Posted on September 23, 2004 by Larry Bodine

The Evolution of Sales in Law Firms

Writer Cary Griffith has written an excellent article about the advent of sales in law firms, entitled "The Law Firm Marketing Director: Breaking New Ground?" on Lawcrossing.com, at
http://www.lawcrossing.com/advice44.php.

He writes:

"Twenty years ago, most lawyers believed their work was somehow different from the rest of American business. The same tools, activities, and practices that characterized the competitive marketplace didn't apply to law firms or the practice of law. Today, that perspective has been turned upside down, paving the way for a revolution in the advertising, sale, and promotion of legal services."

But since 2001, everything changed when the first law firm (Womble Carlyle) hired a sales director. The article describes how more than 100 law firm marketers flocked to a program in February 2003 for a presentation and discussion of what could be a new trend in law firm business development -- the sales director.

The author He caught up with Mark Cowan, the Partner in charge of Sales at Patton Boggs in a Grand Rapids hotel room, where he was attending to the business of his firm. It's a great interview.

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Posted on September 16, 2004 by Larry Bodine

The unsung heroes

Reprinted from the 17 September 2004 issue of Legal Week. http://www.legalweek.net/ViewItem.asp?id=21304

Nigel_knowles
The managing partners' forum has produced the first league table of practice management professionals. Nigel Knowles, Ed Smith and Richard Chaplin urge firms to re-think the way they distinguish their 'fee earning' lawyers from their other staff, who they argue are the firm's 'unsung heroes.'

Nigel Knowles is managing partner of DLA and MPF chair, Ed Smith is a senior partner of PricewaterhouseCoopers and an MPF committee member, and Richard Chaplin is MPF founder & executive director.

The Managing Partners' Forum (MPF), the association for leaders and their management teams in professional firms, has long recognised that a firm's people are fundamental to its success. Any leader, whether called MP, CEO, chairman or practice director, has to rely on management disciplines if the firm is to achieve its goals.

Traditionally, partners were given management roles such as marketing, finance or staff partner. However, this was progressively seen as a poor use of valuable partner time, combined with a higher risk of the firm making costly mistakes through the actions of enthusiastic amateurs. In addition, the leading professional firms have grown rapidly over the last 20 years and are now complex businesses that employ many thousands of people. This leads to the need for greater focus on 'the firm' rather than on 'the partners'.

In theory, a partnership stands for collaboration and team work; in practice, many partners are highly competitive animals, focusing on client-based financial measures to determine relative status and reward. If partners see success in these terms, it is hardly surprising that those who neither directly bring in fees nor deliver services to clients are referred to in pejorative terms; for example, as a 'non-fee earner'. This highlights two key points:

  • Language conveys messages: 'non' indicates that something is not important, not valued; it is a negative and not a positive. Chargeable as opposed to non-chargeable time suggests that non-chargeable is less relevant than chargeable; it probably is if you are an assistant solicitor, but most definitely is not for a department head. Differentiation between fee earners and non-fee earners, talk about support staff, lawyers and non-lawyers, all reflect the culture of the past. Even in a firm where this terminology has been changed, it persists and is deeply rooted in people's minds.

  • The notion that bringing in fees and delivering client service are superior to all other roles when evaluating a contribution to a business is probably unique to the professions. CEOs of top commercial organisations are not expected to join the production line, serve customers over the counter or answer calls from the general public. Their role is to articulate and promote the organisation's strategy, manage relationships with key employees, clients and other stake holders, and foster an environment and culture where everyone gives their best. The MPF believes that a law firm leader should provide a similar contribution to the business.

    As law firms grew rapidly over the past decade, with concomitant management challenges, hiring a cadre of specialists in marketing, finance, HR etc ceased being a luxury and has became a necessity. Finance partner and similar roles have been retained, but with a new emphasis on making life easier for their hired professionals. While there is also a changing attitude towards such staff, the second-class citizen syndrome still exists in pockets (and some large pockets at that). There are also many leading firms where they are now recognised as critical team players.

    The MPF believes that marketing, human resources, finance, IT, facilities and knowledge professionals are unsung heroes. We have therefore embarked on a public campaign to change attitudes in the professions towards what we believe should more accurately be called 'practice management professionals'. We also believe that the term 'fee earner' with its emphasis on billing should be replaced by 'client service professional'.

