Anatomy Of An Associate Marketing Competition

Here is something interesting we have done to help associates learn to market at my law firm, Duval & Stachenfeld LLP.

Among other things, we have an associate-led Associate Marketers Group that meets monthly to teach, learn, and share various marketing skills and strategies. This year, by way of example, the group read an impressive marketing book called How To Master The Art of Selling (affiliate link), and then they practiced the techniques outlined in the book.

I believe our associate marketing program is unique as far as law firms go. Most law firms don’t really teach associates that much about marketing, at least not until they have achieved a certain level of seniority. We start the first day the associate joins the firm.

In any case, this past year the associates took it upon themselves to arrange a mock pitch presentation — sort of like moot court, but for pitching.

The associates divided themselves into groups and decided to have each group pretend to be representatives of a craft beer company that was pitching a local supermarket chain in order to get their craft beer product on the store shelves. Each group was then judged by a panel that was comprised of four partners and our Chief Marketing Officer, Caitlin Velez.

The associate pitching groups did their best to prepare for — and actually be — the senior management team for the craft beer company. And the partners and Chief Marketing Officer did their best to actually be the senior executives of the local supermarket chain. We all made it as real as possible. I styled myself as the annoying, penny-pinching CFO who didn’t care about the beer at all — just whether we could make money on it in our supermarket. I even annoyed myself in my role!

It was suggested to the groups that they use the techniques outlined in the How To Master The Art of Selling book; however, they were absolutely free to create their own, unique presentations.

I will say that after many years of pitching to clients and prospects, I was convinced I wouldn’t see anything in these mock pitches that I hadn’t seen before, but I was happy to be wrong, as I saw a bunch of creative ideas that I will be thinking about how to weave into my own future pitches.

For example, one group provided sample beer with a new brand and logo. Another provided cheese and crackers to be sampled with the beer. Another one made clear that they had no need for our shelf space due to the power of their brand, and wouldn’t pay a nickel for shelf space, despite me pushing them on that point. And there was much more.

At the end of the day, this project was a great success. Everyone got the real feel of a pitch, including:

Preparing for the pitch;

  • Coming up with a powerful and memorable message;
  • Having butterflies in the stomach of being in a room “across the table” from those who were being pitched; and
  • Pitching a tough group of people — we didn’t make it easy for them at all, but they all rose to the occasion.

It may sound like “I am just saying this” because I am writing a public article and could hardly say something negative about my associates; however, I assure you that that is not the case at all. My associates nailed it across the board. I also like the fact that they came up with the entire idea and it wasn’t from me at all. Hats off to the Duval & Stachenfeld associate marketers.

Our associates leading the project said, “Pitching legal services is tough — especially when you’re not yet comfortable impressing potential clients with war stories and your breadth of experience (because, guess what, you don’t really have any). You have to sell yourself just as much as the services you’ll be asked to provide. By having associates test out their marketing skills in a totally different context, focusing on a fun, more congenial topic than legal services, we were able to see their creativity and confidence soar.”

Finally, I end with the thought that — alas — I wish someone had pushed me to learn about marketing at the beginning of my career. It really wasn’t done in those old days. I just came in and did legal work. I didn’t think about building client relationships until I was in my late thirties. Oh well. I can’t change my past, but hopefully my associates will be great marketers as well as great lawyers.

Platforms – The Flavor of the Month In Real Estate Investing

In the old days a sponsor found a deal to buy a real estate asset and called up a financial party (either a fund or other institution).  They would form a joint venture and purchase the asset and that would be that.  Of course those – relatively simple – deals continue today; however, more and more we see clients entering into a more long-term relationship.

Here are some (philosophical?) perspectives on the various types of relationships that can ensue between sponsors and financial partners.  Since I have been (happily) married for over thirty years — and therefore know nothing about dating — I thought I would relate my thoughts here to the dating process.

