Legal Marketing -- by Larry Bodine

Attorney retirement and legal marketing

Question of the day: How do law firms handle retirement of attorneys?

My observation is that most firms -- especially large-ish ones -- handle the issue badly. Because it is not part of the usual, daily practice-of-law grind (kind of like marketing and so many other business issues), it is handled "ad hoc." Some lawyers retire... slowly, devolving from Partner to Of Counsel or even Staff Attorney. They may spend years "handing off" their work, going into the office for 8-10 hours a day to do a steadily diminishing amount of work. They go from being senior, "heavy" partners, to being somewhat extraneous.

This is made more worrisome by the arbitrary nature of retirement ages at many firms. Whether it's 60, 65 or 70, forcing a lawyer to retire who is still a valuable asset to the firm is goofy. As is wasting 30+ years of service due to a lack of planning and imagination... and marketing savvy.

As business mavens, government higher-ups and other movers-and-shakers retire, they don't always go into obscurity. They continue, in many cases, to benefit their organizations in more non-operational ways. Ways that you and I might call "marketing." Many of the tasks that we as legal marketers would love to see lawyers spend more time on are truly well suited to older lawyers whose books of business don't necessarily require 60 hours of work a week:

• They can meet with important clients and listen... just listen... without the excuse of a mad, frantic case.
• They can speak
• They can write
• They can get facetime and do PR with the community.
• They can fundraise for firm-sponsored charities.
• They are often in the unique position of "knowing everybody," and having a degree of fame in the business world.
• If they've kept up their contacts at their alma mater, they could probably engage in great recruiting activities.
• They can spend time with young associates, training them in both legal and cultural firm issues. Match their experience with young attorneys' energy and tech-savvy, and you'd have a great team for doing all kinds of marketing and cross-pollenation of contacts and ideas.

There are probably more I'm not thinking of off the top of my head. But to let all the accumulated knowledge and wisdom of long-time partners just sink into obscurity is...well... an example of the excessively bad planning that most firms are guilty of when it comes to non-opperational issues.

And the planning for this needs to start when an attorney hits about 45 years old. I've had a number of lawyers around that age -- when they've reached the point of "confident partner" -- tell me that they start experiencing feelings of, "Is this all there is?" They have another 20 years to practice law, but they've really climbed the last big hill. From there, is it just "turn the crank" until retirement steals away your mojo? Well, no. Not if you plan a career lifecycle.

At about the time that an attorney really gets confident and settled, that's the time to start thinking about ways to leverage his/her experience into doing "more" than just lawyering. That's the time to start ramping up the required number of hours doing things other than billing them thar hours. Why? Because the greatest value that a strong, confident, experienced lawyer can give the firm is NOT hours and hours of billing. This is the point when folks should start doing more management activities, marketing, recruiting and strategic thinking. Why? Because those activities will improve the ability of the firm to bill many more hours via many more lawyers, to be more effective, and to ensure an ongoing stream of clients.

Most industries get this. We call it "management." The smart-as-a-whip kid who can do the work of three regular dudes eventually moves up to manage a small group. Where he eventually maxes out his potential, and hopefully gets promoted to manage a department. As the experience increases, so do the challenges.

Yes, there is legal work of a more challenging nature that requires more experienced lawyers. I'm in no way suggesting that lawyers stop practicing law just when they hit their peak. But I am suggesting that they should start doing "more" than practicing law at that point. And if you have a plan that gradually shifts the emphasis from practice to management activities over 20 years... retirement will be a well-designed, gradual withdrawl. Or it may not really occur at all, as many of the activities I mention above could be done part time, or as part of an alumni program. Either way, it's better than a gold watch, a giant sheet-cake from Kroger and a move to an office the size of a closet while you "wrap things up."

Deloitte report may add to legal marketing stress

A new report from Deloitte consulting, "Calling a Change in the Outsourcing Market," attracted my attention, because of my business interest in the Indian legal services outsourcing market. Turns out, though, that the gang at Deloitte were using the term "outsourcing" more generically. They're not talking about getting somebody in India, China or Australia to do the work of a US vendor... they're talking about getting a vendor to do the work at all in the first place, as opposed to doing it yourself inside the  corporation.

It's a good read for anybody who works inside a large company, or who has clients who work for large companies. Nudge, nudge... wink, wink... that might be most of you lawyers and legal marketers out there.

There's a really scary copyright warning at the beginning of the report, so I'm not going to cut-and-paste any of the pretty charts and graphs -- and there are plenty. Don't be scared by the 34 page size of the report. There's lots of big graphics, good swaths of white-space, nice bullet lists and the aforementioned graphs. You can power-read the whole thing in about 15 minutes.

I can hear you begging, though: "Boil it down for us, Andy! Give us the 15 second version!"

How can I resist my screaming legion of fan.

