There is a very interesting debate going on at the moment over on the Law Society Gazette’s LinkedIn group about the role of non-lawyers, and whether 2010 will see an influx of new external talent into firm management. Any LinkedIn members would be well advised to check it out, and to get involved.
The consensus, if there is one, seems to be that many law firms need a more commercial approach to management – and that bringing in more talent to operational roles is a key element in this.
However, top class professionals in finance, marketing, HR, IT, as well as business management generally, will not accept being treated as ‘second class citizens’. Firms need to think very seriously about their management and ownership structures if they are to attract and retain people of the requisite calibre. Value creation does not begin with the legal work, and the value that these people add must be recognised.
The key issue in managing the relationship between solicitors and non-legal staff is communication. Lawyers have a completely different mindset from accountants, marketers, IT or HR specialists. Often, the mindset engendered by legal training leads people to value faultless arguments and a focus on problems rather than opportunities, which can be unhelpful in achieving the compromise needed for successful management.
Non-legal professionals need to understand this mindset, and vice versa, in order for communication to be successful. Above all, lawyers need to recognise that the other professionals with different backgrounds and functions in their midst are every bit as valuable to the business as their fee earning staff.
Whether or not 2010 sees a further shift towards non-lawyers, it is a question for firms of how they organise their management. Often, the best option can be to bring in the expertise on a retained basis, so long as this expertise is provided by someone who knows the legal market and the ‘lawyer mindset’ inside out.
Thursday, 24 December 2009
Wednesday, 2 December 2009
Developing Business through the Database
It is commonplace to hear that cash in the legal market is in short supply – and, with the possibility of the economy emerging from recession in the next year, firms looking to grow again will have an even greater need for cash to stay solvent. Tighter budgets aside, how does this impact on the day to day operations of business developers?
It is one of the less exciting facts of business development that it is far more expensive and time-consuming, for example, to attend networking events to get a new client’s business, than to get business from an existing client. Therefore, any firm wanting to increase sales without significantly increasing costs should concentrate on their existing clients. And the key to this – the client database.
Investing in the Database
The client database is not particularly glamorous, but it is without doubt your most valuable tool for maintaining sales while those around you suffer. Above all, the database needs to be as complete and accurate as possible. This is the only way to be sure that you are targeting the right people for the right services.
This means that the database must be cleansed and maintained, and once it is up to date, information collection should be limited at first. Too many database exercises fail because of over-ambitious collection targets. Only basic and essential marketing information need enter the database, such as contact details and services provided. Marital status, home ownership and employment position would be an excellent start for a private client database. Building a relationship is important, so home as well as work email and other family contacts may be appropriate.
Professional Standards
Information collection is a question for individual departments and teams, but setting standards up front is a vital task. Professionals generally respond well to the concept of standards, especially when they have been involved in setting those standards. Therefore, every team should get together and set the standards of database maintenance to which they will all adhere. This is especially important for the initial client interview when, by its very nature, there is more freedom to ask wider ranging questions. Having achieved this buy-in, there can be no complaints when individuals are expected to explain any cases of non-compliance.
Certain standards will apply to all fee earners, regardless of their practice area. Information must be collected at the first meeting, using a standard form (which will have been created using the standards defined by the team). All necessary fields will be completed.
Trusting in the Database
The biggest obstacle to effective database management is a lack of trust – not of the system itself, but of the other fee earners who will be using the information stored in it. Partners in law firms are notorious for ‘hoarding’ clients, demonstrating an inherent lack of trust in their colleagues. If the firm is to develop its business successfully, this barrier must be broken down. Cross-selling is a crucial part of business development, especially when times are tough, and having a well-managed, up to date database is central to this.
Lack of trust is endemic within legal partnerships, and the issue of database management is symptomatic of this. So it is important that, when setting the standards for data collection, procedures and guidelines to usage are agreed. Data owners must have confidence that the information they provide is going to be respected. However, something as seemingly basic as the database can play an important part in overcoming this challenge – and promoting cross-selling and business development in the process. That is surely worth investing in.
It is one of the less exciting facts of business development that it is far more expensive and time-consuming, for example, to attend networking events to get a new client’s business, than to get business from an existing client. Therefore, any firm wanting to increase sales without significantly increasing costs should concentrate on their existing clients. And the key to this – the client database.
Investing in the Database
The client database is not particularly glamorous, but it is without doubt your most valuable tool for maintaining sales while those around you suffer. Above all, the database needs to be as complete and accurate as possible. This is the only way to be sure that you are targeting the right people for the right services.
This means that the database must be cleansed and maintained, and once it is up to date, information collection should be limited at first. Too many database exercises fail because of over-ambitious collection targets. Only basic and essential marketing information need enter the database, such as contact details and services provided. Marital status, home ownership and employment position would be an excellent start for a private client database. Building a relationship is important, so home as well as work email and other family contacts may be appropriate.
Professional Standards
Information collection is a question for individual departments and teams, but setting standards up front is a vital task. Professionals generally respond well to the concept of standards, especially when they have been involved in setting those standards. Therefore, every team should get together and set the standards of database maintenance to which they will all adhere. This is especially important for the initial client interview when, by its very nature, there is more freedom to ask wider ranging questions. Having achieved this buy-in, there can be no complaints when individuals are expected to explain any cases of non-compliance.
Certain standards will apply to all fee earners, regardless of their practice area. Information must be collected at the first meeting, using a standard form (which will have been created using the standards defined by the team). All necessary fields will be completed.
Trusting in the Database
The biggest obstacle to effective database management is a lack of trust – not of the system itself, but of the other fee earners who will be using the information stored in it. Partners in law firms are notorious for ‘hoarding’ clients, demonstrating an inherent lack of trust in their colleagues. If the firm is to develop its business successfully, this barrier must be broken down. Cross-selling is a crucial part of business development, especially when times are tough, and having a well-managed, up to date database is central to this.
Lack of trust is endemic within legal partnerships, and the issue of database management is symptomatic of this. So it is important that, when setting the standards for data collection, procedures and guidelines to usage are agreed. Data owners must have confidence that the information they provide is going to be respected. However, something as seemingly basic as the database can play an important part in overcoming this challenge – and promoting cross-selling and business development in the process. That is surely worth investing in.
Tuesday, 3 November 2009
The Growth Imperative
We may not yet be out of the recessionary woods, but many firms are now (rightly) looking to the future, and considering their options for growth and development. In the past, this was something of a no-brainer – firms grew year on year, in some cases growing simply for the sake of growth itself.
There is a distinct danger that this mindset will reappear along with the ‘green shoots’ the optimists are predicting will appear towards the end of 2009 and beginning of 2010. This may not seem like the biggest cause for concern as the economy picks back up, but in fact many more businesses will fail in the first stages of the upturn, as they struggle to fund growth, than did during the downturn itself.
Managers in law firms across the country need to consider very carefully their options for growth, and how they will fund it.
An increase in fee income will naturally bring with it an increase in profits (as most of the costs in law firms are fixed). However, the increase in lock-up (i.e. the firm’s assets) will also need to be funded. When taxes are taken into account, it is entirely plausible that the extra funding requirement will significantly outweigh the increase in profits.
There are effectively three options open to managers looking to fund growth:
Option number 1 is likely to be (extremely) unpopular with the partners, many of whom will have had to accept lower drawings in the recent past.
Option number 2 is likely to be unpopular with the bank, unless the partners are at least willing to match borrowing with their own capital – and, in any case, credit lines are notoriously tight in the current market.
Option number 3, better financial management, may be difficult to achieve. However, it is surely the most palatable (and desirable) option and, to be honest, is something all firms should be striving to achieve regardless their growth ambitions.
The upturn will be fraught with danger, but for those firms with an eye on both top and bottom lines there will be significant opportunities to create competitive advantage and prosper.
There is a distinct danger that this mindset will reappear along with the ‘green shoots’ the optimists are predicting will appear towards the end of 2009 and beginning of 2010. This may not seem like the biggest cause for concern as the economy picks back up, but in fact many more businesses will fail in the first stages of the upturn, as they struggle to fund growth, than did during the downturn itself.
Managers in law firms across the country need to consider very carefully their options for growth, and how they will fund it.
An increase in fee income will naturally bring with it an increase in profits (as most of the costs in law firms are fixed). However, the increase in lock-up (i.e. the firm’s assets) will also need to be funded. When taxes are taken into account, it is entirely plausible that the extra funding requirement will significantly outweigh the increase in profits.
There are effectively three options open to managers looking to fund growth:
- Increase partner funding levels, to meet the extra requirement.
- Increase borrowings, to meet the extra requirement
- Reduce lock-up in line with growth, to negate any extra requirement
Option number 1 is likely to be (extremely) unpopular with the partners, many of whom will have had to accept lower drawings in the recent past.
Option number 2 is likely to be unpopular with the bank, unless the partners are at least willing to match borrowing with their own capital – and, in any case, credit lines are notoriously tight in the current market.
Option number 3, better financial management, may be difficult to achieve. However, it is surely the most palatable (and desirable) option and, to be honest, is something all firms should be striving to achieve regardless their growth ambitions.
The upturn will be fraught with danger, but for those firms with an eye on both top and bottom lines there will be significant opportunities to create competitive advantage and prosper.
Tuesday, 20 October 2009
Help Needed!
We like to think of ourselves as thought leaders when it comes to the legal marketplace, and we hope that you are starting to think the same as you read this blog and visit our website.
However, all of our opinion is based in analysis and experience working with those on the front line – managers in successful law firms around the UK, seeking to become ever more profitable and successful partnerships.
For us, this is clearly an iterative process, and we are learning all the time. We always seek input and feedback from our clients and allies with ties to the legal sector.
We are looking to carry out a survey on the role of the Finance Director in law firms. We already have our opinions on some of the issues, as you will see from previous posts, but we want more input from those affected – Finance Directors, Managing Partners and Senior Partners, other Partners, Accounting and other support staff.
If you think you are affected by this, and would like to take part, we would be delighted to hear from you. Responses can range from a few minutes filling out a questionnaire, to a more in-depth interview – whatever fits your schedule.
