Marketing Change - Differentiation Amid Upheaval

Clients have demanded changes from their law firms for years, but the economic downturn accelerated this process.  Law firms have begun to adapt business concepts that have proven to be effective in other business segments.  The most progressive law firms have embraced these changes and proactively seek opportunities to showcase their new capabilities to clients and prospects.  Leaders at these law firms have also discovered that change can be more profitable and help the firm stand apart from those clinging to the old ways.  Marketing takes on a whole new meaning at firms where growth is predicated on news ways of doing business. To read the full article published in The Legal Intelligencer, click here (a subscription may be required.)

Off-Shore Outsourcing of Document Reviews

In the most recent edition of In-House Legal presented by Lex Mundi, I explore what In-House Counsel should know about Off-Shore Outsourcing of Document Reviews.  Special guests on the broadcast included Cindy Courtney, with Day Pitney LLP (Lex Mundi member firm for New Jersey), and Kate Bertini, Assistant General Counsel with United Technologies Corporation in Hartford, Connecticut.  We discussed the nuances of eDiscovery, factors to consider when deciding to use off-shore reviewers and helpful tips and safeguards for In-House Counsel. This is a fascinating topic about which I've written previously.  Outsourcing continues to strike fear in the hearts of outside counsel, even as In-House Counsel consider the use of LPOs and other offshore service providers to be standard procedure.  As a Biglaw partner said to me recently, presumably operating under the belief that he alone was capable of identifying the potential risks:  "You just can't trust the quality of these offshore providers."  Contrast that with the opinions offered by In-House Counsel on the broadcast, in which the underlying motivations for perpetuating the Biglaw model are deemed to be  revenue protection, lack of transparency and lack of process.  Not surprisingly, outside counsel who embrace outsourcing and off-shoring as just another approach often find that quality is improved, costs are lower, efficiencies increase productivity... and clients are very happy.

There's no right or wrong answer on this topic, but law firms who fail to explore these options do a disservice to their clients.  As the old television commercial goes, "Try it, you might like it."

Insights from the Marketing Partner Forum 2011

I recently attended the Marketing Partner Forum in Scottsdale, Arizona.  I've attended and spoken at this event multiple times in the past, though I hadn't been in a couple years.  I was pleasantly surprised to see full rooms, which is a positive sign for the economy.  After all, when law firm profits are down, attendance at conferences plummets -- even at those conferences showcasing techniques to increase law firm profits! There are several good recaps of the conference content:  here and here and here and here and here and here.  You can even see a video recap of one of my sessions here.

You can also view the entire Twitter feed from the conference here (note that the most recent posts are displayed first).

Here are a few brief takeaways from the sessions I attended and from my own two presentations:

• Although the economy is reviving, General Counsel are not content to go back to the "old ways."  They will continue to exert downward price pressure on law firms, seek alternative methods of accomplishing routine legal work and cast a wider net for law firm providers that "get it."
• Sales is no longer a dirty word in many law firms.  It's no longer sufficient to characterize a law practice as a profession that rises above such mundane tasks as generating business, as evidenced by the numerous lawyers who've had a rough go of it the last few years.  If you don't know how to generate new business individually or collectively, you won't thrive.  Lawyers are embracing business development more than ever -- and without exploring the nuances too deeply, let's just say that Marketing can be delegated, but Business Development is the lawyers' responsibility.  Law firm marketers are employing more sophisticated tools to identify target markets so the firm can more efficiently direct its resources.
• There is a blurring of the lines between the traditional roles of Marketing, Business Development, Knowledge Management, Finance and Operations.  Slowly but surely law firm leaders are realizing that profits can be generated by allocating resources efficiently, and this means not chasing every dollar, not endorsing every partner's whim, targeting prospects that fit the firm's skill set, retaining clients that are profitable, exploring new ways to deliver legal services at lower rates, and so on.
• There is a clear role for both business process improvement and Legal Project Management, some of which is simply doing things differently, some of which requires technology to be effective.  There are a number of firms effectively embracing these concepts, and they are taking work away from competitors one and two tiers above them because they can demonstrate high quality and competency at lower rates, not just talk about it.

