, or will not, spend the Marketing time effectively, such that the result is that there is on average one hour less paying client file work/average day, Raw WIP production will be down over $84,000 in a year, and collected fees down about $71,000.
That missing Revenue represents at least 13% (karma in that percentage?) of the team member’s annual fee potential.
For most small-medium law firms that means no profit margin is possible from that team member at all. The slippage is certainly very significant, and something effective needs to be done about it, fast!
Typically, the intention would have been that the time, and direct costs, invested by the team member would have created relationships that would generate enough referrals of new work.
If it isn’t happening well enough, and clearly isn’t going to be happening any time soon, the time and the money would be better directed into alternatives to generate the work.
On average I would expect a team member in this situation to be investing half an hour a day into Marketing, so when the firm uses a different approach to get the necessary new work, the time saved by redirecting the resource can in due course be used to generate extra fees instead.
The financial impact of this is very powerful, with the $71,000 gap described above closed, and there being potentially half that again available.
Of course most of the quickest options to generate work will require a direct spend, but they will not be as expensive as paying a team member a proportion of their remuneration, and other associated costs, to generate new work that simply isn’t coming!
For example, money well-spent on a website that is easy for prospective clients to use, well-maintained and monitored for Search Engine Optimisation, coupled with a fully results-tested “pay per click” program such as Google AdWords, will generate a very good return on your investment.
The bottom-line…be aware early when expected results in relationship marketing are not happening, and not likely to happen, be aware of the full financial impact, and take pragmatic steps to develop and implement a different strategy.
Who was it who said, “When you find yourself in a deep hole it’s a good idea to stop digging”?
LinkedIn…if you are going to be involved in a networking organisation such as LinkedIn it pays to be serious, and to make daily activity of the right type in LinkedIn a real habit…
Set aside a small amount of time each day from your WorkPlan™ FirmTime™ allocation, and use it consistently…
Every time you are in contact with someone in your practice and business life generally it would make sense to be connected to on LinkedIn… take the time to check in your connections to see if you are… and send a bespoke polite request to connect if you aren’t. Don’t just use the standard text.
When LinkedIn suggests people you may know, take 30 seconds to scroll through and check a manageable number out and send invitations to, say ten, appropriate potential connections…every time! That very small amount of time every day adds connections surprisingly quickly.
When you do long-form posts all your connections will be notified…so spend some time identifying relevant, helpful, information and do those posts!
When you read a member’s post that gets your juices going take the time to add a considered comment…it’s surprising what opportunities can flow when like-mined people are in contact.
When I started my consulting business in early 1988, long before LinkedIn existed, I started building a detailed contact database immediately, using FileMaker.
It eventually contained over 11,000 contacts…and it has been quite a journey in the few years since I joined LinkedIn ensuring that those who are LinkedIn members have been exported into LinkedIn, and contacted with invitations to connect.
LinkedIn provides good tools to assist with importing your contacts from other places, and clear instructions, and is very helpful in answer to specific requests for assistance.
I still use the database for these newsletters but LinkedIn works alongside it, and differently.
Don’t hesitate to ask your connections for recommendations where appropriate.
There are good training tools on LinkedIn, and very good materials of the “LinkedIn For Lawyers” style abound
The “take-away”? LinkedIn is another terrific tool to assist with building your network and reputation…if you belong it pays to take it seriously. A reminder for anyone who is… “on LinkedIn”, without a photo, a scrappy profile, and very few connections…it’s not a good look.
Pricing… There’s Often Still Room For Fee Increases In A Competitive Market…
When was the last time you reviewed your pricing across your entire range of services?
How much potential revenue, and profit, are you leaving on the table?
Feedback out there in the trenches is showing me that a combination of factors is working to cause some lawyers to lose sight of opportunities to increase prices for their services.
All the discussion about clients wanting “more for less” can create inertia.
A bad experience with a Costs Assessment can make a lawyer overly gun-shy.
Misinterpretation of ethical concerns or even specific Regulations can also obscure proper opportunities for fee uplifts that would be properly agreed to by informed clients.
Introducing appropriate fixed fees across a wider range of services may allow for improved profit margins with smart choices of price points and excellent description of the value equation to clients.
Being ultra-conservative, or plain lazy, in pricing will leave large slabs of potential revenue on the table, and keep profit margins low, and that is hardly a wise business strategy.
The bottom line…Heads-up, eyes wide open. Even modest increases in fees in just some areas of practice will do wonders for your profit as most have little or no increase in Expenses associated with them.
Lies, Damned Lies, and Statistics…Accuracy in WIP Realisation Rates Is Important!
In each issue I try to introduce comment about a management issue that revolves around “the numbers”.
This time I’ll focus on an issue that regularly arises in miscalculating the percentage of Raw Work In Progress that is absorbed in a given period that makes it into a client bill.
Many Practice Management systems allow the generation of reports that show the amount of Work In Progress that was used relative to a bill generated…either bill by bill, by client, or in total for a team member or group.
What is often missed is that Raw WIP can be absorbed outside of the billing process, and analysing just the WIP absorbed into bills will produce a false picture…usually healthier than the reality.
WIP can be written off without a bill being produced, often at the end of a matter, but not only at that point.
The correct way to assess the relationship between gross WIP absorbed and bills produced in a period, for an individual or a group, is to take the opening WIP balance, the new Raw WIP added in the period, and the closing unbilled WIP balance. That will pick up all WIP absorbed by any means, and that number can be compared to fees billed to give an accurate percentage.
With profit margins in far too many firms being small to non-existent, an accurate understanding of Realisation Rates is important, so the continuous improvement journey can roll along properly informed.
The bottom line…being fully aware of the level of leakage in WIP Realisation can cause you to look at lot more carefully at the causes, and be more determined to ensure effective fixes are put in place.
KMS Services…KMSManagementSupport™…28 years young!
How often have you wished you had ready access to a genuinely experienced lawyer and Manager for input on a challenge or opportunity facing you in managing your practice?
Larger firms often have suitably experienced team members to turn to in HR, Marketing, Performance Management, FeedBack Reporting, Pricing etc., but far too often small-medium firms are left feeling they need to “go it alone”.
For 28 years now we’ve been providing KMSManagementSupport™, and currently have member firms that have been members continuously for well over twenty years.
Whenever members have an issue to discuss they simply email an outline and tee up a telephone discussion with me.
KMSMS subscriptions are modest, based on firm size, are payable annually, half-yearly, quarterly or monthly to suit your cash flows, and are usually fixed for at least three years.
