Addressing the Martindale-Hubbell Question

One of the most common questions I'm asked as a legal management consultant specializing in law firm marketing and business development is whether there's any remaining benefit to participating in the Martindale-Hubbell Law Directory.  It's also one of the most common queries on the various law firm marketing discussion groups (here and here) and a common topic for legal bloggers (here and here) and journalists (here and here).  My expertise in the category comes from having led the Martindale-Hubbell large law and corporate business some years ago.  However, I typically remain quiet on the topic.  I'm told that, as an alum, critical commentary may be discarded as some sort of sour grapes and any positive commentary may be mistaken for misplaced loyalty.  The reality is, I may bring the most objective perspective of any pundit.  And it's from this perpective that I suggest that we're all asking the wrong question. Law firm leaders have an unusual reliance on precedent for decision support.  Invariably when assessing whether to launch or cease an activity, they will look to what other law firms are doing, particularly firms considered to be competitors or in their peer group.  There's strength in numbers, so if other firms are doing X, or discontinuing Y, this provides context and cover for us to do the same.  The problem with such thinking is that benchmarking works best in comparisons between similar entities, and law firms are as different as other businesses, even those in the same space.  (Do you think Mercedes-Benz closely follows what Kia is up to?)  Also, and not to put too fine a point on it, just because a respected competitor is doing something, or stops doing something, doesn't mean it's a smart decision.  The object lesson is that mimicking dissimilar organizations in dissimilar markets and in perhaps dissimilar geographies that offer dissimilar services to dissimilar clients, is hardly an exercise in sound business management.

Whether it's Martindale-Hubbell or any other directory, and there are many players in the space (here and here and here and here and here, to name just a few), the question for law firm leaders isn't whether other firms are participating or not, the question is whether our participation is an effective use of our law firm's capital.

A legal directory is but one component of a law firm's marketing mix, in the same way that a bowl of sugar-coated chocolate lumps (or is it chocolate-covered sugar lumps?) is part of a balanced and nutritious breakfast.  Rely on one component alone and your results may be less than desirable.  In a bygone era a legal directory may have been the only marketing tactic a law firm employed outside its own native market.  But today, there are countless marketing tools available, and the Internet provides potential access to countless buyers.  But access to such tools doesn't always mean they're used effectively.

Recall the appearance in the late '80s and early '90s of word processing and desktop publishing software programs, which provided average computer users with sophisticated tools to rival those of professional publishers.  What resulted was primarily an increase in poorly-designed, barely-readable newsletters produced by anyone with typing skills.  Want an example closer to home?  How many law firm leaders believe that ready access to self-help legal tools has eliminated the need for estate, bankruptcy and real estate lawyers?  Merely having the tools doesn't confer expertise.

This result also occurred when tools for web publishing became more accessible.  Recall the endlessly scrolling HTML pages of yesteryear, complete with blinking icons and spinning globes.  While both the tools and the professionals using them have improved over time, quite a few law firms continue to waste time and money because they deploy their marketing tools ineffectively.  Publishing a website but doing little to drive traffic from qualified buyers is much like printing a pretty, glossy brochure and advising potential clients to visit your office lobby if they want to read it.

Many law firm marketers and leaders focus on the design or even the usability of their firm's website, yet ignore the confusing area of search engine optimization (SEO).  Even many who invest in SEO efforts do so with the underlying assumption that their targeted buyers rely on the popular search engines to inform their buying decisions... it sounds logical, but is it actually true?  But it's not just about websites.  It's not too hard to identify the many associations and events populated by target clients.  Still, knowing this and actually sending lawyers to these events to participate are two very different things.

And this is where legal directories come in.  While law firms can do a lot of outbound promotion of their credentials, it's challenging and expensive to attract a lot of quality, and qualified, inbound traffic on a website.  Similarly, while law firms can send lawyers to mingle with potential clients, they can't send lawyers everywhere.

A sophisticated law firm marketing strategy plan will identify the ideal targets for the firm's offerings.  The subsequent tactical plan will outline specific actions to increase visibility with these targets, to demonstrate expertise and to convert targets to clients.  Reaching the target audience requires being visible in the places they visit, prominent in the publications they read and, of critical importance, being part of the consideration set when the buyer is ready to buy.  Some marketing tools are effective at generating awareness, e.g., advertising, sponsorships.  Others are effective at demonstrating expertise, e.g., speaking engagements, articles.  Some offer a little of both, e.g., websites.

Now let's play this out.  We've identified a target market, consisting of potential clients in a specific industry located in multiple jurisdictions globally.  We've purchased some search engine keywords to drive traffic to our website, we've secured a speaking engagement for one partner on a panel at a leading industry conference, another partner has been invited to contribute a monthly column in a trade publication, we publish a blog of legislative and regulatory changes impacting this industry, we send several lawyers to various industry association meetings, we advertise in multiple trade publications and we sponsor quite a few industry events.  The aggregate cost of these tactics is $250,000 -- assuming our search engine key words aren't in high demand, or the cost could easily reach ten times this amount.  And lest we quibble over the amount of this imaginary investment, trust me when I suggest this is a very conservative estimate.

