Building plans

One of the following statements is by an equity partner at a London law firm, the other is from a business development (BD) specialist. See if you can guess which is which.

First this: “Employing professionals to perform the BD aspects of the job simply makes good commercial sense.”

And now this: “We know our respective markets inside out and we don’t believe that any outsider could know it and get it right in the same way that we do. We’ve tried outsiders. Vast sums of cash for no visible return. There’s no support for spending money on a braying Sloane in a hairband in this firm, and such an individual would be eaten alive anyway.”

It is not really that hard, is it? But these diametrically opposed views have been at the core of the conflict over BD in the legal market ever since the practice began. One side cannot see the point, while the other is unable to convince the partnership side of its worth.

Overcoming lawyers’ scepticism
Part of the problem for BD professionals is that it is still a young industry in legal market terms. It is still less than 20 years since lawyers have been allowed to advertise, and even after the Law Society’s rules were relaxed it took most firms years to cotton on to marketing their services. Indeed, many partners still remain unconvinced.

“The law firms are about 10 years behind the professional services firms such as PricewaterhouseCoopers and KPMG when it comes to business development,” says James Hodgson, director of HallMark IP and founding partner of the now defunct KLegal.

For many firms, there remains a big question mark over the relevance of BD. The fact that there is even a dispute over terminology highlights how muddy are the waters in which BD people swim.

As Oliver Pykett, director of marketing at Burges Salmon, puts it: “BD is a relatively uncertain science. You don’t know if you’re going to win that next pitch or hire that next prospect. That goes against the grain about the way lawyers have been trained.”

Added to that problem is the fact that most BD professionals are not lawyers and as a consequence cannot understand fully what a lawyer’s role entails. “Marketers don’t understand what lawyers do enough,” says Matthew Record of consultancy Record Associates. “What are the steps in a big M&A deal, for example?”

It also still goes against the grain for the many lawyers who believe that, like it or not, BD is actually another term for sales. How vulgar. As the equity partner who was quoted at the beginning of this article puts it: “Had I realised that I’d end up as a glorified insurance salesman, having to be nice to lecherous, uneducated halfwits, I’d have followed a rather different path.”

The value of BD
So with such polarised views on BD, it is reasonable to ask whether it actually has a place in the legal market. Does it actually serve a purpose? The answer, unequivocally, is yes.

“As a business development professional in the accountancy profession, I never cease to be amazed that the debate around ‘do we or don’t we invest in BD?’ still continues afoot within the legal fraternity,” says Mark Valentine, head of tax business development, PricewaterhouseCoopers.

So what exactly does BD in the context of a law firm mean? The fact that no one seems to be able to give a definitive answer to that question hardly helps the cause of the distressed BD staffer facing an irate partner. “I’d argue that the role of BD has nothing to do with marketing, promotion or even sales,” says Steve Towells of consultancy Strategic Creativity. “It has everything to do with building a shared vision and communicating that within.”

Towells’ view contrasts with that of Pykett, who says that “PR and comms people should be seen as distinct from BD and marketing”.

There is even a debate about what the people working in these roles should be called. “We call them practice management professionals, not support staff,” says Richard Chaplin, founder and chief executive of the PM Forum, a professional marketing association.

There is no set definition for either BD or marketing, although the former suggests sales while the latter suggests brand management and communications. But despite this confusion, the role of BD professionals is actually quite straightforward.

“The first question of a good BD professional should be, ‘what are you trying to achieve?’,” says Chris Hinze, joint chair of the Professional Services Marketing Group (PSMG). “Of all the support functions, BD and marketing has to be the most integrated with the firm’s strategic direction. Otherwise it’s operating in a vacuum.”

The target could be anything from increasing the fees from your top 10 clients to opening an entirely new market. Whatever the ambition, it gives a firm the metrics to measure the effectiveness of BD.

BD take-up
Nowadays, however, some of the most forward-thinking firms – among them Allen & Overy (A&O), Clifford Chance and DLA Piper Rudnick Gray Cary – are raising the BD game: they are hiring client relationship managers (or account managers) specifically to take care of a selected few client relationships, taking a leaf out of the accountants’ book.

Claire Rowles, for example, joined the banking division of A&O today (11 April) from DLA Piper, where she spent three years as an account manager. “As an account manager at DLA Piper, I was the first point of contact or relationship for the eight to twelve clients I was looking after,” she says. “The job’s all about adding value. We were also constantly looking to cross-sell.”

Firms such as A&O are finessing the BD process even further by recruiting specialists to back up the client care in specific departments. Linklaters, for example, hired a specialist account manager for its projects practice last year from energy company TXU.

“Seventy per cent of our placements in marketing and BD are not from law firms and 50 per cent are from non-professional services organisations,” says Tim Skipper of recruitment consultant First Counsel. This is in marked contrast to 10 years ago, adds Skipper, when law firms would only recruit from other law firms.

There is no point undertaking this process, though, if the person hired for a particular task is then swamped with off-strategy tasks. “The problem is that law firms are wary of investing enough in client development,” says Hinze. “They get an account developer and then get them to work on a dozen clients instead of four to five. That’s spreading them too thin. Sorry, but it isn’t going to work.” Alternatively, according to Steve Blundell, a director at consultancy Gracechurch, they recruit for a key account position “and then draft them into ‘scone-buttering’ roles.”

Effective implementation
Measuring the effectiveness of BD is the nub of the issue. There is no point spending hundreds of thousands of pounds on a BD team, which is easily what the largest firms spend (see table page 21), unless you have some idea of what you are getting for your money.

