Law Firm 4.0 Blog

Attention! Law Firm Marketers and MarTechs - 2019 ILTA survey is ready to take!

Content Pilot is proud to support the second annual ILTA Marketing Technology Survey. To complete the survey, click on this link or the link below. Your deadline to complete the survey is July 19, 2019 and it will take less than 20 minutes to complete.

In-house marketers: The survey is open to everyone, including folks who are not a member of the organization.  Please see the release from ILTA below for more information. I encourage you to have your firm complete the survey and share with others.  As stated below, the more participants, the better the data for all of us.  

 

                   

 

The 2019 ILTA Marketing Technology Survey is Ready!

 

For the second time ever – and because demand is sky-rocketing – ILTA has released its 2019 Marketing Technology Survey to further benchmark the state of our industry. You can access the survey here: https://www.surveymonkey.com/r/8CND9LR

Law firm marketing technology professionals, processes and tools have been increasing exponentially over recent years, and until last year, there had never been an industry-wide benchmarking survey or analysis done – well, we're doing it again!

Sponsored exclusively by Content Pilot, ILTA’s survey goals include:

• Learn what tools firms are using
• Identify what comprises a typical “marketing technology stack” by firm size in 2019
• Collect qualitative data that marketing tech professionals can leverage in their law firms and help them make more informed decisions
• Raise the profile of marketing technology within the industry and law firms

We know that marketing technology budgets are increasing, that new tools are being introduced each year and established systems have evolved to accommodate new needs. The survey results will shine a bright light on all of these things. We want to get as many firms to participate as possible over the next few weeks – firms of all sizes from all locations, regardless of whether you have a marketing department of one or 100. The more participants, the better the data for all of us. 

A few important answers to your questions:

• Who should complete this survey?A: The marketing technology leader in your firm.
• What if we don’t have a marketing tech person?A: The senior person in the marketing department should complete the survey, or the person who knows the most about the marketing technologies you deploy in your firm.
• We have several marketing tech people – can they all complete the survey?A: Just one respondent per firm, please.
• How long will this survey be live?A: The survey period is four weeks, ending on July 19.
• How much time will it take to complete?A: We estimate it will take 15-20 minutes to complete.
• When will the results be available?A: ILTA will publish a Marketing Technology White Paper this fall, which will include commentary and the results. Our goal is to have it in plenty of time for your budgeting season.
• Do I have to be a member of ILTA to participate?A: No – come one, come all!

Lawyers: Rethink your bios to meet clients where they are (and win more work)

How do clients buy? By category.

To set the stage for winning more, lawyers have to understand how business-to-business buyers of legal services make their purchasing decisions today. Corporations often segment their work based on:

• Category 1: Volume of repetitive matters (frequently referred to as commodity work);
• Category 2: Important day-to-day matters; and
• Category 3: Strategic, high end, or bet-the-company matters.

Today, they seldom hire one law firm to handle all three of these categories. Similarly, they consciously or subconsciously segment their outside counsel as fit to handle only one category of matters. The leaders of law firms that are in Category 1 want to go up-market, trying to sell Category 2 services to their clients. This is commonly rejected by clients, however, because (consciously or subconsciously) they have erected barriers that are difficult for the law firms to penetrate. Clients have boxed-in their law firms based on their (right or wrong) perceptions of them.

Category 2 law firms really want the plum Category 3 work – the highest end, most strategic matters. With rare exceptions, they won’t get it – and they will waste a lot of time and money going after work clients simply do not want to give them. Strategic planning and diligent positioning can alter clients’ perceptions, but it is virtually impossible to jump categories inside the confines of a client relationship, especially to jump from Category 1 to Category 3. Don’t waste your time. Focus instead on practice management and relationship and process improvements that will make your clients happy and loyal, and that will make the category of work you own as profitable as possible.

How else do clients buy? With emotion. 

For Category 2 and 3 work (and sometimes Category 1), buyers of legal services make their purchasing decisions on two levels. When they are considering hiring lawyers or firms, they create a shortlist of features they can intellectually evaluate – a lawyer’s expertise, experience, jurisdictional background, geographic suitability, fee arrangements, etc. These are all items they can check off a list. But when they are choosing the one lawyer or firm to hire, they are making an emotional decision, where they focus on how they feel about the lawyer – do I trust him? Do I like her? How would I feel if I got stuck on the tarmac next to my lawyer for five hours? Would it be painful? Or a party?

