Clients to Law Firms: Lean and Mean Legal Teams are Dead

 
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About 22 minutes into an in-depth client feedback interview I conducted, this client shared the real Achilles’ heel holding back the relationship. Our client, a mid-sized law firm, was steadily billing this client about $440,000 per month. Based on the feedback above, our client started offering bigger teams and staffing for contingencies. 7 months later, our client is now billing this same client just over $900,000 monthly. 

Lean and mean is dead. At least in any matter with risk or importance. Client thinking is going through a rare transformation—the risk of a legal team who can’t handle an unexpected problem far exceeds the savings of a lean legal team. Client risk and uncertainty are the new drivers in evaluating teams, and almost everything else. Your firm may have THE rock star in a practice—but if clients think you can’t scale up, they’ll look elsewhere.

How will you know if the matter in front of you is one of those matters, or in the case of our client, a continuing stream of matters? Here’s how:

 
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The move away from lean and mean is catching 62% of law firms off guard. Clients report law firms still propose smaller teams with no thought to contingencies, suggesting these law firms don’t understand what they are getting into. Clients will avoid these firms and unfortunately will still tell these firms it’s because of their rates—the easiest answer in the world to say no to a law firm—so don’t be fooled.

We will be discussing this and more during our upcoming BTI Mid-Year Webinar: 5 New Trends Changing How You Win High-Rate Work on June 19 at Noon Eastern. Please join us.

12 Tactics Branding Your Law Firm and Boosting Hirability

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A better brand means better hirability—a strong brand makes you much more attractive to clients.

BTI’s brand new research with corporate counsel shows 28% of law firms are strengthening their brand in the eyes of clients. Of these, more than half improved their brand to be ranked at all-time highs—making them the firms to beat to win new work.

36.8% of law firms suffered a drop in their brand, as ranked by clients. Top legal decision-makers see the brands of these firms as having less impact on decision making—so getting hired is harder. A weaker brand means you do more work to get access to new business.

The most common way law firms dilute their brands is inaction; particularly in the face of more aggressive firms actively building the strength of their brand in the market.

Only a few actions truly impact the strength of a law firm’s brand in the eyes of clients—these are broken into 3 categories:

  1. Direct Experience

  2. Transferred Experience

  3. Indirect Experience

Direct Experience

Direct experience will always be the strongest driver in leaving your brand imprint on a client. This includes:

  • Delivering legal services

  • Well-designed websites

  • Client service initiatives; including client feedback, client teams, and client service standards

  • Your pitches

  • Watching your firm from the other side of a matter

  • Attorney bios

  • Interactive thought leadership (such as custom CLEs, webinars, and training sessions)

  • Value-driven digital conversations (typically social media and blog interactions where clients learn new approaches to better manage risk)

  • Memorable encounters where clients and prospects quickly see the direct impact you can have on their business; typically, these occur by active participation in:

    • Trade Associations

    • Industry networking opportunities

Transferred Experience

Transferred experience is the 2nd most powerful way your brand is built up in clients’ minds. This type of strength is built through:

  • Referrals and recommendations

  • Client-to-client conversations about law firms

  • Client comments about law firms in:

    • Articles

    • Social Media Posts

Indirect Experience

Indirect experience ranks 3rd in the small set of activities able to leave a positive imprint on clients, including:

  • Passive, but relevant, thought leadership, such as:

    • White papers

    • Speeches at industry events

    • Quotes in publications

    • Email newsletters—with personal commentary on the relevance to the client

    • Non-custom seminars and events

    • Generic websites

On the other hand, there are a number of activities proven to have a limited impact on clients and prospects—and can sometimes even confuse and dilute brands. These low-impact experiences include:

  • Traditional advertising

  • Brochures

  • Single sponsorships

  • Entertainment

The law firms with improved and better brands are going out of their way to drive more direct experience with clients and prospects. Look for more on exactly how they are doing this in a future post.

You can learn exactly where your law firm stands, including a history and comparison to 8 law firms of your choice, in the about-to-be-released BTI Brand Elite: Client Perceptions of the Best Branded Law Firms 2019.

MBR

3 High-Performing Practice Leaders Share 5 Tips and Secrets

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Practice Leaders agree and disagree on a lot of things. But when 3 high-performing practice leaders agree, it’s a learning moment. I enjoyed having an insightful panel discussion with Rich Moche of Mintz, Tom Schulte of Clifford Chance, and Philip Sellinger of Greenberg Traurig at the Practice Management 2.0 Conference in Chicago. We focused on how to drive performance. Each of the 3 panelists presented a different perspective—but the following common themes emerged:

Prioritize

The move into practice leadership means an exponential increase in situations with an apparent need for attention. The solution—prioritize. Don’t limit yourself to taking a hard look at the list of items competing for your precious attention. Scrutinize and decide what you absolutely must do and can’t delegate—and what needs to be done now. Now does not mean just short term—now can mean starting strategic initiatives as well.

Prioritizing can become a second nature skill, enabling practice leaders—and their practices—to be more focused and get substantially more done.

