Implementing Business Practices That Foster Shared Interests — #ILTACON #ILTA103

ILTACON 2015 LogoSession Summary: Many organizations are adopting “best business practices,” but they would be most effective if they intersect, bringing together the shared interests of law departments and law firms. Where do you begin? Let’s start the conversation with a panel of representatives from law departments and law firms who will discuss how to come to agreement on best business practices.

Speakers:

  • Lisa Damon, Seyfarth Shaw
  • Katie Debord, Bryan Cave
  • Mike Haven, NetApp
  • Peter Krakaur, Solar City
  • John Alber, retired strategic innovation partner, Bryan Cave (moderator)

[These are my notes from the International Legal Technology Association’s 2015 Conference. Since I’m publishing them as soon as possible after the end of a session, they may contain the occasional typographical or grammatical error. Please excuse those. To the extent I’ve made any editorial comments, I’ve shown those in brackets.]

NOTES:

  • The Rise of Legal Operations. Mike Haven explained the legal operations function within law departments, especially departments with 50 or more in-house lawyers. In the 1990s companies like GE, Bank of America, Prudential, Cisco, HP and other Silicon Valley companies inaugurated this role.  Initially, the role focused primarily on cost savings. In the early 2000s, the role evolved beyond cost management to technology implementation. Since the global financial crisis of 2008, legal operations professionals have been charged with the task of reducing legal spend. Now legal operations professionals are responsible for a variety of functions including cost management, alternative support models, data analysis, vendor management, communications, strategic planning, litigation support, data governance, records management, knowledge management, etc.
  • First Audience Exercise. You are a partner at a law firm and have a client who recently moved to a new company, Acme Corp, to become its general counsel. Your client has discovered that Acme’s systems cannot provide a general understanding of the company’s overall expenditure on legal matters. As part of a broader RFP for transactional and litigation work, your client has told you that it intends to implement an eBilling system and has asked you for an opinion about eBilling platforms. Additionally, Acme more broadly has asked for help in identifying ways to track engagements, manage conflict waiver requests, monitor fees, streaming accruals and billing, and track overall legal spend.
    • What is the challenge for Legal Ops?
      • Define for itself the management problem it is trying to solve (e.g., matter and financial management) and what it needs internally and from external counsel to enable the law department to meet it’s own goals.
        • what shared expectations?
        • what individual and share business processes?
      • Then think about what tools (e.g., eBilling platform) would be most helpful and must external counsel must provide the necessary data?
      • Throughout this process, keep in mind the company’s own tolerance for risk and ambiguity.
      • Haven:
        • the first thing you need to do is put a team in place to manage the process. You may need to engage a consultant to help drive the effort.
        • Get a handle on the range of technology.
        • Understand what your budgetary constraints are for the project.
        • Find out what your external counsel typically use. This may save money spent on the learning curve.
        • Should you involve procurement in the RFP process?
        • Get IT involved early — especially if you are looking at cloud solutions.
        • What geographies are ou looking at? It is more complicated to deploy eBilling platforms in Europe because of taxes.
        • Have a project manager to drive the implementation
        • Prepare eBilling guidelines and then train your external counsel regarding those guidelines (e.g., when to submit forecasts, bills, etc.)
          • CLOC has prepared some sample eBilling guidelines. You can find this via ILTA in the downloads connected with this session.
        • Put a team in place to monitor the tool, support use of the tool, push data to dashboards, etc.
    • What is the challenge for the law firm? The main challenge for the firm is provide help that is valuable to its client.
      • Review the firm’s historical matter billing records and share those with the client.
      • The firm can analyze its historical billing records.
      • The firm can research eBilling platforms internally (with finance, even though they may be fundamentally hostile to the various eBilling platforms) and externally (either with other clients who might be able to provide direct advice to Acme, or with consultants).
      • The firm can provide an eBilling solution as part of the entire engagement.
      • The firm should consider its own ability to support the business process improvement necessary internally for the firm to help the client’s aspirations regarding cost management.
      • Ask: what’s the clients essential problem and what assets do I have to help the client?
      • Caveat: Haven noted that it would surprise in-house counsel if many law firms have been asked this question since most law departments handle this on their own. That said, Debord reported that Bryan Cave often gets this request — especially when there is a new general counsel.