Now imagine there's a legal directory that also targets this industry.  It offers a monthly e-newsletter containing lawyer-authored articles to thousands of opt-in industry decision influencers and decision makers.  A section of the legal directory website is dedicated to showcasing the unique talents of the law firms serving this industry.  The legal directory search engine allows industry insiders to research law firms claiming industry expertise, and provides users with quantifiable evidence of expertise to help differentiate from those law firms merely aspiring to enter this market.  Imagine that visitors to the legal directory website can click through to the member law firm's own website, and this traffic represents a meaningful portion of overall traffic to the firm's website, with the added bonus that these inbound referrals clearly represent qualified and quality traffic, and not, say, law students trolling for employment opportunities.  And don't forget about the legal directory's ranking of law firms specializing in this industry, compiled by editors who conducted independent and objective research.  In addition, perhaps the legal directory allows clients to provide commentary about the capabilities and service posture of the law firm, so that other interested buyers can make more informed decisions.  And maybe the legal directory forms an alliance with the leading industry association to embed a lawyer search engine on the association website.  Perhaps the legal directory offers online discussion forums where lawyers can contribute to substantive discussions in their practice area and engage potential clients in a running dialog.  And finally, what if the legal directory can provide statistical evidence that the sum total of its efforts influence buying decisions?  Can you quantify the influence that your other marketing activities have on your target clients' buying decisions?

There may not be a legal directory that does all of these things, or at least all of these things for all practice areas and industries.  But some may provide a host of meaningful opportunities to increase visibility and demonstrate credibility to a targeted market.  And that's the whole point.  All legal directories aren't created equal, and just because one doesn't suit your firm's needs doesn't mean another won't.  To be clear, in some cases there may not be any legal directory that meets your needs.

None of the above are unique tactics that a law firm itself couldn't adopt.  However, the scale of the investment to replicate the volume and quality of the traffic generated, to reach such a high number of qualified potential targets, and to sustain this visibility and demonstrate this expertise over an extended period of  time, will generally cost substantially more than the modest investment above.  Imagine if a law firm could obtain access to these benefits by participating in a legal directory for $10,000.  Or $50,000.  Or maybe it's $150,000.  Perhaps it's $250,000.  This price may seem high as a single point statistic on an invoice, but is it?

The point is, the value of such an investment can be effectively measured only by comparison to the alternatives.  If the firm can find a way to reach the target audience in a similarly effective manner at a lower cost, it should run, not walk, to do so.  There's no rule that says a law firm should invest in any legal directory, any more than it should invest in a website or in publishing client alerts or printing glossy brochures.  It's merely a function of how buying decisions are made with the target market, and what tactics influence buyers and buying decisions.  Some firms -- though thankfully fewer than in previous years -- still believe that marketing is about answering the phone in a timely manner.  And for some firms, this may be so.  For the rest, marketing is about investing thoughtfully in tactics that will provide a return.

So what does this mean for the "Martindale question?"  The analysis should contain a disciplined approach to weighing alternatives, comparing the costs of reaching targeted buyers through various means.  If a law firm leader is convinced that the firm's particular target audience can be delivered without investing in Martindale-Hubbell's legal directory, then this is an easy decision.  If the analysis suggests that Martindale-Hubbell can be a multiplier to the firm's own marketing efforts, and through careful negotiations the cost to participate is tolerable, then this is also an easy decision.

Likewise, it's okay to opt out simply because you want to save money and since others are doing so it's seems like a safe decision.  But let's not pretend it's a rational marketing decision when it's merely cost cutting.  It's also okay to invest time and energy in directories that provide little access to clients, but that allow the partners to boast of obtaining a top ranking in their practice category.  But again, let's not pretend we're making a rational marketing decision.

Many pundits will talk about the scourge of legal directories, or the demise of Martindale-Hubbell in particular.  My approach is more circumspect when advising my law firm clients.  Such investments are derived from analysis, not hysteria or conventional wisdom.  Even we supposed experts should be ignored if we enter the discussion with a pre-formed opinion.  I certainly don't feel qualified to advise a law firm leader of the effectiveness of his or her marketing investments until I study what he or she is trying to accomplish and what alternatives are available to achieve these objectives.

Some years ago a law firm hired a chief marketing officer from outside the legal profession, and she had no prior knowledge or pre-conceived notion of the effectiveness, or lack thereof, of legal directories.  At first she was a client but over time we've become friends.  When we first met she relayed that many of her partners and staff encouraged her to drop all directories outright.  Instead, she commenced an exercise to analyze the reach and effectiveness of each of the firm's existing legal directories, and invited representatives of other legal directories to provide quantifiable evidence of their product's reach and effectiveness.  In the end she canceled many, added a couple, scaled back a few, and augmented some, without regard to internal politics or favorites.  She even declined a fully-paid trip to speak at an industry conference, sponsored by one legal directory provider desperate to influence her decision.  Her announcement memo to the partners overseeing her analysis was detailed and disciplined and effectively eliminated any arguments, so everyone could go back to work.