Delegate

Delegation quickly follows prioritization in lessons learned. These practice leaders looked to see what they could delegate up, sideways, down, or to support staff in some way. Limiting yourself to downward delegation constrains the ability to leverage your time. Practice leaders are moving more towards using support and management staff to help get things done.

Embrace Other Professionals Within the Firm

Embracing other professionals is a key part of a practice leader’s strategy. This includes the Marketing/BD department as well as HR. But, the newest area of support is coming from practice managers. These individuals help with running the practice and ensuring associates are being utilized—both for associate careers and maximizing billable time. Some of these practice managers drive communications and act as the go-to person to try to resolve issues which may not need practice leader attention.

Learn Why Not What

As a relationship manager, partners want to know what their client really wants, needs—and how to make this happen. As a practice manager, your focus becomes: “Why did we win this work”? What can we learn from this to win more work? What did clients see as our strengths and why did we stand out? All the practice managers agreed—the only way to learn is to ask clients—whether they interview clients themselves or through 3rd parties.

Talk and Listen to Millennials

The generational divide is top of mind. Our panelists suggest the best strategy for understanding and getting the most out of your millennials is to talk to them—and listen to what they have to say. The millennials may or may not want to be lifers at your firm but—the more they are heard and believe their voice matters—the longer they will stick around. These practice managers also note millennials have a sense of how the business of law and delivery of legal services may be disrupted—as disruption is a routine part of their life.

Overall, these practice managers are optimistic about the future but don’t suggest it will be easy. Each is highly focused and has a clear idea on where their practices are headed—and what they want their practice to look like. Successful practices use different strategies than other practices. These tactics are among those defining the high performers.

The panel consisted of:

Richard H. Moche, a Member at Mintz Levin and Chair of its Public Finance, Real Estate, Bankruptcy, and Environmental Division

Philip Sellinger, who recently served as Co-chair of the Global Litigation Practice at Greenberg Traurig and currently serves as Managing Shareholder- New Jersey; and Regional Operating Shareholder

Thomas Schulte, Senior Counsel at Clifford Chance. Tom recently served as Head of the Americas Banking & Finance Practice and was a member of the Firm's Partnership Council, the supervisory board of the global firm.

I extend my deep appreciation to Rich, Tom, and Philip for their candor, time, and energy in sharing these thoughts with a captivated audience at the Practice Management 2.0 Conference held last week (October 4, 2018) at the Gleacher Center at the University of Chicago.

MBR

9 Reasons Practices Thrive While Others Struggle

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Law firm performance is lumpy.

A small number of practice groups thrive in up, down, and even hostile markets—while others dwindle in the best of conditions. You can see this within a law firm or across a spectrum of different law firms. Thriving practices use strategies and tactics the others don’t. The good news is, you can learn how to start using these tactics immediately to improve your performance—even if you’re already thriving.

These 9 strategies and tactics include:

Training

Not to teach—but to bond and teach. Good training bonds the participants almost like boot camp. Bring your team together to learn and sweat over a never-before-seen problem and come to agreement over solutions. But the team-building could be more valuable than the learning. To practice, train everyone at least once a year in both hard and soft skills.

Continuous Informal Knowledge Sharing

No matter how big the group, the attorneys in the top practice groups are all talking to each other—and do it all the time. They talk about clients, legal issues, unusual circumstances, thorny problems, new ideas—and in this day and age—politics as well. Some of this time becomes billable—some not. But, the knowledge sharing results in better outcomes for clients—and this morphs into new business, cross-selling, client referrals, and a cohesive group who shares leads as part of this knowledge.

Ongoing Informal Dialogue

Unlike knowledge sharing, informal dialogue includes social talk, sharing about hobbies, families, and a whole other world outside law. While not the dominant topic over a year, a relevant topic providing the on-ramp for all the other conversations to take place. These practices also provide opportunities to foster this dialogue. We discuss this more in depth in this post: The 8 Habits of Highly Profitable Law Firms.

Shared Goals/Clear Strategy, Sense of Purpose

Top performers define clear approaches to the market and clients. Thriving practices have strategies for their largest clients, smaller clients, and set goals for growth. This contrasts with underperforming practices who rely on attorneys to develop their own individual strategies. This individual approach dilutes resources, prevents teamwork, and increases business development costs as each partner requires a unique support system to go to market.

Client-Centric Approach

So many practices rely on referrals from other practices (although they may never share this plan with these other practices), marketing to state bar associations, lawyers’ groups, and referral sources. While these can generate business—there is nothing more effective in building a practice than marketing to clients and decision makers directly.

Uniform Client Experience Through Client Service Standards

Every single client of the top-performing practices expects a uniformly high level of client service—and gets it. The top practices have client service standards which govern how each attorney interacts with clients. They can be as basic as informing clients of all filings to partners telling clients about change in scope within 48 hours of the change.

Client Feedback

High-performing practices embrace client feedback. They want to know how they are doing—exactly, how they can improve, and how client expectations are changing. These practices don’t care how good they already are; they care deeply about how good they can be.

