Paul Gilbert, chief executive of LBC Wise Counsel, says that firms can help themselves out of the recession by focusing on six key areas of business development. LBC Wise Counsel is a Legal Futures Associate
While we are all still in the midst of a worldwide recession that has seen volumes of activity (in some disciplines) fall off a cliff and where many law firms have taken hard (perhaps even harsh) decisions to lay off staff, cut spending and reassess business development strategies, one question remains to be resolved: when will the confidence return?
When, in effect, will the profession be able to climb out of the bunker?
Implicit in this reflection is whether the profession should passively wait for signals that the global economy is coming back to consistent and predictable levels of growth in order to invest in their businesses again, or whether there is perhaps a case for making the first move.
It is probably a mix of the two, but in this article I want to suggest the six things I think law firms should be doing right now to promote the opportunity for business development.
Reaffirm the values of the firm
It is something that can sound a little trite, but no business (and especially a business that depends on its people quite so much as a law firm) can afford to lack energy behind it business plans. Will the workforce commit to making those plans come to life? Will they do so willingly and with enthusiasm because they believe in what the firm is trying to achieve? If the answer is “yes”, then the chances are the law firm has a very credible and coherent sense of what it stands for and it lives up to those goals consistently.
Meet the challenge of your unprofitable clients
It is often said that 80% of a law firm’s profit is derived from 20% of its clients. In recent years many firms have tried to tackle the unprofitable tail, but many have done little about it and expediently travelled a course of least resistance, tolerating cost and inefficiency at every turn, subsidising their efforts from the profits made from activity with their key clients.
In these difficult times, now is the right time to be completely honest about the value of activity and to cut into inefficient and unprofitable relationships.
Identify your market differentiators
It is very unlikely that in a new pitch anyone in the firm will make the one “killer” point that allows the firm to sweep the floor with the competition; contributions to the bid support effort will tend to be much less dramatic, but it is crucial to have a clear sense of direction, consistent messages and an eye for insightful detail.
- Always check tone and direction and seek many opinions to give assurance. Seek opportunities for others in the firm to review the bid so you gather a broad range of current experiences.
- Be your own best critic and honestly address all the firm’s weaknesses. Demonstrate the firm’s advantages, do not just assert them.
- Seek out people to join the bid team who have procurement experience not just sales experience
As the factors that differentiate one law firm from another are becoming narrower and narrower, so the margins between success and failure are also narrowing. The more a law firm can therefore bolster the bid process, even if it is at the periphery of the activity, then this should improve the probability of successful outcomes.
Ensure your best clients know what they mean to you
The best advice I think I could give any firm just now is to assume that every single client valued by the firm (whether that is just for their name and/or for the volume of activity they generate and/or for the quality of work they generate) will review their outsource strategy in the next six months.
In other words, assume you will be in a competitive environment to justify your service and your fees.
If you make that assumption, what steps would you take now and throughout the next six months to ensure the client sees and appreciates your work? What would you plan to do in the next six months to allow the client to see the quality of the relationship and the opportunity for developing the interaction on a mutual gains basis? What would you not do (and stop doing) that might prejudice the relationship and the perception of value.
Develop a business plan that matches the aspirations of your best clients
This is going to be a key message over the next two to three years – general counsel and executive directors are going to be asking in terms, “Are you aligned to our goals and aspirations, our plans and our values – are you with us on our journey?”
If the firm is aligned in this way, work will flow and the opportunity to embed the relationship will become more accessible. Fail to do this and law firms are left to be judged almost exclusively on price and in the present market, someone, somewhere will low-ball any bid you can make.
Ensure your new business development capability is focused
It is not credible to make a concerted and thoughtful bid for every single opportunity that arises. Law firms must focus on four things:
- While there are no easy options, retaining your best clients and building opportunity with them is the surest way to growth.
- Developing the capability and insight inside the bid team is going to be critical to success. Bids can no longer be run off a conveyor belt; they must be relevant, targeted, thoughtful and insightful.
- Reject opportunity that does not allow the firm to shine; it is diversionary in nature and will compromise standards and values in terms of the presentation and thoughtfulness of the bid process.
- However, when an opportunity does come along that excites, fits and is laden with opportunity, leave no stone unturned – prepare, prepare and prepare again so that you can deliver simply the best possible bid that you can make.
A bunker mentality is an understandable outcome given the year we have had, but now is as good a time as any to ensure that systems, processes and people are ready for the opportunities that will arise (for some at least). It might be too soon to climb out of the bunker, but it is never too soon to make sure your ladder can support your ascent when the time comes to get on.