Tag Archives: Client Feedback

Talking with Clients: The Critical Role Non-Lawyers Need to Play

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This article is a follow-up to a major section in our recent article Non-Lawyers: A Critical Success Factor for the Law Firm of the Future.  Namely, when should non-lawyers – and specifically, business development professionals – be expected to interact directly with major clients?  This follow-up is both informed and motivated by the comments, feedback, speaking invitations and other conversations that original article sparked.

To be clear, we are talking about non-lawyer involvement in communications with major clients.  By major clients we mean that group of clients that (with the possible exception of the very largest law firms) fall into an 80:20 or 70:30 rule (i.e., the 20% of clients who represent 70% or 80% of the firm’s revenues).  That especially includes clients for whom the firm provides multiple legal services (i.e., clients served by multiple practice groups).  Even more particularly, that should include major clients who are using other law firms in areas where your own firm has demonstrated strengths (i.e., where your firm is not getting work from otherwise great clients in areas where your firm  has exceptionally strong capabilities).

Are You Advocating Cutting Lawyers Out of the Relationship?

The short answer to that question is, “of course not.”  So, let’s stipulate some things that may be obvious, but ought to be underscored nonetheless.

  • Lawyers are the primary contact(s) with clients for the delivery of legal services and the management of legal (and often other) risks.
  • Nearly 100% of current client relationships originated with a lawyer or team of lawyers – though in many instances, the “originating” attorney is no longer active in the practice of law (i.e., the client relationship pre-dates the current team serving that client).
  • Lawyers should (in fact must) remain integral to client relationships – maintaining, improving and growing those relationships.

The point is not that lawyers are set to be thrown on the trash heap of history.  Rather, the point is that the efforts of client serving attorneys can be greatly enhanced and augmented by involving non-lawyer (particularly business development) professionals in client communications.  Also, while a few firms are turning to (non-practicing) lawyers to take on these business development or client relations roles, the majority will be filled by professionals whose training and experience has prepared them to lead business development in a professional services setting.

So, How Can/Should Talented Business Development Professionals Be Interacting With Major Clients?

Business development professionals are (or at least should be) extremely well positioned to gather systematic, objective, constructive, deep feedback and input from major clients.  That feedback gathering can benefit from the involvement of managing partners, practice or section leaders, or others law firm (i.e., lawyer) leaders.  However, law firm leaders are generally too busy to maintain regular, systematic contact with major clients.  Gathering that input via well-structured, extended conversations with multiple people within major client organizations is the starting point for non-lawyer interaction with clients.

Remarkably, relatively few firms are gathering feedback from clients (major or otherwise) on a systematic basis.  Even in firms that are committed to gathering client feedback informally, many do not leverage the skills and experience of business development professionals to do so.  Many firms on the smaller end of what we would consider to be mid-sized may not have a seasoned business development professional capable of leading that process (i.e., the marketing and business development function is staffed by people skilled in marketing communications and/or event planning).  In that case, feedback gathering can be outsourced – frankly, the return on investment is outstanding.

With systematic, objective, constructive, deep feedback and input from major clients in hand, what should the firm do?  There are several answers to that question.

  • Most importantly, firms need to use that client input to help the team of lawyers who serve the client on a day-to-day basis – together with lawyers who perhaps should be serving that client – to develop and implement a plan to expand the relationship.  Seasoned business development professionals can and should facilitate this process (though it can also be outsourced if necessary).
    • That includes both deepening the relationship (i.e., doing more of what the firm is already doing for the client, ideally with a more engaged and informed team) and broadening the relationship (i.e., bringing other strengths of the firm to bear on behalf of the client – providing legal assistance in other areas where firm strengths align well with client needs).
    • That also includes tracking and coordinating implementation of those “client service plans” (which almost certainly should include metrics, action plans, and milestones).
  • In addition, that feedback needs to be used to draw other non-lawyers into the client relationship.  In the current environment, client feedback often uncovers expectations and/or needs that require the assistance of IT professionals (e.g., extranets, connectivity, proprietary systems, etc.); knowledge management expertise (e.g., process automation, database integration, smart forms, etc.); project management expertise (which may reside at the firm and/or at the client’s organization); and finance expertise (e.g., cost analysis, creative pricing arrangements, etc.).  Again, a seasoned business development professional should be able to bring this extended support team to the table and coordinate their efforts with those of the rest of the client service team.