Superior Client Service

Attorneys in the thriving practices deliver with anticipation and certainty. They know their clients and what they want to accomplish in each matter. Their clients have fewer surprises than others because their attorneys keep them up to date in near real time—and faster when needed. These high-performing practices work to always improve their client service—not just for their personal rewards—because clients expect their attorneys to always get better. This is one reason high-performing practices obtain client feedback.

Meetings and Retreats

Get togethers are the vehicles to create opportunities to meet, talk, and get to know one another. The more facilitated social time, the better. The more provocative speakers you offer, the more conversation you create. More conversation creates informal dialogue.

Any one of these tactics can improve your performance. As you adopt more tactics, you see benefits multiply. These tactics require time—no technology or size requirement stops any practice from embracing each individual step.

Hear More from Top Practice Leaders Live In-Person

I am honored to be discussing these topics and more with Philip Sellinger, Co-Chair, Global Litigation Practice, Greenberg Traurig; Thomas Schulte, Head of the Americas Banking & Finance Practice, Clifford Chance; and Kristian (Krist) Werling, Co-Chair, Life Sciences Practice, McDermott, Will & Emery in a panel discussion at the Law Firm Practice Management 2.0 on Thursday October 4, 2018. This one-day conference developed by my Co-Chair, Patrick McKenna, promises to be a high-impact and interesting event.

All BTI clients and friends are welcome to register at a 20% discount using this code: PMSPK20 as you register.

 Conference Agenda:

Law Firm Practice Management 2.0 Agenda

Event Details/Landing Pages:

Law Firm Practice Management 2.0 Event Summary

Law Firm Practice Management 2.0 Event Details

Hope to see you there.

MBR

Where Law Firms Think They're Great, and Where They Ain't

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The B players outperform the A players.

They are hungrier, want to make change and are ready to fight city hall (aka management), if need be. These law firm marketing leaders are focused on blocking and tackling issues such as: client service, client feedback, basic business development skills, client teams, and an occasional industry group.

This is from the results of more than 160 law firm marketing leaders’ self-assessment of 15 key areas of performance.

B Players are Building with the Basics

The B players are much harder on themselves—offering a self-ranking of 8 out of a possible 10. But, they sport the highest 3-year growth rate of all law firms, at just over 5%. It pays to be just a bit humble and focus on the basics.

A Players are Building Strategy before the Basics

The self-ranked A players show the slowest 3-year CAGR, at a 1.2%. The self-ranked top performers are focusing on the strategic. They are emphasizing legal prowess, technology, innovation, content marketing, industry groups, and collaboration—all important. But these programs rarely show results without training in the basics. These strategic programs are highly effective in attracting clients—but don’t turn into business unless partners can turn these leads into clients—using the basics which remain the focus of the B players above.

Doing What Works – the Self-Ranked 7s

Law firm marketing leaders ranking themselves 7 and below receive less institutional support than the self-ranked 8s, 9s, and 10s. The 7s put all their energy into getting programs, tactics, or a single effort in place—but they are making forward progress—at the 3-year CAGR of 4.3%.

These 7s are like the 8s—they focus on basics and building blocks. And don’t let go until their program is up and running—and working.

Influence by Osmosis

At a self-ranking of 6, the law firm marketing leaders are making an impact at the partner level. They may get a firmwide program or 2 off the ground (usually client feedback) and will use the feedback and their coaching skills to drive improvement and change. These CMOs take on the one-to-one relationships with the vested partners—and drive change with each one. The good news—the vested partners are typically the most interested in building client relationships and new business—so it’s well-placed leverage.

The self-ranked 6s deliver a CAGR of 2.8%.

The Disenfranchised

Ranking their firm’s performance at 5 or less—these CMOs are most likely to be in the market looking for a new gig—they try—but can’t get a lot of traction. They are pushing water up hill and want to make more progress. Usually, somewhere other than their current firm.

Few Areas of Greatness

Only 3 areas really stand out with a self-ranking of 10—with more than 20% of CMOs ranking themselves a 10—these are:

-        Cultivating Work from Existing Clients
-        Setting Strategic Direction
-        Providing Tools for BD

Conversely, more than 50% of CMOs rank their firms at 6 or lower in 4 areas: 

-        Partner Accountability
-        Using Metrics to Drive BD
-        Attracting New Marquee Clients
-        BD Training for Attorneys

You can see the full results of how CMOs rank their firms in each of the 15 activities by clicking here.

The best performers show a bit of humility and hunger. They show how mastering the basics beats the strategic at this stage of the market. But, it won’t always be this way. Business development is going to become a lot more difficult—and those firms who mastered the basics will be the first to really get benefits from a well-crafted strategy.

 
 

Based on in-depth interviews BTI conducted with more than 160 law firm marketing leaders between September 2016 and May 2017.

