Redefine Client Origination to Get More Lawyers Involved in Marketing and Selling
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Too-broad client “territories” are stifling lawyers” marketing efforts. Despite progress at some firms, the profession is embracing marketing more slowly than it and its trade media like to think. Compensation, particularly the way that firms define, recognize and reward client origination, is a major obstacle. The broad question will take time to sort out, but there is something firms can do now to remove one barrier: redefine the scope of the term “client” for origination credit or other compensation considerations. Throughout the U.S., lawyers tell me that, at their firms, bringing in the first matter confers credit for all future business with that corporation to the originator in perpetuity. The result: other lawyers feel no incentive to cultivate anyone in that company. During market planning and sales coaching sessions, I often hear something like this: “I know some people at General Electric who can give out legal work. I think I could develop something there, but with our origination system I wouldn’t get any credit for new business because Alice Jones brought GE into the firm and everything goes under her name.”So why not just go after other companies? Because it costs less to develop a client than to get a new one, and it costs more to service a greater number of clients to generate the same total revenue. In a sellerís market, new clients come to you at little cost. In this buyerís market, it costs plenty to get a client. And every service you donít sell is a point of entry for a competitor. 1. Individual corporate buyersí charters are shrinking, so sellers must cultivate more buyers per company, not fewer. In a July, 1997 Corporate Legal Times survey, almost 70% of legal department respondents said they handle all corporate work inside now, using outside counsel only for overflow or when they need a unique specialty. The trend toward doing more legal work internally and using very specialized outside counsel has been building for years and affects all practice areas. Buyersí narrower charters mean that, apart from ìbet the ranchî litigation or major transactions, the average value of each legal service sale will trend downward. 2. Few lawyers have the skills, inclination or time it takes to leverage initial work into broad-based client penetration. Ignore all the noise. Cross-selling just isnít happening. Formal research among law firmsí Top 100 clients yields a consistent pattern. On average, these successful firmsí best clients each buy about four of the firmsí twenty-odd legal services. Lawyers rarely expand the initial sale very much, even among clients who love the firm and spend big dollars on the services they now buy. Worse, when asked future buying plans, clients often don't even know that these firms offer other services the client now buys elsewhere (and plans to buy more). The wound is salted when clients volunteer that, had they known, they would have bought those other services from the firm, too. The culprit is a recognition system that ignores that modern corporations are too large for one person to have any chance of developing meaningfully, and award one person the exclusive sales ìterritory.î No corporate salesperson could expect exclusive right to a Fortune 500 company based on a single sale. Large corporations consist of many subsidiaries and operating divisions with distinct buying authority. For example, General Electricís web site1 lists 71 separate ìbusinesses, organizations, partners and affiliatesî totaling 240,000 employees. How many of those employees can buy legal services? If only 1% of them can, thatís 2400 ìbuyersî in 71 different operating units. Not even a full-time, seasoned corporate salesperson could cultivate and sustain buying relationships with that many GE people in a lifetime. What chance has a lawyer who must do legal work 80% of the time? GE may be an extreme case, but it illustrates that lawyersí sales ìterritoriesî are too broad. To maximize marketing and sales results and empower other lawyers to pursue opportunities, firms must modify the internal definition of ìclient.î For example, Alice Jones brings in a large employment matter for GE Lighting Systems. Give her origination credit for that business unit, not ìGE.î Encourage others to approach GE Wiring Devices, GE Investments or GE Capital Structured Finance, and donít compensate Alice for business others win from those divisions unless she actively contributes to those sales. Firms must get as many of their part-time salespersons in the game as possible, and no firm can afford to settle for a minuscule slice of a major buyerís business. Redefining client origination is one small step toward that end. 1http: www.ge.com/ulallbiz.htm |