Breaking the Wall: Six Rules to Managing The Three Million Dollar Practice and Beyond
It is relatively rare to find a major business developer in a law firm who maintains a truly large practice. Certainly there are situations where a partner is the responsible attorney for a large institutional relationship that may involve $10 or $15 million in billings or where, by virtue of a relationship with senior management, an attorney may be the lynchpin for a total corporate relationship worth millions of dollars. But, typically, mega books of business are more the result of the way the firm’s compensation system allocates credit than actual client responsibility.
It seems that most law firm rainmakers seem to hit a wall when their billings hit a certain level, usually at about the three million mark. They have gotten to this level through hard work and paying extraordinary attention to the needs of their clients. To advance beyond this level, rainmakers find that they have to depend more greatly on other attorneys to maintain their client relationships – and that’s where it all falls apart.
There are, however, some lawyers who have broken through the wall and seem to be able to manage virtually a limitless number of relationships totally well into the eight figures. Indeed, we have a client who year in and year out maintains a billing base of almost $15 million. The clients may change but the total size of the portfolio continues to grow each year. What’s more, the average client pays less than $600,000 annually in fees.
A few years ago I set about learning how this attorney accomplishes what so few lawyers can do (for purposes of confidentiality I’ll call the attorney Joe Smith but I assure you that he is a real person). I talked to him and some of his partners and associates and came away with six rules that seem to work extraordinarily well for him.
Rule #1: The client must believe that Mr. Smith is an active part of every engagement
No client wants to feel like they are getting the second string. Yet, Mr. Smith can’t attend every meeting and be involved in every phone call. The answer is to have well trained lawyer who serves as the client liaison on a daily basis. The lawyer may be a non-equity partner or a senior associates who makes a point of dropping Mr. Smith’s name several times in every conversation – “Joe asked me to call and give you an update on the XYZ matter” or “I’m meeting with Joe on this issue later today and he asked me to give you an advanced briefing.” A primary task of every attorney working for Mr. Smith is to constantly put a specific spin on communications. That spin should make the client believe that the only reason they are talking to the associate is because Mr. Smith is too busy working on their stuff to be involved in the conversation. But a primary rule and a firing offense is to ever lie to the client about Mr. Smith’s involvement.
To make this work, two things must occur. First, the lawyers working with Mr. Smith must be willing to put aside their egos and work for Joe’s benefit. Joe Smith accomplishes this by making sure his people are well compensated and actually augmenting their firm paid bonus out of his own pocket based on the metric of client retention. Joe is also good about handing off billing responsibility for matters that are too small for him to take an interest in.
Second, Mr. Smith must really know what is going on with his clients. That’s accomplished by rule #2…
Rule #2: There is a mandatory attendance early every morning of everyone working on a Joe Smith matter.
Taken right out of the pages of the old LA Law TV show, every day begins by going around the table and talking about what was accomplished yesterday and what is going to be accomplished today. The focus is not on process. Instead they talk about accomplishments. Mr. Smith takes notes and frequently asks probing questions about why more has not been accomplished or about a matter that has not been mentioned. One associate describes it as being akin to hospital rounds for interns in a teaching hospital. Mr. Smith uses the sessions for enhancing the legal skills of the group by learning from one another, to publicly recognize extraordinary accomplishment and, upon occasion to humiliate unsatisfactory performance. But the primary purpose is to facilitate rule #3…
Rule #3: Mr. Smith talks to every client at least every week and much more often when a matter is highly active.
Joe Smith views his role as the conductor of an orchestra. He selects the music and the venue, helps market and publicize the performances and directs who plays what notes, when. But the conductor never actually plays any music himself. By the same token, Mr. Smith rarely does any actual legal work. His day is taken up in conversation with clients, advising attorneys working on his matters during dozens of short conversations during each day and calling or taking calls from clients. In fact, one of his two administrative assistances does virtually nothing but manage his phone traffic. Joe is not afraid to leave detailed voice mail messages but he seldom uses e-mail, even for clients who prefer it. He believes strongly that “they need to hear my voice.”
Joe is meticulous about keeping track of his time at quarter hour increments even for clients where he has a fixed fee or retainer relationship (which is most of his clients). His assistant records every call he is on and every person who comes into his office.
To create a purpose for Mr. Smith’s client communication calls, he has rule #4…
Rule 4: Every client must have some specific next expected action that will be happening within 7 to 10 days
Joe Smith believes that client relationships languish and clients are lost when the intensity of the relationship dwindles. One of the things that is communicated in the daily meeting is the next action step. It may be something that is due to the client or it may be something for which the client has responsibility. In some cases the action step may be pretty flimsy but it establishes a justification for Mr. Smith to make contact with the client. And, it never causes the client to wonder what is going on with their matter.
Of course, the reason for Mr. Smith investing so much time in phone contacts is to generate business that meets his rule #5.
Rule #5: Every matter Mr. Smith takes responsibility for must represent a significant financial investment for the client and receive CEO or Board of Directors level attention.
It is amazing to listen to a conversation between Mr. Smith and his client regarding engagement for a matter that does not achieve the standard for acceptance. It goes something like this:
“Thank you for thinking of us for this matter. I’m asking one of my partners, Tom Johnson to take responsibility for it. Tom has my complete confidence. I know that it might be your preference that I handle it but then I wouldn’t have the time to work on the especially important matters that you and my other clients have entrusted me with. But, if you are ever dissatisfied by any aspect of our performance or can’t get a hold of Tom, please call me immediately.”
Mr. Smith then sets up a meeting with the client and Tom. If the client is local, they meet in the client’s office. Tom usually attends to make the introduction but excuses himself after about 15 minutes. If the client is out-of-town, Tom will travel to meet with the client and Mr. Smith will attend by phone for the first few minutes. Unless the matter is really small, every engagement begins with a face-to-face meeting.
It is important to note that the partner, to whom Mr. Smith hands off the matter (it is almost always to a partner level attorney), receives billing and origination credit for the matter in the firm’s compensation system as well as any other small matters they can generate from the client. The reason Mr. Smith can hand off a matter for a large client with confidence is his constant stressing to his attorneys of rule #6…
Rule #6: We are offering one level of service – That level must be extraordinary – Clients will not detect a service difference based on the size of the matter
The constant drive of the firm is for greater client service, which typically involves responsiveness. The firm’s prompt return of phone calls is legendary. Secretaries are trained to say to clients, “I know Mr. Smith always wants to know when you call. Would you like me to interrupt the call he is on or may he call you as soon as he gets off the phone.” Every attorney’s business card has their home and mobile numbers. Most client meetings take place in the client’s office.
* * *
So those are my observations about one lawyer who has broken through the $3 million wall. I’m not sure that any one rule is more or less important than the others or that this prescription will work for any other attorney. The one thing I failed to mention which may contribute to “Mr. Smith’s” success is an incredible work ethic and a brutal travel schedule. But I guess working hard and being an excellent lawyer should go without mention