Walker Clark Worldview

Sometimes finding the right strategic partner is like looking for a new romance in a bar. The key to success is finding points of affinity upon which to build a relationship, whether for the rest of the evening or for a lifetime.

This is a second of a series of posts about common mistakes law firms make when trying to establish a strategic alliance with another law firm.

The second big mistake is a lack of actual points of affinity between the two firms.  These relationships have to be based on more than professional friendships or an occasional referral of instructions in the past.

When our firm conducts market research to help our clients find strategic partners, we look for points of affinity that are based on current and recent events, cases, and transactions — such as the candidate firm having clients with significant business interests in the home jurisdiction of our client.

The notion of “build it and they will come” simply does not work in this situation. Two firms cannot simply set up a strategic relationship and then try to create the client base and inter-firm work flow needed to support it. The basic elements must already be there.

This is a major problem for most contemplated strategic relationships between law firms. Too many of these efforts are the products of friendly conversation and wishful thinking over drinks at a conference. While it is always good to be optimistic, it is better in this situation to be realistic.

Norman Clark

Let’s continue this week’s  discussion of the business challenges facing smaller U.S. law firm in smaller legal markets (i.e., metropolitan areas with populations of less than 500,000).

An article in yesterday’s New York Times, “U.S. Home Sales at Lowest Level in More Than a Decade,” is somber news for the thousands of smaller U.S. law firms for whom residential real estate is a significant part of their practice.

The seasonally adjusted annual sales rate for residential real estate in July 2010 was more than 25% lower than a year ago — during the depths of the recession.  This drop occurred despite the lowest mortgage interest rates in decades.  As one observer, quoted in the article, said:

“… sales volume will probably be in the tank at least until next spring.

This news tends to support what many observers have perceived for at least the past six months — that the so-called “recovery” in real estate was largely an illusion, fed by wishful thinking in the residential real estate industry and a bottom-feeding frenzy among predatory investors in distressed sales in the lowest quartile of the market.

It also suggests that there might be fundamental failure of the U.S. economy even to consider, much less to address, fundamental weaknesses in the economic foundations of the American economy, which may have increased the likelihood of chronic unemployment, economic stagnation, and deflation in the years to come. Unless the Obama Administration can find a way to help millions of people get back to work — notwithstanding an increasingly dysfunctional Congress — the sales volume in the U.S. real estate markets is unlikely to improve.

Some real estate lawyers in the U.S. report that their practices continue to sink with no signs of recovery or rescue on the horizon. At the same time, some real estate practices appear to have stayed more or less afloat during the continuing rough times in real estate — both commercial and residential — in the United States.

Thomas Carlyle (1795-1881)

With news like this, it is no wonder that Thomas Carlyle called economics  the “dismal science.”

But the prospects are not necessarily all bad.

Our firm has not done any in-depth research on these “survival secrets,” but four characteristics appear to be consistent in our observations of the “survivors” among real estate practices in smaller law firms in smaller markets in the U.S:

• First, there is a strong correlation between the absence of a real estate bubble in these smaller markets in 2005-2007 and the relative mildness of the impact on the local real estate markets now.

• Second, the real estate practices that appear to have done the best are in firms that had already established themselves as having specialized real estate practices — not just one or two lawyers who “do real estate work.”  This does not mean that a firm has to be a real estate boutique to be successful; but real estate law must be more than a sideline.

• Third, most of these firms operate ancillary title insurance businesses, which frequently reflects an integrated, and usually more profitable, approach to the management of a real estate practice than one might find in a law firm without an ancillary business.

• Finally, most of these firms have well-established banking practices, supported by long-term client relationships.

These four elements are not a guaranteed recipe for continued survival and future success.  However, they do suggest a possible strategy for smaller law firms that want to have competitive and economically viable real estate practices in what promises to be another bad year.

Norman Clark

A partner from a law firm in a small legal market (under 500,000 people) in the United States asked me this question a few days ago.

The answer is really one of definition. While the term  “general practice” is relatively benign, claiming to be “full service” can be toxic for a small law firm.

Business clients, even in smaller communities, are rightfully skeptical of small firms (which, for purposes of this discussion, includes firms of up to 20 lawyers) that advertise  expertise or significant experience in dozens of practice specialties.  When probed, many of these claims are based on one case or one transaction that might have happened years ago.