I recently had coffee with my old friend and I asked her how it all worked out, with several years of history to analyze results.  She laughed and said that not every decision has worked out in the long run, but she feels confident that her analysis is as sound as it can be, and certainly more effective than her firm's competition.  She's now earned the credibility to act quickly and without onerous committee oversight, so each time one of her major competitors makes a hasty decision to reduce its spending on sponsorships or advertising or directories in areas her firm targets, she tends to increase her investment in order to capture the traffic the competition has given away.  This works for her, and though it may not work for the rest of us, how many of us are prepared to submit our decision criteria against hers to justify our marketing decisions?  I didn't think so.

One final note: the Martindale-Hubbell discussion isn't complete without acknowledging that the organization and the product offering has changed dramatically in recent years.  Countless wannabe pundits have concluded that "no one looks for lawyers in books any longer!" as if they're the first to offer this startling revelation.  If your analysis of legal directories, whether Martindale or any other, fails to consider the online and in-person components of the value they deliver (or claim to deliver) then your analysis is outdated.

Update:  Based on the many comments this post has generated over time, I'll make two additional points:

(1) Some directories are vanity publications, with no redeeming feature other than the ability for a lawyer to say he or she has achieved some professional distinction, albeit of dubious value.  The various state bar associations have started to look more closely at legal directories in an effort to help consumers distinguish between those that provide a valuable service and those that are mere puffery.  Not all legal directories can withstand such scrutiny.  Sooner or later, every legal marketer is asked to support a lawyer's "nomination" to the "Tall, Blond-Haired, Left-Handed Lawyers of the Upper Midwest" directory.  Nothing wrong with a little vanity press for a needy lawyer, but once again it's important to distinguish between such actions and actual strategic marketing.

(2) A common objection to participating in a directory is what I call the "mall rebuttal" which is usually some version of "We prefer not to advertise or promote our firm any place that our competitors are doing so."  The logic, presumably, is that if we promote ourselves in close proximity to competitors, we risk driving our potential clients to the competition.  If this were actually true, then there would be no malls, or shopping centers, or auto dealer supercomplexes.  In other words, if you can identify a venue where qualified potential buyers in a buying mode are routinely visiting, why would you reject this venue in favor of a isolated outpost on the edge of town than can only be visited by special arrangement?

As I stated above, I'm stridently neutral on whether a legal directory is an effective marketing tactic for a law firm.  I can't positively declare that a given directory is a terrible idea, or a wonderful idea, unless I know what your firm is trying to accomplish with its marketing strategy, and the cost of the alternatives available to do so.  If you conduct this analysis, you may be surprised to learn that some directories will survive the scrutiny, and others will fail the test.  You may also find that quite a few other common marketing tactics, when held to a standard of proving ROI, are not productive investments.  But measuring ROI is a topic for another day...

Procurement for controlling cost - the cure or the affliction?

There are few topics that generate universal outcry in mixed company, but among these are the number of poor drivers clogging our roadways and the vexing role of the procurement function in modern business.  Curiously, another trait these two share is that each of us, at one time or another, is the object of anothers' ire when we're the poor driver or the buyer, but we tend not to notice. Wikipedia offers a sound albeit unsourced definition of procurement:

Procurement is the acquisition of goods and/or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source for the direct benefit or use of corporations, individuals, or even governments.

Taken in this light, who could argue that procurement doesn't serve a vital role in the conduct of business?  Too often, alas, procurement draws fair criticism as the business function that values cost savings over long-term relationships; that reduces all goods and services, no matter how value-added, to commodities which can be differentiated on price alone; and that relies on negotiating tactics one can imagine being employed by Attila the Hun when dealing with vanquished foes.

But these are epithets we typically direct toward the procurement managers negotiating the value of the services we offer.  How dare our client's procurement manager not recognize the clear distinction between what we offer and the sub-standard offering of our inferior competitors.  On the other hand, when we're negotiating with our suppliers, those charlatans who try to drain away our hard-earned profits, then by all means our own procurement manager needs to take an aggressive negotiating stance to protect our business.

Can't we all just get along?!

Procurement is a necessary and important function in the conduct of business.  But there is an inherent tension in carrying out this mission.  The Institute of Supply Management, an association of procurement professionals, asserts that its members must promote positive supplier and customer relationships while upholding one's fiduciary responsibilities and deliver value to one's employer, but do so without the appearance of unethical or compromising conduct.

