July 19, 2007
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ALA Currents is a free newsletter about management trends and innovations
provided exclusively upon request to members of the Association of Legal Administrators.
News & Views
TOP PROFESSIONAL SERVICES FIRMS REVEALED
The Managing Partners’ Forum, an association dedicated to enhancing leadership and the status of the
management team in professional firms worldwide, launched the first ever consolidated view of the world’s
leading professional services firms in its inaugural MPF Global 500 Annual Report.
Employing 4.7 million people across the globe, the top professional services firms provide key services to
virtually every commercial and public sector organization in the world, yet the true scope and scale of the
industry has remained obscure – until now. The MPF Global 500 reveals an enormous and influential sector
generating annual fees of $535 billion, with established professions such as accountancy, law, technology,
design, and management consultants accounting for over half of that total. Fees generated by field are broken
down as follows:
| Accountancy | $115 billion |
| Law | $85 billion |
| Technology | $77 billion |
| Design | $77 billion |
| Management consultancy | $63 billion |
| Marketing services | $48 billion |
Law firms making the top 60 include Clifford Chance, Linklaters, Freshfields Bruckhaus Deringer, DLA Piper,
Latham & Watkins, and Skadden Arps. To view the full report, visit
www.mpfglobal.com.
USING COMPETITIVE INTELLIGENCE TO MAKE
BETTER LAW FIRM BUSINESS DECISIONS
By Janet Ellen Raasch
In the increasingly competitive environment for legal services, most law firms recognize the
need to make intelligent business decisions. Decisions made in a vacuum – based on (often faulty)
internal assumptions – do not fill the bill. Truly intelligent business decisions are made within the
context of a law firm’s external competitive environment.
The way to accomplish this is through the use of competitive intelligence – a systematic and
ethical program for the collection, analysis, and management of outside information. CI can be
gathered from many sources – including public records, publications, the Internet, surveys, and
personal interviews. This information can be used to win new clients, cross-sell to existing clients,
evaluate merger and acquisition opportunities, and decide whether to add a practice area or
open a new office.
“Currently, about 75 percent of firms claim to conduct some sort of CI,” said Jillion Weisberg, a
business development executive with The Thomson Corporation. “Most of these law firms, however,
are using CI on a strictly tactical basis – to reactively aggregate information on a case-by-case basis.
Only the top 25 percent are tapping the full value of CI – proactively for strategic decision-making.”
CI functions – basic to strategic
As a result of its research, Thompson recognizes four categories of law firm CI efforts – ranging
from the most basic to the most sophisticated.
1. Basic Aggregator Level
A marketing or library staff person (in response to a specific request) uses free public or basic
research products to compile readily available resources. “These raw data would be distributed
to the attorney ‘as is’ – without additional summary or analysis,” said Weisberg.
2. Aggregator Level
A marketing or library staff person supplements basic research with data gathered from some
mid-value resources (like Hoovers or Dunn & Bradstreet) – and perhaps a few high-value
resources (products that can track the actual legal activities of clients and competitors). “At this
level, some of the aggregated data would be summarized into a report that is more useful to a
busy attorney,” said Weisberg.
3. Reactive Analyzer Level
A dedicated marketing or library staff person uses basic, mid- and high-value resources and
provides a report that includes analysis of what the data mean within the context of the
requesting attorney’s goals. “Efforts at this level are sophisticated, but limited to a specific,
time-limited opportunity – like a response to an RFP,” said Weisberg.
4. Proactive Analyzer Level
A dedicated staff person – who is familiar with the firm’s strategic goals – continuously gathers and
analyzes CI using a combination of basic, mid- and high-value tools. “This senior-level person
proactively identifies goal-related business development opportunities, analyzes them, and brings them
to the attention of the firm,” said Weisberg.
Six ways to use CI
According to Thomson research, law firms commonly use competitive intelligence in conjunction
with six business development activities.
1. Meeting with a potential client
Marketers and librarians at most law firms will be asked to prepare materials that describe the firm
and its capabilities, create a business and financial overview of the target company, coach the attorney
on presentation and sales skills, and identify firm capabilities that are potentially important to the
prospective client. “The most sophisticated firms will supplement these efforts by using higher-value
CI tools to access court dockets, transactions, and court cases to determine the potential client’s and
potential competitor’s actual legal activities – reported by issue and geographic area,” said Weisberg.
