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Marketing Techniques from a Consultant's Perspective

by Barbara Lewis 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.

Marketing defines 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 business.

Once you've 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 profit.

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 publication.

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 referral sources.

            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 the attendees.

The previous 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 barely subsist.

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 increase efficiency.

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."

Litigators, who 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.

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