Feature

posted 11 Jun 2004 in Volume 7 Issue 2

Genuine client focus: Managing the sophisticated client’s expectations

Many a firm will be horrified to hear that clients are dissatisfied with the service they are receiving, especially if it has gone out of its way to meet every special request made by the client throughout the relationship. However, Patrick McKenna, a partner at Edge International, argues that firms are still getting it wrong. They should, in fact, be looking to the bigger picture, where value is the watchword for meeting the highest level of client expectation.

It is reported that a major law firm has been dropped from the approved list of a Fortune 500 company due to a lack of satisfaction with the relationship. For many law firms this is not an isolated instance. We regularly work with firms who share their tales of woe – often only after discovering they are no longer a client’s preferred choice.

Notwithstanding expressions of disbelief from some lawyers, changing law firms is seldom something that corporate counsel undertakes lightly. It is time consuming, often creates disagreement and even dissent within the legal department, and takes senior people away from their main focus of running the legal function and the business. But, obviously some clients reach the point where they believe that their lawyers don’t manage the relationship at all well – and fail consistently to deliver value.

The most recent BTI Consulting survey of Fortune 1000 companies confirmed that most clients are not just looking for legal skills as the key to satisfaction, because they believe that they can get the legal skills they need at most good firms. But what clients do not seem so readily to find is genuine client service – the effective delivery of those skills in a way that demonstrates value. Moreover, although most lawyers are genuine in their desire to deliver client value, clients have reason to believe that their lawyers do not listen to their concerns – or do not care. Surely if their lawyers really cared, they would do something about rectifying the client’s perceived dissatisfaction?

The all-too-common advice offered by consultants and other advisers is that firms should get serious about regularly seeking their client’s opinions of how well they are delivering their services and managing the overall relationship. If law firms would simply make it a habit to survey or get out and talk with their clients on a regular basis (and especially at the conclusion of every major transaction) about the level of service being provided – and then act on what the client tells them – the firm would not be vulnerable to losing these clients.

While this sounds eminently reasonable, is it really at the heart of managing a client’s satisfaction and delivering value?

First, many law firms will quickly claim that they ‘pretty much do that anyway’. The lawyers may be described as extremely confident in their belief that they know exactly what their clients really want. Yet many of their clients do not appear to experience the relationship in the same way their law firm describes it.

Second, when was the last time you ever verbally complained about a perceived lack of service that you experienced? It’s not a natural or comfortable thing for many of us to do. Many in-house counsel feel the same way, so you cannot assume that no complaints mean satisfied clients. (It goes against the grain for many people, but for your business’s sake you may come to appreciate those of your clients who really do let you know just how they experience your services – the good and the bad.)

You may think it unfair, but your client may feel no obligation to be candid with you about the level of their dissatisfaction. Only a small minority are vocal complainers who give warning of their unhappiness, and they often feel even more frustrated when firms don’t seem to listen. A number of in-house counsel have said to my colleague Ronald Pol1, who was formerly a corporate counsel for Telecom, that law firms consistently fail to hear what the clients have said. You can’t rely on hearing about complaints to assess the efficacy of service delivery. Many dissatisfied clients will simply vote with their feet and you may only find out after the fact. Perhaps to soften the blow, the client may allow you to respond to an RFP, but your chances of winning may be next to nil. The client’s views are shaped by their past experiences, and their expectation (based on that view, with nothing to suggest otherwise) that you won’t change, so client surveys or future promises become a poor form of counter argument.

Third, clients sometimes fail to express the real essence of their discontent. They might express it in apparently specific terms, for example, you don’t meet our requirement to return our calls within two hours. They may even genuinely think that this is the issue, yet the essence of the complaint may lie elsewhere. This is particularly significant if the firm (apparently justifiably) considers the complaint to be without merit. For example, if:

The lawyers are unable to call back one client representative, because they spend so much time at the client’s offices;

The lawyers will not disrupt their work for the client by taking calls;
The client always calls to explain everything anyway.
If the client fails to express it clearly, the real complaint might never surface.

For instance, the clients might say that they are not understood, despite their careful explanation of each instruction. They might even feel that the firm isn’t even interested. Without delving deeper than what the client says in reply to regular surveys, it may be little wonder that the client walks, and that the firm genuinely doesn’t know why.

