Feature

posted 5 Oct 2004 in Volume 7 Issue 5

Client-relationship management: Thoughts from the bottom line

You may think you’ve heard it all before, but when it comes to meeting client expectations, there’s always something more to be learnt. Paul Gilbert, legal director at LawBook Consulting, has worked with many in-house lawyers, which has given him an inside perspective on what law firms really need to do to improve their client service.

In October 2003, I overheard a conversation in the staff canteen of a well regarded law firm in the City of London:

“It’s a TLA.”

“What is?”

“CRM”

“What’s a TLA?”

“It’s a three-letter acronym, ‘T.L.A’. Get it? It’s what management consultants use to make the rest of the human race feel excluded.”

“Oh right…but what is CRM then?”

“Client-relationship management”

“Oh God, not more management mumbo-jumbo double speak!”

And so began another debate over a sandwich and a cup of coffee about how CRM is no more than ‘common sense’ or ‘vital to the very existence of the firm’ or about ‘rainmakers and plodders’ or ‘cross-selling’ or ‘marketing’.

I feel a little like a vicar. I have been an incumbent in the parish church of a law-firm management consultancy for a few years now. We have saved a few souls, showed people what they can do for themselves and helped them to build values that are genuine and important, but I am beginning to worry about the power of the message.

Just how do you keep making what is essentially the same message sound relevant, useful and important?

I wonder if I can face my errant flock of a congregation again with what I fear some may now consider to be nothing more than heard-it-all-before platitudes and sanctimonious pleas to their better judgements.

I still believe in the power of the message (obviously) but I wonder if I can be bothered, frankly, to trot out something that for so many will simply give rise to a metaphorical shrug of their shoulders and a look the other way as if they are hearing the same joke for the umpteenth time.

However, if it is the same joke we thought was hilarious the first time, and we laughed then, why not now? I know there is not the surprise of the punch line any more, but surely we can still appreciate the construction, cleverness, delivery and timing?

Similarly, in writing about CRM, I hope that you will not turn your nose up at my efforts, but remember that this is the single most important skill you will ever need for yourself, your associates, your colleagues, and even your trainees. And even if you are familiar with CRM, it is no bad thing to hear some further thoughts and ideas that will reinforce the significance of the CRM message.

Please read this article, suspend your cynicism for a few moments and reflect on your world in the context of the following thoughts. I want to develop three themes:

What the client wants;
What this means for law firms;
How you get there.

What does the client want?

There are some things clients will say they want. This is the easy bit.

There are some things clients will say they want but they do not really need. This can be tricky.

Finally, there are those things clients really do want but they do not realise it. This is more than tricky. The client not only wants to win, but to win:

On time;
On budget;
With added value.

And that is all.

Your legal expertise helps mostly with the first of these wish-list requirements, but it is of precious little use to you for the rest. The last two require systems, process, communication, empathy and, above all, cost.

Over the course of the past seven or eight years, I have spoken to and worked with hundreds of in-house lawyers. If I could encapsulate into a single sound bite what they want from law firms, it would be this: “Don’t waste my time, don’t give me unpleasant surprises, stick to the costs we agreed and deliver results.” Some would also add: “And I would like to be able to have a beer with you too.”

Most of this is not rocket science, but don’t dismiss it without analysis just because it sounds so obvious.

Don’t waste my time

General counsel are busier than ever. A typical day will include a share of responding to executive-management issues, staff management, long-term projects, responding to requests for more (and better) budgetary information and management information, implementing HR policies, coping with desperately inefficient IT, sitting on board committees, making risk assessments, doing research, correspondence, meetings, e-mails, etc. They will probably also have calls to make to chase up work that has been outsourced to law firms and to decline invitations from other firms for lunch, etc.

Suffice to say, they probably have no time to read the latest e-alerts or seminar invitations…

So, don’t waste my time is not the unreasonable request of a GC losing touch with common courtesy, it is an essential prerequisite of a successful relationship.

Don’t give me unpleasant surprises

The general counsel is managing relationships too. He or she will be reporting at least monthly to a board and/or executive colleagues who are looking for progress, value and hopefully success. The GC’s colleagues do not care that some new issue, nuance, factor, fact or interpretation has caused a review of previous thinking.

