9/23/10

Elephant Post: What Do You Spend A Lot of Time, Money and Effort On That Just Isn't Worth It?

Tell us something that you spent a lot of money on, support and promote, but just isn't worth all the money, time and effort?

This question popped up at one of our "Curry and a Pint Nights" and the group started calling out programs, technology, outsourced materials, and even people as examples. When I asked other groups this question, there was one specific item that was mentioned almost unanimously, and that was a law firm’s Client Relationship Management (CRM) resource.

I’ve asked the contributors to do a couple of difficult things with this week’s post:
  1. Keep it generic as possible… so, don’t name names (no matter how fun it would be to do so.)
  2. Take a negative point of view and point out the bad things without trying to sugarcoat the problems with things like “well, it’s not really the products fault that no one uses it correctly” kind of justification.  
As you’re reading these posts, please keep those two rules in your head. In other words, we may go a little overboard in how bad things are in the trenches. We have also blended a number of different comments that we received from different perspectives and put it together as “one voice”. Therefore, we’re going “anonymous” on all of the contributors this week in order to keep the conversation lively.

Feel free to jump in on the conversation and come to the defense of all the things that are being discussed below, or let us know that we didn’t point out the things that are really terrible about them!!


KM Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it?”
This one is too easy: CRM

First off, we call it CRM in the legal business, but it isn’t.  We do not use CRM tools to “manage client relationships.”  Instead, at best it’s a Enterprise Contact System (ECS).  So calling it CRM is stretching the definition a bit.

Looking at all the time and money spent on this system you would expect it to be highly valued and often used.  From my experience at a number of firms, this is not the case.
First issue: GIGO (Garbage In, Garbage Out).  Lawyers do not care about updating their contact list any more than they need to get their jobs done.  Updating contacts increases their billings and income by … zero (in the short run).  This means only the contacts they are currently working with will be updated, and only on the information necessary for their work.  Job titles, company names and physical addresses are not typically kept current and duplicates may well exist.

Taking into account that some of this information is accurate - do lawyers spend time reviewing updates from the ECS to update their own contacts?  I refer you back to: “Updating contacts increases their billings and income by … zero.”

Taking a bigger leap of faith that enough info in our ECS is accurate, how much time do lawyers spend using this system to discover relationships for biz dev opportunities?  Once again – this is activity that “increases their billings and income by … zero”  (in the short run).

I’m not saying CRM couldn’t or shouldn’t have value for a law firm.  In fact, I believe quite the opposite since our business is all about relationships.  IMHO – law firm structures and compensation system do not reward or encourage this kind of behavior, so the money spent on CRM systems is mostly wasted.

Bottom line: CRM is a solution in search of a problem.  Until law firms recognize and define this problem, CRM will not be worth the time and money spent on it.

IT Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it?”
Once Again… CRM…

There is a reason why CRM has been labeled “largest shelfware product ever created."  Firms have licensed it for all users only to have the core marketing department and a few attorneys using it.  The lofty descriptions of knowing and understanding our people knowledge assets turns into one giant centralized rolodex.  CRM is one of those projects that IT can implement perfectly from a technical perspective, but fail miserably as an overall project.

Part of the problem with most implementations is the initial goals are set impossibly high.  There are so many things that CRM can do, people want to accomplish them all.  Sometimes you’re trying to justify the huge price tag that came with the tool.  Ultimately it’s just not possible.  When I started my first CRM implementation, we started with something like 33 success goals.  By being realistic, seeing what was enforceable through the technology and what was reasonable to expect lawyers to do, we whittled it down.
By the time we actually deployed the tool, we were down to 3 or 4 goals.  Much more manageable, much more understandable by everyone involved.

Like any enterprise system, another key to success is overcoming the fear of lack of power of senior people, educating them how the system ultimately benefits them, their practice and the firm as a whole (and usually in that order).

CRM: it’s way more culture than technology.  To be successful you have to have teamed with marketing, provide a thorough education, have proper sponsorship at the senior leadership level, have taken into account your firm’s culture and your ability to affect change.  And even then it can fail in a spectacular way.


