Is social networking “In” or is it “Out” when it comes to legal marketing??

I came across two competing blog posts today: Larry Bodine’s SEO and Email Better for Law Firm Marketing than Social Networking and Kevin O’Keefe’s Law firm websites dead as a firm’s primary Internet marketing tool? Each post highlighted a different study on the effectiveness of social networking, extrapolating the results to the legal industry.

According to Marketing Sherpa, where the SEO study (pdf) comes from:

There’s no doubt that social media is an immensely important trend or perhaps even a sea change in how we buy, sell and communicate. Still, the chart below puts the role of social and Web 2.0 tactics in some kind of perspective when compared to search engine optimization and tried-but-true house email. For the time being, the main drivers of website traffic are the known quantities of SEM (free and paid), email and display.

I’m not certain that I agree with the premise that driving traffic to your website is the goal, or should be a measurement for success, for a social networking campaign.

Social networking sites, as far as I am concerned, are about engagement. And while I use both Twitter and Facebook to drive traffic to my blog, the goal is not to increase my visitors, but to engage in a dialogue and build my reputation. And while my web stats might or might not go up with any given post, I have noticed that my phone rings more and more.

I am more inclined towards what Steve Rubel, SVP at Edelman Digital, had to say in his recent post on the The End of the Destination Web Era:

Unfortunately, digital marketing is still wired for the destination web era. To succeed going forward we have to change our thinking. “Earned media” through direct public engagement in the venues where our consumers spend time will become the only way to truly influence a behavior change. The greatest advantages will go to the first movers who embrace this shift. It’s not too late.

Kevin O’Keefe (of course) gets it:

Engagement? That’s interesting. Engagement is how good lawyers have traditionally grown their business.

By networking with clients, prospective clients, and their influencers (reporters, editors, conference coordinators, business associates etc.) a lawyer established their reputation as a reliable and trusted in a niche area of the law. This reputation spread by word of mouth.

Websites have never been the be all and end all of law firm Internet marketing. Good lawyers get their best work by networking through the Internet, not by building shrines to themselves in the form of websites.

Today comes the news that Mark Levy, a recently laid-off attorney at Kilpatrick Stockton, committed suicide in his office.

As we all blog and gossip about law firm layoffs, salary roll-backs and job deferments, we cannot lose sight that behind each number is a man or woman, a father, wife, daughter, son, parent. They are like us, stressing about the mortgage, how to put kids through college, high credit-to-debt ratios on credit cards, and student loan repayments.

As we gleefully rejoice that our jobs are safe (for now), we cannot forget to reach out to those who have not been as fortunate.

I suspect that today’s tragedy was not the first, nor will it be the last.

As we continue to “survive” the current economic crisis, we cannot forget that before we are a lawyer, secretary, paralegal or legal marketer, we are Mark, or Susan, or Bill, or Heather.

We are more than our job, title, or whatever is listed on our business cards. We have to seek our identity in things greater than what happens at our office locations.

My heart and sympathies goes out to Mr. Levy’s family.

The most anticipated issue of the American Lawyer, the AmLaw 100 (link to chart), is hitting the Internet and our in-boxes this week. Ohhhh, give me a bowl of popcorn and a strong cup of coffee … the numbers are in:

The 2009 AmLaw 100 – How Bad?? (really bad)

Lessons of the AmLaw 100

Nothing grows forever. For the first time since 1991, both average profits per partner and revenue per lawyer dipped last year among the Am Law 100 firms, the top-grossing firms in the nation. And, given the weakness in the market thus far in 2009, another decline seems likely this year.

(SKIP)

There is plenty of blame to go around. We don’t pay much heed to the blanket criticism that many law firms grow just for the sake of growing. But we do pay attention to results. And here’s the bad news for firm managers and owners: At 71 firms last year, the percentage change in lawyer head count was greater than the percentage change in profits per partner. To put that more bluntly, the failure of two-thirds of the firms to restrain their lawyer hiring cost their partners money.

(SKIP)

Ouch: The New York firms were the only category that, year over year, slid in gross, RPL, and PPP. This has led to much brooding that essentially predicts the end of the lucrative New York market as lawyers have known it [see Losing Their Balance]. Some of this has been served with a dash of schadenfreude.

