law firm partners

3 ways you can grow your book of business today

It’s very much been a story of doom and gloom in the Australian legal marketplace of late. Demand is down. The Aussie Dollar has fallen through the floor and seems to keep going. It’s nightmare and has been for some time.

As someone who advises law firms on business growth strategies, all this doom and gloom can be down right depressing. If, that is, you let it.

As for me, I prefer to talk things up and I enjoy looking around for the opportunities rather than dwelling too long on the negative. With that in mind, here are three ways and places you could be growing your book of business today:

1. Thailand

Rohini Kappasath (handle @TalkingAsia on twitter) recently tweeted that there are 180 Australian companies – large and small SMEs – operating in Thailand who are looking for growth and guidance.

When I questioned Rohini where these numbers came from, he told me (vid DM) they were provided by DFAT (Department of Foreign Affairs and Trade).

Think about that for a second: 180 Australian companies operating in Thailand who are looking for growth and guidance. I wonder how many of these companies are currently represented by Australian law firms? Having lived in Thailand for 12 years myself, I’d hazard a guess not too many.

Massive opportunity going begging here.

2. Malaysia

Headline in yesterday’s The Star Online:

“Domestic F&B players strive to expand into Australia”

with a lead paragraph that reads:

“The domestic food and beverage (F&B) sector is striving to expand into the high-value Australian market as reflected from the participation of 18 Malaysian exhibitors at the Fine Food Australia 2015.”

18 Malaysian exhibitors at the Fine Food Australia 2015 with,

“Ninety-five business meetings with over 80 potential business partners were arranged by Matrade for the Malaysian companies during the event”

and not a single law firm in sight (from what I can see).

Massive opportunity going begging here.

3. Inbound M&A

Headline from yesterday’s Australian:

“Foreign takeovers tipped to surge”

with the following graph:

Other than, “massive opportunity going begging here”, not really sure I need to add anything to that!

So if you practice law in Australia and you are wondering what you can do about your ever dwindling revenue stream, all I can say is the work is out there: you just need to go looking for it.

* did you notice how I didn’t need to mention China once in this post… …quite clever that really.

Currency woes strike again!

It’s that time of the year again when law firms in the UK (at least those with LLP status) publish their annual accounts and, once again, it would appear that currency exchange fluctuations have played a significant part in the profit and loss (P&L) sheets of most with international operations (‘Currency woes hit growth‘ – subscription required).

As I pointed out back in March 2013, and then again in August 2014, the Australian operations of international law firms were not going to be sitting pretty when it came to reporting full year earnings in GBP or US$. At the time the experts were predicting mid 80 cents on the US$, and things can only be said to have taken a turn for the worse since then.

Failing a dramatic turnaround in commodity prices, it doesn’t take a genius to work out this will remain the same unless – or until – the Australian arm of international firms can muscle in on the [hopefully much more attractive US$] rates their offshore partners set up for them on advisory or transactional matters (see my post ‘Can a falling A$ make selling Australian legal services easier overseas?‘).

Alternatively, if you are an international firm with operations in Australia you could do what I have seen a number of firms doing during this reporting season and talk up you Australian earnings in “local currency contributions“. Because all things being equal, these firms have worked hard over the past 12 – 18 months to get their strategy on track and have most likely seen real growth in local currency contribution terms.

What are my pricing options?

You hear a lot these days about ‘pricing‘. This might be as it relates to Alternative Fee Arrangements (AFAs) or Value-based pricing (VBP).

Indeed, all the noise around this issue can get daunting at times.

So for today’s post I thought I would share a graphic that I have created from the many RFTs (tenders), RFQs (quotes), RFPs (proposals) that I have been involved in over the years and which I have named: “What are my pricing options?“.

Also, I’ll let you in on a little secret:- there’s isn’t such as thing as an “Alternative Fee Arrangement” – only pricing options or fee arrangement. Likewise, if properly explained and clearly transparent, all pricing options are value-based.

