Will law firms transition to using sales professionals to sell their services?

Will law firms convert to a system where they utilize sales professionals to sell their services to clients, as financial services, accounting firms and other professional services industries have? What are the considerations?

Looking at the pros of using sales professionals, law firms would be able to have their attorneys focus entirely on practicing law, and not losing potential revenue by devoting billable hours of attorneys to developing business, networking, drafting pitches and proposals, and presenting them to potential clients.  This would allow firms to develop a complementary department adjacent to the attorneys- similar to marketing and business development - where professionals would work with individual attorneys on developing relationships with clients, gathering the necessary information and strategy to prepare pitches and proposals, and going into clients to present their pitch.  Would lawyers welcome this change or would they have difficulty acquiescing their business to non-lawyer professionals?  If they welcomed the change, would this result in more robust revenues because lawyer time would be freed up?  Or would there be a decrease in revenues because non-lawyers would be selling services to in house counsel, and this could potentially be damaging to the firm's reputation and relationship with their clients?

On consideration is how to determine who would be viable candidate for these sales professional positions?  Financial services sales professionals are required to have Series 7 and 63 certifications, with additional certifications required depending on the types of products being sold.  Would law firm sales professionals need a JD or would they just need familiarity with the law?  When looking at third party legal vendors such as Lexis Nexis, Bloomberg Law, LPOs and other legal service providers, what qualifications or skills and experience is required?  Often times former attorneys do end up working for these types of companies, but not all employees have a JD or have practiced law.  How is this different from what would be required for sales professionals selling legal services to in house counsel?  Does in house counsel look to only have lawyers pitch their services or would they be accepting of non-attorneys selling a firm's legal services? How much legal knowledge is required to make a pitch or develop a relationship with a client?  Is it just generalities and the intricacies of the legal work is done once the work commences, or is there discussion of legal concepts that would require an attorney to be making the presentation?  Or would it work better if the relationship partner accompanied the sales professionals on their pitches in case specifics come up?

Another consideration is developing a secondary track at law schools for legal sales professionals that would be less than the 3 years and cover both legal concepts and selling strategies?  Some law schools are now revamping their programs to include areas of expertise such as business management, project management, legal technologies.  Would developing a sales track be any different?  Would this be part of earning a JD or could this, and the other topics, fragment into other individual programs which would not require the same years of schooling and state bar admittance as JD?  Law schools are currently under fire for the significant expense in attending and the inability of law students to be hired for positions that would justify such an expense.  There are only a limited number of high paying, AmLaw 100 positions for first year associates as law firms scale down their junior hiring as the leverage model is no longer effective and clients are no longer willing to take on the cost of training junior lawyers.  Developing these secondary programs would allow individuals interested in the legal profession earn degrees that would help them gain employment at law firms but in a different capacity than attorneys.  Legal IT professionals, business development professionals, legal project managers, and sales professionals all could be developed career paths at law firms.

As law firms continue to struggle with the changing business model caused by clients and the general business environment, they will test out different ways to continue their profitability and success.  An internal sales team could be beneficial in selling their legal services and changing the way the firms conduct their business - allowing their lawyers to do what they do best: practice law.

Has industry competitive intelligence become a barrier to change in law firms?

As I have mentioned before, law firms for the most part exhibit herding behavior when it comes to decision making.  They consult what other firms are doing, research news articles and attend conferences to assemble a substantial amount of data from a variety of sources when deciding to make a change in their business.  It could be as small as how much their technology stipend for lawyers should be, to a more significant decision such as which CRM system to invest in.  For several years now, the legal industry has been inundated with discussions on alternative fee arrangements, CRM systems, business development, preferred vendor lists, in house legal procurement, the death (or everlasting life) of the billable hour, and - most of all - how the legal industry is, should or is going to change.  When you think about it, is all of this data gathering and communication too much?  How much and what kind of data is enough to make an informed decision? For legal professionals who are notorious for being "big data adverse," there is certainly a huge focus on compiling evidence in order to make decisions.

I wonder if firms stopped paying such close attention to what others are doing, and instead invested the time and energy into their own internal intelligence, would their ability to not only make a decision, but make the right one for them, increase?  Of course, competitive intelligence should always play an important role in how businesses operate in order to keep track of industry trends and learn from others, but do law firms have too much of a reliance on it?