Spend enough time in business and you'll encounter an evil procurement manager.  I have fond memories of the procurement manager who was hired several months after my team negotiated a mutually successful long-term agreement with our client.  She called our accounts receivables clerk to demand assurances that the contract would be abandoned in lieu of one more favorable to her employer, then threatened a lawsuit when the frightened clerk squeaked that she needed to speak to someone higher up the food chain.  By the time I was engaged, the procurement manager was practically frothing at the mouth, spouting sobriquets like "But you have to do what I say, I'm the customer!"  We were sure to carefully document our conversations for future use when, as sure as night follows day, she proudly announced to her superiors that she had won concessions that we hadn't even discussed let alone agreed to.  "I'm not singling you out, you understand" was her explanation, "My job is to reduce our vendor costs no matter what it takes."

Therein lies the challenge.  This procurement manager did not have a full understanding of the total cost of ownership.  As we've written in this space previously, the cost to an organization for any product or service is more than merely the price tag.  Selecting Product A because it has a lower sticker price than Product B is hardly a wise choice if Product A is incompatible with our existing systems and therefore incurs significant customization to function effectively.  Likewise, a lawyer charging $425 per hour but who has a terrible track record of staying on budget may be a worse bargain than the lawyer charging $650 per hour but whose budgeting capabilities are precise.

And one must consider switching costs too.  If I hire a plumber to fix a major leak from my hot water heater, and in a fit of pique over high costs I fire the plumber while the parts are scattered across the floor, the leak will continue to generate costs in the form of water damage while I seek a replacement plumber at a fraction of the cost.  Changing lawyers mid-trial, relocating your office across town to save a few dollars per square foot and scrapping a software implementation after a significant investment in training in order to find a lower per seat license cost are examples of business decisions that run the risk of emphasizing price tag shopping over the total cost of ownership, if we don't fully think through the implications and downstream impacts of our decisions.  In our above anecdote, the procurement manager demonstrated no understanding of the concept and therefore damaged valuable business relationships in her quest to save a few dollars.  If your supplier is fungible, damage away.  If you may need that supplier again, take a long-term view.

Those who sell services which aren't commodities, or at least those who aren't willing to admit they sell commodities, fear the procurement manager who reduces all potential suppliers to the lowest common denominator -- namely price -- without understanding the context.  But many service providers are lazy and unhelpful in demonstrating why their services are different and therefore more costly than the alternatives.

A well-trained procurement manager will seek to unpack the value in an offering.  For most products and services offered in a moderately efficient market, there will be a base cost to deliver services below which no supplier can reasonably sell its product and still make a sustainable profit.  And in most competitive markets, there isn't wide disparity in profit margins between competitors.  So if we can assume that within reason everyone can make and sell the same product for roughly the same cost, then why are there differences in price?  This is the procurement manager's quest -- to understand and quantify these differences without the undue influence of past relationships or conventional wisdom.  Just the facts, ma'am.

In this visual, we see the base cost.  A good procurement manager can even identify the increased cost of a comfort brand.  In many lines of business there's that one reference point, a supplier at the high end of the food chain, one whose prices are higher but whose reputation is impeccable, so that if I purchase from them, I'm immune from criticism for making a poor choice of suppliers.  Let's call that the "brand safety" factor.  There's no shame in acknowledging that sometimes we make safe purchases and that we pay extra for that safety.

What remains is an "X" factor, or an unexplained difference between the costs of two apparent substitutes.  A good procurement manager will seek to explain and potentially reduce this difference, first by ensuring that the product offers what is needed and not more, nor less.  This is the true function of an RFP (a request for proposal), to ensure an apples to apples comparison of alternatives.  Absent clear guidance on what is needed, it's a challenge to compare alternatives.  A favorite tactic of some former colleagues of mine who should be elected to the Sales Hall of Shame is to "throw in" as many unnecessary items as possible, allowing them to reflect a much higher starting cost and then apply discount after discount to achieve what appears to be a compelling and substantial "effective discount" off list price.  In the end the customer may get what he wants but at a higher price, and by the way he wins a lot of crap he doesn't need.

A law firm that can demonstrate its prowess in managing to a budget through effective project management, that keeps the client fully informed of any changes to expectations, that staffs appropriately and doesn't "overwork" matters or expect clients to subsidize young associate training, is in a better position to present clear, quantifiable evidence of its higher rates.  A software vendor that has documented compatibilitywith existing legacy systems, thereby keeping integration costs down, may have a strong case for higher license fees.  In each case, the approach reduces total cost of ownership.

Those sellers who have the most to fear are those whose price points cannot be reasonably be justified, or quantified by an independent outsider.  It's not enough that my CEO and your managing partner are golf buddies.  It's not enough that we've done business for a long time.  If I cannot unpack why your rates are significantly higher than some apparent substitutes, and you can't articulate it either, then I'm compelled to explore alternatives.