There’s one caveat I have though: any pricing option that includes a ‘discount’ or ‘volume discount’ component isn’t a pricing option – as you’re not getting your asking price!

I hope your find the graphic useful and if this is a subject you are interested in learning more about I would suggest you start with the Association of Corporate Counsel’s (ACC) Value-based fee primer.

To succeed in the future, law firms need to specialise

Over the course of the past week I have seen two news items that include comments by prominent industry experts advocating that for law firms to success in the future they will need to specialize.

The first item was a short [1 minute 40] video interview of David Lat (editor of Above the Law) titled More ‘Shakeout’ Coming for Big Law, Says Above the Law Editor in which (the recently married – congratulations David) Lat touches on the issue that for firms to survive going forward, they will need to get much better at the specialization game.

The second item, from the same day (11 September), was an article (‘How future-ready is your law firm?‘) on the Australasian Lawyer website that included comments by Keynote speech presenter Jordan Furlong of Edge International and Tim Williams of Ignition Consulting Group at last week’s ALPMA (Australasian Legal Practice Management Association) Annual Conference on the Gold Coast (at which I was not a participant).

In essence the article promulgates the experts opinion that the “future of law firms will be specialisation, rather than expansion” and that “In reality, clients have changed from wanting to be loyal to a full service firm to shopping around for the best firm suited to a particular project.”

Both the article and Lat’s interview video raise an interesting issue and I have to say that while I largely agree with William’s view that:

“Buyers [today] are seeking best in class solutions to their problems. They no longer need to fall back on a generalist firm that they can count on for everything in their hometown.”

it has yet to be fully explained to me why some, but certainly not all, full service firms cannot also claim that they provide “best in class solutions to their clients’ problems”.

The 4 Cs you need to attain “trusted advisor” status

Following the breakthrough work of David Maister in 2000, gaining The Trusted Advisor status has become the Holy Grail of all private practising lawyers. Not many, however, fully understand what this entails. While many may be able to name one or two elements what follows constitutes the 4 Cs you will need to demonstrate in order to attain “trusted advisor” status with clients and your work colleagues:

	= Credibility: delivering what you promised, when you promised it
	= Competence: having the right expertise and the right track record for the job – and being able to evidence this (as well as being able to say you DON’T have the right expertise to do the job!).
	= Compatibility: being able to work collegiately (as part of a team)
	= Consistency: delivering over a period of time

—

NB: this post was inspired by a recent post by Rachael Wheatley on PM Forum South West: “The Trusted Advisor is Dead. Long Live The Trusted Advisor“

Survey: One in four Australian law students are not sure about their future intentions

We often talk about the lack of opportunities that current Australian law students face when looking for work in what counts as the ‘New Normal’ in the world of legal in Australia.

It was interesting to read, then, in a recently published survey of the 1,403 law students undertaken on behalf the Women Lawyers’ Association of NSW that:

“One in four law students were not sure about their future intentions, and one in ten intended not to practise as a lawyer.”

Of those students who did intend to practise as a lawyer (61%), only half (both female and male) anticipated working as a solicitor in private practice; while close to one third intend to work as a government lawyer, in-house corporate lawyer or as a barrister.

Those law students who do not intend practising law after graduation said they anticipated working in banking and financial services, government/politics or in corporate strategy.

Interestingly, given the cut backs in this area, one in five law students were proposing to work as a community-based legal service lawyer, with female law students the more likely to be studying law for altruistic reasons; including “having an interest in social justice“.

Less surprisingly, male law students were more likely to cite “a good income that a career in the law offers” and “the prestige and status that a career in the law would bring” as being their main drivers for studying the subject. Which probably proves beyond any reasonable doubt that females are smarter than males!

