Is It Marketing, Or Is It Sales?

Years ago I worked with a Managing Partner who regularly referred to the Marketing Department of his law firm as the PR Department. I’m certain it was a habit rooted in the days when law firm marketing efforts centered on work that was public relations in nature.

Though I believe he knew the marketing group’s responsibilities covered a broader terrain, the habitual use of the wrong label both perpetuated and was emblematic of a narrow view of the discipline. 

Today many professional service firms do something similar — saying marketing when what they really mean is sales.

Or perhaps more to the point — expecting (or hoping) that marketing efforts designed to create visibility and awareness might be able accomplish the lead generation and one-on-one work required to land new clients.

You know this. But in case we need to underscore the point — marketing and strategic business development (sales) are not the same thing.

Confuse them, attempt to blur the distinctions in hopes that one will cover for a lack of focus on the other, or ignore either, and be prepared to be completely unhappy with the sum total of your investment.

Hit Pause

I need to inject two relevant notes here.

  • First — I do my part on a daily basis to spread the problem. The very title of this Blog — Marketing Brain Fodder — suggests that everything we discuss here falls under the marketing banner. This is not true. An audit would probably reveal that the majority of content for at least a decade has focused on business development / sales. So I’m guilty…and I’m considering appropriate options.
  • Second — I believe the siloed-nature of our organizations works against us…diminishing the value of resources, inhibiting creativity and strangling innovation. Turf wars and resource battles consume too much time and energy. Underscoring the distinction between sales and marketing can easily be twisted to be an argument for more defined silos. While the topic for a separate post, we should underscore that this is not a case for more defined departments, teams or silos.

Hit Resume — Here’s The Point

If this is just a labeling issue, that is one thing. Anyone working in the legal space for 15 years or more knows of the problematic nature of the “Sales” word. Again — a topic for another post. 

For now, if while we’re using marketing as the umbrella, we all understand that when it comes to the pursuit of new business in the professional service arena, sales is a different animal, then we might debate the value in saying what we mean.

On the other hand, where we’re not clear about the difference, we run the risk of inadequate planning, misappropriation of resources, faulty expectations, and poor ROI in both marketing and sales.

Understand The Difference

If you’re part of a leadership team, prior to judgements as to whether your marketing efforts are effective, be certain you’re not looking for target identification, lead generation and qualified pitch opportunities. These are the purview of a strategic approach to sales (or, if you’re squeamish over the label, business development). An increase in sales requires appropriate investment.

If you’re in marketing or sales, clearly articulate the difference. Great marketing is an asset, to be sure. But perpetuating confusion between the two serves the objective of neither. Marketing is not the same as sales.

A Recession IS Coming — Proactive Business Development Is The Only Way To Prepare

You’ve seen the articles. Many knowledgeable observers believe a recession is inevitable; some are predicting a severe slow-down as early as spring 2020, based on certain indicators.

I do my best to avoid trafficking in fear and doom, but it is difficult to find a serious economic observer that doesn’t believe a downturn is coming.

If it occurs, law firms (and other professional service providers) that are not doing the strategic planning today to prepare for whatever happens in the market over the next six to twelve to twenty-four months are likely to find themselves reliving the dark days of 2008, and following.

Roger Hayse, a colleague and consultant to law firms in transition — particularly those dealing with crisis — just authored a terrific piece on this topic.

With his article as a jumping-off point, here are two ways firms can become proactive with business development efforts today, and be better prepared for whatever the market at large has in store.

Talk To Your Clients

Your best clients are constantly looking at projections for the coming months. If you don’t know what their concerns are — first, why not? And second, you should assume someone is having this conversation with them. If it’s a relationship you value, that someone should be you.

There are a number of outstanding professionals who can help you construct a client feedback program that will do 3 things:

    • Let you know what your client’s most significant business concerns are — for the near-and-long term. Your job, should you choose to engage in the proactive pursuit of trusted advisor status, is to become valuable to your client in this specific area. (SIDEBAR: you’re going to have to resist the temptation to disregard something just because it doesn’t appear connected to the service you provide.)
    • Shine some light on just how loyal your best clients might actually be. Regular, strategic conversations is the key to improving your score here.
    • And as a bonus, you should uncover
      • any existing immediate opportunities
      • threats to the relationship that you’re unaware of.

Build Allied Relationships

Unless you are a unicorn, the core of your practice lands on your desk either by virtue of a direct or indirect relationship — those who know and trust you, or those connected to those who know you. We refer to these as allied professionals.

One of the most valuable assets for business development professionals is a robust pipeline of these allies.

Consider the example of an estate planning consultant who, rather than waiting for families in need of his specific brand of counsel, proactively built relationships with CPAs, bank trust officers and others directly connected to those who would benefit from his practice.

By becoming a valued and indispensable resource to the professionals serving his target market in related ways, the estate planning advisor built a pipeline of relationships that, overtime, delivered a steady flow of the work he sought.

The key is to become Proactive.

We’ve made just two suggested here. There are certainly other important and productive ways in which your business development efforts should be intentional, and proactive.