But let's not kid ourselves.  We sometimes forget these principles when looking at our own cost structures.  It's a sad but not uncommon situation that large buyers will squeeze their defenseless suppliers.  Some years ago I hired a consultant to handle a project when the internal resource dedicated to the task resigned abruptly.  I had moved on by the time the project was complete, but I learned that my former law firm employer gave the consultant a 60 cents on the dollar take-it-or-leave-it offer to settle the final invoice.  The law firm's procurement manager reportedly dimissed the injustice: "We're a global law firm.  What are you going to do, sue us?"  The sad irony is that the law firm took this action as part of a massive cost-reduction effort, initiated in part because its own corporate clients were spending less, at the recommendation of the corporate procurement managers.  Justice served?  Or just a sad cycle of frustration?

When your organization comes up against a procurement manager, this is a good opportunity for some self-examination.  Are we able to articulate why our costs are higher than our competitors?  If not, why not?  Rather than assume our competitors are using predatory or lowball pricing to steal work away, is it possible that we've failed to recognize the inexorable march to commoditization of our products and services?  Do we assume our brand carries with it more prestige and "safety" than the market?  Maybe our competitors have devised some innovative ways to deliver more for less.  Their lower pricing may reflect this innovation, suggesting they can remain profitable at a lower price point.  And yet we assume they're losing money because we can't offer similar savings.

When hiring a procurement manager, focus them on total cost of ownership.  Saving pennies on discrete costs is fine, so long as the impact of these choices doesn't result in higher fees over the long run.  In organizations with many silos, a procurement manager may be in a unique position to recognize opportunities to consolidate services, to seek lower-cost alternatives, to adjust business practices to save money.  This means they put a spotlight on us as well, and not just on our pencil vendor.  If we're serious about controlling costs, it has to start with us.

If you're a procurement manager, please stop issuing RFPs asking 127 questions for which you have not a clue what you'll do with the responses to 120 of them.  Be clear that your role is to maintain positive business relationships with valued suppliers, but help identify those whose costs are not aligned with the value delivered.  Times change, prices increase, needs fall out of synch with what's sold, but except in a few cases the sellers aren't charlatans and the buyers aren't ignorant weasels trying to extort kickbacks.  Shine the light of day on the commerce of your business and start with those areas which are most easily recognizable as commodities.  As your colleagues begin to trust your process, you can then move on to the more sensitive areas, where we business managers tend to protect our turf.

Let's all be prepared to take our medicine.  For some of us, the increased use of procurement managers may be a miracle cure leading to lower costs and new business opportunities.  For others, well, the cure may end up killing us.

The ACC Value Index - We're Not Worthy!

The Association of Corporate Counsel held its annual meeting recently in chilly Boston, and the next phase of the ACC Value Challenge was released:  make way for the ACC Value Index, a "client satisfaction measurement tool that helps ACC members share meaningful information about the value they get from their outside counsel."  I applaud the continuing effort to not just admonish law firms for not fully meeting client needs, but for providing practical tools and techniques to guide law firms in their efforts to deliver more value. We could go on for days discussing the need for yet another law firm rating system, and the pros and cons of closed vs. open systems, the merit of subjective vs. objective rating criteria, which criteria really matter, and so on.  In fact, that debate is already underway (here and here) and will likely continue -- in part because debating lawyer ratings is as prolific and inevitable as the ratings systems themselves!  ACC would probably be even more effective were it to, shall we say, align more with others singing the same tune in order to amplify the efforts. But this isn't a critique of ACC; they should be commended for helping to put a voice and a framework around issues many have been discussing for years.

What exactly is the value index?  Essentially, it's a scoring system that measures a law firm's efforts in six specific categories, plus an opportunity for unfiltered commentary, and ultimately the question at the heart of a client's level of satisfaction:  Would you use this firm again?  For the six primary questions, the rating scales from 1 to 5, with 5 representing excellent.  Others may raise the oft-repeated criticisms that 5-point scales tend to regress to the mean, and that ratings systems often reflect selection bias because dissatisfied customers make their view known in greater numbers than satisfied customers.  I'll merely say that simple is better if one seeks rapid adoption, and ACC's approach appears to meet that challenge.

What are the six rated categories?

• Understands Objectives/Expectations
• Legal Expertise
• Efficiency/Process Management
• Responsiveness/Communication
• Predictable Cost/Budgeting Skills
• Results Delivered/Execution

I have yet to see clear and consistent definitions of these categories, so it's likely there will be some ambiguity and disparity in how law firms and in-house counsel define and therefore rate law firm efforts.  But the entire rating process is subjective, so there will always be variability.  Nevertheless, I'll give my two cents for what each category entails, with references to my earlier blog postings reflecting the same themes. (As I said, there are multiple voices discussing these issues!)

Understands Objectives/Expectations - I don't know whether ACC has listed these categories in order of priority, but if so then this is an apt place to start.  So many engagements falter, and costs exceed expectations, because the outside counsel and in-house counsel don't have the same understanding of the desired outcome and the path to get there.  In business, surprise can be a fatal mistake, so setting proper expectations is critical.  In-house counsel share responsibility in not just explaining the issue, but if they have ideas on the optimal process to achieve the desired outcome they had best reveal it.  This doesn't mean the law firm must adhere to the approach -- after all the in-house counsel is often paying for the outcome -- but this should generate a dialogue regarding what's expected, and what level of risk the client is willing to take.

