As consultants who have worked with attorneys since the mid
'80s, we have seen a tremendous change in law firm marketing. While most attorneys have
embraced marketing as an integral function of operating a business, many litigators have
difficulty marketing. Sole practitioners and small boutique litigation firms, have learned
to survive on their marketing skills. However, litigation departments of large and
mid-size law firms have often relied on their firms' current clients for business, with
little, if any, marketing to prospective new clients.
Marketing is a numbers game. Research
indicates it takes eight contacts to convert a prospect to a client. For a litigator, that
number may be even higher since litigation is often the result of an external influence
such as being sued. If we use the "eight contact theory," then we acknowledge
that the first seven contacts will not yield a new client. For many attorneys, the fear of
failing to obtain a client during the first several contacts or getting the "No"
seven times will inhibit their marketing efforts. For litigators the situation may be
worse, since they strive to win and a "No" may signify a failure in some
attorneys' minds. On the other hand, rainmakers see "No" as the path to a
"Yes" someday and pursue a prospective client accordingly.
Marketing defines two groups on which efforts
can be focused: the client or end-user of your services and/or the referral source who
refers the client/end-user. The most cost-effective way to market is to concentrate on the
referral source. You can market to one referral source who may refer you five clients over
the course of one year. Or you could use the same time to market to one company and you
may or may not get that one client.
The best way to determine whom you should
market to is to review your list of clients from the past several years and determine how
your clients originated. Examine both the number of clients and the amount of revenue each
generated. This exercise usually reveals some interesting data. By tracking this
information in a spreadsheet or database, you can periodically (at least twice a year)
analyze any trends that occur.
For example, you see that two years ago, one
of your former law professors referred a client. The next year, he referred you several
clients and another professor referred a client as well. This year several professors have
referred several clients that have generated substantial revenues. Law professors should
become a marketing focus for you.
If you determine that other clients refer
most of your clients, then you need to look at your clients' industries, since it's easier
to target a specific group. In analyzing your client base, you discover that a number of
the clients are certified public accountants. Consequently, you should be speaking at CPA
organizations and writing for CPA publications.
All too often, attorneys automatically market to other attorneys, when, in fact, attorneys
may not be a good source of clients. We have found attorneys who are extremely active in
bar associations, speakers at lawyer groups and authors for articles in legal
publications; however, they find that no clients come from other attorneys. While some of
these activities are important to build a credible resume, at some point the attorney's
time will be better spent in marketing to the people who will generate business.
Once you've determined where your clients have come from in the past, you are ready to use
that data to develop a marketing plan for the future. Research has shown that firms with a
written marketing plan have more growth in revenues and profits than firms without a plan.
Average revenues and profits per attorney are higher as well -- by as much as 147 percent.
Developing a marketing plan is critical if you want to generate more profit.
The marketing plan, divided into two areas of reputation and relationship marketing, is a
month by month program of action steps describing what you intend to accomplish during the
next 12 months. Reputation marketing includes speeches, articles and seminars that will
build your reputation whereas the relationship marketing is one-on-one marketing to
individuals. You can do relationship marketing without the reputation. However, you
usually can't do reputation marketing without the relationship, unless you have a very
high profile, media intensive case or practice.
The most crucial element of the marketing plan is to develop a database, which is the core
of any marketing program. We talk with many attorneys who don't have a database or a
mailing list. The lack of these tools is a missed opportunity to let people know about a
speech that you'll be giving or about an article that you've written.
The adage "out of sight, out of mind" is true. You need to communicate with your
referral sources, clients and prospects on a periodic basis (about four times a year), so
that they remember you when they need you. A formal newsletter is impersonal; however, a
"memo" to each person (easy to do these days through mail merge), creates an
image that the information has been written for the specific individual.
Speeches are an excellent way to get your name in front of your potential clients or
referral sources. If you tape record your presentation, you can transcribe it, and with a
little editing, have an article ready for a publication.
The value of articles that you write is not that people will necessarily read it in the
publication, but that people on your mailing list will see the reprint that you send out.
You can also include reprints in your package of materials you give to prospective clients
or prospective referral sources.
Co-sponsoring a seminar with a prestigious company or organization lends credibility to
your reputation. In addition, you may have access to the mailing list of the organization.
