Chasing RFPs? There’s A Better Way To Drive Law Firm Business Development
Law firms are chasing RFPs at unprecedented rates yet industry data shows these new business efforts may not pack the profitability punch law firms want or need.
Law firms are chasing RFPs at unprecedented rates yet industry data shows these new business efforts may not pack the profitability punch law firms want or need.
The average law firm now handles 200 RFPs a month, to the tune of 10,000 hours of work annually. The very best firms have a win-rate of about 30%. This means a great deal of time and money – upwards of 7,000 hours a year – is being invested in efforts that lead to nothing.
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The reality is law firms are facing an evolving business landscape. BTI Consulting reports clients dropped 11 more clients from their law firm panels, last year, hitting a 15 year low. A dwindling client base is only a small part of the problem.
Law firms today face new threats, such as online sources offering support for routine legal matters at a low cost. Perhaps more disconcerting are non-traditional competitors who are entering the mix. Powerhouse assurance, tax, transaction and advisory services firm, Ernst & Young, now employs 1,000 attorneys on staff. These non-traditional competitors are leveraging their existing relationships to lock firms out of the new business mix.
All the while, firms are scrambling to respond to every, and any RFP that comes their way. Thus, furthering arming clients with intelligence about pricing, which they are using to negotiate lower rates.
More Activity Doesn’t Mean More Business
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This puts firms in a unique conundrum to drive profitable growth. Unlike in a traditional sales process, in a law firm, the road to business development is non-linear with multiple touch points taking place across the firm. This means it could take months, or even years, for a firm to close a deal. As a result, firms focus heavily on the pursuit of clients.
This translates into more activity on the part of the firm in the hopes of landing clients. Attorneys participate in more RFPs, conduct more seminars, invite clients to events, lunches and dinners, among other engagements. However, there is no concrete evidence to illustrate whether this increased activity is leading to actual business for the firm. In tandem, attorneys are expected to serve as an extension of the firm’s salesforce. A role many aren’t trained for, or particularly skilled in.
While some of these activities will prove profitable, without proper analysis, firms won’t know which of these activities are most successful and, more importantly, repeatable.
Unfortunately, as this goes on unaddressed, firms continue to do more of the same activities, which, more often than not, becomes a wasted effort. Attorneys are also frustrated because they would rather be practicing law. In the end, the law firms loses on productivity by chasing low-percentage leads.
From the client’s vantage point, these numerous outreach attempts are confusing. Often times, these activities don’t address their real needs or concerns. Now multiply these efforts across the firm and it starts to look uncoordinated and unfocused. This is when clients and prospects begin to question if their firm really understands their business. This not only costs the firm, but takes attorneys away from their billable work. Indeed, a situation no law firm wants to be in.
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Target the Right Contacts with the Right Activities
Instead of assuming increased activity in the pipeline is going to translate into more business for the firm, a better approach, identifies who the firm’s most profitable clients are and cherry picks which activities and efforts with respect to those client contacts, actually translates into legal work.
This starts by applying a targeted analysis to reveal the right events, seminars, RFPs and business development activities that are most profitable to the firm. From there, the firm can implement a systematic process for which these targeted activities can be coordinated and repeated, as necessary.
This positions the firm as a cohesive organization with a seamless interaction process. This more streamlined approach engages attorneys at the right time and increases the likelihood of closing real business. Research shows clients are 90 percent more likely to retain a law firm, when five or more partners are actively engaged with the company.
By arming themselves with the right targeted pipeline of activities, attorneys can better understand which BD model is the best fit for their clients. This not only increases profitability for the firm, but increases productivity for clients, by allowing attorneys to focus on their actual billable work.
Now a solid foundation emerges on which firms can build lasting client relationships.
James Paterson is the vice president for LexisNexis Large Law Practice Management Solutions.
