Developing Your Local Law Practice

“Billing by the hour often fails to align lawyers’ interests with their clients’.” – The Economist, July 24, 2010

More and more clients in large and renowned New York City based law firms are asking for alternatives to the billable hour.  This is not just a demand born out of the current ”recession.” With the advent of legal technology automating document production and other legal tasks, clients realize more than ever that the law firm business model (hourly billing) is outdated and no longer makes sense. 

Westchester and Fairfield County law firms can differentiate themselves almost immediately if they propose this kind of fee structure to prospects.  It may also serve to improve relationships with existing clients and provide more referrals.

Last January, Evan Chesler, presiding partner of Cravath, Swaine & Moore, LLP, wrote an article in Forbes Magazine entitled, “Kill the Billable Hour.” In this widely read news piece, Chesler argued that the correlation between cost and quality is lost with hourly billing.  In many cases, early success is not even rewarded.  Look at it from the clients point of view.  They worry about fairness. They also desire predictability so that they can budget for the year.

Chesler proposed five key steps to adopting a new model and banning the hourly rate:

• Identify the client’s objectives,
• Measure, calculate and build in a contingency fee,
• Create an estimated price for the work,
• Build in a success fee, where applicable, and most importantly,
• Review the billing arrangement on a quarterly basis.

These steps – especially at the beginning of an attorney-client relationship – indicates to a prospect and/or client that your law firm is aware of the changing (and ever increasing technological) marketplace. Adopting this billing structure, some call it value-added billing, may even make your firm different and more attractive than competitors.

The alternative billing model might cause concern that the attorney may now “cut corners” in interest of avoiding losing money. To cure these worries, Chesler suggests building in a “success fee,” where appropriate. Clients will see that their attorneys are motivated to win. Good and growing client relationships are built on communication.  Open conversations about fees must be scheduled every three months. Have the conversation over lunch. Build a mutually beneficial relationship. Split the tab.

Here’s the second point that makes hourly billing outdated. Most clients know that legal technology speeds up document production. For example, HotDocs(LexisNexis) has become increasingly more sophisticated in its capabilities to assemble templates and component files, e.g. integrate/populate existing data into a legal document at a few clicks. Because our key clients are estate planners, we know that Basha Systems has excellent, time efficient software designed to dramatically reduce the production of Power of Attorney forms, Wills, Irrevocable Life Insurance Trusts, and Health Care Proxies.

Varying legal needs require different billing models. When a client’s objective is to settle a case,  lawyers can give the companies the option to figure out how much they want to spend on certain legal tasks. The cost of depositions, for example, can be roughly calculated. Since the time and money needed for a deposition is often predictable, a client can decide how long to depose an adversary and how often. If this sounds too risky, remember the contingency fee that is built into the new model.

Lastly, lawyers spend a lot time creating their monthly billing statements. By purchasing a $99. software like Chrometa, an attorney can automate how much time s/he spent on client emailing.

Proposing or selling an alternative fee arrangement to clients or prospects is a form of legal services marketing. It is a valuable and essential change in a law firm’s business plan and perhaps even in the practice of law. It will require flexibility, a willingness to suffer a “learning curve,” and a desire to improve a relationship or start one on the basis of mutual interest, understanding and trust.

  “Content is not just king, it is the emperor of all things electronic.” – Rupert Murdoch

Just recently I met with an attorney practicing employment law in Connecticut.  He and his partner create preventive systems for small business employers particularly in areas like sex and racial discrimination. Together they write an E-newsletter proposing practical remedies to workplace issues. I suggested that he convert his E-newsletter into a blog. He in turn asked an excellent question:  “What is so important about a blog?”

But I didn’t answer him properly (and now I’m writing this blog post to make up for it). I answered with search engine optimization (SEO) “know-how” that pre-empted the true value of a law blog. The real value of the blog lies in remembering the most essential thing about writing: audience. First, though, something about the technical aspects of a blog.