Incidentally, has any law firm ever offered to refund a proportion of fees for work previously completed when they change course mid flow? No, I didn’t think so. The law firm gets paid, the GC gets the grief.

Stick to the costs agreed

By any assessment, external law firms are already very expensive. It may be essential to engage the firm and the service may be fantastic, but it is pricey and therefore excellence has to come as standard.

This is not just about excellence in the legal proposition, but excellence as the business client recognises it: great management information, courteous knowledgeable people, responsiveness and timeliness.

The law firm may feel it has paired profit to the bone, but the client can only see thousands of pounds going out the door, week after week. If the firm ducks this issue and tries to get more fee income than was predicted, don’t expect an easy ride.

Corporate-client budgets are a work of black magic – they may well be a multi-billion-turnover global brand, but the GC will have £37.50 for teabags and sirens will wail if the monthly variance is outside of tolerance. The legal fees budget just cannot be blown away without recrimination, reports, meetings and endless red tape.

If you have agreed costs with your client, you stick to them. And deliver results.

It’s not just about the taking part that counts. When the general counsel has invested £250,000 of legal fees in a multi-million-pound litigation (that is turning up the heat underneath the chief executive, is making the business pages of newspapers and is sucking resource out of the over-stretched in-house legal team), do not casually remark that the result will now all depend on the judge.

Remember, the chances are that you are getting paid anyway, but for real people in your client, this is career-making/breaking activity. It is stressful, emotional and difficult. You have to understand that keeping your commitments along the way is all about your credibility. You are judged not by the quality of clever arguments, but on whether the deal is done or the litigation won.

These are the things that the client says they want, but what about those other two categories mentioned above? What are the things that a client says they want but do not really need and the things they do not say they want but really do need?

Some clients will talk endlessly about ‘added value’, but what do they mean?

In-company training events?
Breakfast briefing seminars?
Library access?
Research?
Secondees?
Updater newsletters?

If asked, clients would probably agree to all of the above, but that does not tell us much about the real meaning of added value, which lies as much in the part played by the law firm delivering such services, as it does the client in expecting to receive them.

Of course, in-house lawyers enjoy these benefits, but from the law firm’s perspective all these things help complete the relationship and embed the law firm within the working practices of the client.

They also encourage routine contact, facilitate the free flow of good quality and reliable information, and offer new working (billing) opportunities. They create stickability, which is a vital attribute of the successful relationship.

While it may be the client who describes these things as value added for them, they are, in fact, mutually beneficial ideas that law firms have at least an equal reason for needing.

Law firms should actually see this activity not as a cost, but as a strategic investment.

The things clients rarely say they want but still need, however, are perhaps the most interesting issues to analyse. It is here that future workflow will be generated for law firms and where relationships will become established over time to become both profitable and enjoyable.

In-house lawyers in general and general counsel in particular are being targeted to show value. They can do this in one of two ways: by reducing the cost of the service (headcount and fees) or demonstrably (verifiably) adding value. In many organisations where I work, the objective is to do both.

On the question of reducing costs, ask yourself how many law firms will be targeted to reduce their costs only after the general counsel has sacked his or her own colleagues?

It isn’t going to happen. Law firms have to reduce their costs.

A law firm that operates away from this context (whether they are told about it or not) is more likely to fail than to succeed. Law firms simply have to be as innovative as possible on the cost effectiveness of their work.

Ironically, my assessment is that the way to secure work going forward, which will be more profitable and for the long term, is to reduce margins, improve efficiency and be seen to pass those savings on to the client.

In addition, law firms must engage with their in-house contacts in ways that encourage an open and constructive dialogue on value, while upholding perceptions of quality, service and expertise.

I am not going to pretend that this will be easy. General counsel can have egos that get in the way and some also struggle to see the merit of this approach, even though their own CEO might be demanding it.

I am convinced, however, that the legal market will focus on cost as a key differentiator. This is already happening with many large companies utilising procurement functions to set in place corporate disciplines around firm selection, instruction and payment.

