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Under the headline, "Weil Slashes 60 Associates, 110 Staffers," the 6/24/13 AmLaw Daily reports that "the firm is trimming associate head count by 7 percent, laying off 110 non-lawyer employees, hitting some partners with 'meaningful compensation adjustments,' and reducing its complex commercial litigation practice in Houston and Boston."

Perhaps the most significant comment from managing partner Barry Wolf was,

"...while the firm will continue to take significant steps to further increase our market share, evidence that the market for premium legal services is continuing to shrink dictates that actions to enhance revenue alone will not be sufficient to position the firm as necessary for these new market conditions.

Taken together, "continue to take significant steps to increase our market share" and "actions to enhance revenue" sound good, eh? Unfortunately, law firms' ignorance about markets, marketing and market share, and what it takes to identify and wrest share from from whoever has it, makes such statements empty.

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Law firms only know how to promote themselves to enhance revenue during high-demand periods like the bull market of the past 25 years. Few know how to do it under the survival-of-the-fittest, gladiatorial conditions that are just beginning in the law biz, but that will continue to intensify until they're more like what firms' clients have always faced.

Under such conditions, revenue enhancement means adopting a completely different mindset, which will require firms to commit to two critical goals:

  1. Consistently expose emerging legal needs driven by emerging business problems
  2. Compete fiercely for market share in mature legal service categories

To do this, they must create a true marketing function, one that goes beyond mere promotion to include the other three Ps in the Marketing MixProduct, Price, Place (distribution). Today, very few law firm Marketing departments have a voice in the latter three components. That's largely because law firm leaders and partners are ignorant of anything but promotion.

Do you think that Toyota is counting on the worldwide auto market to grow meaningfully, or do they spend their days figuring out how to get you to buy a Toyota instead of a Nissan, Honda or any of six other competitive brands? That's "influencing market share," and it's not hard to see how that marketing challenge must inform product development, pricing and distribution. It would do little good to simply spend a lot of money trying to promote what may be the wrong product, improperly priced, and distributed through the wrong channels. Unfortunately, that's what law firms do.

To be truly competitive, firms will also have to create a full-blown sales function. The days of relying on part-time, untrained volunteers must end. To put the right skills on the street, frequently enough, there are two ("either" or "both") options:

  1. Make: Train all the lawyers as sales contributors, either as direct salespeople or serving in various sales-support roles.
  2. Buy: Hire experienced salespeople.

Finally, having done this, they'll have to figure out how to manage, integrate and compensate them.

The point is that Sales is about to assume the mission-critical status it holds in every other industry. That's going to butt up against lawyers' legendary need for autonomy, which will make it hard for them to relinquish sales authority and responsibility (despite the fact that they never really wanted it, anyway).

The enabler for any of this is going to be tough: Law partners must give up their voice in operating decisions.

Their roles need to be limited to 1) work/revenue contributor, and 2) shareholder. That second title needs to be financial only.

Even if you own a huge stake in Toyota, how much of a voice do you have in day-to-day operations? Zero. Shareholders elect the Board of Directors, who oversee executive management, who, through a group of function managers make the operating decisions for the company, e.g., finance, marketing, sales, manufacturing, etc. Shareholders have no voice whatsoever in the day-to-day decisions and actions of corporate managers. Managers don't have to get the OK from uninformed, unqualified shareholders.

Until then, law firms will continue to struggle with the transition from being passive beneficiaries of a bull market to being effective competitors in a mature business.

Mike O'Horo

If you've ever purchased or participated in any kind of sales training program, you know that much of the training you're asked to devote time to feels like "just in case." You can't see any immediate application for it, so you put it in the "get around to it when I have extra time" column. We both know when you'll have extra time.

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