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Are you getting pressured to cut expenses?

When business is declining or the marketplace is starting to panic, firms start making decisions they hope will protect them. Months or years later, some analyze the efficacy of these choices to see what went right or wrong. We have been through enough natural and man-made disasters and recessions that we can look back and find some trends.

What do professional-services firms cut? (1) Payroll, obviously, we’re already starting to see law and accounting firms lay off personnel, and we’ll certainly see lower raises and bonuses at year end. Other firms are renegotiating their steep (2) rent payments with landlords, to defer or reduce near-term payments. (3) Charitable contributions and sponsorships will be drastically scaled back. At a time when less money will be given to those in need, please try to find a way to spend as generously and strategically as possible, to create the most benefit to the people who truly need it. (4) Travel will be slashed while the lawyers are on COVID lockdown, but that’s likely to stay low after we return to work. Once we all finally figure out Zoom and other teleconferencing technology, it will be harder to return to unrestrained spending on costly airfare, hotels, and related entertainment expenses. We may find that this is a mistake; video on a computer screen lacks the impact of a sincere handshake and sitting down face-to-face with clients and prospects.

Another category of expenditure on the chopping block is (5) membership dues. Let’s analyze that. Some of this cutting is appropriate, actually. It’s easy for lawyers to fill out a short form, spend firm dollars to join a local or state bar association or industry group, add those bullets to their resumes, then never give them a second thought.

Cancel those memberships―those are a waste of precious marketing dollars.  The same goes for most of those “anyone can join” organizations. 

Scrutinize other professional groups and memberships. If (a) they’re not helping you do your job better right now, or (b) you’re not an active participant, i.e. chair of a committee, or attending regularly for networking purposes and seeing results from them in terms of clients or referrals, then I’d ask why you’re giving them your money. No one’s impressed, they’re not legitimate “honors,” and you’re not deriving any value from them. These are the types of groups that firms might well consider cutting.

What organizations should you continue to support?

Many of my law firm clients are members of either the Legal Marketing Association (LMA) or Association of Legal Administrators (ALA). It can feel easy for firms to cancel those, feeling that they don’t contribute sufficiently to the firm’s bottom line. I’d urge you to maintain those memberships ― they’re both excellent at keeping your administrative professionals educated about what they need to know right now. Members receive candid advice (via teleconferences, webinars, listservs, alerts, and networking) from a dedicated cadre of consultants, vendors, and professionals at similar firms who are dealing with the same issues. It’s a way to ensure you don’t miss anything important, keeping your firm informed and flexible during a time of rapid change.

There are other groups that also require monthly or annual dues, like the associations that bestow a credible honor or accreditation upon the recipient. For example, I’ve worked closely with the Federation of Defense and Corporate Counsel (FDCC) and Litigation Counsel of America (LCA) and have seen their vigorous vetting process from the inside. I’d hire any of their litigators straight out of the member directories, because I thoroughly trust the screening process. And anyone else who’s made aware of the rigor of their processes would feel similarly.

These types of honors help validate the quality of these lawyers, which enhances their business development. These accolades set the lawyers apart from their competitors.  I’d suggest maintaining your membership in these groups, particularly at a time when there’s less business out there. Do nothing now that can make it less likely that your rainmakers will get hired.

Also maintain your firm networks.

Another expenditure that gets scrutinized is memberships in professional firm networks, those that seek to refer work among its member firms. These operate under a variety of structures. For example, they can be collections of full-service law or accounting firms (e.g. Mackrell International or Meritas), or mixed law/accounting groups (e.g. Abacus Worldwide, Alliott Group, or MSI Global Alliance), or single-practice networks like The Trial Network.

The annual dues and other costs associated with these groups can be quite high. Over the years, I have worked closely with literally dozens of these networks all over the world, including most of those mentioned in this post.  It can take years of hard work to establish a sufficiently visible presence in a network to generate a steady flow of referrals. It’d be marketing malpractice to squander all that effort in the interest of short-term cash flow. And of course, an invaluable but intangible aspect of these networks is having a close-knit collection of trusted firms or professionals that you can safely refer your clients to. Don’t let the bean-counters understate the value of that component.

This year, of course, it will be more difficult for all of these organizations to prove their value, with conferences being canceled, and less business to refer around the networks. But I’d urge member firms to do their best to maintain select memberships while working aggressively to build their visibility.  Research shows that firms that continue marketing aggressively in a recession exit in much stronger position than their competitors.

Is your firm acting similarly? Please comment below or feel free to contact me directly if you’d like to discuss how these apply to your particular situation.


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