Legal Expertise - Many lawyers believe this is the primary asset the client is buying.  But in many cases, it's really just the table stakes to get in the game.  The firm wouldn't even be considered for the work if there wasn't already a belief that their legal chops are superior.  So it's not enough to do the work, but demonstrating innovation and an in-depth understanding of the relevant guiding authorities, based on prior experience, is critical.  This isn't done by producing a deal list, substituting quantity for quality, but by regularly discussing strategy with the client, identifying alternatives, and calculating the costs of different approaches, including doing nothing.

Efficiency/Process Management - This may be the single greatest growth area in law firm management discipline in the coming years.  General contractors build tall buildings incorporating tens of thousands of raw materials and pre-fabricated parts and relying on hundreds of sub-contractors and vendors over multi-year construction horizons.  Yet lawyers often insist that managing a deal or complex litigation is a unique experience requiring a new approach each and every time.  "No more!" demand the clients and, more to the point, the clients' clients.  The challenge is that billable hours drive hourly-based compensation but do not encourage efficiency, to say the least.  As more clients insist on alternative fee arrangements, lawyers must become better project managers, wringing efficiency from processes they've performed or led hundreds of times in the past.  Only now the price of inefficiency is borne by the firm.  And if the client is dissatisfied, then there are growing alternatives, and these organizations are all about efficiency.  (Interestingly, this post places some of the blame on law school training, which teaches lawyers how to pull an all-nighter but not how to manage a long-term project!)

Responsiveness/Communication - Many lawyers read this as speedy response times and 24/7 accessibility.  Of course there are clients who define responsiveness in this manner, but as often, probably more often, the better definition would be keeping me apprised of progress so there are no surprises, and so I can develop contingency plans when the unexpected occurs. This also means providing clear updates rather than confusing obfuscation.  Relying on the all-too-often inscrutable notes entered by each lawyer at time entry to inform the client of the project's status is insufficient.  Reduce the noise to a simple dashboard report, reflecting progress on key deliverables and highlighting questions and potential challenges.

Predictable Cost/Budgeting Skills - Hand in hand with project management skills are budgeting skills.  Imagine in our construction scenario above that two general contractors are competing to win the project.  One relies on long experience to provide forecasts and budgets within certain ranges and expectations, while the other claims similar experience but suggests that complex construction projects are too variable to pin down a forecast or adhere to a budget.  Who wins the work?  It's that simple.  Law firms that develop some rigor in providing forecasts and budgets will have a competitive advantage over the firms clinging to the "it's too uncertain to know" school, and they will have a greater opportunity to employ profitable alternative fee arrangements.  Sound financial management isn't the same as trying to win new work by lowering rates.  As many law firms have learned, at times the client is as concerned about predictability as total cost, so those firms that reduce rates when what's really needed is more predictability are leaving revenue on the table.

Results Delivered/Execution - Many lawyers read this as achieving a certain outcome, such as winning in litigation or closing the deal.  Business people often define the outcomes differently, based on their tolerance for risk and their business objectives.  Is the goal to launch the new product in a timely manner and generate new revenue streams, or is it better to delay the launch until every potential avenue for loss of IP protection can be identified and addressed?  Is the goal to win the suit, or to balance litigation and public relations costs with winning?  It's critical that law firms know explicitly what outcome is desired, and orient their actions to that outcome.  Sometimes the best choice is to do nothing.  Sometimes business people knowingly choose paths that expose them to legal risk, but they accept risk in every decision.  The role of the lawyer is to inform these decisions, to help quantify the costs to the business of the various viable approaches.

There are some understandable concerns with the ACC Value Index.  For example, at present, law firms do not have the opportunity to view any client feedback, though that ability will come in due course -- else the exercise would be somewhat ineffective in changing the behavior of those law firms rated poorly.  The anonymity of the program may lead some law firms to dismiss negative feedback.  And there will be some uncertainty as to what constitutes excellent rather than mediocre performance.  The age old questions "What are we doing well?" and "What can we improve?" have found a new locale but the fundamentals remain the same.  It's now more important than ever before to implement a structured and permanent client feedback program that starts by asking the questions relevant to the ACC Value Index, but delves more deeply into areas of particular strategic importance to the firm.  Only by knowing how clients feel can we improve.  And the best way to learn is to ask, something too few firms do according to numerous studies.  If simply asking can be a differentiator, just imagine the loyalty a law firm can engender by actually acting upon client feedback!  So why wait?

For additional insights into the Value Index, see this post by Fred Krebs, ACC President.

Is Pro Bono At Risk?