Blogs now refer traffic to websites. This means that websites must still perform well – they contain narrative as well as professional resumes (most visitors go to the “About Us” page first). A good law firm website has a compelling USP, differentiating brand and call to action. Blogs are, however, currently the best way to capture traffic. Technically speaking, a blog can improve a website’s visibility (Google search engine rankings) because by definition, blog posts are uploaded two, three, four times a month.  They are a lot like “news feeds” - 400-500 word pieces on anything relevant or new in an area of law. Any piece of legal news that effects your client base. Some of our clients’ blog posts reveal how they solved a problem, mitigated a risk or how they are up-to-date on political, economic or social issues.  With our help, we insert related legal industry keywords, categories and outbound links. We do a great deal of keyword research with tools like WordStream, WordTracker and Google Analytics in order to figure out how prospects are searching for specific answers to legal problems.

At the outset of law blog creation and together with our clients, we create blog mission statements and identify key audiences. We create profiles of our clients’ ideal clients and their markets. Then we ask: Who are we writing to? Who are we writing for? Later, and with industry and market research, we design monthly blog posting topics (3 or 4 titles with keywords) so that the law blog consistently stays on point and relevant to a very specific and defined audience. We want, after all, qualified visitors.  Some say that Internet marketing is a lot like how the Yellow Pages used to be. And we know how lawyers feel about the yellow pages.

Lots of legal services Internet marketing firms offer ”law blog platforms.” As most people know, open source programs like WordPress are free. These Internet marketing firms do not supply any content: research, branding or actual writing. Blog posts must still be written by the attorneys. Yes, the real work still falls to the attorney. As if they don’t have enough to do.

But here is the good news. Writing a 400-500 word, well focused blog post (when the audience and topic is pre selected every month) is not too difficult. Dispel the idea of  National Law Journal’s standards. There are no Blue Book citations needed. Now we get to the point. If the purpose of the Internet is free information, blogs are the penultimate to making law accessible. After the requisite disclaimers,  blogs share the law, make a unique point about it, provide a recommendation for a cost efficient solution or even a new perspective.

It finally happened. I sent an email to someone unintentionally.  Their first names both began with -M. (The Outlook function that finds email addresses for you based on a few letters). This mistake caused a new “Email Communications” policy at Lehmann & Lehmann Legal Communications.  I removed our Outlook’s automatic bleed-in function of an “incoming email” and notified our clients, ironically, through e-mail and then in person, that a telephone call to my mobile device will elicit a speedier response.

Our goal -even as we grow client relationships- is to check my email two to four times a day at designated times; never more than every 45 minutes. (Since writing this post, I’ve checked it three times.) Correcting this ever growing  impulse will be a difficult process. I know that responding immediately to poorly written emails will be my downfall. Haven’t we all emailers in our work lives who have trouble expressing/containing their emotions and intonations are just all but lost in an email?

Taking the time to change the RE: Subject in an email is a great way to slow it all down. Have you measured your Click Thru Rate (CTR ) on emails? Writing a compelling subject may make the difference.

“The Tyranny of Email” by John Freeman (New York: Simon & Schuster, 2009) describes the current situation well. The average corporate employee receives up to 200 emails a day. We are now communicating at the speed of electricity. According to the E-Policy Institute, email volume is growing at a rate of 66% a year.  Author Freeman argues that since we spend, on average, 40% a day with our electronic devices, this time and energy compromises our real relationships. We are more engaged with virtual relationships and our attention to the ones that matter suffer. He wishes to return to a place of conducting our lives mindfully; with deliberation and consideration.

Since legal communications is largely about attracting and growing client relationships, we can not stress this enough. Good relationships are born from active listening. Email confuses this. We need time to digest and process communications in order to respond thoughtfully and with relevance.

Frontline’s series on “Digital Nation” is a profound examination of what is happening all around us. Clifford Nass, Professor at Stanford University at Director of the California think-tank, “Communications between Humans and Interactive Media”, believes that our brains cannot do two things at once – except for listen to music.  He argues that multi-tasking is making us dumb. There is a “switching cost” that is exacted when we do two things at once. Science confirms this by recognizing that language tasks have to go through the same brain channel. Switching costs include mistakes and burnout.

