Ontario Bar Association | Association du Barreau de l'Ontario The Ontario branch of the Canadian Bar Association | La division ontarienne de l'Association du Barreau canadien
Law Practice Management is published by the Law Practice Management Section of the Ontario Bar Association. Members are encouraged to submit articles or suggest story ideas.
The articles that appear in this publication represent the opinions of the authors. They do not represent or embody any official position of, or statement by, the OBA except where this may be specifically indicated; nor do they attempt to set forth definitive practice standards or to provide legal advice. Precedents and other material contained herein are intended to be used thoughtfully, as nothing in the work relieves readers of their responsibility to consider it in the light of their own professional skill and judgment.
Law Firm Advertising is No Silver Bullet Paul Kuttner*
“We need to market our firm. Let’s do an ad.”
This all too familiar law firm call-to-arms has led to the tragedy we witness in legal and business publications across Canada and the U.S. Why is advertising often the first refuge sought when firm revenue hits a bump in the road? Maybe this occurs because advertising is a familiar, tangible action so many other firms are taking. Let us walk through some universal advertising basics. And, as we do, please excuse my using the dreaded “S” word (you know…“sales”), but, hey, that is what lawyers do (knowingly or unknowingly) to get new business.
All Advertising Needs a Purpose
As we begin the journey, consider two statements:
You cannot be chosen if you are not found.
Buyers are more comfortable with the familiar.
Before deciding to advertise, ask yourself and the firm’s other decision makers, “What is our purpose for advertising and what result should our advertisement achieve?” You will need to think hard because the answers are not always obvious.
Here is one company’s answer:
“The purpose of our advertising is not to sell more. It’s to do with institutional publicity, whose aim is to communicate the company's values... We need to convey a single strong image, which can be shared anywhere in the world.” -- Luciano Benetton, Founder and Chairman, the Benetton Group.
Now, let’s look at another company. What do you think is behind the new Porter Airline advertising? Well, Porter is announcing its existence. But, that alone is not good enough. Porter must answer a key prospective customer question, “Why should I care?” In a highly competitive market, Porter needs to differentiate itself and give targeted users a compelling reason to try Porter. Porter is doing this by basing itself downtown, offering competitive pricing and the little touches (including politeness and service) that other airlines don’t, creating a compelling image consistent with its business strategy, and building a convincing reason for becoming a customer. To its credit, Porter did not place a full-page advertisement with the single statement, “Your lowest fare airline to Ottawa.”
Not a Short-Term Proposition
We all want new clients and more business, but can one advertisement deliver this? Maybe? Ultimately? Unless you are a Leon’s store discounting brand name refrigerators by 80% this Saturday, do not expect the phones to start ringing the second your advertisement appears. Except for some personal injury and family law practices, this just does not happen. If you have a business-focused practice, only time and recurring advertising exposure (and recurring advertising costs) will bring in business.
Advertising provides exposure. But, the purpose of advertising is not simply exposure; the purpose is to generate measurable response that advances sales. This could be a tactical response to a simple strategy or top-of-mind name-awareness among a target audience to support other tactical sales efforts.
It’s All in the Mind
Advertising deals with individuals’ feelings and emotions, no matter how sophisticated, knowledgeable, educated or experienced those individuals may be. Powerful appeals to human nature are built into strong advertisements regardless of whether the service provider is a courier, bank, or law firm. One rung in the strategic ladder that many law firms miss is understanding the buyer’s psychology, motives, attitudes, and external influences, like immediate business pressures, reference groups, social class, and culture. People do not decide what they like based on advertising; they decide based on their frame of reference and other triggers. A corporate commercial law prospect is seldom landed as a client because of an advertisement.
