For all of the 25 years I’ve been training lawyers to market and sell, I’ve heard the mantra, “It’s all about relationships.” By “relationships,” most people mean “personal relationships,” which really means “friendships.” According to the common wisdom, you’re supposed to go to networking events, meet people, and initiate a personal relationship with them. OK. Let’s say you do just that. Then what?
Presumably, if you initiate a relationship, you intend to sustain it long enough for it to produce some benefit. However, few people define the expected benefit beforehand. Instead, they take it on blind faith that relationships are inherently valuable. “You never know what might come of it.” Well, that part’s true, anyway.
Relationships come with obligations
Relationships don’t sustain themselves. That means overhead. Each relationship requires you to invest time, attention, effort, and creativity. Those are serious investments for lawyers who operate in a time-based economic system, where time literally is money. And those investments are based on little more than the unsupported expectation of vague, unspecified benefit at some unknown time in the future, following some unknown amount of investment.
Would you invest your money that cavalierly?
So, how much investment could we be talking about? Let’s take a stab at quantifying that.
The traditional networking approach is based on establishing and cultivating personal relationships first, and pursuing business second. You collect business cards from those you meet, and send each person the obligatory email saying “Nice to have met you last night. Let’s get together some time.”
Be careful what you ask for; you might get it
What if each of the five replied, “Great idea. I’d like that. How about lunch next week?”
Will you make time for five lunches, the value of which is unknown and, because of that, is a “someday, maybe” proposition at best, or will you claim to be jammed or put it off in some other nice way, and never revisit it? If you choose to blow it off, you wasted your time at the networking event initiating something you won’t carry through. If you choose to cultivate these relationships, it’s actually far worse.
Let’s say that you’re willing to make the long shot bets and invest in the five lunches. Even if the restaurant is in your office building, you’re still committing to an absolute bare minimum of 5-7 hours over the course of, say, two weeks. What percentage of your business development time budget does that represent? For most lawyers, the answer is “all of it.”
Unless you’re an outlier, 2-3 hours per week is probably your total weekly time allocation for business development. How wise is it to expend it all on five strangers, about whom you have no objective evidence that they’re legitimate business prospects, all in service to some abstract “relationship building” aim?
Relationship Math
Continue the relationship math. You can’t develop much of a relationship over one lunch, which means that you’ve got to continue contact with these five people via phone, email, and lunches. How often? Nobody knows for sure, but let’s say you have to be in touch at least every other month to have any expectation of a productive relationship, and any chance at the result you want. Let’s assume that your cultivation activity looks like this:
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25% of your touches will be over lunch (1.25 hours each);
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25% by phone (20 minutes each); and
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50% by personalized email (10 minutes each).
Since it makes no sense to go to one networking event, get five business cards and quit, let’s further assume that you go to a networking event twice monthly, and meet five new people each time for a total of 10 new contacts per month.
Sounds great, right? Maybe not. Here’s what that would look like over 18 months:
The good news is that you’ll have added 900 contacts. The bad news is that you’ve added 900 “relationship obligations” — for contacts of unknown utility or value. Each of these will require meaningful time investment to develop.
Over the course of just Year One, you’ll have invested roughly 200 hours staying in touch with, and trying to develop some kind of relationship with, 420 people whose only initial qualification for such investment was being nice to you at an event and handing you a business card. At a billing rate of $250/hour, that’s an opportunity cost of $50,000. At a 40% gross profit (which is very, very good for a law firm) you'd have to generate $125,000 worth of work from those contacts -- just to break even.
Because you’re building relationships, and there's no basis for a decision that would allow you to disengage, these people will remain in your pipeline indefinitely, creating a cumulative cost that will bury you. Take a look above at how this really ramps up in Year Two (blue highlight above).
Consider, too, that at the 18-month mark, you’ll only have had 2-3 touches with each of the people you met in the first six months of Year Two. Those relationships are immature, so you can’t count on them for any kind of business or referral results just yet. Combine those with the carryovers from Year One, and you’re on the hook for another 230 hours of relationship overhead in just the first six months of Year Two.
Applying the same hourly rate to calculate opportunity cost, that translates into $57,500, which is more than your relationship cost for all of Year One. Using the same gross profit numbers, you’ll have to generate an additional $143,750 to break even for the first six months.
Break-even total for 18 months: $168,750. That's just to break even on the relationship overhead.
The marketing/sales budget norm for many lawyers is roughly 200 hours per year, so you’ll exhaust all of that and more developing relationships with random contacts. (This doesn't count the 50 or so hours you’ll have spent at 24 networking events each year creating this huge obligation.)
The rest of the bad news is that this time overhead doesn’t include time required to sustain and grow relationships with current clients. You’ll have to choose between neglecting them in favor of attention to these random strangers, or boosting your time budget by an amount that isn't possible.
You'll do neither. Instead, you’ll make random, infrequent contact with some of these networking contacts, and ignore most of them.
Why do it at all? Why begin something that you know you can't sustain or see through to a productive end?
Today, the personal vs. business relationship sequence is reversed, i.e., business relevance, demonstrated through electronic distribution of your ideas (and the occasional speaking gig) earns a virtual relationship between many people and your ideas.
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A percentage of those people will agree with your ideas and choose to remain in virtual contact with you.
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A percentage of those will experience the idea or problem that you’ve associated yourself with and attribute to it consequences that require them to take action.
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A percentage of those will discuss the problem with you, and
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a percentage of those will hire you.
Over time, as you do a good job for them, a personal relationship or friendship may emerge, but it’s not required. You can have robust “idea relationships” and economic relationships with people you’ve never met, in places you’ve never been to, and they’re just fine with that.
So, let’s gore the “relationship-first” sacred cow now, and replace it with a much more discerning and rational approach in which you
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know precisely who you’re looking for,
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know how to quickly reveal whether or not they’re investment-worthy, and
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spend your time at events filtering the crowd, connecting only with those for whom you have objective evidence that it’s worth your time to cultivate them.
Reminder: You’re not attending the event to make friends. If you are, then call that time “entertainment,” not “marketing.”
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[Mike O'Horo is the co-founder of RainmakerVT and has trained 7000 lawyers in firms of all sizes and types, in virtually every practice type. They attribute $1.5 billion in additional business to their collaboration.]
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