The firms and service providers that elect to count on the flow of work historically enjoyed from sources that have been there for years will find themselves making decisions about who and where to cut, when and how to maintain stability, and how to survive what appears inevitable.

Firms who muster what it takes to become proactive in a strategic way have a much better shot at being prepared for recession when it rears its head. 

The Difference Between Managing and Leading

(This is an update to a March 2018 article originally published on Forbes.com.)

The role of leadership in any enterprise is fraught with a number of legitimately urgent distractions — especially in a volatile marketplace. A single projection missed, one team assignment blown, a silver bullet misfired can wind up costing precious resources. In short order, leadership can find itself caught up in the management of commotion.

The challenge is that commotion is a constant. Responding to it is a full time job.

And when reacting to commotion occupies the attention of leaders whose highest calling is to see beyond distraction, it threatens the timely recognition of real disruptions — some of which may shake the foundation of once stable firms.

Dealing with daily commotion should not be mistaken for visionary leadership.

To be clear, the issues that cause commotion can have a measurable impact. So this is not to diminish in any way the task of managing daily operations. This is not an either/or proposition. And one is not better than the other.

But in great organizations, responding to issues related to personnel, processes and systems is the purview of a strong management team. Admittedly, in some organizations — especially small businesses or those possessing an entrepreneurial nature — one or two members or a small team must both manage and lead.

And though they often are, the two roles should not be confused.

The difference is leaders have the ability to see through the commotion that can potentially characterize every day, and recognize the signs of what might disrupt and threaten an organization.

When the response to disrupting factors is born solely in the experiences of daily commotion, the outcome is likely to be less than satisfactory. Organizations that mistake even the most effective daily management for the core responsibility of leadership are likely to miss impending fundamental change until it is too late.

The contemporary marketplace offers vivid examples of the dangers that accompany the absence of leaders who are able to recognize disruption. Consider the consequences inside once stable industries like film (Eastman Kodak), print production (typesetters), home video (Blockbuster) and public transportation (taxi cabs).

Where management is mistaken for leadership, and success has historically been gauged by monitoring daily, monthly or quarterly metrics, there is an increased risk of missing severe disruptions.

For example, within the professional services industry — accounting, consulting and law firms in particular — innovators are reshaping go-to-market realities. Certain services that were once only available via hourly rate or retainer fees are increasingly using technology and infrastructure shifts to redefine the way in which clients determine value.

To be sure, there is comfort in black-and-white benchmarks. Progress or position can seem clear. Value seems easy to define. Established benchmarks provide a necessary roadmap for managers. Reach this point in this amount of time and you’re on track. Miss a benchmark, deviate from the charted course or take too long along the way and something must be awry.

The challenge comes when a reliance on these management tools comes at the expense of or is mistaken for spotting issues no less real, but much less black and white.

In 1962, speaking of the essential nature of a focus on the future when considering a space program and other issues of the day, President John F. Kennedy often quoted the story of the French Marshal Louis Hubert Gonzalve Lyautey. Reportedly, Lyautey once asked his gardener to plant a specific tree on his property. The gardener noted that the tree would not reach maturity for 100 years. Lyautey replied, “In that case, there is no time to lose, plant it this afternoon.”

There are no processes or project maps…no org charts or committees…no reading of metric tea leaves that will secure the the future. Great organizations acknowledge this and cultivate leadership that sees beyond daily commotion, looking toward a spot on the horizon that beckons.

 

This Is What A Priority Looks Like

When things don’t change, there is typically one reason.

Change is simply not a priority.

Wherever there is a lot of talk, but very little action…when progress is painfully slow (without regard to how essential we say it is) it is almost always due to one thing.

The prescribed movement isn’t important enough to command the necessary attention and resources.

And the venue doesn’t matter.

From inside your firm, to global seats of power…from personal living rooms to centers of social, academic and religious establishments…we prioritize what we care about most.

There are a number of ways to distract or mislead. And most of us learn how to talk a good game.

My website may display eloquent proclamations on client service. Or a carefully crafted mission statement might frame purpose in the context of critical conversations — the value of diversity and inclusion, work-life balance, and work-place collegiality, for example.

But beyond copy and soundbites, it is tough to ignore an absence of progress  And it is next to impossible to hide what is most important.

We Invest In Priorities

Sure…finances reveals a lot.

Who we reward and what we support tells a big part of the story. What is often overlooked in this arena is how those we elect to pay defines where and when we decide to withhold resources.

And then there are those spots where financial support can be a proxy for priority.

The real measure of our priorities is where we invest our most precious resource. Most of us come to the realization that we will eventually run short of time. Where and how we spend our hours says everything about our priorities.

If It Is A Priority, We Measure It

Steps-in-a-day. Miles-in-a-week. Heartbeats-in-a-minute. In a given context (and to varying degrees depending on who you talk to), these are measures worth keeping.

We measure what we count as valuable. If it has either captured the imagination or has direct impact on the pocketbook, we find multiple ways to take its measure — from a favorite sport to the machinations of economic indicators.