The Mad Clientist: Shoveling Snow Unlocks Market Feedback for Start Up

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Around the age of 8, I started to shovel snow to earn extra money in Lynbrook, NY, a suburb of New York City. I had 2 main competitors: my friend from across the street and another at the end of the block. We each charged $2 to $3 per house, and we all used the same strategy.

The natural marketing strategy was to leave the house and knock on doors to offer our services. We would visit the closest houses first and then fan out, skipping houses where there were kids our age. We made a good living for our age and kept ourselves in baseball cards and other essentials of the time.

As one particular storm was ending, I decided to change my strategy. I went out early and could see I was the first one out. I skipped my own house and walked 3 blocks away before I started knocking on doors. I started with Marjorie’s house, named for the high-school girl who lived there. Marjorie’s mom answered the door and promptly hired me.

I went to work and tried to do an especially good job. I am not sure of the reason, but I was pumped. I shoveled the entire length and width of the 20-foot long sidewalk. I shoveled outside the decorative rails going up the steps as well as the inside where people walked.

I finished the job, promptly ringing the doorbell. I received a nice thank you and compliment. Marjorie’s mom also handed me a crisp 5-dollar bill and told me to keep the change. I was in heaven. This was serious money.

I went away trying to spot more homes who would pay premiums, wondering why they would. I changed my whole approach with the next snow storm.

I made sure I would get to Marjorie’s house first, even before shoveling my own walk. I worked the outer fringes of the neighborhood first instead of treating my home as the starting point. I kept a list of the people who tipped and paid premiums. One customer asked me if I would take on shoveling their snow for the entire winter – my first long-term contract. I offered this same arrangement to other premium payers who all agreed.

I shoveled snow until the age of 14, when I was living in Poughkeepsie, NY –  where there was a lot more snow than in Lynbrook. This extra snow, and 6 years of experience, brought another realization: I was better off paying a neighborhood kid to shovel my own driveway while I was out getting paid for 2 to 3 shoveling jobs, instead of performing a non-revenue assignment.

I quit the snow shoveling business and found other ways to make money. I look back and think about how much guidance I got from my clients and the market itself, much as I do today. I am a bit of proud of the idea of hiring someone to shovel my own driveway to leverage my time. And every time a storm hits in the western suburbs of Boston where I live, I am reminded how much can be learned by listening to your clients.

MBR

Shoddy Law Firm Work Doubles

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Shoddy work is driving clients crazy. And, it is driving twice as many clients crazy—in fact, 22% in 2017, up from 11% the previous year. 

Most of this sub-par work is unintentional. Certain law firms don’t even know they are missing the mark. What’s worse—clients simply let these firms fade away never to be hired again. Few law firms ask for client feedback, so they never learn what they’re doing wrong (or right). The decline of quality work is reflected in clients’ growing impatience and in their redefinition of quality. Here’s how it happens: 

Missing the Mark

Certain law firms didn’t do what clients asked. These firms often believe they did, but their clients think otherwise. Clients say these firms racked up a lot of hours, and more importantly, precious time passed before clients figured it out. 

The law firms believed in their heart they knew what the client wanted. But these firms did not confirm their strategy, work plan, and overall approach. They did not confirm the scope. They may have provided a budget—but figured they could blow through it if needed. And off they went, with the best of intentions, delivering shoddy work because the client couldn’t use it.  

Other firms believed their client’s goal was unrealistic. Acting in what they believed to be their client’s interest, they changed course. These self-correcting firms added people and tasks to do the right thing. They worked into the night making sure no deadline was missed. And a few developed irrefutable research to back their positions. The only missing element was the most important one: sharing any of this with their client—who was ultimately stunned by the invoice and the strategy—and not getting what they want. Maybe their client’s goal was unrealistic, but the responsibility lies with law firms to tell their clients why—on a timely basis. 

These miscommunications are the biggest reason even the best technical legal work turns shoddy in the eyes of clients. 

I Know Something You Don’t

Silence during ongoing work has graduated from annoying to shoddy. Silence undermines confidence and can make clients look bad. Corporate counsel expect to be advised and updated on a regular, systematic basis, and when needed for unique events. Anything less is low quality and signals clients are not front and center. Or worse—no one person is looking out for the client. 

Final Invoices

Top legal officers believe the budget is a proxy for strategy and risk management. Clients know budgets change—but they don’t change at the end of a matter—changes can be seen and managed. Clients have concluded an over-budget final invoice represents their firm’s lack of planning and the use of an ad hoc approach to their work. No management means no quality. 

Clients still talk of faulty research, incorrect citations, and mistakes showing up in their documents. These are relatively rare in comparison and not something clients worry about and look for; and somehow, they don’t drive clients crazy. Maybe because they don’t leave the legal department and are easily fixed.

Clients have neither the budget nor time to deal with issues they believe should never have come about in the first place. The main safeguard against shoddy work: over-communicate with your clients. Always tell and retell clients what you are doing and why. And tell them once more, to play it safe. As one top legal officer put it, “Communicate until it hurts.”