Here's the deal: according to Deloitte, many of the benefits of outsourcing -- getting a vendor to do work for you instead of having employees do it -- may be more than offset by the risks, troubles, costs and headaches. The main benefits that most companies site for outsourcing -- cost savings and increased flexibility -- may, in fact, be much less zippy than imagined, even before you figure out all the hairy-scary detail stuff.

In short, ironing your own shorts may be the smarter choice.

What does this mean for law firms and legal marketers? It means you may be competing against bigger and bigger law departments again in the near future.

I'm going to put my other outsourcing stick in this pot for a second, too, and stir things around even more. If law firms are competing less and less with other law firms, and more with larger law departments, they will also be competing more with outsourcing solutions from India. Why? Because law departments are nowhere near as hesitant to try new processes and ideas when it comes to shaving 20-80% off operational overhead items. So while the head of a practice group at a large corporate firm may not have a reason to outsource any of his legal support work... if he leaves and goes to work "inside," his priorities will change.

I'll give you another reason why legal Indian outsourcing services will fare better if/when law departments start growing again: when you reduce the amount of overall legal outsourcing you do, the stuff you do decide to outsource will be subject to even more competitive pressure. Which is good news for Indian firms that can provide some serious downward pressure on costs.

So... while the Deloitte report may not be bode well for the corporate legal industry as a whole, I think it might be a bright light for Indian legal outsourcing. I also think that US firms will need to take even longer, harder looks at how they put forth their value proposition to clients. And that's a conversation that should include serious, mature marketing folks.

Are you ready to rumble?

Legal marketing in a flat, flat world

I'm in the process of reading Thomas L. Friedman's "The World is Flat: A Brief History of the Twenty-First Century." So far, it is a fun, compelling read. Which is what I expected, as Friedman is a fun, compelling guy. Here's the point of his book in a nutshell:

Globalization 1.0 was countries globalizing and the dynamic force in Globalization 2.0 was companies globalizing, the dynamic force in Globalization 3.0 -- the thing that gives it its unique character -- is individuals and small groups globalizing. Individuals must, and can, now ask: where do I fit into the global competition and opportunities of the day, and how can I, on my own, collaborate with others globally?

What does this mean for the legal industry and legal marketing? In a word -- change. Big change.

Early on in the book, Friedman makes the point that he's glad he's a journalist and not an engineer or software designer or accountant or in any of the other professions that were "easily" outsourced to India, China or elsewhere over the last 5-10 years. Except he then immediately goes on to talk about how Reuters has opened a 400 employee shop in Bangalore and aims to grow their operation there to 1,500 within the next year or so. The Indian journalists do the "grunt work" of Reuters' financial reporting, taking earnings' statements off the wire, putting them into tables, doing very basic analysis, and shipping the formatted information back out. More complex work is done by senior analysts, many of whom are in New York, London, Tokyo, etc.

Whoops! I guess you can outsource journalism.

Or parts of it. And that's one of the biggest points that Friedman makes early on in his book.

Remember this term  -- "service delivery fragmentation." I'm coining it right now. You heard it here first, my friends. I'm going to come back to you people later as witnesses when I claim to have invented the phrase.

Friedman quotes an Indian entrepreneur talking about the old saw, "Well, you'll never be able to outsource a haircut or a meal." This refers to the idea that you can outsource goods, and certain services, but not direct services. His reply?

"True. But I can take the reservation for your table sitting anywhere in the world, if the restaurant doesn't have an operator. We can say, 'Yes, Mr. Friedman, we can give you a table by the window.' In other words, there are parts of the whole dining experience that we can decompose and outsource... [and] we are coming close to exporting a haircut, the appointment part. What kind of haircut do you want? Which barber do you want? All those things can and will be done by a call center far away."

Service delivery fragmentation. Most law firms practice a form of it now already. The days of one lawyer doing all the work for a client went the way of the dodo decades ago. But that used to be the norm, remember? Now, the work is split among several practice groups, any number of partners and associates, secretaries, paralegals, project support personnel, etc. In fact, with large clients, there are probably several (or dozens of) firms working together, maybe under the direction of one coordinating counsel. There may even be non-lawyer resources being managed by lawyers; expert witnesses, forensic pathologists, engineers, accountants, records management firms, information technologists, etc.

The practice of law is highly complex and one case can sometimes require hundreds of workers. The delivery of that service is fragmented.

Now all you've got to do is figure out how to go one step further. It seems like a big step because it's across a large body of water. It seems like a big step because it involves another country. It seems like a big step because it's across a bunch of time zones. But, as Friedman says, all this fiber-optic cable, email, voice-mail and technology has flattened the world. The "bigness" of the proposition is mostly in your mind. The broader your mind, the easier the step.

