Ed: Welcome to this episode of the Passle CMO Series podcast. I'm your host, Ed Lovatt, and today we have a distinguished guest in Ralph Allen, the Chief Operating Officer of Kelley, Drye & Warren. Ralph brings a wealth of experience and insight into how law firms can strategically align their operations and business development efforts to drive profitability.

So in this episode, we'll explore the critical intersection where operations meet speedy, discussing strategic decisions, market competition, client relationships and also the transformative impact of technology. We'll also uncover how firms can effectively increase their top-line growth while boosting their bottom-line results.

Charlie: The CMO Series podcast is brought to you by Passle. Passle makes thought leadership simple, scalable and effective so professional services firms can stay front of mind with their clients and prospects when it matters most. Find out more and request a demo at passle.net. Now back to the podcast.

Ed: Welcome to the CMO series, Ralph. 

Ralph: Thank you. Good morning.

Ed: Ralph, we've gotten to know each other over the previous weeks, having a few calls and finding out more about yourself, and I've probably given you a little bit about myself. But for the sake of the listeners, could you please begin by telling us a little bit about your role as COO And how you work with functions, including the BD and marketing teams within your firm.

Ralph: Sure. So as COO of the firm, my job is to sort of oversee the entire operation. And that's both from the legal side and from the staff side, or business professional side. And perhaps that's an evolution from how this position, which previously might have been an executive director, has sort of evolved in the last 20 years or so. Most people that had this role 20, 25 years ago were called executive director. They mostly only spent their time with financial reporting and overseeing what was then the staff departments and being that conduit for making sure that the staff departments were serving the partners and the associates at a level that they thought was necessary.

So it was very sort of reactive, right? You know, we respond to the lawyers and what they want. What has evolved now and the way that I've done this role in the last 20 years is we have to look at the business overall and we have to anticipate service models and service needs and how the lawyers are practicing and what tools the lawyers need to practice and what the clients are requiring. So my job is to sort of look at all of that, look at the entire landscape of the business of the firm. Do we have the right people to serve our clients based on what the demand is. Are we staffed appropriately? Are we overstaffed? Are we understaffed? Do we have a way of looking at our business pipeline to see what's coming and what we may need to staff and perform? And then you transition over into the services that support the practice of law. Do we have the right people? Do we have the right services? Are we thinking about what's coming next? Technology is changing things all the time. There's all kinds of new tools. Are we vetting those things appropriately? Are we working with the business, with the lawyers to ensure that they have the right tools? And then do we have the kind of environment that is conducive to the culture that the firm thinks is important to serve the clients in the way that we most want to serve them?

So my job is to sort of look at all of that and kind of understand all the players that we have and assess strengths and weaknesses, assess where we're going and our progress towards getting there. And, you know, at the core of it. And, you know, I don't want to mislead people. People, look, this is a business and we have to be profitable. And in order to do the kinds of things that you want to do and be the kind of place you want to be, you have to be profitable and you have to continue to grow in profit. So how do you do all of that while growing profitability in this day and age where you see inflation is four or five or 6% per year. Well, that means in order to show growth and profit and compensation to your highest performers, you've got to have top-line growth of 10 to 15%. And how do you go about doing that? And people like me are responsible for helping to figure that out. And that's where business development comes right into play. I work very closely with our CMO and work with them in their efforts to support our practices. But it's getting larger than that, and I think we'll get into that a little bit later. But I see the role of business development as an ever-expanding role beyond the traditional sort of role.

Ed: Some of the other parts that you mentioned there, I mean, you have such an all-encompassing position. Is there something maybe that takes more focus than others or if it does that sort of comes in waves occasionally? 

Ralph: Yeah it kind of comes in waves you learn to balance these things and the thing that you begin to understand if you've done this for a long while is. None of these things are disconnected like one thing is connected to another thing if you imagine a circle and something happens at the top right corner of a circle. You might think it's disconnected from something on the bottom right corner of the circle, but it's not. Somewhere down the line, a decision here impacts a decision there. And you have to think about that. And so I have days where I might be dealing all with one thing, but I have to be sensitive to what decisions here are going to have in other areas. And so while my time on a day-to-day basis may bounce from one thing all-inclusive or two or three things at the same time, and some days it's just kind of monitoring, just kind of watching and seeing what's going on and then checking in. I spend a lot of time talking to my direct reports. We meet weekly, individually, and then as a team just because things happen so fast and you have to stay on top of them so it's there are days where it's one thing there are days where it's multiple things but they're never disconnected from any other thing ever. 