The ultimate vision for non-lawyer interaction with clients ought to be somewhat akin to a more traditional marketing function in a corporate setting.  In a corporate setting, market intelligence and customer input is used to drive an integrated marketing function that goes well beyond marketing communications and business development.  Some may remember the “Four P’s” from Phillip Kotler’s Introduction to Marketing text books (i.e., Product, Pricing, Promotion and Placement/distribution).  Gradually, the legal industry is moving toward this model.  For instance, there are reportedly over 300 “pricing directors” at law firms now.  Similarly, there are more and more non-lawyer business development and outright sales roles.

Ultimately, these roles need to be integrated and coordinated.  Call the leader of that group the Chief Marketing Officer, the Head of Client Relations, or some other title.  Frankly, the title is less important than the function, which is to bring the outside into the firm (e.g., client input, market intelligence, competitor intelligence, etc.) and to coordinate the firm’s response to that information in ways that (profitably) extend and deepen existing client relationships and establish new ones.

What Are the Prospects for Mid-Size Firms – and What Does Mid-Size Mean Anyway?

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The Executive Committee of an AmLaw 200 firm (aspiring to become an AmLaw 100 firm) raised the following question.  “(We’re at) an awkward size (roughly 500+ lawyers)…what should a mid-size firm like ours do (strategically)?”  Given their aspirations, the answer was to keep growing and become a ‘big’ law firm.  They certainly would not be the first to follow that road and some have realized their aspirations.  For instance:

  •  At the time of their merger in 1999, Piper Marbury was a 400 lawyer “Baltimore law firm” with most of its lawyers located outside money centers and Rudnick & Wolfe was a 350 lawyer “Chicago real estate powerhouse” with no New York presence at all.  According to the American Lawyer DLA Piper is now the world’s largest law firm, with over 4,200 lawyers in 30 cities worldwide.
  • Similarly, at the time Elliot Portnoy became chairman of the Firm in 2007, Sonnenschein, Nath & Rosenthal was a 600 lawyer “Chicago-based law firm,” with less than 20% of its people in New York.  Since declaring its intention to become leading global law firm, Sonnenschein scooped up over 100 lawyers from the disintegrating Thatcher Proffitt & Wood in New York, merged with UK law firm Denton Wilde Sapte, and simultaneously merged in international firm Salans and Canadian firm Fraiser Milner Casgrain.  Dentons now has over 2,600 lawyers in 80 offices across 50 countries.

“Moving up market” (as some like to term the strategy) is certainly not impossible.  But, the conversation with that aspiring AmLaw 200 firm raises a couple of pointed questions.  Is a 500-600 lawyer firm actually “mid-sized?”  And, is growth the only winning strategy for mid-size firms that intend to survive and prosper into future generations?

What is a Mid-Sized Firm Anyway?

Let’s deal with that first question – is a 500+ attorney firm mid-size?  Sure, if your frame of reference is the AmLaw 50 or 100, then an AmLaw 200 firm is mid-size.  That is especially true if your firm aspires to being part of ‘BigLaw.’  To generalize the point, defining what mid-size is depends largely on what you are comparing it to (e.g., an elephant is mid-size next to a brontosaurus).

That said, for many, many firms ‘mid-size’ is better defined in the context of nearby (i.e., local and regional competitors).  In other words, mid-size is a function of your size relative to other firms/offices in your primary (or only) city.  Firms that are mid-sized by that definition tend to share some common traits.

  • They tend to be general service firms (since “full service” is unattainable at any size) focused mainly on the legal needs of business clients and their owners.
  • They have a number (perhaps a majority) of clients who are classic middle market companies – and that means that legal costs are paid out of the owner/CEO’s pocket (if it isn’t insured risk).
  • They have people and/or practices that are the absolute best in the local/regional market in their areas of expertise.
  • They have at some point (perhaps frequently) been approached by another law firm (probably a larger law firm) interested in merging.

Is the only (or even the most logical) strategy to say ‘yes’ to merger overtures and/or launch a search for suitable merger partners with whom to grow aggressively?

Winning Strategies for Mid-Size Law Firms

So, is aggressive, merger fueled growth the best/most logical/only strategy for mid-size firms?  After all the demise of the mid-size firm has been predicted for at least 25 years.  Our answer:  it is certainly not the only strategy, but it really depends on what your firm aspires to become.  We addressed that broader question in a recent article regarding strategic direction.