Our firm works with smaller law firms, both in the United States and worldwide, to develop and execute marketing strategies that work in smaller legal markets.  Our experience and observations suggest three points that a small law firm should consider:

• Avoid the temptation to tout yourselves as a “full service law firm.” Not only does such a claim lack credibility among sophisticated business clients and high net-worth personal clients; it can also unnecessarily raise their skepticism among the things that you really do well. And no news travels faster in a small market than the experience of a client who has been disappointed by mediocre performance or poor client service.
• Focus on the client sectors in which you are already strong.  If some of your best clients are, for example, in the construction industry, be sure that you understand their businesses better than any of your competitors.
• Don’t be afraid to refer a client to a competitor for work that is outside your area of expertise. Of course, there is a risk that the competitor might “steal” you client. If that happens, it probably was likely to happen even without the referral. The much higher probability is that sending a client to another firm, when you cannot give the client the best possible service, will actually increase the loyalty of that client to your firm, as well as make the client more likely to refer you to others.

The risk to small law firms that try to do it all is that you usually end up doing nothing particularly well. This is a sure formula for invisibility in the competition for the types of potential clients that your firm needs the most.

Norman Clark

“We all know that we should be cross-marketing and cross-selling, but we’re just so bad at actually doing it.” I frequently hear comments like this from law firm partners.

There are a number of reasons why a law firm can be so bad at cross-marketing.

• Lack of available, shared information about the best cross-marketing opportunities
• A partnership culture that produces a “my client” mentality rather than “our client”
• A partner compensation systems that do not reward — and in some cases discourage — cross-marketing
• Lack of adequate marketing support
• A misdirected marketing strategy that focuses on opportunities with relatively low return on investment

All of these are important factors; but, in our experience, the most important obstacle of all is simply that the partners lack the basic skills to work together as a high-performing business team. Unless and until partners can learn to organize themselves for the achievement of specific goals, manage internal disagreements productively, and build genuine trust based on the free flow of information and ideas, they will never — repeat never — achieve their full potential, whether at cross-marketing or any other worthwhile goal.

This sounds like a dogmatic statement, but there is simply too much overwhelming evidence — both in law firms and in other businesses — that supports the importance of group development as the make-or-break factor in the ability of a business group — like a group of partners or a practice group — to achieve its goals.

To quote the American comic strip character, Pogo, “We have met the enemy and he is us.”

The good news is that business groups develop their achievement potential through specific behaviors and skills that can be learned and improved with practice.

To learn more about how to do this, contact Lisa Walker Johnson by e-mail or through the walkerclark.com website.

Norman Clark

Why don’t more law firms conduct client surveys?

Our firm has been researching that issue continuously for the past five years, through surveys (of course!) and also hundreds of informal discussions with law firm managers and marketing directors.

Some law firms are simply afraid to ask for feedback.  They are not relevant to this issue because, refusing to solicit feedback in a systematic way, they are doomed to crisis-to-crisis improvisation and, ultimately, the deterioration of their client base and market position.

However, when we ask people from healthier firms why they have not conducted a formal client survey within the past five years (or, in a shocking percentage of instances, never!), we usually hear three excuses.  Each one of these reasons seems to make good business sense, but has been disproven by the experiences of successful law firms throughout the world.

“Clients already have to fill out too many surveys.  The won’t participate in ours.”

Most clients see a significant difference in a survey conducted by a hotel chain and a serious survey conducted by a law firm.  When clients fail to participate in a survey conducted by their law firms, it is frequently because:

• The survey questions are trivial; or
• They are not confident that their answers will make a difference.

Law firms that send out generic surveys usually learn this lesson the hard way.  Surveys that might work well in ordinary consumer businesses can completely miss the key points with respect to quality in legal services.  This is why we recommend that your survey be designed for a law firm — not a hotel chain — and  be tailored to the specific characteristics, practice specialties, and client base of your firm.

The truth is that even the busiest clients like to be asked for their opinions.  If at all possible, even busy clients will try to find time to answer serious questions.  However, questions such as “Do you like our website?” and “Are our fees fair?” (I am not making these up.) usually drive clients away.

A good law firm client survey should be as sophisticated and thoughtful as the clients to whom it is sent.

“Client surveys are too expensive and too much work.”

Like all myths, this one has a kernel of truth.  Client surveys used to be expensive and time-consuming.  With on-line survey administration and tabulation, a custom-designed survey, including an in-depth analytical report and benchmarking to other law firms, can be conducted at a cost that most law firms can recover, several times over, with one new client or one new matter. Whether you design and conduct the survey yourselves or outsource it to a firm like Walker Clark, your firm cannot afford not to conduct a client survey.

“Surveys don’t produce results.”

This myth also can be true if you merely read the survey and do nothing about it. The most important part of a client survey is the follow-up, both with the clients and internally. Even a dissatisfied client can become one of your firm’s biggest fans if you follow up specifically and systematically concerning the points of dissatisfaction.

Specific follow-up means responding promptly to the client about the client’s concerns. Systematic follow-up means making improvements in your firm’s internal operations and client relations practices to ensure that similar problems do not arise in the future.