MBR

(Based on BTI research conducted on a rolling basis between February 2017 and December 2017. BTI conducted more than 350 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations)

Exactly When, Where and How the Big 4 Will Steal Your Firm’s Best Clients

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PwC is out to steal your clients. They just told you so.

PwC, through its legal arm, ILC Legal, has formally announced its intentions to open its US office. ILC indicated it will “wait to see how the market reacts” to decide its future plans—we interpret this comment to mean: How many clients can they sign up and how fast?

And, by extension, the remaining 3 of the Big 4 accounting firms can’t be far behind.

This is more than a wake up call or point of observation—it is a rare defining moment. This is also the kick in the pants any organization would see as a screaming voice for change. The nature of competition has changed. Law firms will be competing against a new beast who has already been through the changes law firms need to make to be winners.

The Big 4 accounting firms faced the same issues as law firms face today—about 30 years ago. At the time, I spent a decade working for PwC predecessor firm Coopers & Lybrand and helped to implement their changes to make client service the top priority, rivaled only by business development. This included training in business development and working across practices and offices, selling multiple services to a single client, going to market by industry, segregating high priority pursuits from others and using partners with skills to land these prized clients, and harnessing the power of finding the right partners at the right time to win big-time work.

They figured it all out and haven’t looked back since.

The last time BTI measured (by interviewing more than 300 CFOs, CAOs, and other top financial executives a few years ago) we found:

  • PwC has the best client service of the Big 4
  • 58% of clients recommend PwC to a peer (the highest of the Big 4); for comparison - only 31% of clients recommend their primary law firm to a peer
  • PwC has a highly developed business development process designed to identify the strategic nature of potential clients, locate the right partners in terms of chemistry, industry and skills, and talk business issues to win big, sophisticated clients
  • Clients report PwC partners work collaboratively across the globe; clients say the majority of law firms don’t work collaboratively within their own firms
  • PwC was the first to develop the paperless audit—inventing new ways to use technology
  • PwC’s thought leadership is considered to be one of the gold standards
  • PwC plays hard and plays to win big

All of this is already built into the fabric of ILC Legal and will change the business development and client service rules in the legal industry.

The best clients will be the first to go on ILC’s target list. And your new competitor(s) will be playing by different rules. The most dangerous part will be in how this all plays out. No client will hand over all their work to ILC. The shift will unfold one assignment at a time and be hard to notice until it’s too late.

But, every law firm can still take steps to protect their clients and make it harder for ILC, or anyone else, to encroach on and poach your clients. Here is what we recommend you do about it, now:

Develop a Meaningful Client Retention Plan

Identify what the firm would do if you learned a client was thinking of shifting work elsewhere. Who would lead the charge? Exactly what steps would you take? The steps include intense client feedback, coaching from top rainmakers and consultants, changes in the team, adopting client service standards for these mega clients who might be defecting, forming a dedicated client team and meeting quarterly to discuss progress internally, and talking to clients semiannually to check progress. The sooner you start taking the steps, the less likely your clients will defect.

Get Deep, Meaningful Client Feedback

Not client satisfaction feedback, but performance feedback—and, the type of feedback which reveals how your clients want you to perform. Clients view performance improvement as equal to/or more important than understanding their goals—because if you can’t improve, you can’t meet their goals. And, they will never be satisfied.

The winning firms are getting feedback from their:

  • Largest and most important clients
  • Large clients where you do only a limited amount of work
  • Large clients (as measured by client revenue) where your fees have flat lined or declined
  • Clients where they have a new GC

Implement Your Client Teams Now

Dedicate your most skilled and high potential resources to care for, look after and grow client relationships on a long-term basis well beyond the current case. Make the leaders accountable for a robust business development plan and give them the budget they need to keep your clients for years, if not decades.

Train Partners in Business Development and Client Service

Most partners in law firms readily admit business development is their biggest weakness. And you can’t develop business without superior client service. The Big 4 are decades ahead of law firms in establishing business development and client service cultures. The firms unable to beat the Big 4 back with superior client service and business development are already at a disadvantage.

You can start changing now—and see business development skills, and client service soar in less than a year with the right training.

While there is more you can do, the steps above are game changers for most law firms. Follow these recommendations with the same zeal as you track and bill time and you will be ready for battle with any firm—Big 4 affiliate or not.

You battle the Big 4 (and other law firms) on the client-facing front lines of competition. The law firms who make the investments now and build these skills into their culture will leave all others behind—some far behind. Few industries get a wake-up call announcing one of the final chances to change is upon them. No firm serving medium to large clients is immune.

BTI has successfully helped our clients work through and accelerate the pace of change and improvement—at the Big 4 Accounting Firms as well as the law firms wanting to keep pace and even move ahead. We can help you with any or all of these recommendations—I welcome your call to discuss what this would look like for you and your firm. Reach me at mrynowecer@bticonsulting.com.

MBR

Client Interviews with Managing Partners only Scratch the Surface

With your competitors out interviewing wide swaths of their clients, firms who stick solely to Managing Partner interviews are missing out on a catalyst for firm-wide change.