Please email us, info@wilkinsonread.co.uk, and we will try to get back to you the same working day.
Many thanks in advance. Any comments posted here would be most welcome.
The WRP team.
However, all of our opinion is based in analysis and experience working with those on the front line – managers in successful law firms around the UK, seeking to become ever more profitable and successful partnerships.
For us, this is clearly an iterative process, and we are learning all the time. We always seek input and feedback from our clients and allies with ties to the legal sector.
We are looking to carry out a survey on the role of the Finance Director in law firms. We already have our opinions on some of the issues, as you will see from previous posts, but we want more input from those affected – Finance Directors, Managing Partners and Senior Partners, other Partners, Accounting and other support staff.
If you think you are affected by this, and would like to take part, we would be delighted to hear from you. Responses can range from a few minutes filling out a questionnaire, to a more in-depth interview – whatever fits your schedule.
Please email us, info@wilkinsonread.co.uk, and we will try to get back to you the same working day.
Many thanks in advance. Any comments posted here would be most welcome.
The WRP team.
Wednesday, 7 October 2009
Detailed Development
Strategy is about more than setting a vision or agreeing on a general course of action. It also involves setting out the specific milestones on the roadmap – the actions that will need to be implemented to achieve the vision.
This means measuring what is done (and not done), and improving on what has been measured. It is remarkable that many firms create a marketing budget without first accurately planning, scheduling and costing their marketing activities and returns. Indeed, many firms seem to carry out marketing activities on the basis that either the client or the partner expects them, they maintain ‘profile’, or even that ‘we have always done it’.
Rather than cutting back indiscriminately, firms would be well advised to undertake a detailed audit of their marketing activities – establishing what is most effective, and what this costs. For example, a seminar is not necessarily successful because it is well-attended. Rather, for all marketing-related activities the marketing director must establish:
This is not just a question of addressing marketing spend and marketing time. Equally important is measurement of client value, in terms of speed of payment and how much management time they take up, as well as how profitable they are. No firm wants to lose business – but equally as damaging can be keeping the wrong business. Clients who are unable or unwilling to pay promptly and are impossible to manage, are rarely profitable and not worth retaining. (It is also worth looking up Ron Baker’s view – that bad clients actually drive out good clients, and are therefore harmful to the firm).
For firms looking not only to ride out the storm but to emerge as stronger and more profitable businesses, the devil is in the details – and marketing is no exception.
This means measuring what is done (and not done), and improving on what has been measured. It is remarkable that many firms create a marketing budget without first accurately planning, scheduling and costing their marketing activities and returns. Indeed, many firms seem to carry out marketing activities on the basis that either the client or the partner expects them, they maintain ‘profile’, or even that ‘we have always done it’.
Rather than cutting back indiscriminately, firms would be well advised to undertake a detailed audit of their marketing activities – establishing what is most effective, and what this costs. For example, a seminar is not necessarily successful because it is well-attended. Rather, for all marketing-related activities the marketing director must establish:
- New client take-on (as a result)
- Matters opened and their value
- The real cost of resulting instructions
- How successful the activity was (comparatively)
This is not just a question of addressing marketing spend and marketing time. Equally important is measurement of client value, in terms of speed of payment and how much management time they take up, as well as how profitable they are. No firm wants to lose business – but equally as damaging can be keeping the wrong business. Clients who are unable or unwilling to pay promptly and are impossible to manage, are rarely profitable and not worth retaining. (It is also worth looking up Ron Baker’s view – that bad clients actually drive out good clients, and are therefore harmful to the firm).
For firms looking not only to ride out the storm but to emerge as stronger and more profitable businesses, the devil is in the details – and marketing is no exception.
Tuesday, 6 October 2009
Developing through the Upturn
We have alluded in previous posts to the responses we’ve seen across the sector in the face of extremely tough conditions – including blanket cost-cutting, cutbacks in support functions, and a redirection of resources away from marketing and business development.
Whilst these actions are at the very least understandable, management must now turn the focus towards the future. Strategy needs to be a priority (urgent and important), and marketing and development are a vital part of this.
There are three core elements to this process:
Look Back and Learn
Considering the downturn of the late Eighties, we can identify a similar pattern, whereby cutbacks were focused at all levels below the very top. Leverage was reduced as a consequence, leaving a gap in the hierarchy and leading to a shortage of talent and salary inflation in post-recession years. As we look forwards, firms need to consider extremely carefully how they will manage their staffing in order to prevent this situation.
Economics over Politics
Law firm leaders have an extremely rare opportunity, and one that will not last long. The economic imperative to maintain (or recapture) profits and develop a successful growing business can be used to push through fundamental changes to the partnership that may never otherwise occur because of internal political posturing. Inefficient partners and practice areas can come under scrutiny in a way previously inconceivable, all in the name of preserving PEP.
Client Ownership
Gone are the days when a partner can legitimately claim to ‘own’ a particular client. All clients must be clients of the firm, not of any individual partner, and they should have access to key fee earners and decision makers within the firm. The clear goals are client protection, client retention and cross-selling, all of which should be consistently monitored. This can only be achieved if the partners trust each other, and as such they must ‘share’ clients in the interests of the firm as a whole.
If managers can grapple with these key issues, they have a real opportunity to grow and develop their firms, and to push home competitive advantage in a market undergoing rapid transformations.
Whilst these actions are at the very least understandable, management must now turn the focus towards the future. Strategy needs to be a priority (urgent and important), and marketing and development are a vital part of this.
There are three core elements to this process:
Look Back and Learn
Considering the downturn of the late Eighties, we can identify a similar pattern, whereby cutbacks were focused at all levels below the very top. Leverage was reduced as a consequence, leaving a gap in the hierarchy and leading to a shortage of talent and salary inflation in post-recession years. As we look forwards, firms need to consider extremely carefully how they will manage their staffing in order to prevent this situation.
Economics over Politics
Law firm leaders have an extremely rare opportunity, and one that will not last long. The economic imperative to maintain (or recapture) profits and develop a successful growing business can be used to push through fundamental changes to the partnership that may never otherwise occur because of internal political posturing. Inefficient partners and practice areas can come under scrutiny in a way previously inconceivable, all in the name of preserving PEP.
Client Ownership
Gone are the days when a partner can legitimately claim to ‘own’ a particular client. All clients must be clients of the firm, not of any individual partner, and they should have access to key fee earners and decision makers within the firm. The clear goals are client protection, client retention and cross-selling, all of which should be consistently monitored. This can only be achieved if the partners trust each other, and as such they must ‘share’ clients in the interests of the firm as a whole.
If managers can grapple with these key issues, they have a real opportunity to grow and develop their firms, and to push home competitive advantage in a market undergoing rapid transformations.
Monday, 5 October 2009
Remote Support for Success
One of the less obvious consequences of the difficulties of the past 18 months for small and medium sized firms has been the challenge of producing sufficiently detailed figures for the needs of the bank manager.
Banks are increasingly requiring detailed management and financial information from solicitor customers, both on renewal of facilities and on a regular basis, with explanations to accompany accounting numbers - as they would expect from a Finance Director.
Whilst most Legal accounting systems hold the relevant data, turning it into meaningful information so that Partners and Lenders can make the right decisions has historically proved both challenging and costly. Many small firms simply cannot afford the requisite calibre of finance or marketing staff, while producing the information independently is close to impossible.
We have worked over the past year to develop a cost-effective solution to this problem, by delivering the skills and experience of a Finance Director and/or a Marketing Director on a remote basis – not only turning our clients’ information into an understandable format, but using it to help them achieve greater profits, smoother cash flow and increased revenues.
This is rapidly becoming one of our most popular services, as it meets the needs of both the firm and the bank, while also providing peace of mind for both. If you would like more information, please see this page on our website.
Banks are increasingly requiring detailed management and financial information from solicitor customers, both on renewal of facilities and on a regular basis, with explanations to accompany accounting numbers - as they would expect from a Finance Director.
Whilst most Legal accounting systems hold the relevant data, turning it into meaningful information so that Partners and Lenders can make the right decisions has historically proved both challenging and costly. Many small firms simply cannot afford the requisite calibre of finance or marketing staff, while producing the information independently is close to impossible.
We have worked over the past year to develop a cost-effective solution to this problem, by delivering the skills and experience of a Finance Director and/or a Marketing Director on a remote basis – not only turning our clients’ information into an understandable format, but using it to help them achieve greater profits, smoother cash flow and increased revenues.
This is rapidly becoming one of our most popular services, as it meets the needs of both the firm and the bank, while also providing peace of mind for both. If you would like more information, please see this page on our website.
Wednesday, 30 September 2009
Embracing Change
In spite of the well-publicised drawbacks of charging by the hour – that the incentive is for firms to spend as long as possible on a particular matter; that fees are largely divorced from the value delivered; and that it promotes the long-hours culture that still dominates the profession – most lawyers have been slow to embrace change. The forthcoming changes in the market will provide the kickstart that many firms need, albeit perhaps too late for some.
Delivery
Some of the larger firms have started to accept the need for new billing practices, but even this has been limited. In any case, this is merely the tip of the iceberg. Firms throughout the market will need to fundamentally alter their processes and methods of delivery, in order to compete with providers well-versed in the commercial imperatives of efficiency and low-cost service provision.
Valuable Services
Establishing the value of services provided without the aid of hourly rates, and away from the simple ‘cost-plus’ mentality prevalent in some areas, will not be an easy task. However, firms must be able to demonstrate clearly the value they bring to their clients, and it will not necessarily be a simple question of price competition. Quality of service and relationship management will also be crucial ingredients in the value proposition.
That said, there will also be areas in which competition will necessarily be with low-cost providers, and firms that cannot compete in terms of efficiency will not survive long. This is something that needs to be tackled now, not as and when the issue arises.
A Different Approach
It will not be enough to change processes or look to compete in areas other than price – differentiation will be at the heart of the new market. Firms that do not know how to market themselves and their brand, to existing clients as well as to prospects, will lose out and will be waving goodbye to more than their old timesheets.