The Bland, the Generic, and the Horrible
Your advertising simply must have a point. Whether you sell beer or litigation services, you risk wasting time and money if you create, or pay an expert to create, an advertisement with no well-thought copy strategy behind it. So many legal advertisements crash and burn because the creative resource presents a neat graphic, photograph, or catch-phrase. The message becomes subordinated and the effort is destined for failure. Just how many more chess pieces, boxing gloves, compasses, pillars, puzzle pieces, and partner head-shots can the world endure? A copy strategy will make you stop and think about your practice and a message that is not generic, bland, and pointless, but rather realistic, relevant, and motivating.
What Can Good Advertising Do?
So, what can strategic advertising do for you? It may bring you many, if not all, of the following:
Advertising establishes contact. Advertising builds awareness and attracts attention. You might think that this alone is a good thing, but always ask, “To what end?” Years ago, a mentor of mine in Europe explained the value of relevant awareness to me like this, “It’s easy to attract attention – wear lederhosen to a black tie event.”
Advertising builds subconscious preference. Research shows that familiarity positively affects the buying decision.
Advertising influences some perceptions.
Advertising educates and develops prospects. Advertising helps distinguish benefits from features.
Advertising challenges emotions.
Advertising attracts attention.
Advertising reduces the cost of sales. Knowledgeable prospects often know exactly what they want to buy, reducing the time you need to sell.
Advertising helps sell existing clients more services.
Advertising helps reinforce other purchase decision criteria.
Advertising keeps a business top-of-mind. You want to be thought of first when prospects are considering a law firm for a particular matter.
Advertising extends your message’s reach. You are one lawyer of perhaps fifteen at your firm. How many prospects can you personally reach?
Advertising helps build and maintain an image.
Advertising boosts firm morale and focuses lawyer efforts.
Advertising creates industry buzz. Is anyone out there not on the Lax O’Sullivan Scott LLP Christmas card list?
The Case Against Advertising
On the other hand, if you are prepared to only dip your toe into the pool, advertising may not resolve your client acquisition problems. Before dipping that toe, carefully consider the following:
If you decide to run an advertisement or two to see if the phone rings, you will almost certainly be disappointed and view the expenditure as a waste of money — which it almost certainly would be.
If your firm's advertising insists on making use of the conventional imagery — the scales or chess metaphor – take a pass. These themes offer convincing testimony that your firm is one of the herd, unable or unwilling to stand for something different and relevant.
If you insist on the marketing committee being the creative resource, you are probably hurtling towards communication oblivion.
If you cannot agree on a relevant focus and answer the questions, “What is the purpose of our advertising and why are we doing it,” save your money.
If your advertising cannot paint an illuminating picture of what it would be like to do business with your firm and the benefits that will follow, redirect your money to the annual firm picnic.
Advertising does work. Rather, strategically focused, relevant, smart advertising works, and usually in combination with other thought out marketing and sales activities. If you plan to fiddle around the edges, heed the advice of that guy on TV ads who says in a neat Dutch accent, “Save your money.”
* Paul Kuttner is a Principal of innovate! Marketing. He has been providing marketing, coaching, and business development support to law firms of all size and levels of marketing sophistication in Canada and the US for 15 years. Paul can be contacted at paul@innovatemarketing.ca (www.innovatemarketing.ca).
Law Firm Accounting Part III: How Collections Affect Cash Flow David Debenham*
Firms generally carry a line of credit to finance the difference in cash flow between partners’ billings and other expenses and actual cash flow. Associates and partners alike are pressed to work many hours and generate lots of docketed hours. Year-end sees a final push to translate W.I.P. into billings. In an era of low interest rates, lawyers are rarely pushed to translate billings into cash. And, it is the rarest of firms that offers clients a 2% discount for payment within ten days, a term that has become standard on most of our clients’ invoices. Let us see why you should make speedy collection a strategic issue.
Consider a hypothetical associate’s first three years of practice. Under Scenario One, it takes 4 months to turn a bill into cash. On the other hand, it takes only 2 months to turn a bill into cash under Scenario Two.