A friendly, familiar, conversational voice is important for your visitor to want to connect with you.

The two-levels of hiring – intellectual/technical and emotional – have been proven for more than 25 years, in thousands of interviews with corporate counsel and senior executives. Lawyers who live in their heads and who have impressive technical resumes may dismiss this research. But then they wonder why, when on the shortlist numerous times, they do not get chosen. This is why: with expertise and qualifications being equal (or perceived as equal), he or she isn’t as likeable as the person who got hired.

Your bio overview.

The first two attributes of Content Pilot's Ten Foundational Best Practice for a Professional's Biography are the following:

1. First 140 characters of the bio are current, compelling and relevant for SEO benefit. Count all letters, punctuation and spaces, and ensure that your most important keywords about your practice are appearing first. Avoid starting your bio like this: John Smith is a partner and chair of the labor and employment practice at ABCXYZ law firm. This is likely what will appear in Google and other search engine results when searching by that lawyer’s name. This information doesn’t move the needle in hiring – don’t waste this valuable real estate on your titles (your titles will appear elsewhere in your bio). Rather, tell what you do.
2. Overview paragraph – the first two to three sentences are descriptive of the work the lawyer does and the types of clients the lawyer represents. After the 140 characters, focus on enriching your bio with additional keywords, such as types of clients, industries, and subject matter strengths. If you are a noted expert in SEC enforcement matters, Family Medical Leave Act claims, or SBICs and BDCs, this is where it should live.

Then, create three-dimensional (3D) bios.

Based on the analytics that we track, more than 40-70% of  visitors are viewing your bio pages. Thus, your goal should be to keep visitors on your lawyer bios longer – and convert visitors to viewing more of them each visit. This is where the cash lives in your firm. Pour an extra cup of coffee and ask your web administrator or marketer to show you the Google Analytics for your website – see how many different lawyer bios any one visitor opens, and check the average length of time a visitor spends on them. Then, focus on improving this number and duration.  You should design and write your bios to accomplish this goal.

In the hundreds of client interviews we have conducted, here is what I have learned about how clients choose their lawyers.  In today’s landscape where competition among attorneys is stiff and it is harder to differentiate one from another, they must provide more insight into why they should be hired. Why are they the expert? What makes them the perfect fit for a client’s problem? You must prove you are the right fit, and there are three ways to do this. I call it “3-D Bios:”

1. Demonstrate expertise
2. Prove relevancy
3. Show humanity

All three “dimensions” must be present for lawyers’ biographies to work hard for them.

1. Demonstrate expertise:
1. Show specific experience: Remember the three questions: What have you done? For whom have you done it? What can you do for me?
2. Include client case studies or stories that prove what you know and your approach to getting things done. This often gets into how you did what you did, not just what you did.
3. Depending on the nature of your practice (for example, if you represent a lot of start-ups or technology companies), include client logos, with their permission, of course.
   
   
2. Prove relevancy:
1. Important keywords that are relevant to your practice should appear in the top 140 characters (characters, not words) of the bio overview. When someone is Googling, or otherwise searching for your name, it is important that the 140–150 characters that show up in the search engine description are those most relevant to your practice – and the expertise that people are buying from you – today. Consider the disconnect for your future buyer if you are supposed to be the expert in global trademark protection and your Google search description does not even mention it.
2. Feed current blog and Twitter posts into your bios. Social media that proves you are current and on top of the subject matter in your practice gives the people evaluating you comfort and confidence in your intellect and grasp of today’s issues.
3. Feature a book the lawyer has written – or something else notable, such as white papers, an important speech, a short video about a trending topic.
4. Design an infographic, which highlights trends in the lawyer’s practice or industry. For example, number of patents in the energy industry over a ten-year period of time, or a US map showing the number of states in which the lawyer has handled litigation.
   
