CRM: The next step

A masterclass detailing the benefits of performance management and the use of key-performance indicators for improved client-relationship management in law firms. By Tim Nightingale

When I send my children to school I can examine its standalone assessment test results. If I go into hospital for an operation I can find out about success rates achieved by that hospital for that procedure, and if I read a report on a football match in the sunday papers, they’ll score the performance of each player as well the defensive record of the team, their goal-scoring record, performance at home compared to away, and so on.

The world has gone performance-management mad. Society has become streetwise; glossy marketing and slick advertising is no longer enough – we want to look behind the spin to get to the substance. Law firm clients are no different. With procurement departments in support, they want some hard facts on which to base appointment decisions. Law firms, however, are conservative beasts and are yet to be convinced about the benefits of letting clients rate their performance on an ongoing basis.

More than a decade ago, my company started doing client satisfaction and perception studies for law firms. Our clients took a lot of persuading. In those early days of helping firms to be more client focused, many partners came up to me to say that they had no idea why this exercise was necessary when they knew what their client thought. So, I developed a stock reply: ‘If your firm was a newspaper, which one would your client think it was?’ The answer was invariably The Times or the Financial Times. I would then ask their clients the same question and the answer, more often than not, was the Daily Mail, or similar. When I reported this fact back to the firm a look of horror would, understandably, spread across the partners’ faces. However, the pained expressions normally resulted from being seen as downmarket, not from failing to understand their clients.

Client interviews
Twelve years on and everyone is trying harder to listen to their clients. Expensive client-relationship-management systems are de rigour. Time and fashion moves on. We still spend a good deal of our working year at Nisus carrying out client interviews, but increasingly we believe that such deep-dive interviews should be supplemented with something that provides more frequent reporting of quantitative data. Not just endorsements, but a set of numbers that clients will be impressed by.

Conduct an in-depth face-to-face interview and you can find out a wealth of information, if the meeting is meticulously prepared. Win the respondent’s trust, stimulate them with interesting and challenging questions, demonstrate your professionalism by knowing the wider issues and the specific ones pertaining to that relationship. Do these things and you uncover all the information a client-relationship partner (CRP) needs to protect this relationship and to drive it forward in the face of competition.

Online reviews
Enter the online performance-management review. Ask most clients if they would be prepared to spend five minutes every quarter or six months filling in an online form about the firm’s service provision and very few will decline. Most will smile, pleased that their firm is client-led rather than inward-facing.

By going online you sacrifice depth but can spread the net wider and facilitate responses by making it, primarily, a performance-scoring exercise that takes the client five minutes every quarter. Send it to as many clients as you like.

This won’t provide the deep and meaningful information of a face-to-face study, but it will provide a snapshot of how the business is seen to be performing. It will give you a set of key-performance indicators (KPIs) to work to and can be aggregated across the firm or broken down by practice group or partner. More important still, it can track trends over time, highlight where there are problems, and where clients are clearly dissatisfied. It may just give the heads up on a key client’s unhappiness before it is too late – how often is the first sign of dissatisfaction when the firm is sacked?

Let’s be clear: this doesn’t remove the need for the biennial in-depth review any more than it excuses the partner from talking to the client to gain feedback. What it provides is a set of numbers across different aspects of the service, which are just as important as the figures your accounts department produces. No firm could operate its business efficiently without management accounts, so why operate without a set of metrics to highlight service performance?

When we have demonstrated our own system of performance management, some partners have been less than comfortable; there is a feeling that maybe they don’t want to see some of these scores. It was the same ten years ago with client-service reviews.

What does strike us as strange is the magnetic pull of the directories. Firms invest partner time, marketing time and plenty of cash in supporting their directory entries. It is important for everybody to see how far up the pecking order they come, but directory rankings are a subjective and arbitrary measure and based upon law firms’ own submissions, not rigorous client feedback. And when you speak to clients about their value, you’re left wondering why firms invest all that time and money in their submissions.

A simple online performance review can provide the sort of information that is going to be gold dust to the CRP, the managing partner and the business-development team. If I was a CRP, I would absolutely want to know:

How we are performing and whether the client is happy with me and my team;
How we could, or should, be doing better;

“They should certainly explore these [performance] tools.”

Interviewer: “What would you say to partners who say no?”

“I would say get real. If you’re in business, what have you got to hide?”

“It’s a very good idea… Anything that concentrates their minds on things that really matter to us has to be good.”

And then there are post-transaction reviews. Clients tell us that they don’t know why this doesn’t happen when it is directly to the law firm’s advantage. The following comments also come from FTSE-100 general counsel.

“I’ve wondered why, after every key piece of work when they send the bill, they don’t ask us how they did.”

“It’s more than just turning around at the end of a project and saying ‘was it ok?’ It needs to be a more formal, structured debrief with specific, formal questions.”

Once again, there are implicit advantages a firm can gain by tracking data and looking at performance. A post-deal review can include questions on the pitch and why the firm won, what it did right or wrong and whether or not it is going to get the next major instruction. A simple ten-minute telephone interview can uncover invaluable information that, when combined with other responses over time, provides a wider picture of the firm’s competitive position. Who can say that they wouldn’t want this information as they plan the future and look for ways to outperform the competition?

Conscientious objectors
Dissenting partners will tell you these metrics won’t work – the client doesn’t have time, or gives them all the feedback they need over regular lunch meetings. The normal excuses, but what this is about is monitoring your team’s performance, because that is exactly what the client is doing to assess whether his company is getting good value. The client is, therefore, giving us access to their views and for business developers, marketers and CRPs, there is nothing more valuable.

This means we have to be able to overcome the objections and to do that, support from the top of the firm is usually key. Backing this up with the argument that most clients will be impressed by a concerted effort to monitor performance – and thereby improve service and value – should help, but there will be doubters in every firm. Sadly, perhaps only seeing the system bring success to competitors, or even the clients asking why the firm doesn’t do it, will provide the tipping point.

One of my colleagues managed a KPI and benchmarking scheme for one of the big four accountants in the corporate-finance area. Results were reported every six months and benchmarked against the competition. This was the one event for which he knew he could guarantee full partner attendance. And they’re not alone; all sorts of businesses within and beyond professional services are doing this.

Lawyers pride themselves on their professionalism and acknowledge the need to behave more like grown-up businesses, while clients bemoan the fact that their law firms are not more businesslike. Here, therefore, is an opportunity to kill two birds with one stone. Gathering hard data and tracking it over time is professional; discussing feedback over lunch, which is not recorded anywhere and that is unstructured, is unprofessional.

Performance management will impress your clients and enable you to improve your service and your competitiveness. In which case, perhaps the whole world hasn’t gone mad after all. In ten years, maybe we’ll all be looking back on those very unprofessional times before online performance reviews and post-transaction interviews became a cornerstone of the professional ethic.

Tim Nightingale is founding director of Nisus Consulting. He can be contacted at tim@nisus.net