Legal Industry Forecast 2012 – 2015

Zeughauser, Peter — Thu, 23 Feb 2012 00:00:00 +0000

Peter Zeughauser, Partner, Zeughauser Group, will speak at the annual meeting of the United States Law Firm Group, February 23-25, 2012, in Las Vegas, Nevada. Peter will discuss the forecast for the legal industry in 2012 – 2015.

Please note that this meeting is open only to Law Firm Group members.

2012 In-House Counsel New Media Engagement Survey

Mon, 30 Jan 2012 00:00:00 +0000

TABLE OF CONTENTS
I. Executive Summary
II. Analysis
III. Implications
IV. Select Verbatims
V. Complete Survey Findings
VI. Methodology
VII. About

EXECUTIVE SUMMARY

2010’s landmark In-House Counsel New Media Engagement Survey, the first research project of its type in the legal field, affirmed that client-side lawyers were beginning to dip their toes into the social media pool by using new media technologies for both personal and professional reasons. There was a clear generational divide between younger and older counsel in their use of social media tools, but even a year ago both were taking significant advantage of new media resources, especially law firm blogs.

This year’s follow-up to that research posed some of the same questions and asked new ones in order to measure how perceptions and behaviors have changed over time. When distilled, the refreshed survey data fuels some interesting headlines:
. Blogs, Executed Well, Influence Hiring of Outside Counsel:
Seventy-six percent of respondents say they attribute some level of importance to a lawyer’s blog when deciding which firms to retain. Additionally, the percentage of respondents who say a law firm’s blog can influence hiring decisions went up slightly, from 50 percent in 2010 to 55 percent in 2012.
. Client-Side Counsel Prefer Firm-Branded Blogs: Survey respondents indicated they read blogs written by firms slightly more often than they read blogs penned by journalists. In-house counsel also perceive blogs as credible (84%). This perceived credibility, however, is not fueling an increase in daily blog readers, which we explore further in this report.
. LinkedIn: The ‘Serious’ Social Network for Lawyers: LinkedIn leads all other social networks in professional usage and perceived credibility (88%) but, as of now, domestic law firms aren’t taking full advantage of its technological capabilities. In addition, significantly more in-house counsel are using LinkedIn for personal reasons than were doing so in 2010.
. New Media Usage (Steadily) Going Mainstream: The generational divide that fueled the 2010 findings is leveling off. This effect is driven by older counsel consuming more content rather than a significant drop in consumption among younger counsel. While the 2010 survey revealed that blogs were read more consistently across age groups than the “big three” social media platforms (LinkedIn, Facebook and Twitter), the 2011 research shows a continuation of this trend plus older counsel reading blogs with even greater frequency.
. In-House Counsel Largely ‘Invisible Users’ of Social Media: This audience rarely contributes content on social channels, preferring instead to listen and consume. This approach makes their true level of engagement difficult to measure.
. Wikipedia Important, But Not to Research Law Firms: Very few in-house counsel (7%) are using Wikipedia to research outside firms, but they are using the online encyclopedia for issues-based research (51%). . Firm-to-Client Communications Going Social: Whether initiated by inside counsel or by firms themselves, the legal industry is warming
up to social media as a client services mechanism at an eight percent year-over-year increase.
ANALYSIS
In 2010, the In-House Counsel New Media Engagement Survey revealed new media, particularly blogs, had been adopted by in-house counsel of all ages, but use of social media tools such as LinkedIn, Facebook, and Twitter skewed to younger in-house attorneys. The results in 2012, by contrast, indicate much wider adoption by in-house lawyers in their 40s, 50s, and 60s, while use by younger attorneys has leveled off. However, you wouldn’t notice this change unless you surveyed the community, because they’re largely consuming information without commenting or providing content themselves.

In-House Usage Becoming Mainstream
In-house lawyers are using new forms of media more today than they were 18 months ago when the first survey was conducted. However, the earlier generational gap is tightening; younger counsel are consuming new media at about the same rate overall, while their older peers are engaging more often than before–a shift from the differences in penetration by age group that characterized our earlier study.

The primary utility of social media—at least for this survey’s audience—is as an intelligent filter of useful information.
We believe in-house counsel had been comparatively slow to adopt social media because the buzz surrounding new forms of media outweighed their real-world utility. In other words, they appeared to think new media was a waste of time.

At a certain point, however, legal users began noting that web-based resources were changing for the better; the tools became more interconnected, and there was more content relevant to the in-house lawyer being produced and filtered. So, as new media technologies have become increasingly useful for business and professional reasons, in-house counsel slowly but steadily have changed their perceptions and continued to increase their use.

The primary utility of social media—at least for this survey’s audience—is as an intelligent filter of useful information. Not surprisingly, few in-house lawyers are using new media to generate content; in their roles, they seek to receive content that helps them do their jobs, but many perceive that generating content for people outside their companies will not benefit them and, moreover, may be restricted by company policies that they or others have created. As a result, they generally don’t blog (or Tweet or Facebook); they read blogs (or relevant Tweets or newsworthy Facebook updates). They are relatively invisible users who increasingly consume content via these channels, but give little public indication that they are doing so.

New media is becoming more like mainstream, traditional media: not so new anymore. Aside from consistent demographic movement towards the middle–LinkedIn use for professional reasons among counsel aged 40 to 60 years, for instance, grew substantially, while usage among their peers aged 30 to 39 stabilized–respondents indicated they read law firm attorney-authored/branded blogs as often, if not slightly more, than they read blogs penned by actual reporters. They are relatively invisible users who increasingly consume content via these channels, but give little public indication that they are doing so.
Survey Background
The 2012 research, conducted in November and December of 2011, repeats some questions from the 2010 survey and introduces new questions as well. Thus, this report shows how behaviors have changed and uncovers new perceptions that inside counsel hold towards new media. A total of 334 in-house counsel responded to the survey, more than double the 164 respondents in 2010.
Defining the New Media Ecosystem
This research primarily studies the two primary components of new media: social networks and owned media. It is important for marketers to recognize the difference between the two. Social networks are now ubiquitous. 53 percent of the United States’s population uses Facebook, according to data from ComScore. It states, "Facebook is still the
undisputed leader in the U.S. social networking market with 166 million unique visitors in November [2011]. The average user spent 6.6 hours engaged on the site during the month, an increase of 37 percent in the past year." LinkedIn is
popular among professionals in North America and among lawyers in particular, with 83 percent of social media-using attorneys maintaining a presence on the platform in 2010, according to the American Bar Association. Twitter has a large volume of content but is not associated with a specific niche.
Owned media is an emerging term that describes content over which companies can exercise a high degree of control. Distinct from advertising, which is paid media, and public relations, which is earned media, owned media describes tools
that organizations use to push content to their target audiences, including websites, blogs, email lists, and other content streams. New media technologies allow organizations to create and control content and distribute it to an extensive,
yet targeted audience, more efficiently.

