Legal Business Development: What You MUST Learn From Law Firm Layoff Trends

On Monday morning, I read a Wall Street Journal article sharing the news that law firms have “regained some of their pricing power” and that hourly rates are up an average of 4.8% from 2011.

Later Monday, other news started to roll out:

  • Weil Gotshal announced a layoff of 60 associates (7% of its associates) and 110 non-lawyer employees.  Weil further announced that about 10% of its partners will see “meaningful adjustments” to their compensation.  See articles here and here.  The layoffs were explained by the shrinking market for premium legal services that are a part of the “economic realities of the new normal”.  According to the firmwide memorandum that announced the action, Weil remains strong on a variety of economic indicators that have been linked to the demise of Dewey LeBoeuf.
  • Jones Day announced a “reorganization, which includes a realigned management structure and the elimination of 65 positions around the Firm.”  All of these positions are staff.

This follows earlier stories of firm layoffs, including:

Does this signal a return to the cuts of 2008-2009?  I don’t think so, though I do think it’s quite likely we will see additional layoffs and firm failures.  Instead, these layoffs seem to be signs of large firms’ efforts to adjust to the “new normal,” a change that is neither comfortable nor simple.

But the trend that’s becoming clear should be a wake-up call, whether you’re practicing by yourself or in a large firm.  There has never been much room for non-productive personnel in a law firm, but the measuring stick for contribution is much tighter now than it might have been in the past.  And thanks to shifting client demands, smaller and less elite firms have opportunities to gain from clients unwilling to accept law firm business as usual.

Here’s what you need to know today:

  1. If you are a service partner, you may be at risk.  I’m hearing from more and more service partners who have seen their compensation cut, sometimes by as much as 50% over the last three years, and moving to another firm may be difficult or even impossible without a demonstrated ability to bring in business.  Technical expertise is only one component of a successful practice, and if you don’t have your own clients, you may soon find reduced opportunities to demonstrate your expertise.
  2. If you are a junior associate, you have to “learn the law,” but you’d better spend time developing your network and beginning to lay the foundation to build a practice as well.  You may hear that you don’t need to worry about bringing in business yet,  but you need to lay the groundwork well before you need to see results, especially in more sophisticated practice areas.
  3. If you’re working in a midsized or larger firm and don’t have your own book of business, it’s time to get moving and to look for ways to facilitate introductions for your firm.  Even the very most junior lawyers may have an opportunity that results from conversation and culminates in an introduction to a more senior lawyer who is more likely to land the business.  That opportunity won’t happen if you aren’t looking for it, however.
  4. If you’re working in a small firm or as a sole practitioner, you have opportunities.  Larger firms are historically resistant to change, whether because of institutional beliefs and expectations or simply because it’s harder to shift the approach of a firm of several hundred (or thousand) lawyers than to shift the approach of a firm of a dozen lawyers.  This is a time to reconsider practice and to look for ways to meet your clients’ (and desired clients’) needs and preferences, even those that may not have been fully expressed yet.  Read Mitchell Kowalski’s intriguing book Avoiding Extinction:  Reimagining Legal Services for the 21st Century for inspiration.
  5. Whether you’re a highly successful rainmaker, an aspiring rainmaker, a reluctant rainmaker, or a lawyer in denial, relationships matter.  It’s critical that you focus on building a network that’s composed of clients and former clients, referral sources, colleagues, former classmates, and other contacts.  This network is your lifeblood, whether you’re looking for business, for a job, or for a new dentist.  Build it before you need it, and always seek to add more value to your network than you extract.  (If this is a scary thought to you, email me and I’ll be happy to send you a list of networking resources that will help.)

The days of having a practice supported by being a “great lawyer are gone forever.  In today’s economy, every successful private practice lawyer is a rainmaker who has created an effective plan for building a consistent pipeline of new business.  Rainmakers harness their unique strengths and perspectives to create a cohesive, strategic, simple-to-implement plan–and they take consistent, focused action on that plan.

Don’t delay.

Legal Business Development: Where do you stop yourself from getting results?

A few days ago, a colleague and I were swapping stories about our business missteps:  the things that just didn’t work, and the things that were colossal, flaming failures.
 To listen to us, you might think that neither of us had a viable business, must less a successful one–but fortunately, that isn’t at all the case.

Although the failure stories are fun to tell (with sufficient hindsight and success in the time since), the real story is in how we respond to the failures and, more importantly, how we turn failures into success.  Stella and I shared experiences in which we’d had to undertake massive action to change course and shift our results.  Sometimes graceful, usually not, we’d refused to quit until we had succeeded.