Those firms willing to make the step out and consider how to incorporate legal services outsourcing into their model will have a huge advantage in the next decade. Why? Effective use of legal outsourcing as part of your service delivery chain enables a firm to:

• Offer more services
• Reach new clients
• Offer lower rates for commoditized services
• Maintain higher rates for US attorneys
• Offload more of the mundane work to outsourced centers
• Maintain high-end, high visibility work for US attorneys

It's all about doing the right work at the right place for the right price.

For example,  outsourced legal services is  a way for smaller firms to "up-size" their own service abilities. A firm with, say, 50 attorneys can't normally, easily compete with a 100 lawyer firm. But if that 50 lawyer firm were to utilize the outsourced services of several Indian companies to provide back-office support for many of their routine, low-end support functions, those 50 lawyers could free up more of their time to work on value-added, high-end work, and compete with larger firms.

The cost differentiation will also enable firms that take advantage of Indian outsourced labor to provide services to a wider range of clients.

For example, US lawyers in estate planning might still do high-end work for clients that need complex, multi-level plans. But other customers -- ones that couldn't afford such services previously -- might now be serviced by a more "fragmented" practice in which the first two-of-three rounds of work were performed off-site by Indian attorneys, the third round of which was simply spot-checked by a US lawyer.

Instead of paying $600 (3 hours of work at $200/hour), which the average customer can't afford, this new process costs $190  (3 hours at $30/hour + 1/2 hour at $200/hour).  This process yields:

• A cost of less than 1/3 for the US customer
• 15% more time spent on the job for the US customer
• More time availability for the US attorney to spend on complex matters
• Maintenance of the billable rate for the US firm
• New customers for the US firm
• Retention of previous customers for the US firm
• Passing off of tedious work from US lawyers to Indian attorneys

This same model will work for a variety of different practice areas. The main rule being that the US attorneys function more as managers, doing the value-added, high-visibility, highly profitable work, while the more commoditizable work is outsourced. For firms willing to move away from the billable hour model, outsourced work can even show a very healthy profit.

Change is always seen as a threat by some. That is inevitable. For those willing to embrace change, however, there is also opportunity. Globalization 3.0, as Friedman calls it, represents a significant opportunity for those law firms who are willing to consider "fragmenting" their service delivery further. Remember -- you're already fragmented as it is. This is just one more step -- and potentially a very profitable one -- on a journey that began when you stopped being a sole practitioner and began working with other lawyers, firms, paralegals, employees and service providers.

Definition of "Churn" [follow up to yesterday's "Pizza Post"]

I just got an email from a good friend about yesterday's post asking, "What's churn?"

I forget that not everybody's done time in retail. Sorry.

"Churn" is the propensity for a customer to switch from one brand to another within a category, or for a worker to switch from one company to another within the same industry. It's worse than simply losing a customer or an employee, because you're not just down one unit, you're actively contributing to a competitor.  It's a net comparative loss of at least two units, if you catch my drift; you're down one and your competitor is up one. Plus the fact that you're out whatever investment you put into your customer or employee.

For example: to attract , train, house, equip, water, weed and polish a good, new associate for 3-4 years,  a firm these days probably has to spend between $200-$400k above and beyond what they're able to bill them out for. If they then lose that associate to another firm, they've "churned" them to a competitor. So not only have they lost a worker, but they've paid $200k to train someone to go work at a firm that could take business away from them. And they've paid $200k for someone to take all his/her networking connections with them.  And they've paid $200k for someone to go badmouth them all over the place at their new digs. You get the picture. It's bad on both ends.

What makes this  even more interesting, is that most firms don't even think of 99.9% of all other firms as competitors, unless they are directly vying for very specific types of work in the same markets. Which is crap -- all firms are in competition for a variety of resources other than clients; smart young lawyers being one of the most obvious.

So that's what churn is. And it's a bad thing. Good managers spend lots of time thinking about ways to decrease it. Bad managers make up excuses about why it's inevitable. See how many of these phrases sound familiar to you:

• "He was simply a bad fit."
• "She never really connected with our culture."
• "He couldn't find enough work to do."
• "She wasn't able to gain the trust of the partners."
• "He wasn't really sought after by the successful teams."
• "She wanted something different than she could find here."

All crap. Crap, crap, crap. Total and complete wind.

Here's how you can tell. Imagine that you had one major client who represented almost all of your billable work. You devoted tons of time and effort to making them happy. And then, all of a sudden, they fired your firm. Out of the blue. And the only reasons they could give you were ones as vague and unspecific as those in the bullet list above.

Don't get me wrong; by the time somebody leaves a firm on their own steam or is fired, there are usually a bunch of excellent, specific, measurable reasons why. But you'll never know what they are. Because firms don't measure associate and employee satisfaction. And they don't do granular exit interviews, if they do them at all. So what you end up hearing is, "It just didn't work out," or words to that effect. Which is as helpful as your doctor telling you, "We don't know what the problem is. But we know it's gonna kill you."

