MMC Lateral Lines – Thoughts for Lawyers in a Changing World
February 2009
Virtual Reality?
Going virtual is the name of the game for law firms seeking to reduce overheads and give clients more value for money. There is no single definition of the concept but in its simplest form it involves eliminating many fixed overheads and creating an entity resourced around the needs of the jobs in hand. Lawyers and support staff, apart from a central core, have a flexible working relationship with the firm - frequently self employed - and are generally free to take on work from other sources. Bricks and mortar overheads are replaced by online resources, dramatically reducing the firm’s operating costs. Clients respond well to the reduction in costs as heavy overheads are no longer passed on.
The success of this model depends of course on how it is managed. It is essential clients understand exactly how it works. Lawyers may assume clients will be negative about a business model that doesn’t appear as robust as the traditional firm with all the trappings. However, their primary concerns are about quality and value for money. Particularly in this day and age, where clients are more cost conscious than ever, it can be difficult to justify significant fixed overheads in what is, after all, a service business. Virtual law firms are common in the US and several have started in Europe and the UK in recent years (see www.virtuallaw.eu, www.excellolaw.co.uk and www.novalex.co.uk ). Some have targeted niche areas – see www.generalcounsels.com .
As the impact of recession is felt in the legal sector, more virtual law firms will appear for a variety of reasons. Some will be established because of client demands. Some lawyers who have been made redundant during the current recession will turn to the internet for ideas and then solutions and will reason there is little risk and much to be gained from setting up a business with minimal startup costs and negligible ongoing overheads. Some stronger players in partnerships will feel held back by declining profits and take the opportunity to provide the same service to key clients, giving them better value service and retaining higher earnings for the lawyers. Some law firms may take the opportunity to “virtualise” their businesses completely by reducing fixed costs, realigning employment relationships and marketing their services over the internet rather than through window displays in their offices.
The Professional Sale – Myth or Mandatory?
Try and think of another business whose executives are expected to service clients, find new ones, manage teams and bill their own time. In addition, those executives are trained in some, but not all, of these functions. There aren’t many such businesses, and for good reason.
In many ways, the traditional law firm model favours the few naturally gifted supermen and women who can effortlessly bridge these disciplines. Yet, when you’re selling a service, people buy on emotion and justify with logic, and there are a range of skills that can be acquired to create relationships. In many organisations, business development (and often account management) are separate functions. If law firms are not to be held back, why not them too?
Prospects need cultivating over time. The way and pace at which this is done is crucial. Practicing lawyers will always have the need to focus on the most important transaction at hand, and get it over the line. All but the most disciplined, or with the most natural gift of timing, will feel the conflict. Which leads to a natural choice – separation or restricted ambition? Either delegate the job to a dedicated professional who can develop leads to a certain point - a dozen at a time - or focus on just two or three prospects at a time. No more!
The secret to creating new relationships is simple yet challenging; learning how to talk about your prospect not yourself. It’s always easier to talk about your firm and expertise – especially when you’re rushed and haven’t had the time to do research – but there’s no faster way to turn people off. It’s harder to find out about the prospect’s situation without appearing intrusive. And harder still to develop the confidence and patience to think only about how you can make a difference to their situation - as a precursor to a sale – trusting that this is the quickest way to gain the prospect’s confidence.
Imagine you’re one of the few people currently thinking of buying a new car and you go to two different showrooms. In the first, an overconfident salesperson talks at you about how big their dealership is and runs through all the technical specifications. In the second, his peer asks you what you’re most looking forward to about driving a new car, and what aspects of service you most value. Which are you more likely to warm to?
So next time you’re meeting a prospect set yourself a three point challenge; first, focus only on finding out as much as possible about their situation. Second, when you’re asked about yours, talk only about experiences and outcomes that have relevance to the prospect. Then finally, consider how you can make a difference - not a sale. You’ll see how the barriers drop and the sale takes care of itself.…