KEY HIGHLIGHTS
The most noteworthy findings, summarized, include:
Prominent blogs influence hiring of outside counsel
Seventy-six percent of respondents say they attribute at least some level of importance to a lawyer’s blog when deciding which firms to retain. Additionally, the percentage of respondents who say they expect a law firm’s blog
will exert influence on buyers in the future went up slightly, from 50 percent in 2010 to 55 percent in 2011. The increase was driven by those in their 40’s and 60’s, with two-thirds of those in their 40’s now agreeing with the statement.

Blogs decline in daily readers, increase in weekly and monthly readers
The percentage of respondents who indicated they were daily readers of blogs for professional reasons dropped from 27 percent in 2010 to 17 percent this year. However, weekly and monthly readers increased from 20 percent to 26 percent and from 13 percent to 17 percent year over year, respectively. Daily exposure declined, but overall frequency made up for it. The daily decline may well be driven by a reality that legal-industry insiders know very well: lawyers are profoundly busy professionals. As the new becomes the familiar and they have more sources of content from which to
choose–both inside and outside the legal market–in-house counsel are becoming much more discerning about the
information they consume. Since daily readership is less frequent, posts can be more intermittent and still have the
same effect, as long as they are highly relevant to in-house lawyers. This data influences the ideal content strategy for a law firm’s blog: deferring to quality instead of quantity. Since daily readership is less frequent, posts can be more intermittent and still have the same effect, as long as they are highly relevant to in-house lawyers.

Law firm blogs preferred by in-house counsel
Building on the 2010 survey, respondents indicated that they read firm-branded or attorney-authored blogs slightly more than they read blogs written by professional journalists. In-house respondents also overwhelmingly view blog content as credible, at a rate of 84 percent, which, given their high usage of blogs, apparently extends to law firm blog content.
In addition, in-house counsel use email alerts to access traditional business, legal, and industry-related (banking, real estate, etc.) media at a high rate. This suggests that a firm can maintain a blog with compelling content and offer email
alerts of that content, and in-house counsel will subscribe to those alerts if they are relevant to their business. Firms have the opportunity to become, in the eyes of a majority of in-house attorneys, as relevant as a traditional media operation.

LinkedIn perceived as the “serious” social network
LinkedIn continues to be the most commonly used social media platform for professional reasons. It perhaps is the most dynamic example of older counsel–those between 40 and 65 years of age–increasing their usage of social media, with
the majority of counsel of all ages using LinkedIn at least weekly.   In addition, 88 percent of respondents perceive the content they obtain via their LinkedIn connections as credible, which further supports the efficacy of the platform for professional reasons. However, according to a recent LexisNexis Martindale-Hubbell-commissioned survey, Global Social Media Check-Up, not one of the largest North American law firms is using social integration—the linking of two or more social media platforms—on LinkedIn. Blog posts, for instance, automatically can be syndicated on a LinkedIn page and a Facebook news feed to capture those divergent audiences. This integration, termed the “semantic web” by those with an affinity for buzzwords, places quality content ahead of all other web priorities, such as collecting connections on social media. Virtually every data point from the survey supports the notion that in-house counsel prefer to use new media to find and consume quality content, and the wide lack of content integration on LinkedIn presents an opportunity to reach in-house lawyers via a medium that they rapidly are embracing. Blog posts, for instance, automatically can be syndicated on a LinkedIn page and a Facebook news feed to capture those divergent audiences.
Behavior change: Use of LinkedIn for personal reasons
There is a notable shift in how respondents are using LinkedIn. Respondents over 40 have increased their usage
dramatically, with those over 50 doubling their usage. This well may reflect a behavioral change because LinkedIn is
reaching such critical mass that it is becoming useful for career mobility and generally for staying in touch with important contacts. Lawyers tiptoeing into the social media pool

Communication between law firms and their clients that takes place on social media platforms is increasing slowly but steadily. In 2010, 26 percent of respondents said they use new media tools to “a small extent" to access content
from their outside counsel. This year that measure leaped to 34 percent, while the rate of respondents who are not doing so dropped from 43 percent to 34 percent. Clearly, more communication between the two is taking place on social media platforms. Wikipedia effectively can credential attorneys, not brand firms The percentage of respondents who say they have visited the Wikipedia page of their outside counsel is very small (7%). However, the percentage of respondents who say they regularly use Wikipedia to research issues is much larger (87%).
For law firms, this suggests that investing significant time to exert a high degree of control over a firm's Wikipedia profile is not a good use of time, because in-house counsel are not reading that information. However, the data supports that Wikipedia may provide law firms an increasingly effective tool by which to credential their lawyers as subject matter experts. By having articles, decisions, opinion columns, background on precedent-setting cases, and similar material featuring firm attorneys cited as references in a Wikipedia entry, firms can showcase the expertise of their attorneys in front of in-house counsel. It is important to note that Wikipedia has very specific rules on how entries are to be edited, and a very active community of editors who do not tolerate the use of Wikipedia as a promotional tool. This further supports the notion that law firms should use Wikipedia to enhance existing articles by adding to the fingerprint of reference material contained within those articles, rather than promoting themselves via firm-focused entries.