Don't Tell Me What You Think I Want to Hear, Tell Me What I Need to Know!

Have you ever been placed in a situation where someone protected you from a painful truth, but in so doing left you at a disadvantage because you couldn't make a fully-informed decision?  A common complaint I hear from in-house counsel is that outside counsel often don't share small problems, and some of these grow into big problems.  This applies whether it's a budget overrun or a curve ball in the legal matter they're addressing. I've written previously about the critical need for in-house counsel to budget accurately for legal matters -- matters that from the perspective of corporate chieftains are no less variable or uncertain than global supply chain costs or revenue projections.  At a recent discussion on the topic, a Chief Legal Officer explained the impact of a cost overrun in her legal department.  As a big box retailer with profit margins in the mid-single digits, there is very little excess spending in the organization from which they can divert funds to address cost overruns.  As a result, some cost overruns are distributed as a sort of "tax" on sales, or in other words, for every $50,000 overage in the legal department, the organization must sell an additional $1,000,000 of product above forecast.  And since there are incremental costs associated with additional sales, and in some cases revenue cannot be fully recognized immediately, the actual surcharge is something on the order of $2,000,000.

Think about that for a moment.  Imagine the GC addressing her peers in the boardroom in late Q3 of the fiscal year.  She claims that because legal matters are so uncertain there's no way to submit a proper forecast, and as it turns out she'll need an additional $50,000 in her budget, maybe more, and so Sales must step up and deliver an additional $2,000,000 in revenue.  Someone's going to be eating alone in the executive cafeteria.

Of course this applies to legal matters that start out small but grow into big hairy complicated messes.  If the outside counsel doesn't provide early warning that the matter is growing beyond the expected scope, the GC can't properly re-assess the situation.  Since legal matters are, at heart, business issues, it's critical to inform business management how new developments impact expectations.

Does the discovery of a smoking gun during document review warrant a fast reversal of course in the SEC investigation?  Will previously unknown IP infringement claims that surface in acquisition due diligence alter the calculus in a make vs. buy decision?  The earlier a GC knows of the potential issues, the better she can advise business management.  This is not to say outside counsel routinely and purposely withhold information, not at all.  But when project scope is ill-defined in advance it sometimes takes too long to understand when the scope has materially changed, and this lag time is unacceptable.  For help on defining scope, look into Legal Project Management.

As with many of my life lessons, I learned the hard way.  I vividly recall a product development project for which I was an executive sponsor.  Each month for nearly two years the development team provided progress updates, sought additional funding, looked for guidance on feature/function decisions and otherwise adhered to the development schedule.  However, two months before launch, long after we had incorporated significant new revenue streams into our current year forecast, the development team advised that they were six to eight months off schedule.  They had hoped to make up time and they didn't want to deliver bad news, so they hadn't raised the alarm earlier, but other projects interfered and now there was no way to meet the deadline.  As executive sponsor I wasn't necessarily expected to be sitting with the developers each day, looking over their code and analyzing their progress, but I was expected to know if the launch date would be delayed into the next fiscal year, putting all of our revenue projections at significant risk!  I ate lunch alone quite a bit that year.

Let's close with an unrelated anecdote.  Because of my heavy travel schedule, much of it at hours when others in my time zone are fast asleep, from time to time I hire a car service to take me to and from the airport.  I grew fond of one car service owner-operator and hired him exclusively for several years.  Needless to say, I was a lucrative client for his small business.  For one return trip I had a tight schedule:  land at the airport, dash to the car waiting at the curb, try to shave off some time on the hour-long ride to my home, and make it to my daughter's band concert a few minutes late.  There was no room for error, such as an unanticipated (but quite common) traffic jam, so I also consulted the train schedule.   I could take a train and almost certainly have no delays, but I would miss more than half the concert.  I gambled on the car service.