On the other hand, if we can’t be troubled to recognize benchmarks or measure progress, it simply doesn’t rise to the level of high priority. Period.

And, by the way, to measure begrudgingly does not signal priority…especially when the response is to ignore what the measurement tells us.

I’ve heard the saying since I was a kid — perhaps you have too:

What you do speaks so loudly, I can’t hear what you say.

Translation: actions speak louder than words. Or website copy. Or mission statements. Or the speeches rolled out at annual meetings.

You Name The Issue

    • Diversity and inclusion
    • Succession
    • Client service
    • Firm alignment and integration
    • Business development
    • Or fill in the blank with the area in your organization where movement is needed

In firms where progress is made in challenging areas, it is because a critical issue has risen to priority status.

In these firms, five things drive change:

    • Goals reflect what is most important;
    • Plans exist in order to pursue these goals;
    • Progress is measured;
    • Leadership demonstrates priority status;
    • The priority is clearly reflected in the firm’s investments — in finances and in critical human resources.

This is what a priority looks like.

In The Aligned Firm, Everyone Shares The Vision

If your firm is puzzling over conversations like inclusion, mental health in the work place, succession, stability or any aspect of how to grow, take it as a warning sign: critical areas of your organization may not be aligned.

Not that these topics can’t be plenty challenging. Indeed, any one calls for the best a leader or leadership team can bring to the table.

But if you’re having trouble finding a framework for addressing your challenges, the elements essential to a highly functioning organization are either missing or severely out of alignment. Until these elements are put in place, the pressure on firm productivity, profitability and stability is likely to intensify.

But enough of the dark side.

The good news is alignment changes the decision-making process — even around the most challenging issues —  and results in maximum productivity at every level of the firm.

The First Step — Identify Guiding Principles

In a recent post we suggested 5 areas of every firm where the identification of guiding principles provides the basis for institutional alignment. These areas are:

  • Nature of the Practice
  • Nature of the Platform
  • Compensation system
  • Governance and Succession
  • Work-Life equation

These areas form an interrelated construct of a firm, where the decision-making that accompanies both daily operation and the strategic pursuit of the vision take place. Without established guiding principles, it is difficult to manage day-to-day operations and opportunities, never mind navigate the issues related to leading in a competitive, changing market.

Consider a typical case — the firm aspiring to move into a new market.

Misaligned Growth

When a firm elects to expand its geographic reach by combining with a firm with a significantly different focus, the expansion not only redefines the nature of the firm’s practice; it has significant impact on the nature of the platform — with practical implications for technology, finance, human resources, marketing, administrative, office services and risk management…to touch only the obvious areas.

Though everyone who has been part of a combination knows such a change will have dramatic impact on every area of the firm’s reality, firms continue to merge practices, cultures, and entire operational systems at enormous cost, and with results that call the strategy into question. In a July 2018 article for American Lawyer, Blaine Prescott notes findings that in the corporate world 70 percent or more of mergers meet with questionable success; and the numbers are similar for law firms.

This is not an argument that mergers are doomed to marginal success.

The articulation of basic values and shared aspirations in the five areas noted above provides a kind of manifesto — a set of Guiding Principles that are born of the vision partners have for the firm. Leadership is able to use these Principles to vet opportunities, analyze possible responses to challenges, facilitate better conversations and streamline the administrative process.

Given this framework, opportunities can be purposefully measured — from where and how to grow, to the ideal client profile; from what constitutes an appropriate investment in office space, to how much and where to focus marketing resources; from the comparative value of a million-dollar conference facility, to a client-driven technology capability.

Add the questions you’re investing disproportionate amounts of time on.

A set of Guiding Principles frames productive conversations.

Spotlight The Right Questions

When it comes to decisions that matter, success is often about asking the right questions. The presence of Guiding Principles makes this infinitely more clear-cut. For example, in our growth example above, Guiding Principles might lead to a series of questions like:

Is the expansion consistent with the footprint we envisioned in our strategic plan? Do current key clients benefit from this expansion? Are the demands caused by the acquisition consistent with the way we view the role of the platform, and our guidelines for investing in it? Does the expansion demand new technology? Will the infrastructure requirements tempt a compromise in what we’ve set forth as a guiding principle? How does this expansion impact our diversity and inclusion goals? Do the cultures mesh, or collide? How long will integration take?

How To Define Guiding Principles

Each of the five interrelated areas named above will have multiple areas that should be considered. For example, we suggest at least 7 issues to be considered as you seek to define the nature of your firm’s platform. Guiding principles should be identified in each. (See Fig 1, below)

  • Size — What size do you aspire to be — specific goals, parameters, and timetables, as well as investment parameters should be specified;
  • Footprint — Does the partnership seek to build a local, regional, national, international firm…and is there a strategic driver;
  • Leverage — Define the leverage formula the partnership views as ideal;
  • Cost per Professional — specify the ideal, and the acceptable range each lawyer will be asked to contribute to the creation and maintenance of the desired infrastructure — cost to operate should never be a surprise;
  • Inclusion Profile — specify diversity and inclusion goals, and to the degree this is a challenge, a time table for realizing the goal;
  • Career Path — define parameters and timeline for varying career paths;
  • Professional Staff — define the specific role of the non-subject matter Professional Staff, including the role each team plays in pursuit of the Vision — IT, finance, HR, and Marketing should have a clear understanding of how their roles connect to the firm’s vision.