Records Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it?”
Excessive Document Retention / Failed Document Destruction

Law firms expend a good deal of money and effort with little resulting business value on the retention of paper documents. Long past the time when, under any rational records destruction management regime, they would be destroyed or recycled, they are maintained in file cabinets and off-site storage. It is an open secret among law firm records managers that many firms with formal document retention schedules have not actually "pulled the trigger" and implemented timed destruction of most classes of ancient client documents (by way of background, under such schedules a few rare documents such as wills and trusts and active contracts have an indefinite retention period, while documents like client correspondence or bills might have a retention period of 7 or 10 years after the close of the matter).

Why is this? No corporate owner would allow this situation to continue, because the cost of holding onto documents (not just the cost of third-party providers, but also the cost of the space at the firms themselves) is quite substantial and there is no obvious benefit from storing them.

I see two primary reasons.

The first is an unfortunate diffusion of organizational responsibility for risk management. Most law firms are not strict top-down heirarchies, but rather are collections of strong-minded independent professionals. Law firm administrative structures can be correspondingly diffuse. This works well for many functions, but not so well for risk management. Where there is a "General Counsel's Office" or even a "Risk Management Partner," the firm has (appropriately) delegated responsibility and maintained accountability for risk management to a single person or role. Such firms tend to have stronger records destruction practices. As recently noted at a PLI meeting looking at Pitney Bowes, making one person responsible for risk management ensures that one person at least has a vested interest in rationally reducing risk.

The second reason goes to a core aspect of being a lawyer. Lawyers are paid to worry about the worst that could happen in a given scenario, and figure out the best way to prevent those problems. Good lawyers may even be better than bad ones at identifying potential complications and worrying about them. When this attitude is applied to a client's problems, the lawyer is fulfilling a natural and appropriate function, and the legal advice is an important factor for smart corporations to weigh in making business decisions.

And of course there are risks in destroying documents (particularly if there is no centralized "litigation hold" business process), but there are also risks in *not* destroying documents. For instance, a client's records retention policy might result in the entirely lawful destruction of documents within the client's repository, but a subpoena to the firm reveals that unfortunate non-privileged correspondence lived on, supporting client liability and distraction of suit where the client's own policies would have prevented it.

Imagine that if a firm acts, the vast majority of the time things will turn out well, but there is a quite remote chance that something highly embarrasing and bad for business will occur. The lawyer's attitude towards risk places a higher value on reducing or removing remote risks, rather than approaching risk by weighing it, together with the likelihood of occurence, against the business value obtained by acting.




Legal Marketing Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it ?”
Most of the seminars (and webinars) we hold

Before the marketers out there submit a nasty comment, hear me out.  I am a marketer and have managed hundreds of these events.  I do think they have value, but not necessarily the value they are sold on for most firms.

Many lawyers think that holding and/or participating in seminars gets them work.  The old story of how some piece of business came in the door due to a client attending a seminar is trotted out as evidence.  Right.  How much work comes in the door that way?  If you sell wills and trusts by holding seminars at senior centers, that might be true.  But even then, it takes post seminar effort to make that happen.  The vast majority of work that comes to a firm, comes in from relationship efforts, not seminars.

Seminars can be great tools for generating leads.  But they don’t close business.

Law firms tend to treat seminars as the beginning and end of the process.  I understand why.  Speaking at people (i.e. juries) is something lawyers do well and with which are comfortable.  Engaging in a dialogue about getting business is not that comfortable.  As might be expected, if given the choice, lawyers will always do another seminar over conducting follow up contacts.  On one occasion I had a lawyer ask for help in preparing yet another seminar.  I commented that the last seminar must have resulted in a good number of contacts.  The lawyer said they didn’t have time to make all those follow-up contacts.  Why?  They were too busy preparing seminars.

If seminars are part of a lead generation and follow-up process, they can have very high value.  In contrast, holding seminars so you and your firm can be viewed as experts has a different value.

My point is that expecting sales results from marketing efforts is not reasonable.  Firms should hold fewer seminars and spend more time having their lawyers engage in relationship efforts and ultimately getting business in the door.