When I left the plane, I called the driver to alert him that I was walking to the airport exit.  He said he was slowly circling the airport, as is his custom so he doesn't have to park.  The flight was long so I needed to visit the restroom and it was maybe 20 degrees (F) outside, but instead I waited outside for 10 minutes knowing the airport police would shoo away the driver if he approached and I wasn't there.  After a few minutes I called back, and the driver revealed he was actually pulling into the airport now and would be there momentarily.  Another ten minute delay.  I called again and as the driver was telling me that he drove by but didn't see me, I heard a toll booth agent in the background.  The driver then sheepishly admitted that he was just exiting the nearby interstate highway, and now he really was about 10 minutes away.

You know how this ends, don't you?  By now I had missed my train.  There was no way I would see even a moment of my daughter's concert.  I had been standing in below-freezing weather for nearly half an hour expecting the driver to arrive at any second, and, not to put too fine a point on it, I was in dire need of a visit to the restroom.  So I told the driver I would no longer need his services, then I went inside, visited the restroom, bought a Starbucks and headed to the next train.  A week later the small business owner sent me a letter scolding me for throwing away our cozy relationship merely because he was a little late.  And, by the way, he claimed I owed him for the trip since I didn't cancel in time.

The real error was not giving me the information I needed.  I could have visited the rest room, secured a hot beverage and stood inside the door.  I could've taken the train -- and I still would've paid the driver for his time.  In other words, I could have explored my options.  Instead, his misguided effort to protect me from the truth eliminated all of my options, leaving me furious, cold and in search of a new business partner.

I'm presently conducting several client satisfaction interviews for law firm clients.  Often we hear about poor communication and poor budgeting skills.  Sometimes my Biglaw partner clients will dismiss these as one-time easily-explained situations that are blown out of proportion, certainly not the sort of issue to derail a longtime relationship.  I caution them to put themselves in their client's shoes.  Are these the comfortable loafers of a well-informed client?  Or are these shoes hopping from one foot to another, trying to stay warm in the absence of information?

Timothy B. Corcoran delivers keynote presentations and conducts workshops to help lawyers, in-house counsel and legal service providers profit in a time of great change.  To inquire about his services, click here or contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com. – See more at: http://www.corcoranlawbizblog.com

Corcoran's Greatest Hits, Volume 1

A long time ago when I was a radio and club DJ, I owned a lot of Greatest Hits albums and CDs so I could fulfill listener requests for popular songs. Some of these collections were hastily compiled by an artist's record company in order to fulfill a contractual obligation. But sometimes the collections were compiled with care and enthusiasm and included never-before-released songs from the vault, liner notes from the artist and other material to appeal to the true fan. With that in mind, I present the top five posts from this blog over the past year along with additional insights of my own and public and private reader reactions. Legal Project Management Q&A - For quite some time I've been writing about the need for law firms to embrace business concepts to improve operations.  Last year I adapted some of the concepts and techniques I learned in my corporate life and developed a curriculum for educating lawyers about project management.  Turns out there's a whole discipline growing on this topic, now dubbed Legal Project Management, and there are some quality trainers offering insights.  But there are also a number of folks hopping on the bandwagon.  In my view, one can obtain certification in a discipline, one can even teach the concepts, but one doesn't really know the topic until one applies these techniques in a commercial enterprise to make money.  Ask your project management consultant for real commercial examples of these concepts in action.

In addition to imbuing my approach with real-life experience, I also focus on the big picture and keep away, at least initially, from the statistical and quantitative basis that others believe is necessary to commence a project management process.  One Six Sigma Black Belt criticized my approach, exclaiming in disbelief that no program that addresses project management and process improvement could possibly succeed without a heavy dose of analysis and math.  I disagree.  Well, at least I disagree insofar as I'm confident few law firm partners will sign up for a course that's heavy on math and analysis.  But many will sign up for a workshop such as mine (and hundreds have!) where we cover the basics, whet participants' appetites for how project management skills can be applied to a law practice and generate sufficient interest to go to the next level where -- surprise! -- we get deeper into the underlying math and analysis needed to truly benchmark and track performance.  On a few occasions my colleagues and I have replaced a consultancy that specializes in engineering firms, or that applies a standard Six Sigma methodology to any business process with little customization.  I've learned that the practice of law, while not as unique as some lawyers would have us believe, does require customization and care to ensure that the concepts are properly applied.