Fig. 1: The Aligned Firm | Platform

There is no right or wrong answer here. The objective is to identify the few basics your partnership feels strongly about — a set of principles agains which critical decisions will be tested. As noted, each of the five functional areas has a similar set of issues and questions that will yield a complete set of Guiding Principles. And yours may evolve over time.

Guiding Principles Reveal Vision And Drive Strategy

Sure — in some firms conversations around alignment and vision are met with an obligatory wink-and-nod. Sure…everyone says we should have one. It will make nice filler for the website; but we all know what the real vision is — a larger profit-pie this year. When push-comes-to-shove, wherever revenue is in question we all know what the guiding principle is gong to be.

Four things typically characterize partnerships with this view:

  • Little-to-no organic growth (ironic, given the degree to which organic growth increases the profit-pie);
  • Fractured culture — where few believe the firm stands for anything more than a pay check;
  • Alignment has given way to silos, fiefdoms and fractures’
  • Mediocrity — where there is little appetite for change, and zero incentive to innovate.

There are multiple benefits to the alignment that results from the identification of a set of Guiding Principles. Most can be summed up in two categories (and not necessarily in this order):

  • streamlined operational efficiency;
  • a culture where aspirations are shared, and core values are reflected in a set of guiding principles that shape daily operation and strategic execution.

In his paper — The Aligned Organization for McKinsey & Company Thierry Nautin characterizes it this way:

when people understand and are excited about the direction their company is taking, the company’s earnings margin is twice as likely to be above the median. And it showed that high-achieving organizations are also better than others at turning their visions into viable strategies that guide operational planning— something many business leaders may believe they already do well, but which often proves difficult in practice.

Earlier we mentioned that Guiding Principles form a kind of manifesto for the pursuit of a firm’s vision. As such, they provide an outline for how to begin to strategically address the issues, challenges and opportunities that present themselves today.

For Most Firms, Alignment Is The Key To Higher Productivity (Not to mention, answers to the most vexing questions)

For every firm wrestling with direction, under performance, growth, market position, diversity and inclusion, compensation systems, how to address succession planning…and the list goes on…there is good news

The shortest distance between today’s challenges and meaningful progress could be as close as organizational alignment.

The downside is that institutional alignment is often the last thing anyone focuses on. When the day-in-day-out realities of running a firm already demand more time than is available, “soft” discussions around aligning work with purpose, mission and vision become low on the priority list.  These conversations have little to do with the actual practice of your profession. What’s more, experience suggests that time spent here rarely produces any immediate results.

Research Begs To Differ

To accept this position is to ignore volumes of organizational development research and case studies over the past twenty-plus years underscoring the fact that institutional alignment is a critical component in highly functioning organizations. Data repeatedly indicates that purpose, direction, mission, and vision are inexorably linked to high productivity, stability, and yes, increased profitability.

In The Aligned Organization, an article for McKinsey & Co.,  Thierry Nautin suggests: “Achieving real alignment, where strategy, goals, and meaningful purpose reinforce one another, gives an organization a major advantage because it has a clearer sense of what to do at any given time, and it can trust people to move in the right direction. The result is an organization that can focus less on deciding what to do—and more on simply doing.”

Less Time Deciding (Translation: Less Time in Meetings)

This alone should be reason to reassess, and at least test the waters of alignment. I have yet to visit with a law firm leadership group whose goal is to spend more time in meetings.

Nautin contends that in the aligned organization, decision making is streamlined because decision making parameters are known, and understood.

Put another way, in the aligned firm there exists a set of core values and guiding principles. These “knowns” provide the basis for a clear vision for what the firm aspires to become.

  • Should we open a new office?
  • Is a merger the way to go?
  • What about lateral pursuits — what should the model look like?
  • What should our policy be on pro bono involvement?
  • Does our comp system need an overhaul?

Name the question. The place where efficient decision-making begins is in the context of alignment. Which decision and what direction are aligned with core values, guiding principles and firm vision?

More Time Doing 

If you’re prepared to invest time on alignment with the goal being a more agile, productive and profitable organization, where do you begin?

There are at least five areas where the identification of guiding principles will serve to create an aligned firm. These areas are:

  • Nature of the Practice
  • Nature of the Platform
  • Compensation System
  • Governance and Succession
  • Work/Life Issues

The uniqueness of some partnerships may call for a greater focus in one or two additional areas; but the firm that is willing to have the (often difficult) conversations around the identification of vision and guiding principles in these five areas is well on its way to being able to articulate much more than a generic website mission statement.

