The bounce-back is over
Although the majority of firms surveyed in 2011 felt they were better than average at developing new business, the lack of growth in pricing and improvements in recovery rate shows less cause for optimism than last year’s survey. More firms are reporting greater downward pressure on prices and more are decreasing prices in order to compete.

Figure 1: CHANGES IN PRICING FOR THE SAME SERVICES

Marketing is becoming more sophisticated
Indications are that solicitors are using a wider range of pricing models and more marketing methods. While there is no clear pattern revealing what works best, increasing numbers of firms are moving marketing decision-making into the hands of specialist individuals reflecting a more commercial approach.

Reliance on rainmakers at the expense of marketing culture
Despite the perceived importance of business development for all legal professional roles, at the majority of legal firms less than 50% of employees carry out these activities. These results suggest that firms are relying on ‘rainmakers’ and not encouraging a culture of business development. Whilst leadership commitment is important, this approach will be unsustainable in the long-term, particularly for smaller firms.

Figure 2: WHAT PERCENTAGE OF PEOPLE AT YOUR FIRM ACTIVELY CARRY OUT BUSINESS DEVELOPMENT

The strong are getting stronger and the weak, weaker
It looks like some firms are doing well despite the economic indicators and are still pushing up prices and increasing client numbers. However, others are seeing increasing falls in recovery rates, prices and client numbers.

Recovery rates take a battering
There number of firms seeing recovery rates fall has trebled, whilst those seeing recovery rates rising has halved. This suggests that any confidence that the sector had ridden out the worst of the recession may have been misplaced. Rather, solicitors are seeing a time lag in the impact of the recession on their clients as the realisation hits that a large proportion cannot pay.

Figure 3: DESCRIBE YOUR RECOVERY RATES COMPARED TO LAST YEAR

More than half of firms see ABS as a ‘threat’
Alternative Business Structures are seen as a threat by more than half of respondents. More surprisingly, a quarter see the impending change under the Legal Services Act as an opportunity. The contrast in responses suggests a division between those firms shaping up for a new regime and those taking on a King Canute approach.

Figure 4: DO YOU CONSIDER ALTERNATIVE BUSINESS STRUCTURES A THREAT TO YOUR BUSINESS

Jump in importance of selling for new recruits
72% of firms believe that the ability to generate new clients is now a consideration for all legal professional roles. This is an enormous jump from the 42% reported last year. Furthermore, 77% of respondents believe that the ability to sell is extremely important for career progression, suggesting the new competitive pressures are being passed directly to all staff. However, our survey does not show a commensurate increase in business development and sales training.

Figure 5: THE ABILITY TO GENERATE NEW CLIENTS IS A CONSIDERATION WHEN RECRUITING FOR ALL LEGAL PROFESSIONAL ROLES

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We are delighted to announce that, according to the 2011 Thompson Dunn customer survey, 100% of our clients would recommend our services and that our average satisfaction score for service overall has increased to 8.5 out of 10, exceeding our previous benchmark of 8 out of 10.

So what do Thompson Dunn actually do?

Thompson Dunn is perceived to add value to our clients by supporting personal, career and leadership development and helping to identify and reflect on strengths and weaknesses.

“Giving us an objective perspective on future talent”. SVP HR at Iron Mountain

Our clients described how our holistic approach adds value to both individuals and organisations. Thompson Dunn contributes to the bottom line by assessing, developing and benchmarking the organisational culture and talent pool. We also provide a ‘sounding board’ and source of different insights and perspectives to individuals, supporting them to accommodate change.

“In general they give people an understanding of who they are, why they behave in a particular situation and how they move forward from there”. Integration Program Manager at DHL Express, France

What do our clients think of us?

In general, the survey highlighted that we have an impressive list of clients who are pleased with the work that we do and want to build on our existing relationship as they continue to work with us. Thompson Dunn are respected for our “professional”, “honest” and “genuine” approach and it is clear that we are regarded as a trusted advisor to many of our clients.

“Relationship based, integrity and consistent approach to people”. Founder and Director at CBS Logistics

Other thoughts related to our skills and included; people who care, personality, supported, personable, caring, business like, personal relationship, effervescent and warm and fluffy. Whilst the remaining phrases were profession based, such as coaches, mentors, development assessment, psychologists, build good relationships and recruitment assessment.

A clear message from the survey was that, whilst our clients understand our ability to provide a business return on their investment, we do not deliver clear messages about how we can do so. This is something that we aim to address.

How do our clients feel following an assessment or coaching session?

The top five answers were self-understood, well understood, energised, very positive and challenged positively.

“Very positive. I always feel I’ve been given some kind of focus and new direction”. President International Brands at James Perse

Other phrases to describe how our clients feel were; supported, helped, good, positive, clearer, very comfortable, cared about, motivated, stronger, cathartic, liberated, focused, powerful, confident, encouraged, rewarded, chastised, exhausted, inspired, able to have come up with my own answers, confirmed and satisfied.

“Batteries recharged and defective ones replaced”. Integration Program Manager at DHL Express, France

What are the 5 most important people related challenges currently faced by organisations?

1. Recruiting and retaining the right people.

2. Adapting and remaining effective in a rapidly changing environment.

3. Sustaining motivation, commitment & performance.

4. Multicultural/national post merger issues.

5. Communication.

Other challenges faced by our clients include awareness, development and commercialisation of organisational culture. Talent management, succession planning and development of senior management leadership skills are also important considerations.

