Legal Marketing -- by Larry Bodine

Jumbo Shrimp Marketing

John Moore, who was formerly in marketing at Starbucks Coffee and Whole Foods Market, makes a great point in his blog post, Get Bigger by Acting Smaller on MarketProfs.com.

"When small businesses dream, they usually dream of becoming a bigger business. When you think about it, nearly every big business began as a small business. Nike's first sale came from the trunk of a car. Dell shipped its first custom-built computer from a college dorm room. And Starbucks began as a mom and pop coffee shop.

However, a bigger business doesn't always equate to being a better business. At some point, big becomes bad. Big becomes a matter of being convenient rather than unique (McDonald's). Big becomes a game of market share rather than customer care (Wal-Mart). Big becomes ubiquitous (Microsoft).

It seems that by the time a small business gets big, it's time for it to act small again."  He offers five "Jumbo Shrimp Marketing Rules:"

Rule #1. Be the Best, Not the Biggest

Rule #2. Love Your Business

Rule #3. Passion Attracts Passion

Rule #4. Treat your employees as family

Rule #5. Redefine Success (define success by the impact you are having on the lives of customers).

Words to live by.

Ethics Opinion Allows Law Firms to Own Other Law Firms as Subsidiaries

Creating a potential gold mine for law firms, an ethics ruling in New Jersey now allows a law firm to own another law firm as a wholly-owned subsidiary.  This is groundbreaking news, because up to now, a law firm could only own another business, like a consulting firm, as an ancillary business.

“We…conclude that a professional corporation covered by Rule 1:21-1A may form a subsidiary to provide legal services and that such a subsidiary may be organized as either a professional corporation or a limited liability company,” the opinion states.

This means:

• Law firms can buy and sell other law firms as investments.
• Law firms can hire a pinpoint boutique to handle a spike in client demand, and then sell it off or shut it down when the demand falls off.  The owner firm wouldn’t have to fire any of its own staff, as happened when the technology bubble burst.
• The owner law firm can acquire a smaller firm without having to charge big-firm rates or pay big-firm salaries.  A large firm could own, for example, an insurance defense firm, pay the lawyers bottom dollar, and be able to bill out at $100 an hour.  This means big law firms won’t leave money on the table.
• Owner law firms can acquire less glamorous practices, like collection law firms (which are very profitable and make a 40% commission on debts collected) without having to sully its own reputation.  This can be very handy when the big firm has a bank as a client, and is happy to do its securities and acquisition work, but doesn’t want to foreclose on mortgages.  It makes the owner law firm a full-service firm.
• Big firms can get into profitable areas they won’t touch now – like matrimonial law and plaintiff’s personal injury law – without having to have their own lawyers do the work.  Of course, the subsidiary PI firm would be conflicted out of suing clients of its owner.
• Law firms can market themselves like General Motors, and have separately branded divisions, like Cadillac, Chevrolet, Pontiac and Buick.
• Or, law firms can market themselves like General Mills, with individual brands like Betty Crocker, Pillsbury, Green Giant and Häagen-Dazs.

The ruling came down April 27, 2006 as a joint opinion: Opinion 704 of the Advisory Committee on Professional Ethics and Opinion 37 of the Committee on Attorney Advertising of the Supreme Court of New Jersey.

The opinion states that the parent law firm can reap the net profits of its subsidiary, but “the ownership/subsidiary relationship be disclosed in all subsidiary advertising and marketing materials.” 

One or more of the parent law firm’s shareholders and associates must direct and handle the operations of the subsidiary; this is a role that cannot be served by a non-lawyer.  “The central goal of that prohibition is to keep the rendition of legal services from being under the control and direction of nonlawyers,” the opinion states.

“The Subsidiary must include the names of one or more of the attorneys who are principally responsible for the legal services provided by the Subsidiary.  Nevertheless, we conclude that to ensure clear disclosure, the name of the Subsidiary also must contain the following phrase beneath or next to the Subsidiary’s name “a subsidiary of X law firm.”

This opinion illustrates the trend among law firms to behave more like business corporations. Of course, it’s an ethics opinion that applies to only one state. However, New Jersey is a bellwether, and I see other states adopting a similar approach soon. 

