For law firms, “the world of profitable opportunities is shrinking rapidly,” said Darryl Cross.
His perspective was part of a standing-room only presentation made at the 2015 LMA conference. Mr. Cross walked through a series of slides with several data points including some drawn from the CounselLink Enterprise Legal Management Trends Report.
“Profitability is going backward,” he noted, suggesting that while there are a lot of large law firms, there are not a lot of profitable large law firms. The competition is coming from all sides where for corporate counsel there are other firms that meet the “good enough and large enough” litmus test.
To that end, the rules of law firm business development may well have changed. Mr. Cross offered six new rules in the first part of his session:
1. RFPs are asking for discounts.
From AFAs to free or steeply discounted discovery, the requirements asked for in requests for proposals (RFPs) have consistently gained prominence.
2. Stick with what a law firm does best.
Mr. Cross notes that every so often law firms will create “grand plans” that appear more “aspirational” than anything else. For example targeting a new practice area where a firm has little experience. “When in doubt, stick to what you know,” he advises.
3. Law firm competition is plentiful.
The “main competition is big enough, large enough and close enough,” he warned hinting at the GC’s inclination to test services with other firms other than the largest. “Demand for legal services and demand for law firms are not the same thing.”
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4. Realization is the law firm health metric.
Mr. Cross breaks the concept down simply: if a firm bills $100 and the client pays $90, the realization rate is 90%. There’s incredible pressure on realization rates and it currently serves as sound metric for the health of a law firm’s business development program.
5. Technology enabled law firm.
Technology will enable a firm, allowing it to do more with less, or if it’s not adopted, will leave a law firm behind. The reality is, technology allows smaller firms to be bigger and have wider, even global reach.
6. Lawyers manage individual relationships.
“It’s high time for individual lawyers to manage individual relationships.” To illustrate he told a story where the business development staff was hand-signing client holiday cards for an attorney. The purpose of course, was to provide a personal touch. The irony of his anecdote lingered in the conference room.
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What rules would you add, edit or otherwise modify?
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