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Related to my post yesterday about blogging changing law review publishing and legal information exchange overall, there is an excellent post today from Tax Law Prof. James Maule entitled: In Defense of Law Blogging.
Accountants, too, should be reading this. The same principles hold true in your profession. The changes will come.
By the way, accountants, if you aren't regularly reading Mauled Again (the blog above) you should be!
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An important story was featured by Kevin O'Keefe discussing the impact that lawyers and law professors using the Internet to broadcast legal trends and opinions is having on traditional (print) law reviews.
He references "Law Reviews Adapt to New Era" posted by WSJ online.
Both of the above posts deserve attention. They validate both the practical application and marketing merit of blogging in the professions.
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Lawyer Dan Hull of What About Clients tagged me for the following "4 Things" question series that I have to answer or my retirement funds go "poof" or something equally horrid. I'm saying "sorry" now to the four bloggers I'm supposed to pass this "tag" on to.
Try not to fall asleep, I lead a pretty dull personal life!
4 jobs I've had:
4 movies I can watch over and over:
4 TV shows I love to watch:
4 places I've been on vacation:
4 tunes that play through my head:
4 favorite dishes:
4 websites I visit daily:
4 books I'm reading or want to read:
because Mom gave it to me for Christmas and I haven't been able to start it yet 4 places I'd rather be:
4 Bloggers I'm Tagging
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Mark Merenda on his Smart Marketing blog has a great post on taglines!
Merenda points to lawmarketing's collection of over 100 taglines (thanks for the refresher, Mark, I'd forgotten about this interesting list).
He also highlights the longest (perhaps a descriptor rather than a tagline, but definitely waaaaay too long of a sentence--rather amusing) and the shortest: "N.A.A." (Not An A**hole)!
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While I agree with a lot of what Barbara Walters Price posts on her blog, this week she had a post that I don't agree with at face value: "Marketing Directors: Great Advice for Your Career"
Ms Price says Eric Gagnon is "right on target' with an article he wrote entitled Two Big Things: How to Achieve Lifetime Job Security in Your Marketing Career.
I don't dispute the potential validity of the points in typical B2B companies, but I challenge the "job security wisdom" for CPA and law firm marketers. It seems to me that Mr Gagnon has probably not personally worked in-house in these unusual environments.
The first point the article makes--
Job Security Tip #1: Marketing is Mostly Tactical
Sure, the high-concept elements of marketing strategy are important - positioning, trends, pricing, distribution, etc., but once they're set in your marketing program, the rest is all tactical: The process of marketing execution that drives all of the deliverables and activities of your marketing program. Tactical marketing execution is where the game of marketing is won or lost.
My concern with this point centers around the simple fact that most firms don't adequately (if at all) address "positioning, trends, pricing, distribution, etc." That "once they're set in your marketing program" assumes it is a given. In professional services, I think that's a dangerous assumption. PS firms tend to shortcut that essential marketing strategy part.
Many firms' tactical goals are based either on gut instinct or copycatting tactics used by other firms, perhaps touted as "best practices."
The advice, above, puts the bulk of responsibility on tactics. Fine. But, without strategy, the tactics may be all wrong.
Ms. Price summarizes:
It's all about execution. Don't give your partners fancy talk about branding, instead, do those things every day that make the phone ring.
I counter that with all the buzz about branding (and other popular concepts) over the past decade or so, it is often the PARTNERS wanting to pursue branding and other such trends, not necessarily the marketers.
Marketing IS about execution. But it's about execution of the RIGHT things.
Partners are more aware of marketing than ever, but can have preconceived notions of what they must or should do. Since marketing is not one-size-fits-all between firms, so-called "best practices" should be viewed with some caution.
Even when firms have knowledgeable marketing people, there can be a strong tendency to "override" the marketer's advice with partner opinions (see my recent post "Hire a Marketing Director and Substitute Your Opinion for Theirs. Not.").
Marketers, for your job security (and measurable marketing success), don't quietly accept it when management suggests curtailing critical planning and research steps in order to have you instead work through the standing "wishlist" of marketing tasks partners compiled in a partner meeting or collected from other firms over time.