I recently had the good fortune to spend time with the Association of Pro Bono Counsel (APBCo), the organization whose members are charged with organizing and promoting pro bono efforts, primarily in large law firms.  At their day-long annual conference, my colleague Pam Woldow and I discussed the recent teeth-rattling changes taking place in the legal marketplace, and more specifically, what it means for pro bono efforts. First, let me say that after having spent countless hours over the years with legal marketers -- by and large a sunny, lively, high-energy and positive demographic -- I was pleasantly surprised to find pro bono counsel to be as lively and engaging, with a deep passion for pro bono and a deep belief that large law firms can be leaders of change.  I very much enjoyed the positive interaction and the focus on improvement during a time when sessions like this run the risk of turning to melancholy and frustration.

Speaking of risk, the fundamental question presented is whether pro bono is at risk.  Pro bono efforts, or offering free legal advice to those unable to pay, is an honorable practice well-suited to the community-minded attitude taken by so many large law firms.  But as recent events have unquestionably demonstrated, large law firms are businesses too.  And thus isn't the notion of deploying valuable and now limited resources, e.g., associates, to non-billable work a quaint notion at best, and irresponsible or even willful negligence?

In a word, no.

The traditional obstacles to promoting pro bono within a large law firm environment have usually focused more on practical matters rather than desire.  No matter how many words I write about the need to embrace better business practices, I hope I never see the day when lawyers stop acting out of a sense of duty to their community and profession and cease pro bono activities because it's not profitable.  Thankfully, large law firms by and large haven't taken this tone in the past, and I think with proper expectation setting, it won't be a problem in the future.

Associates on the partner track, or at least those hoping to maximize bonuses, struggle to maintain the proper balance between billable hours and other duties, such as professional development, pro bono and client development.  Through long effort, pro bono coordinators have succeeded in achieving parity between an hour spent on pro bono activities and an hour of billable client work.  In other words, within reason spending time on a pro bono case counts toward billable hour quotas.

The challenges now come from many fronts:  with a substantial increase in alternative fee arrangements, reward and recognition systems based on billable hours will need updating, and the pro bono lobby may not have as strong a voice as they did when times were flush.  The occasional partner who railed against the opportunity cost of diverting a valued associate away from client work may have an audience now, when associates are in shorter supply.

But these challenges also present opportunities.  Partners who have raised the opportunity cost argument tend to ignore the fact that defining a law firm's revenue potential under a billable hour model, e.g., the number of timekeepers multiplied by the billable hour rate multiplied by working hours available, imposes a greater opportunity cost than a law firm offering alternative fee arrangements.  Simple math suggests that if I can negotiate sufficient simultaneous alternative fee projects which generate fees regardless of the time invested, I have the potential to generate greater revenues than those with a self-imposed ceiling.  Furthermore, adopting tactics to improve efficiency so we can take on more alternative fee projects will lower our costs and improve profitability.  This isn't a rant against the billable hour (others are more eloquent on the topic than I) but an observation that a movement away from the billable hour doesn't necessarily lead to lower revenues and profits.

In fact, in light of the ACC/Serengeti survey released at the Association of Corporate Counsel's annual meeting, which declared that controlling outside counsel spend is the primary concern of in-house counsel, the reality is that moving away from the billable hour and toward more efficient operating models is now a requirement for all but a handful of firms.  And no, odds are that despite your innate pride in your firm, yours is not in that handful.

As clients demand efficiency, there are other downstream impacts.  For example, partners can't overstaff projects with associates-in-training, simultaneously delivering an education and generating fee income, compliments of the client.  This has led to an unprecedented number of associate layoffs, and a reversal of the impressive pay packages offered to Biglaw associates.  Equally impacted, but less newsworthy, is the loss of training opportnity for the associates who remain.  Will large law firms adopt the UK model, where an investment in PSLs (professional support lawyers) is far more common?  Will they return to the guild approach of apprenticeship?  Most firms will not make such revolutionary changes, at least not right away.

Cue pro bono, entering stage left.

In what other venue might an associate obtain an opportunity to cross-examine a hostile witness, learn how to navigate the endless bureauracy of a government agency, make decisions on the fly that, in some cases, have real life or death consequences?  The answer is, of course, pro bono.  To be clear, most pro bono work is less than glamorous, and you can only derive so much experience from helping a senior citizen file a social security disability claim.  But such as it is, this experience now has to come from somewhere.

As the business challenges of large law make headlines, some have predicted the end to the quality of life concern, or to the need for law firm diversity, or to the need for pro bono.  After all, with fewer associates we can only rely on those who are willing to pull all-nighters and stay on the treadmill that leads to the partner track, even if only a fraction will actually make partner.  And with clients focused on cost, won't the client be more interested in our fee than in how many women partners we have, or how many hours we devoted to pro bono last year?  Perhaps.  But I doubt it.  The lesson of recent events is that corporate counsel must accept that the legal function is like any other, and must adopt the practices of the other functions.  So if the corporation has a requirement for diversity in its suppliers, then despite the complications such a constraint imposes on the selection of outside counsel, the GC must find an outside law firm that has both the proper diversity footprint and an acceptable fee range.  Managing multiple and often competing constraints is what leaders of businesses do all day, every day.