Toward the end of our conversation, Stella said, “That’s the difference between success and failure:
knowing when to quit, and when to dig in and do what it takes to succeed.”

Are you stopping yourself when instead you should shift strategy and keep going?  Here are some indicators:

  • Have you put in enough effort?  I attended a Christian high school, and every classroom included a poster that read, “Bless me, Lord, according to my preparation.”  Religion aside, if your preparation has been half-hearted, you can’t expect good results.  Be honest:  have you put in the necessary time and energy to get the results you want?
  • Are you picking apart opportunities unfairly?  Lawyers are highly skilled at finding problems, and that skill sometimes undermines business development.  For example, are you waiting until you find the perfect opportunity to get active in a relevant industry organization?  Are you searching for the perfect speaking opportunity?  If no action seems to have a sufficient likelihood of success, you may stop yourself from taking any action at all — and that’s a certain route to failure.
  • Are you unconsciously looking for proof that you can’t land business?  If you believe that business development is a talent that you may lack, you may unintentionally expect and then highlight any evidence to support that proposition.  Do you expect to succeed?
  • Do you feel disheartened? It’s ok to feel discouraged for a time, but recognize that feeling as an impotent emotion.  When you’re disheartened, you’ve given up and your activity will grind to a halt.A client once consulted me on an upcoming pitch and described some of the challenges that might prevent him from getting the matter.  Rick’s tone was downcast, though he put a good face on it by asking how he could address the problems in the future, so he might succeed next time.  He had already given up on the pitch, which ensured that he would not be successful.I pointed out that he had declared failure prematurely and challenged him to buckle down and shoot for success or to bow out of the pitch contest altogether.  Rick chose to strategize how to meet the challenges that had consumed him.  He was irritated (first with me, then with the challenges themselves) and he used that energy to create and deliver a powerful pitch, and a few days later he received the good news that he’d been retained.

    When things aren’t working out, take a bit of time to be disappointed, but then get your energy flowing.  Do whatever you do to pump yourself up (work out, listen to powerful music, review a list of your successful engagements) and then get active.

  • Do you have a partner who can push you forward?  I pushed Rick forward, and many times my mentors have urged me to continue when I really wanted to give up.  Be sure that you have a mentor who can offer objective insight into whether you should keep going and who will give you a swift kick if you stop yourself.  You may find this a difficult determination at times, and outside help and support makes all the difference.

A successful business development plan will require you to give up unsuccessful activities, but before you stop, be sure that you’re stopping for the right reasons.  Don’t allow the discomfort or discouragement to stop you short.

Rainmaker’s Book Review: Network Like A Fox

Networking has a negative reputation among so many lawyers.  It’s often time-intensive and, if not done well, can be a waste of time.  Lots of us (especially us introverts) dread the thought of walking into a crowd of strangers, so we spend time with people we already know, hang out on the fringes of the room and escape as soon as it seems feasible, or find great and completely reasonable excuses not to go in the first place.

Even if you get over those bars and meet new contacts, the challenges continue.  How often have you come back to your office with a stack of business cards and good intentions that get buried under a pile of work?  Even after the initial follow-up, continuing contact can be difficult to maintain, so relationships fizzle before they get off the ground.

And yet, we all know that networking is critical to rainmaking.  Although you’re most likely to get business from or through people who already know you, you need to be sure that you’re growing your network by adding new people on a regular basis.  After all, personal contacts are the foundation of every successful business development plan.

What’s a reluctant networker to do?  Read Network Like A Fox.  Here’s why:

Network Like A Fox offers clear, step-by-step, outcome-driven suggestions for networking.  This isn’t the same old, same, old, as becomes apparent immediately from Fox’s opening five Tenets:

  1. All Networking Is Not Created Equal:  You must network with the right people and engage in effective follow-up activity, or networking will be a waste.
  2. Your Attitude Is Your Aptitude:  Networking is a process, and it won’t work for you without bringing curiosity, interest in others, and a willingness to discover ways you can help one another.
  3. Who You Are Is Who You Hang Around With:  Spend time with successful people, not those who are mediocre or negative.  Fox expands this tenet into the unusual but highly effective strategy of “networking up” with decision-makers and influential members of your target community.
  4. The Right Relationships = Real Business:  Build relationships with people with like-minded interest and connections and those who are of the same caliber of professionalism.
  5. Networking Does Not Equal New Business.  It Is Only the Plus Sign:  Networking substantially increases the possibilities for new business, but you can’t expect that new business automatically networking.

