The New Normal
Make New Friends by Keeping the Old: New Normal Rules for Business Development
Posted Jul 2, 2012 9:07 AM CST
By Susan Hackett
Because of my strong contacts in the in-house legal community and my experience working with them on their outside counsel relationships, I’m asked by a lot of outside lawyers and firm business development professionals for advice on generating new business from in-house counsel, especially since the goalposts and the playing field seem to be shifting lately. Here are my thoughts, for whatever they’re worth.
• Don't talk to strangers.
I think that speaking on programs, improving the functionality of and resources on your law firm website, posting substantive or opinion blogs, inviting prospects to sports outings and client junkets, sponsoring a CLE, promoting your LinkedIn profile with group engagement and posts, and networking at cocktail parties are all fine ways to showcase your stuff for prospective clients. Knock yourself out. It is good to be visible and to share your expertise, and you’ll grow from your professional interactions. But don’t expect big returns in terms of new business from all these outlets, even if you do become better known for your efforts.
From my experience, what’s going to get you hired by new clients is the recommendation of your current clients. It’s really very simple. Clients may be impacted by all that great business development activity you engage in, but clients don’t make the decision to hire new outside talent without the practical endorsement of another client who’s used the firm or one of the firm’s lawyers. Period.
The best business development you can invest in is improving your service to your current clients. And for many lawyers entrenched in providing great quality–but essentially fungible–services to clients, it’s hard to think about what improvement means or requires. But it’s truly necessary, to earn your current clients’ referrals, and to distinguish your value from other lawyers and law firms (and from an increasing number of non-law firm legal service providers).
• Your clients are talking about you, especially when you’re not in the room.
Let me assure outside counsel that in-house lawyers are talking about their experiences with law firms and outside lawyers all the time. They talk by phone or email, or in the hallways at program breaks at CLEs, or at business or bar meetings. Every day the Association of Corporate Counsel (ACC) listservs are jammed with queries posted by members for referrals from other members: By location, by expertise, requesting a validation of a firm’s credentials for a project they’re considering, you name it. (And those are either last or first resort inquiries, resulting from a lack of leads that could be offered by the poster’s own personal contacts.) It is really rare for a decision about a new retention to be made without some level of validation having been provided by a live current client.
Sometimes a referral is requested of the client’s other outside counsel, but I’d argue that the same logic applies since outside counsel tend to refer clients to other outside lawyers they have enjoyed working with whom they believe provide great value … which is a first cousin to “current client” relationships. You know this is true since so many outside counsel refer work first to other lawyers outside their firms, rather than defaulting to referring it to internal colleagues. The lesson is that when a lawyer is making a referral, they are attaching their name and their credibility to the person they are referring, and making a pledge to the person requesting the referral; so they recommend only people they know and trust from current practice.
• Find out what your clients think about you, and ask them what you can do to assure that they’re singing your praises.
The long and the short of it is, new clients are more concerned about the firm’s current client relationships and how good they are than many firms are. Don’t lavish a lot of business development attention on prospects: you will generate more and better new business by investing more in better serving existing clients.
I’m not suggesting that a business development focus on current clients means that you should cross-sell other practice groups in your firm to current clients; the fact that you do the client’s employment law work does not necessarily mean that the client will value or want to meet your partners who do tax. When cross-selling opportunities arise “organically,” that’s great! But you’re missing my point if cross selling your firm is how you think that current clients will help you generate new business.
Here’s my suggestion: Ask your current clients what it would take to rocket you to the top of their referral list. And that means asking them what you can do to improve. I know this is hard, since most lawyers aren’t in the habit of asking for feedback or evaluation (they either think it unnecessary or somehow unprofessional). Indeed, many lawyers don’t believe they could do better or that anyone else in the market is offering services that could beat theirs; and they will even argue that changes aren’t necessary when suggestions for improved performance are offered–they’re doing quite nicely as they are, thank you. In my humble opinion: wrong, wrong, and wrong.
Tell clients you want to earn their top marks by not only meeting, but exceeding, their expectations. Ask them how you could do that–in general, and in the context of specific matters that allow the client to give specific examples. Ask them what would “delight” them, rather than fulfill their minimum expectations. Find out what others are doing that they greatly appreciate.
Then do it. (If you need ideas, there are all kinds of great “value” practices that you can review–highlighting both firms and department success strategies–on the ACC Value Challenge website.)
Then follow up. If your client agrees you’ve given them the exceptional service they want, then ask them whether they’d please consider referring you whenever relevant opportunities arise.
It’s my experience that very few lawyers do this. For whatever reason, they don’t ask clients to refer them generally to colleagues, or they ask for a referral only for a specific matter they’re pitching.