Delivery
Some of the larger firms have started to accept the need for new billing practices, but even this has been limited. In any case, this is merely the tip of the iceberg. Firms throughout the market will need to fundamentally alter their processes and methods of delivery, in order to compete with providers well-versed in the commercial imperatives of efficiency and low-cost service provision.
Valuable Services
Establishing the value of services provided without the aid of hourly rates, and away from the simple ‘cost-plus’ mentality prevalent in some areas, will not be an easy task. However, firms must be able to demonstrate clearly the value they bring to their clients, and it will not necessarily be a simple question of price competition. Quality of service and relationship management will also be crucial ingredients in the value proposition.
That said, there will also be areas in which competition will necessarily be with low-cost providers, and firms that cannot compete in terms of efficiency will not survive long. This is something that needs to be tackled now, not as and when the issue arises.
A Different Approach
It will not be enough to change processes or look to compete in areas other than price – differentiation will be at the heart of the new market. Firms that do not know how to market themselves and their brand, to existing clients as well as to prospects, will lose out and will be waving goodbye to more than their old timesheets.
Tuesday, 29 September 2009
Getting the Right Cost Structure: First Steps
As the economy starts to emerge (slowly) from recession, it would perhaps be understandable if managers took the opportunity to return to ‘business as usual’. But in the new legal market, there will be no ‘business as usual’ – firms need to wake up to the new commercial reality, and accept that their business model has to emphasise efficiency and profitability.
The issue of costs in law firms is complicated, and I shall be returning to the subject in the coming weeks to give further opinion – but getting your cost structure right, measuring returns and spending wisely is an absolutely essential part of the approach.
Structures
Broadly speaking, law firms can be described as ‘fixed cost operations’. In some areas these costs can be made more variable, using flexible contracts and outsourcing arrangements, but on the whole there is little room for change in the main outgoings. These costs can be broken down into staff costs, property, IT, professional indemnity, marketing, and ‘other’ (including, unfortunately, write-offs).
People
Without doubt, a law firm’s most substantial outgoings are people-related – salaries, bonuses, drawings, and related taxes. It therefore follows that, as difficult as it may be, the most substantial savings will also be people-related. The tough decisions must be taken early and openly, as remaining staff must be kept ‘on-board’. It may be possible to keep some people on part-time, but your cost structure absolutely must fit with your income profile – and if this means fewer property or commercial fee earners, then this is unfortunately the new market reality. By the same token, there will be potential growth areas that ought to be considered for expansion. Improving profits is not just about cutting costs, and firms must be prepared to invest where it would make commercial sense.
‘Other’
Once the big potential savings have been identified, and action taken to get the ball rolling (bearing in mind that severance costs will create a short-term hole in the cash flow), then other less substantial outgoings can be considered. Major savings can be made by reassessing the firm’s property requirements (especially if there are now a few more empty desks), refocusing marketing efforts on existing clients (see below), and even through some mild investments in technology.
Where the Money Is
However tough the decisions will be, the firm’s survival prosperity while upturn gradually reappears will depend upon swift and decisive action – and a determination to ‘go where the money is’, focusing on the most substantial potential savings, emphasising returns on outgoings and flexibility where possible.
The issue of costs in law firms is complicated, and I shall be returning to the subject in the coming weeks to give further opinion – but getting your cost structure right, measuring returns and spending wisely is an absolutely essential part of the approach.
Structures
Broadly speaking, law firms can be described as ‘fixed cost operations’. In some areas these costs can be made more variable, using flexible contracts and outsourcing arrangements, but on the whole there is little room for change in the main outgoings. These costs can be broken down into staff costs, property, IT, professional indemnity, marketing, and ‘other’ (including, unfortunately, write-offs).
People
Without doubt, a law firm’s most substantial outgoings are people-related – salaries, bonuses, drawings, and related taxes. It therefore follows that, as difficult as it may be, the most substantial savings will also be people-related. The tough decisions must be taken early and openly, as remaining staff must be kept ‘on-board’. It may be possible to keep some people on part-time, but your cost structure absolutely must fit with your income profile – and if this means fewer property or commercial fee earners, then this is unfortunately the new market reality. By the same token, there will be potential growth areas that ought to be considered for expansion. Improving profits is not just about cutting costs, and firms must be prepared to invest where it would make commercial sense.
‘Other’
Once the big potential savings have been identified, and action taken to get the ball rolling (bearing in mind that severance costs will create a short-term hole in the cash flow), then other less substantial outgoings can be considered. Major savings can be made by reassessing the firm’s property requirements (especially if there are now a few more empty desks), refocusing marketing efforts on existing clients (see below), and even through some mild investments in technology.
Where the Money Is
However tough the decisions will be, the firm’s survival prosperity while upturn gradually reappears will depend upon swift and decisive action – and a determination to ‘go where the money is’, focusing on the most substantial potential savings, emphasising returns on outgoings and flexibility where possible.
Friday, 28 August 2009
Renewal Season
The Professional Indemnity renewals season is fast approaching again and, if commentary from within the industry is to be believed, then this year could be even more difficult than the last, particularly for smaller firms.
With capacity in the market reduced, and further increases in numbers of claims seeming ever more likely, it is those smaller firms with greater exposure to risk that will find their renewal process most painful. There is an interesting piece on this on the Gazette website at the moment.
But, as always, we are concerned with what this actually means in practical terms for this (extremely large) chunk of the market... What should managers be doing?
Undoubtedly, an early conversation with the broker is essential. Many firms didn’t find cover last year, simply because they left it to the last minute (although others applied early and still struggled). Either way, this will give the chance to shop around where possible. And shop around you should – well managed firms will still be able to gain favourable deals, if they apply in good time.
Application forms should be filled out as completely, and diligently, as possible – we are always amazed by the number of sloppily filled out forms, which certainly won’t help your case!
Check that Lexcel accreditation is up to date, and that you comply fully with any requirements – as this will make your risk profile considerably more attractive, especially for firms with significant exposure to property work.
None of this sounds especially difficult, and it isn’t. There are firms out there that will struggle to get a good quote in any event, but there are others for whom doing the simple things well and early could mean all the difference. This is worth bearing in mind.
The real experts in this field are Legal Risk, and I would encourage anyone worried about their renewal to visit their website.
With capacity in the market reduced, and further increases in numbers of claims seeming ever more likely, it is those smaller firms with greater exposure to risk that will find their renewal process most painful. There is an interesting piece on this on the Gazette website at the moment.
But, as always, we are concerned with what this actually means in practical terms for this (extremely large) chunk of the market... What should managers be doing?
Undoubtedly, an early conversation with the broker is essential. Many firms didn’t find cover last year, simply because they left it to the last minute (although others applied early and still struggled). Either way, this will give the chance to shop around where possible. And shop around you should – well managed firms will still be able to gain favourable deals, if they apply in good time.
Application forms should be filled out as completely, and diligently, as possible – we are always amazed by the number of sloppily filled out forms, which certainly won’t help your case!
Check that Lexcel accreditation is up to date, and that you comply fully with any requirements – as this will make your risk profile considerably more attractive, especially for firms with significant exposure to property work.
None of this sounds especially difficult, and it isn’t. There are firms out there that will struggle to get a good quote in any event, but there are others for whom doing the simple things well and early could mean all the difference. This is worth bearing in mind.
The real experts in this field are Legal Risk, and I would encourage anyone worried about their renewal to visit their website.
Monday, 3 August 2009
Your Most Valuable Asset: Getting the best out of your people
All professional service firms maintain that their people are their greatest asset, and many include outstanding working conditions in their mission statements – but increasing levels of staff turnover and a trend of lateral hiring demonstrate that often this does not ring true.
Smaller and medium-sized firms cannot offer the attractive remuneration packages that the larger city firms can, but they do hold significant advantages. Firms must emphasise opportunities for flexible working patterns, a structured career path, a more specialised or more varied workload, and more face-to-face client interaction. They must be able to demonstrate that their firm has a distinctive culture of excellence and really cares for its people.
1. Involvement
It is vital to get ‘buy in’ from staff at all levels. This starts with the ethos that the firm is a ‘team’, from cleaners through to equity partners and management, and everyone is to be treated as an important player. Therefore, staff must be involved in defining the firm’s direction, communication maintained at all levels and regular information provided about the firm’s performance. Profit-sharing, even in basic roles, is an effective way of demonstrating commitment to these principles, and a dialogue with management maintained. Offering free services to staff add to the sense that they are valued. Moreover, a rewards system for bringing in clients and referrals underlines the ethos that the firm and the staff share goals and priorities.
2. Recruitment
This ethos must be apparent not only to current staff, but also to all new applicants and recruits. Any firm taking this issue seriously will have a dedicated ‘Careers’ section on their website, outlining how they provide a different and caring working environment. Interviews are an opportunity not just to assess the candidate, but to demonstrate the firm’s ethos and community.
3. Training
Training and support are areas in which many firms do not live up to their own highly professed standards. Smaller firms often concentrate resources on technical training, while giving insufficient attention to training for management roles and ‘soft’ skills. Good lawyers do not automatically make good managers, and personal development is an important element in retaining staff. Staff should also be trained in confidentiality standards and good practice, client care and telephone skills, IT and firm processes, and in how to deal with new enquiries.
4. Support
Likewise, fee-earning staff often feel that they are insufficiently supported to carry out their roles to the standards they expect of themselves. Ensuring that fee-earners are supported by the staff and technology they need is key to maintaining excellence as a firm. If a firm must streamline, it should do so by cutting back in unprofitable areas and retaining a reputation for outstanding technical work and client service in its remaining services – even if this means flexible arrangements such as part-time contracts and outsourcing arrangements.
Smaller and medium-sized firms cannot offer the attractive remuneration packages that the larger city firms can, but they do hold significant advantages. Firms must emphasise opportunities for flexible working patterns, a structured career path, a more specialised or more varied workload, and more face-to-face client interaction. They must be able to demonstrate that their firm has a distinctive culture of excellence and really cares for its people.
