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Law Firms in Business Development Transition

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Most law firm marketing and business development professionals believe law firm growth prospects are more promising this year than last, although competition is the top barrier to growth, according to a new survey. The study was published by LexisNexis provides peer perspective on the state of legal marketing – and more importantly benchmarks for improving overall business development strategy. Key statistics and trends on how law firms are tackling evolving challenges stemming from the survey include: More than half of those surveyed (57%) are sanguine about law firm growth this year, while about one-third expect growth to remain flat. Just 5% expressed pessimism; Competition was the single largest challenge to law firm growth according to 52% of respondents; Upwards of 90% believe there is a fairly clear distinction between “law firm marketing” and “law firm business development.”

Published in: Law

Law Firms in Business Development Transition

  1. 1. Law Firms in Business Development Transition A survey of 400+ US legal marketers and business development professionals on the challenges and opportunities
  2. 2. 1 Executive Summary  Legal marketing is sanguine about growth. Most law firm marketing and business development professionals believe law firm growth prospects are more promising this year than last (57%). About one-third said growth would be flat and just 5% reported the outlook is worse.  Law firm competition is fierce. Competition was the single largest challenge to law firm growth according to 52% of respondents. The next highest challenge cited was obtaining attorney participation (39%) and rounding out the top five included 3) pricing, 4) no long-term strategy and 5) no accountability. Open-ended comments such as “Many people courting same potential client with no respective plan in place” illustrated the data.  Law firm marketing strategies are in transition. 85% agreed or strongly agreed that the strategy and activities required to win new law firm business have shifted in the last several years. Upwards of 90% believe there is a fairly clear distinction between “law firm marketing” and “law firm business development.” When asked how these are different, more than 320 participants offered open-ended comments. One respondent quipped, “One spends money, the other makes it.”  Law firm marketing and BD structures vary greatly. Precisely how law firms have structured marketing and business development to meet evolving requirements varies greatly – almost into even fourths. For example, about one-quarter of respondents said their law firm did not have a business development department, while 29% indicated marketing reports to business development. Just about one-fourth of law firms say they have a chief business development officer (CBDO) and of those, 81% said the CMO fills both roles.  Law firms eye thought leadership? The top five activities in which law firms are investing to drive growth are 1) thought leadership (63%); 2) analytics (58%); 3) blogging and content marketing (57%); 4) social media marketing (55%); and technology such as CRM (51%). As a percentage of revenue, 13% said their firm invests between 1-2% on marketing or business development, while 32% said 2-5%.  ROI the perennial challenge. Calculating the ROI on the activities in which a law firm invests for growth, continues to be a challenge. The largest group of respondents (43%) indicated they do not have quantifiable data. About one-third said they did (33%) with another 23% stating they were unsure. The #1 activity tracked among law firms is the win/loss ratio.
  3. 3. 2 Sanguine about Growth Most law firm marketing and business development professionals are upbeat about growth. A majority, 57%, say law firm growth this year is more promising than last year. One-third of respondents thought growth would be flat, while 5% suggest 2015 will be dismal. (N = 463)
  4. 4. 3 Law Firm Competition is Fierce In terms of winning new business, the a majority cited competition as the single largest challenge. The top five are depicted in the chart on the left below. The entire list is shown on the right and demonstrates law firms face a litany of obstacles of near-equal challenge. (N = 434). Open-ended comments add color to the numbers: • Thin bench strength of attorneys in certain practices; • Lack of follow-up on proposals from attorneys; • Potential clients usually go with current counsel; • Many people courting same potential client with no respective plan in place; • Corporate counsel keeping more cases in-house; • Too much focus on what the law firm can do instead of what the client really needs; • Compensation structures which discourage cross-practice collaborating selling; • Too many lawyers, not enough work. Competition is fierce.
  5. 5. 4 Law Firm Marketing Strategies in Transition There is a tremendous amount of discussion in the industry, and while there are indications of improvement, the legal market will never return to pre-2008 levels. How customers buy legal services has change, and legal marketers seem to agree that also requires a shift in how such services are positioned, marketed and sold. (N = 430)
  6. 6. 5 Law Firm Marketing Does Not Equal Business Development And overwhelming majority – more than 90% – believe marketing and business development are different functions requiring different skillsets. Marketing and business development professionals are extremely passionate about the topic. Those that answered “yes” were asked a follow up question and logged more than 320 answers to an open- ended question about how these are different. A representative sample is listed on the next page. (N = 430)