The payoff to an aligned vision is that it provides a framework for strategic execution. It is in this framework that every functional area of a firm realizes its practical connection to the firm’s vision. In this environment silos can be broken down, new leverage realized, and every member of the organization owns a clear connection to the firm’s purpose and future pursuits.

Fig. 1 – The Aligned Firm

Figure 1 above offers a graphic presentation of the Aligned Firm. In our next post we’ll begin to dive deeper, with a discussion of some of the factors that impact the identification of Guiding Principles.

 

Five Keys To Realizing Return On Your Firm’s Business Development Efforts

Does your firm regularly wrestle with measuring return when it comes to business development efforts? If so, you’re far from alone.

At least one reason is that for many firms, the pursuit of new business is not aligned with any overall, longer-than-this-year strategic plan — one that is guided by a set of core principles, and establishes the basis for strategic growth.

There are exceptions, of course; but for the most part, law firms grow by adding lawyers — one or two at a time, through the addition of a group, or by combining with another firm.

In some instances, this approach to growth is in response to a specific need or opportunity. However, much of the time it is linked to the idea that the addition of partners who possess an existing book of business will serve to increase overall revenue.

With a few exceptions, all indicators point to the fact that while adding billable “books” might boost revenue in the short run, an analysis of a three-to-five year window suggests this is not much of a growth strategy. In fact, adding professionals and hoping business comes along:

    • has significant cash flow implications — firms typically experience negative cash flow on lateral hires for the first nine months — often more; and,
    • 24% of lateral hires will leave within 3 years — within 5 years the percentage jumps to nearly 50%.

And for all the headlines made by merger announcements, combinations are costly, dilute profitability at least in the short run, and are often fragile.

Organic Growth Is Even Tougher

Meanwhile, efforts to codify the growth of the pie as the responsibility of every lawyer has barely moved the needle. From key client or industry teams and cross selling initiatives to talk of hunting in packs and outright sales coaching, firms continue to search for and invest in an approach that will deliver organic growth. 

Yet, in spite of significant investment, many firms actually sabotage their efforts from the word go. For many the investments produce negligible return, year after year.

If this sounds all too familiar, here are five ideas found in firms possessing productive and vibrant business development efforts that, in addition to impacting profitability (yes, it is possible), produce measurable rewards in terms of firm culture and stability.

1. Business Development Is About The Future

The growth of a solid practice does not hinge on finding a silver bullet or learning manipulative techniques. Real growth comes from new connections and newly productive relationships. Every real rainmaker I know will tell you the best business — the work most sought after — comes by way of an existing relationship or a referral.

Strong relationships are the byproduct of shared experiences; and these come with time.

Translation? Business development is a long game — an investment in the future. Every time the pursuit of new business is launched with the need and expectation of near-term return, the potential of the effort is compromised from the outset. Every time the decision to scrap a 24-month plan is made based on perceived results at the 12-month mark, it is a decision based on faulty data analysis.

Effective business development is rooted in clear goals, market intelligence, considered strategy, and a commitment to stay the pursuit.

2. Not Everyone Is A RainMaker

We know this. Yet we continue to try to force the issue.

There is an important reality here. Not everyone possesses the basic skills attendant to rainmaking. An effective (and realistic) firm (or group) strategy recognizes this fact. This is not to suggest that certain partners should be able to opt out. In the healthiest partnership everyone has a role in the growth strategy. However, expecting that every single partner will be equally gifted in every area of responsibility is to set many of your partners up to fail.

This warrants lengthy exploration; however, for example, successful initiatives include research, analysis, and a variety of critical tasks. Partners, it would seem, would strive to construct pursuits in a way that leverages every skill set available. Build a program that involves everyone, but doesn’t expect everyone to do everything.

3. A Focus On Business Development Is Not Punitive

When an emphasis on development is associated only with under-performance, you may as well be saying that a business development assignment is the penalty one will pay missing a mark.

In more instances than I can count, a forced focus on development activities is linked to missing an hourly benchmark or a declining or anemic book of business. Get them a coach to set them on the right path. Bring in a consultant to work with groups that are stagnant. Or adopt the current solution-of-the-month to fix across the board deficiencies.

In one instance, intending to take me into his confidence I’m certain, a Managing Partner let me know that a strident firm naysayer was being named to the Marketing Committee. Implicit in the communication was that, since this wasn’t Compensation, Governance or one of the other “primary” committees, it was a place where the strident voice could be exercised with minimal impact. As a result, meetings of the Marketing Committee were tense and unproductive.

The firm equivalent to a “time-out” isn’t going to turn anyone into an overnight development whiz..

4. Where Programs Flourish, Leaders Participate

Whether an initiative is perceived as punitive will almost always be determined by who opts out. Strong partnerships collaborate on critical solutions, including challenges and opportunities associated with the development of new business.

When firm leaders and/or known rainmakers are not in the middle of growth initiatives two things occur that have negative impact on the overall effort: the message delivered is that the initiative in question doesn’t rise to the highest level of priority; and, the initiative does not benefit from the experience of those with skins on the wall.

If organic growth is a priority, leaders participate.