1. Involvement
It is vital to get ‘buy in’ from staff at all levels. This starts with the ethos that the firm is a ‘team’, from cleaners through to equity partners and management, and everyone is to be treated as an important player. Therefore, staff must be involved in defining the firm’s direction, communication maintained at all levels and regular information provided about the firm’s performance. Profit-sharing, even in basic roles, is an effective way of demonstrating commitment to these principles, and a dialogue with management maintained. Offering free services to staff add to the sense that they are valued. Moreover, a rewards system for bringing in clients and referrals underlines the ethos that the firm and the staff share goals and priorities.
2. Recruitment
This ethos must be apparent not only to current staff, but also to all new applicants and recruits. Any firm taking this issue seriously will have a dedicated ‘Careers’ section on their website, outlining how they provide a different and caring working environment. Interviews are an opportunity not just to assess the candidate, but to demonstrate the firm’s ethos and community.
3. Training
Training and support are areas in which many firms do not live up to their own highly professed standards. Smaller firms often concentrate resources on technical training, while giving insufficient attention to training for management roles and ‘soft’ skills. Good lawyers do not automatically make good managers, and personal development is an important element in retaining staff. Staff should also be trained in confidentiality standards and good practice, client care and telephone skills, IT and firm processes, and in how to deal with new enquiries.
4. Support
Likewise, fee-earning staff often feel that they are insufficiently supported to carry out their roles to the standards they expect of themselves. Ensuring that fee-earners are supported by the staff and technology they need is key to maintaining excellence as a firm. If a firm must streamline, it should do so by cutting back in unprofitable areas and retaining a reputation for outstanding technical work and client service in its remaining services – even if this means flexible arrangements such as part-time contracts and outsourcing arrangements.
Friday, 31 July 2009
The Importance of First Impressions: Eight Ways to Wow New Clients and Prospects
First impressions are all about conveying your professionalism and principles, so that there is no doubt that they will be in ‘safe hands’ with you. Here are eight ways to impress from the beginning of a relationship:
1. Keep a scrap book of testimonials in reception
The power of someone else’s endorsement over and above your own should not be underestimated, and yet many firms overlook the importance of getting testimonials in front of clients.
2. Keep a scrap book of client press clippings in reception, and post links on your website
Likewise, whenever a client’s case is reported in the press (local, national, or sector-specific), this provides you with a priceless (and free!) marketing opportunity.
3. Undertake a review of reception and other areas that come under scrutiny on first visits
This is your showcase area and must help to embody your service standards, to which you commit in your promotional and welcome material. Reception must convey an image of professionalism and care, should be staffed at all times, and staff must be trained in client care. You may also want to consider showing clients into a meeting room straight away, providing them with privacy rather than keeping them waiting in a busy reception area.
4. Treat your own people as you would expect to treat a valued client
You cannot successfully portray an image of client care if this image is not a true reflection of your firm’s principles. Therefore, you must take into account the needs of your people when it comes to designing your ‘showcase’ areas as well as your staff facilities.
5. Always introduce the client to the key team members
It is not particularly comforting to receive a call regarding your legal matters from someone whose name you have never even heard. This is also provides a reason to keep in regular contact with the client, obtain regular feedback and promote the firm’s other service offerings, which may be of interest.
6. Research yours client or prospect’s business
All it takes is a few minutes’ internet research on a semi-regular basis, or prior to a scheduled meeting or call, and you will come across as a consummate professional. Moreover, this again gives you the excuse to get in touch and flag up potential areas in which your firm could be of service. This is a habit that all professionals should be in.
7. Provide new clients with a ‘Welcome Pack’
This allows you to begin the relationship on the right foot – and on your terms. Here you can set out clearly what they can expect from you and, likewise, what you expect from them regarding availability, input and (not least!) payment.. You can also include an ‘Our Team’ section, easily compiled from your website profiles.
8. Give the client the option of methods of communication
Busy professionals and businesspeople will often like to be contacted by email, or on their mobile while on the go. Conversely, other clients may not have internet access or a mobile phone. Allowing the client to decide on the method of communication is a question both of client service and practicality, and further enhances your ‘client-centred approach’.
1. Keep a scrap book of testimonials in reception
The power of someone else’s endorsement over and above your own should not be underestimated, and yet many firms overlook the importance of getting testimonials in front of clients.
2. Keep a scrap book of client press clippings in reception, and post links on your website
Likewise, whenever a client’s case is reported in the press (local, national, or sector-specific), this provides you with a priceless (and free!) marketing opportunity.
3. Undertake a review of reception and other areas that come under scrutiny on first visits
This is your showcase area and must help to embody your service standards, to which you commit in your promotional and welcome material. Reception must convey an image of professionalism and care, should be staffed at all times, and staff must be trained in client care. You may also want to consider showing clients into a meeting room straight away, providing them with privacy rather than keeping them waiting in a busy reception area.
4. Treat your own people as you would expect to treat a valued client
You cannot successfully portray an image of client care if this image is not a true reflection of your firm’s principles. Therefore, you must take into account the needs of your people when it comes to designing your ‘showcase’ areas as well as your staff facilities.
5. Always introduce the client to the key team members
It is not particularly comforting to receive a call regarding your legal matters from someone whose name you have never even heard. This is also provides a reason to keep in regular contact with the client, obtain regular feedback and promote the firm’s other service offerings, which may be of interest.
6. Research yours client or prospect’s business
All it takes is a few minutes’ internet research on a semi-regular basis, or prior to a scheduled meeting or call, and you will come across as a consummate professional. Moreover, this again gives you the excuse to get in touch and flag up potential areas in which your firm could be of service. This is a habit that all professionals should be in.
7. Provide new clients with a ‘Welcome Pack’
This allows you to begin the relationship on the right foot – and on your terms. Here you can set out clearly what they can expect from you and, likewise, what you expect from them regarding availability, input and (not least!) payment.. You can also include an ‘Our Team’ section, easily compiled from your website profiles.
8. Give the client the option of methods of communication
Busy professionals and businesspeople will often like to be contacted by email, or on their mobile while on the go. Conversely, other clients may not have internet access or a mobile phone. Allowing the client to decide on the method of communication is a question both of client service and practicality, and further enhances your ‘client-centred approach’.
Wednesday, 29 July 2009
Keeping Clients Happy: Five areas where service counts
What many lawyers forget is that clients are often unable to establish what actually constitutes excellent legal representation. Therefore, at least as important in client retention is a firm’s client service standards. Here are five areas of client service which help to distinguish the outstanding from the ordinary:
1. Maintaining Contact
The most damaging image you can create in a client’s mind is one of disinterest or complacency. Conversely, keeping in regular contact demonstrates that you care. Allowing clients access to an online diary, so that they can easily make appointments, and providing web-enabled case tracking are examples of effective use of the internet. Appointing a dedicated Client Relationship Manager makes managing the whole process much smoother, and gives the client an immediate port of call for any questions or issues. A regular ‘bulletin’, providing primarily items of genuine interest to your client base, as well as information about the firm, helps to keep you in mind and shows that you share your clients’ priorities.
2. Flexibility and Service Standards
An important component of client care is to show a ‘client-centred’ approach. Examples include flexible working hours, ‘out of hours’ meetings for busy business clients or families, or holding meetings at the client’s premises or home where appropriate. Keeping clients regularly updated of progress, offering telephone and video conferencing where applicable, and hosting a dedicated client area on your website will underline your commitment to making the relationship as smooth as possible. Maintaining service standards is crucial, so the firm should require Heads of Department to continue to identify and consider possible new services for the firm.
3. Finance
The prospect of paying for legal services is something that often puts potential clients off, but there are ways you can help to make things easier. At first, offer fixed prices up front to help avoid worries about chargeable hours building up. Guarantees help to reassure clients, as does the option of 0% finance. Only if the firm has the capacity, bridging loans and interim finance can help the client to pay and to plan their finances. It is also a good idea to provide flexibility in billing and collection, allowing clients to view the accounts ledger online and make online payments, and updating them of the status of their account. Automated billing at certain key points in an engagement also help to smooth your own cash flow.
4. Promotion
Holding events with a ‘wow’ factor in the local community boost your profile and credibility. Your sense of Corporate Social Responsibility, demonstrated by promotion of your work with local community groups and charities, further enhances this image. A ‘green strategy’ is a crucial part of this profile. You can also maintain the ‘client-centred’ approach by holding networking events, which benefit both the firm and clients. This must all be geared towards portraying yourself as the premier firm in your area.
5. Feedback
The only way to achieve genuine service improvements is to gain honest feedback from the people who matter – clients. This is more than a question of asking clients to fill out a questionnaire, although this is generally a good place to start. It is often possible to go further, forming client ‘focus groups’ for feedback, and using a ‘mystery shopper’ to contact the firm for quotes, the client for feedback, and other firms to provide an idea of competitive positioning.
1. Maintaining Contact
The most damaging image you can create in a client’s mind is one of disinterest or complacency. Conversely, keeping in regular contact demonstrates that you care. Allowing clients access to an online diary, so that they can easily make appointments, and providing web-enabled case tracking are examples of effective use of the internet. Appointing a dedicated Client Relationship Manager makes managing the whole process much smoother, and gives the client an immediate port of call for any questions or issues. A regular ‘bulletin’, providing primarily items of genuine interest to your client base, as well as information about the firm, helps to keep you in mind and shows that you share your clients’ priorities.
2. Flexibility and Service Standards
An important component of client care is to show a ‘client-centred’ approach. Examples include flexible working hours, ‘out of hours’ meetings for busy business clients or families, or holding meetings at the client’s premises or home where appropriate. Keeping clients regularly updated of progress, offering telephone and video conferencing where applicable, and hosting a dedicated client area on your website will underline your commitment to making the relationship as smooth as possible. Maintaining service standards is crucial, so the firm should require Heads of Department to continue to identify and consider possible new services for the firm.
3. Finance
The prospect of paying for legal services is something that often puts potential clients off, but there are ways you can help to make things easier. At first, offer fixed prices up front to help avoid worries about chargeable hours building up. Guarantees help to reassure clients, as does the option of 0% finance. Only if the firm has the capacity, bridging loans and interim finance can help the client to pay and to plan their finances. It is also a good idea to provide flexibility in billing and collection, allowing clients to view the accounts ledger online and make online payments, and updating them of the status of their account. Automated billing at certain key points in an engagement also help to smooth your own cash flow.