Ed: I'm sure that kind of has that concertina effect of yeah it can and it can really have a knock on to the next to the next and to the next.

Ralph: Oh I can't tell you how many times somebody would say, well, you know, when we made this decision to do this, we had no idea that it was going to impact that. And that's exactly the kind of thing that we're supposed to consider, that we're supposed to think about.

Ed: So, yeah, just going back to the BD, the business development side of things, how do you see business development as a tool for expanding and capturing new business within the legal industry? And how has it maybe differed from previous roles that you've had?

Ralph: Yeah, so I won't say it's any different in previous roles, but I would say that, again, it's evolved. Where I think 20, 25 years ago, you would have had lawyers directing the efforts of marketing and business development. Now, I think you see more where the younger lawyers who have come up and have become partners, they support these business professionals, which means they have a high level of expectation from these business professionals to bring to the table really important competitive advantage making skills and mindsets and so I think what you see now what I see and what I have been trying to foster and encourage it's more than just you know helping. To identify cross-selling targets of clients right you know here are our top 100 clients or our top 50 clients and this is where we're serving them and this is where we're not serving them and let's go pitch. Let's go figure out if we can make a pitch or responding to RFPs or doing articles and all those things are still important.

But where I think BD and marketing is becoming more critical and I think firms that are showing a lot more growth are the ones that are using these business professionals to help them identify, in a proactive and in a preemptive way, targets for new business. Targets for new business, targets for lateral growth, for acquisitions of talent. And this is what I mean.

For years, I've heard lawyers say, and I'm sure anybody that listens to this will nod their head. I've heard lawyers say, oh, our marketing people don't know what we do. They don't have any idea what we do. Well, what that means, what I've come to learn what that means is it means I don't have the time to go out and find new work. Your job is marketing. And as a lawyer, my understanding of marketing is as I look at my clients and as I look at other businesses that my understanding of marketing is marketing goes and finds us new clients. Okay. So, so. What I think a lot of marketing people and business development people think that means is, okay, I need to understand the practice of law. I need to understand how to be a lawyer in this particular area, which means I need to understand the bankruptcy code, or I need to understand the litigation process. I need to understand this. 

No, they don't need to do that. What they need to do, they need to focus their time on, is understanding the why. Meaning, why does a particular client need our services at this time? What is driving them to hire us? What need are we serving? Okay. And so it, so that could mean it's a company that needs to make an acquisition in order to remain competitive. Why do they pick our firm or why should our firm be among those, those firms chosen or considered to be chosen? Why does a business who's being investigated by one branch, a regulatory agency or another, why do they need us? And so if business developers and marketers can understand it from the other way in rather than from the inside out, they can understand why clients are buying our services and in what instances drives them to need our services, then it's easier. 

You don't have to understand law. Then it's sales. Then it's identifying opportunities. You could look at the Wall Street Journal. You could read the different media pieces about different businesses and see what's happening and see an opportunity. Okay? And so I think that any marketer and business developer that's trying to spend their time figuring out how to actually practice law in that particular area of a practice that they're supporting, they're wasting their time. They need to figure out from the outside in, which is why are clients buying our services? And if you can identify that, then you can be more helpful to identifying opportunities and helping to craft pitches and helping to craft outreaches in a proactive and in a preemptive way. And also, and lastly, then you can also help you define, oh, well. Here are the two or three firms or 10 firms or however many firms that have leading practices in this area where, gosh, if we had those people in our firm, then it would increase our scale and our depth and would make this practice area a great competitor. And so they can both help. If they do that, if they learn from that direction, then they can be super helpful in identifying more business opportunities. And it can be super helpful in identifying opportunities for lateral acquisition, which all drives growth.

