“Corporate counsel drop 7 firms from their law firm rosters,” emphasizes BTI Consulting Group in its just released report on Corporate Counsel Management Strategies. And the news gets more challenging: “Overall legal budgets remain relatively flat and any increases seen are going straight to internal resources.”
Add to client pressure on billing rates, which may have been frozen or even dropping. At the same time, realization rates have continued to drop, and now hover just below 83%, meaning law firms are doing the same work for less money. All the while, many of these same clients are in businesses that are actually growing.
The corporate counsel mandate in the report is clear: ‘Deliver More Value’ with over 41% of respondents to the BTI survey, communicating delivering value as their top expectation of their outside counsel. In fact, in this year’s report, that expectation outpaced ‘controlling legal costs’ at a rate of approximately 2:1.
If delivering more value is critical to competing for business – even against your own client – then the starting point is to build and manage relationships that will deliver value.
3 Tips for Building Relationships to Deliver Value
Managing client relationships is the key to your profitability, the key to sustaining your law firm, and ultimately for growing business with your clients. Interestingly, for some time there has been a misalignment, however, between firm perception of value and the client’s. In LexisNexis’ 2012 sponsored ALM survey on law firm strategy, these alarming responses captured our attention:
- Value of service. 44% of firms –cited ‘Value of Service’ as their firm’s competitive advantage – this was the top response to the question.
- Law firm client satisfaction. Meanwhile nearly half of the firms did NOT have a plan in place to build track and measure client satisfaction.
- Knowing the best clients. And perhaps the most startling revelation of all, less than a quarter of firm leaders surveyed (22%, in fact) claimed to be extremely knowledgeable on the top 20 clients – ‘including their business models, earnings, financial performance, P&L, growth strategy, executive leadership, and board members.’
With demand for value top of mind, we offer these tips:
1. Adequately Engage Your Top Clients
In many firms, it is common for partners to ‘protect’ their clients from other attorneys in the firm. While this approach may be prevalent, LexisNexis research has found that the result of ‘protecting clients’ is counter-intuitive: clients who are not engaged across the firm are actually more likely to leave. When only one partner is involved in a client’s business, the rate of attrition is almost 40%. But when 5 or more partners are involved in the business, the rate drops to 5%. And similarly, the rate of attrition drops dramatically when the number of practice areas of law is 4 or higher.
One way to help create value is to share the client knowledge and accountability across a team.
2. Make Relationship Focus an Attorney Priority
Clearly, business development activities from training and coaching to client planning are common focuses. Another way to help create value is to help attorneys focus on building relationships. The challenge to creating success for many attorneys is to help them focus. Though your firm’s CRM may contain tens of thousands or even hundreds of thousands of contacts, there are a finite group of individuals that each partner or attorney needs to know really well. The people that will make or break your year.
Our advice is to start small . Narrow your attorney’s focus from 100’s of contacts per attorney to a dozen or even two dozen really critical contacts – including top clients, top prospects, and key ‘friendlies’ – such as Alumni, key referral sources, or friends from law school. Darryl Cross refers to this as the ‘Rule of 15.’
3. Capture Relationship Insight – It’s your Firm’s Competitive Differentiator
Finally, everything about your client or your prospect – from meetings, to action items, to referral activities, to marketing activities – needs to be tracked in a relationship-centric CRM solution. The information you collect is like gold: the insights gathered over time are what makes your relationship with your client, solid and unique. Plus, the information your attorneys capture helps you assess if your efforts to deliver value are being realized by the most important person of all: your client.
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We welcome your thoughts and comments – please feel free to chime in!
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