So if pro bono, like diversity, will persist as a requirement in coming RFPs, why do so few law firms take the time to establish a well-oiled process for maintaining a record of pro bono achievement?  It's not an uncommon occurrence in law firms for the various functions to, shall we say, not get along famously.  Far too often, for example, the IT organization doesn't appreciate the marketing department acquiring new technology.  The Marketing department doesn't appreciate being asked to run events for the Diversity team.  The pro bono team promotes the firm's efforts without the assistance of the firm's public relations specialists, and so on.  This must end.  A holistic approach is needed.

My advice to pro bono counsel is to embrace the opportunity to help inform the conversation as compensation systems come under review in this alternative fee world.  Ensure that all marketers involved in responding to an RFP or otherwise promoting the firm's accomplishments have an up-to-the-minute scorecard of the firm's pro bono activities.  Ensure that the professional development team, what's left of them, has full insight into the sorts of experiences the associates are gaining in their pro bono efforts, which could perhaps become certified for professional development credit.  Engage the CFO in terms that she or he can understand about the quantitative impact of pro bono:  How many RFPs required a pro bono scorecard?  What was the value of these projects?  How well do pro bono-experienced associates perform in client satisfaction interviews (you do these, right?) as compared to associates who have no pro bono experience?  Which clients and targets, specifically, have a pro bono policy for their outside counsel suppliers, and which really mean it? If you're not sure, ask them.

I am a fan of pro bono and find it to be one of the most appealing aspects of the legal profession, and even as I counsel law firm leaders to become better business people, I do not want to see efforts like this fall to the wayside in a quest for profits.  I am now a fan of pro bono counsel, who have the passion, energy and desire to accomplish their mission in these challenging times.  If you don't know your pro bono coordinator in your firm, drop in and say hello.  I assure you, you'll be pleasantly surprised by how capable and willing they are to engage in the improvement of this profession.

Update: I just learned that this is National Pro Bono Celebration week.  Who knew?!  Several notable names in the legal community have spoken up in support of pro bono, even during these trying times.

No Sleep For You!

Legal tabloid Above the Law recently published an email from a Biglaw partner to all associates, admonishing them to check their email every hour unless "asleep, in court or in a tunnel."  The partner goes on to declare that "all of our clients expect you to be checking your emails often."  The back story is that a partner emailed a new associate a request to send a fax to "a relatively new client whom we were trying to impress" but the associate had left for the day and didn't attend to the task until returning in the morning.  The partner closes the lesson by reporting that "in this case it was no harm no foul, but I think we can all imagine scenarios when this could be a disaster." As the Association of Corporate Counsel annual conference winds down, and our RSS readers are deluged with reports of how in-house counsel demands are increasing, placing unprecedented pressure on outside counsel, it might be helpful to once again reiterate a fundamental truth in client service:  speed does not equal responsiveness.

Now I don't know the back story behind the back story.  Perhaps the client was in his office expecting a late night draft, but the "no harm no foul" comment suggests otherwise.  So let me superimpose my own experience and propose a likely fact pattern:  the partner believes that impressing a client requires speedy turnaround of work product, so he requested a late-night fax to the client's office which would greet him or her upon arrival in the morning, demonstrating the firm's round-the-clock responsiveness to his needs.  Trouble is, relying on a fax to send this message is a bit like sending the finest horseman to inform the townspeople of the latest Amber Alert.  Why not send an email if speed is your central concern?

But of more interest to me is the partner's assumption that speed is impressive.  Clients regularly complain about a law firm's lack of communication and responsiveness.  Translating this as a desire for speed is not uncommon.  However, what it often calls for is setting proper expectations, and then meeting (or exceeding) the expectations.  Given our presumed fact pattern above, if the client was advised that a draft memo would be on his or her desk at 9 AM the following morning, and it was, then the expectation was met.  Exceeding this expectation is admirable, but if the client wasn't in the office late at night to receive the fax then the impact of the speedy response is wasted.

Impressing a client is all about understanding his needs, setting proper expectations for what it takes -- how long, how much, how difficult -- to address these needs, then fulfilling the expectations you've established.  Obviously things change, and often in thorny deals and litigation time is of the essence.  So when lightning-fast speed is a need, build it into the expectations.  But be careful about demonstrating round-the-clock prowess to a client who is price-sensitive, because the first thought that will leap to mind may be, "We agreed on tomorrow morning.  I'm pleased that you sent a fax to my (empty) office 12 hours early, but I hope that any extra effort taken to beat the agreed-upon deadline won't be reflected on my invoice."

Clients can be confusing that way.  This is why we ask questions, set proper expectations and then use these as guidelines for delivering exceptional service.  Substituting our own definition of exceptional service is a short-cut that we sometimes can make only once in today's competitive market.