Fox begins by offering an appealing and nonthreatening definition of networking:  “Networking is just an extension of your interest and curiosity about people, what they are up to in business, and how you can help each other.”  This definition explains why those who go for conversation on topics of mutual interest often do well with networking, while those who are simply on the prowl for business and seek to talk primarily about themselves tend to fall flat.

Fox urges networkers to eschew comfortable and easy networking in favor of building relationships with decision makers and influential business people.  This recommendation illustrates Fox’s absolute dedication to effective networking and underlines what I find so valuable about Network Like A Fox.  The book doesn’t spend time on the warm, fuzzy, “rah-rah” inspiration that’s so common in networking books, though it is full of encouragement.  Instead, it’s focused on how to make networking pay off, with case studies and advice on what it takes to make that happen.

One of Fox’s central organizing approaches is to break down the ideal network into four Connection Archetypes:

  • Ideal Prospects
  • Ideal Introducers (Connectors)
  • Ideal Referrers
  • Ideal “sweet spot” Clients (end users)

According to Fox, the “sweet spot” network (which she calls your “Grow Zone”) exists when all four of these ideal archetypes are present.

Understanding the archetypes will help you to create a productive networking strategy, how to reach the kinds of people you need in your network, and to determine which contacts merit more time and attention.

While Network Like A Fox is inarguably results-focused, it’s important to note that Fox doesn’t support or promote quid pro quo networking.  For instance, she recommends introducing the right people to one another as a way to enhance your value as a networker, but she cautions that expecting anything in return is a recipe for disappointment and frustration.  Instead, Fox writes:

[T]he solution to this is completely letting go of expectations.  It is the way to set yourself free.  If people don’t return the favors you provide, don’t get mad or disappointed.  Get moving, meet more good people, sow more seeds.  You will meet the right people who will definitely introduce you to good people.  Your stress and frustration level will plummet.

Why should you read Network Like A Fox?  Simple:  networking is one of the few non-optional business development tasks.  There’s no way around networking, whether you choose face-to-face or online, and you must have networking skills if you’re going to build a book of business.  Fox offers realistic, simple, insightful methods to become a valued networker with a valuable circle of connections.

Network Like A Fox is one of the best books I’ve ever read on networking, and I recommend it without reservation.  As I told Nancy when we last spoke, networking isn’t my favorite activity, but talking with her and reading her book always makes me eager to go out and build some new connections.  I hope you’ll feel the same.

Personal Contacts: The Foundation of Every Successful Legal Business Development Plan

I clerked for a Federal judge in my first job after law school.  Among the many lessons Judge Forrester taught me was to look for the existence of a “Q” case, the source from which the rest of the precedents would flow.  In practice, I learned that some questions require the thorough search that would to the Q case, while other simply needed “quick and dirty” research to get to the right answer.

When it comes to business development, there’s one “Q” activity:  making personal contacts.  Although not every activity truly flows from making personal contacts, contacts make every other activity much more effective.

As Bob Burg, author of Endless Referrals, wrote, “All things being equal, people will do business with and refer business to those people they know, like, and trust.”  In other words, the more people who know you and think well of you, the more likely you are to receive business and referrals.

While you might argue about whether all things are ever equal, think about how you select any service professional you hire.  Whether you’re looking for a dentist, a house painter, a baby sitter, or a lawyer, chances are that you check with a least one or two of your contacts to get a referral, and a significant number of clients who seek your services will do the same.  Knowing more people increases the chance that someone in need of your services will find out about you.

Likewise, your current and former clients know and (let’s hope) like and trust you.  They also have had the experience of working with you, so they know how you serve clients and may be able to evaluate, to some extent, your legal ability.  As a result, current and former clients may be even more likely to refer business to you and, where your practice is amenable, bring you additional work themselves.

Even discounting the possibility of landing new business, knowing more people increases the chance that you’ll be invited to speak, to join a relevant Board of Directors, to attend events that your ideal clients might attend, and so on.  The more people you know, the more you’ll be in the flow of information that may benefit you–and the more you’ll be in contact with people whom you might be able to serve or help in some other way.

So, the bottom line is that the more people you know, the more likely you are to bring in new business.  And it follows naturally that, without knowing any information about your specific practice or your strengths, the “Q” activity for growing your law practice is to work on consistently and strategically increasing your network contacts.

Consider these questions to kick-start your networking:

  • Are most of your clients referrals, or do clients contact your directly?  (Should you look to increase your network of potential clients or potential referral sources–or, more likely, both?)
  • Where do your ideal clients congregate?
  • Where do your ideal referral sources congregate?
  • What organizations offer a natural fit for your practice, by virtue of subject area or membership, and how can you get involved?

No matter what your business development plan might be, personal contacts are a foundational activity for any rainmaker.