  7. 7. 6 15 Ways Marketing and Business Development are Different The following is a representative sample of answers survey- takers provided describing how law firm marketing is different than business development. The wide range of views are reflective of variance in roles and responsibilities across law firms. (N: 323) 1. Marketing establishes the brand by making an impression. Business development builds on the brand by confirming the reputation and turning connections into a relationship (sale). 2. Marketing is the brand, the message, and the umbrella over business development. Business development is growing a network of people who will refer clients. 3. The marketing function develops the tools and technology needed to support the BD efforts. 4. Marketing is more of an art form, whereas BD is about relationships. 5. Marketing is about the product, placement, price, promotion and profit. It's numbers based and easy to analyze, it does not account for the touchy-feely aspect in business development. Biz dev is about creating and maintaining client relationships and is very individualized and doesn't have a number tied to each activity, it's longer term. 6. Lawyers are not good a selling or marketing themselves, you need professionals for that. They need to focus on practicing law. 7. One spends money, the other makes it. 8. Marketing is making the strategic decision about where opportunities lie. Business Development is the process of trying to maximize those opportunities. 9. Marketing requires someone to go to specified public groups and make a pitch to people you do not know. Business development usually requires going to people you are familiar with (and may already represent) and convince them to send more business. Both skill sets are completely different from what it takes to practice law. 10.Business development requires more precise analysis, and long-term and sophisticated attention. 11.I view "marketing" as mostly synonymous with visibility. Marketing is the earliest stage of the business development process and mostly involves making clients aware of who you are, what you do, etc. When I think of business development, I view that as being further along in the process. It relates more to a smaller, select group of clients or prospects and the focus is on relationship- building and follow-up. It is less about visibility and name recognition and more about developing genuine connections and trusted relationships. 12.Marketing is brand image. BD is relationships. 13.Marketing is focused on collateral, PR and advertising. Business Development is focused on developing and maintaining relationships that lead to new clients and work for the firm. 14.Marketing supports business development efforts. 15.BD has generally been responding to RFPs, preparing pitches, and partaking in some training. Marketing is generally everything else - content, PR, web, etc.
  8. 8. 7 Law Firm Marketing and BD Structures Vary Greatly The relationship between marketing and business development falls in a near equal distribution of fourths across the industry. Among the themes that stand out, albeit by slight margins, marketing is more likely to either report to business development, or is maintained as a separate function. (N = 412)
  9. 9. 8 Chief Marketing Officer or Chief Business Development Officer? Most law firms do not employ a chief business development officer (CBDO) – just about a quarter of respondents said their firm did (right). Given the overall sense that strategies are in a period of transition, respondents were provided separate follow up questions: • Answered “yes.” These respondents were asked to describe how the CBDO roll was filled: 81% said the chief marketing officer (CMO) filled both roles; 9% said the CBDO and CMO were unique and separate roles; 10% indicated these were separate roles working in close collaborating. • Answered “no” or “unsure.” These respondents were asked: Do you believe your firm should create a separate role for a CBDO? The margins shrank noticeably (left). N = 412 N = 310
  10. 10. 9 Law Firms Eye Thought Leadership The investments identified by legal marketers and business development personnel center on technology and new media marketing. The top 10 areas law firms that said they plan to “increase” or “increase significantly” are: 1. Thought leadership (63%) 2. Analytics (58%) 3. Blogging and content marketing (57%) 4. Social media Marketing (55%) 5. Technology (i.e. CRM) (51%) 6. Client events (48%) 7. Lead development (44%) 8. Business development calls (41%) 9. Public relations (40%) 10. Digital Marketing (35%) 4 1 2 3 5
  11. 11. 10 Return on Investment (ROI): the Perennial Challenge Calculating the ROI on the activities in which a law firm invests for growth, continues to be a challenge. Most respondents (43%) indicated they do not have quantifiable data. About one-third said they did (33%) with another 23% stating they were unsure. By way of analysis, if a firm is unsure as to whether or not it has strong data on ROI, it probably does not. A follow up question drilled down into what metrics are tracked. This may provide context to the sentiment expressed by respondents previously that many firms do not have a unified marketing and business development plan. Win/loss was the most common metric tracked and was followed by practice and individual goals. N = 385 N = 214