(SKIP)

To test that theory, we ran a couple of simple calculations. Many observers predict a 10 percent drop in gross revenues in 2009. If that’s true, and all lawyer head counts were to remain flat, PPP in 2009 would fall by about $360,000, to $925,000. Alternatively, if you assume a 10 percent drop in gross, you can hold PPP steady, on average, by cutting a little more than 10 percent of the lawyers, 84 out of the average-size firm of 820. The cuts don’t have to be confined to a single category: lopping off 66 asso­ciates and 18 equity partners will hold the line for the survivors.

There will be blood–2008 was not the bottom, just the beginning.

One thing is clear: “business as usual” in law firms is dead. The current business model worked when the economy was flush, rates were not an issue, the deals were flowing, and litigation was an option. The operating mode now is to reduce rates, reduce costs, conservative deals, and settle before fees get out of hand.

Clients are in the drivers seat, insisting that their law firms contain costs. Save for “bet the farm” cases, smaller, regional and boutique firms are more attractive than ever.

Firms need to look at their business models and make smart business decisions and adjustments. For some firms, this will mean a more conservative approach. For others, now is the time to get aggressive and take risks. For individual “AmLaw 100” attorneys, more and more are finding that the marquis-named firm might not be the best option for their clients, and their practice.

In any scenario, I predict that law firm cultures will continue to be challenged throughout 2009 and 2010. And I do concur with the American Lawyer’s prediction: “2008 was not the bottom, just the beginning.”

I came across a great post today by Jim Hassett, author of “Legal Business Development.”

In his current blog post, Marketing advice for Harvard Law School students (Part 1 of 2), Mr. Hassett lays out the scenario facing current law students, whether they are from Harvard, NYU, UCLA or anywhere else:

Like everyone else these days, law students are worried about the economy. As if law school wasn’t stressful enough, now students have to plan their futures against a backdrop of law firm layoffs, pay cuts, and delayed start dates.

No one knows whether these changes are temporary, or whether they reflect the beginning of a paradigm shift in the way lawyers do business. Either way, they call attention to the importance of a topic that is rarely discussed in law school: how marketing is related to long term success. Your success in the first critical years of your career will probably have more to do with your relationships and marketing skills than with anything you’ve learned about civil procedure, property, contracts or torts.

And if you go into private practice, marketing could become a matter of life and death. Whether you end up at a firm with hundreds or thousands of lawyers or at a small boutique, your firm’s health will depend on a steady flow of new business.

The economic crisis has raised the stakes. In its 2009 client advisory, Hildebrandt International notes that “the current economic downturn in the legal market is likely to be deeper and longer than any we have seen in the last two decades.” Hildebrandt also predicts that in the future “the right economic model for success could well be a firm with relatively fewer associates and partners than today, but with expanded categories of other lawyers (some of whom would be temporary or project specific).” What does that mean to you? Less job security, and more need for personal marketing.

If this is the scenario facing our current students, what’s the solution?

There are many. But first and foremost, I always coach young associates that law is not only a profession, it is a business. Big Business at the mega-firms. With revenues over $2 billion at Skadden and Latham, how can it be anything but?

Yet, many students and young associates do not realize that the day of the institutionalized client is gone. No longer is the client passed down from senior partner to junior partner. Gone are the days when you can work the files, do a great job, and make partner in 7 (10 or 12) years. Service partners, while serving a needed role, are “out.” Rainmakers are “in.”

In my professional role, I have provided the marketing department’s orientation to both 1st year associates and summer associates. I would talk about marketing and business development, how the firm is a $X million business, and if they want to make partner, they need to realize that BUSINESS is a key component.

I and would then look about the room and watch as these young “professionals” tapped on their newly issues BlackBerrys, rolling their eyes, and staring out the windows bored. Yet, in every room, there would be one or two people hanging on every word. THOSE were the future rainmakers and partners in our firm. THOSE were the kids who always volunteered, hung out in my office, actually read the e-mails I circulated.

As individuals, we cannot do anything about the economy. As associates (or marketing professionals) we have little control over the business of our law firms. But, we can do something about our personal careers. We can take charge of our lives and our careers. We can take time everyday “marketing me.”

The next couple years promises to be a bumpy ride for many. Yet, there are also opportunities for those who put down the BlackBerry and iPhone and engage in the solutions.

If a little role-playing can spice up a marriage, can it do some good for a dying AmLaw 200 firm?

That’s the premise of a FutureFirm (pdf),

a game of strategy, skill, and endurance. The goal of the game is to craft a new law-firm business model that provides the best odds of your firm surviving and thriving 20 years into the future.