Ed: Okay. And that sort of all adds up. Are there any key factors when it comes to making those decisions, though, that sort of fall on your head as opposed to sort of… 

Ralph: Well, you know, again, it goes back to profitability. And, you know, so what are you able to charge for these services? And how much does it cost you to provide those services? What sort of team do you need? What sort of resources do you need? And those clients, can they afford to pay? The thing about a law firm, which makes it very hard, well, not very hard, it's just what it is. Firms invest in growth. They invest in new talent. They invest in laterals. They invest in first-year associates. It's all those things. But we are still a cash-based business, which means we live in 12-month increments. And so even though we invest in growth and new people, we still have to find a way to be profitable every year and growing our profits every year and ensuring our partnership that they are in a growing concern they're in a businesses continue to grow its profitability so, You sort of start and start with looking at your practices and which practices have less rate sensitivity, which practices have clients that are that are more willing to pay very quickly, which which practices require, you know, less resources or more resources. All that goes into figuring out profitability.

I recently took a course at the Northwestern Kellogg School. It was a course about sales. And one really salient thing I learned out of that, which your listeners probably know this because you're all sales and marketing people, vitamins and painkillers, right? So what are we selling? Are services, are they vitamins? Are they painkillers? And what you learn from that is a painkiller, if you have pain, you'll pay almost anything to get rid of it. If it's a vitamin, it's certainly something that is helpful to you. It's something that you need, but you're not going to spend your last dollar on it. And you're going to try to negotiate. The price, or you may not even buy it at all. You may defer it. But a painkiller, If you have something that is stopping your business or impeding your business or impeding your ability to sell, impeding your ability to transact commerce, that's a pain. And so an evaluation of the practices in a firm to determine how many are painkillers and how many are vitamins. And if you take it from that perspective, then you can see, well, what's the contribution to profit? And how do you build your law firm to support that? If you're a firm full of vitamin practices, then your firm has to be built in a certain way to be profitable, but you're not going to have the painkiller premium rates. If your firm is full of painkiller practices, you'll be able to pay more, you'll be able to give, but you'll have to get higher level talent, right? You'll have to go. So it all kind of flows through that. And most firms are a mixture of both. So how do you build a firm that can be profitable every year with both painkiller and vitamin practices? And how do he continue to invest and determine which ones to disinvest in which ones do you increase your investment.

Ed: I love that comparison um I've not heard it before and that it makes perfect sense when you say it out loud and genuinely it sort of simplifies it but maybe that's what's needed.

Ralph: Yeah oh it's very much look this isn't a hard business the work that what the lawyers perform is very hard. They are under great pressure to produce and to deliver services to people who are in need, who have a need, but on the inside, How you build it, how you serve it, how you support it. Look, as I said, it's a cash-based business. We're profitable if our clients pay us and pay us in a timely way and pay us as much as we anticipate. And if our clients don't pay us so quickly, then we have to do other things.

Ed: So leading on to possibly something you were able to help us or at least give us a little advice on about some effective approaches that you've seen or implemented through the firm about leveraging existing client relationships to expand into new areas, into new business, as it were. 

Ralph: Yeah. So I have seen that. I've been a part of that in the middle 2000s, 2005, 2006. I was at a firm at the time. And that was when you had convergence going on, meaning many clients, many Fortune 100, Fortune 500 businesses were whittling down the number of law firms that they had. And they were creating panels so you might have a panel A  panel B panel C panel A firm is where your sort of painkiller painkiller law firms your vitamin B law firms were sort of somewhere in between the painkiller and vitamin right and so. And so through that process, what I saw there was an opportunity to win a lot more business that you otherwise wouldn't have had the opportunity to win because the clients were now sort of resorting or reorganizing their approach to buying legal services. So certainly there are those opportunities when the clients push that towards you.