4. Promotion
Holding events with a ‘wow’ factor in the local community boost your profile and credibility. Your sense of Corporate Social Responsibility, demonstrated by promotion of your work with local community groups and charities, further enhances this image. A ‘green strategy’ is a crucial part of this profile. You can also maintain the ‘client-centred’ approach by holding networking events, which benefit both the firm and clients. This must all be geared towards portraying yourself as the premier firm in your area.
5. Feedback
The only way to achieve genuine service improvements is to gain honest feedback from the people who matter – clients. This is more than a question of asking clients to fill out a questionnaire, although this is generally a good place to start. It is often possible to go further, forming client ‘focus groups’ for feedback, and using a ‘mystery shopper’ to contact the firm for quotes, the client for feedback, and other firms to provide an idea of competitive positioning.
Friday, 24 July 2009
Managing the Bank
From all of our recent dealings with the banks, it has been clear that things are not as they once were – and that solicitors will quickly have to accept the new commercial reality.
Lawyers have traditionally been low-risk, profitable customers for banks, and this has allowed access to funding on extremely favourable terms, often with a minimum of security.
But the world has changed almost beyond recognition in the past eighteen months:
Law firms no longer constitute such an inherently highly profitable sector, and the risk of lending to them has been increased by the move from Joint and Several Liability to LLPs
The introductions they provide to other potential customers have lost some of their value as banks’ lending appetite has been limited by the ‘credit crunch’
Client account balances – which make law firms’ accounts most attractive to the bankers – have shrunk in line with the volume of property transactions.
The balance of the relationship between solicitors and their banks has changed, and attitudes must respond. Many bankers feel that they have been viewed as sources of “permanent” capital, rather than overdrafts being in place to deal with fluctuations in the business cycle. They also suggest that access to extra capital has been sought as a way of avoiding difficult conversations with partners or clients.
In the first place, bankers want solicitors to recognise that they are involved in a relationship, and that the bank is a ‘partner’ – not a mere ‘supplier’.
The most important thing has to be communication. Bankers want to work with united, coherent and committed partnerships, and more extensive probing about the personal financial affairs of the partners has (or will soon) become a fact of life.
The bank also needs to know that it is backing a winner. Times might be tough, but this only underlines the importance of financial management. You must be able to show the bank that the firm is financially sound and in a position to honour commitments. Having a Finance Director, or financially literate partner, with good communication skills handle the relationship is crucial.
In all dealings with the bank, preparation is key – which means sending regular copies of management information, and scheduling the annual review of facilities well in advance.
What the Banks Don’t Want
Clearly, bankers don’ want to feel that they’re being taken for granted. They certainly don’t want any surprises. Keeping the bank in the loop, even if things don’t go to plan, will pay great dividends, especially if facilities do need to be extended. Finally, Bankers do not want to be regarded as providers of ‘quasi-equity’ – permanent capital in the form of overdraft.
A Healthy Relationship
The basis of a sound relationship with the bank is to have a plan and to communicate it clearly, in their language. This means detailed cash flow forecasts, based on explicit realistic assumptions, as well as the Profit and Loss accounts plus balance sheet. It also means committing to meeting the projections, and being proactive within the firm. The bank can no longer be relied on as a ‘soft option’ in place of taking tough management decisions – the firm may need to be recapitalised at least partly by the partners themselves, jobs may need to be cut in unprofitable areas, and the firm’s business model may need to be fundamentally altered. This would all be painful, but in the absence of an alternative it may also be necessary.
If the above all fails, then it may be time to look elsewhere – but expect an ‘intrusive process’ and do not assume you will get more favourable terms. In many cases, the inconvenient truth will be that the bank has a point – and working closely with them will be vital for the firm’s future prosperity.
Thursday, 23 July 2009
The Holy Grail of Cross-Selling 3: The Process
There is no right or wrong time for undertaking this exercise, and there is no right or wrong time period for expecting results to come in, as this is all client-dependent. However, it never harms to set down timescales, to set down service expectations and, most of all, it never hurts to set income targets. Our experience in, for example, assisting an office with an office budget, has shown that lines in the sand provide targets for people to aim at and measure their own performance. This gives them something to focus on, and an incentive to try and achieve it.
The Managing Partner, coupled with whoever is handling the marketing for the office, should set down a broad process for undertaking this exercise.
The first step is to identify the clear service expectations. For example, if the office has just carried out a piece of Residential Conveyancing work for a client, it is not unrealistic to expect that there may well be the further requirement for (new) Wills. It is also not unreasonable to expect your team to ask a couple of simple questions - for example, ‘are you married?’ – potentially highlighting a need for mirror Wills. ‘What other family do you have?’ - might identify further opportunities.
By undertaking this exercise, you can establish a set of expectations that you would realistically expect your service teams to have explored with the client. In my experience, it is often best to incorporate these as part of the initial client interview. It enables cross-selling to start from the very beginning of the relationship and forms a fundamental part of the client set-up process allowing fee earners to fully understand potential client needs.
This exercise can be broken down across an office, across a department, or even across teams that operate in the subsidiaries or divisions that the larger clients operate. The easiest way of doing this is to download from the firm’s practice management system the fee income across the firm for the last two years.
Incorporate this into an Excel spreadsheet and segment it by clients and then by work types. What you are very clearly looking for are those instances where there has been either a single or, in certain cases, only two work type sales to a client.
This means that there should in theory be opportunities for selling other services. For example, a limited company that owns property probably also has employees. If it has employees, it will have the need for all aspects of employment advice. It may have tenants so there may be leases or dilapidation litigation. All companies have a director. Do they have a will?
In cross-selling, usually it is simply a case of asking questions, identifying which opportunities exist and then within the client organisation, finding the right person to talk to. Again asking the question “Who would deal with this?” is usually the most direct and successful route.
I have seen that the key thing in achieving success is having undertaken the work type analysis to set up a co-ordinated tracking process. If the analysis was simply sent out to department heads and they were told to get on with it, it would appear too onerous a task - disappearing into an In Tray, never to re-appear. It is therefore in my view critical that there is one person who drives it and that person breaks down the opportunities into bite-sized segments.
For each potential opportunity an “account manager” should be appointed and a target of new sales set. I have reported earlier why I believe a line in the sand should be drawn which sets out the expectations of the management team when embarking on such exercises.
If these things are consistently done, then the ‘Holy Grail’ of cross-selling can become achievable for any firm . . .
The Managing Partner, coupled with whoever is handling the marketing for the office, should set down a broad process for undertaking this exercise.
The first step is to identify the clear service expectations. For example, if the office has just carried out a piece of Residential Conveyancing work for a client, it is not unrealistic to expect that there may well be the further requirement for (new) Wills. It is also not unreasonable to expect your team to ask a couple of simple questions - for example, ‘are you married?’ – potentially highlighting a need for mirror Wills. ‘What other family do you have?’ - might identify further opportunities.
By undertaking this exercise, you can establish a set of expectations that you would realistically expect your service teams to have explored with the client. In my experience, it is often best to incorporate these as part of the initial client interview. It enables cross-selling to start from the very beginning of the relationship and forms a fundamental part of the client set-up process allowing fee earners to fully understand potential client needs.
This exercise can be broken down across an office, across a department, or even across teams that operate in the subsidiaries or divisions that the larger clients operate. The easiest way of doing this is to download from the firm’s practice management system the fee income across the firm for the last two years.
Incorporate this into an Excel spreadsheet and segment it by clients and then by work types. What you are very clearly looking for are those instances where there has been either a single or, in certain cases, only two work type sales to a client.
This means that there should in theory be opportunities for selling other services. For example, a limited company that owns property probably also has employees. If it has employees, it will have the need for all aspects of employment advice. It may have tenants so there may be leases or dilapidation litigation. All companies have a director. Do they have a will?
In cross-selling, usually it is simply a case of asking questions, identifying which opportunities exist and then within the client organisation, finding the right person to talk to. Again asking the question “Who would deal with this?” is usually the most direct and successful route.
I have seen that the key thing in achieving success is having undertaken the work type analysis to set up a co-ordinated tracking process. If the analysis was simply sent out to department heads and they were told to get on with it, it would appear too onerous a task - disappearing into an In Tray, never to re-appear. It is therefore in my view critical that there is one person who drives it and that person breaks down the opportunities into bite-sized segments.
For each potential opportunity an “account manager” should be appointed and a target of new sales set. I have reported earlier why I believe a line in the sand should be drawn which sets out the expectations of the management team when embarking on such exercises.
If these things are consistently done, then the ‘Holy Grail’ of cross-selling can become achievable for any firm . . .
Sunday, 19 July 2009
The Holy Grail of Cross-Selling 2: The People Profile
It is a generally-held belief that any fee-earning member of a professional service firm is capable of initiating or identifying a cross-selling opportunity. Whilst I believe this is in principle true, the reality is that it comes much more naturally to some people than to others and, for a successful cross-selling campaign to have positive results and generate enthusiasm, it is important that the firm’s resources are put behind those most capable of delivering results.
So what is required to undertake this initiative?
Probably the most important thing is a change in the fee earners’ approach to clients. This is especially true with partners, and this change in mental approach involves a recognition that the client does not belong to any one individual, but is an asset of the firm, and that it is the responsibility of all members of the firm to look at identifying and serving the needs of their client, no matter what their size. This may well require the removal of some of the hidden barriers to co-operation, such as reward structures that focus on fee earners introducing clients to the firm, and bonuses for those who meet billing targets but do not encourage delegation and sharing of opportunities. This step can be quite a radical change for many firms, but the recognition that the economic imperative must override political niceties should allow managing partners to take action.
It is also my experience that during this stage of the assignment, the failings of a firm’s database come to light. When you have only done one piece of work for a client, you usually only know the person who commissioned that piece of work, so being able to cross-sell services across a corporate organisation remains difficult when your relationships with those who have authority and responsibility is very limited to isolated individuals.