      • Haven: “I love the idea of collaborating on matter data.” Getting [external counsel] involved upfront on the types of eBilling features that would be helpful for both parties to manage a matter would be great.
      • Damon: If these conversations happen, it is usually between the client’s finance function and the law firm’s finance department. The partners don’t usually see anything except information on receivables.
  • Second Audience Exercise: “The Axe”.  You are in the legal department of Acme Corporation. The new general counsel has received a clear mandate from the board to cut expenses dramatically. The GC has set a goal of reducing overall spend by 30% over a two-year period. The GC is looking for at least a 10% reduction in 2016 and has asked you to present a high-level plan for the reductions by October 1, 2015.
    • What should the legal operations function do?
      • Assemble a team and then create a process map for the cost reduction effort.
      • Gather ideas: What are the low-hanging fruit? What work can you eliminate?
      • Then get historical data on legal spend to test your ideas/theories AND expose additional options
        • what do the types of legal work cost?
        • what do the various external firms charge?
        • what’s the relative efficiency of the firms?
      • Gather ideas: What types of work can you eliminate?
      • Consider reducing the size your panel of external counsel
      • Solicit cost reduction ideas from external counsel
      • Implement cost reductions.
      • Monitor ongoing work and costs to measure efficiency and quality. Have the lower costs led to lower quality?
  • Mike Haven.
    • The key is to spread a mindset that the world has changed. Clients are being pressed by their organizations to improve their service while cutting costs. The client’s objective is NOT to put the law firm out of business. However, the client has a deep interest  is working with efficient firms. The more the law firm understands the client’s needs, the more the firm can help.
  • Katie Debord.
    • There is a huge investigation stage to many matters. However, before jumping into this, take a step back and make sure you understand exactly what the client needs and how the client defines success.
  • Peter Krakaur.
    • Know your client. Understand the client’s business model. Have conversations with the clients. Don’t just get lost in the data. The client rarely has the luxury of time, so the firm needs to move quickly to support client decision making.
    • Invest more in process mappers and data analysts than in business development people. This change will ultimately bring the firm more business.
    • The client actually is looking for business advice, not just legal advice.
  • Lisa Damon.
    • Collaboration between a law firm and its client is critical. Eliminating 10% of cost is easy — firms do this all the time. The tougher challenge is to create a sustainable way of working together over the long term.
    • Start by listening carefully to the client.
  • John Alber.
    • Law firms need to change their attitude. Their “expert” attitude (e.g., we know all the answers) is highly toxic. Instead, firms need approach these challenges from an attitude of openness and collaboration.
    • Law departments are lean in resources, and they believe that law firms are relatively rich in resources. Yet the clients do not see firms bringing those resources to the relationship. Firms need to take a fresh look at their own assets and think in new ways about deploying them to improve the client’s situation.
    • Some law firms are training their associates to reforming attitudes and approaches. But 95% of firms are not.
  • Key Takeaway: Law firms cannot provide the ultimate value to clients until firms change their approach and then reorganize their processes and staffing to support the client the way the client wants to be supported.
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No Romances Required

New York Public Library My family loves books. In fact, we’ve got so many books that they are double (and, in some cases, triple) shelved in several of our rooms. Given the abundance, we periodically have to cull our collection, but it is becoming increasingly difficult to find places that are willing to accept donations of gently used books. Thankfully, the New York Public Library has a solution in their correctional services program, which aims “to get books into the hands of incarcerated New Yorkers.”  The activities of the program are commendable:

NYPL’s Correctional Services consists of two staff members and several outstanding volunteers. Twice a week they run four mobile libraries and staff one standing library at Rikers Island. Recently, in partnership with the Department of Corrections and supported in part by funds from the New York State Library’s Family Literacy Library Services grant program, Correctional Services has run a book recording project with detained fathers at Rikers Island. Dads take a series of early literacy workshops followed by a recording session where dads can make a CD of themselves reading a favorite book to their kids. We anticipate adding the program to more facilites shortly.