The first level is the one I mentioned above, i.e. the sponsor finds deals on a one-off basis and when she finds a deal goes around to money partners until one is interested.  Then they form a joint venture and close.  I would call this casual dating since no one is obligated to do more than the single deal at hand.

The second level is what is often called a “programmatic relationship.”  This is where the sponsor and the financial partner enter into what we called a “Deal Production Agreement”, although there are other names for these types of arrangements.  Basically this means that the sponsor will seek out deals and give the financial partner “first dibs” on the deals.  Often the financial partner asks for exclusivity (or at least the first look) and sometimes the sponsor asks for the financial partner to pay part of its overhead or pursuit costs in return; however, these issues are typically heavily negotiated on both sides.  By the way, sometimes there is no agreement at all and the parties just handshake that the sponsor will show the deals to the financial partner and they will try to work together.  I would say this is like going steady (for old-timers) or being “in a relationship” (for people in the middle) or “making it Facebook official” (for the millennials).

The third level is a formal agreement to form a Newco, which is a joint venture between the Sponsor and the Financial Partner.  Newco will be used to do new deals, with typically Newco forming a special purpose subsidiary for each deal.  The Sponsor will pre-agree to post a certain (smaller) percentage of the capital needed for the new deals done by Newco and the Financial Partner will agree to post the rest.  There are quite a number of important issues to be negotiated in these types of arrangements since the parties are really joined together.  For example, are deals “crossed?  Can the Sponsor do the deal without the Financial Partner if the Financial Partner disapproves the deal?  How much discretion does the Sponsor have?  What if the Financial Partner just doesn’t fund any deals what can the Sponsor do about it?  How does the promote split work – does the Financial Partner get its pro rata share of the promote or some smaller amount; does the Financial Partner pay a promote or not?; does the Financial Partner participate in the payment of fees or receive a portion of any fees?  Going back to the dating analogy, this is like moving in together, but you aren’t really married yet – with the added twist that, when you move in together, you invariably need to think about how much you want to share and how much you want to keep separate.  But, at the end of the day, in a program, typically each party keeps its own business and if there is a divorce they are (moderately) easily able to go their separate ways.

The fourth – and final – level is typically called a “Platform Investment.”  To start off with our analogy, this is truly getting married.  In these types of deals, the Financial Partner invests directly “into” the Sponsor or, alternatively, just purchases the Sponsor whole-hog.  Often the theory is that the Financial Partner will have access to everything the Sponsor does plus the ability to recapitalize existing deals plus a share of promotes and even fees.  In return the Sponsor now is more credible in the market with the real backing of a major financial player.  Often, these transactions are used to set the stage for an eventual IPO and/or to grow the sponsor’s business.  Sometimes the goal is to have the now-recapitalized Sponsor raise a fund, using the Sponsor’s reputation and the Financial Partners financial backing, and sometimes the goal is just to do future deals as a team.  These deals are very intricate and involve significant negotiation.  There are numerous issues but some of the big ones are the valuation of pre-existing deals and whether and to what extent the Financial Partner participates in pre-existing promotes and future promotes, the split of fees between the Sponsor’s principals and the Financial Partner, the allocation between fees and promotes where the Financial Partner has different participation rights depending on the income stream, the nature of incentive compensation arrangements, the ability to reinvest funds into the business, the extent of future funding obligations of the Financial Partner or Sponsor, the ability of the Sponsor to raise additional capital from alternative sources, corporate loan facilities, discretion and decision-making, buy-out rights, the terms of an eventual unwind, and the degree of non-compete that the Sponsor’s principals will have to agree to.

Duval & Stachenfeld is right in the middle of all of this.  And what we are seeing is a gradual gravitation from the simpler deals to the programmatic to the formation of Newco’s and all the way to the platforms.  Indeed, we are seeing more platform deals than we have ever seen before.  My sense – as I survey the real estate industry – is that Financial Partners are fearful of being locked out of the “good deals” if they are not right in on the ground floor with a high-quality sponsor seeking those deals.  Correspondingly, the Sponsors are fearful that if they don’t have credible and real financial backing they will not be able to compete for the “good deals” as the sellers will gravitate towards buyers who have the ready cash to be able to perform.

