6’off-the-shelf’ webcam tactics for lawyers

The Lawyer, the client & the webcam: 6 rules to a good call…. ignore at your peril!

The era of social distancing is bringing new challenges to effective communication.

I can still recall when first joining the banking sector being put through a training programme regarding ‘telephone etiquette’ as it was referred to then.

This was an entry-level skill set.

To this day many of the basics that I was taught remain invaluable in the business world. This was around tonality, content, listening skills, preparation before the call, taking notes and use of questions in response to questions.

At that point the use of telephone in terms of working with a new client or an existing one was recognised as a specific skill set.

Later in my banking career I was put through another training programme regarding the skill of writing a letter. Again, relatively an entry-level skill but the bulk of those entry-level skills remain exceptionally valued. The content was around the use of language, construction of arguments, framing a call to action and various other well thought through techniques to ensure that my skills in correspondence were appropriate.

At that point using the written word in terms of; working with a new client or an existing one was recognised as two specific skill sets.

As my career developed, I was put through another training programme. This time regarding the skill of presenting. In continuation of the theme I would suggest that these were relatively entry-level methods in terms of how to present in a boardroom. Much of what I was shown I was later able to transpose into making PowerPoint presentations and the need to deliver complex software demonstrations that occurred later in my career.

At that point developing a presentation in terms of; working with a new client or an existing one was recognised as two specific skill sets.

What is interesting to me is that these specific types of training were areas that my employers realised could differentiate our banking offer against the competition. If your bankers were able to handle telephone conversations to a high standard and follow the calls up with well-constructed correspondence it left a positive impression. If your bankers, where appropriate, were then trained to present information either across a desk or within the context of a boardroom to a high standard than that to would leave a positive impression.

If you combined all three skills then you became a ‘Rainmaking’ force.

I suspect that everyone reading this article can immediately ‘buy into’ Rainmaking skills using the spoken word, the written word and the presented word. These are specific business development requirements within the field of professional services which law is.

In this current climate we have a situation where on many occasions there is a brand-new requirement. That requirement is the use of the Webcam.

Currently the virtual meeting is not recognised as a skill set in the same way that voice, text

and face-to-face have been. Yet it is a specific discipline. It is highly likely that over time it will become evident that:

You can win and develop business based on your virtual ability.

Just as:

You can win and develop business based on your telephone approach.

You can win and develop business based on your written word.

You can win and develop business based on your face-to-face performance.

These are 6 basic building blocks to differentiate yourself from other practitioners.

  1. Focus on the webcam and not on your colleagues

Eye contact is a vital way to reinforce your point. In a webcam-based meeting this means looking into the camera and not into the faces of other the participants. Looking into a small black circle will feel uncomfortable. For years we have been trained to look at the people when talking to them and the challenge is to have a focus on your camera for the meeting. This is especially while others are talking. This will separate you from the behaviour of other people on the call.

  1. Project a stronger voice

Use a louder and firmer than usual voice on a webcam call. As well as projecting your audibility a strong voice conveys authority, confidence and credibility. It is just as true in the virtual world. Even though you may be using a headset and be tempted to speak at your normal volume maintain a slightly higher audibility level almost as if you are in a large conference room.

If you are using a microphone that is desk-based resist the temptation to lean into it and speak at a conversational level. Actually, lean back and project your voice as if speaking over a lectern. This will also separate you from other people on the call.

  1. Frame yourself

Look at how you appear through the lens of the webcam. You need to organise the call in a manner where your head, the top of your shoulders and just above waist, should dominate your projection. Look at newscasters, that are sitting behind a desk, to get some idea of what this should look like.

Be mindful of your background as cluttered rooms communicate something and anything that is distracting will pull the attention away from you. Look for a simple plain background as neutral as possible.

  1. Be totally engaged

In a boardroom meeting, participants are usually exceptionally aware of what their body language and behaviour may signify. In a webcam call, where you may be muted and perhaps dressed less formally, you may forget that you are on show.

Do not multitask. At any moment you may be asked a question. Even if you are not the speaker ensure that you are fully engaged. Close all screens on your PC and a good habit is to turn your phone facedown throughout the call.