In light of our family’s current surplus of books, I was delighted to discover that the NYPL correctional services program accepts donated paperback books. But what caught my eye was that they had a very clear idea of the kinds of books their patrons wanted: dictionaries, classics, urban lit, educational books, vampire books, popular fiction (e.g., by James Patterson, John Grisham, Stephen King, etc.). The NYPL sets all of this information out on a webpage that provides examples of the foregoing types of books, as well as “other genres and subjects of interest.” In addition, they have provided an Amazon Wish List of books they would like to receive.

While admiring the clarity of the NYPL’s lists, I found myself wondering how many lawyers would be able to create a comparable list regarding the preferences of their clients? We hear repeatedly about the disconnect between client needs and the perceptions of those needs by external counsel. We’re also hearing honest admissions that external counsel may not be getting all the guidance they need from their clients. Meanwhile, we have the plea from clients that their external counsel initiate conversations that will allow clients and their lawyers to reach a clearer understanding of each others expectations. It appears there is much work to be done with respect to understanding what your clients want.

Yet knowing what your clients want is only half the equation. You also need a clear understanding of what your clients do not want. Again, this requires that honest conversation that we’re hearing too many lawyers are reluctant to undertake. The challenge is to move beyond the obvious (e.g., failing to return client calls promptly, demonstrating an insufficient grasp of the client’s business, allowing billing surprises, etc.) to the more subtle issues that can fester and fray a client relationship if not brought into the light and addressed appropriately.

Returning to the New York Public Library’s program, there is one other thing of note that you’ll find near the bottom of the list of suggested donations:

Items not needed at this time:
…Romance novels

Do you know what’s on your client’s list?

[Photo Credit: Graham Well]

 

 

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Focus on Clients: Creating a Law Firm from a Client’s Perspective

Lawyer's Row Historic Marker[This is the sixth and final post in a series of posts featuring a conversation with Susan Hackett of Legal Executive Leadership focused on deepening client relationships in meaningful (and profitable) ways.]

If clients have so many reservations about the way law firms currently work, what form of firm would work better for a client? This is the provocative question I put to Susan Hackett, inviting her to join me in a little blue sky dreaming. If a client could start their dream firm from scratch, what would it look like and how would it work?

Admittedly, it is hard for any law firm to remake itself overnight, but if a lawyer is serious about becoming her client’s dream external counsel, what should she do? Here’s Susan’s advice:

Build a firm that inspires a client to hire the firm, and not just some of its great individual lawyers.

So many clients `hire the lawyer and not the firm'; what kind of negative commentary is that? The firm and the individual lawyer should be equally important (and contributing) to a client.  In my experience, many great lawyers are sometimes left to swim against the stream in their firms: the fact that they want to try a new fee structure, rearrange and retrain the team serving the client, or revise business processes to achieve greater efficiency can put them at odds with the very business models of their firms. They are not compensated for making those changes, they are not supported in delivering services in new ways, they don’t have the backing of their colleagues.  I’d build a firm that rewards lawyers for innovation, creative client service, and proven performance against goals.  That means a firm that is just as fully committed to each client’s total satisfaction as the individual lawyers who work with those clients.

Build a firm that embraces technologies, and deploys both data and experience to rethink the processes and teams focused on client work.

This means conducting business process assessments to better understand the cost and price of work. It means using reliable data to support the firm’s calculations of internal profitability, as well as predictable matter budgets, cost controls, and pricing models for clients. It also means empowering staff and lawyers to examine and change pricing and performance standards in order to connect them more directly to results.

Build a firm that understands that knowledge and experience, applied with great judgment, are the foundation of the firm’s core value to clients.