Finally and most important, it becomes difficult to survey and measure your client’s satisfaction in hindsight, if you never agreed upfront the basis upon which the client’s satisfaction would be determined. In other words, it is a bit like having somebody come down the hall, at the end of the year, to offer you a performance appraisal. What is the foundation upon which your performance will be appraised? Hopefully, it will be based upon some performance indicators that have been established and that you willingly agreed with at the beginning of the year.

In short, client surveys are valuable, but no panacea. They mostly have you looking backward. Looking forward from the outset provides the best view.

When you think about it in those terms, how do we even attempt to measure our client’s satisfaction at the end of an engagement? What is it that we are measuring? And how do we know that what we are measuring is of any importance whatsoever to our client? It certainly doesn’t come from the standard template of ‘questions to ask’ provided by some consultant.

The key lesson is that rather than determining your client’s satisfaction or the value of your services after the event, it is essential to agree in advance the key elements that will determine satisfaction and value. From the firm’s perspective, this might be seen as helping shape your client’s expectations. From a client’s perspective, it might be seen as identifying, from the outset, what will add value to the client.

How client focused are you really?

Whether we like it or not, we are going to be measured by our clients. The good news is that we can affect the measurement process.

However, if we take a passive approach, the measuring stick against which we will be measured will be exclusively a creation of our client and likely imposed upon us. Alternatively, most in-house counsel and sophisticated clients would be delighted if their lawyer approached them at the outset of a matter to discuss ways in which they could determine and provide value.

There are a lot of reasons why most lawyers don’t bother: they are too busy to invest the extra time that it would take; there are no billable hours involved in doing it; they might be afraid to ‘stir the pot’; and perhaps if we don’t talk about it, then maybe it’s not really broken.

The not-so-good news is that the prevailing view among sophisticated corporate counsel would seem that it is broken. As reported in Corporate Legal Times, in a June 2003 editorial entitled ‘Find time to whip outside counsel into shape’, law firms continue to be accused of failing to understand their clients’ basic needs and doing a dismal job in communicating with clients and evaluating whether or not they are meeting client expectations.

As a law-firm partner reading that editorial, you would likely be incensed. Like many of your colleagues, you would genuinely consider yourself to be client focused, so much so, in fact, that we expect that you would argue that you diligently meet every demand, and even every whim, of each of your many clients.

An analogy that might help provoke your thoughts, however, is that of a wagon-wheel.

You have ten major clients. You complete invoices in a particular way to satisfy the expressed wishes of client A. You record time in a special way for client B, with narrations for each entry that match their reporting systems. You provide one-page advice letters for client C, with draft-board papers from time to time. For client D you provide data that fits in with their matter-management system. Client E wants you to send bills on the second Tuesday of the month, so that’s what you do. Then there is client F, for whom you attend the legal team’s monthly group meetings, and visit their factories whenever you’re in town.

You might well say that you are so client focused that you have little time for anything else. And, in a sense, you are.

We are not suggesting you shouldn’t do what your clients need. But maybe we should step back a moment. Look at it like a wagon-wheel. We’re talking about you, so you’re the hub of the wheel. The demands of each of your individual clients represent, say, 20 spokes (some clients have one or two special things they require of you – and we can all think of a few clients who are really demanding). Now, instead of focusing on the spokes, what if you tried to identify what clients are really after, in a more general sense than the specific ‘spokes’?

First, it might be reasonable to assume that most clients do not ask you to do all these things just to annoy you, or just for the fun of watching you run around chasing your tail. They do it because they need to have you demonstrate value, and your current systems aren’t doing that, so they’ve come up with ways that they hope will help force you to do things in ways that will help them demonstrate the value of the legal process. Chances are, even the most demanding clients (for whom you half expect their next request will be for your invoices to be in a particular typeface) are not actually obsessed with the spokes themselves – they’re simply trying to get you to do a few simple things to deliver better value.

So, take a breath from all the running around, and think what it is that clients really want. We believe it boils down to three main things:

Identify what adds value (to the client);
Deliver that value;
Demonstrate that you have done so.

