|Image [cc] Elvin|
Let me start off this post by reminding everyone that I am not in Marketing, but I do consider myself aligned with the overall marketing strategies within law firms. Because of this alignment, I attend a number of marketing related conferences and workshops so that I can stay on top of the current issues and trends, and build relationships with the key players in the industry. Over the past few meetings that I’ve attended, there are some common themes that I am hearing, and am finding a bit disturbing. In a very oversimplified (and amplified) fashion, here’s what I’ve been hearing:
- Marketers: We’ve been telling our attorneys this for the past seven… eight… ten years, and they simply don’t listen. But, here’s what you should keep telling them, because they eventually will have to listen to you.
- Consultants: By simply getting your attorneys to change the way they conduct their day-to-day activities through (insert buzzword for efficiency, communications, client interaction, etc.), they will become more productive, profitable, and clients will sing their praises.
- Clients: OMG, I hate my outside counsel because they never listen to me; they never talk to me (other than sending me a bill); they don’t understand my work/industry/pressures. We hate the billable hour and want something that’s better/predictable/less-costly. We want attorneys to ask us how we think they are doing and get our feedback throughout the matter.
- Law Firm Partners: Not present. (probably back in the office, billing their time.)
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The keynote speaker for the Marketing Partner Forum, Joe Pine, focused his discussion on the idea behind advancing the service economy into an experience economy. He began with the idea of the gumball machine and how adding the experience of seeing the gumball roll down a spiral ramp before exiting the machine has revolutionized the gumball machine industry. He notes that the experience does nothing to improve the taste of the gum, or does it improve anything about the actual gumball itself. In fact, if you think about it, the spiral ramp actually decreases the efficiency of the gumball machine by taking a longer time to dispense the gumball to the consumer. The product stays the same, but the service has advanced by improving the experience of the consumer. Having seen this in action with my four children, I can attest to the fact that the experience drives the customer to come to me and ask for any quarters I have in my pockets.
Pine went on to discuss a number of other services that are improved through engagement of the customer in ways that changes the interaction between the service and the customer. Hospitals that have focused on personalizing, humanizing, and demystifying the hospital stay have created improvements in healing and overall health care experience. Architectural firms that personalize the experience of their customers and cause an engagement between the firm and the customer’s project that makes the customer feel as though they have the complete focus of the firm on their projects. Restaurants that create an environment where the customers are actually a part of the overall presentation, and not simply a bystander there to eat a meal.
There was one example that Pine gave that he says failed in his opinion to engage the customer, although it is known for creating an interesting and interactive environment. The Rain Forest Cafe is a chain that creates an atmosphere of interesting automated animal creatures, but that alone is simply not enough to create an experience (at least not a positive one.) The scene is set, but there is no one directing the experience. I remember my first time in one of these, and was told that there would be a “show” every twenty minutes. We watched, we waited, the animals made a few sounds, moved a bit, but we never actually saw a show. When we left (after about an hour), we asked about the show, and the waitress said that we’d seen the show three times. We left disappointed, and I’ve never gone back.
This type of “show without direction” reminded me of what law firms have created in their receptionist areas of their offices. Lots of interesting items that line the room with spectacular views, and even a few items lying around waiting to be picked up and read. But the experience is usually this:
- Exit the elevator; look around for the receptionist area
- Greeted by the receptionist; asked for name, who you are here to see
- Receptionist calls the attorney and announces you are here
- Receptionist invites you to sit down in one of the comfy chairs
- You wait until the attorney comes to get you (usually after they’ve finished up editing a document or finishing up an email)
- You are then walked back to the meeting room or attorneys office
- When you finish, you are walked back to the receptionist’s area
- Parking validated
- Enter the elevator and leave
There is ample opportunity for engagement with the client, yet the time spent before and after the meeting results in very little engagement actually performed.