For those of us interested in Scenario Planning, this “game’s” real-world implications can lead to real solutions:

To add urgency to this climate, the weekend began with Anthony Kearns, the Australian lawyer, offering an amusing but sharply focused description of the American big firm landscape. Here’s what he sees:

1. The big firm bubble is about to burst. Choose your pin: angry clients; the exodus of talented people from the practice of law; the competition for associates that firms can’t afford; the increased competition for business between and among the firms.
2. The prevalence of bigger and stronger in-house departments.
3. The presence of three generations in the law firm workplace.
4. The global financial crisis, which has broken the old relationships.
5. The utter failure of firms to differentiate themselves to clients or recruits. (And, I might add, to themselves.)

The areas of convergence, while not shocking, confirm the areas of concern that I, along with many of my peers, have been discussing:

  1. Associates – from salaries, to training, to billable hour requirements and more
  2. Clients – from alternative fee arrangements, to client service and relationships, to loyalty
  3. Partners – from commitment to the firm, to partnership structures

And as there is no singular problem which will lead to the dissolution of a law firm, there can be no singular solution we can point to as a panacea or cure.

Mauer School of Law professor William Henderson will publish a complete and detailed report of the exercise, and I, for one, will be excited to read it.

I came of age in the era of Ronald Reagan, Trickle-Down Economics and Gordon Gekko. In my lifetime, the economy always got better, jobs always paid more, and there was something bigger and better down the road.

Not so for today’s associates and law students. The trends that I am seeing do not bode well for the 2Ls, 3Ls and junior associates out there:

Law firms are slashing summer programs, or eliminating their summer programs all together. The consequences will be fewer job opportunities for current law school students. The competition will be fierce for the few positions available. And, as we all know, summer programs lead to 1st year legal positions. No summer jobs = no jobs after law school.

Job offers deferred or rescinded. The market is tight, and it will continue to tighten. Students are no longer competing against themselves for jobs, but they are competing with already trained lawyers who have been laid-off. These currently licensed attorneys are ready to hit the ground running, and are willing to take the work.

Summers and 1st years are being banned from client files. I’ve been hearing this for the past couple years, but firms like Morgan Lewis are confirming it. At $160,000 per year, client reluctance to utilize these younger attorneys makes them less valuable to the firm, and more susceptible to layoffs.

Salaries are being rolled back. Who thought we’d long for the good ol’ days of January 2009 when salaries were only frozen. Salary roll-backs started with Robinson & Cole and the trend will pick up steam. Do I hear $20,000?? $30,000?? Womble Carlyle announced a straight 10% cut last week.

So, what’s this all mean?

I see a smack-down between the 2Ls, 3Ls and 1st-3rd year associates.

Those currently employed want to stay employed and will be willing to do what is necessary to keep their jobs. They have a bit of experience under their belts, and are now able to effectively bill/work on files.

With fewer turnovers there are fewer jobs available for the 3Ls. Couple that with firms reducing their summer programs, and deferring entering fall classes until 2010, we will once again see fewer jobs available for the current 2Ls.

So, who wins in all of this? There are several.

The clients will benefit on pricing. One of the Ps of marketing is “price.” For the most part, there are more lawyers and law firms than work at the moment. Clients are in the position to renegotiate the hourly rates that they have agreed upon in the past. I am hearing of clients pressuring their big-law lawyers to move to smaller shops, or set up their own, both of which will force down their preferred lawyer’s hourly rates.

Regional and boutique firms will benefit as law students will be looking to them as they have not in the past. Clients are also looking closer at the regional and boutique firms that they have used in the past, exploring whether they can expand work in other areas.

Government, public interest and non-profits will benefit from the pool of experienced (and unemployed) attorneys and well-educated 1st years who might not explore these options in a better economy.

The attorneys will benefit … in the long run. For those of us in-house, we have witnessed associates and partners burnout from the pace they’ve been keeping, and can confirm the low job satisfaction in the ranks as well. In 1958, the ABA suggested a 1300 billable hour year. By 2001, the ABA recommended:

billing expectations of 2300 hours annually, composed of 1900 hours billable to clients plus a total of 400 additional hours for: firm service (100 hours), pro bono (100 hours), client development (75 hours), training and professional development (75 hours) and professional service (50 hours).