To read the ethics opinion, see the bottom of the article, "Marketing and Revenue Gold Mine Opened by NJ Ethics Opinion" on the LawMarketing Portal.

Law Firm Marketing Budgets

Here's some fresh information on law firm marketing budgets, which I just picked up from the LawMarketing Listserv.  Many thanks to Marcie L. Borgal, Principal of The BTI Consulting Group, Inc., for furnishing the info.

BTI recently interviewed more than 100 law firm CMOs and Directors of Marketing about marketing budgets and ROI, as well as goals, best practices and management tools. This research will be published in June. Following are the key results:

Overall marketing budgets rose slightly in the past year, landing at 2.2% to 2.5% of firm gross revenue, depending on firm size (up from 1.9% to 2.1% in 2005)

At a typical law firm , the largest budget category is Salaries at 23.8%.

Salaries are followed by:

• Business Development        23.5%
• Marketing Communications    13.7%
• Seminars and Events        12.1%
• Advertising              8.3%
• Public Relations          8.0%
• Research              3.7%

The remainder of the marketing budget goes to a variety of firm-specific
activities.

Administrators Upset over High CMO Pay

I picked up intelligence today that law firm administrators are getting upset about the salaries that some law firm marketers are getting.  They're ticked off that the CMO is making as much or more money that they are, as well as more than the IT or HR director.

According to a 2005 survey by Abbott, Langer & Associates, Inc., Legal Administrators earn a median total income of $73,758, with a mean total income of $81,037; 10% of this group makes under $38,440, and 10% make over $141,744.  The Wall Street Journal reports that the Administrator/Office manager is paid the following:

Firm size	2006	2005
Large	$78,500 -- 123,250	$76,500 -- 115,750
Midsize	$61,000 -- 93,250	$58,000 -- 87,500
Small/midsize	$49,500 -- 76,000	$47,250 -- 69,750
Small	$42,250 -- 57,500	$40,000 -- 55,250

It's an interesting sore spot, because in many occasions, the administrator is the boss of the marketing director.  The CMO, however, reports to the partners or the management committee.

Compare the administrator salaries with some of the marketing job openings advertised so far this year:

• Director of Marketing/Client Services - Baton Rouge, Louisiana - $100,000 to $150,000
• Director of Business Development and Marketing -- Miami, FL -- $100,000 - 120,000
• Director of Business Development and Marketing -- Minneapolis, MN --  $120,000 - 140,000
• Marketing Director --  Tampa Office  -  $80,000 - $100,000

This, of course, is NOTHING compared to the 1,600-lawyer Chicago law firm that paid its ex-Texas CMO $400,000 per year, or the 1,000-lawyer New York firm that allegedly paid its ex-California CMO $600,000.

The administrators are beefing that the marketing salaries are knocking their firm salary structures out of whack, because of the high demand for law firm marketing with 5 years of experience or more.

The is GREAT news for the marketers, because it means they've worked their way out of the "overhead" category in law firms.  The marketers are able to say, "If you invest $5 with my plan, you'll get $20 back.  I can prove return on investment." 

It's a simple case of supply in demand, in my view -- you hire a marketer, your firm earns more revenue

According to a 2005 survey by Abbott, Langer & Associates, Inc., Legal Administrators earn a median total income of $73,758, with a mean total income of $81,037; 10% of this group makes under $38,440, and 10% make over $141,744.  The Wall Street Journal reports that the Administrator/Office manager is paid the following:

Firm size	2006	2005
Large	$78,500 -- 123,250	$76,500 -- 115,750
Midsize	$61,000 -- 93,250	$58,000 -- 87,500
Small/midsize	$49,500 -- 76,000	$47,250 -- 69,750
Small	$42,250 -- 57,500	$40,000 -- 55,250

It's an interesting sore spot, because in many occasions, the administrator is the boss of the marketing director.  The CMO, however, reports to the partners or the management committee.