2. Responding to an RFP
Marketers and librarians at most law firms will manage the process, provide a tailored overview of
the firm’s capabilities, provide input on the make-up of the team, and compile the firm’s record of
relevant legal work in the prospective client’s industry. “The most sophisticated firms will also use
higher-value CI tools to determine the legal activities – past and present – of the potential client,
as well as the relative strengths and weaknesses of the firm’s competitors,” said Weisberg.
3. Identifying prospective clients
Marketers and librarians at most law firms identify major companies in a particular geographic area.
“The most sophisticated firms will use higher-value CI tools to narrow this search to companies
within defined industries and companies that are major consumers of legal services that the firm
has targeted for development,” said Weisberg.
4. Identifying cross-selling opportunities with key clients
Marketers and librarians at most law firms examine internal records to identify areas where the firm
earns fewer revenues and come up with a plan to get more work in those areas. “The most
sophisticated firms will use higher-value CI tools to analyze external resources containing the
actual legal activity of key clients in order to identify areas where the firm does little business – but
where there is significant legal activity,” said Weisberg. “The firm will look at the firms that are
currently doing this work – and approach their cross-selling efforts with these competitive strengths
and weaknesses in mind.”
5. Evaluating a potential merger or practice group acquisition
Marketers and librarians at most law firms gather information regarding any overlap of major clients
and the work reportedly done for these clients. “The most sophisticated firm will use higher-value
CI tools in this process – to confirm the stated experience of the candidate firm or group,” said
Weisberg.
6. Deciding whether to open a new office or launch a new practice area
Marketers and librarians at most law firms gather information on the size and growth potential of the
target market, as well as information on the other law firms in the market and their stated capabilities.
“The most sophisticated firms will use higher-value CI tools to analyze the actual legal activity and
competitive landscape within the potential geographic or practice area,” said Weisberg.
“Obviously, intelligent and successful business decisions by law firms are not made within a
vacuum,” said Weisberg. “They are made on the basis on competitive intelligence – within the
context of a law firm’s wide-ranging external competitive environment.”
Janet Ellen Raasch is a writer and ghostwriter who works closely with lawyers, law firms and
other professional services providers – to establish them as thought leaders within a targeted market
through publication of articles and books for print and rich content for the Internet. She can be reached
at (303) 399-5041 or jeraasch@msn.com.
Management Innovations
BEYOND PROFITS: FIRMS OF ENDEARMENT
This is the end of business as usual, says marketing professor Jagdish Sheth. Some innovative
companies are expanding the goals of traditional corporations beyond simply making profits. These
organizations are striving to meet the needs of all their stakeholders: employees, suppliers, and
neighbors, and not just investors. Sheth calls these companies Firms of Endearment (FoEs). People
who work with, buy from, invest in, or live near these companies “feel safe, secure, and pleased in
their dealings” because these companies do not put the interests of one stakeholder group ahead of
others’. In a new book, Sheth describes the operations of 30 such companies. To choose them, he
asked people for the names of companies they don’t just like – but love. Next, he examined how
well these companies met the needs of their various stakeholders, and finally their financial returns.
The findings surprised him. Over 10 years, publicly traded FoEs returned a whopping 1,184 percent
to their investors, compared to 122 percent by the S&P 500.
“Apparently, not only can you have your cake and eat it too,” Sheth declares, “you can also
give some to your friends, donate some to a soup kitchen, and help support the local cooking school.”
FOEs include LL Bean, Harley-Davidson, New Balance, Whole Foods, and Wegmans.
Knowledge @ Emory
SOCIAL NETWORKING JUMPS TO CELL PHONES
New online services with names like Kyte, Twitter, Radar, and Jaiku that leverage the power of
today’s advanced mobile devices are enabling users to share (or overshare) round-the-clock
chronicles of their travels, tribulations, and triumphs to friends and family. These new phone-oriented
services take the burgeoning youth culture of exhibitionism to new levels, while at the same time
contributing to the barrage of information overload. Kyte offers software that allows users to send
their photos and videos – however grainy – from their phones to their online Kyte “channels,” which
can be linked to their own Web sites or MySpace pages. In some cases the video stream can be
viewed live. “To run a television network used to require expensive cameras, a satellite connection,
and studios,” said Kyte co-founder Daniel Graf. “But the production costs have gone down to zero.
Now you can share your life over a mobile phone, and someone is always connected, watching.”
Radar, a service offered by San Francisco startup Tiny Pictures, is similar to Kyte in that users send
their camera-phone pictures to the Web or to other Radar users’ phones. But it differs in that sharing
is restricted to users’ friends who have been invited to view them. And Twitter is geared toward
bloggers, allowing users to broadcast short text messages to their friends and strangers.