What are the three biggest mistakes people make when buying consultancy people services?

1. Not agreeing clear goals and objectives. The client has to be the initiator and own the outcome and the contracting process must be thorough and robust. Make sure you understand the time and resources required to support the intervention and hold regular management reviews.

2. Not ensuring you get the right individual consultants and firm to work with. Explore the options in the marketplace to ensure that you select the best consultants for the job. Provide sufficient information for the approach adopted to be relevant to your business plans and congruent with your culture.

3. Focusing on cost not value and not ensuring fee structure is clear upfront. Don’t accept a service that doesn’t meet your needs. Make sure you are clear about the extent of the intervention and what you will get out of it at the end to avoid scope creep.

We would like to thank our clients for their valuable insights, with special thanks to Martin Lyle who administered the survey on Thompson Dunn’s behalf.

By Charlotte Conrad

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Reforms under the Legal Services Act, dubbed “Tesco Law” will make the UK legal market one of the most deregulated in the world and have been described as the legal equivalent of the City of London’s “Big Bang” in 1986.

However, the National Solicitor Selling Survey (NSSS), 2010 revealed that law firms were in denial about the necessity to modify their approach to business development, with the majority of firms (54%) rating their ability to develop new business as worse than average.

The Legal Services Act has been seen as a force for change on the high street. Small firms have braced themselves for the shake-up, which they fear could lead to intense competition from aggressive new entrants into the legal sector who have deep pockets and access to equity markets.

More than a third of mid-market law firms have changed their business strategies in the last year *1. Nevertheless, the 100 biggest firms did not regard the forthcoming Legal Services Act as a “high risk” to profitability and only Irwin Mitchell and Pannone publicly declared that they would seek fresh capital *2.

However, with the Legal Services Act coming into force in a few months time, attitudes are changing. Recent research found that about half of UK law firms have already lost or expect to lose work to non legal competitors, that 9% of law firms were interested in bringing in outside investors and that a further 47% said they would consider doing so after October’s reforms *3.

According to research by Sweet and Maxwell, the UK’s largest law firms are starting to acknowledge that liberalizing the legal market could hit their profitability. Some practices are concerned that new capital in the sector will increase competition for commercial work with 13% of finance directors at the top 100 firms now regarding the act as a “high risk” to profitability.

Is your firm getting better at developing new business?

As a consequence of concerns about increased competition, major law firms are changing their approach to business development. In contrast to 2010, the majority of firms (53%) surveyed in 2011 felt they were better than average at developing new business, with 8% rating their ability as excellent and just 3% rating their ability as poor.

How important is the ability to sell for your career?

This indication that legal firms are getting better at developing new business is also supported by the finding that the ability to generate new clients is now a consideration when recruiting for all legal professional roles at 72% of firms (and at 99% of firms when recruiting partners). This is a huge increase from 42% in 2010.

Furthermore, 77% of respondents felt the ability to sell was extremely important for career progression with no respondents feeling it wasn’t important at all. Senior management appear to encourage all staff to generate new business more regularly in 2011, with 82% doing so at least monthly compared to 77% in 2010. The percentage of firms that never encourage their staff to generate new business has also reduced from 12% in 2010 to 4% in 2011.

Who is responsible for developing new business at your firm?

NSSS survey also suggests that legal firms place even less responsibility on all employees to carry out business development than last year. At the majority (58%) of legal firms less than 50% of employees carry out business development activities. This has increased from 52% of firms in 2010. At 23% of firms, less than 10% of employees are involved in business development and only 11% of firms expect over 90% of employees carry out business development activities.

This correlates with our finding that the burden of responsibility for the practical implementation of business development appears to have increased for the Managing Partner (from 23% to 34%) and Marketing Director or Business Development Director (from 21% to 34%). On the other hand, the responsibility appears to have reduced for top level committees (to 8% in 2011 from 23% in 2010), with no-one having principle responsibility at 3% of firms.

These results suggest that firms are relying on ‘rainmakers’ and not encouraging a culture of business development. Whilst leadership commitment is important, this approach will be unsustainable in the long-term, particularly for smaller firms.

Since the collapse of Halliwells, banks have been unwilling to lend to law firms because there are few assets to lend against. A firm’s value is in its staff and firm wide strategies for engaging employees at all levels of the firm to act as organisational advocates are vital.

How to motivate your staff

According to our survey, the most effective mechanism for motivating staff to generate new clients is financial bonuses, with 38% of the respondents that use this method rating it effective or highly effective.

Together with ‘promise of salary increases’ in fourth place (31%), these results suggest that the current economic climate is encouraging short term thinking. ‘Coaching’ (26%) and skills development (34%) are rated as the second and third most effective ways to motivate staff.

It would be interesting to explore how firms measure the skills and development requirements of their lawyers. Whilst selling skills and legal expertise can be quantifiably measured, understanding “softer skills” such as entrepreneurialism, creativity and emotional intelligence can be much more complicated.

Performance appraisals can help to set guidelines but mentoring and coaching will ensure that employees follow a constructive step-by-step plan to achieve their goals. Although many firms arrange mentoring relationships for junior lawyers, this support is not always provided to more senior colleagues.

Senior partners must take a holistic view of the organizational culture and ensure that the continuous development of leadership and selling skills is a priority throughout the firm. This is particularly relevant to individuals identified as key to the leadership pipeline.