Client-side engagement difficult to measure
Of the strong majority (86%) who say they use new media at all, 68 percent use it to listen exclusively, while just 32 percent say they both listen and engage with others. These ‘invisible users’ largely prefer to consume content without interacting on new media channels. These ‘invisible users’ largely prefer to consume content without interacting on new media channels. This approach is likely because in-house counsel have no particular incentive to generate content, not to mention that many corporate social media policies only allow for centrally-generated content and the broadcast of corporate talking points instead of online engagement. This datapoint begs questions about measurement. Traditional methodologies for measuring the impact of new media rest largely on evaluating interactive engagement–so-called “social listening” programs that many digital marketing firms hype. Lacking significant interactive engagement in the use of new media tools by in-house lawyers, those programs are unreliable for determining impact. It may be more useful to measure in-house counsel consumption of new media vs. their involvement in two-way conversations.

Think about the hardware
A high percentage of respondents indicate they use mobile devices–smartphones and tablets–to consume industry news content. Of note, 42 percent of respondents say they use a cell phone for general business media, and 49 percent
say they use it for social media. Consumption on tablets for the two groups was 25 percent and 21 percent, respectively. This no doubt will grow as tablet use becomes more ubiquitous.

IMPLICATIONS
These findings hold noteworthy implications for legal marketers, including:
. Firms can reach and influence client-side counsel effectively by self-publishing through firm-branded blogs. Law firm blogs are well-trafficked and trusted, and the data shows that they affect the hiring decisions of in-house counsel. This finding suggests that “owned media” programs should become more aligned with an overall marketing strategy
to drive brand and support business development.
. As the social media platform with the highest professional usage and credibility rating in the survey, LinkedIn maintains the most captive audience of in-house counsel. The research suggests that this audience will use it to consume content if the content is there. If a law firm is to make strategic use of one social network in 2012, it should be LinkedIn.
. Legal marketers who are not using new media actively to communicate with clients and prospects should take note that the survey data reveals that counsel aged 40 to 60 years are adopting new media in growing numbers. The new media power users are no longer limited to those in the early stages of their careers (30 to 39 years of age) with less
budgetary influence. As it becomes more mainstream, firms should integrate new media into events, client alerts, and other traditional marketing efforts.
. Social listening–observing the engagement or interaction that takes place online–is not adequate for measuring new media ROI. According to the “invisible user” phenomenon that this research uncovers, engagement is not a viable objective. Rather, new media should be viewed as an aligned and complementary function to marketing for building and strengthening relationships. The ROI for new media efforts should be measured in expanded visibility (i.e., social media driving traditional media exposure; generating requests for speaking engagements; elevating reputation) for individual lawyers and the firm’s brand, with the caveat that, as with other communications, content needs to be concise, relevant,
and timely to be useful to this audience.
. Wikipedia is important but for credentialing attorneys, not for profiling firms. The frequency with which in-house counsel use Wikipedia for issues research coupled with the near-absence of counsel who have so much as glimpsed at the Wikipedia page of their law firm is telling. The research suggests that proper credentialing of attorneys, within the strict rules of Wikipedia’s editing and reference guidelines, is more important than articles on the firm itself.

VERBATIM RESPONSES
We asked in-house respondents the following open-ended question: Please describe the extent to which you use and participate in social media. Below is a sampling of responses which capture the broader sentiments of the in-house
community:
. Primarily through getting updates via some of these channels—too busy to use them more actively.
. I mostly use social media for personal reasons, but I am interested in using it more professionally in the future. I believe it is critical for businesses to have some presence in social media.
. I use social media daily, mostly as an observer/consumer rather than a contributor. I need to become more aware of what is available to me in terms of professional resources. (For instance, it never occurred to me that law firms would have Wikipedia pages and so have never used that as an information source when considering choice of counsel.)
. I actively monitor and sometimes comment on LinkedIn for personal and professional reasons. (Same for review of videos on YouTube.) I expect to engage more in Facebook and Twitter in the next 1-2 years due to changing business and client demands.
. I use blogs extensively as sources of information and discussion about topics of interest. I do not use Twitter, LinkedIn, Facebook, Youtube, or other equivalent services at all.
. I mostly use LinkedIn to keep up with colleagues and friends; use Facebook to keep up with friends, but not very often--once per month; would like to read more blogs but don't have the time. I have a blog myself (personal), but don't get to it as often as I'd like.
. I have accounts on most of the sites listed, but I am primarily a consumer of information. I also use them to maintain contacts, both personal and professional.
. Other than following certain blogs of personal interest, I do not participate in social media at all. I tried it for about a year and found that it consumed a lot of time without providing corresponding value, so I quit completely.
. I see value in social media, but I am not a big fan of it. I am skeptical of the content provided in social media outlets. I am also concerned by the potential problems created for employers by the use of social media by its employees.
I use social media to monitor what is being said about the company and its products. I do not generally engage in social media due to concerns about virus and spam issues.
While social media may be a coming trend, it lacks cohesion and reliability. Until it can be better sorted, focused, and trustworthy, it is nothing more than gossip.
. It is part of my professional responsibility to evaluate issues in engaging in social media as a company. I also participate personally.
. I use many forms of social media (see above) on a daily basis and expect my consumption to increase in the next year.
. My company highly endorses social media—Facebook, Twitter, blogs, and YouTube—and we have both global and local policies addressing use of social media with clear expectations of business vs. personal use.
. I am an early adopter. I use social media daily and extensively, not only for research but also posting daily on blogs, Twitter, LinkedIn, and Facebook. I have established company pages on these platforms, as well as social media marketing policies, and I actively monitor activity.

COMPLETE SURVEY DATA

Respondents were asked to complete the following questionnaire designed to measure the degree to which they
are engaging social networking and new media tools. The following charts represent the collective input of 334
respondents to the survey. A full overview of the survey methodology can be found at the end of this report.
Please indicate how recently you used the following social networking and new media tools for PROFESSIONAL reasons:
LinkedIn is perceived as the “serious” social network that most respondents are using for professional reasons. Also,
the demographics of that usage have changed: whereas the 2010 survey revealed a stronger generational play with
LinkedIn, the 2011 survey shows greater usage by older counsel.

