Global Lawyer to Lawyer Referral Market

29 June 2010

Our panel

Michael Molitoris, Partner Noerr LLP (Lex Mundi member firm for Germany)

Janet Looi, PartnerSkrine (Lex Mundi member firm for Malaysia)

Daniel Del Río, Partner Basham, Ringe y Correa, S.C. (Lex Mundi member firm for Mexico)

Our moderator

Derek Benton, Operations DirectorMartindale-Hubbell International

Today’s agenda

Inbound and outbound referrals, tracking and the importance of existing relationships

Increasing referrals in the future

Q&A

Key highlights

26% of respondents believe they derive 20% of their annual revenue from referrals. Yet, many firms, (especially in the U.S.), don’t track referrals.

Receiving referral work holds greater importance outside of the U.S. in terms of volume of work and contribution to revenue.

For the majority of U.S. firms the survey highlighted that their referral work emanates from other U.S. based firms

Key highlights

Most important factors when selecting a referral partner; Likelihood of receiving something in return and strength of existing relationships.

Principal types of work being referred: Mergers & Acquisitions, General Corporate and Litigation. NB: Employment work featured more highly for U.S. respondents.

Key highlights

Majority expect to increase their marketing spend over the next financial year and are protecting or increasing referral work received by:

• Improving service capability• Developing or improving the firm’s web site• Listing the firm in International directories• At least half expect to use social media, some significantly

Research overviewIndependent researcher

Email survey, Feb / Mar 2010

61 countries

650 Law firms, (non US = mostly independent)

NB: ‘Mid-law’ = 21 to 50 fee earners, Large = 50+

18% = Managing Partners

52% = Partners

25% = Lawyers or Associates

2% = Marketing or Business Development

3% = “Other” roles

Total = 734 respondents

Asia

14%

East.

Europe

15%

Latam

19%West.

Europe

15%

U.S. Mid

Law

16%

U.S.

Large

Law

21%

Managing

Partner

18%

Partner

52%

Lawyer /

Associate

25%

Other

3%

Mktg / Bus

Dev

2%

Referral tracking & the importance of existing relationships

Inbound Referrals: Where do they come from and how are they managed and tracked?

Outbound Referrals: Who are they sent to and how are they managed and tracked?

What importance do existing mutual or exclusiverelationships play in your firm’s referral process?

Where do they receive work from?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Asia E. Europe W. Europe Latam U.S.

Asia E. Europe W. Europe Latam Middle East United States Other

94% of U.S. respondents* indicated that their referral work comes from other U.S.-based law firms. For Europe-based firms, Western Europe is the most important source of referrals, whereas Asia and Latam rely heavily on the U.S.

* Removed ‘Don’t Know’ responses

Do you refer or receive business referrals?

0%10%20%30%40%50%60%70%80%90%

100%

Equally

recipient

and

referrer

Primarily a

recipient

Primarily a

referrer

Non-US US

• Majority of firms claim that they equally receive and refer legal business from / to other law firms

• However, in the U.S. 95% of respondents claim that they equally receive and refer business vs. 58% respondents outside of the U.S.

• 38% of non-U.S. firms claimed they are primarily a recipient of referrals

What type of work do you refer?Consistency in terms of the type of work that is referred across Western and Eastern Europe, Asia and Latin America. For each jurisdiction the top 3 work types are:

• Mergers & Acquisitions• General Corporate • Litigation

Typically, followed by Intellectual property, Banking and Finance and Employment.

Likelihood of receiving something in returnWestern Europe places more importance on receiving something in return for a referral (top 2 box 36%) than any other region when selecting a referral partner. However, in the qualitative research, when asked about reciprocation we received mixed messages. On the whole, the importance of the existence of reciprocal relationships was played down.

0%

20%

40%

60%

80%

100%

Asia E. Europe Latam W. Europe U.S. Mid U.S. Large

1 - Not at all important 2 3 4 5 - Very Important

Tracking referral businessFrom the one-on-one interviews (not U.S.), the feedback on tracking was:

• The majority of firms have a fairly unsophisticated approach to the tracking of referral work. The vast majority of participants do not appear to track either the volume or value of the work referred

• Any tracking of performance is invariably undertaken via informal channels / non structured post matter discussions / anecdotal evidence

• The larger organisations (primarily Western European) have expressed a desire to become more sophisticated in this area. Examples discussed include:

• leveraging CRM systems, i.e. InterAction

• capturing of referrals through the use of mandatory fields in matter opening procedures,

• allocating individual partners to assume responsibility for specific jurisdictions / areas

Existence of mutual or exclusive relationships

0%

20%

40%

60%

80%

100%

Asia E. Europe Latam W. Europe U.S. Mid U.S. Large

1 - Not at all important 2 3 4 5 - Very Important

When selecting a referral partner, U.S. firms place the least importance on existing mutual or exclusive relationships than the other global regions whereas Eastern Europe puts more importance on them.