The NSSS has also identified that many managing partners and directors are under an unsustainable amount of pressure to perform. It is vital that these individuals are provided with support and a confidential, supportive and objective ‘sounding board’ to explore the challenges they are facing.

Why is coaching important?

As the service offered by legal firms to their clients is about much more than providing a tangible product, legal professionals at all levels must continue to develop authentic relationships with their clients and establish themselves as trusted advisors. To become part of your client’s business solutions, you must try understand their needs by also learning about their clients. However, the first step is to understand yourself and your value proposition.

Collaborative approaches such as coaching enhance skills for solution selling, rather than order taking. They develop self-awareness and understanding of subtle clues about human behaviour, such as key buying signals from clients and how to respond.

Coaching also enables legal professionals to combine their logical ‘left-brained’ abilities with ‘right-brained’ skills such as vision, intuition, feelings and creativity. Finally, by giving feedback on skills and progress, coaching builds confidence in seeking creative solutions for clients and developing and sustaining key relationships.

Although these ‘soft skills’ are not developed in law schools, in a competitive environment of intellectual and legal excellence, it is these abilities that will set a lawyer apart from his or her competitors.

Conclusion

In a rapidly changing market, which is still recovering from the financial crisis, traditional sources of work are drying up. Developments such as alternative fee arrangements, globalisation, the growth of technology and liberalisation also mean that the legal market cannot grow as it used to. This is evidenced by the steady but unremarkable financial results recently published by the Magic Circle Firms.

Ultimately, lawyering is becoming more of a business than a profession. What are you doing now to produce the next generation of high fee earners and business generators?

By Charlotte Conrad

Research carried out in collaboration with Andy Szebeni, Leigh Caldwell and Paul Collins.

References and further reading

*1 Mid-market firms review strategy ahead of alternative business structures, Law Society Gazette, July 13 2011

*2 Pressure on fees from clients the biggest concern for commercial law firms, Law Society Gazette, July 6 2011

*3 Law firms expect lost work under ‘Tesco law’, Financial Times, April 14 2011

Read more about coaching in the legal sector

Read more about The National Solicitor Selling Survey, 2010

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The article below was featured in a FT article in the Executive Appointments section on the 23rd June 2011. For the full article click here.

“I don’t like my boss; I don’t rate him and don’t think he does a good job. I suspect the feeling is shared by colleagues but I don’t really know. I’m finding the situation demotivating, but I realise this could affect my future career. How can I get round my negative feelings? How can I deal with it?”

Charlotte Conrad, a consultant psychologist at business psychology consultancy, Thompson Dunn, says:

Most people have this problem at some stage in their careers. While it can be stressful, figuring out a way to get on with your boss in a way that helps you both can actually facilitate career development (and is a common question during job interviews).

Is it possible for you to take on some of the jobs you feel he doesn’t do well? It could be a great opportunity to step in and manage upwards. Be proactive. What can you do to improve the situation? Look for common ground to build the relationship.

How you view the situation may be different to the perceptions of others. Do you know anyone outside your immediate situation who can help you to remove the emotion and provide objective support? Obviously criticising your boss isn’t the best career move, so it should be someone that you can talk to confidentially without being perceived as a gossip. Somebody that knows your boss would be ideal – a colleague you respect or, if you have one, a mentor.

Consider talking to your boss. Take a factual example of a time you think you haven’t worked well together. Listen and try to see the situation from his point of view. Put yourself in his shoes and think about what makes him tick. Do you understand his priorities and motivations? What does he see as your key objectives? Is your communication style similar to his or do you need to adapt it to achieve the best outcome?

If it’s really getting to you, leave the firm or consider a transfer to another team.

By Charlotte Conrad

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The Thompson Dunn approach is ‘whole-brained’, client-centered coaching, including scientific models, coaching methods, experience and intuition.

We use assessments to provide a baseline and subsequently combine them with a creative process designed to specifically fit the individual’s needs.

The assessment process provides the following:

1. Data to draw inferences in collaboration with the client about development needs ‘in the here and now’, and potentially in the future.

2.  An opportunity to check out self-perceptions and awareness, and see how well the clients know themselves.

3. Self-report information may often be inaccurate; the assessment process allows Thompson Dunn to explore these inaccuracies together with the client.

The test results form a basis for dialogue helping us to set priorities for coaching and establish what the client wants to change.  The client is asked to prioritise what they would wish to change and set targets based on their stated needs.  In this way the change process becomes collaborative.

There may be disagreement about the client’s needs based on points raised during the assessment.  The coach will act as a ‘mirror’ to facilitate greater self-awareness.  This mirror or sounding board provides the basis for a trusting relationship, where the coach can challenge assumptions or defensive patterns. These defensive patterns may now be anachronistic (i.e. past their ‘sell-by-date’ for the client).

Supervision and boundaries

All Thompson Dunn psychologists have regular supervision in order to keep the coaching safe and ethical. Self-awareness and the capacity to reflect with another is critical for maintaining the boundary between client and coach.  The danger in coaching is for the coach to put his or her own ‘stuff’ (i.e. judgments and projections) into the client relationship.

Another important issue is ‘don’t rescue’ exemplified by the Karpman Drama Triangle, in which there is the danger of coach and client adopting one of three roles – victim, rescuer, or persecutor.  The two individuals may move around the triangle so, for instance, the coach may become the persecutor or even the victim.  If the coach tries to rescue the client, the relationship may also become co-dependent and the rescuer can keep the victim dependent on them by playing to their vulnerability.

