For law firms, one of the first signs of an economic down turn is a slow down in the volume of new engagements.  When this occurs, the natural reaction of firms’ management is to crank up marketing activities and push partners to devote more effort to business development.   Unfortunately, the skills and techniques that lawyers and law firms use to develop business when times are good may not be appropriate or effective when times are bad.  As a result, there is a lot of uncertainty as to how to go about ramping up revenues while clients are trying to cut costs – a bit like trying to walk up a down escalator.  In point of fact, none of us has lived through what is occurring in legal markets today.  But, as in so many other things, when conditions become difficult the best advice is to revert back to basics.

It seems to me that in its most basic form, generating business involves four steps, regardless of market conditions:  (1) putting the firm and individual lawyers in a position where potential clients know who they are (what the marketers would call publicity or name recognition); (2) making potential clients have a knowledgeable and, hopefully, positive impression of the firm and its individual lawyers (that’s the purpose of marketing); (3) having the client acknowledge that they have a problem or issue that requires a lawyer’s assistance (I hate to use the “s” word, but this is the primary function of selling); and (4) convincing the client that your firm is the best equipped to resolve the problem or issue (the art of closing).
Now, I should issue a disclaimer that I do not pretend to be a marketing guru.  However, I do spend a lot of time watching firms go about this process and have observed that, especially in good economic times, law firms spend a lot more time, energy and money on the first two items — publicity and marketing– than on the second two — selling and closing.  The difficulty is, in a time of sustained economic downturn, I think the focus has to shift more heavily to numbers three and four.

Let me explain.  When businesses are treading water during tough economic times, the primary motivation is to minimize risk.  That usually means that they become extremely conservative and focus on relationships they know and trust.  If a law firm does not have its name and reputation established, this is probably not a good time to do it.  Potential clients have so much on their plate that getting them to take notice of your firm and form an opinion that is sufficiently positive to justify their hiring you is going to be very difficult.  Instead, I believe it would be more productive to live with the reputation (or lack thereof) that you have and move forward with helping clients understand the business problems they are facing and how you can help.

Here are five actions your firm can take to become more effective at developing business during the current recession.
1.  Double down on existing clients.  This is not the time to go chasing after new clients.  An inherently conservative nature in a tough economy will make it difficult for them to change law firms.  Plus, your firm has to go through all of the efforts to establish name recognition with them and make the new potential client think you are their best choice to handle their legal issues.  Alternatively, the process of name recognition and the marketing function (getting potential clients to think that your firm is a group of highly competent lawyers) is hopefully achieved with existing clients.  This doesn’t mean that new clients are not available.  It simply means that there are probably more effective ways of obtaining them than through traditional publicity and marketing communications, e.g., referrals from existing clients.

2.  Refocus your marketing budget.  This means that you have to take a hard look at all of the marketing expenditures you are now making.  For most firms, advertising, collaterals materials, websites and entertainment are focused on new as opposed to existing clients by about a five to one ratio.  In our near-term economy, I think it makes more sense to focus those dollars on maintaining and increasing business from existing clients.  This will probably mean a decrease in the amount you are spending on traditional marketing, but since most businesses waste large portions of their marketing budgets, that’s most likely a good thing.
Please note that I am not advocating getting rid of all marketing communications.  There may well be public relations and even advertising programs that could be effective in supporting business development efforts with existing clients.  And, if much of your marketing spend is wrapped in community events that your current clients are aware of (“The Smith & Jones LLP July Fourth Fireworks Show”), you probably want to be cautious in your budget cutting.  However, there will be a strong temptation to “cut back a little” on established marketing and advertising programs while trying to keep them going at some reduced level.  Tread carefully here because name recognition and “branding” programs are built on consistency and repetition.  Cut the frequency of advertisements in half and the result may be to make the program completely ineffective.  Instead, measure each marketing dollar on your refocused business objectives.  If a program supports your objectives, fund it fully.  If it doesn’t, scrap it.

3.  Demonstrate rather than describe.  The best way to convince an existing client of your capability to help them in a new way is by providing them with custom tailored information that has value to them.  Instead of telling clients how good you are in brochures and advertisements, show them through legal work product.  The cost of a couple of associate hours on a memorandum that is tailored to a client’s specific situation is less expensive than almost any other form of marketing but carries a much greater impact.

4.  Cut entertainment expenses.  Here’s the paradox: entertainment is a vital tactic for using existing relationships to generate new business, but elaborate entertainment of clients who are struggling in a difficult economy is akin to wearing a red dress to a funeral.  Even if you have invited a client to your club’s invitational for the last three years, this is a good time to demonstrate that you understand what is going on in his or her business and have adjusted your entertainment and, by extension, the client’s cost of legal services accordingly.  Convince your partners to focus their entertainment on events that don’t give the appearance of being elaborately expensive.  Home entertaining and golf outings tied to charitable events are good standards.
5.  Skill train lawyers in business development.  Lawyers are very good at acquiring knowledge.  But a big part of business development is skill-based, and skills require practice and repetition, not lectures and reading.  Your partners will hate this because it takes them out of their comfort zone and will require that they actually go out and have conversations with clients in situations where the lawyers are not in control.  For many of them this conflicts with years of experience where they could sit back and wait for the clients to call.  But in a recession, the key is to understand client business problems and confidently present a legal solution that causes the client to believe you as a lawyer or a law firm are their best option to resolve the issue.  And that requires practice and experience.  Take some of the money you save on marketing and spend it on business development training or, better yet, individual coaching.
Now, we should recognize that a significant number of law firms in the U.S. and U.K. are in geographic areas or practice areas that are experiencing minimal impact from the recession.  But it is a rare firm whose clients are not feeling the pain.  The more closely the firm can pattern its business development around the needs and sensitivities of the universe of available clients, the better they will do in any economy.

In every sport I have ever played, the key to success always involves keeping your eye on the ball.  It seems that every time one loses focus, bad things happen.  There are constant distractions in running a law firm but typically the ability to grow revenues has been easy enough that it allows for a pretty big error factor.  As the world becomes more difficult, that error factor decreases just as the number of distractions increases.
The point is that sometimes the best thing you can do is call timeout, take a deep breath and make sure everyone on the team is refocused on the same objectives.  Now is such a time.  Take a day or two, get your board or key partners together and come to consensus on your direction. I promise that the result will be well worth the effort.