   
3. Show humanity (to get hired, look for ways to short-cut the pathway to trust):
1. New lawyer photos – “magazine-style” (large format) photos that show personality and approachability. Some lawyers do not like getting their photos taken, so they use the same tired photo decade after decade. In today’s world of selfies, where current photos are pervasive, it is critical that the firm website posts current photos that actually look like the lawyers who work there.
2. Include a short video that tells a memorable story about a case and how you handled it. Of course, do not name a client name unless it is public record and you have your client’s permission, but do discuss unique issues or circumstances. For example, did the case come in at 8 p.m. on a Sunday night and the court filing was due Monday morning at 10?
3. Include an “after hours” tab or feature – content that describes the lawyer’s passions outside the office. This can include community board service, volunteer work, travel, sports and events, books you are reading, the fact that you are training for a triathlon, or your family and pets. Show how interesting you are!
4. Prove accessibility – include your mobile phone, assistant’s name/info, your team’s contact names/info (if you aren’t reachable, it ensures that your client has access to team members without you being a bottleneck), and instant messaging contact information. Law firm technology staff will sometimes prohibit instant messaging, but certain types of clients rely on it – and they want their lawyers to use it. 

Read these for strong examples of 3-D bios - congratulations and thanks to Texas law firm Gray Reed for these examples. Note the first-person introductions and the tab called "When I feel most at home," which ties directly to the firm's strategy and tagline, "Feel at home here."

 

https://www.grayreed.com/Our-People/W-Darrell-Armer 

 

 

 

https://www.grayreed.com/Our-People/Michael-A-Ackal-III

If your bios aren't delivering on all these important cylinders, they aren't working hard enough for you. There is definitely a new world order when it comes to hiring lawyers and how it’s done – let us help you position your lawyers so they are exactly in the right spot for future success. 

A review of "Decisions that Matter" - a Must-read new book for law firm leaders

The first American law firm opened on September 15, 1783. It still exists today in Philadelphia as Rawle & Henderson LLP, a civil litigation firm. The second and third law firms also still exist, with the third known today as the venerable Cadwalader Wickersham & Taft.

“Decisions that Matter,” by authors Roger Hayse and Andrew Jillson and contributor Eric Fletcher, uses history and more than 50 stories to share lessons about the life-cycle of law firms – celebrated names that many law firm leaders will know, others that you won’t. It doesn’t matter. The tales are as relevant to a millennial lawyer with a dream to start and grow her own firm (who may not know any of these names) as they are to an AmLaw 50 firm chair who recognizes them all and sees challenges, transition or growth in his firm’s future.

The five life-cycles include: firm formation, growth, sustainability, crisis and closure. While the Internet offers thousands of pages of advice, a time-strapped law firm executive seldom has the time, patience and (perhaps) discernment to sift through the rhetoric and land on the much-desired pieces that will actually make a difference.  Practical, grounded advice that you can trust seems elusive. But – it’s not. It’s right here.

For example, in talking about growth . . . We all know that “growth” in and of itself is not a strategy. But, when tied to a specific vision and an execution plan that fortifies the strengths and openly calls out the deficiencies (with no fear of making tough decisions that address them), a firm is on the right track to safely and strategically grow. Smart policies, procedures, not being transfixed by the mirage of financing growth with debt, and understanding that thinking, feeling humans are your greatest assets – clients, lawyers, staff – the answers to your questions about how to proceed and the illustrative case studies that serve as cautionary tales are here. Growing or running a law firm without a complete, disciplined understanding of how to mine, manage and maximize the productivity of your assets will stall or undermine the success you might otherwise achieve.

Has your practice grown stale? Are your lawyers restless? Is your compensation system chipping away at an otherwise cohesive law firm culture? Are you flummoxed by all the change you are seeing in business, government and law, and worried about clients’ increasing array of choices of legal and non-legal providers? History and the stories in this book prove that failure to choose a direction can be as debilitating as choosing the wrong one, that eat-what-you-kill compensation systems can, in fact, kill law firms, and that strong, unwavering leadership is imperative during all five life-cycles, especially in times of transition and crisis.

Watching client and industry trends are the best harbingers of what’s to come for law firms.  BigLaw, MediumLaw and SmallLaw have all closed their doors for a variety of reasons that you will understand after reading this book. Why are some firms immune to closure and others vulnerable to it?

Other than being designed for the legal industry, “Decisions that Matter” is a combination of two best-sellers: Jim Collins’ classic book on leadership, “Good to Great: Why Some Companies Make the Leap and Others Don’t” and Stephen Covey’s immortal “7 Habits of Highly Effective People.” It reads like a novel – or even better, a Michael Lewis book, such as “Boomerang,” “Moneyball” or “The Big Short.”