The main problem that popped into my head while considering this process is that law firms have created a highly efficient receptionist that can handle high volumes of telephone calls, visitors, and deliveries that enter and exit the law firm. It is all very utilitarian. However, the trade-off for being so efficient is that there is no individual experience. Views may be great, but views with a story behind them are twice as great. We lack that engagement… that storytelling of why something is laid out on the table enabling the customer to see more than the words and pictures before them. No one is making the customer feel as if he or she is important to the firm. In fact, it is quite the opposite. Vendors coming in to sell products to the firm are given the same treatment as clients bringing in thousands or millions of dollars of business to the firm.
I began thinking of how we could change this bland, one-size-fits-all, experience and make it more engaging to the client, and more productive for the law firm. Ideas of a client concierge began forming in my mind. Imagine having someone in your Marketing, Business Development, or Client Teams departments greeting clients (especially key clients) when they walk off the elevator. Knowing exactly who they are, who they are there to see, and being ready to engage the person or persons in conversation. One of the points that Joe Pine made in his talk was that the experience should be a presentation, staged, if you will, and no “back stage” preparations should be exposed to the customer. Therefore, the attorney should be ready to meet with the client and all other business (telephone calls, document editing, emails, etc.) should be put away. If there are timing issues between the attorney’s availability and the client’s time to meet, the concierge should be ready to expand their engagement to fill that time. However, the client’s time is just as valuable as the attorneys, so this should only be a brief extension of the concierge’s performance.
The idea behind the client concierge is actually two-fold. First and foremost, they are there to engage the client and create an experience that lets the client know that they are important to the firm, and that at this moment in time, our resources are focused upon them. In addition to the engagement, there may be valuable information that the client discusses with the concierge. There may be exciting personal news the client talks about, or new business dealings brought up in the conversation. The concierge should relay these points to the attorney or departments responsible for this particular client. This isn’t about prying, it is about creating a better relationship, and improving the client’s overall experience with the firm.
I brought my idea up a couple of times, and was a bit surprised by one answer I received. “Clients like being left alone in the reception area. It gives them time to check and answer their emails.” I really hope that is not the case. I would think that clients do not like waiting (especially if they think the clock is running on the attorney’s billable time.) Instead of making them wait, engage them. Instead of letting them come up with ways to pass the time, take advantage of the time they are giving you by appearing at your office. Personal contact between clients and the law firms that represent them are fleeting. Firms should find ways of leveraging that time and engaging the clients in ways that produce a more positive interaction, and result in a better experience for the client.
Dan: You may not know this Jane, but I’ve been moving into more of a Pricing role at my firm.
Jane: I’m impressed. And a little frightened for the well being of your firm.
Dan: Every firm needs to have at least one person focused on determining the right price and fee structure for every matter.
Jane: I completely agree.
Dan: … But…?
Jane: No but. For once I think you’re right, Dan.
Dan: …really? I’m may need to reconsider my position.
Jane: No, I think this is may be one issue where the reality of the situation is so clear that we can’t help but agree.
Dan: Wow! That’s kind of strange. I guess it had to happen some time. And this is so obvious. Someone has to calculate revenue and expenses to determine profitability and most attorneys aren’t capable or interested in economics. Without someone in that role, how would you ever determine the lowest possible bid to get more work?
Jane: I’m sorry?
Dan: I mean, with so many clients issuing RFPs for new matters now, someone has to have an idea of how low they can go? Otherwise, attorneys will just make up a number. And you don’t want them to do th…
Jane: That’s how you’re doing pricing?
Dan: That IS pricing.
Jane: That’s dumb. Pricing isn’t about determining the lowest price you can possibly charge. That’s a shortcut to bankruptcy. Pricing is about building a relationship with the client and understanding their needs. Often clients aren’t looking for the lowest price, they’re looking for a firm that is flexible enough to build fee arrangements around their needs.
Dan: I don’t follow. If you bid the lowest, then you get more work. More work is more revenue. Which means everyone makes more money!
Jane: And they’re paying you for this brilliant financial insight? Pricing Legal services is not like selling used cars. You can’t just put out an ad that says, “Will not be under bid! Lowest Price Lawyers in Town!”