You can view the video below, or on YouTube directly here: https://youtu.be/koatZ1Odmvs

We’ll be releasing videos here on The Mad Clientist blog every Tuesday. Subscribe today (in the box at the upper right of your screen) and be sure you don't miss a single one.

The First $100 Million Client

$70 to $80 million clients are no longer the study of cryptozoologists. These relationships are real, tangible, verified, and highly prized. And, the $100 million client is within sight*. To be clear, these gargantuan relationships are rare—with somewhere around 30 clients globally spending $70 million or more with a single law firm on a recurring basis.

This milestone marks the beginning of a new age. Law firms of all sizes will start to see relationships substantially larger than they have seen—and in some cases imagined—before. This phenomenon will not be limited to the world’s largest firms. We uncovered one of the largest relationships at a law firm in the largest 101–200 law firms. We expect to see a select group of smaller and midsize firms developing more relationships in the $25 to $50 million range—if not bigger.

Giga-relationships come about in many ways. But we find a core commonality of all the strategies in use to develop and keep these clients.

All of the firms with giga-clients have a continuous client feedback loop. This feedback is detailed, covers every aspect of performance, and is specific. The feedback is candid because these clients want their law firms to get better and become even more valuable. These clients don’t give their law firms time to rest or admire their own performance. This is a world of real performance feedback—the kind every law firm would (and should) want from any client.

The firms rarely talk about collaborating—the team is too busy working together. The senior partner spends enormous energy making sure everyone on the team is informed about the client and each other. Everyone understands this client team has a leader. Anyone on the team who worries about not getting credit usually finds themselves no longer working on the client’s assignments. These clients get an all-or-nothing effort.

Some of the lead partners have been known to swap origination credit and other metrics to ensure all would benefit over time while putting client needs ahead of their short-term interest. This is client focus working around a system getting in their way.

And, underneath all these essential client-centric, selfless behaviors lies a shrewd strategy. The senior partners are busy sowing the seeds for future work. These partners are talking to their clients, analyzing their every word, report, and filing they can get their hands on. These partners send their team members to attend product development meetings to spot new IP and regulatory opportunities—and use this to think about how to get their clients to market faster. These partners have the best client intelligence, business intelligence, and client feedback in the world—and they use it all to stay ahead.

Firms can draw out these valued partner behaviors because the prize is so visible and cost of failure so obvious. But the same applies to almost any Top 100 client in any firm of every size. The opportunity in most clients is enormous. The same partners who developed these giga-relationships started with much smaller relationships—no one starts with a $70 million client relationship.

We recommend adopting the strategies and attitudes used to support the largest client relationships with these clients. In fact—go further—think about your firm’s top 100 clients. Every BTI client we know adopting this approach has registered double-digit client growth within 2 years. Today’s low growth market screams for this approach.

The law firms with the mega relationships have an edge—but you can start your own version of giga-client care today. This could be one of the most strategic decisions you make. All you need is one competitor to act before you at the same client and you are now behind. BTI has helped numerous clients develop these large scale trophy relationships—some starting with $200 thousand in billings. Call or click here to talk this through in more detail.

BTI research shows the average size of the largest relationship at a law firm is:

  • $33.6 million at the Am Law largest 30 firms

  • $29.3 million at the Am Law 31 to 100

  • $18.3 million at the Am Law 101 to 200

  • $4 million at the firms between the Am Law 201 and 350th largest firm

The single largest relationships are:

  • $72.1 million at the Am Law largest 30 firms

  • $73.3 million at the Am Law 31 to 100

  • $81.3 million at the Am Law 101 to 200

  • $27 million at the firms between the Am Law 201 and 350th largest firm

You can use this analysis to benchmark where you stand—and think about how these numbers may impact your strategy to grow your own version of a giga-client—whatever your size. 

MBR

*Based on in-depth BTI research conducted on a rolling basis between February 2016 and August 2016. BTI conducted more than 330 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations, as well as 200 interviews with law firm leaders.

How Big Law Uses Client Feedback Differently

BTI's research finds big law uses client feedback in ways most firms typically don’t consider—while finding ways to push traditional client feedback a step further than expected.

You can view the video below or on YouTube directly, here: https://youtu.be/tYOkr9LK1CE

We’ll be releasing videos here on The Mad Clientist blog every Tuesday. Subscribe today (in the box at the upper right of your screen) and be sure you don't miss a single one.

Law Firms Missing Best Source of Innovation

Innovation has a long and a short game. The long game is the sexy part. Few can argue how the ability to forever change, disrupt or even reinvent an industry isn’t a little exciting. But, as we wait for the long game to play out, we are all forced to play the short game. Today, we face clients who want new and never before seen ideas and approaches. Your clients love the long game, but earn their bonuses in the short game.

In the short game the only clear, constant source of innovation is your ability to bring truly new and original thinking to clients. This means you bring a continuing stream of new approaches to the previously unseen situations your clients currently face.