When you see this title cross your desk, you might think, “We had a great year last year. We’re exactly where we want to be.” But, as history has proven time and time again, the authors tell us that “…the conclusion of a great year is no assurance that the new one will be equally positive.”

You’ll want to keep this book, earmark pages, highlight and underline passages and advice – you’ll read it and re-read it. Since it covers all five major milestones in a law firm’s trajectory, you’ll want it at different times of your career when you are confronted with different circumstances – some of your own doing, some determined by a changing market.

Buy it and keep it close.

39 Diversity and Inclusion Inspirations

January 21st was an important day for equity, diversity and inclusion. On that day, we celebrated the life and legacy of Dr. Martin Luther King, Jr.

It was also the first day of a series co-authored by Content Pilot's Keith Wewe, “39 Diversity and Inclusion Inspirations” to honor his legacy and to help lead your way – one inspiration for each of the 39 years we were blessed by Dr. King’s life. We encourage you to join the discussion and share your ideas to combat the divisiveness so prevalent in our society today.

It’s up to us to reflect on the gains won during the Civil Rights Movement – and echo them as we address the issues faced by all diverse groups in our industry and society through acts of volunteer service and vigorous action.

Follow the series here.

Why Brand Stewardship is so hard

Creating a new strategy and brand is hard, but once the difficult design and launch phases are behind you, stewardship should be easy, right? Wrong! In a one-office organization, it's challenging, but in a multi-jurisdictional, multi-language and multi-cultural firm, it's a 24/7 job for highly sophisticated and politically-astute team members. 

Below is a great post (4 minutes to read) that describes some of the personalities that brand stewards must encounter. In my experience, it's the lawyers and their enthusiastic assistants who are, unwittingly, the worst offenders.

Beware: Don't invest in a re-brand until you are ready to establish and invest in the right guidelines and rules that will protect it for years to come.

https://www.mediapost.com/publications/article/328518/when-co-workers-go-rogue-how-to-guard-your-brand.html?utm_source=newsletter&utm_medium=email&utm_content=readmore&utm_campaign=111906&hashid=jnMhaM0iHRfd8x-yBxyWIy7yP9g

 

 

EDI is the new black

Having high standards for your law firm’s equity, diversity and inclusion (EDI) is easy. Achieving the results you’re hoping for is hard. There has been more lip service given to this topic than any other in the last decade by law firms and the corporate leaders who hire them. There is a lot of hand-wringing, and we see widespread frustration inside the law firms with their ability to move the needle in measurable ways – and disappointment from buyers of legal services who believe their law firms aren’t trying hard enough.

I am an “expert” in EDI because I am the CEO of Content Pilot, a marketing strategy, design, content and technology company, who wants our office to be highly diverse. Here’s how our numbers stack up:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

And our age diversity is covered: baby boomers to millennials.

New clients have told us that one of the reasons they hired Content Pilot is because we are so diverse. That’s terrific feedback and it inspires us to work even harder to find the best people that will help us excel – our goal is to create the most high-functioning and creative workforce possible.

Does EDI matter in the hiring of law firms?

With all other qualifications perceived as being equal, does the scale tip to a more diverse law firm by the clients making hiring decisions? As an outside observer, I’d say yes – but it does depend on the person(s) in the company who is making the decision.

Leigh Dance, President of ELD International, works with top corporate counsel around the world and runs a group called the Global Counsel Leaders Circle. We asked her the value of content about a firm’s EDI efforts specifically in proposals and RFPs.  

Leigh says, “Know your buyer. Buyers from any minority group in the US, including all ethnic groups, LGBTQ and those with disabilities will care more specifically about your diversity & inclusion efforts as they make their buying decisions. They’ll want to know your numbers and how you plan to assemble a high-functioning, inclusive team to interact with them and serve them.”

She continues, “In presenting your approach to D&I, the gender, race and cultural diversity numbers/metrics should NOT be presented in a body of text (unless you’re trying to hide them), but very visibly. 

“Aspirational goals also count—check out Eversheds Sutherland’s commitment to reach equality by a certain year. And Accenture and Coca-Cola both have goals in reaching gender-pay parity by a specified year. 