  1. Remove all distractions

Train yourself to stay on mute when you are not the person speaking. Only unmute yourself when you are the one speaking. If you mute your microphone it removes any sound that accidentally may be audible from your end of the call.

It is also worth to consider to switch off your webcam when you may be doing something visually distracting such as moving whilst on camera.

  1. Using the chat box

The chat window is a key part of the communication in a webcam-based call. It is an opportunity in a virtual meeting to add your ideas, demonstrate that you are fully engaged and also promote your presence in the meeting.

It may be the case that you have been engaged in virtual meetings for many years. It may be that you have only truly engaged in this medium since the pandemic.

It is vital to understand that a Webcam call is not a conference call through a PC screen. It is a different interactive experience requiring you to rethink your communication tactics.

The Lawyer, the client & the webcam: the 20% rule

Webcam communication is the business development leveller!

Nobody can quantify with certainty the exact impact the pandemic will have regarding working with clients. With regards to potential post pandemic behaviour, there appears to be little evidence from buyers to undertake face-to-face meetings with new vendors.

As a business development specialist or as described in-house as the rainmaker, I was brought up on a concept referred to as the 20% rule.

Not that many people will take the risk of trading a stable and proven professional relationship for a 10% discount. Generally, it needs a larger discount to create the environment where most people will be prepared to have the conversation to explore what a new vendor has to offer.

In my field at that time of Banking we would not be able to offer such financial inducements. However, the client or prospect would have some type of expectation of what customer service and front-line interaction a Bank should be able to offer them.

We had to exceed this benchmark by 10% in terms of our skill and knowledge in the expectation that the incumbent Bank would be taking the relationship for granted and be 10% below this benchmark. This would create in the mind of the prospect a 20% gap which would be enough for us to disturb them into becoming our client.

So, taking this concept further we explored the following as we created an on-line questionnaire that searched projected buying’ habits in 2021.

(We thank Barclays Eagle-Lab Tech incubator C4DI for their assistance).

We had 312 respondents.

These were not specifically buyers of legal services and they also represented businesses with an annual turnover of more than £1 million in 2018.

67% of those respondents could not envisage a face-to-face meeting with a brand-new vendor in 2021 based on their COVID-19 opinion up to August 7th 2020.

This insight is from a busy and presumably stressed out business community. The data is also not exhaustive and is a sample of questioning for a larger project around buying services we will be researching in November. However, thinking that the method for buying and selling services will reboot back to the same method prior to the pandemic may not holdup to much scrutiny. So, that response is just a small snapshot of opinion.

What is not a snapshot of opinion is the following. The researcher Dr Phillipa Lally reviewed the concept of habit creation. She published these findings. (This was published by https://www.ucl.ac.uk recognised globally for its research strength).

https://www.ucl.ac.uk/news/2009/aug/how-long-does-it-take-form-habit

Her research on the creation of habits demonstrated, through a series of tests, that on average sixty-six days was the period required for the creation of a new one. Creation of a new habit was specifically engaging with a new behaviour and calculating the tipping point of where that new behaviour became automatic.

Using that measurement, it is reasonable to suggest that a new communication habit has formed. This new communication habit does not work at all well with offers of service. Service selection is rooted in the concept that ‘people buy people’ and it is hard to do that through the prism of a laptop screen. The webcam is now the filter of your offer and professional use of the webcam is not just about how to employ the technology.

In its most simple form, many professionals see this essentially as a conference call with a head shot.

According to best practice from South Africa, Hong Kong and Australia there is a matrix of skills and proficiency around webcam use. The great news is that it is something that can be learnt and developed.

In fact, for those of us that may lack the charisma and projection in a face-to-face meeting, that so many experienced and successful rainmakers possess, this current situation is actually a leveller.

One of my longest associations is with a financial services professional who has been involved in business development slightly longer than thirty years. He is an exceptional rainmaker in the field of wealth management services. He is over 6 feet in height, he has more than a passing resemblance to George Lazenby, who played the role of James Bond, and possesses a Welsh accent that leans towards Richard Burton.

