July/August 2003  Volume 29, Issue 5
July/August 2003 Issue
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Chair's Message
Skin in the Game
by John C. Tredennick, Jr.
 

Last week I had lunch with an old friend while visiting his law firm on an out-of-town trip. Donald is one of the stars of his firm, a top business developer, a high-hours producer, a practice development leader -- and one of the firm's most forward thinkers on marketing.

But that day he was frustrated. He had made an interesting proposal to his management committee but had been turned down. The idea, which sounded pretty cool to me, was this: "I want to put three of our best business developers on the road for the next six months meeting with our top clients to cross-market our firm's services." His goal was to let his firm's top marketers do what they do best -- sell the firm.

The rub? Billables for those highly productive people would go down while they concentrated on business development. Being protective, Donald had proposed that management guarantee draws for those partners while they tried out the idea.
Normally, I would have commiserated with the obligatory, "What are those folks thinking?" This time I took a different tact, maybe because, in running a business the past three years, I've been heavily involved in sales myself.

"I can't say what your management committee was thinking," I began, "but I can see one reason they might have turned you down. Your proposal is tied to efforts rather than results. If the partners' draws are guaranteed regardless of results, they don't have any 'skin in the game.'" That isn't a good way to manage marketing efforts.

As you learn in Business 101, salespeople are driven by goals and incentives -- goals that are specific and objective and incentives that are tied to results, not to efforts. In the end, it doesn't matter how hard you worked or how many hours it took to win that new account or make that new deal happen -- it only matters that the thing got done. Salespeople always have skin in the game. The best ones love it.

To be sure, the "eat what you kill" approach has probably killed as many law firms as it has helped. However, you don't have to go that far. All I'm suggesting is that people are more motivated when they have clear goals and a personal stake in the results. To help you think of ways to put some skin in the game in a legal setting, here are thoughts on marketing motivation from the business side.

Incentives are too often overlooked. Partners spend much of their time talking about issues relating to their compensation systems. In my experience, most of it relates to measurement after the fact, and to the perceived fairness of the awards process. Seldom do we talk seriously about the front end of the process -- how we might use compensation to better motivate marketing and business development efforts.

Most law firm incentive programs are murky, subjective and remote when, in fact, they need to be clear, quantifiable and immediate. Consider this classic: The firm regularly considers business development efforts in determining partner draws (or compensation) for the next year.

The middle tier needs the motivation. Incentives have the least impact on the top and bottom tiers. Top business getters will do what it takes to get business regardless of the incentive program in place. The bottom tier probably won't develop business regardless of the incentive program. It just isn't their nature.

There is, though, room for motivation in the middle tier. These folks typically slide along with decent numbers but could be contributing much more to the firm's book of business. Why not look for a way to get them to kick things up a notch? After all, the difference between a good year and a great year for business development isn't all that much.

It's all at the margin. The best managers in baseball know that singles and doubles win ball games. Sure, it's hard to beat the glory of a grand slam, but how did the first three runners get on base? The same idea applies in marketing.

Each year there will be a few big wins -- cases, deals or otherwise. But consistent hitting on smaller matters makes the budget. A properly drawn incentive program will encourage partners and associates to make that extra phone call to a potential client or miss a home-cooked meal to take a new client to dinner. In the final analysis, that's what separates the really successful firms from the rest of the pack.

This is my final chance to speak to you as Chair of the Section. As I step back into the ranks, I couldn't be more excited about the Section, its core themes and the message we bring to every legal professional about the business of practicing law. Thank you for the opportunity to serve. See you at the next meeting …


John C. Tredennick, Jr. ( jtredennick@caseshare.com) is a partner at Holland & Hart and CEO of CaseShare Systems, an Internet company building paperless systems for the legal and business communities.