April 2010
by Rene Ciria-Cruz

Small and medium-size law firms are ramping up business development efforts in response to shrinking corporate legal spending. They're zeroing in on industry sectors, using technology and social media for branding and outreach, offering alternative billing models—and most important, they're working to bolster client relations.

Big law firms have long had sales professionals on staff to take care of marketing and business development. "But now, smaller shops and regional firms are hiring them too, or reinforcing existing sales operations," reports Jim Cranston, vice president of client growth and development at the management-consulting firm Hildebrandt.

Last April, Best Best & Krieger hired Maggie Watkins to lead its ten-member marketing team. Although the 200-attorney firm previously had a marketing manager, it made Watkins's position of chief marketing and business development officer part of the management team. She splits her time between the firm's Riverside and San Diego offices (the firm has eight in California). BBK's increased marketing efforts are meant to protect its market share of public-agency clients, whose budgets for outside legal work have been cut back along with other government spending.

Such moves are part of a keener business orientation among smaller law firms. The urgent need for this approach was underscored by a recent national survey of corporate counsel: Eighty-seven percent of law firms are at risk of losing at least one major client, according to the BTI Consulting Group. That is, only 13 percent of law firms enjoy the steadfast loyalty of their corporate clients. Client retention is the order of the day.

Compounding the problem of wavering loyalties, in the face of shrinking profits general counsel are also cutting back their use of outside counsel and seeking relief on billing rates. The BTI Group's research found that corporations have trimmed the number of law firms they use by 20 percent since 2008, and the trend is expected to continue until 2012 as corporations foresee cutting their law firm usage by another 26 percent.

Even deep-pocketed companies are looking for alternative rates when they choose outside counsel: Two years ago the 100 largest U.S. law firms were already billing roughly $7 billion through alternative fee arrangements, according to a survey by the website LegalBizDev. Satisfying clients' desire for rate relief is now part of small and midsize firms' business strategies. "That's why we're offering rates comparable to our more modest structures in the Midwest," says Daniel Stephenson, the Los Angelesbased managing member of Dykema Gossett, which has nearly 400 lawyers in ten U.S. offices.

Client Contact
The most pronounced trend these days is strategic account management, or focusing like a laser on the stewardship of clients' legal needs. "It means understanding the client's business enough to be proactive in suggesting say, tax or litigation strategies, or regulatory compliance," Cranston says. And face-to-face contact is still important. (See "Rainmakers Go the Distance," page 32.)

Indeed, Jonathan Fitzgarrald, director of marketing at Greenberg Glusker Fields Claman & Machtinger in Los Angeles, says that how a law firm sells itself is less important than the value clients are getting from it. Fitzgarrald says Greenberg Glusker's full-service shop with 70-plus attorneys gets the most "draw" from face-to-face meetings with actual or potential clients. "We're constantly bringing them up-to-date on changing laws and regulations, like employment law, especially here in California. That's what it's all about today."

Big-firm lawyers also work to keep up their client relationships. Eric Sinrod, a San Francisco–based partner at the 700-lawyer Duane Morris, has plenty of name recognition through his widely disseminated column at Findlaw.com. Yet the intellectual property attorney and commercial litigator is in constant contact with his clients—on the phone, or face-to-face at lunches, dinners, office meetings, or in-house tutorials, keeping them informed of legal issues and best practices. "I spend hundreds of hours in business development each year," Sinrod says. On top of this, he ceaselessly markets his expertise to a broad legal audience, blogging, speaking at various functions nationwide, posting on several social networking sites, and streaming a podcast on legal issues.

Such branding and public relations activities are still important. But some big law firms are even outsourcing their marketing so they can concentrate on business development, which nowadays means building their client relationships.

"I've heard it said that marketing is one-to-many, while business development is one-to-one," says Cynthia Kaiser, marketing director for Rutan & Tucker, which has offices in Costa Mesa and Palo Alto. Hired last July by the 150-lawyer firm, the ten-year veteran of legal marketing is in charge of community relations, branding, and the firm's website. "But targeted business development is at the forefront of our strategy," Kaiser stresses.

Right Tool for the Job
In pursuit of such a client-focused strategy, smaller law firms are increasingly relying on intelligence technologies that help firms analyze current and prospective clients and provide data on industry and market trends. These tools enable attorneys to better understand and anticipate their clients' business and legal needs, or pinpoint strategic business prospects. The use of competitive intelligence tools has been the most innovative trend in business development, but most of these tools are very expensive—thousands of dollars a month, depending on the number of users.

A Hubbard One survey last year found that nearly 70 percent of law-firm respondents rank intelligence programs-such as LexisNexis atVantage and Hubbard One's Monitor Suite (formerly Thomson's Firm 360)—as their first marketing priority, followed by relationship management tools (41 percent). Through online tools like LinkedIn and Martindale-Hubbell Connected, lawyers can identify within a vast peer network key referral contacts that can "get them in the door" with general counsel. Referrals are still the main way corporate counsel find the attorneys they need. And general counsel always review law firm websites, according to another Hubbard One survey done by the Wicker Park Group; 90 percent rated lawyer biographies as the sites' most important component.

Biz Dev Training
What marketing professionals like Watkins, Fitzgarrald, and Kaiser are trying to create within their respective firms is a deeply rooted culture of business development. In such a culture, designing individualized strategies for actual and potential clients is standard practice. Partners also must eagerly cross-sell for colleagues, instead of jealously guarding their own book of business. To that end, in-house marketing professionals are training attorneys in the basics of business development, or, "What's not taught in law school," Fitzgarrald chuckles. They hold seminars regularly, often hiring consultants to lead them. They coach lawyers on the sales process and train them to use intelligence-gathering tools and to analyze databases for strategic opportunities.

More shops are instituting business development accountability, Hilde-brandt's Cranston observes. "Many law firms are now making attorneys include business initiatives in reports and time sheets."

BBK's Watkins confirms this: "Just ten minutes ago I sent out a memo to our attorneys that they're now required to make marketing and business development plans, and the executive board is fully behind this directive."

Meanwhile, continuing rounds of layoffs in legal services signal that the economic downturn isn't quite over yet. To survive, law firms must retain their current clients and get new ones. In this environment it is no longer enough to practice law; lawyers must integrate business development into their everyday work.

Rene Ciria-Cruz is an associate editor for California Lawyer.