All in all, I’m not sure the outcome of this survey would have varied dramatically in my days studying law at university 20 years ago. That said, I know that my aspirations – in studying the subject – were to be a lot more like Geoffrey Robertson QC than the partner of a Magic Circle law firm.

As it turns out, I ended up being neither. Which is why survey’s like this are important in reminding us that we probably need to hold off telling law students that it’s all doom and gloom in the world of the “New Normal” and start with actually asking them what they want to do with their lives.

Successful lawyers don’t sell, they educate

Don’t sell, educate

One of the first pieces of advice I was given when I entered this profession was not to be selling, but to always be educating.

Over the lifetime of my career I’ve found this small bit of advice to be invaluable. Yes, both the audience [from clients to partners] and the content [the law to coaching] of the ‘educating’ has changed over time – which is only natural given the many varying roles I have had in this profession, but by and large the principle has remained.

Given the above, I find it strange that a growing number of consultants have jumped on the bandwagon that “lawyers don’t sell time, they sell value“, when the reality is they sell neither – what they do sell is expertise.

Which is to say: successful lawyers educate their clients on the potential outcomes of a particular activity or inactivity.

In other words, in “A+B = C”, your lawyer should be educating you on what ‘C’ is before you do ‘A+B’ or else advising you how you can get out of the problems that being in ‘C’ is causing you.

As always, ultimately it will be up to you, as the client, to determine whether or not you wish to proceed with your lawyer’s advice; but, in any event, that lawyer is neither selling you ‘time’ nor ‘value’.

Yes, the currency in which the lawyer is getting paid may be determined [at least in part] by time and/or perceived value, but this is not the same as saying the product being sold is time or value.

So, the next time a legal industry consultant tells you not to sell time but rather to be selling value, I would like to suggest that you respond:

“I don’t sell, I educate.”

#BigLaw is far from dead

Has the death knell of #BigLaw been rung too early?

Despite all rhetoric to the contrary, three reports published within the past week would suggest that the business model of #BigLaw is far from dead.

1. Citi Private Bank’s Law Firm Group report*

The first, published in the American Lawyer, was Citi Private Bank’s Law Firm Group‘s quarterly report on financial performance in the legal industry.

While this report headlined as ‘Despite Growth, Law Firm Forecast Dims for 2015‘, it is worth noting the following three paragraphs from the report:

“Looking at the results by firm size, the Am Law 100 firms saw demand and revenue momentum build. For the Am Law 1-50, part of the positive momentum is due to some moderation in 2014 results from the first quarter to the first half. The Am Law 100 firms are also better poised than smaller firms for near-term revenue growth, given that they had comparably larger inventory increases (especially in accounts receivable) at the end of the second quarter.

The Second Hundred was the only segment that saw a drop in demand. It also had the lowest increase in inventory (2.3 percent), so the third quarter will likely be particularly challenging for these firms.

Despite the momentum generated by the largest firms, it was the niche/boutique firms that had the strongest first half overall. Revenue was up 7.0 percent on the strength of a shortened collection cycle (compared with a lengthening for the Am Law 100 and Second Hundred segments), as well as modest increases in demand and rates. The niche/boutique firms also posted the smallest increase in expenses, 1.9 percent, creating a substantial widening of the profit margin. Because of the accelerated inventory turnover and only modest improvement in demand, however, inventory for these firms was up only 2.8 percent. These smaller firms may therefore find the second half of the year more challenging than the first half.”

So, while mid-tier firms appear to see revenue in decline, the top-end of town was actually seeing demand and revenue momentum build.

[* The results of this report are based on a sample of 177 firms (83 Am Law 100 firms, 45 Second Hundred firms and 49 niche/boutique firms)]

2. BTI Consulting report**

The second report is a snippet from BTI’s Annual Survey of General Counsel and goes under the bye-line: ‘Large Law Edges Out Mid-Sized Firms for New Work, with Higher Rates‘.

