Marketing Techniques from a
MBA and Dan Otto
As consultants who
have worked with attorneys since the mid '80s, we have seen a tremendous
change in law firm marketing. While most attorneys have embraced
marketing as an integral function of operating a business, many
litigators have difficulty marketing. Sole practitioners and small
boutique litigation firms, have learned to survive on their marketing
skills. However, litigation departments of large and mid-size law firms
have often relied on their firms' current clients for business, with
little, if any, marketing to prospective new clients.
Marketing is a
numbers game. Research indicates it takes eight contacts to convert a
prospect to a client. For a litigator, that number may be even higher
since litigation is often the result of an external influence such as
being sued. If we use the "eight contact theory," then we acknowledge
that the first seven contacts will not yield a new client. For many
attorneys, the fear of failing to obtain a client during the first
several contacts or getting the "No" seven times will inhibit their
marketing efforts. For litigators the situation may be worse, since
they strive to win and a "No" may signify a failure in some attorneys'
minds. On the other hand, rainmakers see "No" as the path to a "Yes"
someday and pursue a prospective client accordingly.
two groups on which efforts can be focused: the client or end-user of
your services and/or the referral source who refers the
client/end-user. The most cost-effective way to market is to
concentrate on the referral source. You can market to one referral
source who may refer you five clients over the course of one year. Or
you could use the same time to market to one company and you may or may
not get that one client.
The best way to
determine whom you should market to is to review your list of clients
from the past several years and determine how your clients originated.
Examine both the number of clients and the amount of revenue each
generated. This exercise usually reveals some interesting data. By
tracking this information in a spreadsheet or database, you can
periodically (at least twice a year) analyze any trends that occur.
For example, you see that two years
ago, one of your former law professors referred a client. The next
year, he referred you several clients and another professor referred a
client as well. This year several professors have referred several
clients that have generated substantial revenues. Law professors should
become a marketing focus for you.
If you determine
that other clients refer most of your clients, then you need to look at
your clients' industries, since it's easier to target a specific group.
In analyzing your client base, you discover that a number of the clients
are certified public accountants. Consequently, you should be speaking
at CPA organizations and writing for CPA publications.
All too often,
attorneys automatically market to other attorneys, when, in fact,
attorneys may not be a good source of clients. We have found attorneys
who are extremely active in bar associations, speakers at lawyer groups
and authors for articles in legal publications; however, they find that
no clients come from other attorneys. While some of these activities
are important to build a credible resume, at some point the attorney's
time will be better spent in marketing to the people who will generate
determined where your clients have come from in the past, you are ready
to use that data to develop a marketing plan for the future. Research
has shown that firms with a written marketing plan have more growth in
revenues and profits than firms without a plan. Average revenues and
profits per attorney are higher as well -- by as much as 147 percent.
Developing a marketing plan is critical if you want to generate more
The marketing plan,
divided into two areas of reputation and relationship marketing, is a
month by month program of action steps describing what you intend to
accomplish during the next 12 months. Reputation marketing includes
speeches, articles and seminars that will build your reputation whereas
the relationship marketing is one-on-one marketing to individuals. You
can do relationship marketing without the reputation. However, you
usually can't do reputation marketing without the relationship, unless
you have a very high profile, media intensive case or practice.
The most crucial
element of the marketing plan is to develop a database, which is the
core of any marketing program. We talk with many attorneys who don't
have a database or a mailing list. The lack of these tools is a missed
opportunity to let people know about a speech that you'll be giving or
about an article that you've written.
The adage "out of
sight, out of mind" is true. You need to communicate with your referral
sources, clients and prospects on a periodic basis (about four times a
year), so that they remember you when they need you. A formal
newsletter is impersonal; however, a "memo" to each person (easy to do
these days through mail merge), creates an image that the information
has been written for the specific individual.