Marketing is about more than selling stuff. It's about understanding how the decisions you make affect the perceptions and actions of everyone involved in your business. Advertising and pricing and web sites and PR are all at the tip of the iceberg. Developing systems to monitor and reduce associate and employee churn are deeper issues, yes... but they're just as readily addressed by good marketing processes.

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Side note: It's  called "churn" because it's like water that froths in a closed container; nothing spills out, but there's lots of movement. It has nothing to do with butter.

My god... the pizza people get the marketing implications of employee management and churn more than law firms do

Every now and then I simply want to weep. Mostly because "Little House on the Prairie" reruns can really get to me now that I've got my own family. But sometimes it's because I read an article on business management and it just reminds me of how far the legal industry has to go until it catches up to... Domino's Pizza.

There's a nice post over at Brand Autopsy about how Domino's Pizza CEO David Brandon, when he was hired in 1999, went on a crusade to lower employee churn. In the fast food business, yearly worker churn can go as high as 300%. That's a huge drain on resources and a big, bad marketing black-eye.  So he reduced Domino's 158% churn to 107%. How? Read on...

Hildebrandt Client Advisory Deconstruction Part II: Binge and Purge

I posted pretty recently about law firm mergers. I don't need to go over all that again, do I? Good. Ranting is fun, but re-ranting, well... it's a waste of electrons.  The Hildebrandt 2005 Client Advisory's 2nd main topic is "Consolidations and Dissolutions." Or, as regular people would call it, "Mergers and Belly-Ups." Hildebrandt has this to say on the subject:

Overall, the experience in 2004 confirmed that consolidation is continuing in the US legal market and that segmentation within the market is growing.  As a result, it remains critically important that law firm leaders in firms of all sizes stay focused on the strategies necessary to create a sustained competitive advantage for their firms' key practices.

Ah. Consolidation and segmentation are continuing. Anybody who's taken even a cursory glance at the AmLaw 100 or any other list of the largest firms in America can see that. The trend has been plodding along for the past 20 years. If you haven't glimpsed it, you're either as blind as the post patricidal Oedipus, or you aren't paying any attention to the legal industry. Which would be the case for about 99.3% of the people in our fair land.

But guess what? So far, the limited consolidation in the legal industry hasn't provided benefits even remotely like those secured in other sectors. If it had, you might get key learnings from consultants with slightly more depth than, "... it remains critically important that law firm leaders in firms of all sizes stay focused on the strategies necessary to create a sustained competitive advantage for their firms' key practices. "

Really? Leaders should stay focused on the doing those things that are needed to stay competitive in important areas? Wow. Who'd'a thunk it.

I will resist the urge to re-rant about how most law firm mergers aren't really mergers, but a blissfully ignorant amalgamation of bad habits that everyone involved hopes, against all logic, will somehow alchemically transmutate into a glorious, new uberfirm. Real companies merge for solid business reasons -- not just to get bigger.

Remember the Andy Havens' Axiom of Law Firm Consolidation: The fastest way to create a $100 million firm is to merge two $75 million firms.

Do legal marketers really want a "seat at the table?" Consider the question of law firm mergers...

Law.com picked up a terrific article by Leigh Jones on "Client Conflicts: The Hidden Cost of Law Firm Mergers."  It's a great overview of many of the stumbling blocks related to conflicts that can trip up a pending merger. And like so many other issues related to the strategic management of law firms, it has, at its roots, a core of deeply held misunderstandings about the nature of how business works that is, frankly, disturbing in the extreme...

Legal marketing by way of your alma mater

If there's one thing that lawyers are at least as proud of as their firm's status, it's their law degree and where it came from. In some cases they also hold at least as much reverence for their undergraduate degree, too. How much depends entirely on their opinion of which school has more élan, of course.

So why is it that most law firms do so little to cash in on the natural connections that exist with their undergraduate and law schools? Having spent some time working with lawyers on this very subject, and recently having spoken with Brian Simons of Harris Internet Services, I'd like to suggest three major reasons why firms and attorneys don't take advantage of this relatively simple method of business development:

Marketing's role in strategic planning: Servant Warrior

Although a critical function for the success of a firm, marketing is not, nor should it be, the driver of firm strategy. Marketing can inform strategy, can critique it, can counsel and provide insight... but at the end of the day, top-line strategy needs to be set by the owners of a business or their representatives.

That being said, any organization that does notinclude marketing in their strategic discussions is missing out. Many of the planning and opperational practices of solid marketing are very valuable tools that can be borrowed by other management functions. Also, a goodmarketing department will be involved in a constant cycle of measure-analyze-plan-execute-measure with management. So, in effect,marketing is involved in the strategic process.