No Cause to Fear the Unknown

At some stage most law firms will face the 'existing client vs. new client' conundrum but do these same firms recognise the true value of the clients they already have and the cost to the firm of losing that client? Leslie Lintott managing partner at Penningtons warns of the dangers and consequences of assuming the quality of your service provision without first consulting with the experts...your clients.

Let me pose a problem - you are given the choice of retaining an important existing client or securing an equally important new client but you cannot do both. Both will provide equal benefit to the practice. Which would you choose? In a growing economy you might consider it better to bring in a new client and many partners might select that option. Others might recognise the importance and value of retaining an existing client. Whichever option you choose it is recognised throughout the profession that there is greater kudos both with your fellow partners and with your competitors attached to having attracted a prestigious new client to the practice. We are far more likely to share with the outside world the fact that we have secured a new client rather than merely retained an existing one. After all where is the news value in saying that we have retained an existing client?

But in many ways it is more difficult to retain an existing client especially as your rivals are all trying to secure prestigious new clients and the resulting competition to retain those you have is intense. For a multitude of reasons clients might be forgiven for thinking the grass is greener elsewhere and might well be seduced by the lure of a particularly high profile partner at a competitor firm - the partner who then mysteriously disappears once the business has been secured or the team which is receiving all the plaudits in the legal press - shortly before it moves on to another firm.

Why then do we pay less attention to our existing clients? Is it that we don't care? Are we too busy? Perhaps we assume that unless our clients complain there isn't a problem and there is no evidence to suggest that they will switch to another adviser. Whatever the reason unless we ask our clients what they think of us as individuals and as legal advisers as well as identify their needs and concerns the evidence from countless surveys conducted among clients is that they will go elsewhere.

Regardless of the industry or profession it is an accepted marketing principle that only 4% of customers with problems complain. In other words for everyone who complains a further twenty-four do not. And a client with a problem eventually tells another nine other people - there's no news like bad news as any tabloid journalist will tell you. The more important statistic perhaps is how many of those clients who have complained decide to take their business elsewhere and how many stay with a firm if their complaint is properly handled. It is often difficult for professionals to admit they are at fault and even more difficult to accept the well-used expression "the client (or customer) is always right". As professional advisers it is necessary sometimes to admit a fault perhaps even if the fault does not lie wholly with the adviser. If we don't one thing is certain and that is that those clients who feel less than happy with the service they receive for whatever reason including half-hearted investigation of a complaint will start to look elsewhere.

As a managing partner myself one of the things I would least want to find out is that a client has severed its relationship with my firm without warning. I suspect that many managing partners hear of unhappy clients only when they have voted with their feet and damage limitation exercises are of limited value. The task in hand is to ensure that our clients know that we value their views and opinions and that we want to change our practices where necessary to ensure that the service they receive from us is not only of a consistently high quality but is actually tailored to their specific needs. This may all seem very obvious but so many firms do not work at looking after their existing clients as hard as they should nor as hard as they do in the quest for new clients. The way to find out what your clients think is to talk to them directly. I suspect that in nearly every case a client will have a view on how service can be improved. Many lawyers approach the idea of asking clients what they think of the firm with real trepidation and the 'well it's just asking for trouble' attitude is prevalent probably in many firms. But in truth there is no need to fear the unknown. Clients like to be asked about their business and the level of service they receive and will normally be willing to give up time in often busy schedules to provide in depth interviews.

This is also an opportunity to listen to suggestions as to how improvements might be made from the client's perspective. Managed correctly there is a substantial amount of goodwill to be derived from the instigation of a programme of client reviews. The issues that come from these interviews might at one extreme be in the form of personnel issues - changing individuals who are involved in servicing the client - or less controversial issues such as the need for a more detailed fee breakdown.

A client who may be unhappy with a partner might feel that it is not possible to change the status quo. Certainly there will be a reluctance to confront the partner or solicitor involved and say 'we are not happy with your advice' or even more horrifyingly 'we just don't like you'. The result of this of course is that the client will in due course surreptitiously start to review the existing arrangements. Other firms might be tried and tested contact with the client will diminish and before we know it the client has gone to another firm.

But simply by taking the initiative and asking 'how happy are you with the overall service and with the individuals involved in advising you' in a frank face-to-face meeting will invariably uncover issues that can be dealt with before it becomes too late. The true value of course only comes if we as professionals are prepared to grasp the nettle and take action as a result whether this involves changing a partner or associate or simply ensuring that we return calls within the timescale we have agreed.

As with all marketing programmes there is a right way that may not appear to be the cheapest path to follow. Sadly money often dictates the preferred route in the professions. As lawyers we are trained to analyse in detail and question the evidence in front of us. While it is important to ask the right questions it is also vital to listen to the responses and hear what is said and more importantly in some cases hear what is not said. It is here that using an independent adviser will be of most value. Clients are far more likely to 'unload' their concerns to someone perceived as being independent (even if this is something of an illusion).

A well-conducted client review should provide a firm with additional information about the client that goes beyond the confines of the client/lawyer relationship. It should inevitably lead to useful comparisons of how your firm is perceived against your competitors and it should identify the process by which your client selects legal advisers for appropriate matters. This will provide you with invaluable competitor information with which to tailor and market your services more precisely.

The fact remains that the fundamental reason for implementing any form of independent client review is to improve client satisfaction and loyalty. Interestingly satisfaction surveys have shown that clients who claim to be merely satisfied with the service they receive are five times more likely to move to a new adviser than those who claim to be very satisfied or delighted.

And if you are trying to guess how much this process is going to cost your partnership take a look at your top clients and see for what proportion of fee income they account and measure how big the hole would be if they decided to go. If you are considering a client review programme my advice is to start with one or two clients where you know the relationship is sound. You can hope and expect that the feedback you obtain will be positive and the initial foray into client surveys should help to get the support of those partners who still hold reservations about the value of such an initiative.

Remember also that the cost of acquiring a new client is usually 5-7 times greater than retaining an existing one. The real answer therefore is - can we afford not to take very seriously the opinions of our clients on the service we offer? And when the economy moves into a downturn it is my view that those clients whose opinions have not been sought will be the first to use the downturn as an opportunity to 'review their fees for legal advice' and look elsewhere.

Lesley Lintott is managing partner of Penningtons which has offices in London Basingstoke Godalming Newbury and Paris. She is based in the London office at Bucklersbury House 83 Cannon Street London EC4N 8PE.