The LexisNexis InterAction 2021 Marketing & Business Development Report tracked law firm business development activities during the pandemic. So, what did high-growth firms do that no-growth firms did not?
To say a great deal has happened in the legal world over the last two years is an understatement, to put it mildly. The convergence of a global pandemic, an increasingly unpredictable business environment, and a contentious political landscape have had a significant impact on law firms’ economic prospects. Yet firms have emerged from the last two years in vastly different places, according to the recently released LexisNexis InterAction 2021 Marketing & Business Development Report.
Some law firms have seen great success, others barely hung on, and others went out of business altogether.
What Did High-Growth Firms Do Differently?
What separated the successful firms from their less successful counterparts? Law firms that emerged from the turmoil in good shape did not thrive by accident, the report found.
There are clear differences between the marketing and business development actions taken by high-growth firms (which had annual revenue growth of 11% or higher), average-growth firms (which experienced annual growth of 0% to 10%), and no-growth firms, which had negative annual growth. By conducting qualitative and quantitative research on what different firms did during these exceptionally challenging times, we have identified several key factors that set some firms up to thrive, while others failed.
For the 2021 Marketing & Business Development Report, 168 professionals were surveyed. More than 79% of respondents hold managerial or higher-level positions, and 45% are marketing and business development professionals. As their titles attest, these respondents spend their days working on marketing and business development activities, giving them a unique and in-depth perspective on the details of their firms’ commercial activities and goals.
Survey respondents represent law firms of all sizes, and they are fairly evenly distributed among high-, average- and no-growth firms.
Tracking Marketing and Business Development Activities During the Pandemic
LexisNexis InterAction last conducted this report in 2019. Naturally, COVID-19 dramatically altered the business environment, and therefore also responses to this year’s survey, as compared to the previous report. Slightly more than half of the respondents — 51.2% — cited the pandemic as their top challenge in 2020, followed by business development overall.
Yet, it’s notable the pandemic didn’t change the ways that law firms manage marketing and BD. Rather, it accelerated trends that were already in place – and these trends further accentuated the divide between high-growth and low-growth firms.
For instance, remarkably, a majority of high-growth firms (54.3%) indicated that the pandemic had a “substantially or somewhat positive impact” on their business as compared to just 21.6% of no-growth firms. In other words, for high-growth firms, the disruption wrought by COVID was a source of opportunity to win business from the competition, rather than a threat.
This in turn shaped how they chose to invest in business development during the pandemic.
Increased spending
On the whole, high-growth firms tended to invest more in BD in the face of the pandemic (28% added BD and Marketing staff against just 8% that reduced staff), whereas no-growth firms opted to play defense and cut back their spending (17.9% of them reduced headcount, vs. virtually none that increased it).
Adoption of collaboration tools
Another example: while attorneys and staff were forced to work from home in the wake of the pandemic and couldn’t travel or meet in person, overall collaboration levels actually improved, the report found. In 2019, 42% of respondents named collaboration as their top challenge. In 2021, only 31% of respondents did so – consistent with the notion that mandatory remote working forced a level of attention to deliberate collaboration, and the adoption of effective tools, that actually alleviated the challenges from that preexisting problem. And firms that were most attentive and nimblest in adopting these tools and practices were able to separate themselves from the competition.
Performance and goal tracking
Along with collaboration, another key activity that successful firms approach differently involves their use of metrics and tracking. Across marketing and BD efforts, using data has become an integral part of the job. The survey clearly indicates that successful firms prioritize data—high-growth firms are four times more likely to use tracking metrics for their marketing and BD efforts, and more than a third of respondents that consider their organizations to have a high level of BD maturity consider tracking metrics to be a key driver.
High-growth firms also use different tracking techniques than their counterparts with average or no growth. More than half of high-growth firms use historical data for setting goals, and another 42.9% determine patterns that lead to success and adjust processes accordingly, leveraging metrics and objective ROI calculations to evaluate the real success of marketing events, thought leadership content or other BD initiatives. Successful firms engage in these activities at significantly higher rates than other firms.
On the other end of the spectrum, 35.1% of no-growth firms do not track or report on BD or marketing metrics, compared with 8.6% of high-growth firms.
Biggest Marketing Challenges
For all firms, though, getting valid data remains a challenge. In fact, respondents collectively ranked it as their top marketing challenge, at 23.8%, followed by a lack of lawyer buy-in/cooperation (22.7%) and technology integration challenges–disparate systems (20.3%).
These rankings should come as no surprise to experienced BD professionals. Creating and maintaining good data is an ongoing effort. And getting lawyers invested in marketing and BD is never easy, particularly when different software and platforms are fighting each other. Predictably, the report also identifies that high-growth firms, which the survey confirms are much more likely to make robust use of tracking metrics, are also six times more likely to be using a CRM.
The bottom line: The correlation between effective use of technology, data-enabled marketing, and the ability to gain firm buy-in all contribute heavily to successful firm outcomes.
Looking Ahead, Continuing Growth
Finally, the latest LexisNexis InterAction report also reveals that more successful firms have prepared to take on 2021 very differently from their counterparts. Most respondents said they are planning to spend more on marketing and BD in 2021, with a mean increase of 15%. However, no-growth firms expect to increase their spend by only 10%, while high-growth firms plan to grow their budgets by a sizable 38%. As law firms and their clients emerge from the pandemic, these investment choices are highly likely to deepen the growing divide between faster-growing, better technology-enabled and more nimble firms and everyone else.
COVID-19 caused significant disruption in the traditional model that law firms use to engage with their clients. While some saw an opportunity, others saw a threat — and firms reacted accordingly. Those that embraced the capabilities needed to create meaningful remote client engagement, at scale. And those that had the ability to rapidly experiment with different approaches, to learn, refine and comprehensively harness these lessons, learned to improve their execution model across the organization and were able to harness this disruption to their advantage. Now seeing how effectively their increased investments paid off last year, they are understandably keen to dedicate even more spend to BD and marketing in 2021 and 2022.
The ROI math on this type of BD toolset and process investment is clear. And 2020 showed that it is massively compelling.
Illustration ©iStockPhoto.com
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