The strong frequency of blog use for professional reasons gives context to the remainder of this research. Taken alone, it suggests blogs are a good use of law firms’ marketing dollars. Taken together with the other findings, it supports the notion that law firms, in essence, can become like media organizations–trusted sources of information–in the
eyes of in-house counsel. This is the concept of “owned media.”

Frequency of Wikipedia usage remains strong year over year with a noticeable spike in penetration during the “past week.”

If you're using Facebook for PROFESSIONAL reasons, which of the following describes how you

This data point suggests a “blurring of the lines” between personal and professional lives, a theme that was captured in the 2010 research.

If you're using Twitter for PROFESSIONAL reasons, which of the following describes how you are using
it?
This data point shows that those who are using Twitter professionally–albeit a relatively small number–are using the platform primarily to “listen.”

Please indicate how recently you used the following social networking and new media tools for PERSONAL reasons:
(1) Facebook, (2) Wikipedia and (3) YouTube emerged as the top three platforms for personal usage with LinkedIn closely trailing in 4th place. Wikipedia edged out Facebook for 1st place in 2010. As the year-over-year comparisons reveal, older lawyers are using these tools to a greater extent while frequent use among 30-39 year olds is leveling-off or even declining.
This data point shows that, clearly, in-house counsel are finding time for personal social networking and media
consumption. Facebook and LinkedIn performed well. (And, just as notably, Twitter did not.)
Consistent with the “mainstream usage” theme throughout this report, personal usage of Wikipedia and YouTube
generated notable increases among counsel aged 40 to 60 years.

If you are using LinkedIn for PERSONAL reasons, how are you using it?
This data point reinforces the “blurring of lines” trend among professional and personal contacts highlighted earlier with the professional usage of Facebook.

How frequently do you access the following news and information sources, and through which
delivery methods do you access them?

Read Print Version:
Older respondents are more likely to read general business media daily in print:

. 80 percent of counsel aged 60+ years
. 69 percent of counsel aged 50-59
. 54 percent of counsel aged 40-49
. 48 percent of counsel aged 30-39
Because the majority of trade publications do not publish daily, it would not make sense for many respondents to read them frequently in the print medium.

How frequently do you access the following news and information sources, and through which delivery methods do you access them?

Access via the Web:
A great deal of social networking is done on mobile devices, particularly during travel and commuting, which suggests in-house counsel are developing refined tastes not only for popular social networking sites and new media platforms, but also for the smartphones and tablet computers with which they access these media on the go. Specifically, this insight suggests that there’s a good opportunity for firms to explore application development and other new ways to reach in-house attorneys. While a number of Am Law 200 firms have launched mobile applications in recent months and years, we are likely to see an acceleration of app development in the months to come.

Please rank the following in terms of their credibility as sources of legal, business and industry news and information
Martindale-Hubbell Connected again ranked as the most credible platform in 2011. As with the 2010 survey, we believe this is an interesting finding. While Martindale-Hubbell Connected is among the least-used platforms for professional and personal reasons, it ranks as the “most credible,” which is a testament to the durability of the Martindale-Hubbell brand.

Respondents ranked blogs, Wikipedia, and LinkedIn as "Not Credible at All" at a rate of 16 percent, 10 percent, and 12 percent, respectively. In 2010, respondents ranked blogs, Wikipedia, and LinkedIn as "Least Credible" at a rate of 34 percent, 32 percent, and 30 percent, respectively. The lowest credibility measure decreased from year to year. Though this is not an apples-to-apples comparison, it's a rendering of a trend that we think is very real: fewer counsel actively are skeptical of content and information they get from blogs, Wikipedia, and LinkedIn.

Please indicate the importance of the following in helping you to research outside lawyers and law firms for potential hire In-house counsel ranked the following activities “Very Important” in helping
them to vet and research outside counsel:
1. Recommendations from sources you trust (94%).
2. Bios on the firm’s Website (36%).
3. Articles and speeches the lawyer has authored (31%).
4. Blogs published by lawyers on topics relevant to your business (21%).

Please rank the following legal industry ranking services in order of their importance to you as a tool for vetting outside counsel.
By a fairly significant margin, rankings by legal industry publications are the most influential industry rating services, which affirms that the legal trade media is not only a powerful source of news, but also of industry data. With regard to the peer-driven ranking services, respondents showed the greatest divide for Chambers, with most respondents either loving it or disliking it. It drew the second-most Rank 1 votes and the most Rank 5 votes. Super Lawyers also generated a significant number of Rank 5 votes, thus reinforcing the substantial divide between media-branded industry rankings and those within the peer-review category.

To what extent do you agree or disagree with the following statements?
a. I envision a future in which a law firm's prominence through a high-profile blog will play an important role in influencing clients to hire that law firm.
b. I envision a future in which an individual lawyer’s prominence on Twitter will play an important role in influencing clients to hire that lawyer.
c. My perception of an attorney is positively influenced when he/she has a high number of contacts on LinkedIn.

Fifty-five percent of in-house counsel “agree” or “somewhat agree” that a firm’s prominence via a high-profile blog will play an important role in influencing clients to hire that law firm–up slightly from 50 percent in 2010. Year-over-year data on the above blog statement shows a leveling off when examined from a generational lens. While slightly fewer younger counsel concur with the statement, a greater number of counsel in their 40s and 60s “agree” or “somewhat agree” that a well-executed blog will affect hiring decisions. In 2010, just 10 percent of respondents indicated they think Twitter will "Play an Important Role" in influencing clients to hire that firm. This year, that figure increased to 16 percent. Moreover, just 12 percent of in-house respondents say they value having a large number of contacts on LinkedIn. This reinforces that they perceive the quality of their connections to be of greater value and utility than the volume of their contacts.

What type of blogs do you read and frequent the most?
In-house respondents indicated they are reading attorney-authored blogs slightly more often than they read blogs written by professional journalists. As such, in-house respondents are consuming “owned” media as much as
“earned” media within the blogosphere. As with all social media channels, this finding underscores the importance of populating blogs with quality content.

To what extent do you access content from your outside counsel firms provided through new media
tools (i.e., Twitter feeds, blogs, Facebook pages,LinkedIn discussion groups, etc.)?