Mid-size firms can adopt a compelling strategic direction that does not include substantial growth.  Assuming there is widespread agreement among the partners regarding that direction (whatever it might be), there are a few things that you can (in fact should) do to turn that into a winning strategy.

Focus on a Few Things that Can Create a Competitive Advantage

Focusing a a few things that create competitive advantages requires a firm to do at least two things.  First, honestly assess what the firm is (or can become) truly great at doing – strengths that can become the epicenter of genuine excellence that cuts across the firm.  Second, get external validation that being great at those things is meaningful in the marketplace.  Focus on a handful of things you are great at (or can become great at) that also have meaning in the market.

A basic SWOT assessment (strengths, weaknesses, opportunities and threats) can highlight your areas of strength (actual and latent).  If you are not good at looking objectively at yourself, a good consultant can help.

External validation can and should come from your clients.  Your best clients want you to succeed into the future – they almost certainly consider your partners to be among their most trusted advisers.  So, ask your clients what you are good at and what you can do better.  It will inform your strategy and improve your relationships to boot.  It is amazing how few firms do this in any systematic way.

Think Strategically

What does that mean, to think strategically?  Well at a minimum, think about competitive advantage (those areas you might focus your energies on) through three lenses.

    • Consider whether you enjoy size or scale advantages over competitors – or more likely face larger competitors who have size advantages with which you must cope.  Large firms do have deeper pockets (or at least more equity partner pockets) over which to spread marketing, technology and other shared costs.
    • Identify factors that may help you to defend your firm’s market position against competitors (even much larger, better financed competitors).  It may be your knowledge of the local courts and judges, your reputation and brand may have deep roots in the community, you may have very deep and broad relationships with clients.  Consider how you can capitalize on and solidify those defensive advantages.
    • Finally and most importantly, take an indirect approach – occupy the unoccupied market positions and be willing to do things differently from competitors.  Precedent is a horrible source of strategy – don’t do what others are doing, do things no one else is doing.

Implement – Do What You Say You Are Going to Do

We have written extensively on implementation – through the balanced scorecard and through other means as well.  Successful implementation involves:

    • Cascading strategy implementation throughout the organization – from firm level initiatives to practice and departmental level activities to a vital and meaningful roles in implementation for all of the firm’s people (partners, associates and staff);
    • Measuring and monitoring implementation and the results it is producing – reinvesting in and celebrating the things that are working;
    • Adjusting as implementation unfolds – abandoning or recalibrating initiatives that are clearly not producing expected results and responding to new market challenges and opportunities as they arise.

In sum, if you think you are mid-size, you probably are – it is entirely a function of your perspective on the competitive marketplace.  Being mid-size is not equivalent to being diagnosed with a fatal disease.  You are free to reject the label and seek to grow – others have done so with remarkable success.  But, you can also adopt other winning strategies by focusing on few sources of competitive advantage, thinking strategically, and implementing with discipline.

As always, we welcome your comments and insights below, via email at info@sterlingstrat.com, and via phone at (312) 543-6616.

 

CO-CREATION OF UNIQUE VALUE WITH CLIENTS: A Strategy Tool for Winning the ACC Value Challenge (Part Two)

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Our last post introduced the principles underpinning a valuable strategy tool – co-creation.  We noted that co-creation is a tool particularly well suited to sophisticated legal practices for two reasons.  First, in many respects co-creation principles align well with attorneys’ instinctive approach to managing client relationships.  And second, co-creation is proverbially “just what the doctor ordered” relative to having an effective tool to respond to the Association of Corporate Counsel’s (ACC) Value Challenge.

As we noted in that last post, co-creation is built on four principles:  open dialog; access to information; shared risk assessment; and transparency (especially on costs and pricing practices).  We promised to share a few real world examples of how those principles were put into play by forward-thinking law firms and partners – working collaboratively with clients.  We share three real world cases below (disguised sufficiently to protect both the identity of the law firms and their respective clients).

Managing A Large, Growing Patent Portfolio

A global technology company, spending well into the seven figures to manage and expand their patent portfolio in the U.S. (exclusive of litigation costs), approached their leading intellectual property law firm looking for an approach that would save money, while effectively supporting a core business strategy that highly valued a strong and growing portfolio.  The existing relationship was long-standing and strong.  The law firm currently supported more than 60% of the company’s patent portfolio.  Further, the primary relationship manager was predisposed toward open dialog, access to information, and shared risk assessment.

