Law Firm Marketing Consultant : Larry Bodine Law Marketing Blog : Law firm marketing, legal marketing, attorney marketing, business development, sales training, practice development, training, marketing consultant, legal consultant, individual lawyer coaching, business development, client team, practice development, business development, law firm coach

How important is business development to law firms? Very – with most law firms getting 11% to 25% of their annual revenue from new clients, according to the new study Fees and Pricing Benchmark Report published by RainToday.com Research. The report is a treasure trove of key data about how much law firms charge and how much they earn.

The new report about law firms and the legal profession contains:

• 51 pages of commentary and analysis.
• 51 charts and tables that explicitly detail surprising findings.
• 7 major pricing recommendations to recharge your marketing and sales outreach.

Median fees and discounts

Universally, the bigger the law firm, the higher its rates, according to the research. For example the median rate for larger law firms earning more than $10 million per year was $525 per hour for the highest-level partners and $200 for entry-level associates. For smaller firms earning less than $10 million per year, the median rate was $300 for the highest-level lawyers and $175 for entry level lawyers.

However, discounting is common practice. While some respondents criticized the practice of discounting in their survey comments, 76% of all firms discount their fees versus published rates, or rates they might have mentioned in an initial client conversation — with the average discount amounting to 9.9%.

Order your own copy of this essential research.  Learn if you can raise your fees today.  Visit the LawMarketing Store for more information.

Standard rates vs. the actual rates differ for top-level lawyers. For those firms that use a standard set of hourly billable rates for their lawyers—either published or for internal use only—the median average realized hourly rate for highest-level lawyers is 6% less than the standard or published rate ($400 vs. $375), and for upper-level lawyers the median actual rate is 9% less. For all other levels of lawyers, there is no difference between the standard and realized rate. (See Figure 3.4 and 3.5)

For the rest of the story and the charts visit the LawMarketing Portal at www.lawmarketing.com

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Law firm marketers are facing increasing pressure to justify their budgets and sometimes their very existence, according to a new report, "10 Megatrends in B2B Marketing 2008" published by The Economist Intelligence Unit Limited.

"The promise of intangible or uncertain returns is unacceptable to hard-headed executives, particularly in accounting, law and other professional service firms. To cope, marketing is forming close partnerships with sales and engaging in field sales marketing that can be shown to deliver concrete bottom line results.

"Only 39% of executives today say they closely measure the ROI of their marketing spending. But in three to five years, the figures will more than double, to a staggering 89%. In line with this trend, B2B executives are developing systems to quantify the ROI of thought leadership—from measuring click-through rates on the Web to the number of sales leads and closed deals.

"As one marketing director elaborates, “it’s no longer enough merely justifying the ROI of a campaign.” Increasingly, he insists, “you have to justify the ROI of the whole marketing function.” In es­sence, marketing executives are developing an ROI obsession.

"Moreover, she adds, there are many ways where measurement can improve. For example, “if we organize a meeting, we can track the number of attendees, the number of sales leads and sales calls. Or if we sponsor a white paper, we can track how many times we’re quoted in the press, how many executives request a copy of the report, does it lead to speak­ing engagements or meetings with target executives.”

Ultimately, says the executive, “we may not be able to attribute all of the revenue that is derived from a thought leadership sponsorship program or a print promotion, but we can get some good readings and that can help us with future choices relating to how we market ourselves.”

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The Center for Competitive Management (CCM) is also conducting a survey on alternative billing methods, and they'd like hear from you. Your input is vital to the success of the survey. Please take a few minutes to fill out the survey. In exchange for your valuable feedback, you will receive a complimentary summary of the results.

Click here to take the survey: Alternative Billing Survey.

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Bruce Marcus has a great article about the economic downturn. I love his analogy:

"An economy is an hydraulic system – a closed system in which pressure at one end translates into pressure elsewhere in the system. In other words, nothing happens in an economy without reactions elsewhere in the system. In economics, there’s the added element of fear. Fear of the known and fear of the unknown, which is the worst kind, and adds to the pressure."

Here's his advice for lawyers and accountants:

Are there defensive measures to be taken? Yes (except maybe for those lawyers and accountants invested in mortgage backed securities). The answer lies in firm management. And do it now – before the deluge hits your firm.

