The idea behind LNCA began after Lexis purchased Redwood Analytics and decided that all that financial data was great, but could it be married up with other products like the firm's Client Relationship Management (CRM) tool [InterAction] and external client information that is housed in Lexis' product atVantage? By combining the different products business development professionals (or law firm partners if you're in a pinch) could break down that data and create self-service analysis reports, cross-selling opportunities, client profiles, and trends analysis reports. Those just happen to be the four general features of the LNCA product.
While I was talking with Chris Whitmore, he mentioned that the demand for intelligence and analytics is on the rise in the legal field within the area of business development, and that Marketing has evolved from generic tactical approach to a more analytical and intelligence approach. In other words, firms are realizing that client development, cross-selling and retention can no longer be accomplished through a shotgun approach where the idea was to scatter the firm's resources and talent over a wide batch of clients. Instead, firms need to focus like a laser on existing clients and then isolate potential clients where the firm's services fit their needs.
Many firms have been doing these types of deep-analytical reports, but they tend to be manual processes based on data that may not be relevant to the real needs of the firm in a biz dev approach. The most common of these are the famous "Top 25" or "Top 50" client projects that firms take on to see what kind of opportunities in cross-selling can be made for those clients. The typical pattern for pulling these are based on the past year or two financial data with a few clients sprinkled by some of the firm's top Partners.
Although the idea of using last year's financial data may be the easiest way to pinpoint who the firm is doing the most business with, LNCA is set up to do a deeper analysis of that data and identify those key clients, along with attempting to do analysis of those clients that are at-risk of leaving the firm, or trending in a way that shows significant reduction in work going to the firm. According to some of the Redwood studies, it is typical for clients to reduce their legal spend with a firm somewhere in the average of 15% every year. So, firm's are constantly looking for ways to stop this reduction in work.
LNCA uses that financial data, over an extended period of time (1 year, 2 years, 5 years) to help label clients based on their trends over those periods. Clients are profiled into one of four quadrants based upon the hours of work performed for the clients and the weighted average hours of work per year based on partner rates, the breadth of work, and key partner participation. The best clients fall in the first quadrant, and the clients with the least amount of work trickle down to quadrant four.
Once the quadrants in eight potential areas:
- Acorns - clients that start small and grew into very large clients. (more on these later)
- Backsliders - Started in Q1/Q2 but are now in Q3
- Cross-Sell Legacy - Where clients with have fluctuated over the past two or three years and have worked with more than two practice groups during that time.
- Cross-Sell New Opps - Newer clients that have worked with more than two practice groups in the past two years
- Cross Sell Ongoing Opps - Older clients that still use the firm, but haven't used more than two practice groups at any time
- Fallen Star - Clients that were in Q1, but have fallen below certain sub-quadrant scales
- Growth - Current Q1 or Q2 and have increased in scale since inception (excludes those labeled as Acorns)
- New High Activity - New clients currently in their first 12 months of activity that have more than 10 active matters, each with more than five hours.
LNCA starts with this financial information, but begins to integrate the CRM and other data that helps narrow along the lines of two important metrics that firms need to know about their clients – Relationships and Attrition. InterAction information is isolated to see who knows who and determine the relationships. Are they all with one person, or does the client have a more varied relationship throughout the partnership? The idea is that if all of the relationship is with one partner, the higher the risk is for attrition with this client. If that can be identified, then the firm could work to expand the relationships with that client beyond the core partner.
Now, I'm going to have to stop here and point out the obvious that InterAction is one of those resources that many firms have, but where the data is suspect at a minimum. For firms that have nice clean InterAction data, this may be a gold mine, but for those firms that I've talked to that have InterAction, I'm not sure how much good information can be pulled from this resource.
Self service analysis... Build your own list
The Self-Service Analysis tool is set up to allow for the filter of the data you want pulled. Analysts can focus in on each quad, and within specific bubbles within those quadrants. The financial data also is set up to be sorted and filtered. The analysis also looks at partner billing data and gauges the relationship between the partners and the clients. Finally, external information from LexisNexis' atVantage product is matched up with the client data to give a quick indicator of if the legal work is growing or shrinking, and how much the firm is getting of that work.
Once you have a list (and everyone knows how much Partners love lists!), you can export the lists to Interaction to begin the marketing push. The basic idea behind the self service part is for the analyst to have access to the data, and allows the analyst to set up reports in a number of ways (charts, pivot tables, etc.) This should help identify and rate clients on a number of predetermined categories and make the final results more consistent as you look at a cross section of clients.
The Cross selling analysis tool breaks down exactly how cross sold the clients really are (practice groups, partner relationships, etc.) There are multiple ways to split this data in order to determine where the strengths and weaknesses are for specific clients.
The Trend Analysis portion charts out where the clients fall over set period of time. Charts can be graphed in different ways. By comparing the work performed for the client over a number of months or years, the idea is to get an early warning on when the firm is starting to lose work for specific clients. It also works the opposite way in helping identify trends for the client that may serve as opportunities for the firm to gain work in different practice groups, or differnt offices.
Profiles attempt to sum up the lifetime value of the individual clients. Clients that are high performers, clients that are at risk, and those that fall somewhere in between. The profiles portion is set up to help the firm work toward building better relationships with the client, or even determine that the firm needs to reduce the time the spend attempting to attract new work from clients that have weak ties to the firm.
InterAction, Redwood and atVantage… Do you have to have all of them?
Obviously, not everyone has all three pieces of the LNCA pie. Whitmore explained that LNCA comes with Redwood. So, if you don't have Redwood already, then it will be a part of this product. In addition to bringing in Redwood, LNCA will bring in a limited portion of atVantage if your firm does not subscribe. The limited version is not as broad as the full version, so there will be some reduction in overall capability of LNCA, but there should be enough to point you in the right direction on legal work for those clients. If you do not have InterAction, however, then that piece will not be brought in with LNCA. There is also no plans to integrate LNCA with any other type of CRM resources.
LNCA is a web-based product set up on the Microsoft Silverlight platform. It is a subscription based product that is normally set up on a three-year license agreement based on number of users within the firm. There is no installation fee, so the monthly price will include the set up of the product.
I asked if this resource is also designed to help identify potential billing rates or alternative fee arrangement opportunities, and was told that LNCA isn't designed to do that, and that type of information was something that the Redwood Planner platform (separate service) was set up to do. Also, the data generated by LNCA is usually generic so that it won't expose sensitive billing or realization information on individual rates between partners.
The product goes out on April 1st. Hopefully, I've relayed enough information from my preview to let you know whether it fits the business development needs of your firm. I'm sure you'll hear from your Lexis sales rep before too long!