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For years I’ve heard the mantra, “It’s all about relationships.” At the risk of casting an unwelcome pall in the middle of the holidays, bear with me while I gore this venerable ox, a quaint vestige of the 25-year seller’s market that ended in 2008. Clinging to it now is the equivalent of carrying a flip phone, which, like the relationship mantra, has long since ceased to be relevant.
By “relationships,” most who embrace this canard mean “personal relationships,” which really means “friendships.” According to the common wisdom (which, IMO, is more of the former than the latter), you’re supposed to go to networking events, meet people and initiate a personal relationship with them.
Okay. Then what?
Presumably, if you initiate a relationship, you intend to sustain it long enough for it to produce some benefit. Set aside for a moment the fact that few people seem inclined to define that benefit beforehand, instead embracing some kind of blind faith that relationships are inherently valuable.
Relationships don’t sustain themselves. Each relationship requires you to invest time, attention, effort and creativity. Those are serious investments for lawyers who operate in a time-based economic system, where time, literally, is money. And those investments are based on little more than the unsupported expectation of a vague, unspecified benefit at some unknown time in the future, following some unknown amount of investment.
Would you invest your money that cavalierly?
“Oh, c’mon, Mike. You’re being dramatic. How much investment could we be talking about, really?”
Okay, let’s take a stab at quantifying that.
The traditional networking approach is based on establishing and cultivating personal relationships first, and pursuing business second. You collect business cards from those you meet and send the obligatory email saying, “Nice to have met you last night. Let’s get together some time.”
What if each of the five replied, “Great idea. I’d like that. How about lunch next week?”
Will you make time for five lunches, the value of which is unknown and, because of that, is a “someday, maybe” proposition at best? Or will you claim to be jammed or put it off in some other nice way, and never revisit it? If you choose to blow it off, you wasted your time at the networking event initiating something you won’t carry through. If you choose to cultivate these relationships, it’s far worse.
Let’s say you’re willing to take the long-shot bet and invest in the five lunches. Even if the restaurant is in your office building, you’re still committing to a bare minimum of five to seven hours over the course of, say, two weeks. What percentage of your business development time budget does that represent?
Unless you’re an outlier, two to three hours per week is probably your total time allocation for business development. So how wise is it to expend it all on five strangers with no objective evidence that they’re legitimate business prospects, all in service to abstract “relationship building”?
Continue the math. You can’t develop much of a relationship over one lunch, which means that you’ve got to continue contact with these five people via phone, email and lunches. How often? Nobody knows for sure. But let’s say you have to be in touch every other month at least to have any expectation of a productive relationship. Let’s assume that 25 percent of your “touches” will be over lunch (1.25 hours each); 25 percent by phone (20 minutes each); and 50 percent by personalized email (10 minutes each).
Since it makes no sense to go to one networking event, get five business cards and quit, let’s further assume that you go to a networking event twice monthly and meet five new people each time, for a total of 10 new contacts per month. Sounds great, right? Maybe not.
Here’s what that would look like over 18 months:
The good news is that you’ll have added 900 contacts. The bad news is that you’ve added 900 “relationship obligations” — for contacts of unknown utility or value. Each will require a meaningful time investment to develop, unless you conclude that you can’t or shouldn’t develop the relationship.
So, over the course of year one alone, you’ll have potentially invested roughly 200 hours staying in touch, and trying to develop some kind of relationship, with 420 people whose only initial qualification for such investment was being nice to you and handing you a business card. At a billing rate of $250 per hour, that’s an opportunity cost of $50,000. At a 40 percent gross profit (which is very, very good for a law firm) you’d have to generate $125,000 worth of work from them just to break even.
Because you’re building relationships, and there’s no basis for a decision that would allow you to disengage, these people will remain in your pipeline indefinitely, creating a cumulative cost that can bury you. (Take a look at how this really ramps up in year two.)
Consider, too, that at the 18-month mark, the people you met in the first six months of year two will only have had two to three touches each. Those relationships are immature, so you can’t count on them for any kind of business or referral results just yet. Combine those with the carryovers from year one, and you’re on the hook for another 230 hours of relationship investment time in just the first six months of year two. Applying the same hourly rate to calculate opportunity cost, that translates into $57,500, which is more than your relationship cost for all of year one. Using the same gross profit numbers, you’d have to generate another $143,750 to break even for the first six months. The break-even total for 18 months: $168,750. Just to break even on the cost of relationships.
The marketing/sales budget norm for many lawyers is roughly 200 hours per year, so you’ll exhaust all of that and more developing relationships with random contacts. (This doesn’t count the hours you’ll have spent at networking events creating this huge obligation.)
The rest of the bad news is that these numbers doesn’t include the time required to sustain and grow relationships with current clients. You’ll have to choose between neglecting them in favor of giving attention to those random strangers, or boosting your time budget by an amount that isn’t possible.
You’ll do neither. Instead, you’ll make random, infrequent contact with some of those networking contacts, and the others you’ll mostly ignore.
Why begin something that you know you can’t sustain or see through to a productive end?
Today, the personal versus business relationship sequence is reversed. That is, business relevance demonstrated through electronic communication (and the occasional speaking gig) earns a virtual relationship between many people and your ideas.
A percentage of those people will agree with your ideas and choose to remain in virtual contact. A percentage of those will experience the idea or problem that you’ve associated yourself with and attribute to it consequences that require them to take action. A percentage of those will discuss the problem with you, and a percentage of those will hire you.
Over time, as you do a good job for them, a personal relationship or friendship may emerge, but it’s not required.
You can have robust “idea relationships” and economic relationships with people you’ve never met, in places you’ve never been to, and they’re just fine with that.
Mike O’Horo is a serial innovator in lawyer training. Over 25 years, Mike has trained more than 7,000 lawyers in simplified sales processes by which they have generated more than $1.5 billion in new business. RainmakerVT is an interactive virtual business development training tool for lawyers. Follow Mike on Twitter @LawyerRainmaker.
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In the first meeting, you set the stage for how you intend to interact with the client and what the client can expect from you.February 14, 2019 0 2 0