Dan: How did you…? Do you have….? That ad doesn’t go out until next week.
Jane: You’re an idiot and apparently you have one in marketing too. Pricing is an offensive strategic business development tool. The way you do it is entirely defensive and reactionary. Suppose I was a client and I came to you with an RFP, what is your first move?
Dan: Offer 10 percent off our standard rates.
Jane: And if the client balks?
Dan: 20 percent. We don’t tell them, but 35 is absolutely our lowest offer. Although, for big clients, we might go to 40.
Jane: And you’re doing this with all of your clients?
Dan: No, of course not. Just the ones we think might be considering hiring other firms. The rest we just bill at our standard hourly rates.
Jane: What’s the written equivalent of a face palm? Has it occurred to you to be proactive with your pricing? Take the time to get to know and understand the client. Ask them about their concerns. Where are they getting pressure to reduce legal spending? What headaches are their outside counsel causing them? Take that information and offer the client an alternative fee structure tailored to meet THEIR needs BEFORE they even ask you for a discount! Pricing legal matters is not strictly about getting more business, it’s about making clients happier, which WILL ultimately get you more business! You are an incompetent imbecile, a danger to your firm, and should be fired immediately! Why are you smiling?
Dan: We’re disagreeing again.
Jane: Feel better?
Jane: Me too.
|Image [cc] mandiberg|
I usually read articles written by vendors with a grain of salt, but I think that Thomson Reuter’s Dave Whiteside’s article, “Stop Doing the Legal Limbo” has some good food for thought in it, and it plays into what we discuss here on this blog when it comes to Librarians playing a bigger role in Business Development.
My suggestion is to read the article first and then come back to this part that I think helps explain it in the Librarian/Marketing/KM/BizDev environment.
… okay… I assume you’ve read it.
I’ll reword some key pieces of what Dave Whiteside wrote just a little bit to fit the concept of a law firm’s ability to research, market and sell it services:
- How do we help attorneys get to know the potential client before they meet?
- Are we preparing the attorney to better understand the potential client’s business?
- What do we do to help the attorney understand the client’s industry and competitors?
- How do we get current awareness information to the attorneys to help them keep up with upcoming issues and trends that impact the potential client’s business?
- Do we have an comprehensive method of clearly explaining the relevant experiences that the attorney and/or the firm has that will guide the potential client who faces the same problem?
- What type of training do we give to our attorneys to help them explain how our services don’t just help with short term needs, but we are also there to advise in ways that help General Counsel better direct their company in avoiding future legal issues?
Whiteside hands out a laundry list of Thomson Reuters products that can help, but I wanted to be more generic and think of the process instead of the specific products and see if there are things we already have in place that we could leverage to get to the goals listed above:
- What do we use to organize our collective experiences and help attorneys explain how those previous experiences are specifically why the client should hire us?
- How do we determine where we stand in these issues compared to our peers?
- Where do we find our individual relationships between members of the firm and the potential client. How do we present this in an actionable way to the attorney?
- What type of controls do we have in place that helps manage matters as well as helps quickly identify inefficient or unprofitable work?
I’ll add one more to this list that I think is very important:
- What processes do we have in place that reviews matters once they are over and helps better prepare other attorneys in the firm for the next time?
There are a number of opportunities here for Librarians, Marketing, KM, Biz Dev, Client Development, and many others on the Administrative side of the law firm. I bet that almost all of you have some, but not all, of resources already in place at your firms. The key with something like this is that there has to be a process started of getting the right people, information, resources, and tools aligned so that it becomes a standard at your firm, and not just a one-off project that only comes into play when an attorney comes in with an “emergency” request because they are meeting with the potential client in 30 minutes.
|Image [cc] Magic Trax|
[Recently I was asked by Bridgeway to write a section for an AFA Handbook for Clients. My section is meant to give clients a look in to how law firms are approaching AFAs and give clients some tips on how they might better partner with their outside counsel on this subject. In my usual fashion, it’s too long, so the handbook will have a shortened version. Since I spent the time writing it, I thought I would share the full version here. Enjoy.]
