Tuesday, October 28, 2008

Impediments to Business Development

There are many reasons why attorneys may not develop new business. Here are just a few of them:
  1. Managing Partners do not provide clear instructions. Simple. If attorneys are not directed to generate more revenues from current clients or open new accounts, chances are they won't.
  2. Attorneys are not trained in proper business development techniques. Most people take a few lessons from a professional instructor and/or read a few books when they want to learn chess, golf, or cooking. This applies to news business generation as well. Lawyers need a few basic lessons to point them in the right direction.
  3. New business is not measured, meaning there are no consequences if business is not generated. Employees do what you inspect, not what you expect.
  4. New business is not rewarded. Celebrating the successes and punishing the failure definitely has an impact. The right compensation plan will strongly reinforce your intentions.
  5. Internal dissension causes distractions. The more the law firm team is united in its efforts to get more business, the more successful this initiative will be. Furthermore, there should be agreement on the type of business that is sought.
  6. Attorneys are too busy. They may be cranking out 2,000 billable hours per year, but is it on the right account for the best rates? If your firm is busy, this is the perfect opportunity to choose the engagements that are best for you.

If your law firm does not maintain a healthy sales pipeline, it may find itself suddenly at a loss for new revenue as work in process is completed or cases settle. Don't get caught in this situation!

A well organized, strategic business development campaign that sets clear goals and rewards success can have a significant impact on the bottom line.

Monday, October 27, 2008

Attorney New Business Development Goals

A good question was raised in regard to last week's post on the revenue target for attorney rainmaking goals. Our suggestion was a minimum goal of 1.25 times annual salary (with the .25 to cover benefits) for annual new business development, with a maximum goal of 3x annual salary.

The question is whether the higher end target of 3x salary is gross revenue per lawyer or new business generation. While the 3x number is an admirable business development goal, in reality it is most likely out of reach for most attorneys.

If the 3x salary level is viewed as an annual book of business in its entirety, then certainly it seems fair to say that 1.25x salary is a reasonable goal for the portion derived from new business generation. In the case of a solo practitioner, an attorney's ability to generate new accounts consistency will determine the health and profitability of their practice in the longer run. Partners in a larger firm may operate under a more complex set of goals.

When one third of a firm's revenue is derived from new accounts, this translates into demonstrated competencies in the many activities that go into closing a sale. For example, a sufficient volume of qualified leads needs to be in the pipeline at any point in time. Next, the "conversion" process from "lead" to "client" must be tracked, monitored, and handled efficiently. Finally, competitive factors must be overcome, services must be priced fairly, and prospects must be convinced that their needs will be fully met in order for them to say "yes!" to becoming a client.

When you stop to think about it, a true focus on developing new business skills can actually reorient they way an attorney approaches their practice.

The Rainmaking Lady invites your feedback. What are the business development goals that your firm targets?