    The first task in the MPF 'unsung heroes' campaign has been to establish the demographics, i.e. how many practice management professionals work in the legal sector. Some firms are reticent to disclose this data on the grounds that it is 'commercially sensitive', 'mixes apples with pears' or 'does not compensate for outsourcing'. It is unclear if this reaction is positive ('these people really are important to us') or defensive ('the MP would not want to be seen internally to have hired more of them than the competition'). Nevertheless, we have persevered to produce the UK's first law firm league table of practice management professionals ( see table, pages 14-15). This shows that the largest 100 firms by size had a total of 37,022 client service professionals and 32,564 practice management professionals. A summary is set out below.

    The MPF believes that these ratios will help any firm of any size to plan the composition of its practice management team. Having established the demographics, the aim of the MPF 'unsung heroes' campaign is to ensure that the legal sector continues to attract and retain quality people from finance, marketing and other disciplines. The growth to date has been phenomenal; for example, in early 1989 there were only five people marketing UK law firms who were not lawyers, compared with more than 1,300 in the top 100 firms today. But demand is still strong because the legal sector is one of the few in which the UK remains a world class player. This demand comes from larger firms beefing up divisional capacity and medium-sized firms recognising that it makes commercial sense to hire more practice management professionals, especially now that there is a pool of talent in larger firms that is looking for a new challenge or greater autonomy.

    Three strategies are critical to the MPF 'unsung heroes' campaign.

  • Communicate to the whole firm. Firms send out hundreds of press releases on client matters, partner promotions, new offices and suchlike. Yet all too often the appointment of a senior practice management professional merits nothing more than an internal memo. We are therefore working closely with the PM forum -- the world's largest association of marketers in the professions -- to encourage them to rebalance press releases and internal communication to cover the whole firm.

  • Give the right message to potential recruits. A recent advertisement for a senior practice management professional by a top 20 law firm included the comment that the role would be 'the most important position in the firm after the partners'. The firm might have meant it positively, but many candidates would have taken it as instant confirmation of their second-class status and looked elsewhere. We are therefore working closely with the Professional Personnel Forum -- the association of HR leaders in the professions -- and with leading recruitment consultants to put across the message that the legal sector respects its practice management professionals.

  • Praise success. Talking about a problem is easy; showing others that you care is far harder. For the past three years, the MPF has organised annual European Practice Management Awards. In contrast to the empty celebrations that are common with most sector awards, the MPF awards are intended as a public signal that the professions appreciate the contribution of their practice management professionals. The awards cover all management disciplines, with blue chip sponsors such as the FT, Royal Bank of Scotland and the Commission for Racial Equality. 2003 winners included firms such as DLA, Eversheds, Latham & Watkins, and Taylor Wessing -- plus the Big Four and other accountancy firms. It is heartening that firms are taking these awards so seriously, with the judges commenting on the consistently high quality of entries.

    There is also a defensive aspect to the MPF 'unsung heroes' campaign. Most partners now recognise that it would be almost impossible to manage a modern professional firm without involving dedicated people from finance, HR, marketing, IT and other disciplines. Their participation helps a firm to achieve its fee and profit targets, as well as making sure that client service professionals' time is spent in the market with clients and prospects. In an environment of increased regulation, ever higher demands for technical and professional training to support quality, and huge demand for qualified professionals in practice and in the corporate and public sector worlds, we know an effective cadre of practice management professionals is vital. Their absence would mean a firm is less likely to achieve its targets ... with predictable consequences.

    So we advocate that law firm leaders across the board must recognise 'horses for courses', and make a real effort to praise their own practice management professionals as well as partners are praised on a regular basis. Avoid making potential recruits feel like second-class citizens before they walk through the door. Make unsung hero recognition your firm's official policy. And, if you work for a firm with ambition, make a stand and join the MPF movement.