Supported by solid financial analysis on the law firm side and progressive thinking in the general counsel’s office (including the associate GC for intellectual property), the following solution was crafted

  • An open dialog regarding the full scope and nature of the company’s patent portfolio – and the law firm’s technical capabilities – led to a realization that efficiencies could be gained by having one firm support the entire portfolio in the U.S. (as well as much of the rest of the world).  Essentially, consolidating the work with a single firm would free-up resources in the GC’s office and the law firm and would streamline docket management.
  • The law firm already provided real time visibility to the client’s patent docket.  By consolidating all the work in a single firm, it also became feasible to have secure access to the underlying documents (e.g., applications, USPTO responses, etc.) across the law firm’s and the client’s networks.
  • Real savings emerged from shared risk assessment.  The company had a highly sophisticated strategy for its patent portfolio.  They had a very clear sense for which patent families were most valuable and/or integral to that overall strategy – and the law firm became a valuable partner in helping to assess both value and risk.  That in turn enabled the firm and the company to deploy the right level of resources to each element of the patent portfolio – especially in areas driving the greatest costs (e.g., the application docket and management of the pipeline of new technologies and patents).
  • Entrusting the entire portfolio to a single firm enabled the company and the law firm to create a rational budget for managing the entire portfolio (i.e., via transparency on costs and pricing).  That budget included meaningful insights into what work should be done in the GC’s office and what should be done at the law firm – in the process optimizing total costs to the company.  And, because the right work was being done in the right place by the right people (including administrative support), the law firm was able to maintain profit margins even as the company’s total spending on outside counsel declined.

Controlling Costs on Recurring Litigation

A large petro-chemical company with recurring litigation in the toxic tort arena was looking for a way to gain greater control over the costs associated with that litigation.  Costs ranged from the mid-seven figures to the low eight-figures (excluding judgments and settlements) in any given year.

  • The company’s general counsel started a dialog with the lead partner of a range of litigation matters for the company (across multiple sub-specialties – including some toxic tort work).  He was open about his objectives: to save money overall; and to introduce some predictability in his budget for this recurring work.
  • The relationship benefited from an established set of tools that provided access to documents (via a secure document management system) and to regular status reports on all open cases.
  • The partner was well respected for his ability to understand the risks associated with complex litigation – and his ability to cut through complexity to put a value on cases.  That included an ability to assign solid ranges to the potential outcomes for any given case, as well as an ability to develop litigation strategies to manage cases toward controllable outcomes.  This provided a dual ability to better manage ongoing litigation costs and achieve agreed upon outcomes vis-à-vis judgments and settlements.  Settlement decisions could be made more strategically as a result – better managing risk and reducing the company’s total cost of litigation (not just the cost of outside legal counsel).
  • The relationship was characterized by a high level of trust (and transparency).  Thus, when the company approached the partner looking for savings and predictability, he suggested putting all of the recurring work on a single fixed annual budget.  Time would be tracked against the budget and the budget would be reset annually – some years up and some years down (a real reflection of mutual trust).  As a means of saving the company significant legal fees, the partner suggested staffing routine, but labor intensive aspects of the ligation with low cost contract attorneys (rather than his firm’s higher priced associates).  That took money out of the law firm’s hands, but created additional credibility and trust – as well as substantial cost savings.

Innovative Financial Services Products

One of the largest banking and financial services companies in the U.S. was searching for innovative product ideas to respond to the post-financial crisis banking environment (e.g., low interest rates, higher reserve requirements, more stringent regulatory oversight, etc.).