Having done our assessments, what choices do we make in terms of coaching methods?

Thompson Dunn uses a collaborative strategy with clients and has an eclectic style, based initially on the clients needs in the moment. For instance, a psychodynamic (Freud, Jung et al.) approach might be more relevant for senior managers who require a more long-term look at deeper levels of change and trust.  This allows the client to ‘let go’ of old assumptions and defence mechanisms, which are often held unconsciously and need to be remembered, repeated and worked through.

A senior manager, especially CEOs, HR Directors or other key decision-makers doing this work adds value to the whole organization by developing their skills and awareness of what aspects of themselves they put into the workplace.

Skills and knowledge

In addition to knowledge of key theoretical frameworks, Thompson Dunn coaches have appropriate levels of skill and knowledge in the areas below:

Skills

• Active listening
• Building rapport
• Asking questions (open, closed, probing)
• Summarising and reflecting back
• Ability to show empathy
• Ability to assist in developing goals
• Capacity to review progress
• Willingness and ability to challenge
• Capacity for effective support
• Ability to provide insightful feedback
• Ability to understand and work with complexity
• Capacity to use ‘self’ appropriately in helping clients
• Awareness of when to refer.

Knowledge

• Coaching theory
• Leadership development
• How adults learn
• Organisational awareness
• Assessment tools and techniques
• Contracting

Personal attributes

• Self-awareness
• Ethical practice
• Personal credibility
• Integrity
• Capacity to create a safe environment
• Willingness to continue personal development, e.g. coaching supervision

By Charlotte Conrad

Read more about coaching methodologies

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In coaching, the Cognitive Behavioural Therapy (CBT) approach provides useful frameworks and techniques to help clients understand how their thinking patterns and feelings impact on performance.

CBT evolved from Kelly’s (1955) Personal Construct Theory, which moved away from the notion of the ‘therapist’ as the expert and towards empowerment of the client.  Coaching using the CBT approach is collaborative and encourages the client to draw conclusions and work out their own solutions. The coach facilitates this through skilful questioning to raise the client’s awareness of their thinking.

CBT is based on the idea that we are what we think. Each individual filters and processes information based on their beliefs, personality and experiences.  It helps clients to understand how some of these filters can create negative reactions to situations or people and impact the way they interpret events.  CBT enables the client to uncover underlying reasons for the unhelpful patterns and change them to a more positive approach.

Although many of the underlying beliefs will have been generated during childhood, CBT focuses on the issues they are creating in the present. It is problem-focused and goal-oriented, which means that the techniques seems relevant, practical and logical to clients.  There are 7 key steps to using this approach:

1.    Gather data and develop an understanding of the problem

2.    Identify faulty thinking patterns

3.    Select thoughts and beliefs to change

4.    Generate motivation for change

5.    Modify thoughts and beliefs and explore new ways of thinking

6.    Strengthen the new outlook

7.    Reinforce and sustain the new thinking

CBT is popular because the techniques are clear and structured and research shows they can work.  Initially, the CBT approach can seem simplistic, mechanistic and time limited. However, when used effectively, it can lead to deeper personal awareness and significant personal change.

Gestalt

Gestalt Psychology (GP) is different from objective and rational techniques, such as CBT.  It was born out of the philosophical school of phenomenology, whose central ideas was to describe rather than explain phenomena.

The picture below illustrates the Gestalt idea that our perception of an image is not an objective fact because we isolate the figure according to our focus of attention. For instance, we can either see two faces or a vase, but not both at the same time.

In GP, the need for people to give meaning to their perceptions, their experience and their existence is viewed as the central activity of human existence.  It is concerned with how such human needs arise, how they are frustrated and how they are satisfied.

Fritz Perls, commonly considered to be the founding father of Gestalt therapy (GT) believed most adults are so adept at deflecting their attention away from the intensity of the present experience that they need to re-learn how to be aware.

Awareness can be defined as a deliberate consciousness about what is happening (physical sensations, feelings, imagination) to a person and what is happening in the environment that they experiencing in the present.

The goal of the Gestalt approach to coaching is a full and complete authentic meeting between two people.  The coach uses him or herself actively and authentically in the encounter, not as a passive, objective onlooker seeking to diagnose.  They will make statements such as “ I notice…” or “I am aware of”.

The coach’s questions are not concerned with why the client is aware of their feelings, it is the responsibility of the client to work this through.  The coach is more concerned with raising the client’s awareness of their internal state and helping them examine how they relate to and deal with their issue.

Perls believed that awareness comes from answering four fundamental questions:
What are you doing?

What do you feel right now?

What are you trying to avoid at this moment?

What do you want?

The coach will also facilitate the removal of blockages and defence mechanisms that prevent the client from gaining a full and complete awareness of their situation.  For instance, a client may become desensitised and will avoid experiencing something by deadening their senses to things either external or internal to themselves.

The Psychodynamic Approach

The term psychodynamic refers to the way in which the psyche (our thoughts, feelings and spirit) is seen as active rather than passive. Central to the view of Freud was that we rarely deal directly with external reality in isolation, but instead with our own internal representations of it, or different aspects of ourselves.  The phrase “I don’t feel myself today” suggests that there is a ‘self’ that one normally feels and another version that one is currently experiencing.