There are also times where you have a great relationship with a client in the areas in which you do work for them and you proactively ask, hey, are there other areas where we might be of assistance to you? Now, that's kind of an open-ended, sort of uneducated way to do it. What I have encouraged people to do is to have client teams or to study these clients, to study what's going on in their businesses and to sort of reach out to those clients in a leveraged, proactive way. Hey, thank you for the opportunities you've given us to serve you in these areas. We are certainly very much attuned and concerned with your business globally or overall. And we've seen other opportunities in certain areas to serve you because we've seen this and this. It gives the client a feeling that you are paying attention to their entire business. And so you proactively are doing it that way. But you have to go to these clients, you have to go to a client in an educated way. You can't just go to them in an open-ended way because that's not giving them anything easy. If you put yourself in their shoes, you want to give them everything they need to make this happen. You don't want to have to put them to work for you inside the firm based on just, hey, can you give me an opportunity? That's going to be too hard for them to look for you they got other things to do you should be looking and identifying opportunities and saying to a client we think we can help you here and here's why okay so and then you leave it to the client to navigate the politics on their own so again these are relationships and at the end of the day what you want to be is a valued partner you want to be a you want just to have the client believe that their partnership with you has great value and and so you have to find ways to demonstrate that through the ways that they've hired you through the services they did buy from you but through other opportunities that you bring to them. 

Ed: I'm not envious of you in your position because you have so much going on and so many little angles that make such a big difference.

Ralph: You kind of make it what you want to make it, right? You know, to the extent that you want to focus on certain things or you think the structure within your firm doesn't allow you to focus on other things or allows you to focus on certain things, then you do that. I sort of approach this from sort of the global perspective because that's been my experience. I just sort of do that. I think about all of these things. I think about how this is all connected and how we might do that. Because the one thing I've learned in law firms is that if you are thinking about the business, if you're thinking about it every day, whether or not they believe your idea today or they buy your idea tomorrow, someday they might. And they will realize that you brought those ideas to the table. So I've never not had anything to do. I've always had a full day. I've always had a full complement of things just because I, again, sort of the example I just used for us approaching our clients, I look for ways to bring value to my client. And my client is the firm. And I look for ways to add value across the entire firm. 

Ed: Yeah. That's a good way to put it that your client is the firm. I've not pictured it in that way and now that you've mentioned it, it does change my perspective and I'm sure some of the listeners perspective on where your seat is, it actually does mean that the client is your firm that you're working at.

Ralph: If this position was only about building out space and figuring out secretarial ratios and reporting the financials every month, I couldn't do it. I mean, I could do it. It just wouldn't be interesting to me. I have to, and perhaps that's because I got an MBA and I sort of have always looked at any business from that perspective.

Ed: It's a good way to, it's a new perspective for me and I'm glad that you've mentioned it. Something you touched on right at the beginning, Ralph, was the advancements in technology. And a lot of people outside of law firms think that law firms are still sort of behind the ages a little bit. But how are you adapting with BD and operational strategies to stay ahead using probably this advanced technology? And what opportunities are there to drive the top line growth?

Ralph: You know, I think people are still trying to figure it out. I can tell you that midsize and smaller firms are going to let the larger companies. More profitable firms figure out which of these technologies work and figure out which of these technologies, excuse me, can have an impact because you just can't afford it. I mean, you, smaller firms, mid-sized firms just can't afford that kind of investment. And so it'll sort of flow down, downhill, if you will. But our, but that doesn't mean that mid-sized and smaller firms aren't thinking about it. They have to. Their clients are, you know, asking. And so we look at different ways to do that. We have at my current company, Kelley Drye, we have a group of people that the last few years have studied all the new technological advancements and where we might use some of these technologies and have deployed them and had some success with it. But now everybody's talking about AI.

Ed: Yeah.

Ralph: And how is that going to work? I think for firms that are taking a beat and not necessarily applying that or they're taking a beat, some firms are testing how they may use it in the delivery of legal services. A number of firms are looking at how they may use it internally. For all manner of business service operations. There's a lot of stuff that's manual or there's a lot of people doing things that AI may be able to make easier or to make more usable. There's a lot of information inside of a firm that is inaccessible to be used for competitive advantage. There's a lot of knowledge. There's a lot of work product. There's a lot of history. There's a lot of things that you just can't sit down. You don't have the time to go through and tease out all these things, but this technology can do that for you. So I think firms are looking at it internally first to see how they may deploy some of these tools to make the firm more efficient, to make the firm more effective, and to improve service to the firm. And where that works, I think, I think you may see some sort of slow deployment into other areas. I think it will make things like business development, I think it could probably give more of a boost to things like business development.