I would make a huge commitment to establishing knowledge networks, experience pools, and knowledge management systems (with recyclable content) that would allow the great lawyers in my firm to spend more of their time focusing on what is different in each of their matters, rather than re-inventing or replicating that which is the same. I’d want them known for applying their mighty experience and judgment to the most complex and non-repetitive matters. I would not want to focus my firm on performing services that push the firm into a competitive spiral with legal process outsourcers in a race to the bottom. However, to the extent such services are requested by clients, I’d want my firm to have established efficient systems and competitive pricing for the performance of mid-level, `operational’ work that clients value, but only if its performance and pricing are predictable.

Build a firm culture that values that which clients value most in practice and professionalism.

This means building a firm with a strong focus on pro bono and public interest work, a commitment to inclusion and flexibility in work practices, a dynamic environment that thrives on innovation and creativity, and a compensation and promotion system that rewards great performance rather than large stacks of hours.  My ideal firm’s partnership (I recognize that in most US jurisdictions, this is not currently possible in a law firm) would likely include a significant contingent of leaders who are not trained as lawyers, but who bring all kinds of important disciplines to the firm: financial, technical, management, leadership, IT systems, HR, and so on.  In my firm universe, these professionals would be compensated and promoted based on the same scales and standards as their legal peers, for surely their contributions, if empowered, could be just as important to the firm’s success as the actual client services provided by the firm’s lawyers.

So there you have it:  a client’s view of a perfect law firm.  How does your firm stack up?

At the end of the day, while Susan and I have had a great conversation, it’s clear that this series of posts is just the beginning of what needs to be a much wider ongoing conversation among law firms and their clients. We invite you to to participate.

[Photo Credit: Jimmy Emerson]

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Focus on Clients: The Client’s View of Collaboration and Knowledge Sharing

triplet towers of paper [This is the fifth in a series of posts featuring a conversation with Susan Hackett of Legal Executive Leadership focused on deepening client relationships in meaningful (and profitable) ways.]

At a recent session on extranets at the ILTA 2012 conference, Lynn Simpson of DuPont started her portion of the presentation with the warning that she “was about to throw a bomb in the room.” She followed that warning with these words:

  • We don’t want you to send us poorly targeted, irrelevant marketing or legal updates. We consider that material to be the equivalent of spam.
  • It’s great that you have all these interesting extranets, but we don’t want to have to go to each firm’s special environment to find the materials we need to work. We want our external clients to come to our environment — the place where we, the client, are most comfortable working.

That should make everyone sit up and take notice!

And then what? Here’s some advice:

  • With a broadcasted email blast, the client is left trying to sift through a host of law firm updates in order to figure out which (if any) of these emails actually are relevant to the client’s work.  Speaking on behalf of clients everywhere, Susan says: “That’s your marketing, not my business interest.”
  • The better approach is for the client relationship partner to personally select the materials that are relevant to the client and then forward them with a covering note that explains the context and how it matters (or should matter) to the client.
  • Ask your client how their department organizes legal information. Are there gaps you could help fill?
  • Does your client have easy access to information relating to the matter you are working on? If not, discuss how you might make these materials available to them in a manner that is convenient for your client.
  • Are there basic knowledge resources or tools you could provide your client to allow a certain measure self-service?
  • Would your client be interested in a subscription service by which you regularly provided information useful to your client’s business operations?

While these are some preliminary suggestions, the bottom line is that each firm has to ask each of its clients for guidance on how best to share knowledge resources. It is now longer a matter of routine marketing. Instead, every action should remind your client of how well you understand your client’s business and how much you are willing to do to support your client’s work. Generic legal memoranda run the risk of sending a radically different message. Is that really what you want to do?

The next in this Focus on Clients series: Creating a Law Firm from a Client’s Perspective

[Photo Credit: artnoose]

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Focus on Clients: If You Delight Them They Will Stay

my one & only[This is the fourth in a series of posts featuring a conversation with Susan Hackett of Legal Executive Leadership focused on deepening client relationships in meaningful (and profitable) ways.]

