CRM Legal Survey 2006

Client-relationship management (CRM) continues to confound, on one hand seeming to promise to improve a firm’s client service, while on the other confusing many with its seemingly endless management remit. In an attempt to gain some clarity, Managing Partner conducted an in-depth survey asking firms about their CRM goals and objectives, and the challenges of CRM so far.

Client-relationship management (CRM) has been a subject of debate for some time, with most firms having at least considered the options, if not implemented a programme of activities (including investing in CRM technology) to improve their firm-wide relationships with clients.

For some, the concept of CRM will never be more than the latest ‘management fad’ preoccupying a firm’s time that would be better served focusing on core strengths and services. Indeed, Simon Slater’s opinion column on page eight of this issue, reflects some of the considerable concerns about CRM programmes. As he rightly argues, for instance, firms like Slaughter and May, and Wachtell, Lipton, Rosen & Katz continue to impress with both their profits and client lists, but neither would ascribe their successes to a CRM programme as such. Rather, they have, as Slater puts it: “An uncompromising approach to people selection, a sharply targeted approach to market, and an uncanny ability to turn away clients.”

The lessons from such firms have huge value, particularly in remembering the basic principles of good business. But there are few firms that are in the same profit bracket as Slaughters or Wachtells, where success becomes a virtuous circle, as profit and clients attracts the best recruits, which reinforces the service, which supports the reputation, which brings in the clients etc.

Among mid-tier firms in recent years, the competition has been fierce, with many firms providing good service but few finding it easy to differentiate themselves from their competitors. Many of these firms have responded to the difficult market, by shifting from a traditionally internal to an external client and market-oriented focus. But for many this requires an internal change-management process that requires a fundamental shift in fee-earner behaviour; a review of existing clients and the firm’s target market; and a re-think of current working processes and supporting technologies. If a firm-wide CRM strategy can support a firm through such change, then surely it is worthy of consideration? But is CRM a management theory that has real substance and a clear programme of activities to support change, or does confusion still reign, about what it really means and how it should be employed in a firm to improve business? With this in mind, Managing Partner undertook a detailed survey of its readership, asking firms about their CRM initiatives to date, their understanding of CRM obstacles and benefits, and how far CRM is really proving of value to the modern legal business.

Respondent overview

Of the 72 law firms that responded to the survey, the majority were smaller to mid-tier firms with 57 per cent having 0-25 partners, 18 per cent, 26-50 partners and 17 per cent, 51-100 partners. This split largely reflects the readership of Managing Partner; which tends to be mid-tier firms that have also faced some stiff competition in recent years. The figures also suggest that CRM interests even small firms, many of which are at least considering some degree of CRM initiative.

Geographically, respondents largely came from the UK (64 per cent) or Continental Europe (27 per cent), which again reflects the breakdown of Managing Partner readers. The figures may also suggest, however, a more advanced view or interest in CRM among UK firms, compared to firms in Continental Europe.

In terms of adoption and implementation of CRM, 14 per cent of respondents have no CRM strategy at this time, although the remaining majority have some level of strategy in place. In addition, CRM software appears to be quite far down the list of CRM priorities: 70 per cent have no CRM software (although 26 per cent of respondents are planning to implement CRM software in the future, a significant 44 per cent have no current plans to invest in or implement software).

CRM management and strategy

A large number of CRM strategies among respondent firms are headed up by the firm’s managing partner or chief executive (39 per cent). This could suggest a view that CRM needs to be driven from the top, but more likely reflects the smaller size of many of the respondent firms. A significant minority of respondent firms have a specialised CRM director/manager (11 per cent), suggesting some quite advanced CRM programmes, and, of the rest, CRM is managed by the marketing director/manager (38 per cent) or business development director/manager (11 per cent). This split is also reflected in the respondent job titles, with a managing partner/partner or marketing manager/director proving the most likely to respond (34 per cent and 37 per cent respectively).

The majority of survey respondents described their CRM strategy as improving internal knowledge sharing, thereby enabling cross-selling and a holistic service to clients (26 per cent). Another 17 per cent said that the goal of CRM is to target a selective number of key clients with whom to improve the firm’s relationships. Eighteen per cent pointed to CRM as a way of generating business-development opportunities, which perhaps reflects the number of business development and marketing managers responding to the survey. Ten per cent also pointed to fee-earner client-relationship training as an important goal of their
CRM strategies.

The interesting factor in the respondents’ views of their CRM strategies was the real spread of opinion, with few indicators of any consensus as to the core goal of CRM. There appeared to be a general agreement that CRM is not a technology-driven discipline (see ‘software’ section below), but every other view as to the objectives of CRM seemed to be fairly well covered by respondents. Of the list of CRM objectives we suggested (see figure two), no doubt some firms could have added five or six more. This perhaps reflects the growing complexity/sophistication of CRM programmes. But it could also suggest that CRM has escaped any clear definitions and that CRM is more of an amorphous concept, different to each firm, than the term might suggest.