Arguably, human are the sum of what we pay attention to.    One of Abraham Lincoln’s most famous quotes. “People are as happy as they make themselves up to be.” What we focus on determines our experience. Email and multitasking robs us of our focus. It is too easy to divert our attention electronically to whatever captures our awareness. To truly learn something, and remember it, we must pay full attention.

Here is a list, from Entrepreneur Magazine (March 2010) on how to get control of the Email Monster:

• Turn off visual and sound alerts that announce new email.
• Check email two or four times a day and at designated times.
• Don’t let e-mail become the default communications device; communicating via phone or face-to-face builds relationships.
• Respond immediately only to urgent issues.
• Put “no reply necessary” in the subject line when you can.
• Resist your reply reflex like ”Got it” or “Thanks.”
• Severely restrict use of the reply-all function.

Please write us how you feel about all of this. We welcome opinions, thoughts, comments and advice on this subject.

The simplest explanation is usually the best.

Google Analytics is intuitive.  Putting in this free code into websites revolutionizes any Internet marketing strategy. As we also help to create content for our clients, we insert the free code on every page.

Monthly we track, interpret and make actionable decisions based on key performance indicators (KPI) like page views, new vs. returning visitors, time on page, navigation and site entry paths, and top keyword search terms. From these metrics we also make adjustments to offline business plans. Analytics is valuable data for understanding what interests and compels qualified visitors.

“Bounce rate” (a key analytic/benchmark for measuring the relevancy of a site’s content) had the power to stump us. We’ve done a lot of research on what this percentage means. Taken courses at Google’s Conversion University. Avinash Kaushik finally solved it for us. We’re embarrassed to write the date of the post. Better late to the analytics game than never. For building and creating better law firm websites, these ideas, however, might be relatively new to the Internet marketing legal services game.

Here is some of Kaushik’s wisdom from his supercool blog, “Occam’s Razor”:

Bounce rate measures the quality of traffic coming to your website. It measures the percentage of people who come to your website and leave “instantly.” 

BR = the quality of the traffic you are acquiring.

Here are three factors that bounce rate on a website clarifies (does not apply to blogs):

• Measure percentage of your visitors will give you more than five seconds.
• Measure your traffic sources. How fast do visitors bounce originating from what sites?
• Measure bounce rate for your keyword search term. Cull out words and re-emphasize words that work (persuade/convert).

If your bounce rate is troublesome (anything over 50%), think about these solutions: calls to action on the page, if content is optimally organized, and do multivariate testing (a/b) on page performance. BR under 20% is hard to get. Any BR over 35% is a concern (per Kaushik who has written a well-selling and respected book on Analytics).

We’ve got work to do.  Now a word on “Occam’s Razor” (the name of Kaushik’s blog). We felt compelled to research its definition after spending so much time on this great source of analytic information. 

It is a principle attributed to William Ockham (English 14th century logician, theologian and monk). It puts forth the notion that the simplest explanation or strategy tends to be the best one. Ockham may have learned from Aristotle and Aquinas. As a logical principle, Occam’s razor stresses parsimony. Scientists must accept the simplest possible theoretical explanation for exisiting data.

Einstein agrees with Ockham. He says, “Make everything as simple as possible, but not simpler.”

 I got lucky because it was Dan Levine, of LexServe, LLC, who showed me around the vast empire of Legal Tech 2010. Dan is the nephew of Gadi Rosenfeld, the godfather of the legal tech industry. (Founder of Legal Information Technology back in the late Eighties and former employee thereof). He introduced me to many of his colleagues. We checked out the hundreds of exhibitors on two floors, talking to some, taking swag from others, and laughing a lot. The New York Hilton on February 2 was an absolutely incredible scene. Hundreds of demonstrations of the newest legal industry technology - from eDiscovery to document management, calendaring, billing, client relationship management and production software – gave one the feeling of being in a futuristic arcade swarming with people who knew a lot more than you did. Because our company assists law firm partners in their legal marketing initiatives ( improving their bottom lines) attending Legal Tech will now be considered an annual prerequisite. A bargain for its $50. entrance fee.