Perhaps firms can hold "internal conferences" where the heads of the different departments spoke on panels or created presentations on the key aspects of their department, what they do well, what they need to improve upon, what their challenges are going forward and what their needs are for the future?   Obviously something similar to this occurs at year end when formulating budgets for the new year, identifying hiring needs, and conducting employee evaluations and compensation awards, but what if firms used a different format focusing on different goals to compile internal data to make business decisions?  This would be for not only the different practice groups but also for the accounting, finance, marketing, HR, IT, etc. departments.  Many of the business challenges firms are facing right now involve technology, CRM, business development, and hiring.  However, what works for one firm does not necessarily work for another firm.  The business decisions must be customized to what works for an individual firm, with their unique infrastructure, practices, strengths and weaknesses.  Maybe conducting a balanced scorecard internal analysis on the firm as a whole would be beneficial to understanding how to best proceed?

How can firms weigh the need for competitive intelligence with their own internal knowledge in order to make the right business decisions for them, without succumbing to inertia by an overload of data?  Perhaps this correlates back to a ubiquitous problem law firms have in how to differentiate themselves from each other?  By focusing on what other firms are doing - particularly those they consider "peer firms" (which changes depending on who you are speaking to) - aren't firms continuing to categorize themselves in a group and being counterproductive to the idea of differentiating themselves?  Maybe by focusing on their internal intelligence, firms can utilize the data to better understand their differences from others and develop their unique value proposition, which is invaluable to selling their services to clients?

Interesting articles on Law Firm CRM

http://makemorerainblog.com/2013/chris-fritsch-attorney-crm/

http://makemorerainblog.com/2013/survey-law-firm-crm-2013/

http://makemorerainblog.com/2013/crmdataquality/

Assassins Aim to Reinvent Big Law article link

Interesting article in Law Technology News:
http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202601223589&thepage=1

Can in house counsel herding behavior result in greater efficiency?

Looking at things from the other side of the aisle, clients are becoming more and more focused on keeping legal costs low and predictive, cost savings and the value of legal services from outside counsel.  They are utilizing reverse auctions, preferred vendor lists, frozen billing rate requirements, flat fee requests, LPOs, and other alternative ways of choosing their outside counsel.  This of course has law firms scrambling for how to fulfill these requirements and requests, and how to maintain their connections with their clients and ensure healthy revenue streams to sustain their business model.  However, could in house departments do more to control their legal costs and lessen the time burden of developing systems to choose outside counsel and evaluate responses to RFPs?  

Law firms rely on what other firms are doing to determine their own policies - whether it be the technology stipends, bonuses for associates, summer associate programs, part-time policies, professional development trainings or other components of their business.  There are organizations that facilitate this exchange of information, such as NALP, the Legal Marketing Association and the Legal Technology Association, as well as conferences for these groups and other groups.  Most firms are very risk adverse in their business choices, and tend to follow herding behavior when making decisions about key components of their business.  

Could in house legal departments learn from this type of behavior?  Consider an industry - for example financial services.  The companies within this industry are facing similar issues and challenges, and their need to keep legal costs low is vital to their business and a focus of not only senior management but of their shareholders and the public.  What if the legal departments in the financial services industry came together and determined a set of policies on how they handle outside counsel selection and management?  It could either be a formal group that would meet monthly or more of an informal gathering and exchange of information.  The departments could discuss the issues and challenges that each are facing, identify consistencies, and brainstorm solutions to the problems that would be beneficial to each?  For example, what if each department is having trouble determining what type of work they consider "commodity work" and how to select a law firm to handle this type of work?  As commodity work is relatively low risk and an area where there are opportunities for cost savings, developing a process to enable the department to select a firm quickly and for a specific range of pricing would add tremendous value to their management of outside counsel.  Each legal department of the financial services companies could agree upon (1) what they consider commodity work, (2) the process they would use to select a law firm(s), (3) the range of flat fee pricing or billing rates they would pay for this work - no matter which law firm selected, and (4) how they would evaluate the work completed and identify and implement changes to the process as a group.  This would not only institutionalize a specific process to handle this work type, but also would decrease the amount of time and energy the departments would need to spend on this low risk type of work engagement and give them greater leverage over the pricing of this type of work by having a consistent policy industry-wide.  This collaboration would also enable the departments to open lines of communication and learn from each other.  