Increasing referrals in the future

The effect of membership in legal associations on a firm’s referral strategy

Increasing marketing spend, including international directories and social media

Considering joining an International referral network?

• 37% of total expect to take ‘some’ action

• 30% of total expect to take ‘significant action’

0 10 20 30 40 50 60

No action

Some action

Significant action

No. of responses

W.Europe

Latam

E.Europe

Asia

Increasing marketing spend

0 100 200 300 400

No Action

Some

Action

Significant

Action

Number of responses

• 20% expect to take significant action

• 56% expect to take some action to increase their marketing spend

• 24% of firms do not plan to increase their marketing spend to either protect or increase the volume of referral work received

• 47% of firms are taking significant action in developing or improving their firm’s web site

20%

24%

56%

Listing the firm in international directories

12%

49%

39%

71%

24%

5%

41%

41%

17%

0% 20% 40% 60% 80%

No Action

Some

Action

Significant

Action

Responses

Non-U.S. U.S. Mid-Law U.S. LL

• Non-U.S. firms are taking the most action in listing in international directories with 39% of those respondents stating they are taking significant action and a further 49% taking some action.

• U.S. mid-law firms are taking the least action not surprisingly since 96% of respondents indicated that they mainly receive referrals from the U.S.

• U.S. LL firms show more interest in international directories since a larger portion of their referrals are international

Leveraging social media

40%

48%

12%

0% 20% 40% 60%

No Action

Some

Action

Significant

Action

Responses

• Twelve percent (12%) of overall respondents are taking significant action to leverage social media to protect / increase their referral revenue.

• Almost 50% of respondents are considering some action around social media.

• U.S results are slightly higher with 15% and 18% of Mid-law and Large Law respectively taking significant action and with both groups, 52% are taking some action.

Thanks for your time

To continue the discussion and access the full research report & webinar replay:

‘Lex Mundi Connected’ group in Martindale-Hubbell Connected

Any questions or queries:

Rory Webber, Marketing & Community Development Manager, (rory.webber@lexisnexis.com / http://www.twitter.com/MrRx

Appendix

Survey Respondents

Asia

14%

East.

Europe

15%

Latam

19%West.

Europe

15%

U.S. Mid

Law

16%

U.S.

Large

Law

21%

• A total of 734 legal professionals responded to the survey

• Asia: 104

• Eastern Europe: 113

• Latam: 139

• Western Europe: 112

• U.S. Mid Law: 115

• U.S. Large Law: 150

• Mid-law is defined at 21 to 50 fee earners and Large is 50+

Survey Respondents• 18% of respondents were

Managing Partners (25% were MPs outside of U.S.)

• 52% were Partners

• 25% were Lawyers or Associates

• 2% in Marketing or Business Development roles

• 3% considered themselves in “Other” roles

Managing

Partner

18%

Partner

52%

Lawyer /

Associate

25%

Other

3%

Mktg / Bus

Dev

2%

Proportion of revenue from referrals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Asia E. Europe W. Europe Latam U.S. Mid Law U.S. Large

Law

0 - 10% 11 - 20% 21 - 30% 31 - 40% 41 - 50% 50%+ Don't track

Latam and Western Europe derive the highest proportion of annual revenue from referrals. Interestingly, the U.S. has the highest proportion of not tracking referrals.

% o

f an

nu

al r

even

ue

fro

m r

efer

rals

Removed non-responders – about 10%

Is referral revenue expected to change?

Probably

increase

37%

Stay the

same

49%

Definite

increase

10%

Definite

decrease

0%

Probably

decrease

4%

• Most firms expect referral revenue to increase (47% top 2 box) or stay the same (49%)

• Fortunately, no firms expected a definite decrease in referrals

• Key reasons for expecting changes are related to expectations of the economy’s improvement, changes in the firm’s marketing efforts, personal efforts to build a referral network