Compare the administrator salaries with some of the marketing job openings advertised so far this year:

• Director of Marketing/Client Services - Baton Rouge, Louisiana - $100,000 to $150,000
• Director of Business Development and Marketing -- Miami, FL -- $100,000 - 120,000
• Director of Business Development and Marketing -- Minneapolis, MN --  $120,000 - 140,000
• Marketing Director --  Tampa Office  -  $80,000 - $100,000

This, of course, is NOTHING compared to the 1,600-lawyer Chicago law firm that paid its ex-Texas CMO $400,000 per year, or the 1,000-lawyer New York firm that allegedly paid its ex-California CMO $600,000.

The administrators are beefing that the marketing salaries are knocking their firm salary structures out of whack, because of the high demand for law firm marketing with 5 years of experience or more.

The is GREAT news for the marketers, because it means they've worked their way out of the "overhead" category in law firms.  The marketers are able to say, "If you invest $5 with my plan, you'll get $20 back.  I can prove return on investment." 

It's a simple case of supply in demand, in my view -- you hire a marketer, your firm earns more revenue

Marketing a Tax Practice

How do you market a tax practice? The answers came from LawMarketing Listserv members Vickie J. Gray, Larry Bodine, Jaffer Manek, Hale T. Chan, Ross Fishman and Mark Merenda.  Among the ideas raised were:

• You're dealing with tax-nerds. "Spoon feed them your ideas a little bit at a time. Leave the big picture behind and focus on the steps involved to accomplish what you are proposing. Follow up faithfully. Keep your expectations small - baby steps," said Vickie Gray.
• Decision makers at Fortune 1000 corporations are usually tax directors or financial officers. The best place to find these folks is through TEI (Tax Executives' Institute). Though lawyers in private practice cannot join TEI they of course have conferences and meetings with numerous social and sponsorship opportunities that give you a chance to get in front of their members.
• New business for a tax practice is going to come from referrals and cross selling.  The partners in the practice need to develop a network of bankers, financial advisors, insurance agents and other lawyers who can refer tax legal work to them. 
• Firm management must make it mandatory or create an incentive for the internal partners to introduce tax partners to their clients.  The same onus/incentive must be placed on the tax partners.
• Cross-selling is never going to work unless the firm's culture and compensation system both DIRECTLY AND STRONGLY support it.
• The firm's culture and compensation must also hold lawyers ACCOUNTABLE for cross selling.   First, lawyers need to write out personal marketing plans where they specify exactly what cross-selling activity they propose.   Then the compensation committee must deny them a bonus or cut their income for failure to carry out the plan. 

For the full discussion, visit http://www.lawmarketing.com/pages/articles.asp?Action=Article&ArticleCategoryID=6&ArticleID=500

Maximizing Business Development Through Client Teams

Law firms are creating client service teams to protect, preserve and expand the business relationships, according to marketer Iris Jones, Esq., Client Services Advisor at Akin Gump Strauss Hauer & Feld in Washington Teams add tremendous value to the client by providing better service, better anticipation of the needs, ability to be proactive in service delivery and better communication internally and externally.

Highly successful client service teams:

·        Fully understand the client’s business

·        Listen actively

·        Regularly communicate with the team

·        Share timely competitive and business intelligence

·        Disseminate client policies and guidelines

·        Take consistent legal positions.

For the rest of the story see the LawMarketing Portal.

Nearly 70% of clients dissatisfied

I was shocked to read this new statistic from BTI Consulting in Boston in a new article "The Declining Client Satisfaction Antidote" on the LawMarketing Portal. 

"Low client satisfaction plagues today’s legal industry. Client satisfaction rates among the Fortune 1000 plummeted by nearly 15 percentage points during last year. Local and regional markets fared little better," says Marcie L. Borgal, Senior Strategic Analyst at The BTI Consulting Group.