  • General Counsel at the bank began a dialog with partners at one of its most forward thinking law firms.  The bank and its competitors were responding to the low interest rate environment by adding a substantial quantity of government bonds (in particular municipal and other tax advantaged government bonds) to their balance sheets.  However, the process through which those assets were traditionally created (e.g., underwriting and disclosure by investment bankers, public offerings and market making, etc.) was both cumbersome and costly.  The bank was looking for a creative solution to simplify and streamline that process.
  • That initial dialog led both the bank and the law firm to open access to the key stakeholders at the bank (e.g., investment bankers, commercial bankers, law department, etc.) and to subject matter experts at the law firm (e.g., securities, public finance, banking/bank regulatory, etc.).  The combination of dialog and access led to the development of what amounted to a new product in both the banking and public finance world – direct purchase by the bank of newly created government bonds.
  • The success of the product was strongly influenced by the ability of the bank and the law firm to effectively manage risk.  That included strong risk assessment of the municipalities and other entities originating the bonds (i.e., no distressed municipal debt in this product mix).  It required effective documentation of underlying disclosures by the issuing entities, as well as other regulatory compliance (another form of risk mitigation).  And, to manage the longer run balance sheet risks, it required the creation of products with appropriate durations to protect both the borrower’s and the bank’s balance sheets.
  • Creating what amounted to an entirely new product (both for borrowers and lenders) raised critical transparency questions.  Should this product be considered highly proprietary (which in the world of financial services meant it would take a few quarters before other banks figured out their own way of offering the product) or should it be trumpeted as a new industry standard (enabling faster followers)?  In addition, having created a product that was essentially a winner for all stakeholders (borrowers, the bank and the law firm), how repeatable and predictable could the process become?  Direct purchase of municipal (and other public) debt has been moving rapidly toward industry standardization (answering the first question).  There are tremendous efficiencies in the product/process, however the unique qualities of each asset (i.e., municipality/project/etc.) limit how entirely repeatable the process can be (partially answering the second).

Hopefully these three examples – across markedly different legal specialties and markets – help to provide some insight into how you might adopt and apply a co-creation strategy in your own firm and/or practice.  At a minimum, co-creation ought to be in the “strategy toolbox” of every law firm of reasonable size and capability.

As always, we welcome your comments below and via telephone (312) 543-6616 and email (jsterling@sterlingstrat.com).

 

CO-CREATING UNIQUE VALUE WITH CLIENTS: A Strategy Tool for Winning the ACC Value Challenge (Part One)

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This is the first in a two-part discussion of a valuable innovation tool for law firm leaders – “co-creation.”  Co-creation has its greatest value at the individual client level, but can be applied at practice level as well.  Co-creation dovetails directly with the kind of call to action at the heart of the Association of Corporate Counsel’s (ACC) “value challenge.”  Namely, that increasing the value law firms deliver to clients requires “that solutions must come from dialog and willingness to change things on both sides.”

 Co-creation is quite distinct from disruptive innovation (see our article from April 2013) which provides a process and roadmap for creating low end solutions that fundamentally alter established markets.  On the contrary, co-creation is a process for creating solutions that have unique and enduring value for clients (often enhancing or at least preserving profitability).  It is essentially a process for taking practices to higher levels of value and for strengthening client relationships in the process.

This first article provides an overview of the tool and how it applies in a law firm setting.  Our follow-up article next week will provide a few examples to provide some practical, real world insights into the process.

Origins of the Tool and Principles

Co-creation emerged and was defined by C.K. Prahalad and Venkat Ramaswamy – both professors of business at the University of Michigan.  They identified a number of foundational shifts in the nature of relationships between businesses and their customers – shifts that alter how and where value is created.  Those shifts include:

  • Growing access to information on the part of clients; globalization regarding viewpoints and perspectives (i.e., not only do clients have increased access to information, that information is global in scope);
  • Networking among clients (for example, via the Association for Corporate Counsel, LinkedIn interest groups, and other formal and informal networks); and
  • A willingness to experiment – particularly with digital and/or information driven products and services.

Given that backdrop, Prahalad and Ramaswamy found that increasingly value was created at the point of interaction between businesses and their clients.  Value was becoming less a function of creating a product or service to be purchased (i.e., take it or leave it).  Rather, value was being created as businesses and their customers created unique solutions together.

For many in the legal industry, this insight is not particularly novel.  Because legal services often require dynamic interaction and unique tailoring of solutions via direct interaction with clients, the idea of co-creating value is a standard operating practice for many lawyers.  Prahalad and Ramaswamy approached this dynamic from a mass market, product oriented perspective, and as a result they were able to develop some basic principles that are potentially valuable to law firms.  In short, they have codified the foundational approach that makes co-creation based innovation a repeatable process with clients.

Using the Tool in a Law Firm Setting

Co-creation tools provide a roadmap for taking client interaction to a higher level – recognizing that the world has become more interconnected and information is more readily available to clients than it had been in the past.  By recognizing and embracing that change, more value can be created for clients and in the process, relationships can be strengthened.

Applying co-creation in a law firm setting involves embracing four fundamental, ongoing principles in client interactions.