Collections
Scenario One: 4-month conversion of WIP to $ Scenario Two: 2-month conversion of WIP to $
Year 1
Year 2
Year 3
Revenues
Scen 1
Scen 2
Scen 1
Scen 2
Scen 1
Scen 2
Billable Hours
1200
1200
1600
1600
1800
1800
Hourly Rate
100
100
110
110
120
120
Time Value
120,000
120,000
176,000
176,000
216,000
216,000
Per month
10K
10K
14.666K
14.666K
18K
18K
Prior year carryover
0
0
+40K
+20K
+58.6K
+29.3K
WIP/AR end of year
(40K)
(20K)
(58.6K)
(29.3K)
(72K)
(36K)
Actual Total Receipts
80,000
100,000
157,400
166,700
202,600
209,300
Costs
Compensation
50K
50K
54K
54K
57K
57K
Overhead
80K
80K
80K
80K
80K
80K
Actual Total Costs
130,000
130,000
134,000
134,000
137,000
137,000
Profits/year
(50,000)
(30,000)
23,400
32,700
65,600
72,300
Cumulative Profit
(50K)
(30K)
(26,600)
2,700
39,000
75,000
Return on Investment (ROI)= profit over loss covered by partners
nil
nil
nil
9%
78%
250%
As the numbers reveal, the law firm sees a positive return on its investment in an associate in the second year of practice and recovers almost three times the return on investment in the third year by simply focusing the associate on retainers, monthly billing and collections, client collection meetings after 60 days, and other practices that turn credits into cash.
Lesson 3: The Importance of Realization. By reducing the time between doing the work and collecting for it from four to two months, the partners reduce their investment in an associate by nearly half and their return on the loss by one year.
* David Debenham is Counsel with the Ottawa office of Lang Michener LLP. He can be contacted at (613) 232-7171 extension 103 or ddebenham@langmichener.ca.
Employee Work Ethic: A Different Business Model Cindy Wahler*
Reprinted with the author’s permission.
Long gone are the days of cradle-to-grave work ethos. The employee/employer contract has been broken. Employees on average change employers at the 3-5 year mark. At the 3-year point employees begin to ask, “What’s next?” Both recruiters and employers regard the “lifer” as less marketable. One should be continuing to push the learning curve, engaging in ever-increasing challenges, and embracing new mandates.
The constant refrain from senior executives of most industry sectors is the “lack of work ethic” of today’s workforce. Employers believe that their staff, although working hard, do not possess the same level of investment, commitment, and engagement as previous generations. Although there is sweat equity, it is not at the same temperature and pace as when the old guard was forging ahead with their careers.
I beg to differ. Without a doubt a shift has occurred. Today’s workforce has changed due to a combination of factors, including downsizing in the late ‘80s and mid ‘90s, consolidation of industry sectors, the bottom falling out of the tech sector, and a tremendous access to a plethora of instant means of gratification and lifestyle comforts allowing for employees to be driven to play hard as well.
Our workforce has been labeled as a society of “dilettantes” who are indulged-in and self-possessed with less motivation and regard as to how they may become long-term stakeholders of their organizations. As executives lament about the “liabilities” of the workforce, they must heed this as a critical wake-up call.
A shift in the business model has taken place by employees. Although employers seem to be fighting tooth and nail to hold on to vestiges of an old regime, we are no longer working with the same paradigm. Employees have determined that the value of hard work, although rewarding, no longer is something to which they are willing to donate their blood and sell their soul. The employee population continues to work extremely hard, still clocking in excessive hours. A willingness though to give up a lifestyle for a future far-off date no longer is negotiable. Employees of today are putting boundaries around 24/7 expectations.
As it is a competitive landscape, the war on talent has created a seller’s market. Employees are asking not only, “What have you done for me lately?”, but also, “What will you continue to do for me on an ongoing basis?” and, “How are you investing in my future development?”