Communications between law firms and their clients taking place on social media platforms slowly but steadily is
increasing. In 2010, 26 percent of respondents said they use new media tools "to a small extent" to access content from their outside counsel. This year, that figure leaped to 34 percent, while the rate of respondents who were not doing so dropped from 43 percent to 35 percent. The rate of client-side lawyers who were using new media tools for this purpose
frequently remained consistent year-over-year at five percent.

Which of the following describes how you are using Wikipedia?

In-house counsel are not using Wikipedia to perform diligence on outside counsel, but they are using it for company
and industry research. In some ways, this is welcome news for outside counsel because Wikipedia is not entirely controllable and a number of Am Law 200 firms are not satisfied with the current Wikipedia articles on their firms.
However, this doesn’t mean that reporters and editors are not using Wikipedia for information. They definitely are.
This data also suggests that firms should consider making greater use of Wikipedia to credential individual attorneys on
various subject matters tied to their practices, instead of focusing on their firm’s Wikipedia profile.

Have you visited the Wikipedia pages of your current and/or prospective outside law firms?
The results are almost exactly the same as those in the 2010 study. Respondents from smaller companies (fewer than
500 employees) accessed their prospective law firm Wikipedia pages far more frequently than did respondents from larger companies (24% compared to 7%).

Which of the following best describes the way you use social media today?
The “invisible user” trend–content consumption without interaction–is pervasive across all age categories.
“I observe only; I do not participate or contribute to the conversations taking place.”
– General Counsel, Fortune 1000 company
This data point carries important implications for a law firm's approach to blogging. Traditionally, it has been viewed that generating commentary in connection with blog posts is an essential measure for gauging a blog’s effectiveness. While engagement of this nature is the ultimate goal for consumer and corporate-oriented blogs, the data suggests that this type of interaction is not an important objective for reaching in-house counsel. Although the percentage of respondents who indicate they interact with online content is not insignificant (28%), the majority of respondents (58%) indicate they do not use the comment sections to add anything of value to the original posts. This is not a marketplace in which participants seek to be heard. In a universe of legal marketplace consumers looking for specialized information and the insights of individuals well-versed on the issues at hand, blogging holds greater controlled potential for law firms interested in expanding the channels by which they demonstrate their thought leadership.

Do you expect that your consumption of industry news and information via new media platforms (blogs, Twitter feeds, etc.) will increase in the future?

These findings represent a slight uptick over last year’s results–57 percent expect their consumption to grow during the
next six months to a year compared to 53 percent in 2010.
METHODOLOGY
In November and December 2011, Greentarget Strategic Communications, InsideCounsel, and Zeughauser Group
distributed the In-House Counsel New Media Engagement Survey via email to a group of corporate counsel across the
nation. The results were tabulated, analyzed and released in early 2012. Respondents identified themselves as GCs/Chief Legal Officers, Deputy/Assistant GCs, In-House Counsel, and related titles. Percentages in certain questions exceed 100 percent because respondents were asked to check all that apply. Due to rounding, all percentages used in all questions may not add up to 100 percent. A few minor edits were made to verbatim responses to correct spelling and verb tense.
ABOUT
About Greentarget
Greentarget is a strategic communications firm focused exclusively on the communications needs of highly competitive business-to-business organizations. We counsel those who counsel the world’s most sophisticated businesses and direct the conversation among their most important audiences to help deepen the relationships that impact the long-term value of their organizations.

About InsideCounsel
InsideCounsel is the premier monthly magazine serving general counsel and other top in-house legal professionals. It is the oldest monthly magazine published exclusively for the in-house community with an editorial mission to provide the strategic tools that general counsel need to better manage their legal departments and fully understand the business risks companies face today.

About Zeughauser Group
Zeughauser Group is the firm of choice for legal industry leaders seeking to increase competitive advantage and profitability, enhance market position, and strengthen organizational culture.

ZG Alert: ZG Survey Finds Continued Growth in Law Firm Marketing Departments

Fri, 30 Dec 2011 00:00:00 +0000

According to the results of our second survey of Am Law
200 law firms, law firms have invested in their marketing
and business-development organizations in spite of the
recession. The survey, conducted to learn about their
marketing and business-development practices, indicates
that while large and highly profitable firms experienced
greater growth in their marketing and business-
development teams, all firms, on average, increased
the number of marketing professionals as measured
by the ratio of such professionals to lawyers. Moreover,
marketers now play an even more strategic role than ever,
participating at the highest levels and taking on increasing
responsibilities despite already full plates.

Background

In June 2011, Zeughauser Group conducted a survey of
the largest 200 American law firms (the Am Law 200) to
collect data about the size, structure, salaries, and roles of
their marketing and business-development departments.
Similar research was conducted in December 2007, which
provides for an analysis of trends over time, and changes
that have occurred pre- and post-recession. Sixty-two of
the Am Law 200 firms responded to the survey in 2011,
and a similar number responded in 2007. The firms
responding represent a cross-section of the Am Law 200
in size, profitability, and geography. As a result, we believe
that the results reasonably describe the state of marketing
and business development in Am Law 200 firms.

Marketing Organization Size

In our survey, we found that firms increased the size of
their marketing departments between 2007 and 2011
even though, on average, Am Law 200 firms were under
revenue and profit pressure and generally were cutting
back in other areas, including staffing. The average ratios of
lawyers to marketing and business-development staff went
from 1:29 to 1:25 among respondents in 2007 vs. 2011.
This translates to a 16% increase in headcount per lawyer.
Sixty percent of firms reported increasing marketing FTEs
from 2007 to 2011, while 22% stayed the same and 18%
decreased.

Between 2007 and 2011, larger firms increased the size
of their marketing and business-development staffs to an
even greater extent than smaller firms. Firms with fewer
than 500 lawyers increased their marketing staffs by 15%
on average, while those with more than 500 lawyers
increased their staffs by 22%, even though they had
proportionately more marketers on staff in 2007. Moreover,
profitable firms have much larger marketing staffs than less
profitable firms. The firms in the most profitable quartile,
which averaged a PPEP of $1.5M, employed almost 50%
more marketers per lawyer than those in the least profitable
quartile, averaging a PPEP of $0.5M.

