Tag Archives: business plan

The Importance of Deciding to Do It

Two consulting engagements in the past couple of months illustrate why some firms fly and some firms flounder, particularly in the smaller end of the market.

There were a lot of similarities about the two firms. There were the objective measures such as revenue and number of partners, and you could throw a blanket over each of them in this regard. They were both regional firms operating in buoyant economies where they were the dominant, go-to firm for commercial work in each market. Both were around a two-hour drive from a capital city.

In many of the subjective measures they were similar. The partners liked and respected each other, staff were content with their jobs but not necessarily all with a highly driven work ethic. By all reports clients were happy.

The first firm had been generating reasonable profit for the past seven years. In dollar terms, the returns to the partners had pretty much flat-lined since 2010, but adjusted for inflation the partners were going backward financially. The partners were acutely aware of where they were heading and were all busy paddling to try to correct the course. When we took an objective view of the practice it became evident that any measures implemented to improve profitability were immediately undermined by certain behaviors or expense blowouts. Strategy could best be described as a scramble.

The staffing structure of the firm was out of alignment. Practice groups and individuals had been bolted on without a partner in charge of the group or solicitors having any line of reporting to the firm or management. The firm had disproportionately high ratios of support staff to fee earners. This had arisen for a number of reasons – full-time staff returning as part-timers, fee earners leaving the firm – but it was largely a tail wagging the dog scenario in terms of who had the clout in the firm.

None of these problems had been corrected because the partners were solely focused on staying afloat on a month-by-month basis, which often meant grinding out the fees themselves.

The second firm was a sharp contrast to the first. The strategy session was a little daunting as this firm was one of the most profitable regional practices I have been into. This high level of profitability wasn’t just a spike; they had steadily ratcheted up their profits over a 20-year period. Everything they did was gold standard.

Financial success for the second firm was not really a magic formula. What set them apart is that they actually did what they agreed to do. On the revenue side they were totally focused on capturing all their time, even if clients were being billed on an agreed-fee basis. Partners set the tone, with all billing in excess of 6.5 hours per day. Employed fee earners had a hard floor of 5.5 hours per day, with the subtle message that no one progresses by doing the bare minimum.

Leverage in the firm was fairly low, as they wanted to ensure that there was full utilization. Expense management was also a feature, particularly in regard to the support ratios which were the lowest I have seen in a firm with a ‘traditional’ structure. All fee earners were computer savvy, and the firm had invested a lot of time and money into precedents and workflows to cater for the low-support levels.

I should note that the people in the firm were all happy – they didn’t feel like they were being exploited. They were well paid and just got stuck into work when they were there. The amount of weekend work or late nights the lawyers put in was not excessive, but similar to what one would expect of any successful firm.

The tone of the strategic-planning retreat was for the new crop of partners to decide whether they wanted to continue with the culture and direction that had served the firm very well for the past two decades. Given the financial rewards, it was not surprising they did.

A standout for me occurred when, during a break, one of the partners retrieved a strategic-planning report from 1991 – he had found it in a recent office move. It was essentially a blueprint for success and was a list of around 50 agreed actions and behaviors that members of the firm would adopt. The content of the report was as relevant today as it was 26 years ago – the differentiator is that the partners actually did what they said they were going to do. I am sure that over the years there were a few wobbles, but in essence as new partners came through the practice, they bought into this culture and way of practising.

Perhaps members of the two firms will recognize themselves here. I am not being critical of the first firm as it is probably representative of the majority of firms out there. This article is really about the attitude adopted by the second firm which, all things being equal, is in reach of all of us: It is just about deciding to be successful, and sticking to a plan.

Business Development: Strategic Client Relationship Management

2-FortinaRemember the old adage “The Client is King”? Put more baldly, the reason your business remains in existence is because you have clients. To lose sight of this carries the risk of losing clients. You know that the world you operate in is highly competitive and aggressive. You also know clients are (mostly) sophisticated buyers of legal services with high expectations and demands. The better you know your clients, the better the relationship – and therefore the less chance your clients will look elsewhere. It is well understood that it costs more to discover and develop new relationships than it does to look after existing ones. In addition, you do not need to have new clients to grow your business; you could quite possibly grow your share of their wallet by extending your service offering to your current clients through effective cross selling.

It is assumed that your firm has a clear plan and strategy which encompasses strategic client-relationship management, namely:

  • You have a clear and well communicated Firm Strategic Plan, Business Plan and Operational Plans that are understood in all parts of your firm (HR, IT, Finance, Secretarial & Administration, Reception and all Legal Staff);
  • The Strategic Plan includes: Vision, Values, Purpose, Mission, Key Success Factors, Key Strategic Objectives; Practice Objectives; Goals and Actions;
  • You have identified your Ideal Client.

With this in mind there are many business development aspects to take into consideration when looking after existing clients. It is important that you align all business development activities to your firm’s overarching strategic plan – so the day-to-day activities feed into the business plan, which feeds into the strategic plan. If they do not, ask yourself this: What is the purpose of these business development activities?

Client relationship management should be your number one business development activity. How well you do it may have long term impacts on your relationships and therefore the success of your firm. Here are a few questions which will help you work out how well you know your clients and explore the type of relationship you want with them.

In regard to your client:

  • Do you know your client’s strategy?
  • Do you know what significant business issues your client is facing?

And what about you?

  • Do you make it your business to understand what is special and unique about your client?
  • Do you care about your client?
  • Do you offer a clear explanation of what you are doing for them and why?
  • Do you keep your client sufficiently informed on progress?
  • Do you make sure that you are accessible and available when your client needs you?
  • Do you keep your promises on deadlines and targets?
  • Do you keep within your scope parameters?
  • Do you make your clients feel like they are important to you?
  • Do you make an attempt to be interested and helpful beyond the particulars of the tasks?
  • Are you consistent in all your communications and interactions with your client?

In regard to the relationship:

  • What type of relationship is it and how would you rank it out of 10 (1 low; 10 high)?
  • What are you doing to maintain, build and / or enhance it?
  • Who is / are the key contact points for the client? Do they like them? Do they know they can change their contact?
  • What is your current position with your clients – panel appointment or transaction / commoditised / project based work?
  • Where do you want to position your firm – preferred supplier, trusted advisor role?
  • Have you completed a client plan and identified measurable goals?
  • What is the total annual spend on your services by the client? What percentage do you get? Can you improve on this?
  • Do you have the right people on your client service team?
  • Who are your competitors and in what areas?
  • Have you done any client listening lately? Health checks, debriefs, client conversations? Do you have a 12-month client listening plan? What regular relationship meetings do you have with the client?
  • Getting closer to the client – Have you developed a relationship matrix: i.e., who are the people you need to know and service within the client’s business?
  • Do you have single or multiple relationships with key contacts – looking across the firm and the client?

Conclusion

The wonderful Dale Carnegie said, “You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” The same goes for business relationships. Get interested in your clients – invest time, effort and energy into your relationships!