Three key aspects are the underlying reasons for slow law firm growth, according to Laura Meherg, a founding Partner with the Wicker Park Group. She’ll be presenting at the first-ever LexisNexis® InterAction® business development conference – LexisNexis Accelerate – in March 2016. We caught up with her to ask her a few questions about the state of BD in the legal sector.
Growth is slow first and foremost because “there are a lot of lawyers,” she said. “The volume of competition is at a peak. A decade ago, as a CMO of a law firm in Birmingham, we could see the volume of lawyers was exceeding the volume of work.”
Second, as a Porter’s Five Forces analysis might suggest, there’s a threat of substitutes. Inside counsel is increasingly taking work in-house according to Ms. Meherg. Corporate counsel is hiring increasingly sophisticated people on their team.
Third, there’s the threat of new entrants and she points specifically to new law firm models, like Axiom among others.
Avoid Being Left Behind
As the industry changes, she is worried law firms are being left behind. She points to an analogy she’s heard from GCs: every year technologies become faster, more capable and smaller – all while driving the cost of the product down as the technologies mature.
Law firms have the opposite trend – it’s the same service with annual rate increase letter. In years past, it might have been effective, but there are new service models today.
Is it fair to compare legal services to commodities? It may not matter, according to Ms. Meherg because in “some cases are viewed as a commodity” by clients.
For example, a regulatory issue may affect the construction of a manufacturing facility – a future source of revenue for a client. The value of that regulatory issue is really high. Yet in other cases, a few thorny issues in a construction agreement could derail or slow down a deal, but it’s not nearly as high value.
The latter may well be “commodity” legal work in the client’s eyes. Law firms “can’t approach these two issues in the same way,” she says.
“We have to understand the value clients are placing on the legal work,” she says. “It comes down to listening and adjusting service delivery models and fee structures to meet client needs instead of the law firm’s needs.”
Accelerate: Business Development Conference
by LexisNexis InterAction
March 14-16, 2016
The Umstead Hotel and Spa, Raleigh, NC
BD: Beyond the Relationship
There may be a growing divide between successful and less successful firms. The firms that well positioned “have a greater reliance and value on the value BD professionals play in the process. There’s more focus on the systems, the process, and the tools, “beyond the relationship building that attorneys have relied on the in the past.”
She says leading firms have structured BD departments, building dedicated sales support teams and hiring industry sales experts. These experts aren’t just coaching attorneys, but are actually “partnering with the attorney and going out on sales calls.”
For example “sales” is an “intimidating word for individual attorneys.” Yet the reality is, whether a firm is providing a service or solution – a means to win over a judge or jury – law firms are in fact selling every day without thinking about it.
3 Challenges to Law Firm Business Development
What challenges do law firm business development professionals face in the next 12 months? Ms. Meherg points to three:
- Demonstrating Biz Dev Value. BD pros need to demonstrate both value and the capacity to serve attorneys. It’s a double edged sword in that those with success quickly become overwhelmed with additional requests for support. “It’s a good problem to have,” she says.
- Battle against Complacency. “Lawyers have enjoyed a comfortable existence for a long time,” she says. While this is changing in some firms, others need to “get over the hurdle of approaching clients differently before the competition” provides better performance or value.
- Lobby compensation models. Law firm marketing and BD staff may have the least influence over compensation models, but directly impacts their work. Current models inhibit cross-selling. Why would an attorney generate business if he or she is only “rewarded by the hours worked?” she asks rhetorically.
If there’s one thing law firm BD staff should focus on in the near future, it’s “developing a much greater understanding of clients and their needs.” This means “allowing the voice of the client to inform all decisions” and getting a better sense for client “strategies and growth plans” rather than law firm assumptions.
The Accelerate Business Development Conference is the first-of-a-kind exclusively for LexisNexis InterAction customers focused on law firm marketing and business development. To see the agenda, speakers or for more information on attending please visit: http://lexisnexisaccelerate.com/
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