Feature

posted 1 May 2003 in Volume 6 Issue 1

Cross-selling: Why, how and who?

Partnerships continue to retain an individualism born of years of tradition. Even sharing information and knowledge can be difficult in such an environment, and anything sounding like sales comprises a whole new ball game, often fiercely resisted by the firm’s partners. Ian Reaves, partner in charge of client development at Hammonds, explains why lawyers should stop worrying and learn to love their latent cross-selling talents.

Why cross-selling?

“I am a lawyer. I didn’t come into the law either to sell myself or my colleagues.”

How many times have we heard this statement, either explicitly or implicitly? Cross-selling is an overused and misinterpreted expression, but it is shorthand for one of, if not the most important techniques professional services businesses must adopt.

Before we look at creating the right client environment and actually making a difference, let’s try and crystallise cross-selling’s importance in negative and positive statements:

The negative statement:
All areas of law in a corporate law firm must be demonstrably part of the services purchased by the key clients of the firm. If they are not they will not survive;
The positive statement:
It must be a key objective of any services business to ensure that every client is aware of, and where appropriate, purchases all available services during the client relationship. Clients are not the property of individual partners, but the clients of the firm as a whole. We must ensure that all client relationships are of the highest quality.

These statements can be argued with. That was my intention. They illustrate, however, the fundamental importance of cross-selling.

Is your firm creating the right client environment?

There are only three sorts of clients – new clients, existing clients and ex-clients. Clients cost money to acquire and lose, the latter because you invariably need to replace them. Is your firm focused on creating long-standing profitable relationships with new and existing clients? Here are some of the essential foundations for the right environment:

Do you have executive buy-in?

Every leader of each economic unit must have bought into the firm’s sales and marketing strategy, not merely the senior and managing partner. This requires the creation and communication of strategy to all lawyers and support staff. The strategy will identify every detail of the markets and clients the firm wants to work with, together with the look and feel of the client relationships. The reality, however, is often nearer to a “bill and sue” culture where the executive is primarily concerned with hours recorded and cash collected with little or no clear delegation or accountability for the development of the firm’s business among the partners.

Has your senior partner got the levers to enforce change in partner behaviour?

To develop client relationships effectively, you need a collaborative team-based environment. The provision of legal services to corporate clients is a team-based activity. Individual effort and flair is important but not as much as a well constructed client team. Here are some examples of levers that encourage the right behaviour:

A partner appraisal and remuneration system that reviews and rewards appropriate behaviour;

An overview and management of marketing budget;
Management and direction of key clients;
Management and direction of major pitches for new business;
Sales planning.

Does sales planning drive your fee budgets?

We have all seen departmental fee budgets with rows of fee earners’ names with figures next to them. The figures are in effect a sales forecast from which you must identify and plan which clients you are going to earn the income from and how you manage the client relationships. Many managing partners, however, budget for fees on the basis of historical performance, plus a percentage, to take account of increased costs. They take no account of the following:

The market position of their lawyers;
The quality and sustainability of the existing client relationships;
The unexploited opportunities for new business (i.e. cross-selling) within existing client relationships.

Clients expect to be “sold” to. They do it every day in their own businesses. If you don’t sell your business to your clients they will construe your behaviour as a lack of interest or, more damaging, a lack of understanding. You therefore reduce their trust in you as an adviser, which is not a good position to have in a competitive market.

Are your business units aligned or are they silos?

If you don’t know which of your units work with your key clients and you can’t manage the growth of these client relationships, you have got silos. If the majority of your units can work at all levels, from the boardroom down, with your key clients, then your firm is achieving alignment. The latter is a great platform for sales growth in a competitive marketplace. Your strategy must be clear on the steps that you will take to minimise the silo effect and drive alignment.

Do you promote growth of strong cross-firm trading relationships?

Let’s keep this simple. This is all about working together for the benefit of the client. Is your firm doing any of the following things?

At each unit level, do the partners regularly lead all lawyer discussions about the growth and development of clients?
Is sales and sales development a regular agenda item at partners’ meetings, particularly at office level?
Is there development of products that can be sold by all units?
Is it the rule that in planning any seminar or event, it must involve as many units as appropriate?
Are partner-led team meetings the norm for all key clients?
Are all pitches for new business properly managed team-based projects and not paper based, content poor exercises?

If you can identify half of the above activities in your firm, you are making progress. Cross-selling is involved in every one of these illustrations.

Do your partners and lawyers understand what the firm can do for a key client?

Your goal is to have majority of your units able to advise a key or prospective key client on strategic, tactical and operational issues. If the services of most of your units are only required by a plant manager as commodity support you have a fundamental problem. A good example is employment law and pensions law. The issues impact in the boardroom and right down to the small but potentially damaging discrimination

claim. Your lawyers can use this fact to embed themselves in all relevant levels of the client business using e-based updates, training, and regular reviews of foundation documentation. They are also very important members of corporate finance/project and banking transactional teams.

If you can replicate these tactics through most of your units, your next challenge is to ensure that all of your lawyers know what other units can do in terms of products, expertise and specialist services.

For partners, this must veru clearly be part of their responsibilities and their individual performance and knowledge must be reflected in the firm’s appraisal of them.

The world is never ideal and your executive must overview the partner team to ensure you achieve the right balance of technical producers and business men/women changing and improving as necessary.

Do you have partners managing key clients on a firm-wide basis?

Most firms have a supervising partner for every live client matter. What is interesting is whether the firm has made an individual partner accountable for the maintenance and development of key client relationships. If not, the firm is missing an essential foundation for successful cross-selling. If the answer is yes, the firm must ensure that the relationship partners are supported with appropriate key account management training.

Are your support services aligned behind the partners or not?