Here, BTI Consulting’s research found that:

“60% of law firm hires went to larger law firms (650 lawyers or more) in the last year. Clients report hiring large law as a result of increased and more pointed attention—think industry knowledge and more specific discussion of company issues. Think less about your firm statistics and more about the people to whom you are talking.”

Possibly more damning, however, was the observation that:

“The onus is on mid-sized firms to do better. Clients expect mid-sized firms to bring more client focus and more business understanding than large law—but are not always getting what they expect. And, mid‑sized firms have to demonstrate vastly better understanding of their potential clients’ targeted objectives than large law.”

[** Research is based on 280 in-depth interviews with corporate counsel at companies larger than $750 million in revenue as part of BTI’s ongoing Annual Survey of General Counsel.]

3. CommBank Legal Market Pulse Conducted by Beaton Research + Consulting

The last report is a little closer to home, Q4 2014 results from CommBank’s Legal Market Pulse conducted by Beaton Research + Consulting.

I’ll most likely review the findings of this report more closely in a post later this week – and it may even be interesting to compare them against previous Q2 & Q3 reports – but for the purposes of this post I believe we don’t really need to go past the following infographic from the report:

which would certainly seem to indicate that “top-tier” firms are far happier with overall FY2014 results than their “mid-tier” cousins.

Bringing it all together

So, what does this mean?

To my mind what these three reports cumulatively evidence is this:- while #NewLaw may have arrived, and while it may be here to stay, what is increasingly clear is that #BigLaw is not the market segment that needs to be concerned with this development.

Nope, dig a little deeper and I think you’ll find that it is actually Managing Partners in firms with revenue in the A$20-A$70 million range who will be having a lot more restless nights sleep…

“… we are being asked to do less with less”, Ann Klee of GE

Work in the legal profession for more than 5 minutes and you’ll hear someone say that clients today are asking the law firm to do “more for less“. It is probably one of the fastest terms to become a cliché in the English language.

So imagine my delight, when watching a video of a presentation given by Ann Klee, VP of Global Operations — Environment, Health & Safety, at General Electric Company at the recent Big Law Business Summit, in describing how (in part) GE managed to reduce its outside legal spend by $60 million in a year, she says that the bottom line is that the role of a lawyer today is about managing more risk, it’s not about just being asked to do more for less, it’s being asked to do less with less (see 16 minutes and 15 seconds into video).

This absolutely spot on.

Law firms today need to:

partner with the business to empower their clients,
always be looking to deliver on outcomes, not to be following procedure for procedure’s sake (or, worse, following procedure to blow out legal fees),
through the use of legal project management, agile or some other mechanism that works for you: identify and eliminate any workflows that are adding no value to the deal/advice.

In short: we need to be doing ‘less for less‘, but we need to be doing it in such a way that is “faster, better, and smarter” for our clients.

At the end of the day, clients like GE are already doing this – so law firms today can either get on board with solving their clients’ problems from their clients’ perspective, at a standard of accountability that their clients are being held to; or they face the very real prospect of becoming irrelevant.

Fannie Mae’s GC says “Call Me When I’m Not Sending You Work”

Part 1 of an outstanding interview with Fannie Mae’s General Counsel Brian Brooks was published to Bloomberg’s Big Law Business website on Friday.

Although full of insightful comments and suggestions for private practitioners, my favourite is this:

“[Then] there are lawyers who are really sources of market information and intelligence, who are always letting you know what’s going on in your industry, even when you yourself may not have a need for them that day. Those are the people who really become the trusted advisors.

I know that phrase “trusted advisor” gets overused. Maybe it becomes trite, but it really means something. What it means is that, even when I’m not in a position to send any work your way, you’re still going to pick up the phone and let me know what’s going on in my industry.”

Brian puts the dynamics of the client-lawyer relationship pretty simply really.

He also has something to say on ‘depth versus breadth’ that’s well worth a read, so wonder on over and take a read. In the meantime, I’ll look forward to Part 2.