Don't dismiss the wishlist, but work to prove or disprove the wisdom of pursuing each item on its own merit and in accordance with the firm's strengths, weaknesses, capacity and marketplace.
The second point in the article--
Job Security Tip #2: Never Forget that Marketing is Accountable to Sales...
When a marketing manager is working with their sales VP to develop ads, mailings, and deliverables that effectively sell their company's product, and these marketing activities are keeping the company's sales team supplied with a steady stream of high-quality leads, and the marketing manager is out in front, looking for ways to open new business opportunities in the marketing program, the marketing department is never asked to justify itself.
Note the final words [my emphasis]. (Ha! Clearly Mr Gagnon has not worked in-house in a CPA firm...)
Marketing departments are asked to justify themselves continuously whether there is a sales person/team or not. Further, the "sales people" are usually the partners...often with little or no specific sales training and the first to admit their closing rates should be much higher.
It is true that marketing, when good strategies drive the initiatives, facilitates the delivery of leads. But it must be remembered that a core responsibility also lies with the "closers" to do pre-sale due diligence on the prospect (a step usually skipped) and conduct themselves effectively in the sales process.
Where marketing is accountable to sales, "sales" should also be fully accountable to the firm and marketing, too, ensuring an effective process is in place when marketing turns over its leads.
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I created this list to address the most common concerns and complaints surrounding how, when and why to hire marketing/sales people.
There can be a large disconnect between a firm and the marketing people it hires, and more often than not, it's because expectations weren't well-thought out or communicated. It has been frustrating to watch many good marketers and many good firms unable to make a go of working successfully toward a common goal.
I wrote this in the spirit of helping firms and marketers better align their expectations.
(NEW CHANGES TO THIS OLD POST REFLECTED WITH THE LINKS BELOW)
On AccountingWeb my website, I answer some of the following questions:
Would love to hear your experiences in addressing these things...or perspective having not addressed some or all of them...
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A personal post from me is a rare thing. But so is my son starting highschool. My second of four, Alex, just received the letter he's been wishing for and working toward for many years.
He's been accepted at his school of his choice, St. Louis University High School. (That mythicial creature is the Jr. Billiken, their mascot.)
Alex is an awesome kid who is intelligent, driven from within, and an absolute joy to call my son, even though he often (wisely) questions authority.
I'm so proud of you, Alex, and I know you will always achieve whatever you set your heart upon. This is just the beginning--the first of your many.
Love, Mom
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I'm pleased Robert Ambrogi and Patrick Lamb posted about Exemplar Law Partners -- a new firm not charging by the hour.
Awesome! This is a better way of doing business that is gaining momentum across multiple professions including law, accounting, advertising, IT and consulting. Even I've been working (for years) toward being 100% fixed price and am in the process of transitioning the last of my hourly buyers to fixed pricing.
But let's talk more about law. Here are 3 more examples:
I had the pleasure of meeting some St. Louis attorneys last week, Simon Passanante, a more than 30-person firm, who are litigating IP matters on a contingency model just as they do product liability cases. Truly not expecting an affirmative answer, I prompted: "Tell me you don't keep time sheets...?" to which John Simon, Tony Simon and Erich Vietch answered, "No, only when we absolutely have to on a class action." I confess, the employees that I saw all looked, um, happy...
David Ambrose runs a small real estate finance firm in Portland, OR, that is moving to a fixed price/no timesheet model. They were featured in CNN Money/Fortune Small Business a couple months ago, here. This is a good story covering his many considerations in the shift.
And then there is Sherman & Jeffries, a family law firm in AL. They have a blog that is really good, here it is. Michael Sherman says their firm works entirely on a fixed price basis and would never go back to hourly billing. (Sherman was at the original LexThink in 2004.)
There are certainly many more who deserve kudos and are worthy of study as they are absolute trailblazers adopting these business practices despite great skepticism from their peers.
CPA Tim McKey (who runs a practice in Baton Rouge, Louisiana with no timesheets and 100% value pricing) is the newest fellow of VeraSage. He said it best when he told Ron Baker: "I'd sleep under a bridge before I'd go back to running my firm under the old method."
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If you haven't seen Dan Hull's insights in the form of "12 Rules" for operating his firm, they are a worthy read. He just posted Rule 8: Think Like The Client--Help Control Costs.