In a first meeting, in the first thirty seconds, this is a potent starting point for generating confidence in him. When you add to that, two minutes into a first meeting, in a boardroom environment, he is exceptionally skilled at communicating the value of complex wealth management products to a multiple person audience…if you are competing with him…you have some very hard yards in front of you to win the account.

In this current environment, the immediate first impressions that he delivered previously are now taken from him by the powers of the webcam. The webcam is almost Kryptonite to his communication ability and much of his rainmaking strength is diminished.

(Even I look as imposing as he does through a webcam).

Our starting point is that it is hard to build rapport via the webcam. Without rapport you have another barrier to overcome which is to communicate effectively with the other person. It requires very specific preparation to remove what barriers you can through the on-line environment. The great news is that according to best practice from South Africa, Hong Kong and Australia there is a format to developing this of which Wilkinson Reads will share the basics.

Our next blog: Rapport building through the webcam: ignore this at your peril!

Steps in Sync

The current crisis is having a very different effect across the sector.

But so far many of the firms that I speak to are having far less of a problem than they had expected only a few weeks ago. Most firms are telling me that that their billing is holding up reasonably well. Since the lockdown started in late March the cash flow has been reasonably strong and has been helped by the CJRS Furlough refunds.

But when I’ve probed into the data about new work and about value creation the picture is far more mixed and generally less optimistic.

It has long been the case that law firm’s primary short-term measurement is their billing level. Unfortunately, excessive focus on this obscures some underlying issues

Firms need to hit their billing targets, and even more importantly collect in the relevant cash!

But it is just as important that they open at least as much value of files as they bill in any given month. Of course, many firms don’t bother to identify the value of the files that they open in any given month, so we have to use the numbers of files opened as a proxy. But it remains the case that unless you open at least the same value of work as you complete, your business will decline. In effect you will be selling the family silver-or as we prefer to describe it you will be draining the tank.

A third thing that we have to do in order to ensure our business is in sync is to understand and measure the amount of value that we are creating in each month. It still surprises me after many years just how few firms carefully monitor work in progress creation and movement.

Unless you open matters on which to do the work, and then create value by doing the work, you have nothing to sell, and therefore the billing will not follow.

We know that many fee earners much prefer doing the work (chargeable time) to going out and winning it-we also know that What Gets Managed Gets Better. So, for many firms it is relatively easy to monitor the amount of chargeable hours that their fee earners are doing even when working from home- it is much harder to assess the business development work that they’re doing. Therefore, any fee earner who wants to look good can keep their billing levels high by keeping their Chargeable Hours high and Neglecting to bring in tomorrow’s work.

By not keeping matters opened, value creation and billing in sync our fee earners may just be sowing the seeds of future decline.

It’s much harder to fill the tank up again than it is to drain it

Evasive Action

One of the key benefits of preparing considered cash flow forecasts is that we are able to identify potential problems in advance-hopefully well in advance-certainly early enough to take some form of evasive action.

So, what can we do if we look to be headed for an overshoot?

We either have to increase the amount of cash coming in before the key date, or reduce the amount of cash going out before the key date.

Let’s concentrate on the cash out

At its simplest there are only three things that we can do to reduce the cash out in order to avoid exceeding our limit. These are

  • We can defer expenditure
  • We can make temporary cutbacks
  • We can make permanent cost savings

Since the Covid crisis and its lockdown began most businesses including law firms have adopted the first two. This has been encouraged by the government schemes which were hoping to avoid long-term damage to the economy.

Deferring expenditure-this is often the easiest way to navigate a short-term pinch point. The government has been very keen for businesses to adopt this route by deferring various tax payments for several months. In other circumstances it can be a first port of call in dealing with operating expenses and can often be done without penalty. This can vary from simple manoeuvres like not putting the cheque in the post, through to agreeing monthly rent payments rather than quarterly. The big drawback however is that the liability to make the payment does not go away. The timing may be more palatable but may not have solved the underlying problem-but when it comes to managing cash flow do not underestimate the value of buying some time!