That is what they need to do in their role within the organisation and it is what they need and want you to do. This is something that you have a shared interest in and there is no better basis for real teamwork. If they don’t think you’re doing it, they come up with these ways of trying to force you to do it. And they’re all different: some do lots of research; others do what seems right; and some are just plain crazy. But what it often means is that you have to run around like a headless chicken. Well, perhaps you just think you have to. Maybe you think that’s what it means to be client focused.

However, let’s go back to the analogy. Instead of looking to the spokes, try to find the rim of the wheel. If you find what most clients generally want (say, the three things we mentioned earlier), and you actually set about delivering it to them, then you might just find that many of the spokes fall away. Those that remain will largely be the most basic ‘process’ ones (for example, client G needs you to send a copy of the invoice separately to the legal department and to the accounts-payable department, and both need to approve it independently for the client’s accounts system to generate a cheque). And anyway, for this analogy to actually work, you have to retain a minimum of three or four spokes, or the wheel will collapse and our metaphor will crash with it.

When he managed the major litigation and dispute-resolution function of Telecom, New Zealand’s largest listed company, Pol used to tell his outside lawyers: “Obviously, I’ve put lots of work into getting a system that addresses my needs; into getting this right. So I must care passionately about the process, right? I must care passionately about the specific invoice format and other criteria that I’ve developed, right? Wrong.

“Sure, if we’re going to do it, I expect you to get it right. But in the broader sense, I do not care about it at all. If anything, I dislike it with an intensity matched by the frustration that caused me to do something, anything, to try to force you to do three simple things that I’ve been asking you to do for ages: help me identify what adds value, deliver that value, and demonstrate the value added, in terms that matter to us as the client.

“Now, do I think my system is perfect? Far from it. I’m sure someone else could come up with a better one. But no one has, at least not that I know about. You haven’t done so, or if you have, you’ve kept it a secret. No law firm has done so, that I’m aware. So it’s really just the best I could do, on my own. I won’t even cling to ‘my’ system out of spite. Even now, if any law firm can come up with a simple system that does those three things, I’d drop my requirements in a second.”

And he was quite serious too – but of course, as he reports it, none of the firms ever did rise to this challenge. Instead, they just met the client requirements, that is, as yet another ‘wagon wheel spoke’ – often after putting up lots of resistance, either simply meeting the new requirements, or seemingly ‘gaming’ the new system for all they were worth – later seeking to justify ‘premiums’ and defend ‘discounts’ without ever really trying to look at value.

Identify what adds value

When you are first retained by corporate counsel, you are likely hired to resolve specific problems that the legal department does not have the skills, resources, time, or inclination to handle. In handing the matter over to you, corporate counsel is entrusting you to serve as the bridge between their legal team and those of your lawyers who will work the case. It is your job to ensure that your client’s needs and expectations are met.

To truly understand your client’s expectations, you must first have some empathy for the environment in which they work. For example, the average associate general counsel for litigation may be handling anything from 20 to 200 different matters in a number of different jurisdictions. This means that each matter is likely to get only about an hour’s attention each week. Meanwhile, you may have forgotten that the single matter that you are working on is only one that your client is juggling at any given time.

The ramifications are obvious. We need to understand the workflow and the demands on the time of that in-house lawyer who is giving us the assignment, if we are to have any hope of becoming their trusted business partner and a true asset.

It is important, therefore, to identify and distil the key factors that add value to your client’s organisation and also to explicitly record those factors at the outset of the transaction. Sitting down with corporate counsel allows you both to lay out the commercial objectives, develop strategies to advance those objectives, and then prepare an engagement understanding that can be reviewed and monitored as the matter progresses.

To determine those factors might be as simple as engaging in a discussion with your clients, telling them that you value them and want to deliver a service that not only meets, but exceeds their expectations. You could then ask them to specifically tell you what constitutes value in the way in which you handle the matter. You might also say that you want to completely understand how they measure value, and what you need to do at every stage in the transaction to make their lives easier. You should also suggest meeting at the conclusion of the case to assess how you did and what might be learnt about how to perform even better in the future.

Listening skills are paramount. The key is not to approach collaboration on the basis of ‘here is how we want to do it’, but rather by asking your client how you can best (or at least better) serve them.