5. Where Business Development Is Strong, It Is Measured

Inside most law firms there is no question about the need to measure time. It is at the heart of how value is calculated. Alternative billing methodology notwithstanding, to a significant degree productivity is defined in terms of hours worked on billable matters, and the dollar figure attributable to each. Working the requisite number of billable hours is one of a handful of promotion benchmarks.

Yet, some firms are still reticent to employ metrics to gauge progress toward a revenue goal. The management of one firm I consulted went so far as to proudly announce that the firm had never had a budget for business development. Naming targets, establishing goals and tracking progress were unheard of topics. Discussions of such things ran counter to the firm’s professional and collegial culture.

Not coincidentally, the firm’s revenue per lawyer today is virtually the same as it was a decade ago.

A credible growth strategy, it would seem, comes with a definitive set of goals and a clear set of benchmarks against which progress can be defined. And in organizations where growth in profitability is a priority, these things are measured.

By contrast. where the only thing that is measured is hours, the message is clear — do whatever it takes to bill your hours today…before you do anything to build business for tomorrow.

Sabotage or Facilitate?

There are other factors that determine the effectiveness of business development efforts, of course. But the way in which a firm addresses these five areas will have much to do with whether your efforts to grow organically align with a vision that connects to the aspirations of the partnership.

Where to begin?

Business development should be the natural outgrowth of a strategic plan. Most multi-practice firms will, in one way or another, break the pursuit of new business down into group and individual bite-size pieces. The involvement of senior leadership ensures leverage and a unified pursuit.

At the firm level, a strategic plan should identify core principles of the partnership — the nature of the practice the firm aims to build, the platform necessary to support this practice, a roadmap (think 12, 24 & 36 months for starters), compensation, governance, shared aspirations and values. Once identified, these principles provide the cornerstones for a strategic and aligned approach to growth.

Why Your Lateral Hiring Program Under Delivers, And How To Fix It

If your firm is like most, the pursuit of lateral partners is a critical piece of your growth plan, and you invest in it disproportionately. But unless yours is an exception, the effort under-delivers. Consider data highlighted in a January article from ALM, authored by Nicholas Bruch, Michael A. Ellenhorn and Howard Rosenberg.

    • In the past 5 years (2014-2018) there were almost 9,000 lateral moves made within Am Law 200 firms. (This doesn’t count firms with fewer than approximately 200 lawyers that, though not on the registry of America’s 200 largest, rely heavily on lateral hiring as a center piece for growth.)
    • 97% of Am Law 200 firms contributed to that 9,000-moves figure above.
    • According to the authors, “Slightly more than half averaged at least one lateral every two months over that period, and one-quarter averaged at least one-lateral per month. This is the equivalent of a firm completing one sizable acquisition per year.”
    • The estimated value of business moves between Am Law 200 firms (meaning from one Am Law 200 firm over the last 5 years is $17.1 billion. To quote the authors again, “To put that into perspective, Am Law 200 firms grew their revenue by a total of $16.9 billion during that period.”

We should pause to let that last bullet point sink in — the value of business moved within the Am Law 200 lateral market over the past five years eclipsed the value of total revenue growth among the Am Law 200.

What About The Pay Off?

The ALM article goes on to paint a picture you’ve probably already seen. 

    • 24% of lateral partner hires leave within 3 years.
    • Within 5 years, nearly 50% leave.
    • Two-thirds of lateral partner hires fail to produce even 75% of the expected “book.”

“Put simply,” the article posits, “bad hiring decisions are costing law firms (and their partners) significant amounts of money.”

As stark as they must appear to anyone examining strategies for growth and business development, these numbers do not represent new news. Big investments for little-to-no return have been a common theme for law firms and their lateral hiring programs for decades. The ALM article puts a fine point on the reality of today’s increasingly competitive market where revenue growth isn’t easy to come by.

Why Lateral Strategies Fall Short, Or Fail

The authors of the article cited above suggest an overhaul of lateral programs that begins with two changes: reducing firms’ reliance on search firms; and increasing the amount of due diligence devoted to the process.

(Side bar note to Business Development Professionals — if you’re not already, it is time to plug in to your firm’s lateral hiring efforts; business development intel and due diligence are areas where your experience and expertise are assets.)

Any steps taken that result in a more intentional approach to the lateral process should yield a better result. However, we would submit that the place to begin is much more foundational in nature. In short, a lateral strategy produces sub par results (and let’s face it, that’s putting it mildly) for one of two reasons:

    • the firm has no real strategic plan, and therefore no strategy when it comes to growth; or,
    • the actual lateral process does not align with the firm’s strategic plan.

Before you yawn and move on to the next thing in your inbox, this is not a case for a 100-page B-school style paper that does little more than consume hours to create and then gather dust. It is, on the other hand, a suggestion that a few guiding principles will provide a framework that will turn your lateral process into a productive investment.

Five Guiding Principles

Should you add a lateral in a given area of practice? Should you add a practice area? Is it time to seek a lateral in order to seed a new office? What will it cost in terms of compensation? What about your culture? How do you find the right candidate? Will you know the right “fit” when you see it? When should you say ‘no’.