These results tell us that a robust marketing and business-
development team has become the norm for successful law
firms, following the precedent of corporations, accounting
firms, and other professional and business organizations.
In addition, law firms with higher revenues and profits
are using some of that cash to invest in marketing and
business-development talent, presumably because they
believe talented marketers help them enhance revenue
generation even further, providing a positive return on
their investments. We also believe, based on observations
from our consulting practice, that firms cut back on other
areas of marketing and business-development expenses,
such as advertising and sponsorships, but invested in staff
to support a shift in emphasis to business-development
activities that they perceive to be more likely to lead directly
to an increase in business.

The CMO

Although some high-profile firms have experimented with
splitting the marketing, business-development, and even
communications functions into different departments, all
but one firm among our respondents consolidate those
functions under one person. We view this as a best practice
because, in our experience, the business-development,
marketing, and communications functions are most
effective when they are highly integrated. These functions
need to support each other so that the whole is greater than
the sum of the parts, and this level of integration is best-
achieved under the supervision of a single strong leader.
In fact, many firms have added to the already extensive
responsibilities of their marketing heads. Thirty-eight
percent of our responding firms require marketing heads
to manage other areas, such as professional development
and lawyer recruitment.

Most firms have adopted the title of “Chief” for their top
marketers. In 2011, 72% of the top marketers were
“Chiefs” vs. 54% in 2007; of those, three quarters had
the title Chief Marketing Officer (CMO). In light of their
extensive responsibilities, which often include strategic
initiatives for the firm, CMOs at two-thirds of responding
firms regularly attend executive committee meetings vs.
38% in 2007. Many also regularly attend strategic planning
meetings, partner meetings, and retreats as well.

The substantial salaries and bonuses firms pay their
CMOS are an indication of how much they value them.
In 2011, 75% of responding CMOs had compensation
packages, including salary and bonus, with potential to
reach $400,000 and above, as much as a newly-minted

partner in nearly all Am Law 100 and 200 firms. CMOs
at the largest and most profitable firms are most highly
compensated, with “national”* and “international”* firms
typically paying more than $600,000, including a bonus.
The most profitable firms increased the compensation of
their CMOs by a greater degree, with the top PPEP quartile
of respondents in the survey, which averaged $1.5 million
in PPEP, increasing their CMO’s compensation by an
average of 39% between 2007 and 2011.

We believe that the CMO salaries increased in spite of
the recession due to the forces of supply and demand.
Relatively few people are willing, able, and interested in
managing the demands placed on the CMO of a large law
firm. This lack of supply is exacerbated by the industry
trend of hiring CMOs from other law firms, rather than
from outside the industry. The long-standing debate
about whether to hire candidates from other industries
in hopes that they will bring a different perspective or
skills versus engaging a current law firm CMO with “hitthe-
ground-running” experience continues, but currently
appears to favor those with prior legal marketing expertise.
Seventy percent of CMOs in the survey came from the
legal industry in 2011 vs. 57% in 2007. Moreover, our
experience suggests that law firms seek to hire CMOs who
are employed by firms they view as more prestigious than
their own, limiting the supply even further.

Other marketing department salaries (i.e., those of directors,
managers, coordinators, and so forth) stayed relatively flat.
Demand for those positions ebbed and flowed during the
recession, but our survey results suggest that demand
is back up and we will see increased pressure on those
salaries as well.

Fortunately, law firm CMOs appear to be increasingly
successful, judging by their lengthening tenure. Average
tenure of our responding firms’ CMOs was 4.5 years in 2011,
compared to 3.9 years in 2007. We conclude from this
change that higher turnover was not driving higher salaries.

Increased tenure suggests that law firms are hiring more
qualified and well-suited CMOs, that CMOs are viewed as
more valuable and less dispensable than in the past, that
law firm expectations and use of marketing professionals
are aligning better with the skills of their CMOs, and that
there are benefits that accrue from increased incumbency.

Conclusion

Our 2011 survey indicates that leading law firms
increasingly recognize that high-level marketing and
business-development professionals can provide strategic
guidance, which leads to better, richer, and stronger client
relationships, and ultimately, to higher revenues and profits.

*We used The American Lawyer’s definition of national and international: If no more than 45 percent of the firm’s
attorneys are located in any one region of the country, the firm is identified as “national.” If 40 percent or more of the
firm’s lawyers are located outside the United States, the firm is identified as “international.”

ZG Alert: The Times They Are a Changin', So Must the Metrics

Fri, 11 Nov 2011 00:00:00 +0000

The Times They Are a Changin’

So Must the Metrics

“Come gather ‘round people

Wherever you roam

And admit that the waters

Around you have grown

And accept it that soon

You’ll be drenched to the bone

If your time to you

Is worth savin’

Then you better start swimmin’

Or you’ll sink like a stone

For the times they are a-changin’”

-Bob Dylan

Dollars to donuts says that if you ask the chair or managing

partner of an Am Law 100, 200, or Global 100 law firm what

he sees as the biggest challenge his firm faces in the post2008

recession era, more often than not his answer will be

“building top-line revenue.” This response neatly aligns with

what every Big Law partner would say is his top priority:

“building a book of business.” The exhortation to “build the

top line” isn’t just coming from firm chairs and managing

partners. It has been echoing through the conference halls

at COO, CFO, and CMO legal industry gatherings for 12

months, ever since coins started jingling again in Big Law’s

recession-emptied cash registers. Even the soothsayers

of gender diversity are calling for the creation of a level

playing field on which the under-represented in Big Law’s

partner ranks can “build their books of business.”

Strategically driven top-line growth will always be a sign of

financial health. But, changing times are calling for law firm

leaders to pivot and address a more pressing and vexing

challenge than building the top line: how to increase the

stickiness of their platforms for talent and clients. Industry

editors and academics have spent three years navel-gazing

over whether the traditional law firm model is dead, the

golden era is over, or the re-set button has been pushed. Very

sorry, but time is wasting. What matters is that simplistically

incentivizing, admitting, and rewarding partners for building

their books of business breeds behavior that will inevitably

lead to failure in an industry increasingly driven by clients

under cost pressure who can avail themselves of widely

available cheap labor and low production costs.