What's the problem? She says three critical law firm behaviors underlie falling client satisfaction according to clients:

1. Not keeping up with changing client needs

2. Doing a poor job of articulating and delivering value

3. Poor communication between law firms and clients

She identifies a number of ways that law firms can steer clear of this debilitating trend with their own clients and discover what steps they can take today to gain competitive advantage.  See http://www.lawmarketing.com/pages/articles.asp?Action=Article&ArticleCategoryID=58&ArticleID=495

Wikis and IM offer New Hope to End the Crushing Weight of Email

In 2006 there will be 22,000 billion emails messages sent, up from 19,000 billion law year, according to the April 4 Financial Times. It’s a crushing load.  I could easily spend an entire workday doing nothing but answering emails.  But there’s good news:

• The growth in spam is slowing.
• Most business have effective enough email filtering technologies.
• Companies like America Online offer a Goodmail System, which charges the sender to guarantee delivery to the mailbox of a recipient, who has agreed in advance to accept the email.
• Technologies like instant messages and wikis (web sites that anyone can edit) will draw users away from email, so fewer messages will be sent.

E-mail was never meant to be a collaboration tool, for which it now is overly used.  Blackberry-addicted executives are using email for online negotiations and scheduling, ultimately reducing efficiency and increasing stress.  Business people phone each other less and turn to the less-efficient and less personal alternative of email.

There are two ways out of the email overload, according to the FT:

1. Younger people who grew up with instant messaging are bringing its use to the workplace.  Three or four quick IMs can instantly replace email messages that get bogged down in the crush of messages or falsely snagged by spam filters.

2. Wikis (which are like a Word document online) are becoming popular for collaborating on documents, according the FT, especially for things like meeting agendas and project reports.  “Wikis help managers and executives keep in touch with projects without getting CC-ed to death,” the FT said on page 1 of its April 12 Digital Business section.

Open Text, which sells wiki software, says wikis consistently reduce email volume by about one-third, by capturing content and storing it online.  High-tech companies like Google and even conservative institutions like the Dresdner Kleinword Wassterein investment banks are using wikis.  In fact, traffic on the DKW wiki exceeds that on the entire DKW intranet.

Finally there may one day be a return to the ancient technology of “voice messaging.”  This is when you pick up a phone and actually talk to someone. Can “in person messaging” be far behind?

On the Road Again

I won't be posting from April 4-20 because I'll be out of the country and on the road.  First I have to fly to Munich, Germany, to help my favorite aunt into a nursing home.  Then I return to Tucson and start packing for the drive back from Tucson to Illinois.  I'll be back in my office in the Prairie State on April 21.

Keep smilin' until then.

Ugly Little Ads that Sell

Eric Gagnon has a great little article entitled "Ugly Little Ads that Sell: How to Make a Smaller Ad Pull Better Than a Bigger One" on the Business Marketing Institute site.

"If you flip through successive issues of any trade publication, you’ll often see the same smaller half, quarter, and one-eighth page ads repeating every single month," he says.

"This is often a telltale sign these fractional-space ads are paying their own way by generating solid sales leads for their advertisers, where larger, prettier, full-page ads in the same pubs often appear and disappear like footprints along the beach," he says.

In fact, some fractional ads have become legendary for their pulling power and longevity. According to top ad executive Fred Poppe, the late co-founder of Poppe Tyson, an ad displaying gears and wheels for Downs Crane and Hoist ran in trade publications for 35 years, outpulling the average ad in these publications by 50%.

Just about any type of service can be advertised effectively in a smaller page size. Plus -- fractional ads are cheaper!

Eric Gagnon has a great little article entitled "Ugly Little Ads that Sell: How to Make a Smaller Ad Pull Better Than a Bigger One" on the Business Marketing Institute site.

"If you flip through successive issues of any trade publication, you’ll often see the same smaller half, quarter, and one-eighth page ads repeating every single month," he says.

"This is often a telltale sign these fractional-space ads are paying their own way by generating solid sales leads for their advertisers, where larger, prettier, full-page ads in the same pubs often appear and disappear like footprints along the beach," he says.

In fact, some fractional ads have become legendary for their pulling power and longevity. According to top ad executive Fred Poppe, the late co-founder of Poppe Tyson, an ad displaying gears and wheels for Downs Crane and Hoist ran in trade publications for 35 years, outpulling the average ad in these publications by 50%.

Just about any type of service can be advertised effectively in a smaller page size. Plus -- fractional ads are cheaper!