Temporary cutbacks-in the current environment the government has  encouraged businesses to make temporary cutbacks rather than permanent ones, particularly through the CJRS Furlough scheme. This is an excellent solution to what the government perceived to be a short-term problem. Some businesses have gone further and agreed temporary reductions to salary levels in order to avoid making permanent cutbacks. But there are many other opportunities in managing expenditure to prioritise what is essential now and what can be deferred with little hardship. Some years ago, I was regularly able to cut firms office consumable expenditure by reducing the buffer stock that they held. In one large firm we rounded up sufficient stock to last them six months without having to replenish their supplies.

Permanent cost savings-if the cash flow squeeze is more than a temporary blip, and unless there is a substantial increase in income expected, meaningful permanent cost savings need to be made. These in turn come in two forms. If there is insufficient demand in the market for our service then we have to reduce capacity. In the legal world this means reducing the number of people we employ however hard and painful this may be. We then carry on largely as before but with less people producing less output.

If however the problem is not so much a lack of demand but an inability to make us sufficient margin from the work that we are doing, then we need to make Cost Reductions. This means that we have to change our processes and methods and stop doing things which add little or no value. These tasks are either automated or streamlined out of existence and we no longer need the people who currently perform them hence their roles will become redundant.

In the last recession the legal sector saw a great deal of Capacity Reduction, but relatively little Cost Reduction. This recession looks very different-technology, automation and process improvement all mean that the future could look very different and genuine Cost Reductions will be needed.

Bigger is not always Better

One of our clients applied for a CBILS loan from their main UK clearing bank but were turned down. Their needs were more than those of a Bounceback loan so that was not an Option.

This is not our field, but we do pride ourselves on having good contacts with many businesses who help law firms in a variety of ways.

So, we suggested they speak to a finance broker who has helped a number of our clients over the years. Again, not one of the big organisations

He reviewed their needs and profiled them against the CBILS panel. He identified only 2 members of the panel likely to have an appetite for this proposition. But fortunately, he knows his job. One of the two has approved the application. Our client can continue to service their clients with a facility adequate to see them through the tricky times next spring when the VAT and partners tax will fall due.

Of course, it is always better to have a good relationship with your bank and look to them in the first instance for your funding needs-but sometimes specialist need can be better met by smaller organisation.

Forecasting cash flows (medium-term)

Many firms have had to forecast their cash flows in order to understand their financing needs in the coming year and often to substantiate their application for CBILS loan. How can they arrive at a realistic sensible forecast in such times of uncertainty?

The short answer is that any forecast of the future will be wrong-but that we can get an idea of where we are headed. Provided we are clear about our assumptions we can track the main variables and adapt our response accordingly.

The approach we have adopted is not complex but is detailed.

Firstly, we recognise that the Covid/lockdown will affect all departments differently-so we forecast at department level then aggregate the firm.

We start with the budget income for each department for the coming year-month by month we then ask a simple question. For that department, for that month, what percentage of our budget do we expect to bill (collections come later)?

Best done to the nearest 10%. Spurious exactness is unwarranted. This can be done in a simple spreadsheet and the calculations take only a few lines but can be very powerful.

This format allows us to track the accuracy of our forecasts and update them regularly by tracking the percentage achieved each month against a predetermined standard we can assess the impact in each area and make our staffing and resourcing decisions accordingly.

Any forecast about the future is bound to be wrong-they can only be as good as our assumptions, but this approach gives a logical framework to make decisions regarding funding and people.

Breaking the Link

Lawyers are obsessed with measuring profit. Over an extended period profit and cash flow are related, but our workshop feedback shows that many lawyers do not fully understand the link between the two.

Successful firms can create a strong positive cash flow. They may choose to reinvest it in growth, and use up the cash, but that’s another matter. They do generate the cash. Conversely unsuccessful firms spend more than they earn and burn cash (or liquidate their assets).

But we are currently in very confusing times especially for law firms-one client called it a Fools’ Paradise. Many firms at the moment are experiencing poor trading conditions and (especially if they account for Work in Progress movement in their monthly accounts) have much reduced profits.

Income is down, partly but not fully offset as staff costs are reduced by Furlough and some salary reductions-and yet cash flow is strong.