Both corporate counsel, as well as outside counsel, have come to use the term ‘value-added’ with such frequency that it is in danger of becoming meaningless. Lawyers are suspicious that corporate counsel tend to invoke the term to support outrageous expectations, while corporate counsel believe that lawyers toss around the term in their marketing pitches without ever defining what the value they’re adding really is, or worse still, use the term to justify ‘premiums,’ yet otherwise bill at ‘time.’ Indeed, the hourly billing mechanism appears to have conditioned many lawyers into thinking about ‘premiums’ and ‘discounts’ from a firm-management perspective, rather than about value from a client perspective.

In both cases, however, there is often a mismatch of expectations between the value perceived by the firm and the value perceived by the client. Frequently, this is not just because in-house and outside counsel have a different perspective, or perception of value, but because they failed explicitly to consider what would constitute value – before resources were committed and results achieved.

In some situations, you may need to probe deeper to help your client help you identify the factors that really matter to them. While the client may have carefully drafted guidelines that are presented to the law firm as conditions of retention, there is usually very little real guidance on the kind of client service it would like to get from outside counsel, the frequency of communication, how to provide more proactive preventative counselling, or other conditions that signify what the client might really value.

In those instances, we have found that thinking through the various steps involved (we call this the client’s value chain) in completing the transaction can allow you to explore specific client expectations at each step along the way.

The box below shows the various steps involved in a typical legal matter and a sample question that you could ask to elicit what your client is hoping to achieve at each of these links.

The client-value chain

INSTRUCTIONS

How does this matter fit within your company’s overall business goals and how important is this case in comparison to others you are working on?

TRANSACTION

When (hourly, daily, weekly) and how (voicemail, e-mail, meetings) do you want to hear from me?

DELIVERABLES

How would you like me to make my reports and presentations more useful to you and easier to pass along or utilise within your organisation?

BILLINGS

What would you like to see on your invoices, and how could we simplify or improve our statements so that they provide the information you need in the format you need it in?

ASSESSMENT AND AFTERCARE:

How might we debrief at the conclusion of this case to determine what we’ve learnt, to your future benefit, such as identifying ways to reduce future liability or develop ‘resource multipliers’ enabling the legal department, demonstrably, to deliver more value to the business?

Commit your client’s objectives and key expectations to writing

To manage your client’s expectations all the way through the particular matter, it is important to identify key factors that enable you to effectively deliver value to the client organisation. Our recommendation is that, in concert with your client, you develop a specific checklist of what their expectations are and what, for them, would constitute real value being delivered on this matter.

Your client will often be able to articulate broad concepts, such as the need be sensitive to the importance of the matter to the client company, to be highly responsive when needed, to provide excellent co-ordination and case management, and to provide the client with some substantive training in the area.

While these concepts may be a good start, you then need to have the client define precisely what they need and how they will know when their expectations have been met – and indeed, exceeded (which should be your ultimate goal). This stage is vital, yet often overlooked, as we all just assume what needs to be done. It is also an especially important stage for firms – when you truly know what the client values, then that’s where you can focus resources, without wasting lots of time (and trying to justify it later). And when you deliver, you know it and the client knows it – always a great time to have a billing conversation. So, get into some specifics early on. That doesn’t necessarily mean reams of paper, with detailed procedures and precisely defined micro-objectives. But what it does mean is truly understanding what the client wants – even if that just means a couple of sentences. Sometimes you’ll need to ‘drill down’ just a little more. For example, if the client mentions that they expect availability, you need to ask what exactly is meant by by this, as various clients might define that term differently. You should also ask for some examples of what the client needs so that together, you can develop a standard for how you will actually meet the client’s expectations in a measurable way.

The ten indicators identified below are of course not significant in themselves. They simply represent some of the possibilities – and some of the factors that corporate counsel seem regularly to complain about. What is important is that they reflect what is important to your client. After all, if you never find out what is important to your client, how can you expect to deliver great results? Or more importantly, how can you expect to readily demonstrate to the client the fact that you have delivered?

Ten indicators of client satisfaction

We will both know that we have delivered client satisfaction when (‘what’ happens) in the following categories:

Outcome/importance for company;
Understanding the business;
Legal/commercial judgement;
Availability;
Timeliness of advice;
Co-ordination (project/matter management);
Unprompted management;
Staffing levels/balance;
Manage fee-level expectations;
Relationship – helpful/constructive/useful.