As part of each exercise, everyone with whom you have a relationship at a particular client should be noted, and their position and influence also noted, as well as their ability to provide you with work. Like all things, keep your database simple. At this stage you do not necessarily want to know the name of the spouse and their interests. You are only interested in the actual work people.
I am often also asked who should be involved in a cross-selling exercise and what their role should be. The point of cross-selling is that it should be as inclusive as possible. Everyone at the office has an opportunity to cross-sell, as the majority of cross-selling is done by listening to what the client says. There is no need to divide out roles within a cross-selling initiative. Fundamentally, what is required is someone to act as a driver of the whole operation round the office or firm, and usually because of their seniority someone to account manage the relationship with the client. This is usually a partner, and also usually the partner who has made the first sale into the organisation. I believe this role should be challenged, especially if that partner is a hoarder of work and not an inclusive person. It is not a given that the account manager on a cross-selling scheme should be a partner, nor the partner who has done the work. It should be the best person to do the job.
So what is required to undertake this initiative?
Probably the most important thing is a change in the fee earners’ approach to clients. This is especially true with partners, and this change in mental approach involves a recognition that the client does not belong to any one individual, but is an asset of the firm, and that it is the responsibility of all members of the firm to look at identifying and serving the needs of their client, no matter what their size. This may well require the removal of some of the hidden barriers to co-operation, such as reward structures that focus on fee earners introducing clients to the firm, and bonuses for those who meet billing targets but do not encourage delegation and sharing of opportunities. This step can be quite a radical change for many firms, but the recognition that the economic imperative must override political niceties should allow managing partners to take action.
It is also my experience that during this stage of the assignment, the failings of a firm’s database come to light. When you have only done one piece of work for a client, you usually only know the person who commissioned that piece of work, so being able to cross-sell services across a corporate organisation remains difficult when your relationships with those who have authority and responsibility is very limited to isolated individuals.
As part of each exercise, everyone with whom you have a relationship at a particular client should be noted, and their position and influence also noted, as well as their ability to provide you with work. Like all things, keep your database simple. At this stage you do not necessarily want to know the name of the spouse and their interests. You are only interested in the actual work people.
I am often also asked who should be involved in a cross-selling exercise and what their role should be. The point of cross-selling is that it should be as inclusive as possible. Everyone at the office has an opportunity to cross-sell, as the majority of cross-selling is done by listening to what the client says. There is no need to divide out roles within a cross-selling initiative. Fundamentally, what is required is someone to act as a driver of the whole operation round the office or firm, and usually because of their seniority someone to account manage the relationship with the client. This is usually a partner, and also usually the partner who has made the first sale into the organisation. I believe this role should be challenged, especially if that partner is a hoarder of work and not an inclusive person. It is not a given that the account manager on a cross-selling scheme should be a partner, nor the partner who has done the work. It should be the best person to do the job.
Thursday, 25 June 2009
The Holy Grail of Cross Selling 1: The Reasons
As the American writer Shirley Lord once said, “What really matters is what you do with what you have”. This could not be more pertinent for business developers in law firms today.
A 10% increase in turnover for a full year is a reality for any firm achieving the Holy Grail of a sustained cross-selling campaign. By cross-selling, I mean the consistent and successful sale of a professional service firm’s other skills to a single client. That client can be a corporate entity, a group or an individual – in the course of a year, any one of those entities is bound to require more than a single service offering from you, its lawyers, accountants or other advisers.
But why is this the Holy Grail? Why is it that so many firms fail to achieve any significant planned level of cross-selling?
In my experience, the senior management of a law firm, be it at executive or departmental level, believes that everyone has the skill and the duty to cross-sell. It is also my experience that a successful cross-selling campaign requires management, drive, support and, most importantly, measurement.
So why should a professional service firm embark on a form of cross-selling initiative?
Firstly, let’s take a moment to look at the cost structures of most professional service firms. My partner, Barry Wilkinson, holds the view that every firm can be broken down into the following categories:
1. Property.
2. Staff costs.
3. Professional indemnity.
4. IT.
5. Marketing.
With the exception of marketing and staff costs, which are variable, all the other costs are fixed.
Therefore, and bearing in mind that most staff are now operating with a reduced workload in this recession, anything that can be done to increase the top line of sales is going to have a fairly dramatic impact on the bottom line of profitability – especially if this can be done without increasing any of the marginal costs. The obvious candidate for this is to sell additional services into your existing client base, otherwise known as cross-selling.
The second reason for embarking on a cross-selling initiative at this time of decreased general demand is because, generally, a sale made to an existing client is a comparatively easy win. The firm has already established a level of trust with the client from the work that has been previously undertaken and, assuming the database has been properly maintained, they already have the contacts with whom the conversations can be initiated to establish the client’s needs.
It is my experience that during a downturn in commercial activity, it is barely and rarely economical for a firm to go out and target new work from new clients/prospects. There is usually only one primary reason why a potential client looks at changing advisers during this time. That is because they are looking to cut their costs on professional advisers (although I do acknowledge that there are occasionally service issues or a requirement for a new service that cannot be provided by the incumbent supplier that could lead to the opportunity for tendering to new work. Incidentally, this is where the importance of vetting opportunities to tender becomes so critical. Firms must resist the desire to respond to every invitation for a tender, and only accept those where the client has a genuine new need for new work, and is not simply motivated by the desire to cut costs.)
Last but not least, during this period of recession winning new work has a great morale-boosting effect on a firm, even if that new work is from existing clients. The importance of staff morale should not be underestimated when it comes to pulling a firm through tough times, and keeping staff turnover to a minimum when good times return.
A 10% increase in turnover for a full year is a reality for any firm achieving the Holy Grail of a sustained cross-selling campaign. By cross-selling, I mean the consistent and successful sale of a professional service firm’s other skills to a single client. That client can be a corporate entity, a group or an individual – in the course of a year, any one of those entities is bound to require more than a single service offering from you, its lawyers, accountants or other advisers.
But why is this the Holy Grail? Why is it that so many firms fail to achieve any significant planned level of cross-selling?
In my experience, the senior management of a law firm, be it at executive or departmental level, believes that everyone has the skill and the duty to cross-sell. It is also my experience that a successful cross-selling campaign requires management, drive, support and, most importantly, measurement.
So why should a professional service firm embark on a form of cross-selling initiative?
Firstly, let’s take a moment to look at the cost structures of most professional service firms. My partner, Barry Wilkinson, holds the view that every firm can be broken down into the following categories:
1. Property.
2. Staff costs.
3. Professional indemnity.
4. IT.
5. Marketing.
With the exception of marketing and staff costs, which are variable, all the other costs are fixed.
Therefore, and bearing in mind that most staff are now operating with a reduced workload in this recession, anything that can be done to increase the top line of sales is going to have a fairly dramatic impact on the bottom line of profitability – especially if this can be done without increasing any of the marginal costs. The obvious candidate for this is to sell additional services into your existing client base, otherwise known as cross-selling.
The second reason for embarking on a cross-selling initiative at this time of decreased general demand is because, generally, a sale made to an existing client is a comparatively easy win. The firm has already established a level of trust with the client from the work that has been previously undertaken and, assuming the database has been properly maintained, they already have the contacts with whom the conversations can be initiated to establish the client’s needs.
It is my experience that during a downturn in commercial activity, it is barely and rarely economical for a firm to go out and target new work from new clients/prospects. There is usually only one primary reason why a potential client looks at changing advisers during this time. That is because they are looking to cut their costs on professional advisers (although I do acknowledge that there are occasionally service issues or a requirement for a new service that cannot be provided by the incumbent supplier that could lead to the opportunity for tendering to new work. Incidentally, this is where the importance of vetting opportunities to tender becomes so critical. Firms must resist the desire to respond to every invitation for a tender, and only accept those where the client has a genuine new need for new work, and is not simply motivated by the desire to cut costs.)
Last but not least, during this period of recession winning new work has a great morale-boosting effect on a firm, even if that new work is from existing clients. The importance of staff morale should not be underestimated when it comes to pulling a firm through tough times, and keeping staff turnover to a minimum when good times return.
Friday, 12 June 2009
Why (Our) Training is Useful
In his 2008 book, Strategy and the Fat Smoker, the ex-Harvard lecturer and professional service consultant David Maister explained ‘Why (Most) Training is Useless’. Even starting from the point of being acknowledged as the best in his field, he recognises that, if you don’t put into practice what you have learned, you may as well not have learned it in the first place (much like the ‘Fat Smoker’, who knows exactly how to lose weight and quit smoking . . .).
Without wishing to compare ourselves to David, we have found much the same (understandable) tendency in some of our training feedback – the urgent business issues take priority over the important training lessons. We regularly receive excellent feedback from (most of) our delegates, and are told how they are going to implement their own ‘profit improvement campaign’ as soon as they get back to the office.
But, when we follow up to see how they have got on, they admit that progress is less than they had hoped - the main issues being:
The partners do not ‘buy-in’ to the campaign
The ‘campaign leader’ does not have/is not given sufficient authority to implement the necessary changes
The fee-earning staff do not recognise the importance of the programme for the firm’s (and their own) continued success
The support staff are not included, and therefore do not understand the importance of their role
For this reason, our training is designed to make staff at all levels understand why this programme is important, and how to achieve the desired results from it. This includes how to achieve buy-in at all levels, what to measure, provision of template documents for measurement, and how to balance the ‘carrot and stick’ approach to ensure success.
We also follow up every training session with the offer of free, remote follow-up consultancy, to help with implementation.
Our in-house training programme includes:
Strategic-level training for senior staff on the management of the performance improvement campaign
In-depth training for fee-earning staff on the why, and how, they can help to improve their firm’s profitability
Training suitable for support staff on their role in the profit improvement process
The benefits of our rigorous, cost-effective training programmes lie in our ability to prepare your staff for successful implementation of what they have learned, and our dedication to helping you achieve the maximum possible results from your follow up campaign.
Wednesday, 10 June 2009
Tailored Consultancy
We have had quite a bit of demand recently for more information on our bespoke services. This post is a case study illustrating how we would tailor our consultancy services to our clients’ specific requirements. And how the “obvious” answer is not always the right answer!