Sent on an assignment by a client to scope out software for creating a “paperless” office,  Dan joked that I was looking for Legal Tech 2000. Going “paperless” is about saving time – the search for active files in a large office can still be exasperating.  But I found out that ”paperless” is an extinct word – or, rather, it has graduated to another more advanced one like file sharing and/or document management. 

For the legal services marketing professional looking to understand what kinds of IT platforms can facilitate client relationships, Legal Tech was the perfect venue.  (I furthered investigated LexisNexis Time Matters and offered this as a solution to our client. CT Summation iBlaze might also be a good alternative).

Deloitte’s Electronic Discovery Solutions Center issued a nice eight point list of “What You Should Know in 2010″: 1. eDiscovery and governance, risk and compliance begin to merge and seven other points that may not be applicable to mid-sized law firms and not exactly relevant to law firm services marketing or client development.

Because “digital lipstick” is a growing area of concern for one of our clients who is a family lawyer, I investigated Mimecast (unified email management)’s excellent white paper on “Email as Evidence: 12 Steps to Ensuring Good Evidential Quality of Email.” Litigants in the U.S. are required by law to give discovery of “electronically stored information” (ESI). See the 2006 modification of the Federal Rules of Civil Procedure.  From a law firm client development perspective, showing knowledge of this ESI factor is a good thing to put on a website to attract prospects looking to dissolve their marriages. Who doesn’t text who needs to be clandestine? 

Here’s a list of the other exhibitors of possible interest for L&L LC Westchester and Fairfield mid-sized law firm clients and prospects (by services and software):

• Database Management,
• Electronic Discovery,
• Case Management,
• Document Management and Production,
• Information Management.

ALM Media was everywhere. Still a fan of print media, I picked up the slim copies of The American Lawyer, Corporate Counsel, and the National Law Review.  The articles in Law Technology News (LTN) were especially relevant, especially Robert J. Ambrogi’s article on Google’s entrance into case law research.

What does all this artificial intelligence have to do with law? Perhaps this is best answered with the title of one of the key note seminars: “The Rule of Law and Intelligent Information in Emerging Democracies/Nations” and LTN’s Technology Awards 2009: Most Innovative Use of Technology in a Trial: Khmer Rouge Trial Team/Cambodia Tribunal.

Now that really makes you think.

Each year, every publicly traded corporation has to prepare an annual report. The Chairman’s letter describes the results obtained during the past year, which business grew and why, and what the plans may be for the year. S/he thanks all the stakeholders (not just stockholders).  Annual reports, often associated with Fortune 500 companies, are printed on quality stock paper and contain really nice photographs (and/or some kind of theme). The spreadsheets – from a cash flow statement to a balance sheet – show its financial health and/or its problems. They indicate the company’s capacity for growth. Of course, partners at a law firm do not need to prove to investors and analysts that their share price properly reflects the value of the business.  

A law firm, however, would benefit immeasurably with a  “The Practice Development Report: 2009 & 2010.”  It can be used both as a guide and a way to value the past by identifying mistakes that were made and how not to repeat them. A business plan is a  map to guide you to the future of your firm.

Start with a mission statement for 2010. This may be based on future state and federal legislation that will affect your practice areas. It may be based on your own intellectual interest in developing a field of law. Then, examine the past year. Admittedly, it was a difficult one.

• What practice areas flourished? (What legislation impacted a particular practice area?) Who is to be congratulated for bringing in the most rewarding new clients?
• What practice areas did not exceed expectations? And why?
• Where did the firm encounter the most operational difficulties? How can these processes be corrected for greater efficiency?
• Where did the firm outperform compared to previous years? What new practice areas should we develop?
• Are we ready to develop geographically? What resources are needed?

Judd Kessler, CEO of Abacus Data Systems, wrote an excellent article entitled “Six Simple Reasons Practices Fail” that appeared in The Texas Bar Journal (October 2009)  As one of the largest providers of law office software, he is in a good position to determine these six reasons. He points out that mismanagement of firm finances is the number one reason why firms fail.  ”If you are spending too much money on practices that don’t bring in new clients and are not keeping track of these finances, you are putting your firm in a dangerous position.”