20% Higher Profits from the Short Game

The innovation short game is a client-by-client process. Each client offers you their own set of unique challenges in which you can invest your time and energy. Outside counsel delivering the newest, most novel and valuable approaches to client problems report 20% higher profits per partner than other firms.

Corporate counsel believe innovation will get them a better outcome. These better outcomes for clients translate into better outcomes for law firms, too, including:

New Business: Innovation is one of the few activities proven to attract new business. New and existing clients will seek you out once they learn you are doing something other firms don’t.

Premium Pricing: Clients are paying premiums for these innovative services. The value of your new approach or offering justifies a higher price tag.

Better Pricing across the Board: Your innovation creates a value umbrella. The innovation makes everything you do worth more to clients.

Clients Changing Definition of Innovation

Our 27 years of carefully listening to client feedback tells us innovation has become dramatically more important to clients than ever before. Today, client education—meaning customized for your specific client’s situation and delivered in person—dominates innovation. The top innovators also design continuing legal education sessions for their clients’ staff and provide tools—both online and offline—for clients to educate themselves. Client appetite for learning relevant information is insatiable.

4 years ago clients crowed about Alternative Fee Arrangements (AFAs). While still considered innovative, they don’t bring the same bang for the innovation buck as custom education.

Corporate counsel also value technological innovation centering on eDiscovery, document sharing, and project management—but not as much as they value education.

Finding the Best Sources of Innovation

There are few better sources of innovation than your clients—especially for the short game. Clients report the most impressive are client specific and designed for them. This makes talking to your clients one of the high-speed conduits to high-impact innovation. Probing clients for their needs and for the tools they would like to see developed or have developed themselves is a long-proven strategy for finding opportunities to innovate. The best-run firms bring this data together to find trends across the client base and help a large number of partners innovate—and inform their long game.

Industries and professions outside law are well known for reaching out to their customers and clients for sources of innovation. You can find numerous studies and statistics to drive this point home. Two of the more compelling examples include:

1.       A study of 1,193 commercially successful innovations across 9 industries, where 737 (60%) came from customers. (Users as Service Innovators: The Case of Banking Service by Pedro Oliveira and Eric von Hippel)

In their paper, Oliveira and von Hippel explore the histories of 47 functionally novel and important commercial and retail banking services. They find that, in 85% of these cases, users self-provided the service before any bank offered it. For example: “sweep” accounts (automatically transfer money between checking and savings accounts for max interest). Assets in such accounts grew from $20 billion in 1991 to $368 billion in 2005 and allowed banks to reduce their required reserves.

2.       “3M’s poorly performing Medical-Surgical Markets Division was looking for a way to kick start its lackluster innovation record in the 90s. Instead of taking the standard route (relying on internal, employee backed ideas), a separate team was formed to search for breakthrough innovation that consisted of the “lead users” (read: customers).

When the results of these two groups (users vs. employees) were compared side-by-side in terms of revenue generated, the differences were quite drastic:

        User-lead innovations had an average revenue of $146 million dollars (in 5 years).
        Internally generated innovations had an average revenue of $18 million (for the same span of time).

The results were clear: Customers were coming up with the winning ideas more often than not.”
(Courtesy of https://blog.kissmetrics.com/what-customers-want/)

Client feedback will make your short game more potent. Your skill in the short game will drive success in your long game, and reduce the time you need to develop your long game. Your ability to blend your long game and short game demands diligence and practice—just like any other sport. And, the more you and your partners practice, the higher your profits will go. Just ask the law firms getting the 20% premium now.

MBR

 

The Cost of Stealing a Major Client from the Largest Law Firms

First, big law said they want to crush you like a bug. Now they are putting their money where their fly swatter is.

The largest 30 law firms in the world are spending substantially more of their marketing budgets on client development than all other law firms. Words are important here—client development. This means focusing on developing business with existing clients or highly targeted prospects. Client development follows the path of putting more resources into fewer initiatives for better results.

The biggest 30 firms spend 33.8% of their marketing and business development budget on client development compared to 27.6% at firms outside the top 30*. This budget shift is not nearly as important in dollars as it is in intent. The mega firms have changed their strategic priorities in favor of developing clients and specific targets rather than cold prospects—cultivating more business in fewer places.

The behemoth firms are taking money away from their general events, broadcast webinars and seminars to fund the increase in client development. This is not a complete elimination—just about a 50% cut in funding. You will still find these events—but you will find fewer of them.

The new budget allocations at the largest firms have 2 immediate impacts:

The smaller firms are casting wider nets and working harder to lure new clients in. And, most importantly, law firms outside the top 30 who haven’t matched the increased funding on client development are leaving their clients more exposed—but this can be fixed, now.