  • Dialogue – “Dialogue means interactivity, engagement and a propensity to act – on both sides (client and law firm).”  Beyond simply listening to clients, dialogue suggests shared learning on the part of two problem solvers.
  •  Access – Access focuses primarily on providing access to information and tools.  For instance, many firms have implemented extranets and/or cloud-based solutions for managing shared information with clients.  Embracing the access principle takes that one step further, ensuring access to the insights, knowledge and other foundational tools the law firm uses on behalf of clients (e.g., knowledge management tools, project management tools and processes, etc.).
  • Risk Assessment – To fully engage in co-creation, clients need to have a deeper understanding of the risks (and trade-offs) they face when selecting and creating a particular solution.  Some attorneys are extremely good at helping clients assess risk and make wise choices – others are not.  Helping clients assess risk is fundamental to co-creating value.
  • Transparency – Historically, there has been a natural imbalance regarding some elements of the relationship (e.g., pricing, underlying costs, profit margins, etc.).  Some of that imbalance has already broken down.  For instance, starting salaries for associates are published openly at NALP and profit levels are openly reported in the AmLaw 100 and 200 rankings.  The transparency principle calls on firms to continue and expand that openness.

While many will object to (or fear) the level of openness called for by the principles above, that fear is generally unsubstantiated in actual practice.  Clients do not object to their law firms earning a healthy profit – they understand that profitability is the cost of doing business into the future.  Furthermore, because they are actively part of key decisions regarding the creation of solutions and the management of risks, the value received relative to the fees charged is generally perceived to be very high.  In addition, having co-created approaches that deliver high levels of value, incentives to switch firms falls dramatically – increasingly client loyalty in the process.

Co-creation works most effectively when complexity is high and resulting solutions are genuinely unique and of high value.  In those high end settings, law firms are well served adopting principles of co-creation.  However, the principals work in many other settings as well (e.g., improving value on high volume work, integrating legal process outsourcing vendors into ongoing relationships, etc.).  In summary, co-creation is a natural extension of long standing traditions and leads to deeper, stronger and more loyal client relationships.

Next week we will follow-up with a few examples of how these principals work in practice.

 

 

Implementing Law Firm Strategy Using a Balanced Scorecard

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We have seen a spike of interest in the Balanced Scorecard since our December 2012 strategy question of the month focused on what kinds of measures law firms are using.  As regular readers will recall, the only measures firms are using with a high degree of consistency and reliability are financial measures.  Other areas – client satisfaction/client relationships; people/professional development; operational improvement – are generally not measured.

The balanced scorecard, as originally described by Kaplan and Norton, envisions a balanced set of goals, objectives and measures in four areas (as depicted in the graphic below).  Those goals and metrics should ideally be focused on advancing the achievement of the firm’s vision and strategy.  While these four categories are logical and work for the majority of organizations, the authors (and experienced managers) recognize that measures should be aligned with the strategy (rather than aligning strategy with the generic scorecard categories).

Balanced Scorecard Graphic

The concept is easy enough to understand, but how does one go about implementing some version of the balanced scorecard in a law firm environment?  In our 2009 book on the topic, we highlighted the range of barriers law firm managers might encounter when trying to use this very powerful tool to facilitate strategy implementation.  We will leave those challenges for another post so we can focus on how to use the balanced scorecard in a law firm setting.

The real key to the process (and this is equally true in a corporate setting and/or a non-profit organization) is to ensure the strategy is aligned from the firm level to the practice (and administrative department) level – and from the practice level to the roles individuals play in strategy implementation.

Cascading

Obviously, this graphic assumes the firm has a strategic plan.  For those who might have missed it, our June 2012 strategy question of the month focused on best practices in law firm strategic planning.  Some examples of how this cascading works across the categories of a generic balanced scorecard follow.

FinancialA firm with clear objectives for profit improvement (could be margins, could be PPP, could be some other reasonable proxy) might ask each practice group to identify the profit driver that offers the most promise for improving performance in their area.  In this example, the practice has identified realization improvements as the most promising area.  They would then set a target for improved realizations and adopt initiatives to drive that improvement.  Individuals in the practice would then move those initiatives forward.  In this example, individuals would focus on getting invoices out on a timely basis, with higher levels of accuracy.  Thus, the firm’s goal for improved profit margins cascades to a practice’s goal for improved realizations, which in turn cascades to individual’s committing to more timely billing.