• First, reassess the situation. Check your client list for potential weak companies. Weak companies that may be caught up in the economic downturn become slow payers, and then no payers. Either increase collection methods, or be prepared to let them go and cut your losses.
• Second, check your firm. You don’t want to give up real talent, but in today’s climate, you don’t want to carry staff (including partners) who aren’t carrying their share of the load.
• Third, think productivity. Review all your management processes, from partnership agreements to cash flow management to marketing.  Make sure your electronics are up-to-date, and are really saving you money. Look for potential return on perks and club memberships.  Preserve capital as best you can. And take your banker to lunch – you may need him or her.
• Fourth, look to your marketing. It’s not an expense, its an investment. If you use it wisely, and give the marketing professionals a chance, sound marketing may give you the best return on your investment.
• Fifth, pay closer attention to the industries your major clients are in. That’s where the early warning signs will be.

And finally, the economy really is like an hydraulic system, which means that anything that happens at one end will eventually get to you. Pay attention  and avoid surprises. You may come out ahead of the economy, whether it’s a recession, depression, or phase of the moon.

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Become a LawMarketing Portal Premium Member today for only $200/year! You get: To read "MEMBERS ONLY" articles To post JOBS listings a simple text editor and image upload capabilities (no HTML knowledge needed). To list EVENTS listings. To upload CONSULTANTS listings. All you need is one moneymaking tip, one good job candidate, one good consulting project, or one big turnout for your event -- and you've made the $200 membership fee back. Harness the LawMarketing Portal, which gets 80,000 unique visitors per month.  Click here to join today.

A new LawMarketing Portal survey reveals that:

• A preponderance of law firms spend 2% of their gross revenues on marketing.
• Law firms lavish the amount spent on attorney-client meals and entertainment.
• 52% said that their lawyers have individual marketing plans
• 49% reported that their firm does not have a marketing committee
• 62% said they only “occasionally” measure ROI on marketing
• 54% of respondents admitted that their law firm does not have a written marketing plan.

Note: You must be a Premium Member of the LawMarketing Portal to view the article.  See the sidebar for more info.

The report itemizes in detail how much law firms spend on printed marketing materials, website, sports and other tickets, advertising, public relations, yellow pages, event planning and marketing training.  For example, some firms (16%) spend $101,000 to $200,000 on charitable and civic event sponsorships; ironically an almost equal number (18%) spend $5,000 or less on sponsorships.

Read "Survey Report: How Law Firms Spend their Marketing Dollars" today at http://www.lawmarketing.com/pages/articles.asp?Action=Article&ArticleCategoryID=58&ArticleID=740

 

 

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• The precipitous drop off in structured finance work triggered by the sub-prime mortgage crisis.
• A decline in M&A and transaction work.
• A drop-off in litigation, particularly in Texas and California, based on new federal court case filings in many areas of law.
• Work once thought to be complex, like project finance, is now viewed as routine and is priced accordingly.
• Corporate procurement departments are getting involved in hiring law firms, and demanding rate freezes or discounts.
• There were 19 reported dissolutions of law firms in the US in 2007, up from the 9 reported in 2006.  "We may well see a further upturn in that number during 2008."

• There will be cuts in marketing budgets.  "In periods of economic downturn, there is always a temptation to cut expenses,and the first expenses to be trimmed in many law firms relate to marketing and client relations. While we believe that some marketing and branding efforts have been misguided and highly wasteful, a period of economic slowdown is, in our view, precisely the wrong time to be trimming marketing and client relations budgets. As noted below, the competition to win and keep clients is intensifying notwithstanding the downturn, and firms would be well advised not to be “penny wise and pound foolish” in this area.48% of new partners among AmLaw 200 firms over the last 7 years have been laterals.  "History has shown that in tough times it is often the laterals who bolt for the door first," the report states.
• Firms will be looking to weed out low-performing non-equity or "income" partners. According to the report, associates work the most hours (roughly 1770 hours a year), followed by partners (1732 to 1,666 hours), with Income partners bringing up the rear with 1,600 hours a year.
• Firms that grew too far or opened too many office will have to make painful cutbacks.  In 2007, there was an 11% increase in the total number of lawyers practicing in foreign offices of NLJ 250 law firms -- 15,231 in 2007 compared with 13,707 in 2006.