The other important consideration is that there are only a limited number of indicators and that this process is fairly simple. A complicated process, with too many variables, may look great in theory but will seldom work in practice.

This process can also serve to protect your interests. Let’s say you have agreed to take a litigation case on a fixed-fee basis. Your clients, because they are paying a fixed fee, may have an incentive not to settle expediently and may simply veto early settlement opportunities. Your average cost per case now starts escalating. Then the client pressures you to lower your average cost per case, saying that if you want to stay on their approved list, you’ll need to discount your rates.

It also serves to protect your client’s interests. The relevant corporate counsel has a budget and other expectations to meet within their organisation. If you are part of setting these expectations from the outset, and you meet or exceed agreed deliverables, corporate counsel will also meet or exceed internal expectations. This will help strengthen any relationship more than divergent expectations ever will.

This process channels everybody’s attention into designing a real value-added path from the start and at each key stage – before work is done (and expense incurred) – and reinforces teamwork between the lawyer and client.

Demonstrate that you have added value

When your matter is completed, you can now utilise a simple checklist to both assess your client’s satisfaction (on terms that were predetermined) and demonstrate the extent to which you have added value.

In practical terms, a simple checklist might list the key criteria, with a box for each, to be assigned grades from one (poor) to five (excellent), and a ‘comments’ field. Such a checklist provides a useful basis for identifying whether lawyers meet key-value and performance criteria for each transaction, and across a range of transactions.

You might want to invite your client to complete the form, return it to you, and then schedule a specific meeting to discuss your client’s feedback.

In practice, you may find that your evaluation of your performance may be higher, and that you view your value contribution greater than your client did. Most importantly, however, this process allows you to identify key areas for improvement and key areas in which you are doing well, in which both you and the client may increasingly be ‘on the same page’.

Many corporate counsel will agree that, on the whole, lawyers do achieve results, yet the process by which this occurs is sometimes a difficult one from the client’s perspective. Maybe this is part of the reason for the ‘disconnection’ between law firms and their corporate-counsel clients – lawyers who have in the end ‘delivered the [legal] goods’ might think that’s what it’s all about. For years, however, corporate counsel have been trying to tell them that this is only one part of the game.

Although the best lawyers actively seek to identify key commercial drivers, these sometimes translate into legal outcomes that, at least within the internal processes of the firm, seem to be the de-facto determinant of value in the lawyer’s mind.

Worse, some lawyers still seem to focus more readily on key legal tasks, rather than commercial goals. For example, a claim may be met with a robust defence, discovery and interlocutory applications, before considering creative ways to resolve core commercial issues. For a time at least, the legal process itself effectively becomes the perceived goal.

When that happens, the lawyer almost invariably will not truly have identified what adds value to the client, even if the lawyer ultimately does so, after several years of ‘working on the file’. Little wonder clients sometimes feel frustrated by the legal process.

When a great result is achieved, lawyers sometimes expect clients to warmly thank them, yet often the corporate client has moved on to focus on the next transaction. Worse still, even with a favourable result, the client might consider that it simply achieved what was rightly its due, at what it might view as considerable cost – usually, the perceived cost and delays generated by the lawyers.

It is easy to say that you understand your client’s business, but the best lawyers also take the step beyond simply acting like a legal technician. They translate legal advice into business consequences and business actions. Corporate clients often consider that relatively few lawyers truly identify core objectives, genuinely from the client’s perspective, and from the outset.

In essence, lawyers need do only three things: identify what adds value to the client; deliver that value; and demonstrate they have done so. These are, in many respects, communication skills rather than technical legal skills. The goal is clearly to identify value objectives from the outset, and to effectively demonstrate the value of your contribution in terms that relate directly to client objectives rather than simply legal outcomes.

Reference:

Formerly corporate counsel with New Zealand company, Telecom, Ronald F Pol is president of the Corporate Lawyers' Association of New Zealand (CLANZ), general counsel of Simultext Limited, and a member of the governing council of New Zealand's Law Society. He is available at rfp@xtra.co.nz.

Patrick J. McKenna is a partner in Edge International. He can be contacted at: mckenna@edge.ai.