ClientsOur second example focuses on the client dimension of the balanced scorecard.  At the firm level a goal might be adopted to broaden client relationships where ever possible.  This might be translated into an objective measure that tracks how many clients are served by multiple practice areas and/or partners from different practice areas.  At the practice level, this focus might translate into a set of target clients for whom the practice wants to expand its relationships (either bringing other practices into their relationships or by beginning to serve clients originated by other practice groups).  At the individual level, that could lead to specific plans to introduce colleagues to selected clients (or conversely to seek introductions to colleagues’ clients).

PeopleOur third example focuses on cascading for people oriented goals and objectives.  A firm level goal focused qualitatively on having the best people in the market could be measured via the number and nature of external recognition(s) the firm’s people get (e.g., Chambers, Best Lawyers, Super Lawyers, etc.).  At the practice level, that could translate into initiatives and measures focused on getting people professional (or industry) certifications.  In turn, individuals can adopt specific plans to build certification into their professional development plans.

OperationsOur final example focuses on how operational improvement goals might cascade in a law firm.  In this case, imagine a firm that has adopted a goal to reduce costs related to delivering client services.  A litigation practice in that firm might adopt an initiative to engage project managers on some or all of their matters.  At the individual level, partners/engagement leaders would commit to actively partnering with those same project managers to capture the benefits of project management discipline on matters.

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These are obviously generic examples.  However, if you have clearly defined firm level goals, those can (and should) be translated into measurable objectives so progress can be tracked and the firm can make adjustments if the strategy is not working.  With clear firm level goals and objectives, practice groups and administrative departments can align their plans with key goals.  Note, not every department and practice needs to align with every firm level goal – but, every practice has some valuable role to play in the implementation of the firm’s overall strategy.  Finally, this cascading approach enables every individual to take meaningful action that contributes to the achievement of practice and firm level goals.

 

 

 

 

 

 

Survey Results – The Value of Client Feedback – October 2012 Law Firm Strategy Topic of the Month

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October’s law firm strategy topic of month was the value of client feedback. Our initial rationale for exploring this topic grew as a by-product of our June 2012 strategy question of the month. June’s survey focused on best practices in the strategic planning process. We found that one of the key factors that distinguished highly successful planning processes from their less successful counterparts was the incorporation of client feedback into the process. Specifically, we found that firms that reported having “very successful” planning processes were 45% more likely to have solicited client input than were firms that reported disappointing results.

So, we thought it would be worthwhile to build a deeper understanding of what law firms are doing more broadly vis-à-vis gathering and using client feedback. What approaches are they taking to gather that feedback and what outcomes are they experiencing?

Approaches to Gathering Client Feedback

Interestingly, no single approach is used consistently by more than a third of law firms participating in this month’s mini-survey. Roughly 30% of firms report they consistently have their managing partner (or his/her counterpart) conduct structured interviews with a cross section of clients. Similarly, roughly 25% of firms report they have their senior marketing or business development people conduct structured interviews with a cross section of clients. Note: in some cases, both the managing partner and chief marketing officer conduct the interviews jointly.

When you include firms that report using a given approach – but who do so less consistently – the most prevalent approach to gathering client feedback is having the managing partner conduct informal (often one-off) interviews with clients. Roughly three-quarters of all firms report that their managing partner (or his/her counterpart) conducts periodic, informal interviews with clients. However, those interviews are not conducted across a cross-section of the clientele – and, they are not structured to ensure key topics are covered consistently.

Written surveys of all kinds (e.g., randomized, major client focused, and/or end of matter surveys) have fallen by the wayside. That approach was fairly common in the 1990’s, but fewer than 20% firms report using written surveys (web or paper) at all.

The following table presents the full range of responses relative to approaches firms are using to gather client feedback on a regular and/or irregular basis.

USE OF CLIENT FEEDBACK APPROACHES BY US BASED LAW FIRMS

As is always the case with these monthly mini-surveys, participants were generous in sharing some of their practical experience in the open-ended section of the survey. Among the practices and insights law firm leaders shared were the following.

  •  We require annual meetings with top 100 clients on an annual basis. The meeting is structured and performed by supervising attorney. Top 25 clients are also contacted by firm managing partner on at least an annual basis.
  • We spend a lot of time educating/helping our senior attorneys develop disciplined, regular communications with their clients…we emphasize that all our attorneys need to know their client business/industry well.
  • (Our) client teams develop a (tailored) method that fits the client’s culture and relationship to evaluate how the firm is performing. (Examples include) team meetings with the various client contacts; in-person meetings between the key contact at the client and the (lead) attorney; and various contact attorneys reaching out to their respective contacts in the client organization…assessing our performance as the defined purpose.