The different aspects of our personality that Freud referred to are the Id, Ego and Superego. These internal aspects of our personality are formed during our childhood development and are counterparts of the external relationships that we form, principally with mother and father figures.

Id, Ego and Superego
The Id operates on the Pleasure Principle, which is the notion that every wishful impulse should be satisfied immediately in order to reduce tension and feel good, regardless of the consequences.

The Ego operates according to the Reality Principle, working out realistic ways of satisfying the Id’s demands, often compromising or postponing satisfaction.

The Superego operates on the Morality Principle, which pushes us to do what is ‘right’ or what will avoid shame and guilt.

It is possible to see how these internal structures can be in conflict with each other, constantly taking up energy as they try to dominate the personality.  Whist the Id and Supergo operate in the unconscious mind, the anxiety is felt in the conscious mind.

In order to deal with this anxiety, the Ego develops unconscious defence mechanisms, which help by forming an unconscious compromise. The coach does not try to observe and identify every defence mechanism the client uses as some defence mechanisms, when used appropriately, can be helpful.

When they hinder development and learning or cause problems to the client, it may be relevant to explore within the coaching contract. For instance, the client may be in denial and argue against an anxiety-provoking stimulus by stating that it doesn’t exist.

The coach can help the client to become aware of their defence mechanisms and guide them appropriately to evaluate how they are being used, their usefulness or otherwise.

By Charlotte Conrad

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During the summer, legal professionals across England and Wales were invited to take part in a national survey to gauge attitudes and activities of sales and marketing in their sector. The Legal Services Act, Clementi and Jackson Reports and increasing competition for legal services have put considerable pressure on solicitor firms to adapt.

Arguably this is the most disruptive time in a generation for solicitors and it is timely to take a snapshot of how (and if) they are reacting, what changes they are making to their operations and their opinions and feelings about these changes.

Organisational culture of law firms

Crucially, less than 50% of firms rated their ability to develop new business as better than average. Our results showed that, whilst 38% rated their business development as above average and 8 per cent rated it as excellent, 40% believed it to be average, 10% thought it was below average and 4% rated is as poor.

Compared to similar firms, how good is your firm at generating new business?

Senior partners appear to appreciate the importance of promoting business development, with 88% responding that senior partners encourage all staff in this respect at least quarterly (although conversely this does mean that 12% never issue this encouragement).

How often do senior management encourage all staff to generate new business?

However, in the majority of firms, less than half of all employees carry out business development activities.  In 20% of firms surveyed, fewer than 10% of employees do so and the number of firms where 90 – 100% of employees carry out business development is just 11%.

What percentage of people in your firm actively carry out business development activities?

Furthermore, recruiting legal professionals who are committed to promoting and developing the business does not seem to be a priority for many firms.  Whilst the ability to generate new clients is a consideration for all roles at 42% of firms, for 49% it is only a consideration for some roles and at 9% of firms it is not a consideration at all.

Is the ability to generate new clients a consideration when recruiting for legal roles?

People as an asset

There is a great deal of evidence that, in an increasingly knowledge-based economy, the contribution of people is the largest driver of organisational performance. In fact, “people are our most important asset” is an increasingly common assertion.  However, as the survey suggests, the implications of this idea are not always thought through.

Although senior partners appear to encourage employees to carry out business development, the majority of law firms have not developed a culture that encourages employees at all levels of the firm to identify with organisational goals and take responsibility for developing the business.

These results support previous research * that found that just under a third of employees are actively engaged with their work. More recently (29th August 2010) the HR review reported that 37% of employees in the legal sector do not believe either ‘most’ or ‘any’ of what their employers tell them about business performance.

A further 26% admitted to trusting only ‘parts’ of what their employer tells them and only one in ten stated that they ‘totally trust’ their employer.  Consequently, firms are wasting a simple and highly cost-effective approach to promoting their practice and impacting the bottom line.

As legal firms do not provide a tangible product, they are selling their brand, reputation, knowledge and their people. Consequently, they must establish themselves as trusted advisors by developing authentic relationships with their clients. This involves promoting their services in a professional way by demonstrating their ability to understand and empathise with the issues that may affect their clients’ livelihoods and deliver intelligent and appropriate solutions.

Research has shown that people who like their job and the firm they work for become advocates for it. A 2006 report by the Chartered Institute of Personnel Development found that half of respondents would encourage friends and family to do business with their organisation and just over half would recommend it as a place to work, with only 19% prepared to do so without being asked.

Praise

So what are firms currently doing to motivate their staff to generate new business? Praise by senior staff was the most common method cited, with 47% rating it as effective or highly effective, compared to just 14% rating it ineffective or completely ineffective and 12% admitting it was not used.

Coaching and mentoring

This was closely followed by coaching and mentoring with 39% rating it as effective or highly effective. This high level reflects the legal sector’s adoption of coaching as it becomes an increasingly popular tool for supporting personal development across all sectors.

The quality of coaching and the results it delivers depends on choosing appropriate coaches, managing relationships and evaluating success. Firms must understand how to select appropriately qualified coaches and match them to the organisational culture and the needs of the individual. Further research into the provenance of those staff undertaking coaching and those receiving training for this skill would be valuable.

Mentoring relationships work best when they move beyond the directive approach of a senior colleague telling it how it is, to one where both can learn from each other. This requires the mentor to be open to doing things in a more collaborative way.