(More) Legal Marketing Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it ?”
With no plan or strategy, PR stands for little more than Press Release

Many law firms spend a great deal of money on marketing/public relations with little or no measureable return on their investment.  They operate with no real plan and they continue to do things as they always have, even though they have no idea whether what they did in the past actually worked.  Law firm marketing has turned to webinars as a way to cut costs.  I’m sure leveraging webinars has cut costs in some ways, but how effective are webinars with respect to getting new business for law firms?  Another great tool of law firm marketing - email campaigns.  This is viewed as a great way to inform interested parties of the various events coming up, but does it work?  I receive many emails daily and have little free time to look through all the emails that come to me unsolicited.  Do you really think the General Counsel (GC) of ABC Corp is poring through his or her emails looking for that next webinar?  To be effective, law firms need to connect with the people making the legal purchasing decisions.  Frequently that will be the GC, but many times it is not.  How do law firms know who makes the decision?  They do that by meeting people at the company, by researching the company and by talking to others in the community.  What do law firms do with that information once they have it?  At best they are putting the information into a CRM system, which gets very little use.  How about that ever popular website?  It must be all things to all people, therefore it provides little value to anyone.  How are law firms targeting these decision makers with websites?  They aren’t.  For many law firms a website is little more than a virtual billboard.

You can put adverts on the sides of buses and get business - that doesn’t mean it is an effective way to get business.


Cost Recovery (Library/IT/KM/Lawyer/Client) Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it ?”
Cost recovery systems/initiatives

Talk about a process in futility! Law firms are spending enormous amounts of money in the attempt to recover expenses incurred in the service of the client. Why don’t firms just treat this as the cost of doing business and either find a way to build it into the rates charged to the client, or just accept the fact that most of these charges are going to be written off by your own attorneys, or rejected by your clients anyway??

No one likes being nickeled-and-dimed when they read the bill you send them. Just think of the time that attorneys and administrative staff spend on recovery. Now add in the time that attorneys spend on reviewing the invoices, writing off charges and sending them back to accounting for adjustment. Now add in the time that your clients spend poring over the invoices and looking for expenses that they think you are trying to get away with. Add in those expensive resources you bought that attempt to track even more expenses to bill to your client, and you’ve got yourself a real time-waster, and a system that ends up making everyone frustrated and angry.

Just absorb expenses as costs of doing business and increase your rates….again!

Library/Attorney/Researcher Perspective

“Spent a lot of money (and time) on something, but just isn’t worth it ?”
Having both Westlaw and Lexis

In the “good old days” it was a no-brainer to have both Westlaw and Lexis in your research tool chest, but the good old days are long gone! At one point, law firms could recover most (if not all) of the expenses related to having both products. Vendors and firms had the benefit of being able to pass costs along to the firm’s clients, and had no incentive to reduce duplication or control costs. Although the vendors would love to believe that this is still the case, I’m afraid they are sorely mistaken. Clients are going through invoices with a fine-toothed comb and rejecting expenses left and right.  That’s if the attorney in charge isn’t already admitting defeat and writing off the charges to avoid this fight with the client.

There are a couple of reasons that firms that have both services are giving to justify the enormous expense:
  1. We’re ‘risk-adverse’ and use both to make sure we don’t miss something.
  2. Partner ‘X’ will only use one of the services, while Partner ‘Y’ only uses the other.
As for point #1, I would ask how many times the research was conducted in both systems and checked to make sure that they ‘didn’t miss anything?’  Usual answer: Never. Most of the time, there is a way to purchase the specific information you need on an ad hoc basic, or buy the print version of that resource if available. You don’t have to buy the cow in order to drink a glass of milk.

As for point #2, my answer is grow-up!! If every partner took this approach, we’d be bankrupt as a firm. Having both research tools is a luxury that is no longer necessary for most firms. Time to determine if this is one of those traditional attitudes of a law firm that should have gone out the window when these same people were laying off attorneys and staff because the firm needed to trim down. Cutting the duplication of legal research tools will go a long way in really trimming the fat of firm’s overhead.



Wow... there was a lot to digest in this week's Elephant Post (and we had more that we didn't post this time around!!)

Agree?  Disagree? Got more to add?? Feel free to add your comments and see what others think.

This great post was due to the fact that we had a number of people contribute their answers, comments and perspectives. If you missed out on sharing your opinion this week, don't worry... we have another topic brewing for every Thursday. 

Next week's Elephant Post builds on the topic that we discussed recently on Vocational Law Schools:

"If I could have a day with a class of law students, this is what I would say that would help them once they enter the 'real world' of working in a law firm."

Everyone seems to be picking on the way law schools prepare their graduates for the work force... but, what exactly would you do to help prepare graduates for the "real world?"

Got a perspective? Send me an email with your perspective and we'll get it set up for next Thursday's Elephant post.

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10 comments:

Anonymous said...

What about Martindale-Hubbell and all other wonderful directories that someone thinks is actually doing more than just stroking their own egos?

