The client perspective

The legal profession stands accused of failing to deliver client expectations due to being inapproachable, failing to ask the right questions and not fully understanding the issues faced by those it serves. But, as the Legal Services Bill looms and commoditisation of the legal marketplace continues, are firms finally taking notice? By Kate Clifton.

When it comes to client service, law firms have often been on the receiving end of some pretty damning criticism. ‘Pushy’, ‘arrogant’ and ‘aggressive’ have been mentioned time and again. And then, of course, there’s the question of cost. The billable hour and, indeed, having fairly simple work undertaken by a partner, when it could be accomplished by a cheaper associate, have been difficult pills to swallow for many organisations that choose to outsource their legal matters.

So, if we rely on past stereotypes and the testimonials of disgruntled clients that appear in the news from time to time, it is probably safe to assume that all law firms are money-driven, stuffy dinosaurs – completely out of touch with the clients they work with and, seemingly, totally oblivious to this fact.

However, in a legal landscape when client relationship management (CRM) is taking centre stage in firms’ marketing and overall strategies, such a view just doesn’t sit comfortably. In fact, if we believe the hype, surely the client is king?

From a journalistic point of view, I’m continuously bombarded with press releases flagging up the latest all-singing-all-dancing CRM technology being deployed at firms, and how it is enabling them to improve all-round relationships and increase their understanding of what really matters to clients – what makes their businesses tick. Add to the mix client-care programmes encompassing feedback interviews, client research, in-house lawyer seminars, and so on. The list is endless.

But even with law firms making the right noise, a few grey areas still exist. Let’s start at the beginning.

What clients want
International research consultancy Acritas recently interviewed 800 UK buyers of legal services across the commercial sector, as part of its ‘Sharp Legal Brands’ survey. The study sought to examine law-firm brand strength and favourability among clients, and bought to light various preferences. Female buyers, for example, are much more interested in the responsiveness of individual lawyers and firms, combined with a thorough understanding of their business. Males, on the other hand, seem to be attracted more by specific legal expertise.

Not surprisingly though, cost is riding high on the list of drivers for UK clients seeking to outsource legal work to the most appropriate firm, especially as there is significantly more pressure on them to improve efficiency and drive value for money.

“In the UK, this is resulting in more work switching to firms with offices outside of London, where they can offer an equivalent service on more and more service lines, for cheaper rates,” says Lisa Hart, managing director at Acritas. In circumstances where expertise can be found only in London, or the negatives of switching to another firm outweigh the benefits, clients will play hardball when it comes to rates.

“The price must be competitive,” agrees Jonathan Waters, director of legal services at the British Medical Association (BMA). “There are a number of firms on the London legal market and pricing is pretty expensive, but in my experience, if you can ask around you can normally negotiate costs – and we try to cap cost wherever possible.”

In a 2006 study of European medium-sized businesses conducted by LexisNexis Martindale-Hubbell, ‘How mid-sized companies in Europe select and review their legal services providers,’ respondents stated that, although legal-spend budgeting tended to be a low priority (63 per cent had no fixed budget and tended to allocate funds on an ad hoc basis), they did prefer to work with value-based billing. This included fixed-price projects, caps and retainer agreements.

More important than the billing method, however, was that firms stuck to their original pricing estimates, with respondents displaying dissatisfaction with firms that billed significantly beyond budget expectation. As one interviewee, the chief executive of a UK manufacturing company, stated, they stopped working with a law firm after it continuously billed them much higher than was initially agreed: “The final straw was when they billed us for taking time to explain the large bill.”

In the early stages of law firm/client relationships, sector expertise is no longer enough. Clients increasingly expect their firms to drill right down into the core aspects of their businesses: their drivers, organisational culture, the nature of the business they are in and the level of risk they are comfortable to take on.

According to Guy Smith, UK deputy legal director at international risk management, benefits consultant, and insurance and reinsurance broker Aon, some may think it unrealistic to expect a law firm to fully understand the business environment at Aon, but it shouldn’t be. “We expect them to understand the role they can play in helping us meet our challenges, which may not always require a technical or legal response, but more a strategic response to a challenge,” he says. “They also need to respect the skills our internal lawyers can offer in progressing our legal work. There’s a value in both the internal and external roles, but there needs to be a clear understanding of how the two fit together, and I do sometimes see slight tension or overlap in their activities.” For that reason, Smith tries to impress that there should be clarity at the beginning of a matter, as to what the law firm will do and what his in-house team will do.

Waters also expects firms to understand the expertise that resides within his in-house lawyer team, so there is no need for lengthy, excessively academic documentation, which can often be of very little interest. “As we’re lawyers instructing lawyers, we know the law,” he says. “We want fairly short pieces of work, which just identify the key issues. We’re not interested at all in reading about the law, but we do want practical, external guidance.”

For many clients, the key differentiator in selecting legal-services providers is the individual lawyer or lawyers that they work with, and the strength of those relationships.