Meanwhile, mobile phone companies are also eying mobile social networking, led by Helio, a
joint venture of Earthlink and SK Telecom of South Korea. Social networking “is at the core of the
company strategy,” said Helio Senior VP Michael Grossi, adding that the company plans to introduce
a handset with a fold-out standard keyboard for easier typing.
The New York Times
Building Buy-In
SELLING UP
By Paul Trout
It all comes back to mom or dad.
As children, each of us had experiences that govern our ability to effectively Sell Up.
As a youngster, the likelihood to “get what you wanted” depended largely on understanding
how to persuade one or both of your parents.
My poor dad would agree with me. As I approached 16 – the age in which you could
receive a driver’s license in California, where I grew up – I coveted a very specific car: a
blue 1978 VW Rabbit. Six months before my birthday, however, I asked my dad point
blank: “Will you buy me a blue 1978 VW Rabbit for my birthday?” “No” he said. “Why?”
I asked. “Because I said so,” he replied, giving me a hard stare.
Moments later, I recognized my desire for that car was greater than my aversion to
making him mad. Perhaps asking the question so pointedly was not the right way to go
about things. Perhaps I needed to plan a more sophisticated persuasion campaign.
The campaign would result in getting my dad to say “yes,” by figuring out ways to
get my mom and my younger sister to influence my dad to buy me that car. I figured
my chances of success would be increased if dad felt pressure from everyone within the
family.
My sister said that I should drive him crazy, as this method proved successful in the
past. She would help me drive him crazy, she said, if when I got the car, I would drive her
and her best friend to the roller skating rink on Sundays until she was old enough to drive
him crazy for a car herself.
Mom had a different idea. She thought I had asked the question too early and too
bluntly. She revealed that he, in fact, was doing side jobs to save up enough money to buy
me a car. (She was also tired of being the owner of “Mom’s Taxi,” and figured the sooner I
got my Rabbit, the less she would have to drive both my sister and I around town.)
On the “Project Rabbit” launch date, pictures of rabbits – some hand drawn, most coming
from magazines – made surprise appearances in my dad’s car, his lunchbox, and even in
unexpected places like in the packaging for the salami he ate in the middle of the night.
My sister helped me with the campaign (she put a stuffed bunny rabbit in his bed) because
there was something in it for her. My mom steered their private conversations to getting me a
car as soon as possible. The rabbit revolution was well underway.
It ended one Saturday morning, no less than six weeks before my 16th birthday,
when my dad told everyone to get in the car, “we’re going to buy the damn Rabbit.” I was blown
away by my good fortune and smarts – it had worked so well that I was going to have a car even
before my birthday!
At the lot, we all spotted it at the same time – the 1978 Blue VW Rabbit. It was everything I
wanted, but there was only one problem. It was a stick. I didn’t know how to operate a manual
transmission. Why would he buy me a car that I didn’t know how to drive? My dad paid cash for it –
the cash he had earned at his side jobs. As he drove it home, said that he would teach me how to
drive stick on my 16th birthday. Over the next six weeks, he tortured me the same
way I had tortured him by watching me fruitlessly try to use the clutch, stick, and pedal to make
the car go up our sloped driveway. Touché!
Eight important lessons to learn when Selling Up:
- Plan a persuasion campaign (especially for larger purchases/ideas).
- Ask people for their opinions on the idea before you try to sell it.
- Determine if there’s anything “in it” for the people around you; if there is, they are more likely to help.
- Make trades with those who would block your efforts to gain their support.
- Create continuous buzz over a sustained period through multiple people.
- If you want a kitten, ask for a horse – i.e. ask for more than you expect; you won’t always get everything you want.
- Timing is everything – pick your time based on external events, not internal desires.
- Let the idea become everyone’s, not just yours. It may take a different shape than you expected, but if the spirit
of the idea is still there, let your ownership go.
Paul Trout is a Managing Partner with
Akina and teaches Associates and Partners who were trained in the law but never in sales how to authentically
build books of business. This article is an excerpt from one chapter of a book he is writing on the topic of Building Buy-In.
He strongly encourages readers to submit case studies, learnings, or questions about Building Buy-In, which may
become part of the book and appear in a future column. Contact him at ptrout@akina.biz
or (312) 224-8028.
Caucus Insights
This section features condensed versions of recent discussions in ALA’s Large Firm Administrators Caucus ListServe, which is exclusively for people working in firms with 100 attorneys or more.
