Practice Management

Marketing Tip for Law Firm Managing Partners: Require Non-Billable Hours

By Brian J. Ritchey

Last week I wrote about some responses to the 2007 Remsen Group Managing Partner Survey (part of the Juris 2007 Law Firm Economic Survey by LexisNexis (the Survey))  related to managing partners' strategic perceptions of profitability.  I wrote about two of the strategies:  increasing fees and cutting costs.  However, 25% of managing partners felt marketing and business development was their firm's best way to achieve higher profitability, second only to increasing fees.   That is a substantial number, especially since those same respondents reported that only 3% considered marketing and business development when determining partner compensation.  It appears there is a disconnect here.

If you believe that marketing and business development is an effective strategy to achieve higher profitability, it is in your firm's best interest to provide a financial incentive to increase marketing and business development activities.

So, how would you compensate for marketing activities?  Utilize your accounting system to record non-billable work that is targeted to specific marketing activities.  Some Juris clients create specific codes representing marketing activities and require a certain amount of time be allocated to these activities each month.  Just as the firm budgets for billable hours, they budget for marketing hours.  And your compensation formula, to the extent you use them (63% of those surveyed were using either a strict or mostly formula-driven compensation system), should include non-billable business development and marketing hours.  Only 4% of those surveyed placed considerable weight to non-billable hours in their compensation formula.

Requiring non-billable time as part of your compensation formula is an incentive to focus on marketing activities.  It doesn't, per se, achieve higher profitability.  Marketing efforts must also be targeted and measured, just like any other performance metric.  However, it is a lot easier to determine whether your business is being generated by word-of-mouth or by marketing efforts if you are tracking the hours you spend marketing and have a paper trail of activity that leads to new business.

Michelle Golden has a great post on developing a marketing plan here - she even includes a downloadable sample marketing plan spreadsheet.  John Remsen also has a good article on marketing plans here.  Look here, here, and of course here for other ideas on how to integrate marketing into your practice.

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Full post as published by More Partner Income on December 12, 2007 (boomark / email).