• Are you one of the few, or one of the proud?
Lawyers interested in promoting business development via current clients have to do more than slap a discount onto standard, unexceptional services–discounts, to my mind, diminish value, rather than increase it. You’re going to have to do the hard work of inventing smarter service mechanisms that delight clients and convince them that you’re actually better at delivering what they want than the other million lawyers who work in good firms; also do quality work; and are happy to offer a discount, too.
Warning! If you’re reading this and thinking, “No worries! I’m already ‘tops’ in my clients’ eyes, and I know they’re very satisfied with our relationship,” I would respectfully suggest that the odds are that you need to double check. Year after year, legal publications, consultants, and other groups (InsideCounsel, Corporate Counsel, Altman Weil, BTI, ACC, HBR Consulting (formerly Hildebrant), GCR, and others) publish or report on research that demonstrates (with incredible consistency in numbers) that if you ask outside lawyers to grade their work and what their clients think of them, they’ll overwhelmingly report that they are the best at what they do, and that their clients are completely satisfied. Clients of those same lawyers, when asked whether they’d recommend their outside counsel to a colleague, are less enthusiastic: Only about a third of them say that they would recommend their outside lawyers to a colleague.
That means that about two-thirds of in-house counsel don’t feel good enough about their current outside counsel to recommend them, even as they continue to give those outside counsel work. It also means that most law firm relationships with law departments are vulnerable: Meaning, if something or someone better–more distinguishable, more highly recommended, less expensive, more successful in driving results, more cost-predictable, more efficient–comes along, current client law firms may be replaced, without ever knowing they had a problem.
Jim Hassett of LegalBizDev regularly cites a piece of his favorite research: 60 to 80 percent of clients who leave firms say they were satisfied–they left for something better, rather than due to an overwhelming sense of dissatisfaction. So quality work by good lawyers at firms with institutional relationships is probably the floor, not the ceiling, when clients are assessing their options.
• When “good enough” isn’t good enough.
So let’s say you’re in the majority of outside lawyers who clients may think are good enough to retain, but not exceptional enough to recommend. Get ready for a “Tums & Tylenol” moment:
If there’s one corporate legal client trend that’s been consistent for the last 20+ years, it’s convergence–the practice of winnowing the number of firms the client retains in order to better manage the work, build stronger teams, and leverage their spend. For larger law departments with hundreds of firms, clients may have first moved to consolidate work to 100 firms; then to 50; now they’re thinking about sending 95 percent of their work to fewer than 10 firms. In smaller departments that may have spread work historically over 50 firms on their roster, GCs are looking to consolidate the work to five or so firms over time. That means that the vast majority of firms CURRENTLY representing clients and enjoying at least a satisfactory relationship will be more likely than not to lose good current client relationships over the next few years in a convergence exercise, if they haven’t lost them already.
Thus, to pay attention to current clients is not only important in building your base with new clients, but in protecting your current base by assuring that you’ll be one of the winners in current client convergence processes. If you are, you’ll not only keep the business, but likely increase the number and profitability of matters that the relationship generates, since the whole point of convergence is to strengthen and leverage prioritized relationships with more work done through more predictable service models for more predictable prices. Firms that win this work may charge less “per piece” due to structured pricing, but they will have the opportunity to drastically lower the cost of providing that service and to bill for more services overall, thus increasing the profitability of their best client relationships. And they set themselves up to get even more new clients impressed by the results delivered to existing clients who can’t stop bragging on them.
• Final thoughts
It’s the referral that’s the thing. And you’re likely going to have to work smarter or think about how you can reinvent the value of your work to your clients to earn the full benefit of their referral power. Remember, that they don’t refer the majority of their current outside counsel, and may not be thinking about what you’d like them to do to help you, if they would refer you, unless you remind them that their referral is important to you and highly valued. So don't spend the majority of your business development time, treasury and talent focusing your attention on people who don’t know you from Adam. Spend it where it counts–and counts twice: with the folks who brought you to the dance, and who are most likely to introduce you to new dance partners.
Paying full-time attention to improving the value of current client relationships may actually be not only good advice for keeping current clients, but the only way to assure a good stream of continuing and new business in the future.
Susan Hackett, CEO of Legal Executive Leadership, is the former senior vice president and general counsel of the Association of Corporate Counsel. She can be reached at hackett [at] lawexecs [dot] com. You can follow her on Twitter at @HackettInHouse or @LawExecs.
Editor's note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, Patrick Lamb, founding member of Valorem Law Group and their guests. New Normal contributors spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. You're invited to join their discussion.