Susan Hackett and I discussed in the prior posts in this series the proposition that the richest source of new business is found in referrals from existing clients. But what does that really entail? To dig deeper, we considered the following questions: What can you do to ensure that your current clients are

  1. Absolutely in love with you?
  2. Willing and able to recommend you to their colleagues?

 

Falling in Love

There are thousands of law firms and millions of lawyers. How can you stand out? What can you do to ensure that your current clients are absolutely in love with you (as opposed to thinking of you merely as a representative of one of 73 firms they work with who are doing just fine, but aren’t really “distinguishable”)? In answer to these questions, Susan offers the following advice:

First off, get over the `quality’ thing. I know you’re a great lawyer.  But let me share with you that I personally know about 5,000 great lawyers who offer their clients high quality services. And I certainly don’t know nearly everyone who’s out there. Quality is the floor; you have to build up from there to be distinguishable.

Second, open yourself to critical assessment of the value of your services and to ideas and practices you could implement to improve your value. When I say `value,’ I’m talking specifically about those things that go beyond the ability to write a great memo/brief or understand and explain complex regulation. I’m talking about whether the result of the service you provide to clients (which is what you’re responsible for providing, not a memo) drives a better outcome for them.  I like to say that most clients don’t think of the problems they have as legal problems; they are business problems. And they want solutions, not just advice. So if you’ve not thought about your value to the client’s business or the practicality of your service, you’re missing the point.  And you’ll be missing the referral.

Third, the very best way to deliver value to each client you serve is simply to ask them what it is that they value, what it is that you’re doing right or could do better, what it is that other lawyers or service providers offer them that makes them pleased with the service, and how it is that you personally could improve.  Ask it in person, ask it in surveys, ask it outside the course of matters, ask it during the matters on which you’re serving. Saying once a year over dinner, `so how are we doing?’ is going to get an answer as specific as `just great.’  Trust me, that’s not the feedback you need.

Sharing the Love

As we discussed in our earlier post, Help Your Clients Make Rain for You, the key to new business generation is ensuring your current clients are willing and able to recommend your services to their colleagues. Perhaps the biggest challenge is in the perception gap between how a law firm views the impact of services rendered and how the client views those same services.  According to Susan, this gap can be significant:

When outside counsel are asked how they think they’re doing in their client relationships, about 85% of them give themselves an A  grade.  When inside counsel are asked whether they would refer their outside counsel to another client, only about 35% of them would.  The fact that a client gives a lawyer or firm business and keeps returning for more services does NOT mean that the client loves that lawyer or firm.  And a B grade in today’s market puts you and your firm on the `danger’ list when it comes to which firms will be asked to leave the preferred provider pool as clients continue to winnow down the number of firms they use.

How can you raise your grade to an A or make sure you’re one of the 35% who is recommended? Susan suggests the following:

Asking for feedback is not the same thing as acting on it.  Too many of us ask for feedback and then we sit back and `admire’ (or ignore) the results. Instead, we need to take actions that allow us to improve from the feedback.  If you receive positive feedback, look for ways to apply the principles underlying your success to other kinds of work. At a minimum, when the evaluations relate to performance, include them in the performance reviews of those involved. After all, if lawyers’ compensation and advancement are only tied to the number of hours they’ve billed, and not to how well they serve clients, we’re all in trouble.

One critical element is to work with your client to develop a relationship of trust and collaboration. Since clients have the option to walk away from their external counsel, the load often falls on law firms to take the lead in establishing a value-based focus that works for both parties. To be successful, both sides must feel that the relationship ensures that all boats rise – that the firm will profit well from serving the client better: lowering or controlling costs, improving results and turn around time, creating new efficiencies, etc. While everyone talks about “partnering” and all this may sound obvious, Susan believes that too many firm/client relationships are defined by a “zero-sum” mentality – any concession to the client is seen as a firm “loss,” and any profitability or increase to the firm is seen as a client “failure” to secure the better deal.  In her view, that’s just bad thinking.