The time-honored easy-to-measure metric of revenue

per lawyer, frequently hailed by The American Lawyer,

belongs to a time gone by as the most important measure

of a law firm’s health. The world of Big Law has gotten

more complicated. Just like providing quality work and

extraordinary levels of client service once sufficed for

making partner and climbing the compensation schedule,

building a book of business is no longer enough. It is only

a piece of the pie.

The “new normal” in which law firms find themselves

today calls for a new, double-barreled test for measuring

partner potential and success. First, to make it as a partner

today, leadership must require the firm’s lawyers unfailingly

to meet or exceed client expectations on quality, service,

cost, and results on each matter as measured by the

client’s desire to come back for another matter and to refer

additional clients to the firm. Second, each partner must

do that and deliver the work at a level of matter profitability

high enough to enable the firm to generate profits sufficient

to attract, train, and retain more talent capable of consistent

performance at that level.

Executing on this “new normal” double-barreled metric

for partner success will require wholesale change at most

firms. For starters, partners and firms will need to measure

and know how well they are satisfying their clients and

how profitably partners are delivering matters to clients.

Too many firms and far too many partners have simply a

hunch or nary a clue about either. And firms will have to

make hard decisions about partners, practices, and offices

that don’t, won’t, and can’t be re-structured to meet the

metrics.

This may seem like tough medicine. It is. But inexorable

and accelerating industry trends have triggered change

faster than expected. The Global 25 predicted by Steve

Brill in 1983 is rapidly emerging. Most, if not all, of them

have already taken the medicine. The big, hairy monster

firms are those with $2 billion a year or more in revenue or

$2 million or more in profits per partner, or both, and are

approaching or passed $3 million and $3 billion. As predicted

by industry pundits and noted by McKinsey a decade

ago, these firms have gone on a tear of unprecedented

cherry-picking. They aren’t cherry-picking the “average Joe”

partner. Convergence, one of the most relentless trends of

the past quarter century, is producing an ever-growing class

of elite mega-rainmakers with $25 and $50 million-plus

books of business, and the Global 25 are clawing them in.

This phenomenon has driven the Am Law 100 and 200 to

adopt soaring average 10:1 partner compensation ratios,

double what they were five years ago, sometimes tearing a

firm’s cultural “fabric” in an effort to hold onto partners with

ultra-large portable practices. The American Lawyer has

reported ratios as high as 30:1, and nobody is arguing with

the number. The lock-step is collapsing or is near collapse

at the few remaining holdouts. For the firms that find

themselves among what we might call the “N75” (for “next

75”), or the emerging second-tier, all of them competing

ferociously to occupy one of the few remaining slots left

in the Global 25, a $25 to $50 million hit in revenue is a

material loss. This is especially true in the face of another

powerful margin-corrosive market force: unbundling and

off-loading to non-law firm legal service providers some of

the highest margin, high-priced associate work, once the

sole province of Big Law. Know it or not, and some do and

some don’t (the latter the proverbial frogs in boiling water),

these firms are in the midst of a crisis, and no good crisis

should be wasted.

The time is ripe for changing partner behavior. To draw an

analogy to inside the beltway politics, firms need to “eat their

peas.” The best place to start is with adopting, educating,

and communicating with partners (at appropriate times and

in appropriate ways) about the new metrics for success.

Partners will have to be educated about how to improve

matter, client, and their own profitability. These metrics are

poorly understood by vast numbers of partners; not only

that, the levers that drive them are rarely measured and

addressed in conversations between management and

partners. Some will undoubtedly raise the old arguments

that measuring and talking about partner, practice, and

office profitability is divisive. But how can partners improve

matter management if it isn’t measured, or if it is kept

secret from them? Quaint. Big Law firms are run more like

businesses every day. It shouldn’t be a struggle to educate

the managers and line workers on how to produce widgets

more profitably while, at the same time, creating a healthy

“one-firm” environment in which competition to achieve it

is encouraged.

Techniques for measuring profitability have long been

debated at firms. Most have come to accept realization as an

acceptable measure, and it is a good one. Communicating

to partners how much more or less profitable the firm

would be if the realization rate on every matter were the

same as for a matter just completed would be a step in

the right direction, as would informing the partners of how

the realization rate could be improved. The same analysis

should be applied to clients. Likewise for profit margins.

Practice group, sector, and office leaders should engage in

post-matter debriefings with client team and engagement

leaders to discuss how to improve margins by adjusting

staffing and improving utilization. In many firms, it would

serve to highlight the margin-eroding effect of relying on

the bloated ranks of high-priced, non-equity partner talent

to do associate-level work.

A generation ago, partners at scores of firms endlessly

debated how to load costs for measuring matter and client

profitability. The big, hairy monsters got over the hump by

making and refining rough estimates. They recognized that

satisfying GAAP wasn’t necessary. And they devised many

of their own software apps. Today, off-the-shelf software is

widely available. Most firms have it. They just aren’t using

it. Or management uses it secretly. That needs to change.

Joined at the hip with the priority of improving profitability is

measuring, meeting, and exceeding client expectations on

service, cost, and results. Robust client feedback programs

are the only way this can be accomplished. Lawyers

regularly need to seek client feedback on how well they

are meeting and exceeding their clients’ needs by asking

clients themselves, surveying them using tools like the Net

Promoter Score (NPS) at the conclusion of every matter,

and seeking in-depth feedback using independent experts.

Once partners and firms measure, communicate, and turn

to improving the profitability of their client work and how

satisfied their clients are, they need to focus their resources

on growing their most profitable and promising client

relationships. Firms must continuously reduce the billable

and non-billable lawyer time and firm resources devoted to

less-profitable (save, of course, pro bono), less-promising

clients. Growing the most profitable relationships should

be brought about by rewarding partners who successfully

lead and manage client teams that deliver high levels of

client satisfaction and profitability. We have entered an era

in which firms have to be proficient at and disciplined in

winnowing out the wheat from the chaff when it comes

to clients. Deploying the right metrics is a prerequisite to

making that happen.

