By: Jared Coseglia | President | Tru Staffing Partners
Date: Friday, February 8, 2013
One undeniable trend this year will be the increased demand for, and decreasing supply of, seasoned e-discovery sales professionals available for hire in the legal technology job market. There are more opportunities for sales professionals than any other position on the market. However, the lifecycle for an e-discovery sales hire can be anywhere from three weeks to two years, and job orders often stay open and active for more than a year.
To complicate the equation, the pool of available talent has significantly decreased in the last five years. Simultaneously, e-discovery service providers are becoming far more selective in who they hire.
These are the top five ways service providers attract seasoned e-discovery sales representatives:
- Increased compensation (base and total)
- Company culture
- Brand recognition
- “The new guy”
- Technology offering
Keeping your pastures green
In order to stay competitive and attract the best existing sales talent in the industry, service providers are offering increased base and total compensation for proven e-discovery sales professionals. In major U.S. cities in 2012 the average base salary for an e-discovery sales professional who generated between $1.5 and $2.5 million in revenue annually was between $100,000 and $130,000. The average on-target earning in total compensation for this rep was typically between $150,000 and $250,000 annually based on revenue goals being met. In others words, e-discovery sales professionals are taking home approximately 10% of their revenue. This percentage increases, often significantly, when goals are exceeded. For example, if an e-discovery sales rep generates $10 million in revenue, it is entirely plausible that he or she would take home $1.5 to $2 million in total compensation.
This, to be sure, is an exaggerated example, and reps with books of business that large are highly unlikely to move elsewhere. For reps of this caliber, or even close to this caliber, there often needs to be a “cataclysmic event” at their current employer motivating them to make a move. Traditional “cataclysmic events” include a merger or acquisition, compensation plan realignment in favor of the employer, or service delivery issues leading to the loss of large clients and revenue streams. When one of these things happens, a seasoned e-discovery sales professional might begin to think about greener pastures. Cataclysmic events are rare, though, and vendors must find proactive means to attract and retain successful sales reps.
Creating an attractive culture
Culture is a huge component of why a sales professional makes a job move, and it plays a key role in attracting talent to service providers. Driving millions of dollars in top-line revenue in the e-discovery space is hard work; the development of relationships up and down the corporate and legal food chain takes time, persistence, dedication, and many hours in the field wooing clients. Successful sales representatives want to have a voice in the continued success and vision of the company. They are the vendor’s first line of defense and feel their perspective is essential to the improvement of customer satisfaction. They want to be heard — at the executive level — and they want to be part of making the business bigger, better, and more profitable.
The double-edged sword of big brands
Service providers also use their brand authority and market dominance to attract talent. Big brands open big doors. On the other hand, big brands often have big sales teams, potentially leaving smaller territories for an individual’s sales potential. With every acquisition or collapse, several new providers emerge to fill the space. Sometimes being “the new guy” can attract top sales talent looking for expansive territories, limitless client base potential, and a unique technology twist that will capture the attention of their client base. The technology a company offers is also often a key motivator for sales reps. Some want to be with a provider that has a proprietary technology and a unique business model; others want to be with a vendor that offers popular industry tools, like kCura’s Relativity.
These are the top five factors driving demand of sales representatives:
- Organic growth
- Geographic expansion
- Industry attrition
- Quality over quantity
- No farming system
Service providers are growing, both organically and through acquisition. Acquisition has caused little displacement of talent. When a smaller company folds, the talent is picked up very quickly by competitors. Additionally, companies that have had a local stronghold in East Coast cities are now moving west. CDS Legal, once primarily based in New York and ranked as 2012’s #1 e-Discovery Provider by the New York Law Journal, has since opened offices in Washington, DC, Chicago, and San Francisco. Driven, Inc., a Washington, D.C.-based provider, now maintains offices in New York, Chicago, and Houston. The same is true of West Coast originating providers moving east. Geographic expansion inevitably creates increased demand for sales representatives and operational talent.
Picky can be pricey
There is no denying that the talent supply has also been significantly diminished due to an exodus of sales professionals from the industry. Service providers will no longer tolerate candidates who change jobs and companies every few years. Tenure has become a huge consideration for sales hiring managers, and this has forced many legacy e-discovery sales representatives who had excessive job movement in the last seven years to reconsider their long-term success and viability in the litigation support and e-discovery sales space.