Next in this Focus on Clients series: The Client’s View of Collaboration and Knowledge Sharing

[Photo Credit: Jessica Lucia]

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Focus on Clients: Help Your Clients Make Rain for You

raining in baltimore [repost][This is the third in a series of posts featuring a conversation with Susan Hackett of Legal Executive Leadership focused on deepening client relationships in meaningful (and profitable) ways.]

Prospecting for clients is a project that many lawyers find challenging. The thought of meeting new people and selling business can be daunting for someone who only ever really wanted to be left alone to practice law. For these lawyers everywhere we offer some information and advice that should come as a relief. Rather than making cold calls, there is another much less painful and far more productive method for growing your business. The secret is to help your clients make rain for you.

In our conversation Susan Hackett noted that while attractive websites, insightful conference presentations and pleasant cocktail parties may increase a lawyer’s exposure to prospective clients (and thus certainly are laudable efforts), “new” client work comes from referrals by existing clients. In fact, Susan believes that most of her law department colleagues would say that they award an overwhelming majority of new work primarily on the basis of positive referrals by existing clients. Accordingly, firms that fail to earn referrals are not getting as much new work as possible, in spite of all the other “special sauce” things they might do.  This is advice no law firm can afford to ignore.

Most new business comes through referrals by existing clients.

For the nuts and bolts of how this works, I asked Susan to give us some insight into the process from the client’s perspective.

Some client referrals come in response to a direct inquiry by a prospective client to his or her colleagues asking: `Does anybody have any experience with a firm that does X?’  And some referrals come from the kinds of credentialing that help the retaining inside lawyer discriminate between contestants to choose the winner in a formal or informal RFP-type process.

While several firms may be considered by a client in either of the above scenarios, whether through a formal contest or through the in-house counsel’s network research, a selection from the group of well-qualified finalists usually is made only after a trusted colleague with experience using that firm directs or endorses the client’s decision by saying something like:  `I think they’re the go-to guys/gals for this project – talk to my gal Sally when you call.’  Any way you slice it, new business is predicated on the ability of the prospective client to validate the firm or specific external lawyers with trusted colleagues who currently use their services. Who are those colleagues? Your clients.

To be top of mind with your clients you have to do something more than simply provide the agreed-upon services or send a periodic passive newsletter that can be filed. You have to connect at the place where your expertise and excellent service meets the client’s pressing needs. The only way to ensure you’re hitting that mark consistently is to ask the client regularly`how are we doing?’ and then, most importantly, to act on the feedback and report progress to the client.

A recent LexisNexis Martindale-Hubbell survey of in-house counsel in Western Europe reported the following troubling information:

Most respondents were also very happy to participate in feedback programmes conducted by their law firms, although less than half had received an invitation to provide this. However, law firms appear to be even less committed to using customer insights to help strengthen their relationship. Only 28% of survey respondents said that their law firms came back to them to share the results and communicate improvements or changes that would be made as a result of feedback received.

That sounds like an invitation to a meaningful conversation with your clients. Will you accept?

Next in this Focus on Clients series: If You Delight Them, They Will Stay

[Photo Credit: Paul G]

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Focus on Clients: Making Rain by Making Conversation

St James's Park In The Rain [This is the second in a series of blog posts featuring a conversation with Susan Hackett of Legal Executive Leadership focused on deepening client relationships in meaningful (and profitable) ways.]

My post on the allure of “that new client smell,” (in which I pushed back on the notion that “new” clients are somehow better than old ones) led to a conversation with Susan in which she explained the issue from her perspective — namely, from the client side:

Being a successful rainmaker is invaluable in a desert. It also is seen as a ticket to success in law firms. But it has limited value in the eyes of the client. In fact, it can have a negative value. Law firms are often perceived as spending incredible amounts of time, energy and resource prospecting for new work, which could suggest to current clients that the efforts of their external counsel to pursue that ‘new car smell’ may be distracting their fullest attention from preventive maintenance of the vehicle responsible for getting the client around.  While partners are off looking for new attribution sources, clients may feel underappreciated, and that could have a devastating impact on work flow going forward.