The Law Firm Side of AFAs
Many clients are exploring Alternative Fee Arrangements (AFAs) as a means for controlling their legal spend. AFAs do present many opportunities for attaining this goal. However, clients will find that their best chance of meeting this goal is in partnership with their outside counsel. This approach makes the goal a shared one and allows the law firm to focus the types of AFAs and its service directly towards that goal.
In pursuing healthy fee partnerships with their outside counsel, clients will benefit from a deeper understanding of how law firms are approaching AFAs. What follows is a brief description of the internal workings of how a firm might be responding to requests for AFAs. As part of this description, also provided are ideas for how each step in the process can be improved with better levels of trust and communication
Currently most law firm AFAs are generated at client requests. A partner receives a communication from a client about a potential matter. In addition to the legal issues, the client will request a quote on rates along with a note about being open to alternative fees. Sometimes the request is more direct, suggesting that the law firm “be creative in proposing some sort of AFA.”
This is a key point in time when a partnership between client and outside counsel should be established. Law firms can be creative and propose all sorts of fee options. However, for a fee option to be successful it needs to be crafted with a client’s specific fee concerns in mind. As a client, your fee drivers will change from matter to matter, for each type of legal practice need, and maybe even over time. Sometimes risk sharing will be the right approach. Other times monthly predictability will be best suited. The main point here is that to get the best suited fee type, you should meet with your law firms and have an open conversation about those needs. Without that information, your outside counsel is making a wild guess as to how best to help you meet your fee goals.
Once a firm has an understanding of your fee needs, they can prepare a specific AFA proposal, including fee amounts as appropriate. Using best practices, the law firm should be modeling this fee arrangement to know whether it is profitable or not. I suggest you will want these to be profitable. Doing business with a low-cost provider who is not profitable is unsustainable. This is not to say that firms are not able to lower your fees while maintain profitability. In fact it is quite the opposite. Firms must find ways to meet this challenge and many are devoting expanded resources to this goal.
With a specific proposal in hand, another best practice is to meet in-person to present the proposal and discuss it together. Too many intentions can be lost with just the written word. As noted above, the best approach is one where you develop a common goal. A conversation about the proposal leads to refinements and improvements that stay focused on the goal while generating a win-win option.
Providing the Service
Many clients have “efficiency” as a stated goal. However, much like the AFA request, efficiency can take many forms. This presents another opportunity to forge a healthy partnership with your outside counsel. With a fee arrangement in place, or perhaps as part of establishing that arrangement, you should consider engaging in a dialog about efficiency with your outside counsel. Efficiency generally means: a) doing less, b) doing more with less time, or c) doing the same, but with lower cost resources. Your dialog can explore each of these aspects, helping focus on which of these make the most sense for your situation. For instance, a firm could expand its use of staff lawyers (a.k.a. non-partner track lawyers) to move work to lower cost resources, but only if that approach aligns with your needs and goals.
Both the efficiency and fee dialogs need to be on-going conversations. In the past, a single conversation at the onset of a matter was too common. In this new environment, with these new dimensions, conversations need to be before, during and after. Too many things can change during the course of an engagement. What neither party wants is a big surprise when a course change is made, but not calculated in to the fee deal or the delivery model. For instance, a decision to join a third party to a litigation case, results in a substantive change. Regular conversations (e.g. monthly or quarterly) will catch these modifications and keep both the fee and the delivery model clearly aligned with the goal.
Law firms are committing a growing level of resources to concepts like Legal Project Management (LPM). These LPM efforts are focused on both efficiency and quality. Smart firms know that in order to help clients meet their changing goals, they need to change their approaches. An excellent question to add to your outside counsel conversations is: “What are your efforts related to efficiency, including process improvement and the use of technology?”
