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The rate of business being generated for law firms of all types and sizes in this economy has been a great boon. At the same time, the need to produce the work product obscures the need for managing partners to focus on strategic issues that will certainly bite into revenues and margins no matter what the economic picture. As you plan for 2001, I suggest focusing on at least one of the following broad issues: (1) invest in the retention of clients and attorneys; (2) develop your firm’s supplemental services — the extras that set you apart; and (3) motivate your vendors to participate in the success of your firm. RETAIN KEY PLAYERS The financial effect of retaining key clients and employees, be they attorneys or staff, has been well-documented in research studies and anecdotally during the past decade. Studies such as those done by Bain & Company’s Frederich Reichheld, and documented in his book “The Loyalty Effect,” demonstrate that small increases in client and employee retention significantly improve profit margins. This salutary effect occurs because loyal clients refer well-qualified prospects and also buy more services; both actions are low-cost marketing gains. Loyal employees drive down the cost of doing business, most clearly seen in decreased turnover costs — hiring and training expenses — through greater efficiencies and the lower defection of clients when attorneys exit. Anecdotally, pick up a business periodical, or think of your own firm’s cost of replacing clients and employees, and the picture is even more cogent. While it is hard to measure retention, it is rather simple to clock defections, much as it may sting. Start there. On a quarterly basis, measure client and employee (attorneys and staff) turnover, and consider using some of the following strategies to decrease defections: (1) Invest in the training, development and coaching of marketing and sales skills. Training paired with one-on-one coaching sessions produces greater behavioral change than training alone because coaching helps people perform the skills, not just learn about them. On the partner level, consider developing executive-level marketing skills that increase client relationships through cross-selling and referrals. To do this, partners have to be prepared to do the following: Articulate a rationale to get the client to meet with them; review the past working relationship; and suggest (a) reason(s) for the client to meet with other practice groups. Associates need to be coached into creating their own referral network. Getting them to join and be active in appropriate groups and associations most easily does this. Finally, use your training and coaching program as a selling benefit when interviewing attorneys you wish to hire. (2) Burnish your leadership skills by articulating your goals face to face and in writing and repeating them often. It is important to do this all the way down the line, to the lowest-level employee, so that the “team” moves in the same direction. When you have to make changes in your direction, articulate them with the rationale behind it. At the end of each quarter, review the firm’s performance — good and not so good — and remind people how they can be additive to the firm’s objectives. You don’t have to reveal confidential information; trends, percentages or just plain kudos are enough. Nor should you wait for the annual retreat, the name itself being ominous, because 12 months is too long an interval for leadership feedback, and not all the players attend. And remember, you must lead by example. OFFER SUPPLEMENTAL SERVICES A supplemental service is not the delivery of legal services. Supplemental services are the extras that clients have come to expect, if not demand, from professionals. Examples: client seminars, doing client surveys and interviews, delivering written and electronic news alerts and networking your clients to other people or firms you know that can be helpful to the client’s life or enterprise. These are just a few, and the list is virtually endless, given a thorough understanding of what clients need besides legal work. The operating principle behind supplemental services is critical to understand. It is these extras that separate you from the pack. They are what people remember because they take the legal work for granted. It is true that clients choose lawyers; it is also true that after the honeymoon, firms can become fungible, and that is the key. Don’t become fungible. Other professional service firms, such as accounting and investment firms, have preceded law firms in understanding the value of such services. The good news is that they are not always creative or inventive in maintaining them — reason being, that after a number of times, the extras become mundane. Supplemental services add expense and labor costs, so direct them at your top clients and their colleagues. Colleagues have similar values, interests and issues, which make them qualified prospects whose lawyer or firm may not offer the extras. Depending on your capacity, add at least one supplemental service a year. In addition to training all of your people to talk about these services, they should be marketed by discussing them in your brochure and on your Web site. After at least three iterations of a supplemental service decide if it has produced results, and if the answer is “yes,” increase your investment. Do not repeat unproductive ones. VENDOR MANAGEMENT The corporate world has embraced vendor management for at least 10 years. If you or your firm has participated in a beauty contest, received a “report card” from a client or been asked to deliver supplemental services and trim your rates, you have been subject to vendor management. It’s not pretty, but it works. It is the flip side of marketing. Law firms have not used vendor management on the scale that they rightly should. Make a list of the vendors you pay the most to each year — this is probably 15 to 20 percent of your vendor list. As a starting point, ask yourself what they have done to — or how they could — add to your firm’s success. Write down those ideas. Meet with these vendors, laying out your business development strategy and asking them to come to the table with credible, practical means through which they can help you grow. Remember: Vendors, being part of the commercial world, employ these tactics themselves. As a result, it is a negotiable set of issues. How can vendors help you drive down operating costs and drive up revenues? For example, a small full-service firm wanted to cross-sell transactional services to their litigation clients who were corporations and family-owned businesses. To create a reason to meet with the client, and to open the door to broaching other services, the attorneys found they needed to use and understand current business information about the target clients. However, many lawyers had never used the business libraries of their research provider. The vendor of those research tools was asked to train the attorneys on how to compile company and industry dossiers. Some lawyers (quietly) admitted to being confounded by the financial information in the dossiers. The firm’s accounting firm was asked to train the attorneys on analyzing financials. Neither vendor had ever been asked to perform these supplemental services for the firm. Both did so without being paid, the quid pro quo being that their fees escalated with the new business the firm successfully brought in. Being a quick study, the managing partner started an aggressive vendor-management program. His question: “What extra can you do for us so we both win if you want to continue to be our vendor?” 2001 You can’t find enough people. You have too little time as it is. Remind yourself that steady increases in the rate of business generation should not obscure the more strategic management issues you still face — longevity, growth, stability and competition, to name a few. Tackle one of the issues I have laid out and you will find yourself busy, but with fewer sleepless nights. Christine S. Filip is an attorney and the president of The Success Group in New York, which specializes in marketing, public relations and new media design. She is the legal marketing expert at office.com and she can be reached at [email protected]. This article was published originally in The Lawyers Competitive Edge: Journal of Law Office Economics and Management, c.2000 West Group.

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