Where I talked earlier about understanding clients and why they're buying our services and when and under what pressures, you know, certainly maybe AI and some of these tools can help marketers and help business developers get more of that kind of information, get more of that kind of data and sensibility. So I think it's something that we're all looking at. I think we haven't figured out yet how they may directly drive top-line growth. I think they will be more of a tool. That will, for a period, have great import in the efforts that help drive top line growth. But I don't think solely just by themselves, you know, will they do that? I don't think these technologies are going to replace, you know, young lawyers or associates or paralegals. I think they're going to help make them smarter at what they do. I think they're going to help make them more efficient and effective. So rather than, for example, an associate spending an hour trying to put together the shell of a brief or the shell of some kind of document that perhaps you may use these technologies to create the shell for you based on our best in class work product on these kinds of things. And then, so let's say that takes five minutes. Well, now the rest of the hour can be made for fashioning and for creativity and for inspiration and for fine tuning. And so now that billable hour that people have said is going to go away becomes more valuable. It becomes more valuable because now there's more thought product going into it because you've taken away the construction piece of the billable hour.

Ed: We'll dive straight in with some quickfire questions and feel free to sort of delve into some interesting answers just so that we can find out a little bit more about what it is that you really get up to.

Ralph: Well, I'm not very interesting, but let's give it a shot. 

Ed: You say that and we might find out that that's completely wrong. I'll kick it off. What is it that you're listening to or reading right now?

Ralph: Well, I listen to a lot of podcasts just on a random kind of thing. And I listen to old books that I've read or listened to in the past. But the thing that I'm reading now that I'm rereading was a book that was published in, I think the late 1980s. It's called Managing Maturing Businesses. And I found this book, Oh, maybe in 2011 or 12 or so, I was at one of these old bookstores and I kind of like going through those. I actually like going to a bookstore. I don't know if those, you know, that's a big thing still, but I still like going to bookstores. And I found this old book and I thought the title was just, it kind of grabbed me. And at that time, and I think still at our time, you know, law firms were going through a period of maturation and things were starting to change and you needed to think about how do you restructure a business? How do you do this? How do you do that? and so I really found a lot of information from it so I am rereading an old book so it's called managing maturing businesses it was really good.

Ed: I've written that one down and it's going to go into my list of books to buy now.

Ralph: Okay okay.

Ed: Next question is sometimes the most interesting one. What was your first job?

Ralph: Oh my gosh, my first job. So I grew up in Washington DC and my first job was I had a little, this will sound very silly, I had a sort of a lawn mowing and shoveling business when I was a kid I would go around our neighborhood and I you know knock on doors and asked, I saw people needed their grass cut or you know snow shoveled and I learned, I did that, I learned to sort of state my price and my value and did that. And sometimes I got paid what I asked for. Sometimes I didn't. But… Taught me a lot, taught me a lot about competition. There were other kids in the neighborhood who were doing the same thing and I was having a little bit more success than some of the others and had one guy actually threatened to try and beat me up because I was doing so much business, although I wasn't afraid of him. So yeah, so that was my very first job. I had my own business. 

Ed: Getting out there from an early age to pounding the pavement to get drum up some work that's pretty cool

Ralph: Yeah yeah yeah. 

Ed: Personally and/or professionally what is one piece of technology that you can't live without?

Ralph: Oh my gosh it'll sound like a rap song I can't live without my radio I love music I love all kinds of music I have to have music around me or near me or in part of my life I don't think there's a day where I don't you know listen to music in one form or fashion first thing in the morning middle of the day throughout the day when I work out so so I guess it's the radio but I guess it's your phone now.

Ed: Well you know yeah I know what you mean yeah I love that you led with with radio rather than the obvious choice for most people these days is phone but yeah listening to music is obviously a key part of your daily life which is brilliant absolutely. What is a small habit that you have or that you think you have that could help others?