Concluding a Matter
Perhaps the single most important conversation about the fee and service needs to occur at the end of a matter, or in the case of on-going work, at the end of each year. These meetings should be open, honest assessments about how things went. The lessons learned from these conversations will lead to better defined goals for the next matter and continued success towards goals of cost savings and efficiency gains.
Law firms really want to help clients meet their legal needs in a cost effective manner. Most firms are trying very hard to adapt to changing demands and realign their business models to continue to meet client needs. The theme from this section should hopefully highlight that whatever steps are taken by both client and outside counsel, they will be best taken together. As I like to say, the keys to all successful fee arrangements are trust and communication.
As law firms look for opportunities to grow revenue, there really is only once place to look: Down. By down I mean further down the food-chain of legal services. Most lawyers and firms like to hold themselves out as a unique brand: a brand worthy of only the highest levels of legal work.
Even in the old days, that probably wasn’t true. It was just the case that big-name clients gave all of their work to big-name firms. So firms were actually getting a broader spectrum of work, across the value chain.
Not anymore. Clients, whether explicit or by accident, are redefining their legal market spend. First, they are shrinking that overall number, but more importantly they are classifying their work in to the traditional three tiers. Tier One – is the high-end work all firms think they are doing. Tier Two is the mid-level, day-to-day kinds of work that needs good lawyers but is not pushing the envelope of legal thinking. Tier Three is the ‘nuisance’ work, that can’t be ignored, doesn’t hold much value for the client, but must be addressed. And clients are sending Tier Two and Three work to lower priced providers.
So with a shrinking pie, and a greatly diminished Tier One layer, where can firms grow their revenue? Whatever the answer is, it is not Tier One. The competition for Tier One work is heavy and getting more intense. Any firm that wants to expand in this layer will need to do so at another firm’s expense. And displacing incumbent providers in a highly competitive market is an extreme challenge. This leaves Tier Two and Three as the only viable options. But this fact challenges a core reputation factor for lawyers, as anything off of Tier One is presumed to be commodity work. And who wants to do commodity work?
Whenever I hear a lawyer use that term, I am forced to bite my tongue. Because as an economist, I have a more precise understanding of that term.
Commodity (from About Economics):
- Usually produced and/or sold by many different companies
- Is uniform in quality between companies that produce/sell it. You cannot tell the difference between one firm’s product and another.
In English, this means if a client can go to another firm or lawyer and obtain the same level of service, then it is a commodity. I would argue 99% of services any law firm provides meet this definition. I realize many lawyers might try to argue the “quality” angle about their services, however, from a client’s perspective, that kind of quality is a given and not a differentiator.
So the real issue for lawyers when it comes to this subject is not ‘Commodity’ but is instead ‘Reputation.’
Smart lawyers will set this aspect of their ego aside and focus instead on a better question: How can I help my client?
|Image [cc] Cory Holms|
A couple of weeks ago, I sat in on a webinar with a number of Alternative Fee Arrangement folks, including consultants and General Counsels from a few major companies. The talk was the typical discussion of change in the industry, need to adjust the billing structure, AFAs… yada yada yada… the legal industry is saved from itself. However, there was one little nugget of information that came out of the discussion that made me think about how we in the law firms communicate with our clients, and how that communication frustrates clients because we are reactive in our approach to our clients’ needs, rather than proactive. Although I’m paraphrasing, here is the gist of what was said on the webinar by the General Counsel:
One of the things that really frustrates me when dealing with my outside counsel is when we get sued and over the next few days I start receiving a steady stream of emails from those outside firms, as well as other firms that aspire to do work for us, saying:
“Hey, did you know you’ve been sued in ‘X’ Court by ‘Y’ plaintiff?? Please contact us to help you with this case.”
First of all, HELL YEAH I KNOW WE’VE BEEN SUED!! This type of communications of after-the-fact issues doesn’t help me as a General Counsel.