If you lead a law firm and you're convinced that with an improving economy everything will go back to the way it was, and this is a good thing because it's right that lawyers should demonstrate value primarily by billing time, and it's right that lawyers should treat each new engagement as if it's the first of its kind because this is the only way to ensure the client receives the most thorough work product, then you don't need project management.  But write down these beliefs and note how firmly you believe in them, and then let's talk again in a couple years.  I'm certain your views will have changed, because once everyone else has adapted you will too.

A Note on Reducing Law Firm Compensation - This post generated a number of emotional responses.  It's also one of the most commonly searched topics on the blog, suggesting that it's a hot topic elsewhere.  When I wrote this post, quite a few large law firms were conducting public and stealth layoffs of staff, associates and even non-equity partners, and just as many were reducing compensation of these same groups.  Popular legal gossip blog Above the Law teamed with Law Shucks to track these layoffs, and according to their research as of today's writing there have been nearly 15,000 job losses in the legal sector.  This is an unprecedented statistic in a business segment that is typically known to perform well in good times and bad.

It's challenging to write academically on such an emotional topic while the lives of real people are so significantly impacted, but the original intent of this post was to provide some context for why the same market dynamics of supply and demand that influence other industries are certainly factors in the legal profession.  In short, when demand for a product or service declines, there tends to be an oversupply of the product or service, and this drives prices down.  When product or service producers experience lower revenues from lower prices, they look to reduce costs in order to maintain profitability.  It should have come as no surprise that associates and staff, the lowest members on the Biglaw totem pole, would experience the greatest pain when demand dropped and law firms cut costs.  But as I said then, when demand returns, hiring and compensation will increase.  And it is, and they are.

That's the thing about markets -- they tend to operate efficiently when you look at the big picture.  Unfortunately, real people and their livelihoods were sorely impacted, often through no action or inaction of their own.  Which is why this blog is intended to help business leaders make smarter choices, to run more efficient and effective businesses, so we can enjoy profitability while also delighting customers and attracting quality employees.

Law Firm Leaders: Save Money Now By Cutting Marketing - The title is ironic.  I would not counsel any business leader, especially a law firm leader, to limit the organization's visibility to its target audience, particularly when there's a good possibility that buyers are actively seeking new providers.  But I figured the title would catch the eye of leaders looking to do just that, because after all, isn't marketing a nice-to-have, not a must-have?

There were a few different points in this post.  First, every marketer will claim that one should spend more on Marketing during a downturn, but like a politician who's developed a nice ten-word sound bite but doesn't know the next ten words, i.e., the substance behind the rhetoric, many marketers repeat this mantra without offering salient details such as when, where and how to increase marketing in a downturn.  As marketers, we can't just try to protect our jobs without regard for the consequences, like auto workers refusing to negotiate labor rates even if it means the plant must close.  We should be thoughtful and prudent in our spending during a downturn, because while surely there are opportunities to be had, there are also a lot of people willing to take our money in return for a lot of empty promises because they too are suffering.

I also wanted to take on the lazy business leader who applies cuts across the board without regard to growth potential or profit contribution.  In tough times we all need to tighten our belts.  But if Mom loses her job, do we sell the car to save money, and now Dad can't get to work and he loses his job too?  A corny analogy, but in effect many business leaders our of some misguided sense of fairness try to spread the pain evenly.  Hogwash.  The current and potential growth engines might need relatively greater investment in tough times, and the slow growth or cash cows might deserve nothing, so long as we're willing to acknowledge that this will effectively kill them.