Measuring and rewarding performance based on client

satisfaction and profitability will encourage originating and

relationship partners to put the best team on the field,

for it is the best team, the team with the right expertise,

that will generate the best result most cost effectively. By

doing so, client teams are expanded across the platform,

and clients become more reliant on the firm’s platform

of expertise than on any individual partner, which is,

after all, the end game. The quality of hours expended,

rather than the quantity, becomes more important to the

partners working the matter. And it dissipates the desire to

discount and it puts the incentive instead on devising fee

arrangements aligned with the client’s interest in driving

results and efficiency and the firm’s interest in higher levels

of profitability. These incentives will lead to greater time

and attention devoted to matter staffing, planning, and

budgeting and, in turn, more and better communication

between and among the lawyers working on a matter and

the client.

As an industry, we have long known that exhorting partners

to build the top line produces invidious partner demands

to hold rates down, permit greater discounting, and take

whatever work comes over the transom, however badly

it may erode the bottom line and the brand. It flies in the

face of client demands for value in lieu of the billable hours

partners connote with building their books. Growing the

top line by attracting strong talent and clients is certainly a

competitive imperative, but it is all for naught if the platform

isn’t “sticky.”

None of this is to suggest that firms make short shrift of, or

cast aside, other important compensation metrics relating

to client origination, working attorney hours, collections,

and other important firm initiatives, or subrogate them in

importance to a new double-barreled test for success. But it

is to suggest that firms measure, communicate to partners,

and attach great importance to the extent to which matter

origination is driven by exceeding client expectations for

cost, service, and results (in addition to quality) in making

partner admission and compensation decisions. For most

firms, this would be a radical new partner compensation

and admission metric. Partners who have succeeded by

meeting a simpler standard of producing revenue will likely

argue that client satisfaction is implicitly accounted for by

the “stickiness” of clients to a partner and the firm. This

is hard to refute, but hardly any argument for not making

it explicit. And it doesn’t address the issue of profitability.

Indeed, the Achilles heel of too many firms is that they

achieve high levels of client satisfaction with cost in large

part by discounting, but without paying sufficient attention

to eroding margins.

Globalization and the battle for market share among the

world’s most elite law firms isn’t going to go away. The

unrelenting pressure to do it faster, better, and cheaper will

only accelerate. As has happened across every sector of the

economy, globalization is driving and will continue to drive

law firms to reduce the cost of production and increase

what is referred to in the retail industry as “same-store

sales” by exceeding customer expectations on value. The

growing availability of off-shore, on-shore, and outsourced

providers will force firms to manage teams of lawyers

exponentially more complex and diverse, and beyond their

own. The times demand that success be measured in a

way beyond the simple metric of hours times lawyer rates

and that firms turn to measuring and rewarding partner

success in terms that account for today’s challenge to

exceed client expectations for service, cost, and results at

the highest levels of profitability. Ipso facto, the firms that

do so will be more “sticky.”

Crafting Value-Based Alternative Fees that are Practical and Profitable

Young, Mary K — Thu, 03 Nov 2011 00:00:00 +0000

Mary K Young, Partner, Zeughauser Group, will speak at an audio conference focusing on value-based alternative fee arrangements.

Crafting non-hourly fee arrangements that fulfill client requirements, deliver value and keep profits up, is not impossible, but can be tricky. Calculations, investigations, and the ability to tweak arrangements as the firm learns what works are all key to a firm’s long-term success. This comprehensive audio conference will explore key profitability criteria that your firm should consider before entering into any fee arrangement.

2:00-3:15 P.M. Eastern Time

The course description and registration information for this event are posted at Crafting Value-Based Alternative Fees.

The New Partner Forum: Building a Robust Practice and a Meaningful Career

Rubenstein, Norm — Tue, 11 Oct 2011 00:00:00 +0000

Norm Rubenstein, Partner, Zeughauser Group, will co-chair a conference sponsored by American Lawyer Media titled "The New Partner Forum: Building a Robust Practice and a Meaningful Career."

This forum is designed for new law firm partners elected within the last three years who aspire to fast-forward their development as practitioners, leaders, marketers, and client relationship–builders.

October 11-12, 2011

Westin New York at Times Square

270 W 43rd Street

New York, New York

[For more information]

City National Bank Legal Summit

Zeughauser, Peter — Fri, 30 Sep 2011 00:00:00 +0000

Peter Zeughauser, Partner, Zeughauser Group, will speak at the City National Bank Legal Summit.

Los Angeles, California

The Implications of Accelerated Change in the Legal Industry

Zimmermann, Kent — Mon, 22 Aug 2011 00:00:00 +0000

Kent Zimmermann, Partner, Zeughauser Group, will be the keynote speaker at the annual G100 CIO meeting to be held in Nashville, Tennessee

The acceleration of longstanding trends in the legal industry brought about by the deep recession and re-balancing of the global economy is having a profound effect on the legal industry. Kent’s talk will focus on the threats and opportunities presented by these trends and on how leading firms are performing in the face of them.

Lessons from the Am Law 100

Zimmermann, Kent — Wed, 29 Jun 2011 00:00:00 +0000

Kent Zimmermann of Zeughauser Group will present a summary of key takeaways and conclusions that can be drawn from the most recent Am Law 100 results, set for release in May 2011. In his talk, Kent will identify trends that the data suggest and explain what the results portend for the balance of 2011 and beyond, in areas such as profitability, headcount, staffing, use of alternative legal services providers, geographic implications, international growth, and more. He will also explain other important indicators of the industry’s performance, including trends in client spending on legal services. In addition, he will offer an insider’s view to recent law firm merger activity and predictions on the shape likely future activity will take. Lastly, he will identify five of the most important drivers of success of high performing law firms, based on a Zeughauser Group analysis of the financial performance of a select group of leading law firms.

St. Louis, Missouri

Exact time and location TBD.

Lessons from the Am Law 100

Zimmermann, Kent — Tue, 28 Jun 2011 00:00:00 +0000

Barnes & Thornburg

11 South Meridian Street

Indianapolis, Indiana 46204

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The New Partner Forum: Building a Robust Practice and a Meaningful Career

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