Speeches are an
excellent way to get your name in front of your potential clients or
referral sources. If you tape record your presentation, you can
transcribe it, and with a little editing, have an article ready for a
The value of
articles that you write is not that people will necessarily read it in
the publication, but that people on your mailing list will see the
reprint that you send out. You can also include reprints in your
package of materials you give to prospective clients or prospective
Co-sponsoring a seminar with a
prestigious company or organization lends credibility to your
reputation. In addition, you may have access to the mailing list of the
organization. Often, we see attorneys who view the presentations that
they give as their marketing effort. We say that marketing begins when
the speech ends. Presenters should ask for business cards in exchange
for information that will send out at a later date. Always provide
handouts with your name, address, telephone number and e-mail address to
techniques fall into the category of reputation marketing. Relationship
marketing focuses on the individual. One of the best ways to enhance a
relationship is to eat a meal with your target and to do so periodically
(remember the eight contact rule). When we asked great rainmakers how
they obtained their clients, many indicated that social situations were
the number one way that they did business. However, we've spoken to a
lot of attorneys who never mention business in social events and they
may, in fact, be missing out on a great opportunity. Plane trips are
another source of business for rainmakers. The key in a social
situation is to talk about what you do in a way that lets the listener
know more about your skills and talents.
Although you may
have great success in marketing, unless you employ strong financial
management, your marketing efforts may be for naught. Most attorneys
want to bring in as much business as they can and don't look at the
profits. By chasing the revenues and not the profits, some attorneys
Meet the attorney
who looks at a $100, 000 client and can't resist the taking on the fixed
fee work. However, at the end of the case, the profits are only $10,000
or 10 percent of revenues. Another attorney takes on a case that will
only generate $30,000 in revenues, but the profit will be $15,000 or 50
percent. The second attorney is better off financially. Yet, many
attorneys don't bother with the profit calculations and are mesmerized
instead by the high revenues. By the way, the average profits (draws)
in a law firm are 30 percent.
Firms can improve
their profits by delegating work to the lowest paid, most competent
person. Partners who do the work of associates and who could be
marketing instead, are not operating as efficiently as they could.
Firms should analyze their personnel ratios, such as the ratio of
partners to associates, attorneys to legal assistants, and attorneys to
secretaries. The lower the ratio, the more efficient the firm.
Research indicates that as the number of attorneys increase, the ratios
decrease because the firm is more efficient. After 25 attorneys the
firm is less efficient because more support staff are needed. Once the
firm passes 50 attorneys the ratio drops again as economies of scale
Many attorneys don't
initially consider a client's ability to pay. By qualifying prospective
clients ahead of time, attorneys can avoid taking on clients who might
have financial problems. Qualifying a client requires research to find
out the financial stability of a potential client. Attorneys can
conduct research through Dun & Bradstreet, a computer database with a
section called "Paydex" that scores a company on the amount of time it
takes to pay its bills.
Attorneys can also
search for information about prospects on the Nexis database of
newspaper and magazine articles. Other databases provide information on
tax liens and bankruptcies. Attorneys can even hire investigative
companies to perform due diligence on prospective clients. By
qualifying clients, attorneys take on the most stable clients and avoid
unknowingly working with financially risky ones.
Lee Reicher, administrative partner
for 22-attorney Reish & Luftman, a Los Angeles firm whose profit margin
is in excess of 40 percent, says that his litigation department utilizes
two techniques that help prevent future financial problems with clients:
get a large retainer fee and analyze the value of the case.
"Requiring a large
retainer before beginning the work, is the best way to see if your
client is ready, willing and able to pay the fees," says Reicher. "A
client, who balks at a $10,000 retainer fee when you've estimated a
$50,000 total fee, is not a client whom you want to have." Chances are,
you'll be trying to collect money in the future.
The second technique
used by the Reish & Luftman litigators is to analyze the value of the
case. "Every civil case has a monetary value that's worth a certain
amount," continues Reicher. "If the litigation costs $50,000 and the
client 'wins' $10,000, you'll probably have an unhappy client who won't
want to pay the fee." Reicher cautions that the best way to keep clients
happy is to perform a comprehensive budget analysis on the projected
cost of the case in relation to the financial amount to be gained by the
client. "In litigation," he says, "clients are often driven by their
emotions. But when you get into the cost and benefit analysis, clients
may recognize that they shouldn't pursue litigation."
counsel their clients not to pursue litigation, run the risk of
decreasing their revenues in the short-run. However, in the long run,
clients will appreciate the sound business advice and will probably
refer other clients to the litigator. Referral sources, who know that
the litigator conducts a cost benefit analysis, will undoubtedly
appreciate the advice for their clients as well.
We have entered an
era, where the marketing plan and action steps, coupled with astute
financial management, is regarded as an important business function
within the legal profession and is addressed with the same fervor and
seriousness as that of successful companies in other industries.