Now for the sales pitch part of this – sorry……

At Duval & Stachenfeld, we have an entire team of lawyers that have dedicated their careers to corporate real estate transactions.  Our Corporate Real Estate Group consists of over 20 lawyers and is one of the largest of such practice groups anywhere.  But, unlike the corporate groups of most of our peer firms, our Corporate Real Estate Group focuses exclusively on real estate transactions, and this translates into a distinct competitive advantage for our clients in the area of corporate real estate because, put simply, we understand how real estate businesses work from top to bottom!

Notably, over the last five years, our Corporate Real Estate Group has spearheaded some of the most high profile transactions in this space including the formation of several up-and-coming emerging manager and operator platforms, the recapitalizations of several name-brand existing platforms, the launch of new business-lines by marquis managers through the formation of multi-tier joint venture or other arrangements for the establishment of new programs, and a host of other transactions (the list of which is too long to summarize).

Finally, there is one additional piece of information that is crucial to why the Corporate Real Estate Group at Duval & Stachenfeld is different from similar groups at our peer firms.  The practice– and in particular the practice in the specialty area of programmatic and platform arrangements – fits seamlessly with our core business model — which is “to help our clients build their businesses.”  Put simply, if you are considering any of the above transactions it is great to call us for two reasons:

First – of course we know how to do the necessary legal work – as it is our core specialty

But second – we have a wealth of counterparties – Sponsors and Financial Partners – many of whom are looking for high-quality counterparties to team up with through casual dating, going steady, moving in together or even getting married.

So if you are planning to team up with someone in the real estate world, please feel free to reach out to our Corporate Real Estate Group.

Power Niche Marketing: Some Advice On Pitching You Might Not Have Thought Of

So you have a pitch set up. Now what?  Who should go?  Who should speak?  Who should do what?  How did you get the pitch?  What is the prospective client expecting to hear?  What are the strengths and weaknesses of the people doing the pitch?  What is the one question you really hope the team isn’t asked?

At most law firms, everyone looks at each other awkwardly. No one wants to hurt someone else’s feelings. If Toby is a brilliant lawyer but trips over his tongue at a pitch, maybe he should be keeping his mouth mostly shut — but who is going to tell Toby that?

Or if the big cheese — maybe the managing partner — is going to the pitch, should she dominate the discussion or keep quiet and let others speak to get air time?  And who is going to tell the big cheese what her appropriate role should be?

There is a myriad of questions here and they are all personal to the people going to the pitch and the people who are going to be receiving the pitch.

But there is only one answer: everyone should check their egos at the door in figuring out who should do what. There should only be one single goal and that is making the right impression at the pitch.

This is easy to say — and I just said it — but it is difficult to do if there is an inherent awkwardness within the team in having this type of discussion. Let me delve into this important point.

Patrick Lencioni — in his incredible book, The Five Dysfunctions of a Team (affiliate link), puts forth the first dysfunction of a team as lack of “trust.” This doesn’t mean a concern that people will steal. Instead, he means that often Teammate A doesn’t “trust” Teammate B enough to be honest enough to say something like:

“Toby you really aren’t good at these pitches — you just babble too much — I am much better — let me do the talking.”

Yikes — that is awkward to say!  Isn’t it?  You could hurt Toby’s feelings. Yes, you could indeed. You could really upset Toby.

But what is your goal — preserving Toby’s feelings or doing a great pitch and landing a new client?

Do you “trust” Toby enough to tell him what he needs to hear and the team needs for success, or are you too afraid of honest confrontation?

Bottom line — teams that don’t “trust” each other enough to be honest about what each teammate is great at and what each teammate is poor at, are a lot less likely to have a successful pitch.