I agree with Dan that those you serve appreciate when you advise them to pursue the best course of action for them, even when it means less money for you. These excellent principles demonstrate your worthiness of their trust as a long-term advisor.
He gives an example and I can, too. There are many instances in my own practices where I've advised customers, or even prospects, that they don't need my help on an issue, that what they are doing is fine and good. This raises eyebrows in an appreciative way and it also increases future opportunities with them because they know I'm not just out to sell them whatever I can--I really am looking out for their best interests.
I am also particularly fond of Rule 6: When You Work, You Are Marketing in which Dan says:
So we are always marketing--and in [providing services, we are] constantly sending to clients barrages of small but powerful ads.
The ads range from "don't hire us again" to "we want to keep your business--and get more of it".
Very, very true. I've previously referred to these as "moments of truth" but I really like Dan's description--it really brings his point home.
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Fly on the Wall is a really good description for a consultant sometimes. I think that is my favorite part of my job. A lawyer at a firm I've worked with for years suggested the term today when I shared an anecdote with him.
"Anecdote" per Wikipedia: A brief tale narrating an interesting or amusing...incident...to reveal a truth more general than the brief tale itself, or to delineate a character trait or the workings of an institution in such a light that it strikes in a flash of insight to their very essence.
I love that: strikes, in a flash of insight, to their very essence.
As someone privileged to observe numerous firms, I'm going to offer periodic "Fly on the Wall" postings to share anecdotes in their original context or their expanded context. Tonight's is this:
Referral Sources Within Your Own Firm: Cross-selling Killers
As this lawyer (experienced, but new to this firm) embarks on his first, formal Individual Marketing Plan, I advised as to the importance of starting off on the right foot "marketing" internally--to make sure his plans include creating positive impressions with the other professionals in his firm.
In his area of practice, Estate Planning, his success can be tremendously enhanced through referrals from other lawyers in the firm. Conversely, his success can be greatly impeded if few or no referrals come from his colleagues.
Anecdote 1:
I recently observed (though certainly not for the first time) a scenario in which a particular firm partner is rather socially challenged and exudes negativity. As one would imagine, she is not very good at developing business. In fact, because she is ineffective at selling, she's highly dependent upon referrals.
She receives a lower than normal number of client referrals because of her attitude. And though a couple people in the firm do send some work her way--she is very proficient, after all--most would rather not have her directly interact with their clients. Those partners would rather refer that work to another firm before sending it to her.
Meanwhile, her small client-base is shrinking and her charge hours are much lower than her goal. The firm beats up on her for billing too few hours and spending too long doing the work she does. She is annoyed that nobody is fixing the "firm's marketing problem." She thinks she'd benefit from a direct mail campaign or other formal marketing efforts for her services.
Anecdote 2:
A professional in another firm often complains openly to partners and team members about how much he dislikes his work. He comments about what a bother clients are when they call him. And he expresses, in a way that doesn't suggest he has the initiative to change it, that he doesn't really know how to do some of the tasks he is charged with.
The firm has written initiatives to develop the practice area in which this professional is a key player. The plan relies on other partners cross-selling this partner's services to their client-base. The firm hasn't had much success, though. Can you guess why?
Lessons:
Both of the above scenarios are classic examples of really bad internal marketing.
I've long believed the biggest barrier to cross-selling was "trust" lacking on the part of the potentially referring partner because of his or her perfectionist traits. But I now see that the introduction and trust both come easily if the receiving party merits it and does a good job demonstrating, internally, they are the best person for the job.
If you fairly are new to the professions, and haven't developed bad habits yet, take heed! Or, if you've been around awhile and want to increase cross-selling referrals in your specialty area, here is some advice that may help:
1. Recognize that whether or not you convey confidence and competence to your colleagues in the office (basically your attitude and approach toward work) dramatically impacts the future likelihood of those colleagues entrusting their clients or friends to you. (Even what you say in a partner meeting matters!)
2. Know that social skills are every bit as important as technical skills. If you could benefit from some enhancement in this area, a place to start might be amazon.com under "business social skills"...
