Old style business development approaches are losing ground in the new economy and a change offers opportunity to progressive law firms. The remarkable findings disclosed in the book The Challenger Sale have had major corporations rethink their business development efforts and the lessons learned are equally applicable to law firms.
Consider their unexpected findings. Relationship building, the primary tool of rainmakers, only accounts for 4% of complex sales since the 2008 economic downturn. Clients now face cost pressure and have little time for relationship courting but need insightful professionals that can offer unique perspectives and the ability to assert control. This is The Challenger Sale and now accounts for 54% of major transactions.
Interestingly, lawyers are very adapted to the Challenger approach but often suppress this style in view of the former teachings of relationship selling. In essence, a Challenger teaches for differentiation (tell me something that I do not know); tailors for resonance (knows the client’s value drivers); and asserts control (help me get this done).
The purchase experience is the biggest contributor to client loyalty for B2B clients. The loyalty drivers are firm reputation (19%); service delivery (19%); value pricing (9%); and the purchase experience (53%).
Decision makers are unwilling to go out on the limb on their own but demand widespread support for your firm at all levels from their organization. This is contrary to most business development efforts that emphasize the need to identify and engage only at the C-level.
The Challenger Sale is a worthy read from cover-to-cover to appreciate the new approach required at both the marketing and selling levels. You will also learn that continuing your Relationship style of business development is likely undermining your profitability with only a 4% success factor.
As the United States wrestles with increasing income tax rates, the Canadian government is attempting to raise its revenue by compliance. The 2013 Federal Budget stated that the Canada Revenue Agency will be implementing transformational changes to its compliance programs with the goal of collecting an additional $550 million by 2014-15. At the same time, the CRA will be implementing over $60 million in cost savings by streamlining its services.
The leaner staff will accomplish the sizable revenue gains by greater use of advanced data analysis. Specifically, the implementation of filing your tax returns according to the General Index of Financial Information (GIFI) a few years back provides the CRA with a wealth of detection tools. If your filing for business promotion does not fall within the range of other similar filers, then you can expect a review as a possible high risk. If an expense is not within a consistent range of your prior filings, then a red flag will be raised by the computer for investigation.
Random audits have been replaced by risk profiling with particular attention to high wealth individuals, missed filing deadlines, amended returns, inaccurate filings, and those with a history of aggressive tax planning. Many of these attributes are common to law firms.
Canada is also a committed member of the Organization for Economic Co-operation and Development (OECD) that is seeking “tax morality” notably through their work on Base Erosion and Profit Shifting (BEPS). Base erosion being the underground economy and profit shifting resulting in lost tax in a global economy. The interchange of information, among OECD countries, now challenges those that thought they could escape taxes by going off-shore.
How do law firms adapt to this new tax trend? Assisting clients with compliance issues will be an expanding practice area. Tax planning should now be viewed through “tax morality” to limit the risk of impacting your client’s brand. Beware of common tax compliance failures such as automobile expense, shareholder loans, restricted expenses, unsubstantiated bad debt allowances, associated companies, and the many complexities of HST/GST client billings.
In most cases, the annual review by your accountant will not reveal your exposure to the wide range of tax issues (read your engagement letter). A separate tax review may be a worthwhile investment.