Work-life balance might be something that looks good on paper, and sounds great in a job interview, but in most firms it is not practiced. Women, while graduating law school in equal numbers to men, still make up less than 19% of the partners.

I believe that 2009 provides a great opportunity for lawyers and law firms to reevaluate their business models and strategic plans, including recruitment and retention of attorneys. Yes, there will be bumps, hurdles, lost jobs and shuttered firms along the way, but the end result will hopefully be a better attorney-client relationship, increased client satisfaction, lawyers who are more fulfilled, and a better workplace for all of us who work in the legal industry.

And, if all else fails, there is always “life after law.”

Ed Poll in his recent blog post argues that while law firms that fail, fail of their own “unique paths to destruction,” yet successful law firms are all alike.

According to Ed, these firms:

  1. Have a comprehensive business plan.
  2. Remember that the client comes first.
  3. Sell solutions (“provide value”) to clients.
  4. Begin each matter with an engagement letter.
  5. Prepare budgets for each matter.
  6. Understand that their inventory is not “billable hours,” it’s the cash those hours represent.
  7. Practice effective cash flow management.
  8. Recognize that technology cannot replace personal relationships.
  9. Work with a coach or mentor to achieve business and practice success more quickly.
  10. Have a disaster plan in place and keep it current.

(I have edited the list … you’ll have to read Ed’s full post to get the details).

Two things I immediately see missing from this great list are 1) compensation system that benefits the client first. If a comp system takes into account the holistic needs of the client, it will in turn benefit the firm and the partners overall; and, 2) positive internal communication/ Knowledge Management tools. Too often the bad news travels fast, but the good or innocuous news gets lost.

For those of you working in successful firms, what do you see as your most successful traits?

What would you do if your boss walked into your office and said, “Hey, take a year off and we’ll pay you $80,000. And, your job is guaranteed when you return.”

According to Legal Blog Watch, that’s exactly what has happened to the 1,300 associates at Skadden.

While the paranoid cynic in me would be fearful of spending a year away from the office, the opportunity that a paid year’s vacation affords would be too strong of a lure.

If I were a twenty-something with no kids, mortgage or real responsibilities I would:

  • Go to culinary school
  • Get a job on a cruise ship traveling through the Mediterranean
  • Spend a year in India practicing yoga and meditation
  • Build houses for Habitat for Humanity
  • Teach English in China
  • Blog and read

Simply stated, if I were a Skadden associate, I would take this opportunity to explore my passions. Perhaps law is it … but maybe not. Why not take this time to figure it out while you are young and relatively unencumbered?

Oh, and if you are a Skadden associate taking the offer, might I be so bold to suggest that you start a blog and let us know what you and your colleagues are up to. It could be a real eye-opener for the rest of us.

Now, the bigger question: can they defer their law school loans?

For those of us who stopped drinking the mega-firm cool-aid, it’s sometime difficult to articulate why we believe that the mega-firm model just doesn’t work well.

I will concede to my esteemed colleagues that there are some mega-firms that are effective and operate well, but those firms hold few of the AmLaw 100 spots.

Rees W. Morrison in his article “Big and Bad? Making the case for steering clear of mega-sized law firms” (law.com registration required) sums up my sentiments. He argues that the strengths of the mega-firms are mitigated by their drawbacks.

  • Quality controls, training and systems, but higher effective billing rates.

Large law firms are in a position to review the work product of their lawyers several times. Heft allows law firms to invest in more sophisticated software and technology, such as document assembly, knowledge banks and guidelines. But all that fancy software can also distract from sound thinking, analysis and judgment.

  • Huge amounts of experience, but conflicts of interest.
  • Global coverage, but inconsistent quality and coordination.
  • Deep specialization, but narrower perspective.
  • An impressive head-count of legal professionals, but dissipation of a shared culture.

Spread out, with very different backgrounds and without many opportunities to work together, partners are often strangers to each other, foot soldiers in a corporate-style conglomerate. Within that environment, trust and connectedness can easily decline, and internal politics can begin consuming lots of energy among lawyers whom GCs would much rather have focused on their own matters.

  • Resources galore, but the leverage of law departments declines.
  • The best and the brightest might be hired, but high turnover rates persist.

Mr. Morrison rightly identifies many of the issues that my colleagues and I have personally experienced. One thing he did not mention is that the larger the firm, the larger the bureaucracy. Simple tasks, such as getting a check request approved, can take more hours in my time and partner time, than they are worth (not that I have EVER personally experienced that).