What to expect from a survey service provider

Every Walker Clark survey, from our low-cost high-yield Snapshot survey (which we offer to any firm for a fixed fee of US$ 800) to our most sophisticated survey service, the Strategic Business Development Survey, offers these basic components:

• A predictable fixed fee
• Multilingual capabilities
• Customized, firm-specific questions
• Comparison of your results to benchmarks
• A written analytical report with specific recommendations for follow-up
• Post-survey advice and assistance with implementation

These features can turn a client survey from a marginal marketing exercise to a low-cost investment that pays for itself with one or two new instructions and can produce a higher return on investment than almost any other marketing activity.  They can also help your firm to identify opportunities to improve the cost-effectiveness and profitability of your internal operations, by responding to and meeting the clients’ needs and expectations better.

Visit the Walker Clark website for more information and examples.

Norman Clark

The Law Firm Management Committee of the International Bar Association will participate in two outstanding legal management conferences in South America in June.

• Contemporary Management Issues in International Arbitration and Dispute Resolution Practices – Saturday, 12 June 2010, in Asunción, Paraguay.  This is a half-day roundtable conference aimed at the special challenges in the management of international arbitration and dispute resolution practices in law firms.  It is presented in association with CEDEP (Center for Studies in Law, Economics, and Politics), one of South America’s premier continuing professional education organizations.  It is part of the annual multi-day conference on international arbitration, which organizers expect to draw approximately 1,000 lawyers from Latin America and abroad.
• Managing a Modern Law Firm - Monday, 14 June 2010, in Buenos Aires, Argentina.  This one-day conference, co-sponsored by the IBA Latin American Forum, will investigate four key challenges for law firms in the decades of the 2010s:  (1) a business approach to strategic development of the firm; (2) marketing; (3) associate career management; and (4) management of knowledge and know-how.

For more information, please click on the two links above.

Norman Clark

Save the date!

The Law Firm Management Committee of the International Bar Association, in association with the IBA Latin American Regional Forum, will present a one-day conference on contemporary issues in law firm management in Buenos Aires, Argentina, on 14 June 2010.

The conference will focus on four timely subjects, each of which has a profound influence on the business performance and profitability of law firms everywhere:

• How to write, implement and measure results of a marketing plan
• Applying a business approach to strategic and tactical development of a law firm
• Career management:  What do associates need?
• Know-how management in a small or medium law firm

My Walker Clark colleague, Fernando Moreno — one of the top experts on law firm marketing strategy and tactics worldwide — will be speaking during the session on writing, implementing, and measuring the results of marketing plans.  I will participate in the session on a business approach to strategy and tactics. Other participants will include highly successful law firm leaders and managers.

This conference is designed for managing partners, practice group leaders, and law firm managers and their advisors.  For more information go to the IBA website. It also will be one of the premier networking opportunities to meet and become better known among the leaders of leading law firms throughout the Americas.

Norman Clark

This is the final posting in a series about the characteristics of successful quality assurance programs in law firms.

How does one measure the success of a quality assurance program? When Walker Clark advises a law firm, we tell the partners to look for these indicators:

• Improved productivity by fee earners — because they can spend more time on billable work and less time fixing mistakes and responding to client complaints
• Higher collections realization rates — because the firm now manages the major reasons for fee write-downs and write-offs
• Higher levels of client satisfaction – because the firm meets or exceeds client expectations and gets things done right the first time
• Competitive advantage – because the firm can demonstrate quality, rather than just mumble slogans about it

As the previous parts of this series suggest, serious quality management is a challenge for most law firms.  People have to discard bad habits.  They have to sharpen their thinking about the routine work that they do every day.  In some instances, lawyers need to change some of their long-held, fundamental ideas about what constitutes quality in a legal service.

Quality management often involves a set of discrete journeys that a law firm must make…

• From considering errors and mistakes as failures to be hidden — to viewing them as data-rich opportunities to reduce or eliminate them in the future
• From assigning blame — to finding solutions
• From viewing quality in legal services as something that only a lawyer can define — to understanding quality in terms of the client’s needs, expectations, and perceptions

Each of these requires a profound cultural change for most law firms. It is a necessary change, as well; because law firms that are unable to manage serious cultural change are doomed to declining competitive performance and, eventually, irrelevance in the fast-changing, highly competitive legal markets of the 2010s.

The “quality assurance” culture also requires a seriousness of purpose and an ongoing commitment to the procedures and methods. Partners must be highly visible in their support for, and compliance, with the quality assurance program. They must reinforce among junior members of the firm that quality assurance is everyone’s job and is important to the business success of the firm.

