How to value a law firm

September 22, 2015

meeting boardroom professionalsThis piece is not about the acquisition value of a law firm.  More importantly, it is about how you create value for clients, i.e. your identity capital.  And if you visualize clients and prospects as investors, not clients, you then have a unique opportunity to make a compelling business case for them.  “Seek a person of value, not success.” – Albert Einstein.

Not surprisingly, creating value must precede a firm’s growth.  It is possible to develop a brilliant strategic business plan without considering client needs and problems.  But it will be doomed to failure.  Rather, follow the Microeconomic Path developed by 36ixty, LLC. which begins with confirming a strong identity in the market place, supporting active firm leadership and targeting sustainable growth.

Next internal and external communications need to be refined and strengthened with the attorneys and all staff understanding not just the “what”, but the “why.”  These 5 steps will then lead directly to creating that superior value upon which to base your core story.

That core story becomes the key to creating value for your clients.  It should educate them  to expect certain benefits if they hire that someone else that claims to deliver what you deliver.  That is why you must set the “buying criteria” in their favor.  And by doing so, you are ultimately setting the buying criteria in your favor.  Therefore, the benefits they will receive must be clear and convincing.

Recently, a client presented a not-uncommon problem, “Our office has great attorneys but our revenue is flat.”  By presenting  them with issues that frequently cause this revenue gap, they began to understand where and why they had this problem.  Their lawyers did not understand a basic truism – that clients do not care about how great an attorney is.  They assume that to be the case.  They do care about what those great attorneys can do for them.  Developing a common core story with the entire group and using it with each client and prospect got them back in the game.

When setting the buying criteria in their favor, use the 5:5:5 Rule by identifying the benefits, features and advantages.  The core story amplifies your value by:

  1. Identifying the pain of the prospect;
  2. Agitating it with market data and research;
  3. Telling them “it does not have to be this way”;
  4. Describing the solution and identifying what to look for in a provider;
  5. Fifth, and no sooner, talking about your firm and your work.

Remember, first and foremost, clients are buying benefits and solutions.  Yes, a reputation matters, but you would not be in front of them if they did not believe it would be a benefit to have you working for them.    This is known as your identity capital.