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    • Posted on September 16, 2004 by Larry Bodine

    MPF unsung heroes campaign

    Following this week's Financial Times article, the response to the Managing Partners' Forum's public call for respect for practice management professionals has been fantastic. Here is a selection:

    "Glad to see you are tackling this. I have been on about it for the last five or more years - non-chargeable, non professional, non fee earning, non people etc. I love being a non person, especially one with management responsibilities over lawyers." CEO, Top 100 law firm
    "In management consultancy/IT services we have fought a long battle over the years to establish respect and credibility for marketing....the law and accountancy firms appear to be about 10 years behind the needs of their marketplace in this respect...." Head of Marketing, Communications and High Tech Operating Group, management consultancy
    "Good stuff! It was also sent to me by our global COO, so that's encouraging." HR Director, Magic Circle law firm
    "This is a really important theme." Global Director of Research & Knowledge Management, management consultancy
    "I am delighted to receive the latest news on this initiative and anything that I can do to help, just let me know. It has been a thorn in my side for many years and your description of "second class citizen" will strike a chord with many of us out there." Client Services Manager, insolvency practitioners
    "It's simple really but the arrogant professional is too up his own a**e to understand but we know that without support they wouldn't have a hope in hell doing their job properly. I support your campaign!" Former Managing Partner, accountancy
    "What a marvelous idea - I would be keen to get involved in your campaign having long felt like an "also ran" in a firm where the emphasis is on fee earners rather than others....." Marketing Executive, Top 200 law firm
    "This is very helpful. I am currently undertaking an audit of our HR department in an effort to build on PR profile internally and enhance our reputation." UK HR Director, Top 10 US law firm
    "Saw it this morning when I was eating my breakfast and smiled!" Executive Manager, Magic Circle law firm
    "Having been in professional service and general management for 15 years, I will help champion this cause in any way I can." Director of Business Strategy, Top 50 law firm
    "If you think it's bad in the UK, you want to see what it's like here in the US!" Global Marketing Director, Top 100 law firm

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    Posted on September 14, 2004 by Larry Bodine

    Top firms urged to respect non-legal workers

    From the Financial Times, September 13, 2004
    Top firms urged to respect non-legal workers
    By Bob Sherwood
    http://news.ft.com/cms/s/f8a6544a-0523-11d9-8f8e-00000e2511c8.html

    Top [London] City lawyers treat their support, IT, finance and human resources staff as second-class citizens and give them pejorative labels, according to the main association of law firm chiefs.

    Instead of encouraging the non-lawyers who are critical to the smooth running of firms, most practices are rooted in the past, with staff labeled "non-fee earners" and treated as inferiors, the Managing Partners Forum [a sister organization of the PM Forum] will say this week.

    To tackle the cultural divide, the forum is launching an "unsung heroes" campaign to urge lawyers to treat their employees better.

    As firms have evolved into complex, often international, organizations, they have increasingly recruited human resources, IT, finance, management, marketing and research professionals to help run their businesses. But many are not given the respect they deserve, the forum says.

    Nigel Knowles, managing partner of DLA, a corporate law firm and chairman of the forum, said many partners were "highly competitive" and determined status and rewards by how much clients were billed. In that environment, he said, "it is hardly surprising that those who neither directly bring in fees nor deliver services to clients are referred to in pejorative terms, for example 'non-fee earner'".

    In an article in Legal Week, the trade magazine, Mr. Knowles says: "Differentiation between fee earners and non-fee earners, talk about support staff, lawyers and non-lawyers, all reflect a culture of the past. Even in a firm where this terminology has been changed, it persists."

    To kick-start the campaign, the forum has conducted the first analysis of non-legal staff, revealing that the top 100 firms employ about 32,500 "practice management professionals", compared with 36,700 client-serving lawyers. Of the total, more than 15,500 are secretaries, 3,248 work in finance and accounts, 3,147 in IT, 1,528 in HR and training, and 1,300 in marketing and public relations.

    Mr Knowles adds: "As firms grew rapidly over the past decade ...hiring a cadre of specialists in marketing, finance, HR etc ceased being a luxury and has become a necessity . . . Whilst there is also a changing attitude towards such staff, the second-class citizen syndrome still exists in pockets, and some large pockets at that."

    The forum says firms need to change their attitude if they are to recruit and retain the caliber of non-legal professionals they need.

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    Posted on September 2, 2004 by Larry Bodine

    "Bird's Eye" View

    I just got my copy of the e-mail newsletter the BDI Bird, published by the Business Development Institute of New York. Their Interview of the Month focuses on Yours Truly.