Having an answer to these questions is the difference between a proactive lateral growth initiative, and a “send-us-anyone-with-a-book-of-business” approach — which, for the record, is simply reacting to what the market throws your way.

It has become cliche to say it, but there is no cookie-cutter here. Every firm is a unique partnership, with unique reasons for choosing to practice together. However, with plenty of room to edit and personalize, there are at least five issues around which the most critical decisions in a firm’s life are made — five areas out of which guiding principles emerge. These are:

    • the Nature of the Practice, including a profile of ideal clients and projected pricing;
    • the Nature of the Platform, including aspirations related to size and geography;
    • the Compensation System and related profit goals (and how this aligns with projected pricing);
    • the Work-Life Equation, Core Values, and other matters related to firm culture;
    • Issues of Governance and Succession.

The partnership that explores, zeroes in on and continues to refine the foundational elements in each of these areas has, in practice, a set of guiding principles against which decisions that matter can be made. Taken as a whole, these principles give shape to an aligned strategy for growth.

The Formula For Success

Based on history, most firms are going to sit back, wait for what the market offers in terms of available laterals, and then react — and call it an opportunistic strategy.

And most firms will continue to see more than half of their lateral hires leave within a five year window characterized by a significant lack of productivity — presumably for greener pastures or because the partnership just “wasn’t a fit.”

For the few firms serious about overhauling their approach, the formula is a simple one: get strategic, and become proactive.

The formula is simple; the work is demanding (and apparently distasteful).

History indicates that when issues of revenue growth are the topic, most firms repeatedly turn to the same levers — choosing to focus everything except the value to be derived from a strategic plan that expresses the shared goals and aspirations of a partnership.

Focus on the strategic work, and a roadmap for a lateral process will emerge — one that will shape how and when you choose to partner with recruiters and other referral sources, define productive due diligence, and begin to build a lateral program that provides a measurable return for your efforts.

How will you know this strategic focus is working? The ROI will be clearly manifest in lateral hires who stay…and deliver…becoming long-term producing members of a growing partnership.

The Cultural Disconnect That Kills Productivity

Leverage is an often used buzz word when business conversations focus on productivity, growth and profitability. Oxford Dictionaries define it as the exertion of force by means of a lever.

In practical and slightly less mechanical terms — it is the use of resources at your disposal to change the equation that shapes the your status quo.

Leverage is one of the concepts at the heart of the conversation when professional service firms focus on productivity, growth and profitability. How do we gain it? What must we do to maintain it? What can be done to maximize it?

The application of leverage can move mountains. Misuse it, and you can seriously hurt yourself, to the point of lasting damage.

The principle has worked for centuries as human beings, faced with the need to innovate and improve on process, have explored creative ways to apply the principle.

But leverage has a dark side.

When an organization begins to conflate human resources with levers that can be pushed to the limit, and replaced, the pursuit of leverage can tear at cultural fabric. The erosion of characteristics like creativity, a sense of ownership and personal responsibility results in costly, potentially permanent damage.

Manufactured Tension Between the Bottomline and the Human Resource

Let me underscore that I believe the central motivation and most compelling reason for treating individuals as you’d like for them to treat you is that it is simply the right thing to do.

But for a moment we need to address the rationale offered for viewing certain parts of an organization solely through a leverage-lens: that this is a business, after all.

Great organizations and their leaders understand the business reason to guard against viewing an individual as a commodity that can easily be replaced: it diminishes leverage.

This is not a new idea. HR and organizational development professionals have been telling us for decades that individuals are more productive when they are engaged. (Check this HBR article.) If you need more data, talk to your Human Resources team. Here’s what you’ll hear.

To the degree individuals, departments, divisions or classes of an organization feel disconnected from a shared mission, the organization is sacrificing leverage.

This is the real reason Mission Statements have value. It is not so you have a pithy paragraph to post on your website. Rather, a clear articulation of mission enables each member of a team to embrace a personal piece of the vision. Or — in plain terms — this provides the real reason everyone shows up every day.

A measurable stake in a common pursuit is the real fuel of higher productivity.

Take The Law Firm Downtown

For decades the leverage model has been at the heart of how many law firms have delivered their professional service. Inexperienced (and typically young) lawyers in need of real-world experience are engaged by more seasoned attorneys to accomplish tasks demanding lots of time, but not much experience.

With this model, the inexperienced gain on-the-job-training, while making it possible for more senior lawyers to offer their extensive experience to additional clients…which puts more young associates to work…and so it goes.

The glitch comes when younger lawyers begin to believe the firm sees them as little more than replaceable levers in a process. Detached from mission, the younger lawyers seek greener pastures. The cost comes not only in the loss of the resource, but in the absence of the organic development of experience. The sum is the erosion of culture.

While this is perhaps the most visible area where a firm’s culture can result in a costly loss of leverage, it is not the only one. Consider two timely and relevant challenges.

