Law firm

How can your law firm’s Business Development team succeed if they aren’t properly funded?

Reading ‘How law firm marketing & business development teams can deliver in a pivotal year‘ by Elizabeth Duffy on the Thomson Reuters site, I was struck by the following two stats:

On the client side, demand for legal services is projected to remain strong — 41% of clients say they plan to increase legal spending this year, and only 20% expect legal spending to decline.
On average, law firms are allocating 1% to 2% of revenues to marketing & business development budgets.

So, 41% of your clients are saying they plan to increase their legal spend this year, but you [as law firm management/managing partner] are only willing to allocate 1 to 2% of revenue to your business development and marketing efforts (which must be an all time low in the B2B sector).

And, let’s keep in mind that’s business development + marketing combined.

And, we all know the big winners in that expense allocation equation are marketing, not business development – the funnel, not the conversion.

But, like anything in life, law firm business development teams cannot succeed if they are not properly funded. If you want to:

pick the low hanging fruit
grow your share of client wallet

or any variation thereof, you need to make sure you invest in this critical function – and, frankly, 1 to 2% of revenue ain’t going to cut it!

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Peak loading – Hourly billing with a twist

Not exactly sure where I came across this pricing menu by a translation service provider in Malaysia – Lexup – so apologies if I am not giving you the credit you deserve because this really grabbed my attention.

A translation service focussed on the legal profession that not only charges by the minute (let alone 6 minute units), but whose rates vary depending on how urgent your need is.

Alternatively, if you’re not happy with the hourly billing model, then let’s go old school (Charles Dickens era) and pay by the word. Again though, the quicker you want your work back, the more it will cost you!

Peak-load pricing. I have no idea why law firms have not adopted this years ago!

As usual comments are my own – but I’m sure there is someone out there who can tell me the optimum price to time!

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‘More with less’ not ‘More for less’

Back on deck this week after close to 6 weeks off work (not too uncommon for us here in Australia where January is like July in France!).

While catching up on my emails I came across this classic by Tom Fishburne. Yet again Tom hits a home run and I suspect many of us will be feeling this pressure over the next 11 to 12 months!

As usual comments are my own. And I hope everyone has a great 2023!

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FX fluctuations: Has BigLaw finally got the message?

As I have written on this blog on numerous occasions since March 2013, big international law firms need to consider – and account for – foreign exchange (FX) currency fluctuations – especially if their P&L is based in one currency – whether that be GB Pounds or US Dollars.

So it was with some amusement that I saw the following article headline in The American Lawyer today:

‘As Currencies Fluctuate, Law Firms Adjust Lawyer Pay and Billing Across the Globe’
source

But, before we all get ahead of ourselves and start to think law firms have finally figured out that as they approach $2BN+ in global revenue with business operations – in many cases – in over 20 countries, they might want to think about currency fluctuation issues, the real reason this has all of a sudden now become an issue comes out in the article:

‘Firms are taking steps to minimize the impact exchange rates could have on partner compensation, associate salaries and other expenses’

Which itself raises another issue I have mentioned so many times previously on this blog, if currency exchanges do fluctuate over the course of a financial year, what does that do to your multiplier?

Do you go from a 3x multiplier to a 5x? Do you go from a 5x multiplier to a 7x?

And what happens if the FX fluctuation is as a result of a stronger local currency, do you go from a 5x multiplier to a 3x?

Cannot say they were not warned!

As usual, comments are my own.

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The ‘2022 Australia: State of the Legal Market Report’

The latest update on how the Australian legal market is fairing through COVID was published by Thomson Reuters Institute and Melbourne Law School yesterday (29 August 2022).