Clients belong to the firm and not the individual partners. Who is ultimately responsible for the clients and the services provided to them? There is very often confusion – is it the senior partner, managing partner or marketing partner? The answer is the senior partner, who works through and with his managing partner, unit heads, relationship partners and partners. If there is still confusion or tension in your firm in this area, it must be resolved quickly.

The partner team in most corporate firms is supported by fully-formed marketing, finance, IT, HR and training functions. The directors responsible for these areas must be fully briefed and have bought into the firm’s sales and marketing strategy in the same way as the firm’s lawyers. You can’t have the IT director creating an IT strategy in isolation or the finance director producing complex and opaque financial reports to support relationship partners.

Further, the provision of support for the partners is a costly business. Are your support directors and their teams valued advisers to your partners or simply their submissive servants? You require the former in a competitive marketplace.

Making the difference?

Managing clients effectively and profitably is a team-based activity, blended with good/strong partner leadership. Now imagine you are quietly minding your own business and the senior partner calls and asks you to pop in immediately. You do and you are told that one of your rainmaker partners is leaving (and quickly). The senior partner asks you to take over management of one of the leaving partner’s key clients. That is the extent of your briefing. You have a week before you are to meet the client’s general counsel, apparently on your own.

How do you create a strong platform for cross-selling to a key client?

You have a week to get under the skin of your firm’s relationship with this key client. Here are some of the steps you could take:

Ask the finance department for a three-year review of the income earned by the firm, giving details of the client group/units instructed/matters/partners and lawyers who undertook the work. This report will also comprise full details of the profitability of the relationship and its net contribution. It will also give full details of the firm’s financial exposure to the client, WIP outstanding bills all appropriately aged;
Ask the marketing department for a report on the mailings made to the client and recent attendance by executives of the client at the firm’s events;
Obtain the most recent research report on the client and its market sector;
Obtain from your partner his “rolling” key-account plan for development of the relationship, together with minutes of his client-team meetings and his client-review meetings;
Convene and hold a client team meeting and receive a full briefing from your team.

The reality is that in most firms you will only obtain a very small part of the above information. In fact, your partners in the client team might not even want to

meet you because they don’t agree with this intrusive relationship partner concept. You will have to be ready for anything at your meeting; the most important thing is to get the general counsel to trust you.

Does the relationship have the essential elements?

What are you looking for? If you can identify that you can try and change the behaviour of your colleagues and provide tools to support the right behaviour.

Team

Who is currently in your client team? What are they doing? Most important, who are they doing it for at the moment? Have you got lawyers working with junior executives? Are partners building relationships with board members, the managing director, the finance director and the marketing director? Do you have under-motivated lawyers doing work with a client they don’t understand on a lightly supervised basis? Has the client only been seeing a partner when there was a serious problem?

What does your financial information reveal over the last three years? Has your firm’s income been going up? Are more of your units involved with the client? What work was being done but is no longer being received? Why?

The provision of legal services is a “people” business. Many lawyers, however, avoid communicating with their colleagues. In most legal firms, therefore, clients-team meetings are not the norm. Consequently, in getting to know your team, see them first on a one-to-one basis. You will be trying to find out whether you have the right level of technical expertise, how the business comes into the firm and who is currently trusted by the client. Finally, back to your financial information, is the team “profitable”? If you can’t find out, talk to your senior partner. There is no formula for this work – be under no illusions you are on a journey.

Leadership

You must identify any elements of leadership in your client team. It can be found at all levels. From the secretary that sorts failures to adhere to the client’s billing protocols that the partner hasn’t told the team about, to the junior lawyer who plays football with the property director and knows all about the client’s expansion plans. You are looking for anyone who has a vision of the client relationship.

A plan

If you get reasonably positive answers to the questions I have raised, you will have the foundations of a plan to secure and develop the client relationship. We will return to this issue shortly.

How do you identify the key buyers of legal services?

You should by now have identified which legal buyers your team is obtaining business from for the firm. I am also assuming that you have come to the conclusion that this client does buy the full range of legal services and will pay the fees you are charging in the marketplace. This, along with profitability, is fundamental but is a subject for another day. We are concentrating in this article on the right client environment.

Any key client plan will contain particulars of the management structure of your client drawn from publicly available information. It will also have a competitor analysis giving known details of other legal suppliers used by the client. Comparing this core information will tell you who you don’t know.

A relationship partner must use his team’s existing relationship network to identify any other buyers that are not immediately apparent. His plan will include the who, the how and by when of getting to know the missing links.

How do you build and change your client team?

If you have identified new areas of work in your client you will introduce new colleagues into your client team.

It should always include a partner and an appropriate lawyer. Brief them on your plan, your team and agree their objectives. This is cross-firm trading in action.

With regard to existing members of the team you must assess whether they are proactive in the client relationship. Ask yourself, do they know the right people at the client? Is there any evidence of them having obtained any work from the client for anyone other than themselves? A useful way of seeing whether a colleague can change is clear objective setting. You may have to replace team members. The client will have already identified your weak team members but he won’t tell you who they are.

What are your relationship partner’s responsibilities?

This question needs another article to answer it fully, but essentially the relationship partner must be the trusted representative of your firm who ensures that your client team consistently exceeds the client’s expectations and builds strong relationships with the client’s management team. He must be demonstrably confident that he can make your firm work for the client.

Conclusion

Cross-selling is an overused expression but I would suggest it goes to the core of a successful professional services business. There is an unwritten rule that if you have services A, B, C and D to sell, if a partner trys to sell A the client will require D that day. If the partner cannot deliver D he will never sell the A. That is cross-selling in action.

Ian Reaves is a partner in charge of client development at Hammonds. He can be contacted at: Ian.Reaves@hammonds.com.