In particular, younger employees have specific expectations of their employers and will want to be involved in two-way conversations on business performance. They believe that business is about using their talents, not serving time, and expect to be engaged in their work. Enthusiastic and open to new ideas, they want to bring change to firms.

Rewards

Bonuses are not as prevalent in the legal sector, as they may be in other more traditionally commercial environments. However, 28% of respondents rated bonuses as effective or highly effective, with just 11% rating them ineffective or completely ineffective.

Commission on sales was rated effective or highly effective by just 15% of respondents, with almost twice as many considering it highly ineffective. Consequently, it showed the lowest weighted score of all the mechanisms.

It is worth noting that 60% of respondents did not use it as a method of motivation (making it the least used of our options) and this reduces the statistical significance of this specific finding. Commission is a powerful and successful motivator in many sales environments so these findings could highlight issues with application in specific firms.

The use of bonuses and commissions, when carefully designed to align with a firm’s culture and needs, can help to create and sustain high performing workplaces. To be effective, they need to operate as part of an integrated reward strategy closely linked to business objectives. Their success will depend on how effectively performance is defined, managed and ascribed, requiring effective communication and engagement on the part of both employees and managers.

A poorly-considered application of bonuses and financial rewards can actually damage team dynamics, expose the poorer performers and potentially de-motivate them. Well-established firms may be resistant to this change and these opposing factors may be storing up problems for many firms until the younger staff decide to strike out.

Promotion and equity

The least popular mechanism of motivation was the promise of promotion, with just 13 per cent rating it as effective or highly effective. Possibility of equity stake was rated effective or highly effective by just 18% of respondents, with 14% rating it ineffective or completely ineffective and 45% indicating that it was not used.

Engagement

These results are important because they demonstrate that firms are providing the conditions under which staff will work more effectively.  Rather than simply rewarding them in monetary terms, firms are supporting their employees through coaching and mentoring.  This is particularly important in uncertain economic times as concern over job security will often negatively impact individual and group performance levels, when firms need it most.

However, the low numbers of employees who are actively carrying out business development activities suggest that firms are not engaging their workforce to act as organisational advocates. So, how can you unlock the potential in your firm and engage your employees to develop new business?

In 2009, the Government published the report of the MacLeod Review of Employee Engagement. It concluded that leadership, line management, employee voice and integrity are key enablers of engagement.

Employees will also benefit from job autonomy, support and coaching, feedback, opportunities to learn and develop, task variety and responsibility.  Managing an engaged workforce requires ‘soft skills’ and the creation of a culture based on mutual respect between managers and employees.

Different groups of employees are influenced by different combinations of factors, so firms need to consider carefully what is most important to their own staff:

– How well do your employees understand the strategic direction of the company?

– How do they express their opinions on company matters?

– How are the vision and values of the business articulated?

– Are these values ‘modelled’ by the partners?

– Do employees feel they can contribute creatively to address organisational issues?

– Do the partners empower other employees?

In order to develop your business, firm wide strategies for sustaining high levels of engagement are vital in the current climate of change and uncertainty.  Effective engagement of staff needs to take into account company vision, values, recruitment processes, training and development, leadership and organisational culture.

Reference and Further Reading

* The Kingston Employee Engagement Consortium Project.

MacLeod, D and Clarke, N (2009) Engaging for success: enhancing performance through employee engagement. London: Department for Business, Innovation and Skills.

To read the full 27 page report contact Charlotte Conrad at charlotte.conrad@thompsondunn.com.

Read more about the Selling for Solicitors Survey.

Read more about coaching.

Read more about staff engagement.

Read more about organisational engagement projects.

Read more about the Legal Services Act.

Read more about disillusionment in the workplace.

By Charlotte Conrad

With special thanks to the Association of Women Solicitors for their generous support.

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A Workshop to Understand How Behaviour Shapes Financial Decisions

The Thompson Dunn workshop on the Thames could not have been timelier.  While we were chartering the murky waters of Decision Making and Finance, Chancellor George Osborne unveiled the 2010 Spending Review. Later, BBC Political Editor Nick Robinson described the financial statement as a “massive gamble economically and politically”.  So, could the Chancellor have benefited from joining us? What would his Decision Profile look like?  We have summarised our discussions during the day below.

Finance is not rational!

Finance is not as objective as you might think.  During the workshop, Pat revealed the profiles of three Finance Directors who you might expect to demonstrate a preference for logical, rational and critical thinking.  However, their Decision Profile Questionnaire results also indicated high levels of intuition.

Intuition enables the Finance Directors to make fast decisions, read between the lines and look for underlying meanings.  They go beyond what is in front of them and look for patterns, interconnections and associations that enable them to see the bigger picture.

Creative accounting

Budgets are often perceived in different ways by different people.  They may be seen as; a forecast, a promise, a basis for planning growth, an amount that can be spent, a way of planning funding, or even a hope.  Budgets are also typically fluid and negotiated with senior members of the organisation. Consequently, the finance team must be able to manipulate the information they are presenting and work collaboratively with other departments.

An example of this fluidity and potential for creative accounting is the American GAAP – Non-GAAP debate.  Historically, American firms have reported their business income and expense, assets and liabilities according to the Generally Accepted Accounting Principles (GAAP), so that a peer-to-peer comparison can be applied.  However, many companies now also report non-GAAP figures, which exclude certain expenses, stating that they give a clearer picture of the company.