There are two reasons for this

Firstly cash flows come in from prior billing-March and even April were good for many firms. Secondly the government has broken the link between profit and cash flow. Firms are being allowed to keep the VAT they collect on billings, but are not being required to pass it on to HMRC until next spring. Similarly the Partners Tax liabilities on profits already made are also not to be passed on to HMRC until next January. This has helped many businesses, not just law firms, to continue to trade through this unprofitable period.

But-the liabilities are not cancelled, only deferred. HMRC still needs to be paid. The link between profit and cash flow will be re-established at some point. Make sure that you have a robust cash flow forecast, and ideally have some reserve pots holding onto the cash that HMRC will eventually ask for

The Misery Index

When the COVID 19 Crisis struck the Chancellor acted very quickly to help affected businesses and employees with the CJRS Furlough and a range of Government backed loans.

But most of the measures have done little to mitigate the impact on Law Firm Owners, who will still be hit hard.

The Furlough scheme is a real help and has prevented (or at least deferred) many redundancies, in the hope that the recession, whilst deep, may only be short lived. But the loans only spread the impact – they do not reduce it. They turn a major hit into a series of smaller ones over (up to 6 years), and they make the cash flow consequences survivable for most – But the total damage is still there.

So far as I can see for most well-run firms with a typical mix of Residential Property, Private Client and Owner Managed Business clients the likely hit will be in 6 Figures.

How do I arrive at that?

I start with the position of the firm Pre-COVID – actual or budget, as the benchmark, (many firms have March or April year–ends, which coincide with the start of COVID)

I then look at the likely reductions in Fee Income. Of course, this varies by Department/work type, but for most mixed/high street practices this is unlikely to be less than 20% in this financial year – for many it is more.

There are some cost savings to be made – including the impact of the Furlough grant. In most cases these staff cost savings are less than half of the lost income – often closer to one third, but this depends on a range of factors specific to each firm. And then, there are some savings to be made in other overheads, but many of these, such as Rent, PI Insurance, IT are fixed – so the savings are likely to be modest.

This scenario assumes that the economy recovers fully by mid-2021 and that there is no second spike.

So how can we evaluate the impact on partners let us take a simple example of a £5m turnover firm which loses 20% of its revenue (£1m) and saves £350k in staff costs and £50K in other overheads. This firm would suffer a profit reduction of £600K – so simply divide by the number of equity partners to arrive at the impact per PEP. Suppose there are 8 Partners, this would produce a hit per partner of £75K.

If the fee income fell by 30%, and the other ratios followed, the hit per partner would be over £100k. There would be less tax to pay, but that is scant consolation.

It is important to understand that this damage is being done here and now and there is little that can be done to avoid it hitting the profit and loss account, and thence Partner capital. Borrowing money merely spreads the cashflow impact.

For some Partners, the COVID damage may wipe out their Capital/Current accounts. For other looking to retire, this may affect their life plans. There has been plenty of publicity about the impact on other industries such as hospitality. The impact on Law Firm Partners seems to have gone below the radar.

The Sting in the Spring

I was talking to a client last week about his cash flow position, and the impact of lockdown. His answer was enlightening. He said “We are living in a fool’s paradise”.

The period from March to May has been excellent – March  year end billing – good collections through April and May and on top of that the Furlough Grants. They (and many others) have not had so much cash in the bank for ages.

And yet…

He was very concerned about the prospects ahead the foreseeable phases which will make life very difficult for many firms – and may prove terminal for some.

The next 3 months look likely to be difficult. Transactional work both property and commercial has not been coming in – this is bound to affect billing and cash flow soon.

The word from the Professional Indemnity Insurance market is that the October renewal will be very difficult for a number of reasons – not least the Financial Stability risk resulting from lockdown. Premiums (and thus cash requirements) are likely to be higher, and some firms may not find cover at all.

And then courtesy of HMRC we will have “the Sting in the Spring”.

In he short-term HMRC eased the effect on firms cashflows by deferring the Q2 VAT payments until March next year. For Partnerships they deferred the July Tax payments until January next year. But these liabilities are only deferred – they still have to be paid.

The cash flow implications of Q1 2021 look awful. So maybe our client was right. Bulging bank balances at the moment do mean we are in his Fools Paradise.