3. Don't complain to peers or managers/partners about doing work, clients, your direct reports, insufficient skill level on your part or on the part of your team, or anything else over which you should, under normal circumstances, have the ability to improve or influence. Increase your skill, build or trim your team, and if you need to, pick another more stimulating practice area.
4. Be as positive and confident around your co-workers as you should be around an external referral source or client.
5. Be sure to do all of these things outside the firm as well!
In both of the troublesome scenarios I described above, isn't it a shame the owners won't be forthright with each other about the real causes of the problems?
Instead, they try to throw money and time at the problem, investing in marketing efforts and plans that won't succeed without the major behavioral changes that go undiscussed.
A great book about corporate honesty (and a very quick read) is The Five Dysfunctions of a Team: A Leadership Fable by Patrick Lencioni.
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In my (lengthy) post the other day about The Profitability Problem, I cited some average education debt amounts from memory because I couldn't recall where I saw them.
Just found it on Ernie Svenson's blog and my numbers were actually a little conservative.
"About 80 percent of law school students obtain loans to pay for law school, and the average loan debt is $76,763 for private law school graduates and $48,910 for public school graduates."
The Law.com article Ernie points to (that I just now read) further supports my assertion about the state of the profession:
"While law school costs have exploded, associate compensation has not. According to the National Association for Law Placement (NALP), the median salary for first-year associates in private practice in 2004 was $80,000, the last year that figures for comparison were available. The 2004 number represents a 60 percent increase over the median salary in 1990, which was $50,000.
"Between 1990 and 2004, inflation totaled 45 percent, which means that in 2004 an associate would have needed a salary of $72,400 to have the same earning power of $50,000 in 1990, regardless of the much greater law school costs."
More....
"Even at the nation's biggest firms -- those with more than 501 attorneys -- salaries in 2004, which averaged $125,000 (not including bonuses), have risen just 78 percent since 1990, compared with the 267 percent increase in the cost of public in-state education and the 130 percent escalation in private law school education.
"There's a major concern," Sebert said. "If you graduate with average private law school debt and earn something other than the average salary, you are going to have trouble."
"The prognosis also is bleak for new attorneys in smaller firms, who typically earn much less than those at large firms. The median salary for first-year associates in firms with 26 to 50 attorneys was $65,000 in 2004, just 44 percent more than the median salary at those firms in 1990, which was $45,000. Beginning lawyers at law firms with two to 10 lawyers earned $48,000 in 2004, compared with $30,000 in 1990."
And finally....
DEBT INFLUENCES JOB CHOICE
The effect of burdensome student loans on the legal profession is a subject that NALP currently is grappling with, said executive director James Leipold. His group is planning a summit next year with other legal organizations that will explore the ramifications to the legal community of ballooning law school costs and debt. Anecdotally, however, he said that more graduates are entering big-firm practices with the "deliberately stated goal" of paying down debt and then leaving.
So perhaps NALP and firms will conclude that the legal profession should price more similarly to the medical profession. (You have to know how much I hate using HC as an example because of what insurance has done to cloud transparency of how much we are actually paying for what.)
Just look at the fact that you don't pay for the amount of time the doc spends with you, but for all the collective wisdom and tools of their expensive education and environment in which they operate (ha! no pun intended).
Law or accounting...think about it. In most cases, you offer a lot more value than just your hour.
Every hour is NOT equal.
Some hours are rather unproductive. But, in another mere hour, you can provide life altering advice. When you do, isn't it worth more than a few hundred dollars?!
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Bruce MacEwen at Adam Smith Esq. has an exceptional post today about the shortcomings of traditional accounting methods in today's more knowledge-based business environment.
He refers to a Business Week Online cover article, "Why The Economy Is A Lot Stronger Than You Think" that describes the failure of income statements & balance sheets to take into consideration intangible things such as innovation and product development, brand building, employee training, etc.
Absolutely true. Addressing this is one of the handful of pet projects of VeraSage, the think tank of which I'm a fellow. We look forward to many more discussions on this topic when our new website goes live at the end of March.
In the meantime, I challenge you to read Bruce's post and consider how much it might change the behaviors of firms' owners toward working on these intangibles if doing so fed more visibly into the measurable value of their firms.