As well, today’s workforce from a socio-demographic perspective has been indulged in by the accumulation of material goods that is tantamount to instant gratification. Children should be seen and not heard is an archaic notion. Parents are constantly celebrating the achievements of their children. In previous generations, these achievements were considered part of expected roles in the household and contributions to society. Not only does Susie or Johnny get praise for doing well at school, but they are heroes for making their beds, shoveling the driveway, and setting the table. In response our children expect some kind of compensation: a new DVD or tickets to a Leafs game. Have we indulged our children?
Perhaps the attitude of our workforce reflects a degree of self-possession. “Don’t forget to remember me.” “If you want greatness, I will give it to you, but you must acknowledge me completely.” Employees no longer will remain forever loyal and dedicate years for that gold watch. They already have a gold watch among other feel-good items they have acquired all by themselves. The net result is that employees are requesting more and more attention and recognition. It is no longer assumed that hard work is a given. Employees not only expect that financial compensation reflects market value, but now add recognition into the mix. Recognition and affirmation now loom larger. Employees want to be told that they are valued through verbal feedback and ongoing praise, which they view as a marker as to how valuable they are to their organization.
To sustain motivation and enhance investment in our workforce – and ultimately increase stakeholder values – as 60s as this sounds, employees are demanding that employers incorporate as their mantra, “Have we hugged our employees today?” Mission statements that, of course, reflect “Customers as First” and “Leaders in the Marketplace,” now appear not inclusive enough with employees demanding that they too are consumers and need much attention, stroking, and love.
So what is an employer to do? A reluctant but necessary acceptance of the need to change today’s business model must be heralded. As well, although organizations are neither daycare centres, nor sheltered workshops, employers must realize that “employee-of-the-month” is considered paltry, whether they like it or not. Employers must possess an attitude reflective of embracing their workforce. “Employee-of-the-hour” is of course extreme, but it is today’s reality.
* Cindy Wahler is an organizational psychologist and executive coach with expertise in leadership development. She can be reached at cwahler@sympatico.ca.
Get Business from Your Social Contacts Paul Kuttner*
For years you have followed your firm marketing guy’s advice on how to improve business development. You purposefully enlarged your circle of acquaintances to include many influential people with whom anyone would love to do business. You switched golf clubs so you could play with “movers and shakers” and you played enough golf to dramatically reduce your handicap to the point where some of your partners refuse to play with you any more. You joined a private ski club (making you “best dad in the world”) and you tried tennis last summer. You even seem to get invited to all the great parties. Still, your partners are frustrated because your anticipated torrential rainmaking, for some reason, has yielded only a slight drizzle – and, a very expensive drizzle to boot.
An Awkward Situation
Why do some lawyers find it hard to start business discussions with social acquaintances who are the gatekeepers to both professional and financial success? Most of the time, concern over imposing on or straining the friendship or social contact holds us back; it is an awkward situation after all. How do you politely and casually initiate business discussions with friends and social acquaintances without embarrassing yourself, jeopardizing the relationship, or tarnishing your professional reputation?
Know When to Stop
Every situation will have its own sensitivities and dynamics. The company you are in at the time will influence the pace and steps you should take. However, one good ground rule to follow no matter where you find yourself is, without interrupting the conversation, allow the business conversation to advance only to the point where you might become seriously mired in detail and remove both of you from the social interaction. At this point, break off the business talk. Create the perfect opening for saying, “You are facing a very interesting issue, but I fear I may monopolize your time by discussing this further. May I call you at the office tomorrow to continue our talk?”
Reveal the Pain Points
How do you get to the enviable moment where contacts reveal their pain points? How do they reveal the troublesome issues that allow you to better understand how you might help? Let us work through the likely process.
1. Starting a conversation about an acquaintance’s business with a safe question like, "How's business?" is perfectly acceptable. People like being asked about what they do and how things are going. Based on your knowledge of current published news, you may be able to make this inquiry a little more specific to a company or industry. Be alert for the subtle mention of a problem, dilemma, or emerging opportunity. Always ask open-ended questions such as, “How are the new border security measures affecting your flow of goods?” or “How will Ontario’s proposed new emission standards affect your customers?” You cannot learn much from a yes or no answer. You will also pick up clues as to what your train of questioning may be and avoid the dreaded pit of awkward silence.