    Take a look online at http://www.bdionline.com/newsletters/newsletter.asp?nid=114&sid=864&mid=434 to find out:

  • How law firm marketing needs differ from other professional services firms
  • How law firms are approaching marketing and business development initiatives differently today than 3-5 years ago
  • The biggest mistake law firms make with regard to their online marketing efforts and the development of their web site presence
  • Significant trends shaping the next 5 years of marketing within the professional services industry
  • The single piece of marketing advice I would give to a growing professional services firm.

    • BDI is a members-only organization that produces a diverse and comprehensive slate of executive events and conferences. The one you should not miss is on November 3rd - Relationship Marketing Conference For Professional Service Firms. BDI and the PM Forum North America invite you to join us for this special one-day symposium devoted to exploring how to effectively build and maintain breakthrough relationships that generate new and sustainable business in the professional services sector.

    This executive event will get to the heart of the latest techniques in Relationship Marketing and examine the leading strategies and technologies that professional service firms are leveraging to open new doors and maximize the return on one of the most valuable assets they possess - their relationships. Click here for more information and to register: www.bdionline.com/rm

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    Posted on September 1, 2004 by Larry Bodine

    Accounting Firms Face Competition from Emerging "Third Tier"

    A "third tier" of accounting firms is emerging to offer middle-market companies an alternative to the Big Four and other national firms, according to Inside Public Accounting's 14th Annual Analysis of Firms. The Third Tier firms will manifest an increasingly formidable competitive force for the national firms, as well as for small and mid-size local and regional firms, according to IPA research.

    "IPA currently defines Third Tier firms as local and regional firms with $90 million to $349 million in net revenue," said Julie Lindy, editor. "Ten firms currently fall into our definition of Third Tier."

    "The Third Tier enjoys $1.53 billion in net revenue, compared to $2.3 billion for the Second Tier -- that is, non-Big Four national firms such as Grant Thornton and BDO Seidman. The Second Tier's revenue grew 4.5% in FY03-04 -- respectable, perhaps, but puny compared to the Third Tier's 13.2%"

    If current trends continue. Third Tier firms soon may overtake the Second Tier in revenue, Lindy projects. The largest Third Tier firm, Indianapolis-based Crowe Group, is within $82 million of overtaking BDO Seidman, and it already generates more revenue than either BDO or RSM McGladrey did a mere five years ago.

    "Much of the Third Tier's revenue growth can be attributed to mergers, but it's also being fueled by work resulting from passage of the Sarbanes-Oxley Act of 2002, which -- among other provisions -- prohibits accounting firms from performing certain consulting engagements for publicly held audit clients," said Martha Sawyer, president of Hudson Sawyer, publisher of IPA.

    Simple marketing strategy

    The strategy of Third Tier firms is very simple:

    * Compete effectively for middle-market clients by delivering better client service than the national firms do
    * Provide strong niches
    * Offer competitive pricing
    * Feature a hearty menu of services.
    These firms have become fierce competitors for regional dominance and talent, and they tend to have long-term leaders who have entrepreneurial vision and the ability to execute their strategic plans, according to Lindy.

    In some cases. Third Tier firms are growing beyond their home regions. For example, Reznick, Fedder & Silverman of Bethesda, Md., opened a West Coast office in Sacramento, Calif., this year, and Indianapolis-based Crowe Group has offices in Florida and New Jersey.

    The power of the Third Tier puts the squeeze on local firms and smaller regionals as well as on the national firms. With their deep pockets, diverse specialties and a wide range of expertise, they're formidable competitors to smaller firms with more constraints on their resources. Several such firms already have decided to join 'em since they can't beat 'em -- at least not often enough -- and many more will do so in the future: Third Tier firms aren't shy about making deals with other accounting firms.

    The challenge for Third Tier firms will be to stay on course. Many a firm has been doomed by its own ambition and its own growth. To maintain their competitive advantage. Third Tier firms must maintain their regional dominance, their tradition of steady leadership and avoid the bureaucracies and ethical missteps that have plagued the national firms.

    Inside Public Accounting, founded in 1987, is published by Hudson Sawyer in Atlanta, GA. It reports and analyzes the news, trends, strategies and politics that affect the nation's public accounting firms, providing them with the information and resources they need to compete and operate more profitably. You can reach Julie Lindy at mhsawyer@hudsonsawyer.com, and at (404) 264-9977.

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