Now. Look at your marketing initiatives. How did you grow your firm in 2009?

• Which networking events brought in the most referrals?
• Which events were of most personal gain to you? (Where you felt most alive is key to keeping your firm on top of its game.)
• Did a CLE course really help your practice? Which one? Which one will you go to this year?
• How is your membership in the local bar association?
• How is your law school alumni association?
• Community service?
• Did you let the press know of any legal win?
• Is your website up-to-date? Do you know how many visitors you have every month? Do these visitors call your firm for a consultation?

You’re ready now to look at marketing costs (which are tax deductible) and their Rate of Return on Investment.

Did a printed brochure sent out to well targeted prospects cost less and bring in more referrals than the fee for your website developer? Did a seminar increase your thought leadership in the community over carefully selected print announcements?

By analyzing these facts, your firm has a better chance at growing in 2010. You’ll be taking less shots in the dark and moving toward carefully set objectives .

As you begin to collect your receipts and paperwork for your 2009 state and federal income tax returns, don’t forget to include our legal services marketing invoices. Business development costs such as marketing consultants are tax deductible as a current expense. Professional marketing fees can be deducted in the year that they are incurred. This includes Internet start-up fees such as hosting, website design and maintenance. The more tax deductions your law firm can legitimately take, the lower its taxable profit. Advertising and promotional costs related to growing your client base may also be deducted. Expenses that “create business goodwill” (see our previous post on pro bono work) are also deductible as long as there is a clear connection between the sponsorship and your law firm.

So, if you used a marketing consultant to develop your firm’s “identity” (brand), develop a Unique Services Proposition, research, develop and write website content, fine tune your Search Engine Optimization strategy, conduct a Client Satisfaction Survey – all initiatives that help increase awareness of thought leadership in your practice area – remember to deduct it as a small business expense.

The cost of using a marketing consultant just got even less.

 Billable hours might be way down. Pro bono work is an excellent way to keep yourself active using your legal talent and skills and doing work that might lead to fruitful connections. (With the greatest benefit being how you’ll feel helping those less fortunate.) In this economy, many lawyers provide professional services at no fee or at a reduced fee as a way to increase investment in practice development.

All marketing initiatives – traditional or modern – begin with getting noticed. Gaining “share of mind” or becoming a legal thought leader in your community is a gradual process. Potential prospects start to notice your firm through sustained and integrated campaigns that include public relations, an optimized and well-messaged Internet presence and traditional networking.

Pro bono work is a great way to expand your network in the area of law that you practice.

Recently the Partners in Justice met at Pace Law School’s Judicial Institute to honor Westchester lawyers dedicated to helping those in need.  The Legal Services of the Hudson Valley notified those present that families in need of legal assistance are at record levels. McCarthy and Fingar LLP were awarded for their distinguished service helping small businesses with employment law issues. Barbara Lehrman, a solo practitioner, received praise for her work assisting residents from unlawful evictions. The Hon. Francis Nicolai, Julie Cvek, Dawn Arnold and Robert Byrne were also recognized for their participation in programs increasing the availability of legal services.  Several Ninth Judicial District Judges were on hand to congratulate them. Over sixty people in the room applauded the speeches - although the news from the current situation in Westchester was bleak. 

 

Did the recipients cultivate new relationships? Did they list their award and pro bono projects on their web sites? Did they issue an online press release? Or talk to The Journal News about their findings?

 

All of these things can translate into building awareness and establishing legal thought leadership. Networking is a process. Everyone at this reception knows the name McCarthy Fingar. That’s powerful.

 

“Donating time to charity groups, churches, schools and other nonprofits can increase local visibility, deepen local business ties and create opportunity,” says Christine Banning, VP of Marketing and Communications at SCORE (Small Business Counselors) in Washington, D.C. (Quote for The Wall Street Journal’s “Pro Bono Work Helps Firms Fight Economic Slump,” 9/13/09)

 

There is more: pro bono expenditures are deductible – if made incident to the rendition of services to a qualified charitable organization. The IRS does not, at press time, however allow deduction for the fair market value of time attributed to a charitable organization.