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Don't miss the upcoming Webinar: Business Development in a Down Market

	PRESENTED BY:	Professional Business Development Institute
	SPEAKER(S):	Sara Kraeski, Director of Business Development, Davis Graham & Stubbs; Larry Bodine, Esq., and Michael Cummings
	DATE:	February 26, 2008; 12PM - 1PM Central Time
	MORE INFO:	CONTACT: Program Director Laura Kresich; (Tel) 773-966-9273 or  Lkresich@LawMarketing.com
	WEBSITE:	http://tinyurl.com/yraaap

Once thought to be recession-proof, the legal profession is now in a downturn that will including a drop in profits per partner, declining spending for legal services by corporations and attorney layoffs. CMO Sara Kraeski, Esq. reveals 10 of her strategies to survive -- and thrive.

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Patrick J. Lamb says law firms are in the "perfect storm": clients are angry at law firms and want to cut their spending for outside legal services.

I call it a recession.  We're in one already, but the slow-moving National Bureau of Economic Research won't announce it for another nine months.  That's why PBDI is presenting the webinar Business Development in a Down Market at noon (Central time) on February 26.  Don't miss it or you'll wind up like the little boat in the giant wave from the movie "The Perfect Storm." 

Here's how Patrick sees it:

• Last August, Gerry Riskin predicted bad times were ahead for the profession, using the terms doom and gloom.  "He looks like an awfully good soothsayer," Patrick says.
• Citibank's Law Firm Group is predicting hard times. "It sent chills down my spine. 2008 is not likely to be a year lawyers look back at fondly," Patrick writes.
• Clients are the ones being clobbered by the bad economy, and they're the ones who want to "drive up productivity without increasing legal spend... many clients will face CEO demands to dramatically lower legal spend."

"You know the old saying that firms are never fired, they just aren't hired for new matters?  If the Perfect Storm develops, 2008 could turn out to be the year that the old saying was put to rest and firings became prevalent."

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Everybody loves to know what other lawyers make.  There are lots of good reports on starting salaries, and the Robert Half Legal 2008 Salary Guide breaks it down for experienced lawyers.

So for example, a lawyer in Chicago with 4 to 9 years' experience in a midsize law firm (35-75 attorneys) can expect an income of $120,00 to $185,700.  Naturally, your earnings rise with more years of experience, if you work for a large law firm (75+ attorneys) or practice in the following high-paying cities:

• Atlanta
• Boston
• Charlotte, NC
• Chicago
• Detroit (surprisingly to me)
• Hartford and New Haven
• Houston and Dallas
• Los Angeles, Irvine, Oakland, Ontario, San Diego, San Francisco and San Jose, CA
• Manchester, NH
• Miami
• New York City ($160K for new grads at megafirms) and White Plains, NY
• Philadelphia
• Phoenix
• Paramus, NJ
• Providence, RI
• Raleigh, NC
• Seattle
• Washington, DC (naturally)

The industries that are paying lawyers top dollar include:

• Healthcare
• Financial services
• Information technology
• Commercial Real Estate (in the Southeastern US only)
• Manufacturing (in the Midwestern US only)

The hot jobs offering the biggest increases in compensation are first year associates because there is a declining supply of laws graduates. Job candidates who finished in the top 20 percent of their class or have specific practice experience are highly sought. First-year associates at large law firms (75+ attorneys) will see the greatest jump in compensation. Average base compensation for this role is expected to rise 9.1 percent, to the range of $111,750 to $137,000 annually.

Other hot practices include lawyers experienced in commercial litigation, intellectual property, commercial real estate and product liability, particularly for pharmaceutical companies.  The globalization of law is creating demand for lawyers with international litigation and enforcement experience, and ability to speak multiple languages and function in different cultures. Robert Half predicts that attorneys with one to three years of experience at large law firms will earn between $114,000 and $147,500 per year, an 8.2 percent increase over 2007 projections. Senior attorneys with 10 or more years of experience at large firms will see starting salaries rise 7.9 percent, to the range of $167,500 to $234,000 annually.  