More dangerously, divergent opinions on the goals of CRM might also suggest some confusion as to the purpose or reason for CRM. One survey question asked respondents to consider the statement ‘We are stalled from the start, as nobody seems to agree on what a CRM strategy should involve’. Respondents were then asked to rate their level of agreement with the statement on a scale of one to five (one being ‘strongly agree’). While only six per cent of respondents strongly agreed with the statement, the remainder were fairly evenly distributed with a total of 28 per cent agreeing with the statement, 50 per cent disagreeing and the rest choosing the middle ground. For such a fundamental question, one might expect far more clarity. Instead, these figures hint at a considerable number of firms struggling to get their CRM strategies off the ground.

CRM software

While only four per cent of respondent firms have a CRM strategy driven by their IT director, it is in the area of CRM and technology where the most clarity appears.

For instance, a clear 64 per cent of respondents do not think CRM is a technology-driven initiative. This view is supported by the small number of respondents that mentioned CRM software as an essential element of their CRM strategy. (A key element of CRM for six per cent of respondents is to use software to improve client-contact management and marketing automation; three per cent also pointed to the importance of software in their CRM initiatives in integrating client and matter information from existing systems.)

However, a significant 41 per cent of respondents agreed with the statement that the right CRM software is essential to support CRM activities (with only 26 per cent disagreeing). In addition, of the 29 per cent of respondents that have invested in CRM software, 45 per cent are satisfied (or very satisfied) with the investment, with a much lesser 17 per cent stating that they are dissatisfied. The majority of respondents (52 per cent) felt that it had taken between six and 12 months to see the benefits of their CRM system.

Respondents also agreed on a number of benefits of CRM software. The majority (67 per cent) considered it to be most useful in improving firm-wide client contact and matter information, resulting in less duplication of efforts or missed client opportunities. Other chief benefits cited were linking up client information from disparate systems (47 per cent); aiding marketing initiatives (50 per cent); helping fee earners manage working days and client relationships (39 per cent); deriving cross-selling opportunities (53 per cent); and helping in new business acquisition (30 per cent).

Respondents were fairly ambivalent about the problems with CRM software, with the only clear indicator being that firms agree that getting fee earners to use the system can be difficult (45 per cent). This also fits in with CRM challenges generally, where 74 per cent of respondents agreed that changing fee-earner behaviour was the single biggest difficulty in effectively implementing a CRM strategy.

Interestingly, the survey also suggests some movement on law firms’ decision making over CRM system providers. Where InterFace once monopolised the legal CRM system space, new entrants to the market and increased competition have had their impact. For example, while 20 per cent of respondents continue to use InterAction, a significant 23 per cent of respondents have chosen Microsoft CRM, while e1 Metis/Sales Logix (11 per cent) and Apex Elite (nine per cent) have each stolen a comfortable share of the market.

Examples to date

In many surveys, firms are reluctant to name-drop other firms no matter what the context. But when respondents were asked to name three law firms that have particularly impressed in terms of their CRM systems, 48 per cent of respondents were able to list at least two firms. This suggests that CRM, whether loved or loathed, has made some impact on market perception and on those firms that have implemented systems wisely. Firms referenced the most by respondents for praise were Wragge & Co (with six mentions); Berwin Leighton Paisner, Eversheds and DLA (all named four times); and Freshfields, Eversheds and Pinsent Masons (all named three times). That these are all UK firms may reflect that CRM systems are more widely deployed in the UK than in Europe, although the larger number of UK respondents also has to be factored into the results.

Conclusions

CRM has been the subject of much debate and disagreement in recent years, but interest in its potential does not seem to have dissipated. This is hardly surprising considering the competitive marketplace. An effective CRM programme that promises to help differentiate a law firm, by improving client service across the firm, is unlikely to be dismissed without proper attention.

What the survey does reveal, however, is the differences in views as to what a CRM strategy might involve. On the software side, firms are clear: CRM is not a technology-driven discipline, but it is important for supporting CRM initiatives. There had initially been some scepticism among firms about CRM software, especially the first-generation of products. But as more advanced CRM software has hit the market, it appears that firms are increasingly recognising the benefits. And that as many as 26 per cent of our survey respondents are planning to invest in the software in future is indication of the future potential for CRM software in law firms.

Where there is less clarity is in the CRM initiatives that the technology is meant to support. The survey respondents all seem to have ideas about CRM goals and objectives that include a variety of activities from training fee earners to generating business-development opportunities. But there appears to be little consensus about core activities that make up an effective ‘CRM programme’. And that as many as 50 per cent of respondents are either unsure about or support the statement that ‘we are stalled from the start because nobody in the firm agrees on what a CRM strategy should involve’ is indication enough that many firms still face some confusion when it comes to CRM.

Perhaps the struggle is because the term ‘CRM’ suggests a structured programme where it is possible to implement defined step-by-step activities that will improve a firm’s client relationships. But every firm is different. What one firm needs to do to improve client service and profitability may be entirely different to another firm. And if a firm tries to initiate and implement a CRM programme based on some predefined rules of what CRM is meant to involve, it is more likely to result in confusion, disagreement and failure.

Rather a firm’s success will always be about its ability to understand its own strengths and target market, and to recruit the right people at the right time to fulfill the needs and expectations of clients. If a firm gets this right, it can call it good CRM or just good business. The terminology, however, is the last thing that should matter.