Anonymous said...

I think your post this week is misguided and uniformed. The fact that you do not understand the value of CRM is evident. If CRM wasn't useful, why do so many law firms have it? It is possible that some attorneys do not see the value of having a CRM system, but the law firm benefits from it and without such a system, firms would spend a great deal more time and money managing mailing lists, events and seminars.

Maybe the problem with CRM is the way it works. Expecting attorneys to change the way they work is a fools game. If you could get the same value without changing the way attorneys work, you would have a system that provides value to the firm without negatively impacting attorneys.

-Steve

Anonymous said...

Steve - Your ignorant view of CRM reminds me of a story I once told my son about the difference of "reality" and "theory". Let me retell it to you:

Son: Dad? What's the difference between 'reality' and 'theory'?
Dad: That's easy son. Go upstairs and ask your Mom and Sister if they'd sleep with Brad Pitt for $1 million each.
[son comes back downstairs happy]
Son: They both said they would sleep with Brad Pitt for $1 Million.
Dad: Well there you go, son. In 'theory' we're sitting on $2 million, but in 'reality' we're living with a couple of prostitutes.

In 'theory' a CRM resource is a money maker, time saver and benefits the firm. In 'reality' it is a money, time and resource pit.

Anonymous said...

The success of Legal CRM is more about a smart interface that takes the pain out of participation. Perhaps you feel this is only attainable in theory. If that is the case, then you are actually part of the problem.

-Steve

Anonymous said...

You are right Steve,
I am the problem.
I need a prettier interface to motivate me to break my years of neglect of using the CRM.

Most firms have had a CRM for what?? 5-10 years now? And you're thinking that the problem is that you haven't made the interface attractive enough for the lawyers to use it, then what the heck have you been waiting for all these years??

By all means, throw more time and money and IT folks at the CRM and put some lipstick on it. That approach hasn't worked so far, but that shouldn't keep you from trying it again now should it??

Anonymous said...

Just saw this from a mid-sized Georgia firm about Martindale-Hubbell. She should write part-two of this Elephant Post if you have a follow-up to things that just aren't worth it:

We have a 3-year contract with Martindale-Hubbell that will expire in Dec. 2012. As M-H will show up next spring to persuade the firm to sign a new contract, I need to start my Drop M-H campaign now.
(Don't ask me why, but the M-H exorbitant cost is on the library budget, no matter how much I point out that not being on the marketing budget doesn't reflect the firm's true marketing expenses.)

Does anyone have any of the following & would share with me:

1. ARTICLES: One to two-year old (2009-2010) articles from legal publications that mention how many law firms (and which ones) have dropped M-H. (No blogs please, I have partners who have no idea what a blog is.) I have done an exhaustive google search but M-H is very good at search engine optimizing and the only articles I can find discussing law firms dropping M-H are at least 2 years old.

2. BENEFITS v. COSTS: Has anyone done a study on the benefits v. costs or ROI of M-H? If so, can you share your results w/me?

3. ADVICE: Any tips or advice on weaning the partners away from M-H, legal directories in general, and joining the 21st century?

Anonymous said...

That's just it, you are so entrenched in what has been, that you can't imagine anything else. You blindly accept what you know doesn't work and then say that the concept doesn't work. CRM should be an essential part of a forward thinking law firm. After all, one of the most important factors in a law firm is the relationship with the customer.

-Steve

Anonymous said...

Yes... in theory CRM should be essential. In reality, 95% or more of the attorneys you're trying to peddle this to won't use it.

Good luck with your vision of how things ought to be!!

Anonymous said...

I have to disagree with cost recovery tools being a waste of money. I am in the process of selecting one right now. Its value lies in its cost compared to total database usage costs and your goals for the project. I could over analyze database usage with a lot of low level data or I could get high level data which provides just enough information to make meaningful decisions. This goes back to the previous elephant post on good vs. perfect. Good is good enough! - P.Barbone

Anonymous said...

I don't think that the cost recovery tools are the "waste of money" in this topic. The fact that firms are nickel and diming clients is the issue that needs to be addressed. I think clients would rather hear that firms are just "adjusting their billing rates to cover its overhead", rather than hearing "we have a great resource that makes nickel and diming you a whole lot more efficient (for us any way)."

A great tool doesn't make up for the fact that there should be a much easier method of a firm including its overhead charges into the clients bill.

 

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