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Once thought to be recession-proof, the legal profession is now in a recession that will include a drop in profits per partner, declining spending for legal services by corporations, attorney layoffs and a major competitive threat from law firms in London.

Here’s what a panel of experts said at the recent Marketing Partner Forum:

• We are in a recession right now – it’s pretty obvious,” said Sara Kraeski, Esq., Director of Business Development, Davis, Graham & Stubbs in Denver.  She is a former partner in a securities and private equity law firm and a graduate of the Wharton School.
• “We are in the middle of the perfect storm. We don’t want to be the best of the buggy makers, we want to thrive and survive, said blogger Patrick Lamb, Esq., the founder of the new Valorem Law Group, LLC, a national litigation boutique based in Chicago.
• “There are warning signs that road ahead is riddled with landmines.  2008 looking like 2001 – when there were declining profits in the industry,” said Dan Dipietro of the Law Firm Group for Citi Private Bank in New York.
• There’s a new challenge ahead that has the potential to cause the greatest change ever seen in the legal profession,” said Wendy L. Bernero, Chief Marketing Officer for McKee Nelson in New York, referring to UK law firms that will be able to pick off top talent from US law firms.

For the rest of the story, visit the LawMarketing Portal.

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Call me Cassandra.  Or call me the boy who said the king has no clothes. We are now in a recession, there is no doubt.  See below for "Here's how to cope." 

Consider the evidence:

• Consumer spending is down, according to the New York Times. (See "Americans Cut Back Sharply on Spending.") This hasn't happened since 1991. Retail sales for December -- the holiday shopping seasion -- were down .4%. “This is the real deal — consumers are slowing down across the spectrum,” said David Schick, a retail analyst at Stifel Nicolaus. Consumer spending accounts for 70% of the economy.
• The unemployment rate rose to 5.0 percent in December.  (See "Employment Situation Summary" from the Bureau of National Labor Statistics.) The number of unemployed persons increased by 474,000 to 7.7 million.

Nobody likes a party pooper, but I predicted this last August (see Get Ready for the Coming Recession).  (The nay-sayers love to say I'm referring to my own business, which is not the case. Trust me, I'm busier than ever.) Consider the additional evidence:>

• New home sales posted the biggest drop on record in 2007. Weak December sales left full-year new home sales at 774,000, down 26 percent from the 1.05 million sales in 2006. That was the biggest drop since the government started tracking new home sales in 1963, surpassing the 23 percent decline posted in 1980.

• Housing starts are down 24% from a year ago to the slowest pace in 16 years.. The median sales price of existing single-family homes has been falling all year, according to the National Association of Realtors. A person's home is the largest single asset and the source of a sense of prosperity for most Americans.

• The value of the dollar is near an all-time low with the Euro worth $1.46.  The dollar is worth the same as the Canadian Loonie currency.
• The price of oil spiked at $100 per barrel on January 2 and has settled at an exorbitant $92 per barrel.

• The US trade deficit widened sharply by 9.3% in November to a larger-than-expected $63.1 billion.  The trade deficit has widened to its highest level in more than a year. >

• The "credit crunch" means that investment capital is difficult to obtain. Banks and investors become wary of lending funds to corporations, thereby driving up the price of debt products for borrowers. Citigroup, the nation's biggest bank, announced a stunning $10 billion fourth-quarter loss.  The Kuwait Investment Authority -- a foreign country -- is expected to bail out Merrill Lynch with a $4 billion investment.
• The cost of the war in Iraq over the past five years is now approaching a cumulative $500 billion, or about $100 billion per year on average.  Our children will be paying for this for their entire lifetimes.

Here's how to cope. 

1. Lawyers must get business development training.  Rainmakers are not born, they are trained. Marketing is not taught in law school, and today's rainmakers got training and attended programs on business development. Getting clients is not an innate talent, but it is a learnable set of skills. 
2. Smart lawyers will make extra efforts to stay close to their current clients -- setting up regular off-the-clock update meetings and visits to client offices -- so that they don't lose current revenue.
3. Lawyers will develop personal business development plans.  The time to prospect for new clients is when you have enough work -- right now.  If you wait to originate new work until your revenues start to go down, it's almost too late.  At that point your competition will be slashing rates and starting to market against you.  Don't wait until the recession is officially declared.

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