Some of my key take-aways from this ‘The 2022 Australia: State of the Legal Market Report‘ include:

FY22 (defined as being 1 July to 30 June) was a tale of two halves. In the first half, 1 July to 31 December, Australian law firms smashed it out of the park (6.4% growth in the first half), but the second half was much harder going and the market declined 2.1%, representing its weakest quarterly return since 2013
Drivers of growth were all the usual crowd: mergers & acquisitions, banking & finance, etc
Retention – especially at the Associate level – is a major concern with 31.6%, roughly one-third, of Australian associates having decided to move on from their firm over the past 12 months
Law firms are trying to counter this attrition rate by offering their star Associates more money, which makes sense when you consider how much it costs to replace lawyers, but more recently Associate demands have included demands outside of pure financial reward – including a belief that the firm is taking a strategic direction that aligns with their values
Your firm’s reputation in the marketplace is important if you want to keep your Associates
Diversity IS important:

Global research from the Thomson Reuters Institute found that female lawyers and/or those from under-represented demographics, as well as those who identified as LGBTQ+, were the most likely to leave their current firms.
Page 14

Lawyers in Australia from diverse backgrounds are NOT feeling the love:

lawyers from diverse backgrounds gave notably lower-than-average marks in both their own well-being and their leadership demonstrating the importance of diversity, equity, and inclusion (DEI) as compared to lawyers with non-diverse backgrounds
Page 14

Anyone who has read the ‘2021 Annual Profile of Solicitors‘ by the Law Society of NSW should be able to tell you why that’s a problem that’s not going away unless law firms demonstrate a change.

Innovation remains important, even though we are not actually too sure what that means as we continue to draw a hard line between “innovation” and “technology”

That said, there is a really cool ‘Innovation adoption checklist‘ on page 23 that is worth the download by itself!

Partners are leading the utilisation charge – there may be a whole host of reason given for this from “clients want partner time on the matter” to “we don’t want to over burden our associates because they may leave us” but an annual average utilisation rate of slightly over 1,200 billable hours tells me some lawyers out there are working very hard

Last, but by no way least, is an amazing graph on pages 26 and 27 that sets out the ‘4 roles of a law firm partner’ which is brilliant and makes me wish I had created it!

Well done it all involved and make sure you read the report.

As usual, comments are my own.

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Some red flags that you likely work in a siloed law firm

Pre-empting this post by saying that I don’t know Akin Gump’s head of litigation Stephen Baldini. In fact, not sure I know anyone at Akin Gump.

In fairness I would also add that emails such as the one Baldini sent to his litigation team internally – that recently went viral – are probably written every single day in law firms across the world.

What does interest me with this story though is how it clearly identifies (in my opinion) that the litigation “team” at Akin Gump is clearly not “A” team but rather several different teams.

Why do I think this?

Well, let’s take a look at at some of Baldini’s opening comments:

“We have recently had an extremely difficult job getting people engaged on matters”.
“Too many calls for help are either ignored or met with “I’m too busy.” These responses simply do not synch with our productivity, which for 2 months has been extremely low.”

Interestingly, Baldini’s email likely highlights a bigger problem in the Akin Gump partnership deed. That is this: it indicates to me that the Akin Gump partnership deed has a Supervising Partner/Instructing Partner component to it, whereby the Supervising Partner of lawyers in their team are assigned costs, but the Instructing Partner is assigned revenue without needing to necessarily share the costs of the resources they are using outside of their “busy” team (a version of ‘Eat what you kill’ that is played oh so well in many law firms).

To my mind, this accounting issue is a major barrier to internal collaboration in many (if not, most) law firms.

Now I could very well be wrong with that statement, but if you listen to the underlying plea in Baldini’s email:

We need engagement and intensity from everyone on the Lit team across the firm – we also need to act like a team. We need to help each other by easing the burden that is falling on colleagues, and we need to work together to meet our clients’ needs. So when you are asked to help out, please promptly respond, and if you have any capacity please say ‘yes’.
And, if you have capacity, proactively reach out and let others know. We are all professionals and we need to practice with a high degree of commitment to our clients and each other.

I think you might agree that there could well be a silo team mentality happening here.

As usual, comments are my own.

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Photo credit Waldemar Brandt on Unsplash

What’s hot and what’s not in #Auslaw

My article on ‘What’s hot and what’s not in #Auslaw’ was published in PM magazine this month.

My thanks to Matt Baldwin and the team at PM magazine for giving me this opportunity!