“Be succinct and prove that your firm is really walking the talk. ‘Blah-blah’ about diversity and inclusion sounds like ‘Blah-blah’ to most buyers and just takes up space.

“Today (and I think this will change over time) buyers that are not from a minority group may be interested in a particular firm’s and lawyer’s activities to increase diversity, inclusion, doing pro bono, supporting human rights, etc., from a perspective of social interaction and knowing their advisers’ interests. 

“But that doesn’t enter into their decision-making on what lawyers/firms they ultimately choose, unless the company or legal department has a specific standard on gender-parity and diversity numbers, and then it’s just a matter of reaching the required threshold.”

We know that law firms of all sizes are investing in improving their diversity numbers. But “equity” and “inclusion” are not getting as much attention. It requires honesty, transparency and a broader vision of what a re-imagined firm could look like. 

That’s what we did.

The 2018 ILTA Marketing Technology Survey is Ready!

May 17, 2018 - For the first time ever – and because demand is sky-rocketing – ILTA has released its 2018 Marketing Technology Survey to benchmark the state of our industry. You can access the survey here: https://www.surveymonkey.com/r/ILTAMarketingTechnologySurvey.

Law firm marketing technology professionals, processes and tools have been increasing exponentially over recent years, yet there has never been an industry-wide benchmarking survey or analysis done – until now.

Sponsored exclusively by Content Pilot, ILTA’s survey goals include:

• Learn what tools firms are using
• Identify what comprises a typical “marketing technology stack” by firm size in 2018
• Collect qualitative data that marketing tech professionals can leverage in their law firms
• Raise the profile of marketing technology within the industry and law firms

We know that marketing technology budgets are increasing, that new tools are being introduced each year and established systems have evolved to accommodate new needs. The survey results will shine a bright light on all of these things. We want to get as many firms to participate as possible over the next few weeks – firms of all sizes from all locations, regardless of whether you have a marketing department of one or 100. The more participants, the better the data for all of us.

A few important answers to your questions:

1. Who should complete this survey?
   1. The marketing technology leader in your firm.
2. What if we don’t have a marketing tech person?
   1. The senior person in the marketing department should complete the survey, or the person who knows the most about the marketing technologies you deploy in your firm.
3. We have several marketing tech people – can they all complete the survey?
   1. Just one respondent per firm, please.
4. How long will this survey be live?
   7. The survey period is three weeks, from May 17 to June 7.
5. How much time will it take to complete?
   1. We estimate it will take 15-20 minutes to complete.
6. When will the results be available?
   1. ILTA will publish a Marketing Technology White Paper, which will include commentary and the results. Our goal is to have it in plenty of time for your budgeting season.
7. Do I have to be a member of ILTA to participate?
   1. No – come one, come all!

Special thanks to:

• Our ILTA Marketing Technology Survey Task Force: Katy Admirand, Cheryl Disch, Jacqueline Madarang, Deborah McMurray, Sheila Mennis, and Nanette Morales.
• The Legal Marketing Association (LMA) for cross-promoting with ILTA on this important research project.

 

       

   

 

 

 

 

                                     
                    

An Interview with Deborah McMurray: Best Practices for Law Firm Websites - by Craig Guillot

 

Law firms that make a conscious effort to optimize their websites and improve their online presence can make themselves increasingly attractive to new clients. In a recent white paper, marketing strategy and technology firm, Content Pilot, laid out Ten Foundational Best Practices for law firm websites. Researchers studied AmLaw Global 50 top-ranking firms and identified trends, insights and global standards for how these organizations can enhance their web presence. Deborah McMurray, CEO and Strategy Architect at Content Pilot, spoke with Aprio about what firms should do to emulate these practices and set themselves apart from the crowd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What are visitors to law firm websites looking for, and what can a firm do to optimize its lawyer bios?

"Buyers of a legal service make their purchases on two levels. First, they evaluate the firm on a technical or intellectual level. Then, they make an emotional decision - from the heart -  when they choose one firm or lawyer over the other. They ask whether they like them, trust them and whether they would have their back. The vast majority of lawyer bios are not distinguishing and not informative enough. To truly have your website presence work hard for you, lLawyers need to create a ‘three-dimensional bio’ that demonstrates experience, proves relevance and shows humanity."

How do law firms use their websites to attract clients?

