These are the words from David Ackert of The Ackert Advisory during a webinar that he gave for our ILN membership yesterday, and oh boy do those hit home.
I can say that as an organization, we’re not just “hunkering down” when it comes to our strategy for 2020, but is that something that sounds familiar to you for your firm or practice? When COVID hit, was there an immediate flurry of “batten down the hatches!” and everyone just hold on for dear life?
The reason that I suspect the answer to this is “yes” for most firms is that when I speak to lawyers, they’ll say things like:
“You can’t get new business at the moment.”
“We’re just working with existing clients.”
“It’s hard to meet new clients in the current environment.”
So…hunkering down.
The alternative is terrifying – as a business leader, I fully understand that. None of us are sleeping well at the moment. So what’s the answer? (Hint, it’s strategy around two key areas)
During our session yesterday, which combined David’s BD expertise with Michael Ellenhorn‘s lateral hiring expertise, we learned that there are two avenues that firms can explore for growth – business development and lateral acquisition. 80% of law firm revenue is existing clients (this is organic growth). The other 20% is acquired revenue or inorganic growth, and this is where business development and lateral acquisition come into play. These options are limited (and organic growth itself is shrinking), but currently, most firms are not putting much emphasis on this 20%. That’s where opportunity lies.
What can you do? Be one of the firms/lawyers that doesn’t ignore this. It is tempting to hold on and wait for COVID to pass, and the associated economic downturn to right itself. But there’s no time like the present to put into place the strategies and practices that will help to drive your business forward. It sounds like this is about having a “growth perspective” as David called it, but it’s also a “risk reduction” perspective – those firms with plans in place will be in the best position to grow.
We talk a LOT about business development here on Zen, so I’ll hit some highlights here for you.
At the lawyer level:
- Recreate your individual BD plan: the plan that you had at the beginning of 2020 will likely involve tactics that you won’t be able to employ this year. So go back to the drawing board. What do your clients really want? How can you add value? What are the goals that you think are important?
- Try something new: Yes, we’re all having to do a LOT of new things these days, but keep stepping outside of your comfort zone. Call your clients on the phone instead of sending out a mass client alert. Host a virtual happy hour with top clients (and consider sending them a bottle of the same thing you’ll be drinking – make sure you know if they drink or not first). Start a podcast where you interview your clients. Commit to a zoom “lunch” with a client or prospect every two weeks.
- Revisit your contacts: How well do you know your contact list? Doug Ott recently suggested two excellent tips – ranking your list of contacts in terms of who is likely to give you business, who has good potential for the future, and who is not likely to give you business, but may be a friend. In that list, include the last date of contact and commit to following up more regularly. Secondly, dig deeper into how well you really know your contacts, both personally and professionally. Put together a questionnaire and over time, ask client and prospects questions that will get at those answers and deepen your relationships with them.
At the firm level:
- Continue to check in with the lawyers on their BD plans for 2020: Have they revisited these plans and revised them for the current market? Do they need assistance in doing so? Should that assistance come from in-house or a consultant?
- Consider investing in BD training: As with any type of business development, some of your lawyers may have taken virtual business development like they were made for it, while others are struggling. Identify whether those struggles are due to a lack of training (or overwhelm), and assist them in developing and providing the resources to address either need.
- Revisit your own plans: We all had ideas and goals and strategies for how 2020 would proceed, which we’ve thrown out the window, but that doesn’t mean that firms can’t continue to get creative. Were there plans to have associates meet in small groups to stay accountable in their BD activities? Move these to a virtual environment (I know, we’re all zoomed out, but in some cases, it’s still our best option). Celebrating a firm anniversary this year? Get creative in how you can connect with your clients who have contributed to your success without throwing an in-person event. Review how many touchpoints firm leaders and professionals need to be making with lawyers and colleagues in order to remain connected and invested in the firm’s brand now that you’re not seeing each other in person at all or as often.
The other choice for inorganic growth is lateral acquisition – and this doesn’t have to be an either/or strategy for your firm. Rather alarmingly, 48% of lateral hires leave their new firm within 5 years. As Michael pointed out, that’s an astonishingly high failure rate for an industry that prides itself on perfection and reducing error. There are ways to reduce risk and firms can still be undertaking lateral hires during the time of pandemic – while it may seem counterintuitive to bring on new partners at the moment, doing so with a strong strategy in place is differentiating.
How do you reduce risk? Per Michael:
- Interviewing & evaluation: Have a substantive Lateral Partner Questionnaire (LPQ) in place that potential partners complete, and use this to inform your interviewing process. But don’t take this at face value. While interviewing can’t currently be done in person in many cases, you can conduct interviewed via virtual methods.
- Business case must be substantiated: It’s all about context. We all know that many things sound and look good on paper – but dig a little deeper into the partner’s book of business. What is the actual business case for bringing them into the firm, and what does their current book of business look like TODAY? What will it look like when they move firms, realistically?
- Internal feedback: Because interviews are being conducted in a virtual environment, we are losing the benefit of personal interactions that we had before. To combat this, include more people in the evaluation process – not just from your side, but from the candidate’s side. Who has worked with this person before?
- Referencing: This should be an obvious one for firms, but it’s a step that some firms will skip over. Get references from your candidates and follow up on them.
- Due diligence: Consider using an external resource for this step, and don’t see it as a negative. The goal for any lateral partner hire is for the end result to be positive for both sides. In order for the relationship to succeed, both the firm and the incoming partner need to be happy and confident in the success of the relationship.
Key to note here too is that lateral hiring doesn’t end once you bring the partner in – and it’s especially tricky during a pandemic, because the new partner doesn’t get the benefit of wandering the halls to introduce herself or himself to their new colleagues. That means that the firm must be intentional about onboarding the partner (which should be the case in non-COVID times anyway). Revisit your current onboarding plans to ensure these are updated in a way that best engages new lawyers joining the firm on a virtual basis, and finds ways to connect them and help them to feel part of the team. While you’re doing that, consider reaching out to some of your outlier lawyers who may have fallen off the radar a bit to ensure that they, too, are feeling connected and engaged with the firm.
Growth in a downturn feels impossible, and investing in growth at a time like this seems risky. But done strategically and thoughtfully, it can be a means of risk reduction that protects your firm against future unknowns.