The client is a high street firm, with the old three-legged stool mix of Conveyancing, Legal Aid and General Private Client work. We were asked to help following a difficult period of more than two years. One of the founders had retired and not been adequately replaced. The Legal Aid departments in particular, had become very busy but had not been managed.
Matter starts were plentiful - but not all matters were being progressed satisfactorily to completion - and the Legal Services Commission had inadvertently overpaid the firm and wanted its money back - which was not available.
At the time we became involved, the firm was not profitable, not generating cash, was losing good people and, in some areas, was losing its reputation.
We did our initial analysis, but in this case extended it and interviewed around far more people than usual – not just partners and fee earners. We had to find out WHY things were so awry. We identified over 50 action points, grouped under key headings, including:
Financial management
Management of the partnership
People issues
IT
Negotiations with creditors
Our ratio analysis showed that the most important underlying issue was people performance - too many people producing not enough output.
The obvious remedy was to cut back and institute immediate staff cost savings. However, we had identified that previous cutbacks had caused much of the problem. Low profitability had led to low salary reviews and non-replacement of good people who understandably left.
So we did the exact opposite of the obvious. We put in place a very, very focused programme of file completion, billing and collection. This not only generated the cash to satisfy the lenders but also meant that the remaining good staff could be paid more. Those staff not up to scratch were replaced with better, albeit in some cases more expensive, staff.
What we did was to turn a vicious cycle of decline into a virtuous cycle of recovery.
We persuaded the individual partners to take responsibility for specific aspects of the recovery programme. One of the partners, despite a lack of accountancy training, successfully took responsibility (with our help) for hands-on management of the finances.
Within a relatively short period of time, all the creditors had been paid in full and the firm’s overdraft is well within manageable levels. Its reputation has been recovered, and in some areas the firm is continuing to grow and take on significant new clients.
If you would like to see more case study examples, please click here.
The client is a high street firm, with the old three-legged stool mix of Conveyancing, Legal Aid and General Private Client work. We were asked to help following a difficult period of more than two years. One of the founders had retired and not been adequately replaced. The Legal Aid departments in particular, had become very busy but had not been managed.
Matter starts were plentiful - but not all matters were being progressed satisfactorily to completion - and the Legal Services Commission had inadvertently overpaid the firm and wanted its money back - which was not available.
At the time we became involved, the firm was not profitable, not generating cash, was losing good people and, in some areas, was losing its reputation.
We did our initial analysis, but in this case extended it and interviewed around far more people than usual – not just partners and fee earners. We had to find out WHY things were so awry. We identified over 50 action points, grouped under key headings, including:
Financial management
Management of the partnership
People issues
IT
Negotiations with creditors
Our ratio analysis showed that the most important underlying issue was people performance - too many people producing not enough output.
The obvious remedy was to cut back and institute immediate staff cost savings. However, we had identified that previous cutbacks had caused much of the problem. Low profitability had led to low salary reviews and non-replacement of good people who understandably left.
So we did the exact opposite of the obvious. We put in place a very, very focused programme of file completion, billing and collection. This not only generated the cash to satisfy the lenders but also meant that the remaining good staff could be paid more. Those staff not up to scratch were replaced with better, albeit in some cases more expensive, staff.
What we did was to turn a vicious cycle of decline into a virtuous cycle of recovery.
We persuaded the individual partners to take responsibility for specific aspects of the recovery programme. One of the partners, despite a lack of accountancy training, successfully took responsibility (with our help) for hands-on management of the finances.
Within a relatively short period of time, all the creditors had been paid in full and the firm’s overdraft is well within manageable levels. Its reputation has been recovered, and in some areas the firm is continuing to grow and take on significant new clients.
If you would like to see more case study examples, please click here.
Friday, 5 June 2009
Supermarket Law . . .
According to the Law Gazette today, 69% of survey respondents ‘agree they would be concerned about the quality of (legal) service offered’ by banks and supermarkets. This may well be the case – after all, banks are currently very much out of favour.
But the really discernable difference between the banks’ and supermarkets’ approach and traditional firms of solicitors won’t be in the quality of service offered. It will be in the definition of service- speed, efficiency, response -not personal service. They will provide “transactions” not “relationships”.
This will enable these alternative providers to sell their legal services at a much lower price than their law firm competitors. And in areas that are susceptible to a high-volume, low-value approach, price will be the ultimate determinant of success. There is simply no reason why most consumers would pay more than they need to for a “transaction” – for example a Will, or for the Conveyancing work on their property.
The consequence of this is clear – firms that are in business in these areas must become as tightly run as possible, or they won’t be in business for much longer. They must be able to provide the same service in a shorter time, and at a lower cost. This means that IT and delegation become absolutely vital to processing matters as efficiently as possible. Not every task in a transaction requires a qualified solicitor!!
The other area where the supermarkets and banks will take advantage will be in the marketing of their services. Many firms do not even know what different services they sell to each client – and consequently they have very little chance of taking opportunities to cross-sell. This is a question of database management, and of a simple but coherent firm-wide strategy to target existing clients for their services. Most firms won’t be able to compete with the marketing budgets the banks and supermarkets will throw at potential clients. But not maximising opportunities with existing clients is unforgivable, and potentially fatal for the firm.
If firms want to compete with alternative providers, they need to sharpen up in those areas which affect the delivery, not the law – or current client perceptions won’t much matter for long.
But the really discernable difference between the banks’ and supermarkets’ approach and traditional firms of solicitors won’t be in the quality of service offered. It will be in the definition of service- speed, efficiency, response -not personal service. They will provide “transactions” not “relationships”.
This will enable these alternative providers to sell their legal services at a much lower price than their law firm competitors. And in areas that are susceptible to a high-volume, low-value approach, price will be the ultimate determinant of success. There is simply no reason why most consumers would pay more than they need to for a “transaction” – for example a Will, or for the Conveyancing work on their property.
The consequence of this is clear – firms that are in business in these areas must become as tightly run as possible, or they won’t be in business for much longer. They must be able to provide the same service in a shorter time, and at a lower cost. This means that IT and delegation become absolutely vital to processing matters as efficiently as possible. Not every task in a transaction requires a qualified solicitor!!
The other area where the supermarkets and banks will take advantage will be in the marketing of their services. Many firms do not even know what different services they sell to each client – and consequently they have very little chance of taking opportunities to cross-sell. This is a question of database management, and of a simple but coherent firm-wide strategy to target existing clients for their services. Most firms won’t be able to compete with the marketing budgets the banks and supermarkets will throw at potential clients. But not maximising opportunities with existing clients is unforgivable, and potentially fatal for the firm.
If firms want to compete with alternative providers, they need to sharpen up in those areas which affect the delivery, not the law – or current client perceptions won’t much matter for long.
Wednesday, 3 June 2009
The Legal Services Act and Legal Service Standards . . .
We regularly ask clients to evaluate themselves and their colleagues across a range of criteria. We have found that, unsurprisingly and quite understandably, most lawyers pride themselves first and foremost on their legal skills. But in a market that is bound to shrink in the next couple of years, it won’t be a simple case of the firms with the best lawyers leading the way.
What many professionals don’t realise is that it’s actually very difficult for clients to judge the quality of their work. What they can judge very easily, however, is the quality of service they receive. So, here are a number of areas where firms can ensure they stand out, and keep clients loyal:
1. Keeping in Touch
An image of disinterest or complacency will be fatal to any client relationship. Firms need to demonstrate a proactive attitude, appointing a dedicated Client Relationship Manager and allowing clients to make appointments and track progress in their case online where possible. More than anything, simple phone calls and messages to check that the client is happy go a long way and cost nothing.
2. Flexibility and Service Standards
Firms need a ‘client-centred’ approach, with flexible working hours and ‘out of hours’ meetings when possible, as well as service standards that include standardising the way staff communicate with clients, and must always be on the lookout for new services the firm could offer.
3. Finance
Paying for legal work can really be off-putting for potential clients, and anything the firm can do (within reason) to help will be a major factor in purchasing decisions. This includes fixed price quotes and guarantees up front, and the option of 0% finance. Flexibility in billing and collection, allowing clients to view the accounts ledger online, and updating them of the status of their account will all help your own capacity to plan as well as make life easier for the client.
4. Promotion
It is important to demonstrate that your firm is a market leader, and this can be done through profile-raising events with a ‘wow’ factor in the local community, a ‘green strategy’ and other illustrations of CSR such as community and charity work, and holding networking events. These will all enhance the firm’s image, while of course being worthwhile in themselves.
5. Feedback
Getting meaningful feedback involves more than just handing out a few questionnaires – although this is a good start. Client ‘focus groups’ for feedback can be very useful, as can using a ‘mystery shopper’ to contact the firm for quotes and to get an idea of how clients are treated, the client for feedback, and the competition for obvious reasons!
In more and more ways, law firms are being forced to adhere to standards that are the norm in other areas of business. The quicker they do this, the better for everyone involved . . .
What many professionals don’t realise is that it’s actually very difficult for clients to judge the quality of their work. What they can judge very easily, however, is the quality of service they receive. So, here are a number of areas where firms can ensure they stand out, and keep clients loyal:
1. Keeping in Touch
An image of disinterest or complacency will be fatal to any client relationship. Firms need to demonstrate a proactive attitude, appointing a dedicated Client Relationship Manager and allowing clients to make appointments and track progress in their case online where possible. More than anything, simple phone calls and messages to check that the client is happy go a long way and cost nothing.
2. Flexibility and Service Standards
Firms need a ‘client-centred’ approach, with flexible working hours and ‘out of hours’ meetings when possible, as well as service standards that include standardising the way staff communicate with clients, and must always be on the lookout for new services the firm could offer.
3. Finance
Paying for legal work can really be off-putting for potential clients, and anything the firm can do (within reason) to help will be a major factor in purchasing decisions. This includes fixed price quotes and guarantees up front, and the option of 0% finance. Flexibility in billing and collection, allowing clients to view the accounts ledger online, and updating them of the status of their account will all help your own capacity to plan as well as make life easier for the client.