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Ron Baker, pricing expert extraordinaire, doesn't like the term blog (it's okay Ron, none of us do!) but he's eagerly awaiting the launch of his own blog with the renovation of the VeraSage website. In the meantime, he is guest-blogging on Matt Homann's site: [non]billable hour.
If you don't know Ron or haven't read his books yet, this is a good opportunity to become acquainted with one of the freshest thinkers alive! His teachings sound scary to some, but are highly implementable as I discuss in my recent post about his new book, Pricing on Purpose.
Check him out!
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In my last post entitled The Profitability Problem, I promised to discuss specific pricing strategies that can improve profitability.
I suggested integrating three approaches to achieve optimal profitability: evaluating the firm’s capacity by knowledge level, specializing in a limited number of practice areas (service or product oriented) and pricing strategically. But there is one other thing....
To be as profitable and successful as possible, no matter how you price--high or low, hourly or fixed by project--the first and most important thing to address is to assure consistent high-quality of service no matter what service is sold, no matter who is delivering it, no matter what price is asked.
These are the 3 Essential Behaviors:
The above list regards INTERNAL behavior just as much as EXTERNAL behavior. This is known as role-modeling. Treat each other as you wish your clients to be treated. (The same principle applies to parenting. If you yell at your children, you shouldn't be surprised when they yell at others.)
(Near) perfect service is possible. It is defined by proper expectation management and, as such, is completely within your control. This doesn't mean you may never err. If you are managing expectations properly, you can promise that if and when you err (everyone is human, after all) the situation will be remedied immediately and completely, without assignment of blame or other uncomfortable moments for the customer. But I digress....
The above behaviors, alone, will set your organization apart in the eyes of those who work for you and with you. These are valuable behaviors that are hard to find in today's business world. I'm not saying that you can charge more if you do these things because, in fact, they are the foundational traits all businesses should be demonstrating, but we know how that goes...(this is why just a few select businesses, like Disney, are so admired).
So if you cannot necessarily price higher because you are doing these really important things, why do them? Do them to create loyalty and, ultimately, demand for your services. When demand is created (people competing for your limited resources) you can charge more and/or grow to meet that demand.
My first recommendation is to work toward becoming a shining example of the Three Essential Behaviors. At first, this will take a lot of effort and focus from everyone in your organization. Selling the idea to your colleagues shouldn't be hard--people need only listen to their instincts to know the behaviors are in the best interest of both the organization and the customer. Why delay? Start now.
If you don't work on the Three Essentials, you can still work on the following, but results will be limited. The effectiveness of the strategies below assume you are doing the Essentials pretty well.
Here are some specific pricing considerations that can be put into practice to boost profitability:
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This is my 100th blog post (Is that all?? Feels like a lot more than that!). As a milestone post, I decided this has to be an extra thoughtful one--I hope you'll forgive the length and find it thought-provoking.
What subject is of greater concern to firms than profitability?
I’ve read reports of high-profile consultants recently predicting record high compensation for partners in 2006 and beyond. I’m not sure on which data the forecasts are based, but I foresee the opposite. Here's why:
Employee costs are rising significantly. Firms are reacting, albeit slowly, to the continuing large numbers of non-partner professionals fleeing public accounting and law firms in search of less pressure, more stimulating work, and feeling valued by more enlightened employers. Promotions (some premature) and raises are used to keep key people when talent is at a premium.
For the past 5+ years, we’ve watched with amazement as law associate starting salaries skyrocket, now running between $100-145K/year and more in some top firms in top and even 2nd tier markets.
In return for those salaries, associates are agreeing to meet the demands of unhealthily high billable hour requirements. Many agree to these conditions because they begin their careers with average law school debt of $75K for top schools, and $45K for public universities. The associates hope they will be able to aggressively reduce this debt and pick up some valuable experience along the way.
The associates are probably unaware they walk into the firm already on the receiving end of some resentment from the senior partners who happen to know a few things:
• It wasn’t very long ago that they were making $150K
• These kids have it “a lot easier than we did” and they’re going to make them work hard for their money
• They’ll have a lot of trouble billing the new associate out at the standard mark-up hourly rate because clients won’t pay that much for the limited experience of a new associate. This means more write-offs, or less desire to use these expensive new associates (hmmm, think there will be even less delegation to these new associates when more experienced people can do the work more "efficiently"? That's a bad enough problem already! And how will they ever learn if they don't do the work -- see the catch 22?)
