It is a wise businessperson that asks… “If I invest X what will my return on investment (ROI) be?”
A good question… not so easy to answer.
There are many wrong ways for lawyers to calculate ROI.
The investment industry will calculate the ROI as: the return of an investment is divided by the cost of the investment; the result is a percentage. Some firms simply use multiples: for example, spend $1,000 and get a case for $10,000, and the return is 10 times the investment. Others use the comparison of hard dollar cost to hard dollar profit.
For most lawyers I know, the common expectation is the money spent vs. the money received in a specific time period, no matter how you calculate it. It’s dollars and cents and time is seldom a consideration.
However, landing a case (and the revenue it generates) is just the tip of the iceberg in an accurate ROI analysis. When it comes to legal business development… it’s just not so black and white.
As a lawyer, you need to consider the rate of return over the LIFE of an initiative. For example, you make a solid connection with someone you have lunch with, which costs you an hour of your time… and you pick up the tab for lunch. He now becomes a referral source, and over the years he sends you 5, 10, 20 cases.
The ROI on that investment is through the roof. Time well spent, wouldn’t you say? For lawyers the ROI analysis must be both qualitative as well as quantitative.
Your investment goal is simple: to grow your practice.
Yes… to grow your practice you need to land a case… and lots of them. You are extremely busy and your most prized commodity is your TIME: you need to spend it wisely.
When engaging in business development initiatives, you should be looking at the big picture and ask yourself… What do you need to do in order to build your practice on a solid foundation?
In my opinion it is essentially a five-fold process…
- Increase credibility: showcase your legal capabilities.
- Increase visibility: it’s about exposure and name recognition.
- Deliver exceptional client service: create raving fans.
- Build relationships with substance: not a collection of acquaintances.
- By the way, it goes without saying: legal excellence is mandatory.
The more people that know you, and more importantly know what you do and how well you do it, the BETTER: that is the cornerstone. It builds long-term value.
There are many initiatives that can get you there: working your referral sources, blogging, publishing articles and books, getting involved in trade associations as well as Bar associations, advertising and narrowing your focus, to name a few. So let’s take a look at three of these.
Black Pearl: Work your referral sources.
This is where I always have my clients start. These are the people that already know and trust you, at least to some degree. So the main objective here is to keep building TRUST… over and over again. I don’t think that I have ever heard a lawyer say they do a great job at staying in touch with all their referral sources. Are you able to say that? I suspect not. All it takes is a few phone calls and a lunch or drinks every week to work through your list. Yes… EVERY week. Develop this habit and I guarantee you will see results.
Working your referral sources is THE fastest way to landing business… believe me, it’s true. Try it!
Black Pearl: Narrow your focus and write about it.
When you are developing business… you can’t be all things to all people. Your message gets diluted. You can’t be all things to all clients: people won’t remember what you do. And simply remembering you are a lawyer is of no use, since there are over 6 million lawyers on this planet.
Narrow your focus to an industry, a narrow sub practice or a geographic region. OK, I can just hear it… “I can’t do that… I’ll lose cases!” My response? First of all, if you get an opportunity in an area other then where you are marketing… TAKE IT! Secondly, you need to market to what you WANT not what you HAVE.
The benefits are many. You can speak directly to your audience in their terminology… you become an insider, an expert and an authority. Your marketing and business development efforts will be more concentrated to a smaller group… the good old shotgun vs. rifle effect. Narrowing your focus works!
Black Pearl: Be where your clients are… trade associations and more.
Familiarity builds trust. There is no better way to do this than to work side by side with a colleague that has the potential to send you work. They get an opportunity to see first hand how you think and how you deliver. Getting involved in organizations will bring you business.
Repetition… repetition… repetition! It works! Be consistent over the years. Focused on one organization, instead of spreading your time amongst several. Working within an organization gives your potential referral sources the opportunity to see first hand how you deliver. Built substantive relationships, they will come to know and trust you, give them the confidence to refer work. That builds CREDIBILITY… that in turn creates raving fans.
Bottom Line: Look at the big picture to calculate ROI.
As you can see… simply calculating the investment vs. income in a particular time period couldn’t possibly tell the entire story. There are many layers to building your business development strategy, as you can see. No two lawyers are the same, and there are no cookie-cutter ROI applications for attorneys.
When you focus on credibility, visibility, exceptional client service and building relationships… the results are compounded. They build on one another to create long-term value that will attract and retain clients. Now THAT is a return on investment… what builds a law practice!