You can read the article here:

1263_pm_magazine_jun22_p.6-71 Download

As usual, comments are my own and I welcome feedback.

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Kick off 2022 by providing real value to your customers using the 3Es!

Happy New Year to you all, and welcome to the new calendar year that is 2022.

During the holiday period here in Australia (published 13 December 2021) I was fortunate enough to read a really insightful article in MIT Sloan Management Review by Andreas B. Eisingerich, Deborah J. MacInnis, and Martin Fleischmann titled ‘Moving Beyond Trust: Making Customers Trust, Love, and Respect a Brand’

which set-out how service providers, like law firms, could provide real value to their customers using the 3Es:

enable
entice,
enrich

Where:

Enable = help your customers solve problems in ways that are economically feasible, reliable, efficient and convenient
Entice = making your customers feel good
Enrich = build self-affirming identities.

And the benefits of using this method?

Evidencing the research outcomes of this methodology, the article sets out 6 benefits you should see:

Higher Revenue
Lower Costs
Higher Barriers to Entry
More Paths to Grow[th]
Stronger Talent Pool (within your firm as lawyers want to do this type of work for this type of client), and
Greater Retention Rates in your firm.

All of which – should – result in higher profit.

Well worth a look, take a read – and certainly food for thought!

As always, the above represent my own thoughts and would love to hear yours in the comments below.

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(ps – I would recommend you add a 4th ‘E’ to this list – Empathy’ 🙃)

Photo credit to Jon Tyson

Will law firms introduce ‘Anchor Days’ in 2022?

You’d have to have been hiding under a rock for past two years not to have seen an article or two on the benefits/pitfalls of remote working. But, as we move into the next phase of this pandemic/endemic, one in which we must start to learn to live with COVID, law firm management now need to be asking:

‘What does the future of the office look like for our firm?’

Truth is, there’s no simple answer to this question. On the one hand, we have those who advocate that “distance breeds distrust” and “out of sight, out of mind”. On the other hand, we have a lot of people saying we’re not going back to the old ways – and if you make us, we will part of the Great Resignation.

One answer to this issue might be in what the Australian Financial Review recently termed ‘Anchor Days’.

As per the AFR article, ‘Anchor Days’ are days on which a group of employees (in the same team) agree to go into the office on the same day each week with the aim of enhancing collaboration and ensuring a more lively office culture.

While I like the concept of Anchor Days, I think I should also point out that, from my reading, it comes with a couple of major misconceptions:

we all work in the same physical location (geographically in the same State/Cities, but also on the same floor of a building!).
that collaboration is more likely to happen in physical presence, when what we actually find is that collaboration more likely occurs with inclusion, and inclusion is more aligned with trust. QED, if you want more collaboration within your team, then trusting that your team can get it’s shit done here remotely/agile and not dictating collaboration top down, is a big step in the right direction.

My final comment: if Anchor Days become a thing, what day(s) would you chose?

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Report: Top growth strategies for law firms for the next three years

Last week saw the publication of the 14th edition of CommBank’s Legal Market Pulse report for 2021. What I recall starting out as a quarterly, then half-yearly, report, now looks to be permanently set as an annual publication (feel free to do a search of my previous posts on the CommBank report to see some of the history behind this).

Anyhow, the overriding message of this year’s Report is that the pandemic had little affect on overall profit growth at most Australian law firms (probably as a result of dramatically reduced costs). And with year-on-year median 12.1% growth in profit, on first look it appears that the profession is going great guns. Which, as someone who advises to the profession, is great news!

But where do law firms think growth will come from over the next 3 years?

How Australian law firms are looking to grow over the next 3 years?

Looking at page 11 of the Report, Australian law firms will primarily look at the following 11 ways to grow their firm’s revenue over the next 3 years:

Marketing and business development activities
Lateral hires from competitor firms
Adopting new technologies
Building/expanding referral networks
Cross- and up-selling strategies
Increasing fees
New models of service delivery
M&A activity
Graduate intake
Boutique/niche practices
Diversified or non-traditional legal services

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