  12. 12. 11 23 Changes Legal Marketers Would Make to Drive Growth The final question of the survey was open-ended: The single most valuable thing my firm could do for marketing or business development would be __________. A representative sample follows below. (N: 163) 1. Invest more in helping lawyers to understand and focus on business development. 2. Have a greater buy-in and an increase in data for analysis. 3. Revitalize CRM. 4. Hire more sales people who are attorneys, but focused solely on business development. 5. More client-focused activities. 6. Get attorneys to work together so that client sees a united front and attorneys that get their issues across the board. 7. The firm should expand it's reach into new practice areas that may be helpful for business development. They need to be competitive with similar sized firms. 8. To have 100% participation of all people within the firm. 9. Keep the marketing and business development department more in the loop of new business initiatives. 10.Invest in client feedback interviews and figure out ways to automate some marketing processes. 11.Track ROI from start to finish. 12.Have better data in our CRM and in our pitch and RFP tracking to improve our metrics. 13.Better train, equip, and reward attorneys for business development rather than a single-minded focus on the billable hour only. 14.Change their hiring practices; we are approved to expand headcount and get the right people in the right places, but HR takes FOREVER to fill positions. 15.To eliminate origination credit and replace it with financial incentives for cross-selling across offices and practices. 16.Implement a CRM. 17.Establish concrete guidelines that focus solely on strategic initiatives, and eliminate using resources on initiatives that have little to no ROI (e.g., rankings and making pitches to prospective clients that do not have any relationships within the firm). 18.Focus more on the strategic business development plans that are written each year by attorneys, and really figuring out how to leverage that. 19.Fix our compensation system for attorneys so that attorneys would be compensated to work together to build an existing client's revenue base and to bring in new business. 20.Increase number of business development professionals. 21.Leadership communicating about need to engage in business development actively, rewarding those who do, and doing something about those who are unproductive. 22.Create a firm-wide business development strategy and implement/track on the individual attorney level. 23.Create a real strategic plan, rather than focus on tactical plans, and embark on a change management campaign to affect cultural shifts needed to do things different and obtain a different outcome.
  13. 13. 12 Are you peeking behind the curtain? There’s nothing here! Survey Methodology and Demographics
  14. 14. 13 Survey Demographics and Methodology Respondents to this survey were solicited in two ways. First through the membership of a legal marketing association and second through the readership of a 3rd party legal technology trade publication we believe to have a strong subscription base among legal IT and law firm marketers. The survey was open from July 6, 2015 to July 27, 2015. More than 400 participants responded and report being predominately employed as marketers or business development professionals working for law firms in the US. Nearly half of all respondents said they worked for law firms with more than 200 attorneys. Geographical distribution was spread among 45 states or US territories. The states with the greatest participation are those known to have a large concentration of law firms including: New York, California, Washington, DC, Texas, and Illinois. Respondents were offered an incentive to be entered to win one of three gift cards, worth a) $250 b) $100 and c) $50. Winners were selected at random. Demographics at-a-glance: • 87% reported employment in law firm marketing or business development • Other roles reported included attorney, IT, paralegal and research librarian • Law firm size: • 28% work at firms with 501 or more attorneys • 24% work at firms with between 201-500 attorneys • 30% work at firms with between 51-200 attorneys • 18% work at firms with between 1-50 attorneys
  15. 15. 14 Demographics by Role
  16. 16. 15 Demographics by Law Firm Size
  17. 17. 16 Demographics as a Percent of Revenue Invested in Marketing
  18. 18. 17 Webinar and Formal Survey Report in PDF Format Complimentary Webinar: Law Firms in BD Transition - Survey Results When: October 27, 2015 at 11:00 a.m. (EST) Where: Online Cost: Complimentary with registration: http://bit.ly/Law-Firm-BD-Webinar Formal Survey Report: Law Firms in Transition: Marketing, Business Development and the Quest for Growth (PDF) Cost: Complimentary with registration: http://bit.ly/law-firm-BD-report Also see addition resources on the next slide!
  19. 19. 18 Additional Resources on Law Firm Marketing and Business Development • Visit the LexisNexis® InterAction® Resources Page • Legaltech News: LexisNexis Unveils Law-Targeted Business Development Module for InterAction • LawMarketing.com: 10 Best Practices to Implement CRM Effectively in Your Law Firm • LawMarketing.com: 6 Steps to Transform Business Development Action into Real Results • Business of Law Blog: 7 Creative Ideas to Kick Start Collaborative Legal Conversations • Business of Law Blog: The Best Kept Secret to Getting More Work: Stuff Envelopes • Business of Law Blog: LexisNexis InterAction Unveils Law Firm BD Module • Business of Law Blog: InterAction Adds Passive Data Management to Law Firm CRM • Business of Law Blog: Raindance: 5 Takeaways on Client Teams from #LSSO • Business of Law Blog: 4 Easy Tips for Law Firm Client Team Programs • Business of Law Blog: A Cheat Sheet for 5 Recent Legal Industry Studies • Business of Law Blog: How Law Firms Can Successfully Implement a CRM System • Business of Law Blog: 9 Creative CRM Tips for Getting Lawyers to Share Data • Business of Law Blog: How to Get Attorneys to Use Law Firm CRM • Social Media: • Blog: Business of Law Blog (subscribe by email via RSS) • LinkedIn: InterAction CRM Group • Twitter: @Business_of_Law • Facebook: LexisNexis Business of Law • Google+: +businessoflawblog • LexisNexis Software and Technology Press Releases (subscribe via RSS)

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