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November 3, 2010

The New Business of Law: Ideas and Solutions for Increased Profitability. November 3, 2010. Agenda. Tax Update David Springsteen, CPA, WithumSmith+Brown , PC Session I: New Business Development/Social Media Arthur G. Levin, President – AGL Associates

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November 3, 2010

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  1. The New Business of Law: Ideas and Solutions for Increased Profitability November 3, 2010

  2. Agenda Tax Update David Springsteen, CPA, WithumSmith+Brown, PC Session I: New Business Development/Social Media Arthur G. Levin, President – AGL Associates Roger Ardan, Vice President Professional Services – Gibbs & Soell, Inc. Session II: You Can’t Manage What You Don’t Measure Paul Sperry, President – IDP Consulting, LLC Anthony Millaci, Partner & VP Business Development – LDI Color Toolbox Arthur Freierman, President – Southbridge Financial Corp. Moderator : Thomas R. Suarez, CPA, WithumSmith+Brown, PC

  3. New Era of Business… Tax Policy in Uncertain Times

  4. $1 Trillion

  5. 3,500 Taxing Authorities + International

  6. Tax Burdens and Opportunities for Law Firms Administrative Compliance Mergers and Acquisitions Bankruptcies Contracts Estates and Trusts Settlements

  7. NEW BUSINESS DEVELOPMENT A Cooperative Firm-wide Necessity Presented by: Arthur G. Levin President AGL ASSOCIATES

  8. BUSINESS DEVELOPMENT AND CLIENT RELATIONS The vast majority of all business coming into law firms comes in as a result of Partner personal contact.

  9. BUSINESS DEVELOPMENT AND CLIENT RELATIONS Some partners have a natural ability to interact with others in such a way as they attract business, all others need some degree of training and/or assistance. This doesn’t man that Rainmakers are no longer important. It mean that most firms need to develop additional revenue creators from among the remaining partners.

  10. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • The modern firm has the responsibility to provide at least basic business development training to all lawyers. Every lawyer must know: • How to conduct themselves at a first meeting with a potential client. • How to give others a reason to direct referral sources and potential business.

  11. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • How to “ask for business” by telling the other person what’s in it for them. • How to convey their expertise to others. • How to use the right words to convey the firm’s business development message. • How to properly encourage friends and family to help him/her develop business.

  12. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • What is the role of the firm? The firm has the responsibility to assure that: • Marketing efforts are well organized and understood by the entire firm. • The firm compensation system encourages and does not discourage business development. • Lawyers are not penalized for legitimate time spent in developing worthwhile business.

  13. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • Business development results are monitored for effectiveness based on gross fees received reduced by actual overhead cost. • If you do individual partner Marketing Plans, that they are realistic and monitored for results and not just a waste your time. • Lawyers are rewarded for active client retention and fee growth. • EVERY LAWYER IN THE FIRM HAS A ROLE IN FIRM BUSINESS DEVELOPMENT.

  14. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • Additional things you can do: • Target specific clients and establish a realistic strategic acquisition plan. • Develop a comprehensive lawyer connection questionnaire. • Establish an understanding among all partners of what every other partner does and establish a formal, continuous method for internal cross selling.

  15. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • Firm’s leadership must address the following in today’s highly competitive law firm environment: • Encourage cross selling with other professionals. • Reduce partner internal competition and create a firm atmosphere where lawyers think of clients as “clients of the firm”.

  16. BUSINESS DEVELOPMENT AND CLIENT RELATIONS Utilize billing innovation to meet a client’s needs with strict firm control. Strongly encourage client growth and succession by making it part of the firm culture. Develop realistic firm differentiators and make sure every lawyer knows how to present them. Create, communicate and control a strategic firm wide marketing plan.

  17. BUSINESS DEVELOPMENT AND CLIENT RELATIONS Stay away from lawyers when you market. Go to where potential clients are. Eliminate “Stealth Marketing” where lawyers hide behind the firm’s general business development program.