• There will be a lot less money left over for partners once they have raised the pay of all their other associates to get everybody back in-line, sometimes bringing their 4 or 5 year people up tens of thousands to put them appropriately above the new starting rates.
Smaller law firms – those nowhere near this pay amount – are not exempt from these problems. They face the exact same dilemma, just at lower dollar amounts. Proportionately, the impact to profitability is about the same.
CPA firms are some years behind law firms in dealing with this pay issue because new CPAs are nowhere near these starting salaries. But with the recent change in CPA exam requirements necessitating a fifth year in school, accounting grads are now presenting themselves with Masters Degrees meriting higher pay.
Fewer graduates mean everyone is fighting over those who are at all appealing. Rare, also, are qualified lateral hires since so many people are defecting public accounting, more often hired by clients of the firm than recruited by other firms. Headhunters are more brazen than ever.
As mid-sized law firms have been experiencing for years, CPAs are starting to feel the pinch to their profits of the domino effect that occurs when your new hires come in at the pay of your more experienced people. Raising everyone across the board is costly. Add to that the skyrocketing cost of health insurance and other fringes and incentives needed to compete for talent in the aggressive talent marketplace and, well, we have a big hit to the bottom line.
The business of predictions is a dangerous one. But I'm going on record as saying: the cost of the knowledge worker in CPA firms is going to continue to rise rapidly. I believe it is reasonable to expect salaries for mid- to high-level non-partners to double in the next 5 years. Someone receiving $50-60 now, would be commanding $100+. Say I'm wrong and they don't go up quite this much. They're still going to go up a lot.
Though salaries will never grow as much in smaller firms, firms will have to pay more in order to keep their CPAs. Remember, firms aren’t competing so much with each other for this talent pool as they are competing with private industry and other, more lucrative, professions, such as law, for instance.
That’s just the employee component. Then there is the growing cost of marketing and the new HR/marketing cost component for recruiting.
So, with all these costs going up, where is all this profitability – that these other consultants are projecting to turn into partner compensation – supposed to come from?
I don’t see it coming from significant new business development for two reasons:
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Never miss a post again! :-)
If you like this blog but don't "do" RSS (i.e. have it fed into an aggregator like Bloglines), then maybe you'd like to sign up (look-y to the left of the page) to receive a single e-mail on the days that I make any new posts.
Don't worry, I only post about 10 or so times per month...you won't get e-mails every day. And I'll never spam you, I promise.
I use FeedBlitz--it's one of many good ways to distribute your content by e-mail to those who aren't technogeek blog-aggregating freaks (present company included). In fact, if you work in a firm that disseminates e-newsletters, you might be a lot better off utilizing blog technology (from your own website) to simultaneously post your news to your site and enable its distribution via both RSS & e-mail, however your readers choose... And you can do away with those costly e-mail services. It's instant, it's easy, and it is inexpensive or even free.
If you haven't yet, you oughtta look into it. Could free up some room in your marketing budget for the really cool stuff you've been wishing you had the money to do...
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Something about Guy Kawasaki's tone as a blog author makes me feel like we're shooting the breeze over nachos and a cold beer. It's in this tone that he offers some good refresher tips on how to network, but more importantly reminding WHY we network.
It's a good post, check it out...
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Michelle Golden: Social Media Strategies for Professionals and Their Firms: The Guide to Establishing Credibility and Accelerating Relationships (Wiley Professional Advisory Services)
A timeless guide to modern marketing strategies: online and off.
"The most comprehensive guide that I have seen so far."―Joe Bailey, CPA
"How to execute social-media strategies and the reasons why they work, written at a higher than most level; a must read if you are serious about social networking." —Anthony Provinzino, Farmers Insurance
"So much more than a run down of the tools....helps you to think strategically about social media by putting in its proper perspective."―Colette Gonsalves, CPA firm marketing director
"Extremely well organized ... winning ideas for ... firms to develop and maintain non-cookie-cutter marketing programs that are firm-specific and purposeful."―Richard Weltman, Business & bankruptcy lawyer
Michelle Golden's first in-store book sighting! Click to read Michelle's bio
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