But what type of problems could arise from this type of collaboration?  Financial services firms are notorious for not sharing information, so getting legal departments on board would be difficult.  How much information is ok to share?  How can the departments ensure they are being compliant with their firms' confidentiality policies, not to mention the legal issues? Obviously there would need to be firmly set guidelines and structure put in place to make sure that the discussions remain focused on outside counsel management policies and components, and not discuss specific legal or company issues.  But this would be a continuing issue that would be a barrier to communication and a reason why firms would not want to participate.  Another issue is whether it is ok to not only share these issues, but also in sharing the same business practices?  Would this be considered an antitrust violation?  If major financial services companies all began having the same requirements for how to handle outside counsel management, even if only for specific types of work, what effect would this have?  Would law firms stop bidding for this type of work?  Would it cause issues with the companies' relationships with their law firms?  Or would it be beneficial in that law firms would all know exactly what the client requirements were for this type of work, and it would enable firms to also spend less time and energy developing customized bids for this work for each client - they would be able to develop a template for the responses to these types of RFPs and a process for how to handle these requests.  This would result in greater efficiencies for both the in house counsel and the law firms.

Taking the intranet to the next level - law firm social networking sites?

I just read an article in the Wall Street Journal on high tech fixes for patients and it mentioned a new crowdfunding site, CrowdMed.com:

"Founded by technology entrepreneur Jared Heyman after his sister Carly went three years with an undiagnosed illness, CrowdMed lets users offer a cash reward that goes directly to the "medical detectives"—be they laypeople or physicians—who help solve their case.  CrowdMed, along with increasingly sophisticated online "symptom checker" programs for consumers, allow patients to use some of the same strategies that doctors are already turning to for help with difficult cases. Some doctors participate in private, online social networks to seek input from other physicians and use Web-based programs that analyze reams of data to suggest possible diagnoses."
http://online.wsj.com/news/articles/SB10001424052702303773704579270450565101982?mod=WSJ_business_IndustryNews_DHC

This got me thinking about how lawyers are similar to doctors in the way they solve problems - while doctors are looking for diagnoses and treatment for their patients, lawyers are looking for legal solutions for their clients.  Lawyers already consult with one another on matters and handling client issues, but what if law firms built a more formal communication and consultation system by implementing an internal social network?  This way, attorneys across offices and countries can use the system to post questions on various matters and quickly receive input from a various lawyers.  There could be individual pages for specific practices, so the questions can be posted on practice specific sites where lawyers from that practice area are registered and receive alerts when there is a new post.  This would allow for greater fluidity of communication between attorneys throughout the firm and encourage more collaboration.  There could even be a keyword search component, where attorneys can log in to a specific practice site and search for all posts related to a specific issue or question.

Taking this concept to the next level, the firm can add client specific sites, where only attorneys who work on that client are registered to the site and able to log in.  There would be an internal client site where firm attorneys can post issues or questions related to the client - thus furthering the client team concept to enable greater transparency regarding the client and what is current.  There could also be an attorney/client site where the client would be able to log in and post questions.  Similar to the internal social networking site, all lawyers working on that client would receive an alert when the client posted a new question or issue.  Thinking about how often in house counsel have questions that can be answered quickly but currently require a phone call to the relationship partner or firm contact, playing phone tag, and waiting for the firm attorney to call back with the answer, this would provide a quick, seamless solution.  By in house attorneys being able to log in to ask the question, the firm attorney who responds can take the time to come up with the answer and collaborate with colleagues to be sure of the answer, and post the response allows for more timely responses and greater client service.  Similar to the internal site, there could be a keyword search component which would allow the client to search  for any related posts to the question or issue at hand to see if this had already been covered previously by another person - thus saving them the trouble of asking again.  Eventually the posts could be categorized by matter and issue, so it would be easier to search for specifics.  However, a potential issue could be how the firm attorneys choose to respond to the client - if all the attorneys working on the client or matter receive the alert, who responds?  Perhaps the alert would need to include the actual post and who at the client posted it?  That way the attorneys working with that individual on that matter would know the post is related to them.  But narrowing it down by post and individual does not solve the issue of who responds?  There would need to be a process developed to ensure consistency of service to avoid multiple responses.  Perhaps the partner on the matter would forward the alert to the team members and assign it to someone?  Or would there be a designated attorney on each matter who would be responsible for answering all posts?  Perhaps the client site would be segmented into separate sites by matter, each of which would have their own login for only the related attorneys?  The logistics would need to be further fleshed out, but it is food for thought.

