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Improving Sales and Income Generation

This article looks at the approaches to sales and income generation which legal firms can take to help their
businesses grow and improve their income.
Although private practices would obviously not survive without client income, lawyers are rarely well trained in techniques by which they might win work. This is in complete contrast to other industries and other professions. First-rate consultants have always been good at tutoring their employees in sales success and, along with the accountants, often make the ability to generate sales a condition of becoming a partner. In fact some aspects of law, even for massive international business clients, are now so routine that they are simpler than some of the complex technology and consulting projects sold by others. Sales people at IBM, for instance, can be highly educated technical scientists who win huge contracts at the same heights as any lawyer works. Moreover, since 2001, the company has contained the massive consultancy arm of PricewaterhouseCoopers; consummate professionals schooled in salesmanship. There are, then, approaches to sales and income generation in other industries that might help lawyers to grow their business if understood and adapted.

Without explicit schooling in 'salesmanship', lawyers who do succeed often adopt a range of behaviours or personal approaches by which they are able to win work. Either through intuition, tips from experienced people or by gleaning insights from ad hoc courses or books, they become 'unconsciously competent' at winning work. For example, I recently asked a senior partner at one of the world's leading international firms how he built his practice. (He had founded a new specialist banking practice in Hong Kong and made it one of the largest in the region.) Interestingly, he could attribute his remarkable sales success only to 'getting out there and working hard'. There are, though, a number of points partners who want to improve income should consider.

The Truth about 'Rainmakers'
At the heart of most small firms, and at turning points in the history of many large networks, is the vast revenue generated by one driven individual, a 'rainmaker'. This over-used American term, which has its roots in merchant banking, describes people who have above average capacity to generate business. While many professionals earn income, rainmakers generate two or three times the industry average. One of my clients, for example, is a partner in one of the world's leading executive search firms. While the average, top-flight head-hunter completes around 15 board level searches a year, she consistently outperforms that and, one year, completed a hundred. And, if they are honest, not one of her colleagues has any idea how she did it. Her managing partner describes her as
'a phenomenon'.

Although rare, rainmakers exist in all professions, law included, and one research project I completed showed they had a number of similar characteristics, whichever profession they work in. They are:
Driven individuals. They need to achieve and put considerable energy, often caused by personal trauma, into business success.

Market focused. They know the area they operate in very well and understand both developing issues and key individuals within it.

Interested in a legacy or reputation. This might be as simple as being the lead earner in their sector but many create 'thought leadership' because the developing issues in their field fascinate them.

Good at targeting clients. They identify high probability projects that yield high returns and seek out buyers with needs.

Networkers. They put enormous effort into building and energising large personal networks. They have frequent contact with clients; building trust and relationships.

They act intuitively, using years of unconscious knowledge to create energy, excitement and desire amongst clients to engage with their practice. One said: 'I run around like a busy insect and then a big mandate comes in unexpectedly. I'm not quite sure how that happens but I know the projects would not come in if I did not do the running around.'

In the west there has been a plethora of publications promising to make every partner a 'rainmaker'. However, this is often only dressing for ideas and concepts stolen from other industries by people who have never been a partner and who have no understanding of the context, challenges or pressures involved in gaining income at that level. Rainmakers do exist in all professions (generating outstanding revenues) but there is yet to be anything that codifies or captures their techniques. After all, most of these driven and difficult people have no idea how they do it. As a result, it is not possible to build a stable business around their behaviours.

Any practice should have clear human resource policies which identify potential rainmakers in new graduate recruits and experienced hires. They should be led appropriately, given the correct support with increasing responsibility for markets, revenue streams or major accounts as they progress through the firm. In short, the culture of the firm ought to be friendly to such difficult human beings. It also needs to explain their importance and their behaviour to other members of the firm, who they are likely to irritate.

Concentrating on Important Clients
The concept of 'client account management' is based on the simple phenomenon that certain clients will give a stream of business to a supplier whereas others will not. It first developed outside the professions, when product companies began to recognise that benefits arose from taking a different approach to existing buyers than that used in 'new business sales'. The skills of a sales person focused on getting new business were found to be very different to those of a 'representative' dedicated to managing the orders from existing buyers. The latter is focused on creating longer-term relationships and gets involved in many issues, other than direct sales, which affect the business between the two sides. This approach has moved into leading professional practices so that, now, many have partners or senior relationship managers who concentrate on the needs of one important client.

There are several components to this approach. Firstly, the firm must identify and define the important clients from which income will flow. This can be as crude as listing them by volume of business and ranking accordingly. Some focus on their 'top one hundred', or some version of it, others have tiered layers of prioritised accounts each receiving different levels of attention according to the volume of business.

However, this does not recognise all of the firm's objectives in its market. It certainly does not recognise that it may only be capturing a small share of these clients' spend. It may, as a first strategy, want to build on these bridgeheads by identifying clients with the highest potential and penetrating those further. Or it may have more generic strategies such as wanting to penetrate a specific corner of the market or to take business from a competitor. Some firms set objectives to have certain types of high quality clients in order to meet their own aspiration of being recognised as a high quality supplier. These 'targets' may then be labelled as 'strategic accounts' and treated as well as major clients with a larger business volume.

Secondly, senior people need to dedicate time to managing the practice's relationship with an important client. This is not as straightforward as it sounds. Many partners loath 'management' of any kind and it can be difficult to get agreement for senior professionals to dedicate time, which could be billable, to developing relationships. This is an investment in the future, which can be in conflict with the need to earn cash in the short term, particularly when billable hours is such a focus of a partner's working life. Although a good number of lawyers think that 'billable hours' is a crude, inaccurate measure of success, it can be enormously difficult to encourage even a modest change in attitude to achieve an investment in speculative client attention.