A number of firms, including Burges Salmon, have already spotted that some BD activities are, to put it politely, a complete waste of money. The firm scrapped its usual habit of producing brochures, except the annual report, last November. “Our clients indicated that there was no return on that investment,” admits marketing director Pykett. “No prospective client is going to take much notice of a brochure. A neatly tailored pitch, yes, and then it’s the quality of the people.” BD is saving around £20,000 a year by cutting out brochures.

The PSMG last Monday (4 April) agreed unanimously to launch a research study among professional services firms on how they measure the effectiveness of their investment in business development. The group also launched a new qualification in February aimed at raising the quality of BD professionals in the law. Trailed as ‘the first-ever marketing qualification tailored for the fast-growing professional services sector’, the Chartered Institute of Marketing Professional Diploma in Marketing was developed in partnership with the Cambridge Marketing Colleges.

Elsewhere firms are looking at ways of auditing BD activities in a similar way to PR, which has been audited on a qualitative and quantitative basis for years. Linklaters, for example, claims to have conducted its first-ever audit of its BD team last year.

In contrast, Freshfields Bruckhaus Deringer has no formal audit, but according to a spokesman the firm does “monitor the performance of individual business development managers and executives carefully via partner and peer feedback, so that we know exactly what contribution they’re making to the development of the business”.

But the growth of this measure is doubted by several consultants, including Barry Jackson of City Jesters. “No one does formal audits of BD and anyone who tells you they do is kidding themselves,” Jackson asserts. “No one’s measuring it. They wouldn’t know where to start. Clifford Chance is the only one that’s close. Most other firms are still stuck in communications mode.”

Jackson believes that a properly managed BD function goes right to the heart of law firm financial management, and that the challenge is getting people to spend the time to do it properly. “They should be able to measure profitability by practice area, by sector, by individual clients, by type of work and by type of people,” says Jackson. “And BD people should be included in that. It wouldn’t be difficult to see how it breaks down. The US firms manage people better and work them harder. It’s not a mystery why they’re more profitable.”

As far as Jackson is concerned, the majority of firms fail to cost work properly and fail to assign the right people to particular tasks. The result is that they end up discounting work, perhaps by as much as 30 per cent. “Most businesses outside the law don’t have the luxury of a 30 per cent profit margin to begin with,” he says.

All of that costing and planning and following through is the essence of BD if done correctly. “I see it as core to the business, outside of providing legal advice,” says Jackson. “I think developing relationships is the next most important aspect after the legal excellence, which is taken as read. It’s what sells the legal work.”

Making BD pay
After the sales comes the service. Or at least it should. The consequence of doing both with excellence should be a market-leading position. It is what the new head of BD at Clifford Chance, Charles Doyle, calls “the big prize, the enduring prize – brand equity”.

Doyle, who joined Clifford Chance in March after eight years at Accenture, believes that today’s legal market is attracting a higher quality of BD professional than the accountancy profession because it is more globalised. In his opinion, the vital area is brand building. He agrees, though, that to get to the point of brand equity a firm’s BD efforts need to be measured.

“It’s not audited but I certainly think it should be,” says Doyle. “The future challenge for BD and marketing is the whole area of return on investment. It’s measured in different ways in different industries, and in the legal market, where the perceived value is intangible, it’s difficult to measure. But the really important issue for BD and for firms is brand equity – what the brand is worth. This is the hot area. You might not be able to crank it into a machine or measure it easily, but you certainly miss it when it’s gone. Ask Andersen.”

Talking of Andersen, few people know more about the flip side of brand equity than former Andersen Legal head Tony Williams, now a consultant at Jomati. Williams is certain that many firms still fall woefully short of the necessary standards of BD to hit the heights of brand equity. “Many aspects of BD are not at all difficult to measure,” he argues. “Things such as monitoring pitches should be standard, but there’s still insufficient follow-up. I was involved in one recently where, of the firms that didn’t get the job, only half called back to see why. That’s absolutely fundamental, yet lots of firms still don’t do it.”

Williams also agrees that attracting industry specialists from outside the law to advise on targeted team goals is “absolutely” the right thing to do. “Industry experts can monitor the trades, the media and the press and should be able to call up clients and general counsel and say, ‘your competitors are doing this, have you thought about that, or would you like to talk about it?’ and so on. Even if it’s not something of immediate interest, the fact that they’ve got the lawyer thinking about this business issue is the key point. The worst you’ll get is a no, but even then they’ll know you’re thinking about them.”

The key for firms that want to make the most of BD is to take it seriously. Rated professionals have the ear of the board. And of course you cannot put it all down to marketing, but with average profit about to burst through the £500,000 per partner figure at a mid-sized firm, it must be doing something right. nPR, the glitzy cousin of business development (BD), is largely responsible for giving the whole shooting match a bad name. Some of it is good, a lot of it is not. And its effect, good or bad, can be disproportionate to the size of the (usually small) teams beneath the overall BD umbrella.

“Some PRs are very pants,” says Finers Stephens Innocent partner Mark Stephens, “but most of the whinging lawyers wouldn’t know a good one or appreciate what they do even if it bit them on the bottom – no doubt through their pants.”

Stephens says that most law firms’ PRs were appointed by people “completely unqualified” to set benchmarks for managing success or targets. “So it’s hardly surprising that some very well-intentioned lawyers end up getting striped-up by ineffective PRs,” he adds.

Those same lawyers that do not recognise good PR and crisis management are invariably incapable of knowing how to use PR effectively, adds Stephens.

“They think that PR is glossy brochures and indiscriminate press releases about their latest very dull deal sent by ‘marketing’,” he says. “They never trouble to understand why that’s just not effective.”