Often, we see attorneys who view the presentations that they give as their marketing
effort. We say that marketing begins when the speech ends. Presenters should ask for
business cards in exchange for information that will send out at a later date. Always
provide handouts with your name, address, telephone number and e-mail address to the
The previous techniques fall into the category of reputation marketing. Relationship
marketing focuses on the individual. One of the best ways to enhance a relationship is to
eat a meal with your target and to do so periodically (remember the eight contact rule).
When we asked great rainmakers how they obtained their clients, many indicated that social
situations were the number one way that they did business. However, we've spoken to a lot
of attorneys who never mention business in social events and they may, in fact, be missing
out on a great opportunity. Plane trips are another source of business for rainmakers. The
key in a social situation is to talk about what you do in a way that lets the listener
know more about your skills and talents.
Although you may have great success in marketing, unless you employ strong financial
management, your marketing efforts may be for naught. Most attorneys want to bring in as
much business as they can and don't look at the profits. By chasing the revenues and not
the profits, some attorneys barely subsist.
Meet the attorney who looks at a $100, 000 client and can't resist the taking on the fixed
fee work. However, at the end of the case, the profits are only $10,000 or 10 percent of
revenues. Another attorney takes on a case that will only generate $30,000 in revenues,
but the profit will be $15,000 or 50 percent. The second attorney is better off
financially. Yet, many attorneys don't bother with the profit calculations and are
mesmerized instead by the high revenues. By the way, the average profits (draws) in a law
firm are 30 percent.
Firms can improve their profits by delegating work to the lowest paid, most competent
person. Partners who do the work of associates and who could be marketing instead, are not
operating as efficiently as they could. Firms should analyze their personnel ratios, such
as the ratio of partners to associates, attorneys to legal assistants, and attorneys to
secretaries. The lower the ratio, the more efficient the firm. Research indicates that as
the number of attorneys increase, the ratios decrease because the firm is more efficient.
After 25 attorneys the firm is less efficient because more support staff are needed. Once
the firm passes 50 attorneys the ratio drops again as economies of scale increase
Many attorneys don't initially consider a client's ability to pay. By qualifying
prospective clients ahead of time, attorneys can avoid taking on clients who might have
financial problems. Qualifying a client requires research to find out the financial
stability of a potential client. Attorneys can conduct research through Dun &
Bradstreet, a computer database with a section called "Paydex" that scores a
company on the amount of time it takes to pay its bills.
Attorneys can also search for information about prospects on the Nexis database of
newspaper and magazine articles. Other databases provide information on tax liens and
bankruptcies. Attorneys can even hire investigative companies to perform due diligence on
prospective clients. By qualifying clients, attorneys take on the most stable clients and
avoid unknowingly working with financially risky ones.
Lee Reicher, administrative partner for 22-attorney
Reish Luftman Reicher & Cohen, a
Los Angeles firm whose profit margin is in excess of 40 percent, says that his litigation
department utilizes two techniques that help prevent future financial problems with
clients: get a large retainer fee and analyze the value of the case.
"Requiring a large retainer before beginning the work, is the best way to see if your
client is ready, willing and able to pay the fees," says
Reicher. "A client, who
balks at a $10,000 retainer fee when you've estimated a $50,000 total fee, is not a client
whom you want to have." Chances are, you'll be trying to collect money in the future.
The second technique used by the
Reish Luftman Reicher & Cohen litigators is to analyze the value of the case. "Every civil case has a
monetary value that's worth a certain amount," continues Reicher. "If the
litigation costs $50,000 and the client 'wins' $10,000, you'll probably have an unhappy
client who won't want to pay the fee."
Reicher cautions that the best way to keep
clients happy is to perform a comprehensive budget analysis on the projected cost of the
case in relation to the financial amount to be gained by the client. "In
litigation," he says, "clients are often driven by their emotions. But when you
get into the cost and benefit analysis, clients may recognize that they shouldn't pursue
Litigators, who counsel their clients not to
pursue litigation, run the risk of decreasing their revenues in the short-run. However, in
the long run, clients will appreciate the sound business advice and will probably refer
other clients to the litigator. Referral sources, who know that the litigator conducts a
cost benefit analysis, will undoubtedly appreciate the advice for their clients as well.
We have entered an era, where the marketing
plan and action steps, coupled with astute financial management, is regarded as an
important business function within the legal profession and is addressed with the same
fervor and seriousness as that of successful companies in other industries.