2. You really want them to keep talking about their business, the issues they face, and recent opportunities. Participate in the conversation and show interest by gently probing to subtly identify "pain issues" where you or one of your partners may be able to help. Ask business related questions and stay alert for the opportunities to give legal advice. Offer constructive comment, but avoid being drawn into serious opinion – after all, that is billable. Point out where you have had similar experience and how matters unfolded. Without being obvious, make your experience a relevant and obvious path.
3. You will know when you are on a roll. Do not offer specific advice. Stay relevant to the conversation.
4. Cut off any discussion of actual specifics with a polite recognition that you are together for social reasons. Note that you do not wish to monopolize their time or discussion, but that you are very interested in talking further about the issue.
5. Suggest an office meeting to explore the problem some more, with possible dates to be confirmed by telephone the next business day. Try to avoid a business lunch. If this is a relevant and current business issue, a public arena such as a restaurant is a bad idea. By specifically avoiding lunch or breakfast, you reinforce the serious and confidential nature of the topic. It is never a good idea to have a serious business discussion at lunch, on an airplane, or in a cab. You have no control over your listeners, their competitive interests, and how intently they are listening. How many great financial or business presentations have you read on a plane while your neighbour bangs away at the laptop keyboard?
6. Be sure to follow up as soon as possible. Why not call and leave a message when you get into your car after the social event?
Practice, Practice, Practice
It takes practice. Do not be disappointed if things do not magically turn around for you right away. Most business development techniques require some personal adaptation and finessing. Get comfortable, but above all – do it! Take it slow and practice these tips whenever you have an opportunity. Soon you will be adept at politely starting business discussions that lead to substantial meetings and new business.
* Paul Kuttner is a Principal of innovate! Marketing (www.innovatemarketing.ca). He has been providing marketing and business development support to law firms of all size and levels of marketing sophistication in Canada and the US for 15 years. He can be contacted atpaul@innovatemarketing.ca.
LPM Section Presents “How to Get More Out of a Business Lunch than Just Food”
Do you get indigestion just thinking about your next business lunch? If so, consider attending the LPM Section’s upcoming program on making the most out of your business lunches. The audio-conference presentation takes place Tuesday, February 27, 2007, at noon. Dialing in to the presentation from the comfort of your own office, you will learn the fundamentals of making the business lunch work for you. Paul Kuttner, a Principal with innovate! Marketing, will give you valuable tips on making the prospect the centre of attention, selling by listening, answering the predictable yet tough questions, and controlling the conversation. Mr. Kuttner, who recently conducted the popular and well-attended LPM Section program on “How to Work a Room,” advises law firms of all sizes throughout Canada and the US on business development and marketing strategy.
The program costs $35.00 (plus $2.10 GST) for CBA members and $60.00 (plus $3.60 GST) for non-members. Registrants will receive dial-in information forty-eight hours before the program and will have the opportunity to ask questions following the formal presentation. Those interested in the program who are not available to dial in February 27 at noon may instead order an audio CD or cassette tape or MP3 download for a reduced fee. For further information or to register for the program or order a recording, call (416) 869-1047 or 1 (800) 668-8900.
Volume 4, No. 3 - February/Février 2007 
Firms generally carry a line of credit to finance the difference in cash flow between partners’ billings and other expenses and actual cash flow. Associates and partners alike are pressed to work many hours and generate lots of docketed hours. Year-end sees a final push to translate W.I.P. into billings. In an era of low interest rates, lawyers are rarely pushed to translate billings into cash. And, it is the rarest of firms that offers clients a 2% discount for payment within ten days, a term that has become standard on most of our clients’ invoices. Let us see why you should make speedy collection a strategic issue.