How do law firms move past buzzwords & identify those factors that truly promote a successful, long-term relationships between law firms and their clients?
Relationships between law firms and their clients are too often thought of just in terms of buzzwords. Win-win outcomes, or sharing business risk, or investing in the relationship — and these are just a few of the phrases heard when it comes to improving long-term client relationships.
But what does all of this really mean? How do we move past buzz words and identify those factors that truly promote a successful, long-term relationship between a law firm and its client?
For most law firms and clients, there are a few concrete steps that can be taken right now to build toward a stronger, more sustainable partnership. These five steps are a great start:
1. Talk more… about everything
Plain and simple, law firms and clients that want a better relationship need to talk more. This sounds so basic, almost remedial, yet the amount of disconnect, confusion, and frustration that stems from a lack of communication is astonishing.
The range of topics for increased dialogue is almost endless: business goals, project scope, project status, service delivery, fees — the list goes on. Focusing on pain points is important, but the goal should be to increase communication across a wide spectrum of topics in order to build a more complete and connected relationship.
The medium of communication is also important. We live in the age of text messages and Twitter, where e-mail remains the primary mode of communication between law firms and clients. But so much more can be gained by actually talking to another human being, whether in-person, on a video call, or by phone. The ability to read the other person’s reaction, change course in real time, and generate a deeper connection can’t be replicated through words on screen.
I can’t tell you how many times I’ve worked with lawyers on pricing who ask me to review a draft e-mail to a client. Often, my response is: “Let’s turn these into talking points and have a call or visit with them.” I’ve never once regretted that course of action.
2. Partner on improving service delivery
Better, cheaper, faster is the dream of every in-house legal professional when thinking about their outside law firms. Turning the dream into reality involves looking at the entire process that’s required to complete a project. And that almost always involves many more players than just the law firm, so it’s key that all stakeholders actively collaborate on driving improvements. Taking the time to conduct a process-mapping exercise for repeatable work is a great way to achieve some combination of better, cheaper, faster on future projects.
By bringing everyone to the table, you not only identify potential problems, you gain consensus on how to improve the process going forward. Often, the exercise yields “light bulb” moments in which the group discovers a small change in the process that could potentially lead to significant efficiency gains. Because all stakeholders are involved in the design, mutual accountability flows from the process and keeps everyone committed to the new approach.
3. Stop using billing rates to measure value
Clients turn to law firms to help them solve business problems. When a firm provides excellent work product, meets a client’s business objectives, and charges fees that are fair and in-line with expectations, there is alignment on value. Notice, nothing in this calculus involves billing rates or whether or not the fees were calculated based on hours worked or on an alternative-fee basis.
Is the value of legal services easy to measure? No, but that doesn’t mean clients should fall into the trap of focusing on the unit price of an input (which is the definition of an hourly billing rate) or the level of discounting as the way to assess a firm’s value.
Far too many times, I have worked with clients who ask what level of discounting the firm can provide before even asking about rates. With these dynamics at play, it’s easy to see why law firm standard billing rates continue to rise. It becomes a game of artificially raising the sticker price to make the buyer feel good about getting the coveted discount.
Measuring the value of legal services is still more art than science, but if a firm strives to find metrics and data, it can then drive these value discussions. For example, firms should consider such metrics as whether stated objectives, milestones, timelines, and budgets were achieved.
Wherever possible, calculate the business impact of the work and compare it to the total fees. At the outset of litigation, for example, a client may set a goal of settling for $5 million before trial. If its law firm is able to settle the case for $2 million within the first six months before discovery, there is measurable value both in terms of the lower settlement figure and the savings from not having to pay additional legal fees. These savings should be calculated and shown to the client.
4. Leverage your legal operations professionals
The growth of legal operations professionals in both corporate law departments and law firms has continued to rise at a rapid pace over the past ten years. The roles continue to evolve and become more focused, especially in pricing, legal project management, and innovation.
These professionals are experts at their craft and crave the opportunity to collaborate with their counterparts who hold similar roles across the table. Fostering this type of collaboration deepens partnerships and can significantly improve the ability of law firms to understand their clients’ key business challenges and to work quickly to find optimal solutions.
5. The silver bullet: No surprises
Perhaps the simplest way to build a better relationship with your client or law firm is to commit to one goal: No surprises. So often, contentious issues that arise between firms and their clients across a range of topics could have been avoided by communicating earlier and better.
For law firms, common missteps include lack of timely communication around project budget overruns, scope creep, staffing, and service delivery models. If I was placing odds on a firm’s likelihood of success in advocating for a project budget increase due to scope change, the single most important factor would be whether they provided advanced notice. Likewise, staffing changes can often increase efficiency and drive better service; however, if a client first learns of the change when they see five new timekeepers on an invoice, the client is likely going to draw just the opposite conclusion.
For clients, setting expectations as the buyer of services is critical. Clarity on business objectives, timelines, and scope are all topics worthy of significant discussion at the outset of any project. Remember, setting expectations is not limited to substantive work. It also encompasses billing guidelines, IT requirements, and a host of other areas often explained in outside counsel guidelines.
The key for clients is to be clear on what they truly expect, and not throw everything conceivable request into a 75-page outside counsel policy. This approach just leaves law firms guessing on what their clients really care about and can cause them to expend needless time and energy trying to be compliant with a host of rules that clients might not even care about.