"We've seen a shift in the past year from buyers. They ask colleagues and friends for referrals and they Google those names. Previously, the buyer would  simply find the firm website, but today they're going to LinkedIn first and doing initial vetting there. They also use Twitter to see what they're saying and if it’s relevant to what they need. After that they visit the website to make sure the bio is selling on [the previously mentioned] three levels. If it is, then they will view other pages of interest – additional bios, practice, industry or news pages. If they don't see what they're looking for in the first bio they evaluate,, they're going to leave and eliminate that lawyer as a contender."

What web features and enhancements are the most important and offer the most value?

"Search features are the most important. 'Type A' busy business people have expectations and assume the law firm knows exactly what they want. The larger the firm website with the more robust content, the more search functionality they need to have. Another feature is video, which really drives more and longer visits – and the analytics prove it. Visitors stay on the site three times longer and view three times more pages after viewing a video. The good thing is, video production expectations aren't that high (YouTube cat videos have lowered our standards). You can do some 10-second, 20-second or 30-second videos that are inexpensive to produce. If the subject matter is current and relevant to your visitor, it will pay off."

What can firms do to set themselves apart from competitors?

"There needs to be a strategy that is unique to the firm — then you can start building features and functionalities that pay off your strategy. Our Global 50 law firm study found 21 of the world's 50 largest firms had no visible strategy. Identify the signature practices where you are arguably number one or two and go to market with those. Whatever design or development company you're hiring, make sure they can help you create and craft a story that will resonate with the people you want to hire your firm."

Of the Ten Foundational Best Practices outlined in the report, which would you say are the most important?

"Aside from lawyer biographies, search and strategy, I would say content because that's the reason people are coming to your site. As mentioned earlier – and it’s worth repeating - If they have a good experience on the lawyer bio page, they are going to link to another page and read an article, e-alert or news release. Another important foundational best practice is interactivity, engagement and social outreach. The law firm needs to think hard about how they can build engagement and relationship opportunities into their website."

A comprehensive strategy for your firm's website will give you an edge over your competitors who are less strategic. But you need to be prepared to do some serious overhaul if any area of your site is not following the Ten Foundational Best Practices. Depending on your needs, you can create multimedia content, ramp up your bios or add client success stories to engage your prospects in a new way. Ask current clients or potential buyers what draws them to a law firm website and what keeps them coming back, and remove anything that is old, dry or uninviting. Check in on your competitors and fill a niche they may have missed. By taking a critical eye to your current site and improving what you can, your website will work much harder for you.  Your overall web presence will improve and it will better function as a high-performing business development and relationship management tool.

To register for the free Content Pilot Report, visit www.contentpilot.com/subscribe. 

Webinar: Law Firm Marketing on the Internet: The Perfect Marriage of Law, Business Development and Technology - attend for less by using the promo code

Content Pilot's CEO, Deborah McMurray, will be presenting a webinar on Law Firm Marketing on the Internet: The Perfect Marriage of Law, Business Development and Technology. Clear Law Institute will host the webinar, which you can attend live on 05/08 at 03:00 PM ET or view a recording anytime after the event.

You can receive a 35% discount off of the registration fee by using the discount code DMcMurray105702. 

Course description: How does a firm get noticed and compete with the tens of millions of posts on social media today? Where is the best money invested for the greatest return? Where do your business development goals fit in — and how do they drive your strategy and result in opportunity? This session will answer these questions and many more. You’ll hear the results of Content Pilot’s recent study, “How do they Measure Up? Global 50 Law Firm Websites: Ten Foundational Best Practices,” receive practical advice about website strategy/design, hear tips on search engine optimization (SEO), and content best practices — all with the goal of winning your firm more profitable clients.

Upon course completion, you will be able to:

• Describe how B2B buyers of legal services evaluate law firms online and the two buying stages they go through.
• Discuss how to build your next website with business development in mind, and how to plan the right strategy and budget.
• Write website and social media content that will turn the heads of human readers and search engine bots.
• Identify what the world’s largest law firms are doing online.

Learn more and register: https://clearlawinstitute.com/shop/webinars/law-firm-marketing-on-the-internet-the-perfect-marriage-of-law-business-development-and-technology/

If you have any questions, please contact Clear Law Institute (link to clearlawinstitute.com/shop) at 703-372-0550 or [email protected].