4. Promotion
It is important to demonstrate that your firm is a market leader, and this can be done through profile-raising events with a ‘wow’ factor in the local community, a ‘green strategy’ and other illustrations of CSR such as community and charity work, and holding networking events. These will all enhance the firm’s image, while of course being worthwhile in themselves.
5. Feedback
Getting meaningful feedback involves more than just handing out a few questionnaires – although this is a good start. Client ‘focus groups’ for feedback can be very useful, as can using a ‘mystery shopper’ to contact the firm for quotes and to get an idea of how clients are treated, the client for feedback, and the competition for obvious reasons!
In more and more ways, law firms are being forced to adhere to standards that are the norm in other areas of business. The quicker they do this, the better for everyone involved . . .
Friday, 29 May 2009
The Importance of the Non-Lawyers
I recently read a post on the Law Gazette’s blog entitled ‘Professional managers must be accepted into law firms, and fast’. I couldn’t agree more with this sentiment.
The results of a 2008 survey by Managing Partner Forum showed that 50 per cent of Finance Directors are not on the firm’s board, and 70 per cent of partners do not consider the FD an equal. Presumably the same sort of attitude would extend to the Marketing Director, and even more so to other non-lawyers in the firm.
In our previous posts we have underlined just how much the legal market is changing. In a nutshell, there is no longer room for firms that consider management as an aside to their legal work. Simon has already outlined how Business Development and Marketing professionals can benefit from the recession. The same is undoubtedly true for FDs, and for firms who properly value their finance staff.
The pressure on law firm managers couldn’t be greater at present – and there are two sides to this coin.
The onus is on partners to include their senior finance staff in the ongoing management of the firm, requiring regular and easily comprehensible financial information and cash flow forecasts which they can then use to drive change.
At the same time, quality Finance Directors will take the opportunity to impress upon the partners just how important they are – and to demonstrate in concrete terms exactly how they are helping to keep the firm on track while so many are straying badly off course.
Management in law firms may be well behind other sectors at present, but this will not be the case for long. So it’s time to let the non-lawyers in, and give them the support they need to excel at their jobs. Otherwise there may not be much more legal work to be getting on with.
The results of a 2008 survey by Managing Partner Forum showed that 50 per cent of Finance Directors are not on the firm’s board, and 70 per cent of partners do not consider the FD an equal. Presumably the same sort of attitude would extend to the Marketing Director, and even more so to other non-lawyers in the firm.
In our previous posts we have underlined just how much the legal market is changing. In a nutshell, there is no longer room for firms that consider management as an aside to their legal work. Simon has already outlined how Business Development and Marketing professionals can benefit from the recession. The same is undoubtedly true for FDs, and for firms who properly value their finance staff.
The pressure on law firm managers couldn’t be greater at present – and there are two sides to this coin.
The onus is on partners to include their senior finance staff in the ongoing management of the firm, requiring regular and easily comprehensible financial information and cash flow forecasts which they can then use to drive change.
At the same time, quality Finance Directors will take the opportunity to impress upon the partners just how important they are – and to demonstrate in concrete terms exactly how they are helping to keep the firm on track while so many are straying badly off course.
Management in law firms may be well behind other sectors at present, but this will not be the case for long. So it’s time to let the non-lawyers in, and give them the support they need to excel at their jobs. Otherwise there may not be much more legal work to be getting on with.
Monday, 18 May 2009
Developing your Business during Recession
Now that times are tough, many firms seem to be taking the (somewhat short-sighted) view that non-fee earning functions ought to be the first to be cut back. On the other hand, the recession provides an opportunity for strong and effective Business Development professionals to prove their worth to their firm. In the current circumstances:
A New Priority
The role of the Business Development team therefore changes from being one of developing new business to keeping existing business.
Firms can no longer afford for individual partners to keep personal clients, at the expense of other departments or teams within the firm.
Therefore, the primary function of any effective Business Development department must be client service and team building, thereby protecting the firm’s key recurring client activity.
The Role of Management
This focus should be driven and supported by the senior management team, and they of all people should lead by example. There should be a detailed plan in place for the firm’s development.
This still means that a firm should be investing in seminars and targeting clients, but the emphasis has changed. Targeting opportunities to sell new services to existing clients is the priority, ensuring the protection of the client base from matter-hungry competitors. After all, if clients were happy the first time, they should be extremely receptive to further contact.
- The imperatives for change are usually driven by costs, rather than by service.
- The demand for new services (for the potential client) has fallen.
- The normal response is for clients to stay with what they know, rather than exposing themselves to the risk of unknown and unproven suppliers.
- Fee earners now have more time and less money for business development.
- In a recession, Economics must overcome Politics.
A New Priority
The role of the Business Development team therefore changes from being one of developing new business to keeping existing business.
Firms can no longer afford for individual partners to keep personal clients, at the expense of other departments or teams within the firm.
Therefore, the primary function of any effective Business Development department must be client service and team building, thereby protecting the firm’s key recurring client activity.
The Role of Management
This focus should be driven and supported by the senior management team, and they of all people should lead by example. There should be a detailed plan in place for the firm’s development.
This still means that a firm should be investing in seminars and targeting clients, but the emphasis has changed. Targeting opportunities to sell new services to existing clients is the priority, ensuring the protection of the client base from matter-hungry competitors. After all, if clients were happy the first time, they should be extremely receptive to further contact.
Friday, 8 May 2009
Cash is King in Recession
While panic still seems to be dominating opinion in much of the legal press, a number of commentators (this one included) have sought to provide practical recession response advice. In a recent article I wrote for FD Legal magazine, I highlighted a number of points that will be key to successfully managing your firm through the recession:
We are already seeing opportunities arising for well-run, strongly managed law firms as recession inevitably leads to market consolidation. Increasing market share through careful business development planning will be an option, but a swift and effective response requires a strong funding position.
The immediate focus must be on cash flow and the systematic reduction of lock-up. This involves standards being set at a departmental level, and exceptions being identified in order to be eliminated. Responsibility should lie not only with individual fee earners, but also with a nominated partner in each department who will be entrusted with persistent follow-up. This is where the importance of the management board, and the ability to achieve partner buy-in, demonstrates its value. Only then can the firm’s management turn its attention to cost structures, and longer-term profitability.
Cash management has historically been a ‘Cinderella’ function in the legal sector, but strong demand and the barriers to entry to the legal market meant that firms could prosper in spite of this. The market has turned, however. Money is scarce, and banks prefer lending to customers with good financial management and management information, and so these will no longer be optional, while the Legal Services Bill and private equity will step up the pressure next year. 2009’s market therefore requires a fundamentally different approach, recognising the vital role of cash management in ensuring a firm’s survival and prosperity in the changing legal landscape.
- Lawyers can no longer rely on their firms’ inherent profitability, and must learn to forge much stronger relationships with bank managers and other providers of funding.
- The role of the finance department is now more crucial than ever, to keep the firm on a sound footing, and to convince the bank manager that this is the case.
- Economics must defeat politics – partners cannot be allowed to derail financial management initiatives, as this could now be terminal for the firm. Management must provide a strong lead.
- The basis for a sound financial strategy through the recession must be cash flow, cash flow, cash flow.
We are already seeing opportunities arising for well-run, strongly managed law firms as recession inevitably leads to market consolidation. Increasing market share through careful business development planning will be an option, but a swift and effective response requires a strong funding position.
The immediate focus must be on cash flow and the systematic reduction of lock-up. This involves standards being set at a departmental level, and exceptions being identified in order to be eliminated. Responsibility should lie not only with individual fee earners, but also with a nominated partner in each department who will be entrusted with persistent follow-up. This is where the importance of the management board, and the ability to achieve partner buy-in, demonstrates its value. Only then can the firm’s management turn its attention to cost structures, and longer-term profitability.
Cash management has historically been a ‘Cinderella’ function in the legal sector, but strong demand and the barriers to entry to the legal market meant that firms could prosper in spite of this. The market has turned, however. Money is scarce, and banks prefer lending to customers with good financial management and management information, and so these will no longer be optional, while the Legal Services Bill and private equity will step up the pressure next year. 2009’s market therefore requires a fundamentally different approach, recognising the vital role of cash management in ensuring a firm’s survival and prosperity in the changing legal landscape.
Monday, 27 April 2009
Welcome to the Wilkinson Read blog
This will be the first of a regular series of weekly blogs where our aim is to provide thought-provoking comment on issues of relevance to solicitors and other professionals running Partnerships.
At Wilkinson Read we specialise in ‘Making Partnerships More Profitable’. With this in mind you will be hearing from me Barry Wilkinson as Senior Partner and my colleague Simon White on a variety of subjects and topics - all of which will be relevant to helping you run your business and maximize the returns from all your firms’ available resources.
Topics such as ‘Cash Management for Law Firms’ - a subject underlined by our Sector Report which I was asked to write by publishers, Ark Group - has been released today and is available directly through them. In the report, we identify the major factors impacting on a firm’s cash flow, and then go on to provide detailed strategies for improved cash management.
Simon, is our marketing guru and will be dealing with Business Development, Marketing and Sales issues facing professional firms today.
We hope you will find our blogs informative as well as enjoyable and we would actively encourage any constructive comments you may wish to make.
I very much look forward to hearing from you.
Barry Wilkinson
At Wilkinson Read we specialise in ‘Making Partnerships More Profitable’. With this in mind you will be hearing from me Barry Wilkinson as Senior Partner and my colleague Simon White on a variety of subjects and topics - all of which will be relevant to helping you run your business and maximize the returns from all your firms’ available resources.
Topics such as ‘Cash Management for Law Firms’ - a subject underlined by our Sector Report which I was asked to write by publishers, Ark Group - has been released today and is available directly through them. In the report, we identify the major factors impacting on a firm’s cash flow, and then go on to provide detailed strategies for improved cash management.
Simon, is our marketing guru and will be dealing with Business Development, Marketing and Sales issues facing professional firms today.
We hope you will find our blogs informative as well as enjoyable and we would actively encourage any constructive comments you may wish to make.
I very much look forward to hearing from you.
Barry Wilkinson
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