Diversity and Inclusion

For more than two generations the absence of diversity has robbed the legal space of the strength that comes with the perspectives and experiences of an inclusive culture. And while a handful of firms are showing signs of a change in attitude, board rooms heavily weighted with 60+ year-old white men still shape the daily operations of the industry.

Then There Is The Business Side of Things

The bifurcation of a firm — those who attended law school on one side, and everyone else on the other — limits the degree to which the experience and skill sets of all can be leveraged. When this division results in the separation of those experienced in the disciplines of business from the decisions central to how the business runs, the levers of leverage are, in effect, untouched.

Keys To Regaining Leverage

Examples, good and bad, can fill volumes; and the subject warrants far more attention than one article can deliver. But in the interest of conversations that give rise to creative thinking, here are 4 ideas on ways to realize greater leverage in any organization.

1. Be Clear About Why You Do What You Do

You can call it soft and scoff at the idea that an understood and shared mission makes a difference; but I hope you’re in the mood to struggle with cultural disconnect. Great organizations are made up of individuals who buy into the mission, and are clear about why today’s work matters. If your entire team doesn’t know how the work of today connects to the reason you exist, you’re losing leverage.

2. Be Inclusive

Sure…you’re talking about it. Everyone is. But if you’re talking about inclusion because it is the hot topic of the moment, you’re missing the point. Two points, really. The business reason this is an important conversation is that it embraces the broadest perspective and the richest experience inside your firm. It is the way an organization ensures it is approaching a conversation, an opportunity or a challenge with every tool it has access to.

Then there is the fact that it is the right thing to do.

3.Turn Your Team Loose

If you have a team, you likely assembled the various players for a reason. Allow and expect them to perform the jobs for which they were hired. If you don’t, you’ll lose the best of the group. (Side note: if you’re repeatedly searching for “the right fit” in key roles you may not be clear about overall strategy, making it difficult to engage the human resources aligned with your goals.)

4. Treat Your Human Resources Like Human Beings

There are clear business reasons to support and encourage every member of your organization. The most compelling is that the greatest source for creativity and innovation you need to win in today’s market is your team or tribe.

Treat individuals like commodities, and don’t be surprised when you sacrifice leverage at every turn.

But inasmuch as it may seem a forgotten value, it is worth repeating: the greatest return on personal interactions, wherever they might present themselves, is realized when we find a way to pause…and treat others the way we would like to be treated. Why the note to pause? Because we must first see others the way we wish to be seen.

A Moment of Silence For the Death of Dialogue

I remember when we used to be able to disagree with each other.

We could have a debate, and go home friends. We could work alongside others, and even build a community with folks with whom we shared differing views.

Things weren’t perfect, for sure; but it wasn’t unheard of for diverse groups to manage to identify common ground, and get things done.

I remember when collaboration and consensus were positives.

Those were the days.

Or maybe it was all smoke and mirrors…or a product of good-old-days syndrome.

Today is certainly seems like dialogue is dead. Compromise is a dirty word. Peacemakers are more likely to be seen as soft, than as leaders or facilitators of progress.

Hyperbole and name-calling pass for telling it like it is. Give-and-take is wasted breath. Cranking up the volume, and soundbites scripted for the talk-show circuit masquerade as discourse.

When was the last time you heard (or participated in) a calm and reasoned debate around deeply held perspectives. How did it end?

The Sounds of Dialogue

If you’re lucky, you’ve been around someone who modeled the adventure of dialogue.  It might have been a parent, teacher or mentor. For these accomplished few, canned positions rarely suffice. Their conversations are interesting — even compelling. They are likely characterized by listening, and real give-and-take.

In real dialogue there isn’t a winner. There are explorers. Students. Bridge-builders.

If it isn’t dead, the art is fading fast.

These days it’s about nailing the soundbite; sticking to the talking points no matter what the question might be; tearing down in favor of building; being audacious in 140 characters; or going viral.

It’s about the highlight reel and a WOW moment. It is antagonism posing for discourse. It’s about a headline, a spotlight, or a reality gig.

It is about making my point and winning the moment. Without respect to implications on the next opportunity, it is about laying claim, and staking territory.

And before we know it, we’ve gone a day…or a week…or a month without engaging in a single real piece of dialogue.

Little by little, have we forgotten what it sounds like?

It isn’t how-was-your-day-mine-was-okay stuff. It is more than comparing vacation itineraries or updating Facebook or Insta status.

Dialogue requires empathy. It should be an adventure.

If we care about more than attention…if our quest is about more than self-promotion..if the goal is meaningful movement…we must find a way to rescue dialogue from the brink of extinction.

Where and how to begin? Step away from the podium. Spend some time listening — not for ways to shoot holes in what you hear; but in a search for common ground…for shared aspirations. This is where dialogue begins.

Unless we rediscover the art, very little of real consequence will change — whether the venue is personal, professional, social or political.

Will we disagree. Certainly. But we might discover that those faint memories of when we could disagree and debate and walk away with self respect and friendship in tact are not a figment of our imagination at all. Those were the good ole days.

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