Question: We are a five attorney personal injury plaintiff firm in the midwest. In the last few years we have gone through tort reform, increase competition from other law firms doing extensive advertising, and now trying to weather the recession. From a profitability standpoint – we are holding our own. However, we are concerned about the future. While we do not want to be a high volume PI advertising factory – we believe we need to be doing something different. Do you have any suggestions on how we should plan our future?
Response: The majority of our PI law firm clients are advising that they are having to work much harder at getting clients and investing more heavily in marketing – both time and money. PI firms were feeling the most of these challenges before the recession. However, the recession may accelerate the pace with which law firms reevaluate existing processes and consider new business models. PI firms may want to begin by:
John W. Olmstead, MBA, Ph.D, CMC
Question:
I am a member of a three attorney firm. I think that we know where we are as a firm, where we want to be, but we don't know how to get to the next level. Do you have any ideas?
Response:
Rather than following the pack – attorneys need to find ways in which their firms can "dare to be different."
Many attorneys are providing the same service – solving the same sort of legal problems for their clients using similar tools strategies/approaches. To many clients – attorneys all look the same. What can you do to stand out?
Marketing is about more than just promoting the firm to get clients. It is also about deciding on:
Effective marketing requires a mix of the above elements in your plan and then effectively communicated.
Many attorneys suffer from random (unplanned) acts of marketing or business development. To be effective you need to be well focused, have a plan to focus the firm's efforts, and be disciplined and make excellent use of your professional time. Often the largest marketing investment is not advertising or the cost of other marketing vehicles – it is the cost of you non-billable (or investment) time.
A business/marketing plan (10 pages or less) for the firm can do wonders.
Sit down with the other attorneys in the firm, do some brainstorming away from the office, and put a plan together. Then work the plan.
John W. Olmstead, MBA, Ph.D, CMC
Question: During a recent firm meeting one of our partners asked what the firm could do to be different than every other law firm. What are your thoughts?
Response:
Creating a competitive advantage that is sustainable over time is difficult at best. It is so easy for your competitors to copycat your recent innovations. Clients of law firms advise us that they hire the lawyer – not the firm. However, this only partly true. The firm – its image – its brand – provides a backdrop for the individual attorneys marketing efforts as well – makes marketing easier – and provides backup and bench strength that many clients require before retaining a lawyer.
In general the law firm is faced with the dual challenge of developing a reputation (brand) at both the firm and the individual lawyer level. In general – client delivery practices and behaviors that are part of the firm's core values and have been burned into the firm's cultural fabric are the hardest to copycat.
Areas in which you can consider differentiation strategies:
John W. Olmstead, MBA, Ph.D, CMC
Question: What are some ideas that our eight attorney should be doing to improve profitability?
Response:
Use the RULES formula to focus your effort.
R = Realization rate or effective rate per hour.
U = Utilization – billable hours or case production hours.
L = Leverage – ratio of partners to other timekeepers.
E = Expenses – overhead.
S = Speed – collection cycle – converting work to bills and bills to cash.
Profitable law firms have an appropriate mix of each of these profitability levers. Compare against internal and external benchmarks and determine which of the levers require attention. Usually expenses is not the primary problem – in fact many firms should be spending more in the form of investment. Usually the primary focus should be on improving:
Many firms need to increase case/matter volume through better client development and marketing to be able to obtain higher leverage ratios.
John W. Olmstead, MBA, Ph.D, CMC