Rainmaking flows from a steadfast focus on current clients.

As we talked, it became clear that while so much is made of the personal skills and attributes of the individual rainmaker, deeper reflection shows that a highly focused team approach to engaging, understanding and serving clients is key to growing your business. Susan doesn’t pull her punches in advising law firms:

In a shrinking market, before you even think about new business, you better make sure you’re not about to lose current clients first. As convergence trends move more client work to fewer and fewer preferred firms on the client’s roster, there will be a number of firms with long-standing, historically profitable and perfectly productive relationships who will wake up and find that they are one of the 50 firms that will no longer be getting client work as the client moves from 60 portfolio firms to 10 preferred partners.

For every lawyer who has been reluctant to ask the tough questions that initiate conversations that matter with a client, Susan provides some incentive to engage. What’s the nature of the incentive? The promise of clarity in your client relationship that leads to more business. Here’s how it works:

If you’re interested in business development, the people on whom you should be focusing 98% of your time and attention are your current contacts in existing client relationships for they are the keys to not only current revenues, but a great deal of future business.  To help unlock this business, focus on value.

It is imperative for firms to understand their value to their clients and how to both communicate and leverage that value going forward. You can best communicate your value to current and prospective clients by (1) conversing with your clients about what they value (asking questions and listening – not telling them what you think), (2) delivering service in a manner that meets or exceeds their expectations, and then (3) working with them to quantify value you have delivered in ways that can be demonstrated and validated for that client and prospective clients.

Next in this Focus on Clients series:  Helping Your Clients Make Rain for You

[Photo Credit: Garry Knight]

 

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Focus on Clients: Good Client Relationships Require Conversations that Matter

Evening sunlight & conversation, inside the Embassy There are at least two obvious strategies for growth: go wide or go deep. Go wide implies covering as much territory as you can, while go deep suggests mining your current location to extract as much goodness as possible. For many businesses, including law firms, go wide is their first impulse. Doing the hard work of attracting new clients can feel more manageable than doing what feels like the infinitely harder work of truly engaging with an existing client to deepen that relationship in meaningful (and profitable) ways.

I wrote about this phenomenon recently in a post entitled That New Customer Smell. That post led to several delightful and rich conversations with Susan Hackett. For those of you who haven’t yet had the pleasure of meeting Susan, let me introduce you.  Susan was for 22 years Senior Vice President and General Counsel of the Association of Corporate Counsel (ACC). Among her many accomplishments at ACC was the creation and adoption of the ACC Value Challenge (highlighting the need to link value to the cost of legal services). Susan is now CEO and Chief Legal Officer of Legal Executive Leadership, a management consulting firm that helps clients “find smarter ways to work,” build stronger legal teams and “promote thought leadership and collaboration in their work and workplaces.”

In her many years of close work with corporate counsel around the country Susan has learned a great deal about what law department executives expect from their external counsel. It was that perspective she brought to our initial conversations and agreed to share via this blog in a series we’re calling Focus on Clients. Over the next few days we’ll be posting on this blog highlights from our conversations, which examined how critical it is for external lawyers and their clients to engage in meaningful conversations with each other. Because, as with our personal lives, relationships deepen and grow through shared experience and conversations that matter.

Next in this Focus on Clients series: Making Rain by Making Conversation

[Photo Credit: Velvet Android]

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That New Customer Smell

wunderbaum - new car Spotted on the side of a bus recently: “New customers are better than old customers because they have that nice new customer smell.”

Really???

We’re told that it can cost six to seven times more to recruit a new customer than to retain a satisfied customer. With an existing customer you can leverage your established relationship and track record. By contrast, these assets need to be created from scratch with the new customer. Satisfied customers are willing to buy more of your goods or services and they tend to be less price sensitive over time. Best of all, the happier they are, the more likely they are to refer potential customers to you.