Errors in decision-making

Finance is also subject to heuristics such as trial and error rules of thumb, mental shortcuts or ‘back-of ­the envelope’ mental calculations, which are used to simplify complex judgements or decisions and are imperfect.

For example, a recent study found that “market reactions to earnings surprises are incrementally more positive (or less negative) when earnings are announced on sunny days”. *  Do you think The Sunshine Effect could have influenced the publics’ response to the Chancellor’s announcement?

Another study of an American health club found that members who worked out on average just four times a month chose to pay a monthly membership fee of $85, even though the gym also offered a pay-as-you-go rate of $10 per visit. The author suggested that when people are polled about their beliefs as to what they are going to do, there is a radical refusal to accept reality.  **

The influence of personality on decision-making

The group exercises revealed various examples of rational thinking, gut instinct and emotional bias.  These cases illustrate that, whilst we may believe our actions are based on reason, in practice our ability to make complex financial decisions is limited. As well as rational considerations, decision-making is also driven by aspects of our personality. Finance professionals are beginning to recognise the importance of understanding the biases and errors to which we are all prone.  By doing so we can significantly improve the decisions we make.

How can you improve your decision-making?

1. Greater self-awareness – recognising your strengths and development points is key to improving decision-making.

2. Understand your thinking and decision-making processes. Thompson Dunn use The Decision Profile (DP), Myers Briggs (MBTI) and other instruments to provide insight into how people make decisions.

3. Coaching will enable you to explore different, more creative or challenging choices.

4. Find a mentor to act as a sounding board and a valuable and accessible source of experience.

5. Remember to use your whole brain; balance your logical ‘left-brain’ thinking with your more intuitive ‘right-brain’.  The key is to make knowing yet emotional decisions. Acknowledge that intuition, emotions and creativity in combination with rigorous thinking have a critical part to play in key decision-making.

Behavioural Economics

Understanding how the brain works
Behavioural economists start from an understanding of how the brain works: the underlying “lizard brain” and its conflict with the “human brain”, which sits on top and tries to control it.  They show how the brain’s basic desires, working on “automatic pilot”, guide about 90% of our behaviour.  They carry out experiments to understand why kind of assumptions and approximations people make while buying products or applying for a job and then show how you can apply that in your business.

Motivating employees
At the level of employing people, behavioural economics shows how important trust and social relationships are – how performance-related pay can be counterproductive if it makes people too focused on money – and how employees can be motivated to do the best work for their company while gaining job satisfaction.

Setting your prices
Behavioural economics also shows how companies can set their prices: influencing consumers to put a higher value on their products and using specially designed price structures to get people to pay a higher price.  Monthly payments, interest-free credit, prices ending in 9 and showing the high value products at the front of a shop as a decoy to get people to pay more for the mid-priced products at the back – all of these are techniques inspired by cognitive and behavioural economics.

Stockmarket bubbles
Finally, behavioural economics explains why there are stockmarket bubbles, why there are economic booms and recessions and how to regulate the financial industry to take the appropriate risks, that are in the interest of the economy, and prevent the high-stakes financial gambling that led to the credit crunch.

Thank-yous

A special thank you to Philip Wood who gallantly stepped in at the last minute to lead the discussions on Finance.

Thank-you to Leigh Caldwell, who contributed a welcome third dimension to the day sharing his expertise as a Behavioural Economist (and his laptop).

Thank you to all the finance experts who chaired a table.

Thank you to James Howe for taking such great photos of the day.

Thank you to Lance Moir for contributing his slides. We hope he feels better soon.

Finally, thank-you to all our guests who shared their valuable knowledge and experience.

References and Further Reading

Read more about the Decision Profile and Myers Briggs Questionnaires.

Read more about ‘whole-brained’ thinking.

Read more about Lance Moir.

Read more about Leigh Caldwell and behavioural economics.

Read about James Howe and see more photos of the day.

If you are interested in reading more about the topics covered at the workshop you may find these books useful:

Ariely, D (2008) Predictably Irrational, Harper Collins, London.

Hill, D (2009) Emotionomics: Leveraging Emotions for Business Success, Kogan Page, London.

Iyengar, S (2010) The Art of Choosing, Twelve, New York.

Payne, Bettman, & Johnson, (1993) The Adaptive Decision Maker, Cambridge University Press, Cambridge.

*Shon, John J. and Zhou, Ping (2006) “Are Earnings Surprises Interpreted More Optimistically on Sunny Days? Accounting Information and the Sunshine Effect”.

** Jeremy Tobacman (2009) “Hope, Greed and Fear: The Psychology behind the Financial Crisis”.

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Arguably this is the most disruptive time in a generation for solicitors and it is timely to take a snapshot of how (and if) they are reacting, what changes they are making to their operations and their opinions and feelings about these changes. Our findings are summarised below.

Lack of engagement

Firms are not engaging their employees to become actively involved in business development. Crucially, less than 50% of firms rated their ability to develop new business as better than average. Although senior management appear to appreciate the importance of promoting business development, recruiting legal professionals who are committed to developing the business is not a priority for many firms and less than half of employees are actively carrying out relevant activities. In order to stand out from the crowd, firms must develop a culture that encourages employees at all levels of the firm to engage with organisational goals and take responsibility for developing the business.

What percentage of people in your firm actively carry out business development activities?

