Lawslot

I posted some weeks ago about cultivating a habit of optimism: something which is increasingly difficult as the news gets worse, but stick at it. Keeping the morale of the team up should be one of a law firm leader’s main responsibilities.

Another responsibility, and this has to be linked in to that optimism, is to hold onto the long view. Short term solutions often seem to offer immediate relief to problems, but there is the very real risk of missing the wood completely as you concentrate on the trees.

Business planning in uncertain times is an article by David Hunt in Smith & Williamson’s Summer 2008 Professional Practices News was spot on. In it he identified two principal tasks: to reign in costs, and to seek opportunities.

Although the first of these is, in large part, obvious, Hunt adds a number of key riders

• service delivery (i.e. people) cost, so one way of cutting costs is to get rid of them. This is being done across the profession as law firm after law firm puts in place redundancy programmes. But, as Hunt notes, “change (redundancy programmes) may be and are expensive and can have a long term impact on a firm’s culture”. I would add that you need to know what you want to be as you come out of the downturn is also important.
• cutting discretionary spending offers an immediate opportunity to limit costs, but (again Hunt) “marketing, training, recruitment and capex become ever more critical in a downturn as they aid recovery and future expansion.”

And as for seeking opportunities, take the long view: “thought should be given to future as well as current revenues”. So consider

• lowering prices to win work (although I would add the caveat that there is a risk that teaching your client to buy on price makes only one party, the client, happy, and may have a long term impact on the relationship
• re-evaluate business development activity: build new contacts or markets and strengthen relationships with existing clients (back to Nick Jarret-Kerr’s admonition, which I linked to in my post Spending time wisely, back in early July, to get even closer to clients.

In a recent post, Not quite such a simple solution I argued that time may be better spent looking at ways to develop your active clients; or re-activating your dormant clients.

Others think the same. See Reactivate past clients in Matthew Homan’s The [non] billable hour, which in turn links to John Jantsch’s Seven Tips to Dig out from a Recession. At the risk of repeating it,

Reactivate past customers – Where did I put that customer anyway, I know they are around here somewhere. Sad but true, sometimes we don’t bother to communicate with current customers unless they call with an order. By the time they have decided someone else appreciates their business more, it’s too late. Reach out to lapsed customers and make them an apology, promise to never ignore them again, and make them a smoking hot deal to come back.

I was intrigued reading the Acknowledgements at the start of Kate Atkinson’s One Good Turn, with the following

. . . Thank you also to David Lindgren for trying, and usually failing to explain corporate law to me and, more importantly, for being a lawyer who lunches.

It wasn’t the opening bit, about explaining corporate law: I know only too well that explaining the finer points of our specialisation is all but impossible. After years spent trying to tell my children what I do, they are no wiser. Perhaps it is the way I tell it. Rather, it was the lunch bit! I am known in my partnership as the partner who lunches (and also for complaining once that the dry cleaners had shrunk my suit) and I have always spent most of my business development budget taking clients, referrers, introducers and providers to lunch. Not for nothing does my Outlook Contacts have a Restaurants category.

It was therefore gratifying to read John Studzinski in the FT’s September 2008 How to Spend It last week,

In most of the world today lunch – or any meal, for that matter – is used as a basis for determining whether people trust and like each other. . . The importance of one-on-one conversation over food is still something that I do not believe has reached its pinnacle. It’s where people learn the most about each other and I don’t think we’ve found anything else as effective at this point in time. Some day maybe, but not yet.

although I was not a little disturbed by his assertion that

In the US and the UK, breakfast is the new lunch.

Not in Plymouth it isn’t!

It is all too easy to think that the solution to falling fee income in a downturn is simply to find new clients.

Well, up to a point, but this is, or may well be, a riskier strategy than you might imagine. Time may be better spent looking at ways to develop your active clients; or re-activating your dormant clients.

So, why not new clients?

For most organisations changing law firms in a downturn is going to be well down their list of priorities; and for most law firms, themselves facing the same recessionary pressures as you are, hanging on to their valued clients is going to be important. The result is that changing advisers is only likely if there is a  compelling reason to do so. Certainly there will be price sensitivity and pricing pressures, but the aware law firm should be prepared to be flexible. And among the reasons for change are a couple that should give you pause for thought.

First, the incumbent law firm may be trying to “lose” the client. The client may be a bad payer, or it may be asking the law firm to do something that leaves it uncomfortable. In which case why would you want to act for the client? Client take up procedures all too often get overlooked in the bad times, but ignore risk management at your peril.

Alternatively, the incumbent law firm may have cocked up, which in turn may mean that the client has a somewhat jaundiced view of lawyers: and you may get sucked into a lot of remedial work that the client is reluctant to pay you for.

As Stefan Stern noted in his FT column Beware of fad-loving analysts

Simple solutions to complicated problems can be seductive.

And all too often such solutions fail to deliver. There are certainly going to be opportunities to find and develop new clients in this downturn; and there are going to opportunities to be burnt: as a result of taking on unsuitable clients, agreeing to do work beyond your competence, or on terms that not only devalue the work and demoralise your team, but set a precedent it may be hard to reverse later.

From a March 2008 Stefan Stern FT column Desperate measures for latter-day Willy Lomans, in which he quotes Neil Rackham, (in his words, ‘the author of the seminal Spin Selling and reliable deliverer of common sense’)

In hard times, people make the mistake of trying to sell to more people at less intensity,” Mr Rackham says. “But what actually works is selling to fewer people in more depth. The same approach that works in good times works in bad times.