It should be noted that there is still resistance in some quarters… “I’ve not yet been able to convince the Management Committee, who all have great relationships with their clients, that some client feedback system is necessary.”

Results and Outcomes from Gathering Client Feedback

Obviously, it is always helpful to have a sense for what our peers are doing to manage their respective firms more effectively. More importantly, however, it is critical to understand what results can and should be expected from pursuing any given management practice. In the case of gathering client feedback, the key benefits can be summarized in four points (reflecting five sets of insights firms report gaining more than half the time – either always or often).

 

  • First, over 70% of law firm leaders report gaining genuine insights into how to manage their client relationships more effectively.
  • Second, over 60% of law firms gain new insights into how their clients view the firm’s strengths and its opportunities to improve (i.e., its weaknesses and shortcomings).
  • Nearly 60% reported that the client feedback process always or often produces opportunities to do more of the type of work the firm is already doing for that client (i.e., to deepen the relationship).
  • Over half reported that gathering client feedback always or often produces opportunities to do new types of work for clients (i.e., to broaden the relationship.

In addition to the points above, it should be noted that a number of law firm leaders said that the process itself tends to generate goodwill. Further, it creates a dialog that grows the relationship in the context of the client’s needs rather than in a ‘selling’ mode. One law firm leader summed up both points quite succinctly in an open-ended comment, “(The process creates) great client satisfaction that we even take time out to spend time with them and more importantly “care”. Also learn how much many clients “hate” the “cross-selling” pushes.”

A complete summary of the outcomes firms experience via client feedback gathering processes is captured on the following chart.


Closing Points

Given the fact that structured, formalized client feedback processes are only pursued with high levels of consistency at somewhere between a third and half the firms surveyed, it strikes us that this type of outreach can still be a source of competitive advantage for law firms. It is certainly a factor distinguishing more successful strategic planning processes from the rest. And, our anecdotal experience confirms what we learned more systematically from this survey. Namely, asking clients for their feedback generates goodwill; it often creates new work (sometimes, entirely new work in new areas); and it provides valuable insights into what the firm does well, how it can improve, and how it can manage client relationships more effectively.

At Sterling Strategies, we tend to gather structured client feedback in the context of strategic planning assignments (though we do so as stand-alone engagements on occasion). However, our friends at the Wicker Park Group focus intensively on the client feedback process. They even publish a continuing series of client Q&A summaries you might find interesting.

As always, the comments section is open – and we always welcome your calls and emails.

The Value of Client Feedback – Law Firm Strategy Topic of the Month – October 2012

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Our June 2012 strategy question of the month focused on best practices in strategic planning in law firms.  One of the principle factors that distinguished the firms reporting the most success with strategic planning from those reporting the least success was the use of client feedback in the strategic planning process.  Specifically, firms that report having “very successful” planning processes were 45% more likely to have solicited client input than were firms that reported disappointing results.  Remarkably, a similar survey conducted a month later by ALM and Lexis/Nexis largely overlooked the value of client feedback in the strategic planning process (perhaps viewing it as an element of “Client Relationship Management” and therefore skipping it as a specific focal point).

Frankly, we see broad value in gathering client feedback.  Certainly, it is incredibly valuable the the strategic planning process.   But, it can also play a valuable role in ongoing relationship management, in client service planning, in business development and marketing, in innovation, in pricing, and in quality management.

What we see here at Sterling Strategies is anecdotal.  Yes, we see and work with many law firms.  But, these monthly surveys (short and focused though they may be) give us all some real data on what is working and what is not working in the real world of law firm management.  This month, we have an opportunity to learn what approaches firms are using to gather client feedback.  And, more importantly, to learn what results firms are getting from their efforts at gathering client feedback.

The survey below should take less than five minutes to complete.  Results will be posted back on this blog at the end of the month.  Deadline for completed surveys is the end of business (PDT) on Friday, October 26, 2012.  As always, individual responses will remain entirely anonymous and confidential.  Please direct any questions you might have regarding the survey to John Sterling at jsterling@sterlingstrat.com or at (312) 543-6616.

If for any reason your web browser is not showing the survey in the box below, simply click this link and you will be redirected to the survey host.  Thank you for sharing your own experiences with client feedback with your peers.  It is valuable and widely appreciated.