This is not universally popular and for many it is a distraction, but the reason for it is clear and understandable. Businesses can no longer afford to pay for the inefficiency of law firms. Law firms have to wake up, smell the coffee, and deliver cost reductions that do not damage quality.

Before anyone thinks this is unreasonable, it is actually what nearly every commercial entity has had to do in a capitalist economy for the past one hundred years.

And it is where effective CRM plays an essential part.

CRM is not a marketing tool. It is not something you do in addition to your job, nor is it a slogan and/or training programme. CRM is your job. It is everything you do, the way you relate to your partners and to your other colleagues (lawyers and supporters), and the way you relate to your clients.

It is also the way you write, speak to people, answer the phone, keep commitments, care and empathise.

Training takes you to the three-letter acronyms, the models and the neat, off-pat analogies, but CRM is what you do from the moment you step into the office.

The best understand this and work on it all of the time.

I have tried to explain what clients want and there will be moments (hopefully many moments) when you are appreciated and well paid for doing what your clients want. The question is whether you can do it consistently and raise your expectation that in most cases you will get it right.

Training is vital, of course, but not just any old recycled sales-techniques manifesto or ‘tick the box’ exercise. A good approach to CRM might include the following:

Induct all your new starters thoughtfully and well. What are the things the firm is most proud of? What is the culture and what are the expected behaviours? What are the management systems and how do they work best?
Train relationship-management skills across the whole workforce, from senior partner to filing clerk. Everybody needs to know what is expected and how their contribution matters;
Train management skills – what is profitable, what is not and how to tell the difference. It is no good being great at relationship management, but not make any money;
Invest time to find out what your clients want. This goes beyond instructions and is about sensing vulnerabilities and managing them;
Different clients have different needs (obviously) but actually clients can be categorised and there is excellent research that suggests types of corporate client have similar needs and objectives. Tap into this and you have a lot of the groundwork done;
Don’t let the training programme die in the forgotten corner of a CPD log. Link it to appraisal systems and performance measurements. Reward good relationship management;
Set up mentoring and coaching programmes to support the efforts firm wide;
Celebrate successes and recognise the team’s efforts. A well placed referral is as valuable as a well executed deal;
Publish the results. The walls in areas where colleagues meet should be plastered with graphs and pictures illustrating progress and good works. People want to see that the firm is a success – it makes them feel good about their efforts;
Make sure the values of the firm are constantly reaffirmed. The way we treat our staff, colleagues and clients is an everyday lesson, not a classroom case study.

To achieve the above, four things are essential:

Have a plan;
Lead well;
Manage well;
Make it a long-term and embedded commitment.

I still get frustrated with the fads in management theory. Every day in large and respected corporates up and down the land, well meaning people are rolling out the latest buzz words such as total quality management, six sigma and balanced scorecards to name but a few.

This is all well and good, as long as the essential basics are not forgotten.

Good relationship management does not happen by chance. There has to be a plan that sets out what the firm stands for, what it wants to achieve and how it intends to get there.

The plan has to be simple, focused and easy to implement. It must also have the total, visible support of the senior lawyers and it must be repeated and reinforced throughout the firm.

Leading and managing the effort has to be thoughtful and structured. For example, reports have to highlight success so lessons can be learnt fast, while poor performance should be addressed in accordance with the firm’s values.

Remember that just being busy is not enough anymore. We all have to be cleverer than that. It is about doing the things that matter most and making sure our individual contributions are important in the context of the firm-wide strategy.

It isn’t easy, but a firm that wants to do this can plan and implement a programme for change in only a few months. Admittedly, it then has to make it stick, but if successful, the results will be tangible and for the long term.

Many people I speak to agree with my ideas, but frequently add provisos, indicating that they do not think them applicable to their firm. I have no problem with that, but can you seriously afford to ignore the evidence of your own eyes? Clients are less loyal, work is harder to come by, pitches are more cumbersome and harder work than ever, costs are always a target and partners are more demanding. In this landscape, I do not think there is a choice – your bottom line demands you take client-relationship management seriously, right now.

Paul Gilbert is legal director LawBook Consulting, a specialist management consultancy for law firms and corporate legal departments. See www.lawbookconsulting.co.uk.