The tragic events of September 11, 2001 hit legendary investor Warren Buffet hard. It is estimated that his holding company, Berkshire Hathaway, will incur approximately 3-5% of the insurance industry's loss from last month's catastrophe.
Still, he's on the hunt.
He’s looking for information on any company with strong management and an understandable business that wants to be acquired.
IBM Chairman Louis V. Gerstner is charging ahead too—he continues to increase his company’s advertising budget and grab market share from competitors.
Even Herb Kelleher's team at Southwest Airlines is stepping up its marketing efforts during what has become one of the most telling times in airline industry history.
What separates these leaders from the pack? These business veterans see the economic downturn as an opportunity—not a threat. Law firm leaders could learn from their example.
Among its many victims, the slowdown recently hit some prominent Silicon Valley firms. Their aggressive hiring and dependence on business from clients in the technology industry have left these firms with no choice but to reduce headcount through layoffs and “encouraged” sabbaticals. Now, many experts are calling for the downsizing floodgates to open. But, the floods won’t drown everyone.
For every tech-focused firm prone to the wild ebbs and flows of the technology cycle, there are countless firms that controlled their growth, built diversified practices and developed stable client bases. While these firms are certainly susceptible to economic gyrations, their worst fears are more about slowing growth than an absolute free-fall. Like Buffet and Gerstner, leaders of these firms should view the slowdown as an opportunity—not a threat.
Why be so optimistic when the economic forecasts are so gloomy?
Because, like great stock investments, the best and most lasting client relationships are not made during boom times—they’re made during difficult times. These are times when clients face their biggest challenges and when worried competitors are too busy slashing budgets and reducing headcount to notice. This is the time to distinguish yourself from your competitors by helping your clients to weather the storm.
Here are 10 tips for swimming against the tide during the economic slowdown and building a base for your future:
Tip#1: Embrace and profit from change. Instead of denying reality, recognize that the economic slowdown is just one of the many changes that are part of business and life. While your competitors are looking for ways to cut costs internally, sharpen your focus on your clients and the ways in which you can help them overcome the challenges caused by the slowdown. Be curious. Make learning about your client and new developments that will affect them part of your daily routine.
Tip#2: Train your team. While your competitors are restricting their training budgets, find ways to reduce costs in other areas so that you can increase yours. Focus on client development and relationship management skills—including win-win pricing and cross-selling strategies.
An economic slowdown coupled with the proliferation of multidisciplinary practices and the reduction in the use of outside counsel by Fortune 1000 legal departments, make the development of these legal marketing skills critical to the success of law firms and their individual attorneys. Today, it is assumed that every law firm has more than enough competence to handle a prospective client’s legal matters. What separates the winners from the losers are the intangibles that stem more from marketing muscle than legal intellect.
This means conducting meaningful interviews with prospective clients, drafting winning responses to RFPs, making successful client-focused presentations, structuring win-win pricing arrangements and demonstrating a true commitment to client service and relationship management. Success in today’s economy is about getting clients to see your firms’ attorneys as trusted partners who understand their businesses and who see beyond the issue at hand.
Tip#3: Become an expert at helping your clients navigate the slowdown. You’ve been writing articles and giving speeches, but are you paying attention to the ways in which your audiences’ needs have changed during the slowdown? If you’re not sure, call a few of your best clients and ask them how the economic slowdown is effecting them. Read the publications that they read. Not only will this help you develop solutions for these existing clients, it will also help you develop a new marketing message—one that you can begin to deliver through networking efforts and reputation building activities such as speeches, articles and seminars. Even the slightest adjustments in your message can have a dramatic impact on the way in which potential clients perceive you.
Tip#4: Be a master of alternative fee arrangements.During economic slowdowns, your clients are under increased pressure to reduce costs and still get quality results. As a result, take the time to thoroughly understand the various forms of alternative fee arrangements. Know when they make sense and when they don't. Make it your goal to fairly allocate risks and rewards so that you achieve a proper balance between client satisfaction and your own profitability. This ensures that both your firm and the client emerge from the engagement knowing that their respective best interests have been served. This is the key philosophy behind any lasting client relationship.
Tip#5: Find a way to get it done.When times are tight, the importance of your being the “go-to partner” and not the “can't-do lawyer” become magnified. During slowdowns, clients want creativity. They don't come to you so you can tell them what they can't do. They want to get it done and they want to know how. Instead of saying "we can't do that," ask more questions and clarify your clients' objectives. Then, do everything you can to find a legally sound way to achieve them. Make yourself invaluable during the slowdown and you’ll reap the rewards during the recovery.
Tip#6: Don’t reinvent the wheel. While your competitors are trying to squeeze every last nickel from low margin business, look for ways to group standardized legal opinions and boilerplate work product into an affordable package for your clients. Don’t wait for you clients to ask for this. Anticipate their needs and then make sure your clients and prospective clients know about these packaged services. They will appreciate your candor and repay you by giving you more challenging and profitable work when they and the economy recover.
Tip#7: Staff projects wisely. Again, don't wait for your client to tell you. Pay close attention to how tasks are divided between in-house staff and outside lawyers and, unless you've been told otherwise, always try to allocate the best possible resource at the lowest possible cost to the client. Consider outsourcing in areas such as temporary staffing and legal research during peak workload periods. Pass the savings on to your clients. Continue this practice when the economy recovers—staff for the valleys instead of the peaks. You will minimize the need for workforce reductions during the next slowdown because you did not over-hire during the expansion.
Tip#8: Take ownership of problems. During a slowdown, pressures are strong and tempers are short. As a result, it’s only natural to see an increase in the number of client concerns or complaints. Reverse this trend by heightening your sensitivity to your clients’ circumstances. In the face of a problem with a client, avoid placing blame. Assume responsibility and focus on solving it.
Tip#9: Be a part of your clients' business plans. If you've developed strong client relationships a slowdown is the best time to turn those relationships into valuable business. This means reviewing your clients' business plans and making them your own. It means knowing how your clients' organizations breathe. Dig into the financial forecasts, sales goals, competitive forces, industry trends and, applicable government regulations. Find ways to do more than just provide legal services. Find ways to help your clients solve their most difficult problems and achieve their most ambitious objectives.
Use your network to help them win new business. Chances are, you know someone who could use the products or services of your clients' organizations. Get creative and sharpen your focus during the downturn and the lucrative business opportunities will multiply during the recovery.
Tip#10: Apply the principle of “dollar cost averaging” to your media buys. If you’ve had money automatically deducted from your paycheck and invested into your retirement plan at regular intervals you know about dollar cost averaging. The beauty is that you will buy more shares when the price of your investment has declined, and fewer shares when the price has risen.
You can apply the same logic to your advertising and marketing investments. Since most firms cut their advertising and marketing support during downturns, media prices begin to soften and there is less noise in the marketplace. By staying the course or even increasing your spending during the downturn, you will get more advertising and marketing services per dollar and you will increase the chances that your message will be heard.
Jamie Turner, CEO of Turner Fernandez Turner put it best: “If you’re in a room with 20 people and they’re all talking, all you hear is noise. But if 19 stop talking, suddenly the one person who’s still talking can be heard loud and clear.”
Conclusion. You have a choice. You can be at the mercy of the market and let it decide your success as an investor and as a rainmaker. Or, you can empower yourself and your firm by developing valuable skill sets and taking steps to move against the tide so that you can prosper in good times as well as bad. It’s not easy bucking the trend. But, if you think of yourself as the rainmaking version of Warren Buffet and put on your buying hat during this slowdown, you will capitalize on what could be your best opportunity to seize new business from your competitors and solidify long-lasting relationships with your current clients.