The other point was to distinguish between marketing as defined by many lawyers and marketing as defined by experts.  Just the other day I was reminded that this is a long-term battle.  A Biglaw partner asked me if I could help the firm get its RFP response approach "right."  I suggested we might have very different views for what is "right."  An elegantly bound booklet full of deal lists, league tables and lawyer bios, accompanied by boilerplate responses to an RFP's standard questions is very often a waste of everyone's time.  An RFP that addresses the client's business challenges and offers potential solutions along with a project plan and a budget is very often a winner, even if it's a tenth of the size and weight of the alternative!  But lawyers want the former (and so do many marketers).  If a law firm leader wants to cut marketing costs, my suggestion is that in addition to reviewing the marketing budgets and org chart, he should look in the mirror and identify the silly things lawyers do under the guise of Marketing.  And the marketers can help.  After all, we're in this together.

Addressing the Martindale-Hubbell Question - I receive calls nearly every week from law firms big and small asking if I'll help them negotiate their Martindale-Hubbell contract.  Many, but perhaps not all, readers of this blog may know that for a period of time I led the large law, international and corporate business for Martindale-Hubbell.  Obviously I know where the bodies are buried and how to negotiate against my old team (actually, now that LexisNexis manages the business, nearly everyone I knew is gone).  But I have no interest in doing so.  Despite the unethical, short-sighted, juvenile and profoundly incompentent manner in which I was treated when I left the organization, I spent too many years building its brand to take any joy in knocking it down.  Besides, the leaders of the parent company need no help from me or other alumni to harm the franchise.

Of more interest is that when it comes to directories, everyone continually asks the wrong questions!  There is no list of "good" directories and "bad" directories.  Even comparing Martindale to Ted's List of Blond-Haired Left-Handed Lawyers of Southern North Dakota is a misnomer, because one is a multimedia network connecting buyers and sellers, and the other is a vanity listing which lawyers buy to feel good.  But I'll leave it to the Martindale marketers to tell their story.  Despite the title, the post is about how one measures the impact of any legal directory to influence your prospect's buying decision.  After all, isn't that what it's about? 

The calculus is fairly simple: define your target market, identify the ways to reach this market, identify the manner in which they make buying decisions, and then be in those places and do those things.  If the cost to do this effectively is too high, seek out proxies.  If a legal directory has access to the target market and influences a buying decision --and it can prove it -- then perhaps an investment of a dollar there gets you ten dollars of return.  If not, move on to the next tactic.

Marketers are just as bad as lawyers when it comes to judging legal directories, just on the opposing side of the argument.  Typical legal marketer discussion of directories:  "Does anyone use the Tall Lawyers of Montana directory?  One of my delusional lawyers thinks it's an important investment.  I've tried to tell him that all directories are a waste, and he should spend time developing a Facebook fan page instead because I think it's a better investment."  In Biglaw land, few buyers will identify, evaluate or select a law firm based solely on its representation in a legal directory (or network), but sometimes it can be a differentiator when all other factors look the same.  It's important to know when this is the case and when you're throwing your money away.

Web 2.0 / Social Media Update - I've long been active in social media, before we even used those terms.  I had the good fortune of joining Steve Brill's team in the early '90s when Counsel Connect was launched as a sort of AOL for lawyers, which was several years after I joined AOL and participated in its chat groups, which was a year or two after I joined Compuserve.  For many of you, these names mean nothing.  That's okay.  Suffice it to say, I've long been a fan of learning from experts wherever they hang out, and occasionally I'll have something to say that I think others might find useful.  The venues change, but the concept still applies.  In this post I shared the many legal and non-legal blogs I read daily, and the legal and non-legal social networks where I spend time, as part of my effort to stay connected and stay informed about the changes in my chosen field.

This was an enormously popular post a year ago, and while untold millions of users have joined the social networking bandwagon since then, I suspect many are still looking for a roadmap of what's good and what's a waste of time, from the point of view of someone who's been there.  Rather than point people to the year-old summary, I'm updating the post and I'll publish that shortly (Update here).  My daily reading list has expanded yet the frequency of my commenting (on this blog and elsewhere) has declined somewhat as I try to strike the right balance between studying my field and working in my field.  I know that I'm not alone in seeking this balance.

So there you have it.  The top 5 posts from this blog in the past year.  I hope you enjoyed them the first time, perhaps enjoyed reading them a second time, and I hope these liner notes were helpful additions.  Feedback is always welcome.