“Frankly, if we were dealing with a particular partner and they moved, then we would be likely to move as well,” says Waters, who uses the same four or five firms on a regular basis. “Over the years, I’ve tended to use the same people I’ve used in the past and have followed them from firm to firm.”

This could be due in part to the fact that, with the current boom in merger activity and increasing efforts by firms to ‘be the best’ when it comes to service delivery, there often isn’t much to distinguish between the level of service that different firms can offer to clients. Law firms are taking a more holistic approach to client relationship management.

At Aon, Smith is currently managing a review of the organisation’s legal-services providers. The main drivers behind this are to optimise the productivity of the relationships with the firms the organisation selects. Smith is also hoping the review will enable the development of deeper relationships with firms across a broader range of legal disciplines, while leveraging the advantages of existing relationships.

“We have good relationships with a number of firms but we really want to develop these,” he says. “It’s advantageous for us and for them – they’re interested in building deeper relationships with us, too. The firms we deal with will have a wider understanding of our activities and it also benefits our lawyers, as they build closer relationships with the external lawyers, and pick up the phone to talk to someone without turning the clock on.”

Are law firms getting it right?
Writing about European and Australian law-firm geographic-expansion strategies in 20051, David Maister argued that in the legal profession (as well as accounting, consulting and engineering), many clients rated their firms highly on competence and client service – but they did not think that they were much differentiated from each other in terms of the level of client care they offered. “It’s not that these findings are surprising: firms have heard them before,” wrote Maister. “Indeed, firms preach the virtues of client reliability, client care and understanding the clients’ business fervently to all their partners and staff. They just don’t have the programmes to make them happen.”

Distinguishing between service and care could, at first glance, seem quite tricky. Alan Bannister, business-development partner at UK firm Vizards Wyeth is all too aware of this. “Service is not necessarily the same thing as solving clients’ problems,” he says. “Exceptional service could mean that you’re open 24 hours a day, 365 days a year, or that there is always someone manning the telephones and they get answered within two rings. The real problem is not understanding what an individual client wants, and then charging them for an overall service they don’t need, or want.”

He adds that where many firms, including his, stumble is not asking the right questions of their clients. “The tendency is to assume what the client wants, but what we should be doing is asking, not telling, them this,” says Bannister. “Asking questions is as far away from what lawyers traditionally do as it could be, but we are getting better.”

Smith agrees there can be sometimes be an issue in this area, but also believes that it is something that can be overcome by taking the time to ensure that external lawyers spend enough time really getting under the skin of their clients. “I would say there are a great many assumptions made by firms about their understanding of the business and whether they generally understand the issues we’re facing,” he says. “I think if I were looking at this from an external law firm’s point of view, I would be keen to physically spend more time with clients, as, quite frankly, you’re much more likely to be called on for advice if you’re closer to them.” Smith highlights external lawyer secondments as a particularly effective way to achieve this goal, although he recognises that they are by no means a universal panacea.

“I think that many firms have undoubtedly got better at listening to clients, but that is simply because many were truly awful at doing this previously,” says Andrew Dunn, director of business development at UK firm Halliwells LLP. “Honda publicly castigated one of its legal advisor’s CRM programmes. At the end of the day, clients are not daft and will easily detect a programme that adds no value to the relationship.” For that reason, he says, firms have had to seriously “shake up” their approach, with the introduction of everything from simplistic client-care programmes, to more sophisticated CRM strategies. “Many firms insist on developing their programmes in isolation, without client input, which rather defeats the object,” says Dunn. “Others insist on developing programmes that are little more than sales tools, which once again defeats the whole point of a CRM programme. The adage here is one mouth and two ears: listen to what your clients want and act on it.”

Halliwells consulted with general counsel across a variety of sectors, and in-house legal was involved extensively in the development of its approach to CRM and the specific areas which need to be addressed. “We’re constantly developing our CRM programme and this consultation with general counsel is a consistent factor,” says Dunn.

Smith believes that some firms could still be doing more in terms of client feedback. “Not all firms are as effective at ensuring there is regular feedback and insisting on it so they get both the positive and negative comments, then meaningfully steer the relationship in the right direction,” he says. “If there’s a niggle, it’s much more difficult to deal with it six months down the line, rather than nipping it in the bud.”

Waters, too, thinks such feedback opportunities, whether formal or informal, are paramount. “Not only is it an opportunity to see how they are performing, it’s also an opportunity to explain what developments will be taking place at the BMA over the next 12 months, thus giving them a bigger picture to work with,” he says.

At Halliwells, the CRM programme encompasses regular client reviews focusing on key pressure points such as billing, relationship management, communication, added value and areas for improvement. The process is flexible, says Dunn, so that it can be tailored to specific clients. Currently, the reviews are conducted by independent partners, but the firm is working towards outsourcing a considerable number of them. This enables the client to be as open as possible, without having to discuss any personal relationship issues with their client partners. Following the reviews, clients must be written to within 72 hours of the meeting, with information on any action that will be taken to resolve existing issues. Outstanding or incomplete issues are then escalated to board level.

