Sustainable Business Development Post-Recession

In a tough economic climate, all firms should be focusing on getting more work from existing clients and contacts. This means a strong and clear focus on the firm’s strengths, cross-selling and up-selling, referrals from satisfied clients, and introductions from allies. However, the first stage in a sustainable business development programme is to set the standards and to establish the vision – to ensure that the firm’s client base is developing in line with the business plan.

Setting the Standards

Solicitors are professional people, and they respond well to being treated as such. Imposing ‘targets’ to which they should aspire is unlikely to elicit a sustainable positive response. Setting ‘standards’ together with the team concerned, to which they all agree they will conform, generates engagement and means that underperformers cannot claim unfair treatment.

The approach should be one of ‘what gets measured gets better’. If we measure number of chargeable hours, this is what people will focus on. If we also focus attention on the other factors that really impact on the top and bottom lines – new client take-on; new instructions; referrals; realisation rates; billing; collections – then we will see commensurate improvements in these areas of the business development pipeline.

Establishing the Niche

Service professionals can develop a more prominent reputation, and usually charge rates accordingly, when they operate in a ‘niche’ area. Developing a niche takes time, but the rewards will be worthwhile. Therefore, all key fee earners should be asked to identify their own potential niche, clearly in line with the firm’s and the team’s reputation and strategic direction.

In this way, the key people throughout the firm develop a clear vision as to what they plan their client base will look like, and this can form the basis for a ‘gap analysis’, comparing the vision with the current situation – and identifying what resources and training are required to enable achievement of the vision.Sustainable Sources of BusinessClosing the gap between where the firm is, and where it wants to be, involves a systematic programme of training and development in five key areas:

. Repeat work from existing clients
. Introductions
. ‘Keep in Touch’ campaign
. Strategic Alliances
. Collateral

You will note that these areas all require a significant time investment, but relatively little financial investment up front (as compared with, say, advertising or PR).

This is a subject we are covering in greater depth in training course throughout the Spring.

Using Management Information for Performance Improvement

Setting the Standards

A key theme in our approach to performance management is to collaboratively set professional standards, together with each key group of fee-earners. Individuals must know what they are expected to achieve, and how their current performance compares to these objectives. This provides the basis for using management information to improve performance.

The crucial point here is that, if we have agreed upfront that the “standards” are reasonable, we cannot be accused of being unreasonable when we subsequently expect people to perform to them.

The Individual Pipeline

You need user-friendly, comprehensible management information that addresses all aspects of the individual’s Pipeline – i.e. not just chargeable hours, but aged reports for debtors, WIP and disbursements. You can also use charge-out rates and hours billed to establish realisation rates (as well as new client instructions, to which we will return).

From a financial management point of view, performance can then be identified which does not meet the agreed standards, and can be presented in a report that can be used with fee-earners, team leaders, heads of department, and management staff. Therefore, it is possible to use exception reporting to boost individual and overall performance.

Performance improvement is not a simple task, but by using the Pipeline approach as the basis for analysis, processes can be designed that will identify what the exceptions are; where (i.e. in which department/team) they occur; why they have not been dealt with; who is responsible for dealing with them; and when and how they are going to be eliminated.

Improvement Across the Firm

For the firm overall, there should be user-friendly reports created on a daily, weekly or monthly basis. Reports should also contain forecasts for performance this month, in the next quarter, and the year’s performance. When it comes to improving the cash position, emphasis should be placed on WIP – it should be fairly straightforward to forecast billings on the basis of (accurate) WIP figures.

Exception reporting and billing overdue WIP turns WIP into debts, which are more visible and can be acted upon – by the accounts department, by the client, and ultimately by debt recovery.

What Gets Measured Gets Better

Whether billing and collection is carried out by the fee earner or by a credit controller is a decision for the firm’s management, but in either case they must be suitably trained to perform the task efficiently and effectively. If this is a fee earner’s task, then they should be measured upon it.