Esteban Kolsky rightly points out that to compare accurately the cost of retention versus recruitment, we need reliable data regarding customer acquisition costs and customer maintenance costs in the relevant industry.  I wonder how many law firms track these costs in any systematic way? What about tracking the costs incurred by a law firm knowledge management department to attract or retain its internal (or external) customers? Have you given any thought to the costs of maintaining and expanding your services to existing KM customers as opposed to ignoring what you’ve got and chasing new customers?

When you think in terms of developing a long-term relationship, you realize that what you need is an ongoing conversation with your customer.  It’s this conversation that helps you understand your customer’s needs and how you might best serve. It’s this conversation that allows you to grow with your customer in a perfectly symbiotic way.

Zappos has taken this even further.  The company claims that

Customer service isn’t just a department. … We’ve aligned the entire organization around one mission: to provide the best customer service possible.

Contrast this approach to the ones described by James Surowiecki when writing about the current crisis in customer service. Where does your law firm or KM department fall on the spectrum that runs from Zappos to far less attentive organizations?

I’ve heard it said that the difference between a customer and a client is repeat business.  What are you doing to ensure that customers become long-term clients?

 

[Photo Credit: Me Maya]

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What Clients Want

What are the key factors that lead to a successful long-term relationship between corporate clients and their outside counsel? LexisNexis Martindale-Hubbell (in association with The Global Legal Post) have just released a report of a 2012 survey of in-house counsel in Western Europe that seeks to answer that question. The report examines the following issues:
  • Selection factors,  reasons for reviews of panel firms, and the frequency of those reviews.
  • Factors influencing the retention of firms for future work.
  • Top reasons for the removal of firms from preferred panels/lists.
  • Approach taken by in-house counsel to evaluate law firm performance and common themes in feedback.
  • Value-adding elements of relationships.

Of the 219 in-house lawyers who participated across 16 countries in Western Europe, the results were very clear:

  • To be successful, a law firm must demonstrate that it understands its client’s business needs.
  • A guaranteed way to end a client relationship prematurely is to provide poor service.
  • Cost is a factor, but it can be outweighed by the high quality of the firm’s service and the extent to which the firm demonstrates its understanding of client needs.
  • Clients appreciate value-added services such as free training seminars and lawyer secondments.

Be a Trusted Advisor

Clearly, knowing the law is necessary but not sufficient. Clients aren’t looking for an erudite legal lecture, they want the assurance that you understand their situation and have the legal sophistication to apply the law appropriately to their facts.  Beyond that, clients want to know that your understanding of their business is so deep that you can anticipate their needs and be active in helping manage their legal exposure. In other words, your client wants you to be a trusted advisor, not just a technician for hire.

How can KM help deliver what the clients want?

If your knowledge management program has focused primarily on legal documents thus far, now would be a good time to think about adding some current awareness programs.  In addition, consider partnering with library and training professionals to provide opportunities for lawyers to learn more deeply about client industries: What are the economic drivers? What are the pressures? Where are the opportunities? Look for ways to passively capture KM resources from these training programs and from the related conversations within client service teams.

Focus on Feedback

Lawyers are notoriously thin-skinned, so they sometimes shy away from asking directly about client expectations and satisfaction. As a result, they can find it difficult at times to understand how best to serve their clients. The report addresses this issue squarely:

Most respondents were also very happy to participate in feedback programmes conducted by their law firms, although less than half had received an invitation to provide this. However, law firms appear to be even less committed to using customer insights to help strengthen their relationship. Only 28% of survey respondents said that their law firms came back to them to share the results and communicate improvements or changes that would be made as a result of feedback received.

Thanks to this report, we now have some insight into exactly what clients are looking for.  Although the report relates to a study of in-house counsel in Western Europe, I have a hard time believing that their North American counterparts have materially different expectations of their lawyers. Put another way, I think a North American law firm would be foolish to disregard these results.

The client has spoken.  The rest is up to us.

 

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