  18. BUSINESS DEVELOPMENT AND CLIENT RELATIONS • Things to think about: • Do you truly understand all aspects of your client’s business? • Do you take the time and effort to truly evaluate the service you provide to assure that it is holistic and serves the client’s needs not just his requests? • Do you and your firm colleagues sit down and discuss how the firm may better serve your clients?

  19. New Business Development Does Business Development Really Have to be Social ? Presented by: Roger Ardan Vice President/Group Head Gibbs & Soell PR

  20. Law Firm Experience

  21. The Good Old Days • Snail Mail • Rolodex • Phone Messages • Telex • Fax Machine • Software “Secretary”

  22. Where We Stand Today • Cell Phones • Voicemail • E-mail • Software • Word • Excel • PowerPoint • Photoshop • Etc.

  23. It’s a Big Online World That Keeps Getting Bigger…

  24. Lawyers Online – A Snapshot of Social Media Participation • General counseluse of online social networksis expanding rapidly • 71%are membersof an online social network • 1/3 participate dailyin online social networks Survey commissioned by LexisNexis Martindale-Hubbell 2009

  25. Dramatic Shift In Law Firms Towards Social Media • 10% of respondents “had a client retain their legal services as a result of use of online social networking” - 2010 ABA Technology Survey Report • 83% LinkedIn – Professional referrals • 68% FaceBook – Non-professional referrals • 15% Twitter

  26. Do not post anything online you do not want anyone and everyone seeing. Never give legal advice online. Do not discuss client matters, confidential information or proprietary materials online. Be careful of whom you “friend,” “follow,” or allow as a “fan.” Be judicious about posting job recommendations for associates or staff, and/or soliciting them for yourself. Review your firm’s digital media and social networking policy to make sure you are acting in a compliant manner. Lawyers Online – Ethical Considerations * Adapted in part from a New York Law Journal article on 3/16/10

  27. LinkedIn - What Is It? A free business-to-business and corporate networking tool A tool that allows you to search for and contact people Clients, colleagues, alumni An easy way to track people you know, and to learn about who they know (and could introduce you to) Gain access to other people’s networks that you link in with A basic LinkedIn profile can be set up in 15 minutes Photo, educational info, professional information

  28. LinkedIn - A Profile Example Interesting Note: Jim’s connections increased from 274 to 472 from Oct. ’09 to Mar. ‘10

  29. LinkedIn - Setting Your Strategy “Open Networker” Focus is ongrowing the size of your networkby connecting with as many people as possible Pro: wider net to find prospects from Con: less likely to have a close tie with those prospects “Trusted Resource” Focus is onfewer, but deeper connections Pro: Closeness can lead to a strong referral Con: Limited net to find prospects

  30. LinkedIn - Top 10 Tips 1) Put your best “profile” forward Client-focused keywords 2) Make profile available to search engines to index 3) Actively add people to your network Direct connections = opportunities Peruse through their contacts and ask for introductions when relevant 4) Send updates and e-mails to your network when there is something big you would like to share 5) Monitor status updates and conversations and initiate discussion where appropriate 6) Join groups in your area of interest Practice area Key organizations Alma mater, charities, etc. 7) Share white papers, articles and other resources with your group 8) Build a networking “pipeline” through question and answer groups 9) Research potential clients Look for connections and insight 10) Don’t be shy about helping others in your network You scratch my back…

  31. LinkedIn - Tips to Manage Social Media • Use your staff resources, as appropriate, tohelp set up and manage your profile • Dedicate 10-15 minutes a weekto building a new contact and updating your information • Set as a standing meeting • Direct all notices/alertsto your e-mail • If possible, alwayssend a personalized notewhen accepting an invitation • Periodically audit your connections to see if anything “rings a bell”

  32. Benefits of Social Media • Find the right people you want to get in front of from your desk • Turn “cold call” into “warm lead” • Allows people to find you • Keeps your name visible • Keep in better touch with contacts • Actively stay in front of contacts • Serves as a constant reminder • Obtain new business