A great sign that an industry (or company) has hit maturation is when sales forces begin to utilize a farming system. In sports, a farm team is a club whose role is to provide experience and training for young players, with an agreement that any successful players can move on to a higher level. The term is meant as a metaphor for any organization that serves as a training ground for higher-level endeavors—in this case, sales. Service providers are beginning to use the farming system for project management and operational support, but there is a strong resistance and inability to do the same with their sales forces. Like any industry in its adolescence, the power seemingly lies in the hands of the rainmakers. It’s not a sustainable model, but it’s the reality of the e-discovery sales staffing market right now. The vendors continue to vie for a diminishing pool of quality reps, which causes the increase in direct sales rep compensation. Being picky can be pricey.
These are the top five considerations for vendors when hiring a seasoned e-discovery professional:
- Tenure in current position
- Revenue targets vs. actual year-over-year sales (expectation vs. actualization)
- Size and complexity of deals/projects closed
- Network of influence (Paralegal, Lit Support Manager, Associate, Partner, AGC, or GC)
- Cultural fit
As the e-discovery community continues to commoditize and consolidate, companies are becoming far more selective of the e-discovery sales professionals they hire. This intensified selectiveness in sales staff hiring has forced many moderately successful e-discovery sales professionals to seek employment in other industries. It also makes those who are still selling in the industry more valuable with time. Their tenure and success selling year-over-year is the testament to their ability to adapt to the changing market and still drive revenue consistently. It also shows loyalty. Loyalty is a valuable commodity and speaks volumes to clients when sales reps choose to join a new brand.
Measuring with numbers
Providers also want proof-of-concept based on sales. A good e-discovery sales rep should be able to readily produce the figures for their base salary, total compensation, quota, and revenue sold annually for the last five years of his or her career. Employers will want to know these statistics early in the interview process or they will lose interest quickly. The size, scope, and complexity of work sold are also of great interest to the hiring manager. Some sales professionals have sold processing and hosting, but not review. Some have sold collections and consulting, but not trial support. Some have sold one hundred 10GB projects a quarter. Some sell two 100TB projects annually. Clients generally prefer a rep who has sold primarily large projects consisting of voluminous data collections, processing, and hosting services. The ability to sell consultatively across the entire spectrum of the E-Discovery Reference Model and litigation lifestyle also makes a sales candidate more valuable and more competitive.
Selling is a social science
These two factors go hand-in-hand. Larger global service providers prefer that their sales reps have relationships at the partner level (for firms) or assistant general counsel/head of litigation level (at corporations). Local and boutique vendors often find their initial point of contact at the Associate, Litigation Support Manager or Supervising Paralegal level and are more willing to hire sales reps that maintain a network of relationships at that level. These differentiators directly affect the culture of the organization. Selling is a social science and vendors must consider with whom they want sales reps forming relationships, and hire accordingly.
In closing, sales salaries are soaring and there is an abundance of opportunity available in the market. Many attorneys and litigation support professionals are exploring the idea of transitioning their careers into business development. Here are some tips for anyone looking to make the transition:
1 – Learn how to sell! Read books, attend seminars, and invest in a broad understanding of selling as an art form.
2 – Don’t be afraid to cold call. It’s part of the job. Most aspiring e-discovery sales professionals don’t want to have to do “the heavy lifting.” They want to leverage their consultative skills to help close deals by solution selling at the mid-to-end point of the sales cycle. This is often a luxury.
3 – Don’t expect a huge base salary. Aspiring sales reps that want large base compensations, rather than exponential increases on the back-end commission once they have proven themselves, will have difficulty making the transition.
4 – Seek a mentor. Most great sales reps had a great sales mentor at some point in their career. Finding a mentor should be a critical factor in your decision to go to work for a company.
5 – Think long term. Being a successful sales professional in today’s e-discovery climate is not about instant sales or instant big commission. Hitting the jackpot is luck; consistently generating and maintaining predictable revenue streams year-over-year, month-to-month, is skill.
About the author Jared Coseglia is the Founder and President of TRU Staffing Partners (www.trustaffingpartners.com) and has been a go-to individual in the staffing and recruiting field for a decade. He has successfully placed more 1000 people in full-time and temporary positions at the AmLaw 200 and Fortune 1000, and within the Legal Technology Service Provider community. Coseglia is an active member of the Litigation Support community.