Mergers Continue at Record Pace, But Firms should still pay attention to the red flags - Guest Post by Bob Denney

Altman Weil MergerLine tracks law firm mergers of virtually any size, and they report that 2017 is a banner year.  Those of us who are embedded in the legal industry knew this, but it's important to have the data supporting all the water-cooler conversations - and happy hours over Pinot Noir or a Sazerac.  MergerLine reports, "There have been 52 combinations announced through mid-year, including 24 in the second quarter, topping the prior mid-year peak of 48 in 2015 and 2016. Cross-border combinations are also on track to reach an all-time high in 2017."

So now we know the numbers for 2017. We hope 100% of them are successful, but statistically, that's not likely. Like marriages, about 50% of them fail.  

If you want your firm to grow and you believe the best way to become more competitive is to merge, pay heed to Bob Denney's post below. This originally appeared in his July 2017 Legal Communique. 

          

 

 

 

 

 

 

 

 

 

 

 

Law firm mergers may set another record this year because, in order to grow in this flat legal market, more firms are merging in other firms, in many cases smaller ones, or at least entire practice groups.  

Yet history reveals that about 50% of all mergers subsequently fail.  In many cases the reason(s) for the eventual failures were issues that were evident beforehand and should have raised red flags about proceeding with the merger.  On the other hand, when firms end merger discussions, whether the potential merger had been announced or not, it is often only after they have spent an undue amount of time trying to resolve red flag issues.

I call these “red flag issues” because they are difficult and, in many cases, are issues that can never be resolved.  These are the red flags that arise most often.

• Although they have agreed to seriously consider merging, one or both of the firms does not make it a high priority item, dragging their due diligence or the discussions on for an extended period of time.

• A major client that represents a significant amount of the revenues – and also probably the profits – of one of the firms announces it is taking its business to another firm.

• There are wide differences in the partner incomes between the firms.

• The firms have different work ethics as indicated by wide differences in average billable hours.

• The acquiring firm requires partners to buy-in and contribute capital while the firm being acquired does not.

• One of the firms has considerable debt while the other firm is debt free.

• One firm has an unfunded pension liability. The other firm does not.

• The practices do not fit. An example from two litigation firms:  One firm’s practice consisted mainly of major, “bet the company” cases for large corporations.  The other firm’s practice was largely commodity litigation with a high percentage of insurance work at low hourly rates.                                                                                                                       

• Legal conflicts can usually be identified and possibly resolved.  However, there can also be business conflicts such as when a major client of one firm says it will withdraw all its work because a major competitor is a client of the other firm.

• A major producer in one firm opposes the merger and threatens to leave, taking his/her clients and even an entire practice group.
  
  
• Different compensation systems. Partner compensation in one firm is based on billable hours or collections while, in the other firm, partners are compensated mainly on origination.  Another example: One firm has a formulaic system while the other firm subjectively evaluates partner performance based on published criteria.
  
  
• The average billable hours in one firm are far below those in the other firm.
  
  
• Management in one or both of the firms has not informed the other partners that it is in the process of negotiating a merger. Then, with little notice or time for discussion, presents the merger to the partnership for approval.

• The name of the new firm. This has been the “deal breaker” in a surprising number of potential mergers that were called off.  When a smaller firm is merging into a much larger one, this is rarely an issue.  However, when it would be a so-called “merger of equals”, this often becomes sensitive because both firms want their firm’s name to survive in whole or in part.

• But the first red flag that can appear is when the firms are drafting the confidentiality agreement. This document should include a stipulation that, if the merger does not occur, neither firm will attempt to recruit lawyers from the other for a specified period, usually one year. This is often referred to as a “cherry-picking clause”.   If either or both firms are unwilling to agree to this, that should raise a huge red flag.

Negotiating a merger is a complex and delicate process.  However, there would be fewer failed mergers, or considerably less time and resources spent on potential mergers that do not occur, if firms recognized and addressed the red flags when they arise.

To paraphrase the old adage:  “Look long and hard before you leap.”

            -- Bob Denney

Bob is a recognized authority on management, leadership and strategy for law firms and companies.  He is on several company boards and has also     served as an Interim CEO in crisis and turnaround situations. He can be reached at 610-804-7850 or at www.robertdenney.com.