The success of this strategy depends on how convinced leaders are of the value that comes from long term relationship management. Some set about the approach convinced by the concept and argue for it to be resourced based on their firm belief. Others take progressive steps, gradually releasing a greater percentage of a partner's billable time to client management or starting with a small number of accounts to test the value of the total concept.

Another complication is the need to determine the personal skills that the firm needs in its relationship managers. These are much more than purely technical skills. For instance, it may be that the firm will need someone who has a broad vision of their disciplines' relevance to business issues so that they can become a generic adviser to the senior management team. Certainly there will need to be a capability to understand and present the whole range of skills and services offered by the firm. (A surprising number of seasoned professionals know their own field well but cannot talk to clients in any depth about the other skills, even in their own firm!) At a minimum, excellent communications skills will be needed and a recognised ability to generate work. Successful individuals in this role tend to be creative, able to spot opportunities and harness their own firm's abilities, forming teams to
suggest ideas.

In addition to these 'soft skills', deep knowledge of the industry in which the client operates may also be essential. Part of the value to buyers of outside advisers is the perspective they develop from handling the problems of several companies in the same industrial sector. Clients are often curious about how they stand when compared to their peers and have an open ear to issues or trends that outsiders can spot from such deep engagement. They will even attend confidential discussion sessions and briefing programmes with competitors present, if facilitated by a supplier they trust and if there are clear rules for the meeting. Such a powerful position as industry expert is a very rich source of projects and fees for the relationship manager.

There is, however, a more important reason for deep knowledge of the sector in which clients operate. Clients rarely know the full scope of the services offered by a supplier and often have latent needs which they may think irresolvable. They may not have formulated them into potential projects or request for proposals. A leading practitioner, who understands the priorities of firms working in a sector, is likely to spot needs that their practice can meet. They can then create projects, unimagined by the client, to solve problems.

In this area above any other, there seems to be a profound difference with other professions, particularly when dealing with large businesses. Accountants, engineering consultants and management advisers are taught to look beyond their client's briefing. They seek to understand the 'value chain' and the needs of the client's client. As transactions increase, they redefine the client's perspectives on issues and problems, even getting to the point where they initiate and propose projects. Many lawyers, by contrast, seem content to wait to receive a mandate from the client's in-house team. This can limit opportunities and undermine profits.

Finally, the firm needs to consider what support staff it intends to dedicate to the major accounts. Experienced product companies dedicate teams which include: project managers, sales support staff, client service mangers and even telephone sales staff (to handle volumes of small items). Practice in professional service firms vary. Many dedicate administrative staff to key accounts and some client service staff.

Becoming a Trusted Confidante
One area in which modern thinking has set out to make explicit the implicit techniques of income generation, is in exploiting the trust which develops with important or repeat clients. It is beyond doubt that the progressively increasing trust between partners and repeat clients stimulates profitable income. As a result, it is now common for partners in leading Western firms to want to become a 'trusted adviser' to their clients; a concept introduced to the legal profession a decade ago by American professor David Maister. It has put structure and language around the way professional relationships develop and, particularly, the need to earn trust over time. Maister argues that successful relationships change from the simple supply of a service through various states ('needs based' and 'relationship based') until the lawyer reaches the position of 'trusted adviser' to their client. This means that they have won sufficient confidence to advise on a range of issues and, often, start work on a mandate with no competitive consideration at all. They are a confidante of the business leader.

Singaporean practices ought to take time to 'profile' all their important client relationships using recognised diagnostic techniques and to use that information to create a plan for each one, making trusted adviser status the aim of each partner serving them.

Appropriate Context
As I have said above, central to the success of any approach to revenue growth is an understanding of the complexity of the sales process in a professional practice. The elite tier of professional services firms enjoy a virtual circle of success (as represented in the diagram). It starts with the reputation, which develops from a track record of first-rate work. Most successful partners say that 'marketing begins with the work'; and they are right. Study after study shows that, after a good experience, clients talk, creating reputation. They then return for more and refer the firm to others.

This has three effects, which have enabled the margins of private partnerships to outperform other industries. First, it attracts ambitious, hard working young professionals who want the satisfaction of challenging, rewarding work. Second, it keeps the 'cost of sales' down because clients come to the practice when they have a need. Thirdly, it keeps prices high because the practitioner can concentrate on diagnosing and meeting clients' needs; price is a consequence, not the focus, of discussion.

So, partners should begin any review of the practice's ability to generate income with a hard-headed measurement of its competitive reputation. They need to understand exactly what clients think of the firm when they buy and how individual partners compare with competitors. Firms also need to know the propensity of clients to refer the practice to others. While there may be resistance among partners to such analysis, this factual data is a powerful aid to changing behaviours and introducing relevant reputation-enhancing initiatives.

These are just some examples of areas where the intuitive approaches of generations of lawyers and other professionals are being made explicit and harnessed for the benefit of partners in private practice. There is a need for leadership teams to facilitate thinking which builds these approaches into their practice; to ensure that techniques, which have been intuitive and unarticulated, are crystallised into day-to-day working life.

Laurie Young¹
E-mail: lauriedyoung@aol.com

Notes
1 A former global marketing partner for the advisory division of PricewaterhouseCoopers, Laurie Young has also founded, built and sold a practice, and authored the widely read book, 'Marketing the Professional Services Firm'. His clients have included: Allen & Overy, Deloitte, Russell Reynolds, Microsoft and American Express. See www.lauriedyoung.com