“We have to deal with some client issues,” admits Dunn. “The way we deal with them is honesty, both to the client in the first instance and to the lead partner. If the problem is down to personality, we will change our lead partner to the satisfaction of the client. The client then has the opportunity of escalating any further issues to the managing partner.” The new CRM programme, he adds, is helping to prevent this, as it flags up issues early before they actually become problems, enabling the firm to deal with them more effectively.

Business development and pitching
Setting to one side communication and clarity with existing clients, firms are also taking steps to ensure that they cover all bases when pitching prospective clients. Once again, the ability to listen and ask the right questions to ensure that any work undertaken on behalf of the client is satisfactory comes into play.

One common problem is that firms can often approach pitches or panel reviews with a traditional mindset, in that they simply explain every service they offer and give a detailed rundown of their strengths, without exploring the nitty-gritty areas that clients are really interested in. Although, refreshingly, there are signs that this is an area that they are showing a willingness to improve in.

“Most firms deliver the same content regardless of the opportunity,” says Dunn. “We have developed sector-specific content and make a real effort at the front end of the pitch to highlight the issues we should be considering.” He cites ‘exam advice’, whereby you should read the question properly, then provide an answer that fits. Next, Halliwells researches the client and the market they are in and seeks out the main legal issues they expect to face. “The skill is to try and find out what keeps general counsel awake at night,” adds Dunn. “There is increasing evidence that this centres on the whole idea of managing legal risk.”

Previously, at Vizards Wyeth, Bannister found that although his partners and assistants were personable and attentive, they weren’t winning a volume of tenders that demonstrated this. “Our marketing outfit was capable of producing the right background noise, promoting ourselves as experts in certain fields, getting through the door and speaking to clients, but we seemed incapable of actually getting to the ‘Yes’ and receiving the instruction,” says Bannister. This, he says, was due to the fact that rather than going into client interviews and chatting about clients’ problems and the best way of dealing with them, they would instead list their services, point clients to the website and, basically, not ask the right questions. “We should have been saying ‘Let’s work out the best way of dealing with your problems and what we can do to help – if we can help, we’ll be delighted to, if not we can recommend someone that can’,” says Bannister.

Although clients never approached the firm and expressed dissatisfaction with this approach, Bannister set about devising a legal skills and selling training course for the firm’s partners and assistants. The course, which will be repeated over the next few months, ran for three months and was followed by a three-month ongoing support period. It included appraisals, theory (on selling techniques, and so on) and practical business clubs. One role-playing scenario saw groups of partners interviewing and ‘pitching’ a private school. Following an initial interview, the participants were asked to put together and present a document in front of the others. “It was good to see how each group presented in different ways and also interesting to see how much they bought away from the interview,” says Bannister. “Some missed half the leads. This often happens with clients: you don’t ask enough, so you can only tell them half of what you can do to assist them.”

Since the course, Bannister has seen a marked improvement in the way his partners handle tenders, as well as an increase in the number of competitive tenders they win. One client has even gone so far as to say, ‘You interpreted our brief exactly how we wanted, when the other firms didn’t’. “We wouldn’t have been able to do this before,” says Bannister. “The difference in attitude towards business generation and business development was remarkable straight after the course, and has been sustained since.”

There is certainly a growing amount of work being done by law firms to improve the way they are perceived by clients, and ensure that they retain those clients with honest, high-quality service and attention to detail. That is not to say that they are getting it right every time. “What really infuriates me, and I’m sure many of my colleagues in-house, is receiving flyers from law firms that haven’t done their homework,” says Waters, for example. “When they have spelt my name incorrectly, got my job title wrong, or misunderstood what the company does. This happens more often than you would think but it’s simple stuff to get right, just by picking up a phone. If firms clearly haven’t done this, then the flyers go straight in the bin.”

However, as Hart comments, client-satisfaction levels in the UK market, generally, are high. There are a minority of clients that are not happy, “… but most of the issues can be dealt with by better expectation management and enabling a wider team to act as a first response,” she says.

Going forwards, client relationships will certainly become even more critical, particularly in the light of the Legal Services Bill, and outside investors are more likely to examine client satisfaction as part of their due-diligence process.

Firms have a hefty amount of work to do to keep up with client expectations, but the level of research and effort going into client care and CRM programmes is encouraging. Key to success is continuing, thorough client-feedback programmes (according to Hart, an astonishing 80 per cent of clients are still not being asked for feedback by their law firms), and the ability to step back and ask partners – and all client-facing staff – honestly, if they are doing the best they can to keep clients happy. Firms must be proactive rather than reactive, addressing potential issues before they arise, rather than allowing them to progress, then sweeping them under the carpet and continuing as they assume their clients want them to.

Reference

1. ‘Geographic Expansion Strategies’, David Maister, 2005, www.davidmaister.com