Ralph: Oh my gosh a small habit that I have, you know, focusing on just being consistent and, you know, trying to, we all get so. I know I get so busy with so many different things and so many things in my life. And, you know, you're dealing with all these things every day, but you have to try to find a way to come back. To your list or, you know, some people have a vision board, some people have a list of important things that they want to do or things they want to accomplish this year. I, I, I try to try to come back to what, you know, my sort of story is, what my list is, what I, what I. Have said is most important and, and, you know, try to see if life is taking me that way or taking me away from it and whether or not my list was actually accurate or sane maybe I need to change it but just uh just a way of kind of checking back in yeah and re-evaluating so that's a habit that can get away from you but I have tried really hard in my life to come back to that. 

Ed: That makes sense like it seems like a very good idea as well. Where would be your favorite place to visit and why?

Ralph: Oh man, so many you know so many places anywhere where there's water where you can kind of just look at the water and look at the boats and ships on the water I lived in california for six years from 19 from 2015 to 2021 and you know you could sort of drive down the 5 or the 405 and you could look at the ocean the pacific ocean and just kind of just kind of have yourself taken away or there were years where we would go to the beaches in north carolina and look out on the ocean so I think for me it's the ocean it's just any place where there's water and ocean and peace.

Ed: Peace so yeah it sounds very serene. 

Ralph: Yeah yeah someplace you can think.

Ed: Yeah maybe close out some things around you and just focus on reflecting and peace that's a good great answer.

Ralph: Thank you.

Ed: Now as we're getting sort of towards the end of the episode from your perspective which is a I think going to be a brilliant one for this I think anyway. What advice do you have for business development professionals when it comes to driving profitability and what do you think they should be thinking about?

Ralph: I think they should not be afraid, but be diplomatic in sharing their views about particular clients and particular levels of profitability or things like that, whether or not the client is buying us as a vitamin or a painkiller. I think if they start to think about it from that perspective, who are the clients we're serving and why are they buying our services, then that can increase their value and can increase their importance. I think that the more that they are able to think that way, that they will find themselves more aligned with the lawyers that they're working with. Because the lawyers that they're working with know why a client comes to them. But they only speak about it internally in terms of, oh, you know, we did this, or we did that draft, or we did this, and we wrote this, and we argued in the court, or we argued in front of the regulatory, those are the mechanics of how they do what they do. 

Understanding the why. If business developers and marketing is going to understand the why, why does somebody buy our services and in what instances causes them to buy our services. If they can nail that, I think they will distinguish themselves and I think they will help their firms in a massive way because that gives them the ability to be able to do so much more, to identify more opportunities. You know, you know, if you think about a lawyer's day, you think about a 24 hour day, there's a 10 hour period in there where they're working. They are spending time with the clients. They're working on the construction of, you know, this thing that's going to go do with, but, and then somewhere in there, you know, they may go out with clients. They, they, they entertain, they do all that. And then they have their family lives and all that. And somewhere way in there, they have to think about bringing in other work. And if you had more able pairs of hands to identify opportunities that are really like bullseye, nailed it, these people need us because you've identified a situation that looks a lot like the other clients that we're serving in their situations. We should be a no-brainer or we should be really, we should have a competitive shot at getting that work. If they can do that, then that will set them apart.

Ed: And that's a solid piece of advice. I think hopefully for some of the listeners that that sinks into, it should probably be, pay to go quite a long way within their careers to listen to that. 

Ralph: Yep.

Ed: Ralph, it's been fascinating getting to know you over the previous weeks.

Ralph: Same here with you. Thank you. 

Ed: Yeah, it's been lovely to also have this conversation now and make this episode because it's great to get your perspective on things. Also hear how your role differs and probably differs in every firm a little bit. But that comparison that you had with the painkiller and the vitamin, also the way that you said that the firm is your client, I think there's some real great bits of information that people can learn lots from. So thank you so much for agreeing to do this and actually be doing it. I really appreciate it. 

Ralph: Thank you for having me. I hope this doesn't make it your last one of these. I hope I won't be the first and the last.

Ed: No, I think quite the opposite. I think we could probably go on to an episode, part two of this and sort of really start to delve a little bit deeper into some of the more finite topics that we've discussed previously and today. So again, Ralph, thank you so much for appearing on the CMO Series podcast. We really appreciate your time and look forward to keeping in touch with you in the future. 

Ralph: Same here. Thanks so much.