Without doubt one of the biggest concerns that comes up in conversation with clients and contacts in the legal world is the fear of having to quote competitive fixed fees, the impact that will have on business – and how to respond. With economic pressures likely to be compounded by the implications of the Legal Services Act, this is an issue that will be with us for some time – and could dominate the management agenda throughout 2010 and beyond. Our experience is that, with the right training and the ability to understand the context of the assignment, solutions can readily be reached.
The Old Approach
The culture of the legal industry epitomises the hourly-billing approach – which places the burden of risk squarely on the shoulders of the client, with a focus on efforts rather than results and little incentive for an efficient approach to case management. Aside from the effect on work-life balance, charging by the hour inevitably leads to price competition – and a ceiling on earnings.
In the legal sector of old, this limit on potential earnings was barely perceptible, as charge-out rates increased year-on-year and firms returned ever healthier looking profit figures. However, this world is gone and the flaw in the system has been fully exposed. Hourly billing leaves only two possibilities for increasing revenues – charge more per hour; or work more hours. When these options are unpalatable to either clients or fee earners, a fundamental shift is necessary.
A New Paradigm?
The shift to pricing by value is not a difficult one to make, but it does not happen overnight. Partners and business developers need to become practiced in when and how to hold the conversation, fully comprehending the process to enable them to clarify the value up front, and creating payment schedules that reflect the value delivered at each stage of delivery.
The benefits, however, will be worthwhile. Demonstrating value, and being remunerated accordingly, helps to develop trust and build a credible reputation, and brings with it invaluable opportunities for cross-selling and soliciting referrals.
Friday, 14 May 2010
The Business of Relationships
In a hectic business world of networking events, seminars and conferences, a systematic campaign to keep in touch with key contacts is a crucial strategy for maintaining the sustainable business development pipeline.
When it can take 15-20 interactions to turn a relationship into business, and when business roles and relationships are becomingly ever more transient, the danger of forgetting – or being forgotten by – an important contact is an increasingly significant concern.
Cultivating Contacts
Some lawyers will need to keep in touch with many people on a frequent, but perhaps a slightly more impersonal, basis. Others will need to cultivate fewer, deeper relationships with key sources of business. Both have inherent dangers, of being known to many people but trusted by few, or of putting too many eggs in too few baskets, but a successful Keep in Touch strategy will combine the two approaches.
The Broadcast Media
Keeping in touch regularly with a large pool of contacts can be done relatively easily through a generic contact system – such as a newsletter(!). Of course, key personal contacts will also receive this, but it is an ideal way to ‘touch base’ with many people on a regular basis, without the drain on resources (physical and financial) associated with constant networking or generic advertising.
The Personal Touch
Within this larger pool of contacts there will, of course, be the crucial people with whom we have good personal relationships and who are consistent sources of profitable business. These people naturally deserve a more personalised approach, but this should still be monitored systematically so that they are not lost under the mountain of fee-earning work (which will constantly need replacing in any case, if the business development pipeline is to flourish).
Profitable Relationships
Keeping in touch with clients, allies and prospects forms a crucial part of the sustainable business development pipeline – an approach that underpins our Profitable Partnerships Programme, helping partners and key solicitors measurably improve business development and profitability.
When it can take 15-20 interactions to turn a relationship into business, and when business roles and relationships are becomingly ever more transient, the danger of forgetting – or being forgotten by – an important contact is an increasingly significant concern.
Cultivating Contacts
Some lawyers will need to keep in touch with many people on a frequent, but perhaps a slightly more impersonal, basis. Others will need to cultivate fewer, deeper relationships with key sources of business. Both have inherent dangers, of being known to many people but trusted by few, or of putting too many eggs in too few baskets, but a successful Keep in Touch strategy will combine the two approaches.
The Broadcast Media
Keeping in touch regularly with a large pool of contacts can be done relatively easily through a generic contact system – such as a newsletter(!). Of course, key personal contacts will also receive this, but it is an ideal way to ‘touch base’ with many people on a regular basis, without the drain on resources (physical and financial) associated with constant networking or generic advertising.
The Personal Touch
Within this larger pool of contacts there will, of course, be the crucial people with whom we have good personal relationships and who are consistent sources of profitable business. These people naturally deserve a more personalised approach, but this should still be monitored systematically so that they are not lost under the mountain of fee-earning work (which will constantly need replacing in any case, if the business development pipeline is to flourish).
Profitable Relationships
Keeping in touch with clients, allies and prospects forms a crucial part of the sustainable business development pipeline – an approach that underpins our Profitable Partnerships Programme, helping partners and key solicitors measurably improve business development and profitability.
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