It’s critical that financial advisors find new clients—preferably affluent new clients. They can find such people in a number of ways, but the best way always proves to be referrals—either from clients they already have or other influential professionals. The former provide the most clients. The latter produce the best (and wealthiest).
These “centers of influence” can be critical for those building high-end financial advisory practices for two reasons. First, they have access to the wealthy. Second, they can provide functional introductions, validating the advisor’s expertise, showing clients how the advisor fits with them, and prompting the clients to take action.
Private client lawyers and accountants tend to be the best people to refer clients from a list that also includes private bankers and concierge service providers. However, it’s the lawyers, especially, who often have high-net-worth clients. They complement the role of the advisor rather than compete, and they contribute critical services such as the production of legal documents. But is every private client lawyer the same and worth pursuing?
The World of the Private Client Lawyer
Private client lawyers are professionals who provide the wealthy with services such as estate planning, asset protection planning, income tax planning and succession planning.
But beware. Not all of them are good for referring business to you. Some are too focused on technical matters. Some are not particularly adept at business development. And some run transactional businesses—providing legal expertise to one wealthy client only once before moving on to the next (leaving you only a small window of time to get an introduction).
Furthermore, these lawyers are operating in turbulent times, facing downward pressure on their fees as their services become commoditized and as wealthy clients become more sensitive to costs. There’s also a general anxiety among them that there are not enough wealthy clients for everyone. Thus, they are very concerned about their ability to maintain their income (and lifestyles).
This means advisors have to be very astute and focused only on those lawyers with the motivation to grow, because only those will be the ones more likely to direct wealthy clients to them.
One thing that helps is to consider their professional styles.
Four Professional Styles
When it comes to professional styles, there are four different types of private client lawyer: the technician, the rainmaker, the experimenter and the entrepreneur (See Exhibit 2). If you know the type, you’ll know what type of services he or she offers to what type of affluent client. The types also determine who the lawyer likes to partner with. Most important, these professional styles have a direct bearing on how financially successful the lawyer can be; the average compensation is significantly greater in two of the categories.
The professional style also determines the lawyer’s marketing orientation and compensation structure. Some are more oriented to marketing and are thus very proactive in generating new business and expanding current relationships.
Traditionally, private client lawyers are compensated through billable hours (the most prevalent approach, one reinforced by culture), project fees (calculated based on projected billable hours), administrative fees, and probate fees. But there’s a movement to go beyond these structures—for the lawyers to operate less like a profession and more like a business. Tradition-minded lawyers might question the legitimacy of these compensation schemes, but that’s likely because the methods are generating higher incomes for their adherents.