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For Lawyers Is Imperative
Attorneys looking for more clients should consider these four steps,
from finance columnist Michael McDonald.
Handshake Shaking Hands
Business development is undoubtedly one of the greatest challenges that any business faces in any industry. For lawyers, the problem of bringing in new clients is made more complex by multiple factors, including a stigma against advertising in the legal sector, difficulty in finding clients who can actually pay their bills, and a balkanized industry that has both cutthroat competition among small providers and a degree of tacit collusion among large providers. Add to this the lack of expertise many attorneys have in marketing or data analytics, and you have a recipe for the type of stagnancy that has afflicted large swaths of the industry for years.
The business development problem for attorneys is not new or unknown. A recent survey by litigation financing company Burford Capital showed that a full 97% of attorneys identified business development as a challenge today, versus 68% of attorneys who said the same thing in 2013.
Despite the widespread need across the industry for business development, many lawyers remain loath to use formal advertising. For example, one reputable legal partner whose 30-person practice focuses on business disputes said, “Any good attorney worth their salt does not need to advertise – if you have a good reputation, that is all you need. Advertising in law is for ambulance chasers.” That view is just one man’s perspective, of course, but it seems to epitomize the perspective of a large segment of the industry. The commonly held view seems to be that outside of accident and personal injury law, traditional advertising is unneeded. Thus, any lawyer who violates this view will likely be seen by at least a portion of peers as being inept and unable to bring in enough cases through their reputation and word of mouth alone.
The view that advertising is unnecessary is probably harmful to the industry as a whole, and of course to many individual attorneys. Advertising can serve two roles; persuasion or information provision. The information provision side of advertising is particularly valuable to attorneys. Helping to educate the general public and the business community about legal services is a useful function that ads can serve. The key for any attorney in marketing is to understand the return on investment from marketing expenditures. Unfortunately, most attorneys are not familiar with the tools and techniques used in business analytics to forecast the effectiveness of marketing spend. Data analytics remains an under-utilized tool of attorneys.
Litigation finance has sprung up as a mechanism to help deal with this. Anthony Trufelli, an executive with Bridgeway Legal Funding, notes the value of a primer his firm produces to explain litigation finance to clients. According to Trufelli, “The purpose of our guide is to be a tool or resource attorneys can give their clients should they be interested in an advance. The purpose is to shift the burden of explaining the industry off the attorney’s plate so they can focus on more important things.”
Despite the rise of litigation finance, the large majority of cases are still too risky to be funded by third parties. Add to that the ethical concerns some observers have about the industry, and you have a recipe for continued problems with client credibility. Optimization of pricing can help attorneys deal with this issue, but it’s an imperfect solution.
Attorneys looking for more clients should consider several steps:
- Look carefully at options to reach potential customers through advertising – most industries do advertise, and there is little reason for attorneys to be any different.
- Dig deep on business analytics – Big Data and Business Intelligence may seem like the topic du jour of the moment, and to some extent they are overhyped, but there is a kernel of truth behind the hype, and they can help build a better business.
- Study differential pricing opportunities – like airlines, hotels, and even business consultancies, attorneys should NOT be charging the same fees to all clients. Fees should be based on supply and demand for the skills required for a particular case.
- Consider third-party funding if appropriate – not all cases will work with third-party funding, and it often makes sense to get help in shopping a case around to prospective funders, but there is no reason not to at least consider third-party funding if you have a viable case that could use it.
Overall, with all of the obstacles to effective business development, it is little wonder that so many attorneys cite business development as a hurdle to success. Despite these challenges, attorneys need to confront the issue head-on.