What I really want to see one day in my in-box is this from my outside counsel is:
“Did you know that your direct competitor, ‘X’ Company, was sued in ‘Y’ court for the following issues, because they were exposed the the following risk factors, and if you think you and your company may be exposed to those same factors, let’s sit down and talk about what we can do to mitigate those risks before you are sued for the same issues.”
That’s what I want to see!
It’s similar to what I heard Richard Susskind say at the AALL Conference this week about the fact that law firms need to be acting as guardrails at the top of a cliff, and not as ambulances at the bottom of that cliff.
As a librarian, and as someone that thinks about how we can get the right information to the right people, at the right time, I started to think about ways that we could help our attorneys get that type of information and can become a risk guardrail for their clients. I thought of all of the Business Development and Competitive Intelligence resources and tactics that we use, and in a way, we are set up to do this very type of proactive communications, and we can be there to help the attorneys spot issues that affect specific clients, their competitors and their industry. However, there is one area that I think we could actually use help with when compiling this information, and I’ve been bouncing an idea around in my head (as well as bugging anyone at the AALL Conference in Boston who would listen to me.) The idea is that what we really need on staff is a reporter.
There are a couple of reasons why I think a reporter would be valuable. First of all, reporters are great at fact gathering, but they are really good at analyzing those facts and coming out with a clear story at the other end. They are also not afraid to pick up the phone and call people to verify issues and obtain additional details that aren’t laid out in the fact set. The second reason that I thought about bringing reporters in on staff is the fact that they are suffering, as a profession, probably on a greater scale than any other information professional, and there are some great experienced reporters out there that are needing work.
Here’s my rough idea… feel free to poke holes in it, or add your own ideas if you think I’ve missed a few other opportunities to bring into the fold of a law firm.
I’d like to put a reporter on a project that covers four or five practice groups and have them create a weekly update that covers the important issues that face the clients of those groups. The practice groups would need to narrow the focus of which clients, industries and issues they would like to follow, and they would need to be willing to work with that reporter to make sure he or she stays on top of any new issues that pop up from time to time. The Library staff could also work with the reporter to make sure news alerts, case filings, and other timely information is fed to the reporter throughout the week. At the end of the week, an article (or articles) are written and edited, and then sent on to the practice group. This type of proactive, narrowly focused, reporting can help alert the attorneys on issues that affect their clients, and help them craft a few of those “guardrail at the top of the cliff” emails that the General Counsel said he would like to see.
In a way, this would be like a Law360, or industry specific news type of articles, but crafted specifically for the practice group and its clients. In my discussions with a number of vendors this week, we tried to think of ways that we could purchase this type of narrowly tailored information from vendors, but really couldn’t think of ways that they could serve the large pool of law firms and attorneys, and scale that down in a way that gives them actionable information specifically focused on their practice group, their clients, and their clients’ individual risk exposures. In order to have that, firms need that expertise on staff… and that type of expertise is exactly what a reporter could bring into a firm to help them build proactive guardrails for their clients.
I recently stumbled upon an alternative pricing scheme that I instinctively felt was wrong. The details are irrelevant, but I was struck by how vastly different the attorney’s point of view was from my own. So I tried to expand my viewpoint and to see the problem from all sides. I came up with three questions that I needed to answer and I sent them to the smartest, most knowledgeable people I know. Their answers below:
If not “collective knowledge and expertise”, what is the commodity supplied by firms and purchased by clients? How would you answer the questions?
I’ve had a rash of positive customer service experiences over the past couple of months and feel compelled to share them with you. We talk a lot on this blog about making your decisions (whether about a library’s collection, a marketing project, or fee pricing) in a client facing manner. My three experiences did exactly that, and each had a different aspect of what it means to be client facing and to look at the situation the client is in and make the best suggestions for the client. It wasn’t just about giving clients good customer service – that should be the floor of your customer service operation, not the ceiling – but, rather going the extra step to:
- be better than the customer expects you to be;
- listen to what the customer is actually saying and counsel them in the right direction, and;
- know when you are not the best solution, but can point the customer to someone that is, even if that someone is a competitor.