Originally published in Marketing the Law Firm newsletter in September 2017.

It’s that time of year again. Firm leadership is simultaneously focused on minding this year’s financial performance while looking ahead to gauge prospects for 2018. Initial budget planning is underway, alongside efforts to establish goals and objectives for the next 12 months. Among the common mandates for 2018 are the now-familiar refrains of “top-line growth,” “profitable growth,” and “innovation.” Firm objectives have shifted, yet approaches to annual planning show little signs of change.

Unfortunately, at most firms, the planning process has become more an exercise in checking the boxes and filling in the blanks than one in energizing action. Introducing a new approach to planning can help to spot untapped opportunities and revitalize stagnant business development efforts. To truly incite new thinking, engage new activities and motivate changes in behavior, consider a smarter, more savvy approach to business planning for 2018: one infused with data and focused not on what has been done before, but on what can be done in light of all available information.

1.       Ideal Client Profiling – Not All Opportunities are Created Equal

Even today, with all of the available financial software and tools, few firms routinely evaluate and assess their existing client base with an eye towards targeting the most viable, profitable, or growth-oriented opportunities. Silo’d departments, where finance and pricing tackle issues of realization, leverage and AFAs in isolation from business development efforts are, in part, to blame. Other challenges include poor data quality and not well-integrated technology systems. The result is that it is rare to enter the planning process with a solid, fact-based understanding of which types of work, clients, industry sectors, company sizes, etc. offer the firm the best chance at increasing revenue or profitability.

This single step alone – a comprehensive analysis of where and how the firm is generating revenue and profits – can serve to infuse a potent focus into the firm’s annual business planning. Though the analysis itself is often manual and resource-intensive, the outcome is well worth the investment. Often, the firm will uncover unanticipated opportunities (e.g., that portfolio of 1,200 patents handled last year were so well leveraged the profit margin was nearly double that of the firm’s average) as well as a few unpleasant surprises (e.g., securities litigation work for companies in the financial sector are boosting utilization but revenues and realization are declining). When defining the ideal client profiles, remember to consider not only financials, but also other benefits to the firm such as brand-building, expansion of existing client relationships (which has direct benefits) or accomplishment of a strategic objective.

Use this client analysis, in conjunction with partner input (see the next recommendation), to determine an ideal client profile (or profiles). These profiles will provide the framework and foundation for development of a) specific cross-selling approaches; b) clearly articulated value propositions; c) prospecting and targeting strategies for new business development; and d) priorities for next-level research, resource investment and budgeting throughout the year.

2.       Build Relationships, Not Just Analyses

Having the financial facts to support pursuit of specific clients and matter types is an excellent first step. A business case alone, however, may not win over a group of skeptical-by-nature lawyers. Equally important to the adoption of a vibrant, data-driven planning process is the engagement of the leaders and partners who will shape, own and execute on the plan.

Start by building a rapport with the internal stakeholders – the partners, practice group leaders and associated business support professionals who will be instrumental in the implementation steps. Conduct one-on-one or small group discussions to better understand their perceptions of opportunity, gather input into where they see gaps in their knowledge of clients or the market. Discuss success stories, help to isolate unique firm or individual strengths through examples and inquire about trends they see with their respective clients that may impact (positively or negatively) prospects for the coming year. Use this input to inform not only the plan itself but also the direction of external market analysis and supporting research into the trends that will determine 2018 prospects for specific clients, practice areas and the firm, overall.

3.       The External Element – Market Trends and Client Insights

Once armed with a keen understanding of the existing client base, as well as leader and partner perspectives on which topics, issues and trends are most relevant to them and their clients, it’s time to create a focused, targeted research plan to add external data and analyses to the mix. Draw on an array of resources to ensure a well-balanced, objective viewpoint (noting, of course, that findings from external sources may at times conflict with internal data or opinions). Sources may include direct client interviews, company-specific analyst reports, industry forecasts and trends reports, primary analysis of targeted matter types or practice area activities, compiled competitor profiles, etc.

Rely on the ideal client profile(s) to focus research efforts on the most relevant clients, sectors and matter types, however, be open to exploring new avenues as they surface (even if they may yield findings outside of the purview of a certain practice area). For example, a firm’s strength in defending mechanical patents for medical device companies may warrant exploration of other growth areas in mechanical patent suits or in unrelated suits in the medical device sector. The objective is to present a set of key findings from the research indicating where growth opportunities may exist that are relevant and timely for the firm/practice/sector and its clients. Look specifically for areas of increased risk, ambiguity and increased investment or growth. Offer options, not merely recommendations, as an input for the final stages of planning.

4.       The Transformation of Intelligence into Implementation

The culmination of efforts to assess, evaluate and analyze opportunity will likely yield a flurry of ideas. It often incites some level of excitement and, at times, a degree of confusion or the feeling of being overwhelmed. This is a critical point in the planning process. The ability to take the next step – distill key findings into valuable insights, articulate them and develop a compelling story around why and how to position the firm with clients – requires a group effort. Engage the partners in focused, facilitated discussions to surface core goals and help them systematically evaluate opportunities against their and the firm’s strategic objectives. If the ultimate end game is topline growth, for example, focus on the types of clients and matters forecasted to increase in the coming year. Assess available options and work backwards to define the best target clients and isolate what differentiates the firm from its competitors.

An effective business plan will ultimately have no more than three primary goals around which the group can determine supporting activities and investments. Perhaps the single greatest challenge at this phase is not the identification of opportunities to pursue, but rather the decision to not dedicate time and resources to seemingly viable alternatives. This step is, fundamentally, about choice. Enlist leadership to help communicate, encourage and support accountability for adhering to and accomplishing plan goals.

In data-driven planning, there is no single right answer and, like its counterparts, the process is not foolproof. Smart planning is built not only upon financials or statistics. Judgment and personal experience are equally valid inputs to a data-driven planning process, as is evidenced by the key steps outlined above. It is the contributions from various sources that will create the unique combination of synergistic elements most beneficial to the firm, practice or partners. Not ready to take on a new planning approach for all of your practice areas? Use 2018 as a pilot year, launching with a high-profile, data-intensive practice, sector or firm leader to set the course for next year. The results will speak for themselves.

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