  33. THE NEW BUSINESS OF LAW: You Can’t Manage, What You Don’t Measure! November 3, 2010

  34. Is Your Technology Budget the Elephant?

  35. FIRM MGMT EFFECTIVE TECHNOLOGY FOR THE NEW “NORMAL” LAW FIRM COST RECOVERY SOLUTIONS COPY/ PRINT/ MFP SCAN TO EMAIL SCAN TO SHARE EMAIL SCANAND CAPTURE ADMINISTRATION AND DISTRIBUTION CASE MANAGEMENT FAX STORAGE AND RETRIEVAL RECORDS/ KNOWLEDGE MANAGEMENT eDISCOVERY/ LIT SUPPORT DOCUMENT MANAGEMENT

  36. THE RIGHT APPROACH A holistic approach to technology solutions and costs. You cannot afford to leave technology decisions to techies – or even partners who are wannabe techies! Requires team approach that addresses many areas as cost centers.

  37. CONTROLLING COST • Is technology a cost center or competitive advantage? • The right technology is free; performance improvements and reduced labor costs should exceed the cost of technology • How much does it cost? • 1 - 10% of revenue • $2,000 per employee annually • It depends….on risk, service levels, complexity, etc.

  38. FINANCIAL ANALYSIS

  39. THE IMPORTANCE OF INFORMATION & TECHNOLOGY MANAGEMENT Top 4 budget line items for a law firm…. • Labor • Rent • Technology • Insurance A lot of money is spent on Technology – take the time to manage this investment; it’s not difficult

  40. PURPOSE OF TECHNOLOGY • Where it began…Efficiency • Word processor v. typewriters • Spreadsheets v. calculators • Email v. the US Postal Service • Maximize Staff Productivity • Meet the demands of your clients and staff • Generate timely and accurate information to run your business

  41. THE IT PARADIGM Benefits Costs

  42. PEOPLE

  43. PLAN • Define SMART Objectives that Support the Business Goals • Create a Three Year Plan and Revise Every 6 Months • Most Common Trends • Paperless -> Information Anywhere • Project/Matter Management Systems • Business Intelligence & Dashboards • Cloud Solutions • KISS – Keep It Simple

  44. PROCESS • Technology Plan • Decision Making Process • Continuous Communication with Staff & Clients • Gather Requirements • Define Project • Implement • Feedback • Learning Process

  45. FINANCING YOUR TECHNOLOGY • Your firm does not manufacture widgets but does have to make capital acquisitions. • Consider • Useful life • Firm growth projections • Client requirements • Budget

  46. FINANCING ALTERNATIVES • Pay from cash flow – What is impact on distributions? • Borrow on bank line – What is available & what are your future needs? • Term Loan – Is this really additional availability? • Leasing – Vendor or independent?

  47. LEASING ALTERNATIVES • Capital vs. Operating Lease (accounting treatment) • Finance Lease vs. True Lease (tax treatment) • Fair market buyout vs. $1.00 buyout (shifting risk of obsolescence) • Lease Terms (Don’t give equipment lease to a real estate partner for review!)

  48. SOME TAKEAWAYS Review your IT budget & strategy periodically. Explore Alternative Financing Options. Renegotiate Monthly Support Costs. Schedule Periodic Meetings with your Technology Team. Get the most from your technology investment – harness the information

  49. HOW DOES YOUR FIRM MEASURE UP? • Technology Costs • What is your monthly technology costs? • How much did you spend over the last 6 months on technology? • Is there a better way to pay for it? • Profitability • What is the estimated profitability of each active matter? • Who are the top five most productive Attorneys? • Which practice areas are the most profitable? • General Information • How long would it take to review relevant documents for a specific matter? • Do you know where to find the most up-to-date contract form? • Do you have access to critical client information from outside the office?

  50. QUESTIONS

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