On May 12, 2015, David Ackert of The Ackert Advisory presented on "Bridging the Gap between Business Development Training and ROI." The Ackert Advisory recently completed a market-wide survey on business development initiatives that yield ROI to law firms. This summary of their presentation was written by David Ackert and Gabriel Byberg.
In this era of price-sensitive clientele and underwhelming firm profits, law firms struggle for meaningful competitive advantage and increased market share.
Conventional strategies yield underwhelming results: it is unclear whether mega firms are better off as a result of the many mergers of recent years. Plus, expensive lateral hires often fail to import their full books of business, and cross-selling continues to be challenged by firm politics and uncollaborative cultures.
One of the relatively untapped revenue-generating frontiers is to harness the business development potential of younger lawyers whose appetite for client development is considerably sharper than that of their baby boomer colleagues. This is partially due to the fact that they did not spend the majority of their careers in the "boom years," when marketing was considered unseemly and the only skill a lawyer needed to succeed was lawyering.
By contrast, the generation X, Y and millennial lawyer is more entrepreneurial, more social and a little more worried about job security.
A sound argument can be made for law firms to provide effective business development training. A law-school education rarely includes any training in sales, marketing or networking skills. As a result, in order for most law firms to source and secure a sufficient number of new clients and matters in today’s business environment, the firms themselves must take on the responsibility for the instruction of these relationship-development attributes among their attorney ranks. To this end, business development training is an economic investment by law firms.
Many firms recognize this and implement a variety of business development training protocols including webinars, e-learning curricula, multi-tiered training programs and ongoing business development coaching. However, based on a recent market-wide survey, law firms apply little formal scrutiny to ensure such training yields meaningful results.
At the associate level, evaluating the effectiveness of business development training programs is particularly challenging given that associates typically do not originate many new matters. The most common approach taken by law firms is to capture anecdotal feedback from the associate-trainees themselves, as well as a general observation of business development activity through prospective client lunches, articles and presentations.
According to a 2013 white paper, coaching facilitated by professional marketing staff is the most common format, withmore than 71percent of firms reporting its use, yet it ranks dead last in yielding positive return on investment (ROI).
Though internal coaching may be the most cost-effective form of business development training for many firms to employ, the survey results suggest firms need to institute more processes and competencies for the investment into such coaching to yield dividends. For example, it is common for an in-house professional to provide coaching to an attorney on an as-needed basis without any processes in place to measure the efficacy of that coaching. Even a structured program typically is assessed based on arbitrary indicators such as whether or not the lawyers “liked it” or “found it helpful.”
Programs administered by outside parties, such as independent coaches, consultants, and trainers, were twice as likely to result in some sort of reported ROI. Obviously, it is in the outside party’s interest to demonstrate that the firm’s investment was justified, so outside consultants are more likely to establish benchmarks and/or follow-up mechanisms to measure ROI. While internally sourced programs can be more costly in terms of “soft costs,” like the man-hours required to implement them, there is less of an emphasis on a dollar-for-dollar return on investment.
Mentoring programs also rank relatively well in terms of ROI, but one must consider that, at most firms, politics make it difficult for a mentee to give overtly negative feedback to the senior partner to whom she is assigned. As one might expect, most of the reported ROI here is in the form of anecdotes rather than metrics.
On the surface, the struggle for law firms to demonstrate ROI from their expenditures on business development training programs might be equated with ineffective training, but that would be an unfair conclusion. The fact is thatbusiness development training for lawyers, under the best of circumstances, is a difficult undertaking. Not all trainees are amenable and it can be challenging to assign tangible metrics to an educational experience in the hopes of translating it into a profitable business case. Rather than solve for these problems, most firms either ignore the training opportunity or they administer various ad-hoc programs and resources with the hope that something sticks.
Firms that tend to use less quantifiable metrics are bound to find themselves at a loss for meaningful ROI. Specifically, broad use of anecdotal evidence can produce particularly circumspect results in the form of both over- and understated returns.
Without best practices for training and outcomes, law firms will continue to experience inefficient programs that yield questionable returns to the firm. Anecdotal feedback may sustain an initiative, but it will not justify a profitable business case.
The following set of best practices can be used to increase ROI on business development training:
1. Select willing participants: Firm-wide initiatives that implement training for all lawyers within a particular practice area, group or level will inevitably yield poor results. No attorney should be forced to learn how to develop business if it is not an area of genuine interest to her. Reserve training resources for those who will make good use of them.
2. Define ROI: When examining ROI, benefits must be compared to costs. Should it be determined that the benefits achieved are greater than the costs, a firm can assume a positive ROI. However, to ensure that the calculation of the costs truly reflects what the firm puts into the investment, considerations for lawyer time, opportunity costs and other “soft” costs that are not readily quantifiable need to be assessed. Similarly, benefits should be calculated based on the measurable short-term gains as well as the projected long-term advantages. For example, an associate trainee may only bring in one small matter over the course of a given training program, but her increased rainmaking potential will yield a far more meaningful gain to the firm in the years to come. The firm should weigh and prioritize each of these factors before initiating the training so that it can determine its criteria for ROI evaluation.
3. Define metrics: If the firm has a comprehensive system for assigning origination credit that includes prospecting, it should be easy to track thetraining’s effectiveness. Otherwise, establish measurable indicators rather than rely only on anecdotal or “feel good” evaluations. Indicators could include the capturing of such activities as launch new prospect relationships, write and publish and article or blog, receive an incoming referral or introduce a referral to a new contact.
4. Use technology to capture metrics and confirm trainee engagement: Whether metrics are tied to a customer relationship management system or built into a third-party e-learning system, any number of performance tracking tools can provide firms with meaningful data capture so that they do not have to rely solely on the trainees’ feedback.
If law firms invested the same level of energy in their business development training programs as they do in lateral hires, attempted mergers and client events, they would begin to maximize their greatest untapped asset: tomorrow's rainmaker. While these burgeoning originators may not provide the same kind of short-term revenue as traditional pursuits, they will play a meaningful role in a firm's sustainability, especially when senior partners retire. As firms evolve, they will move beyond arbitrary, unstructured training initiatives and begin to learn what the rest of the corporate landscape has known for generations: there is nothing more important than an effective sales force.
David Ackert is the President of Ackert Inc., a company that offers business development solutions to law firms globally. Widely recognized as a pioneer in the field, David is the founder of Practice Pipeline, an alternative to CRM, and Practice Boomers, an award-winning business development training program that integrates E-learning and peer-group coaching to generate consistently measurable ROI to law firms. David can be reached at firstname.lastname@example.org
Gabriel Byberg has worked with several economists in both academic and corporate settings on projects ranging from applied research in the field of renewable resource integration to the development of economic models depicting business-development behavior in service firms. He earned a BA in Economics from Pomona College with a specific emphasis in data modeling and econometric analysis. He can be reached at email@example.com