Reputation overplayed

The reported reliance upon reputation may be the undoing of many firms in years to come. When asked why they thought clients bought legal services from their firm, solicitors are convinced that reputation is TWICE as important as price. A hint to this possible misperception exists when we see that solicitors believe that price is EQUALLY as important as reputation when people buy from their competitors. Of course they cannot both be true.

What are the top 3 factors why clients choose your firm/why clients use most law firms?

Avoiding modern marketing techniques

The reliance on traditional marketing methods by legal firms is starkly illustrated. Three forms of marketing are used by almost all firms; client referrals, third party introducers and networking. Electronic marketing was considered relatively successful sitting just behind these traditional methods, but only around half of respondents ever used either.

This reliance on old-school methods and cold shoulder to increasingly prevalent internet-based tactics leaves firms vulnerable. It also represents a big opportunity for any firms that choose to focus expertise, investment and energy on customers online or develop new routes to market.

The price of conservatism

Solicitors may lack sophistication in pricing their services. Consumers continue to become more sophisticated and many of the provisions of the Legal Services Act will increase pressure on pricing. Some services will become commoditised and all but the most complex services will become easier for clients to compare. Pricing models need to adapt accordingly.

Whilst many clients of magic and silver circle firms require complex services, high street firms with a broad range of service are most vulnerable in the squeeze. Our respondents represented the full range of firms from sole practitioners to firms with 500 partners. A common factor was a resistance to offering pricing models other than hourly rate (less than one third offered retainers as a pricing model) and a resistance to reducing prices.

What pricing structures does your firm regularly use with clients?

Solicitors kidding themselves?

A number of results seemed strangely contradictory, even flying in the face of evidence. Five times as many solicitors think their recovery rates have gone up as do the ones that think they have gone down. Over half the sample said they were winning more clients than last year compared to only 4% who said it was less, which suggests an inordinate optimism. All the anecdotal and much of the financial evidence does not yet bear witness to the legal sector having turned the corner at the time of the survey.

While it is possible that our respondents had a very difficult 2008/2009 and have seen a slight upturn in 2009/2010, several findings may hint at solicitors rejecting the facts. While law is a qualitative discipline, solicitors need to accurately gather and analyse the quantitative data if they are to compete effectively.

Compared to last year, how many new clients are you acquiring?

Seeking the source of growth

Innovation seems an anathema to solicitors and it is not obvious where growth in an ever-competitive market may be coming from. Only 17% of firms believed that revenue growth would come at all from new services. They appear to be relying on capitalising on market growth in some sectors or hoping for clients to defect from competitors.

On the face of it, firms appear to be positioning themselves wisely for increased competition from new entrants. The new entrants into legal services (such as the expected Tesco Law) are likely to be attracted to the higher volume activities such as will writing, conveyancing and divorces. Our survey showed only 7% believing growth would come from the category of “high volume work”.

However, looking deeper, well over a third said they believed growth would come from an increase in a high value work. This suggests the increased focus by more firms on this category will increase supply in the face of a static demand, which will result in renewed price pressure.

From where do you believe that revenue growth will come from?

Senior marketers bring growth focus

Whenever a specialist manager is responsible for business development in a law firm, the focus on sales and marketing inevitably rises. Nearly one third of the respondents to the survey were at partner-level and in their firms less than 3 days per person per year were invested in sales and marketing training. When a business development manager (BDM) answered the survey the equivalent number rose by 200%. In short, BDMs don’t just administer existing systems of sales and marketing, they make sure it is higher up the agenda in most aspects of the practice.

Conclusion

This initial survey provides an illuminating snapshot into the sales and marketing within English and Welsh solicitor firms. There is no doubt that within the surveyed firms there are clearly examples of forward-thinking and successful innovative structures and strategies. However, the overall picture is one of a sector struggling to catch up with 21st century sales and marketing practice and that is ill-equipped to deal with increasing levels of competition.

On the horizon are highly disruptive changes which will herald more aggressive operators that are likely to cannibalise much of the middle market’s core business revenues. Six years ago the Clementi Report * recognised the increasing demand for “one-stop shops” combining solicitors and accounts for such service as inheritance planning and debt advice in multi-disciplinary practices. Recent convulsions in no-win/no-fee, personal injury and claims management might be a portent of more ‘vulgar’ practices to come.

Some responses to the questionnaire and anecdotal experience illustrate how well smaller, more aggressive and generally younger solicitor firms will steal customers as well as the most dynamic staff from traditional firms who do not nurture their staff.

Larger firms are beginning to embrace modern marketing practices, investing more in skills and management support and more money in contemporary (often digital) sales channels. There is no reason why older, mid-market firms cannot follow their example. However, the dominance of committee structures, exclusion of external sales and marketing expertise and general rejection of commercial trends and employee engagement could be their undoing.

References and further reading

* Review of the Regulatory Framework for Legal Services in England and Wales, Sir David Clementi.

For a copy of the full 28 page report, please contact Charlotte at charlotte.conrad@thompsondunn.com

Read more about staff engagement.

The authors

Charlotte Conrad, Consultant Psychologist, Thompson Dunn.

Leigh Caldwell, Chief Executive, Inon.

Andy Szebeni, Managing Director, A&P

The survey was conducted online via a system provided by Paul Collins, Managing Director at Clarity Surveys.

With special thanks to the Association of Women Solicitors for their generous support.

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