THE TOPIC: Origination Credit
We track Originating, Supervising, and Working attorney stats for compensation purposes. We do not
have a formula system, but these three stats, billable hours, and realization are the most discussed
objective measures. The cornerstone of our origination policy is a “first touch” rule, and there are no
sunsets on originations. Over the past several years, team marketing has been emphasized, but the
“first touch” rule compromises the sorting out of credit. All lawyers are encouraged to share origination
credits, but as you can imagine does not always occur. The questions for the group are:
1. Do you track originating credits?
2. If you track them, do you have a “first touch” rule (as indicated above)?
3. How do you reward team efforts at expanding business – existing and potential new clients?
4. If you previously tracked originating credits, have you gone away from it? How did you accomplish it and did
you keep any semblance of originations, e.g. credit to groups instead of individuals?
SELECTED RESPONSES:
1. Do you track originating credits? Yes. As to a first touch rule, basically the same for
individual efforts. No sunset on origination; however, we do not transfer origination
credit should someone leave, so origination credit on new matters for old clients of departing
originator inure to new responsible attorney on the matter.
How do you reward team efforts at expanding business – existing and potential new
clients? We actually have a relatively effective sharing of origination credit for those who are
actually “binding” the relationships and doing follow on work or more new work for clients.
Also, for team efforts to snag new clients, there has been agreed upon sharing of origination
credit before the fish are landed.
2. We no longer track originations…
Years ago, we had a formula compensation system driven by originations and collected work
credits. The fights over origination credits were unbearable and seemed to motivate the wrong
behavior. We dropped the formula and now have an almost entirely subjective system. Partners are
asked to explain in a memo to the compensation committee the clients and revenues that they are
responsible for bringing to the firm (responsible means in their mind at least 50 percent responsible),
clients and revenues that the contribute to maintain at the firm (we use to call this binding), and
clients that they have a passing relationship with (we use to call this minding).
The practice group leaders and the compensation committee sort this all out and make their
own assessments as to how large someone’s practice actually is. We focus our rewards more on
intensity of effort (billable hours), effective client management (realization rates), how well you
play in the sandbox (team marketing and cross selling), and if we need a tie breaker, we look at
the perceived size of one’s practice.
3. We track origination credits. However, they sunset over five years in favor of the Client
Responsible Attorney(s). If the Originator continues as the Responsible Attorney, credit continues
for that Attorney. (Someone will always be the Responsible Attorney).
Never heard of the first touch rule.
No group credits in the sense of a practice group. Those participating, which is usually maxed at
four folks get shared origination credit.
We have tracked for seven years and continue to this day. We also have Matter Originating
and Matter Managing Attorneys. Matter Originating is frequently used for the “sub specialist” who
by reason of his/her subspecialty alone the matter of came to the firm. (The client already being
with the firm using other practice areas). Tracking is not applied in any formulaic way. Instead the
“Contribution Reports” (Client Origination, Client Responsible, Matter Origination, Matter Managing)
are reviewed by our Draw Committee to get a general feel about each partners’ contributions. This
whole “Contribution” process is especially important to partners who are not viewed as rainmakers.
4. We do not track “origination” in our system to encourage group client development. We do,
each year via a database we’ve created, ask partners to identify revenues collected as a result of
their “business development,” which could include taking an existing client and developing new matters
from it as well as bringing a new client in the door. Each year the claims could change as additional
partners work on matters for existing clients. We create reports from the collected data and our
management committee uses those reports, along with working attorney fee receipt data and other
criteria in a subjective system of compensation.
5. We do track origination, but it is not the most important factor. We put more emphasis on
Matter Atty. When an attorney originated a new client, they get origination and matter credit for
the matters they open. Over time, if the work gets spread around to other attorneys who then open
matters, they get that matter credit. Through the matter attorney credit, we can acknowledge those
who expand business from existing clients.
We have set up some team marketing. Basically, we create what amounts to as a new attorney,
e.g, Jones-Smith. There is an understanding before that happens as to how the credit is to be
awarded – 50/50, 40/60, etc.
6. We have never tracked origination credits – although there are always claims as to who brought
in the client, the reality is that we are trying to create a culture of team vs. individual. So, our partner
compensation and associate compensation review process deals with this.
ALA’s Legal Management Resource Center (LMRC) also has several articles related to this topic.
Click here, to learn more.
Special Note: ALA members have free access to the ALA Reference Desk. Send any question on legal
management here. Staff will conduct
personal research on each question.
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