An additional tidbit that could be considered is how firms can monetize this service - perhaps it would be a yearly "subscription" fee for the client to be able to access the site and search for past posts and have this type of instant service?  Not all clients would be interested in utilizing this, so that may not be profitable or make sense - afterall, LinkedIn and Facebook do not charge their users.  But maybe firms could charge the client a fee for being able to access the internal networking site, or the portion of the site that is organized by practice area and formally categorized.  Thus the client would be able to obtain information that would not normally be at their disposal, and as it is attorney work product, the firm could feasibly charge a fee and the client would not question it?

These days, law firms are focused on improving client service and developing and maintaining connections with their clients to ensure their continued business.  With the level of competition mounting between not only firms, but between firms and LPOs, law firms need to think outside the box and use technology to their advantage, to not only generate business and increase their profit margins, but also to maintain their connection to their clients.  

Lessons to Learn from Bezos?

A recent article in the Wall Street Journal discussed Jeff Bezos’ strategy for Amazon to remain successful and continue to innovate and lead the charge in changing the online shopping landscape.  By offering Sunday delivery, Amazon is setting itself apart from its competitors and helping a declining US Post Office to remain competitive in the shipping market.  Ultimately, Amazon is hoping this strategy will force its competitors to adopt the same service, changing the market for online retailers. 

How can this strategy apply to law firms?  For several years now, there has been discussion over how clients are no longer willing to pay for the training of junior associates and law firms can no longer use the leverage model to absorb the costs of training new attorneys into client bills.  Clients have begun demanding flat fees, volume discounts, frozen billing rates, and other components to lower their legal costs.  What if law firms began not charging for first year associates?  What if firms absorbed the cost of each new class of associates each year in an effort to maneuver clients away from the volume discounts and other lower cost requirements and back to the traditional pricing of billable hours?  What effect would this have on the industry?

First, law firms would need to examine their hiring needs more closely, and alter their hiring strategy to be able to afford absorbing these new salaries.  Also involved would be a revamp of the summer associate program, making it less about lunches and events and more about substantial training and rigorous evaluation to identify the candidates who would bring the most value to the firm as a full time associate.  They would need to restructure the costs associated with hiring, such as recruiting events, travel, events, programs and summer associate salaries – if the firm would not be able to offset these costs by billing out first year associates at high rates, they would need to strictly adhere to a lower budget and evaluate the value generated from these costs.  Another possibility would be decreasing the number of summer associates hired, and looking at the utilization rates and determining how many associates would they need to manage the workload at close to 100% utilization. 

Second, firms would need to examine how they staff deals, their workforce requirements and salary structure for associates.  Would they maintain the same billing rates starting with second year associates or would changes need to be made?  Are deals being staffed efficiently or are there pockets of overutilization and underutilization?  How would the salary structure of associates change?  Would they maintain a lockstep progression, would they lower the salary increases, or would they change to a merit based promotion system?

Third, what effect would one or two firms changing their policy have on the legal market?  Would that be enough to cause other firms to follow suit?  Or would there need to be a larger contingent in order to cause change?  Or would it depend on the size of the firm making these billing changes? 

Another way this strategy can be applied is by law firms adopting residency or apprenticeship programs, for the first, second and/or third year associates.  Greenberg Traurig recently announced that they were adopting a secondary first year associate residency program for law graduates who may have not been chosen through the traditional on campus recruiting hiring.  This group would earn a lower salary than the regular first year associates, but would have the opportunity at the end of their first year to be promoted to the regular associate track.  This two tier system may be effective, but what if a firm eliminated the traditional first year associate program completely, in favor of a year-long residency training program for the law graduates they recruit through traditional on campus hiring?  These attorneys would not be billed out to clients, although they would be working on the matters, and would have a full program of work experience as well as extensive training for the entire first year.  This program would effectively have the firm be responsible for the costs of training junior attorneys while enabling clients to have only extremely well trained attorneys working on their matters.  What if the residency was a two or three year program, including a portion where each attorney would be seconded to a key client?  This way the training these attorneys would receive would be both in firm and in house, and can be used as a client service and marketing tool.  What effect could this trend have on the market?  When clients compare using the services of different firms, would the knowledge that one firm had this residency program and another didn't have an effect on which firm they would choose?