Situation number one: A corporation decides that it wants to improve employee engagement (basically, job satisfaction) and thus reduce turnover. The corporation sends this project to its procurement department, which in turn sends out an RFP. Whoever submits the lowest price in response to the RFP gets the job.
Situation number two: A corporation could make $10 billion more in profits if it could only produce more widgets. You do a study and tell the corporation that it could produce more widgets if the corporation could reduce employee turnover. You propose to conduct the necessary studies on employee engagement and thus reduce turnover.
First question: Who earns more when they land the project?
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Second question: How do you do it? How do you transform yourself from being an order-taker into being a respected adviser to the C-suite — when order-takers and respected advisers are doing exactly the same thing?
This question lies at the heart of profitability for many professional services firms.
The management consultants are great at being treated as trusted advisers. The big banks are reasonably good at being treated as trusted advisers. A very few law firms have been able to cast themselves as trusted advisers. And so on down the food chain, with profitability generally decreasing along the way.
The transformation from order-taker to adviser is in part a question of mindset: Do not think about what you have to sell; that’s irrelevant. Think about what the purchaser needs to buy; that’s where the money is.
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You’re thinking about this correctly when you’re analyzing what the client needs, and only then seeing whether your firm can provide any of those things. If you’re looking at things from your law firm’s point of view, then you’ll always be an order-taker, responding to RFPs.
Being an order-taker is easy.
A client calls for your firm to bid on some discrete legal work. You call out the business development folks, ask them to assemble the usual materials, attend the beauty contest, and win the work.
Great!
But also, easy! And not profit-maximizing!
Instead, have someone study the target client relentlessly. Look at the securities filings. Review the speeches given by executives. Scrutinize reports that are publicly available. Decide how the client could become vastly more profitable.
Then, assemble a few folks who actually know all the stuff that your law firm (or, frankly, other type of professional services firm) does. See if your services match up with anything the client needs. If there’s a match, set up a meeting with the most senior people at the client who are willing to talk to you, and explain to the client what the client needs.
Change the conversation.
Because, at the end of the line, you’re talking about exactly the same stuff — the services that you can provide. But the “same stuff” is now far more profitable.
Mark Herrmann spent 17 years as a partner at a leading international law firm and is now deputy general counsel at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at [email protected].