Conversations for Cash Flow and Business Development
In my recent Managing Partners Masterclass, one of the subjects we covered was our well established Pipeline Concept – the 5 stages of adding value in a law firm:
Get Client – Get Work – Do Work – Bill – Collect
As part of the discussion we were talking about the pipeline concepts of Leakages and Blockages.
Leakages are issues that cause a reduction in profits, such as under-pricing, under-recovery of time or write-offs of debts.
Blockages are issues that cause a delay in the cash flow and can arise for a variety of reasons. In recent years I have asked many audiences about the biggest blockage and the answer (especially from Finance Directors) is always “Fee Earners”. When asked to elaborate they then say “fee earners won’t…”
The Biggest Blockage...
In essence their complaint is that fee earners avoid having the necessary conversations with clients. They neglect to explain the terms of payment upfront, they omit to ask for authority to do additional (chargeable) work or take longer as a result of some change arising in the course of a transaction. They avoid raising interim bills through the course of the transaction. They fail to advise a client when a Bill is being raised and somehow assume that the client will have the relevant funds ready and waiting. And if the client for some reason does not pay their bill they will certainly avoid having a conversation to ask for payment. In effect, they show that they are scared of their clients.
It is hardly surprising that if a client receives a single large bill, possibly bigger than expected and for which they may not have budgeted, without understanding the reason for the change they become upset and their response is to withhold payment. This automatically puts the fee earner on the back foot. No matter how good a job technically the fee earner has done, it runs the risk of turning a happy client into a disenchanted one.
The Value Conversation
A few years ago I was conducting a performance improvement programme with a client cohort and was teaching the Value Conversation, a carefully designed process to put the client in the right frame of mind to take the kind of decisions that we would like of them. The Value Conversation can help bring on new clients, get repeat work from existing clients, achieve better prices and elicit testimonials, recommendations and referrals.
Not everybody finds it easy, but with practice most fee earners get there in the end. However, in this particular session the feedback was that the same issues which inhibited the fee earners from having the “Business Build Conversations” were also the issues behind the “Cash Flow Blockages”.
In essence, the psychological factors that hold-up cash flow in law firms are the same as those that hold-up business development, and can be best summed up in the phrase “You Can’t Say That to a Good Client”.
On the contrary, if you do a good job and provide a good service (essential prerequisites), you can hold intelligent, focused conversations with your clients and prospects, provided that you have the inner confidence (which comes from training and practice).
In the past we have treated the development of the conversational skills (and accompanying scripts) as an integral part of our 6 month Profitable Partnership Program.
But the consensus of the Managing Partners at the Masterclass was that the Value Conversations are important enough in themselves to warrant specific attention, and so we agreed to extract the conversation aspects of the PPP and create a pilot event specifically to address the conversation issue. For each stage in the pipeline we created the conversations (around the standard format) to ask for an instruction, more business, a testimonial, a referral, the authority to increase the work/Bill and finally to ask the satisfied client to pay their bill.
Developing Habit, Developing Confidence
The audience (some of whom we’ve known for some time) for the initial event was particularly experienced and high calibre – and so we were eagerly awaiting their feedback. This audience has confirmed our views that by developing the habit and confidence to address these crucial conversations, fee earners can improve their performance at all stages of the pipeline – bringing more work, better prices, and turning it into more cash more quickly.
Always keen to practice what we preach, we have since asked some of the audience (ever so politely) for more detailed feedback and were delighted when the event organiser offered us a testimonial which included phrase “I could not recommend it more highly”.
So we will shortly be offering a new short (1 or 2 day) programme to our clients with the working title “Conversations for Cash Flow and Business Development”.
If you feel that this approach could help your fee earners bring in more business and more cash, we would be happy to have the conversation!