Like most worthwhile investments, quality assurance sometimes is not easy, especially because of the cultural changes that it sometimes requires. But that effort produces profound and positive results that are:

• Long-term and sustainable
• Beneficial to almost every aspect of law firm operations
• Measurable in terms of dramatic improvements to profitability and financial performance.

Norman Clark

As I was reading the weekly feed of law firm press releases from Latin Counsel this morning, I recalled how few law firms bother with this time-honored, but largely overlooked marketing tool.

A press release is an excellent low-cost way to improve your firm’s “targeted” visibility. By “targeted visibility” I refer to the process of getting a specific area of professional expertise in front of the eyes and into the minds of a specific audience of clients and potential clients.

Our experience in Walker Clark, LLC, has been just the opposite of the old myth that “Nobody ever reads press releases.”

For one thing, we read them — hundreds of them — every week. Walker Clark has a highly specialized market research service for law firms and corporate law departments. This requires that we must be continuously researching legal markets and law firms in other jurisdictions. Sometimes the research is focused on identifying potential strategic allies or even potential merger partners. Sometimes we are advising a law firm or law department about potential local counsel in another country. The point is that we need specific, accurate, and timely information. Press releases are one of our major sources of detailed information about a law firm’s expertise, experience, and service capabilities.

The great value of press releases is that they can take your firm beyond slogans and assertions on your website or in your brochure. They can also improve the visibility of individual professional service providers in your firm. Thanks to the scope and self-replicating nature of the internet, press releases are also one of the most cost-effective marketing tools available. The cost of publishing a press release can be almost non-existent — less than the cost of printing a single copy of a brochure.

The return can be substantial. One of our law firm clients recently told me that a single press release was the decisive factor in their beating an equally well-qualified competitor for a major project finance engagement. In fact, the fees from that project were sufficient to cover the firm’s entire marketing budget — for three years!

Nobody reads press releases? Think again.

Norman Clark

For more information about Walker Clark market research services, or to learn how our firm can help you integrate press releases into your marketing strategy, please contact me directly by e-mail or by telephone at +1-239-466-8370.  (For security purposes, the e-mail link will take you first to a validation page on a third-party website.)

If one picture is worth a thousand words, a stupid picture is worth a million.

Yesterday, our office received a brochure from a vendor to the consulting psychology profession. It was marketing a certification program to help people improve “leadership abilities and inspire greatness throughout an entire organization.”

Every photograph in the brochure was of a person who was white and of European or American ethnic background. The only diversity was hair color. There was not a single person of color — or even someone who might faintly suggest an ancestry other than northern European. Not even someone who looked even vaguely Latino!

Is this their visualization of leaders in a “great” organization?  No Asians or Africans need apply?

And this was from a company based in California, one of the most diverse and culturally aware states in the United States!

So what subtle message is your law firm’s website transmitting?

Is this the image you want to project?

Are you visually communicating a “thousand words” about being a diverse, progressive organization that welcomes people of different backgrounds and points of view?  Are you non-verbally reassuring people who have origins elsewhere in the world that they are welcome as clients?

You might might respond, “That’s not rational.”  You would be correct. There is a non-rational component even in the decision to purchase sophisticated legal services. In today’s international legal market, in which hundreds of good law firms and thousands of excellent lawyers compete, such subtleties could make an “irrational” but nonetheless decisive difference.

The vendor who sent that offensive brochure to our firm did not mean to suggest that only white people could lead  a “great” organization.  Nonetheless that was the non-verbal suggestion that comes through, particularly to people who are not white or of European background.

In all but the most extreme cases, the exclusion of non-Europeans from websites in North America and Europe is not intentional or malicious. However, for law firms that are actively trying to attract international clients — particularly multinational companies that consider their diversity be one of their most valuable assets –  such oversights might betray an indifference to, and lack of awareness of, the world around them. For some companies, a demonstrated commitment to diversity might also be a selection criterion for their outside law firms.

If these are merely benign oversights, why all the fuss about these stock photographs of people who are not even members of the firm? Please read the next paragraph carefully

Even with the very best of intentions, lawyers in North America and Europe who have enjoyed a cultural “white privilege” or “male privilege” all of their lives sometimes fail to appreciate how such images might be viewed differently by someone who has been disqualified by ethnicity or gender from such benefits. Even in countries with extensive civil rights laws and a general cultural revulsion at discrimination and bigotry, “white privilege” and “male privilege” remain social facts.

There is nothing wrong with having pictures of  “ordinary” people (not members of the firms or clients) on a law firm website (or a management consulting firm website like www.walkerclark.com). They can communicate personal warmth, humanity, and welcome. However, be sure that these same images do not also subtly communicate a million stupid words that you would never intend and would be horrified to hear yourself utter.

Norman Clark