Change the Odds in Your Favor Today

Start by reallocate your budget to proportionately match or exceed biggest law’s client development. Every size law firm can immediately increase its focus on existing clients by:

  1. Repurposing your webinars and events to be client specific. Add key insights which relate to each of your top client’s issues. Deliver these repurposed webinars privately—onsite or by web—for just your client and their staff. (This is also a powerful tool to introduce new partners who can present and comment on client related issues and questions.) Fund these by reducing the number of generic events.
  2. Taking a big chunk of time and money dedicated to events and spending it on top clients. Use the funds for partner visits to clients, take facility tours, and develop annual plans with clients.
  3. Researching the daylights out of clients. Learn how your clients’ needs and pain points are changing through client feedback. Find out exactly what you are well positioned to do and what you are not—then act. Use client interviews as a road map to new work and as a vehicle to prove you are one of the law firms investing in the relationship.

Short and long term success belongs to those who can build, attract and keep the most clients. The more intense the competition the more valuable each client becomes. Client development budgets will only continue to grow for the foreseeable future in both big law and the successful firms.

This focus on client development is one reason we are breaking records for the number of client interviews we are conducting for our clients. Even the best performing firms ratchet things up when they see exactly how competitive the world is in just one client. You may be even more surprised at how much opportunity there is to be had with existing clients—making this all worth it to put more—much more—of your marketing and business development budget towards clients. 

MBR

And next week, join Jennifer Petrone Dezso and me at LMA 2016 on April 13 at 2:30 pm as we cover even more ways to keep the biggest law firms from crushing you like a bug. 

*Based on in-depth interviews BTI conducted with 135 law firm marketing leaders.

Why Clients Fire: The Silent Epidemic Undermining Your Firm

More than 50% of clients say their primary law firm’s biggest weakness is inconsistency.*

Consistency in delivery is synonymous with quality, client service and trustworthiness. Clients interpret uneven delivery as lack of commitment, lack of communication within the team, and doubt as to whether the team understands the client’s underlying goals.

Clients report 4 major areas where law firms are the most inconsistent:

  • Keeping clients informed
  • Dealing with unexpected changes
  • Handling problems
  • Meeting scope

Clients dream of one stream of proactive communication keeping them in the loop about all matters at a firm, all delivered at a uniformly high level. Instead, clients receive an unpredictable set of communications arriving in different forms at different times from different people. Not only does this create work for clients—it unnerves them. Clients start to believe no one is watching over their business.

This law firm inconsistency is a silent epidemic. Few law firms ever take inventory of all the different interpretations of how and when to talk to clients. This offers wide latitude in exactly how clients experience their interactions. The more difference in style, substance, and schedule, the more inconsistent the experience. Nothing intentional—inconsistency just happens—unless a firm provides a set of performance standards for all to understand.

Your inconsistent delivery is exceptionally hard to detect. Few firms ever test for and measure consistency. Even fewer firms define client service performance standards to clearly articulate what an exceptional client experience looks like. Instead, each partner is left to define their own standard.

Defining Consistency

In 2014, during their first round of client feedback interviews with BTI, we discovered inconsistency in delivery across Firm X’s client base. Worse yet, we found one of their largest clients reluctant to expand their relationship with the firm. During the interview we learned this important client had awarded more than $4 million in work to another firm due to the inconsistencies between all of the attorneys she worked with at Firm X. Nothing legal—but everything else.

We worked with Firm X to fly into action and develop firm-wide performance standards for service delivery.

The firm chair met with the GC in person—offering a blanket apology. With the guidance of the feedback interviews, the chair proposed developing performance standards for this client—based on their specific goals and preferences.

We collectively built out—with Firm X and their client—detailed performance expectations for the most influential client touch points, including:

  • Confirming client goals in writing
  • Partners providing a detailed explanation of invoices over the budgeted amount before submitting the invoice
  • Providing updates based on client preference
  • Informing clients of scope changes in near real time
    • Including impacts on budget and timing
    • Outlining impacts on outcomes
  • Planning points of informal client communication throughout the matter

Firm X’s chair arranged to train everyone associated with this client in the new client service standards in three sessions—one for partners, one for associates and one for support. The chair and GC now meet twice a year to discuss performance and how to continually improve. Firm X also measures performance in these areas (and more).

Two years later the relationship has more than doubled to exceed $7 million in annual billings.

Strategic client feedback is the only reliable tool to test for and measure your firm’s client-facing consistency. Your ability to deliver to a uniformly high standard signals your ability to take on more complex work and work in additional practices. Inconsistency compels clients to look elsewhere when awarding their next large assignment.

MBR

*Based on BTI research conducted between March 2015 and September 2015. BTI conducted more than 300 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations.

False Hope or Healthy Worry? Law Firms Rank Their Strategic Plans

Law firms are placing their bets. Larger firms are putting their resources into fewer initiatives than smaller firms, and have more confidence in their plans. But, the worry about strategic plans at smaller firms may be of the healthy variety. History shows us some of the most successful organizations in the world worry the most about their strategy—and especially its implementation.

Firms outside the largest 100 are more worried about their strategic plans than the largest 100 firms. The top 100 rank their confidence at 8.8 out of 10 with 10 being supremely confident. Firms outside the top 100 show a 7.6.

While confident—the large firms are concerned about accountability and pricing. These same firms want to boost talent development and business development. Large firm concern over accountability may in the end be a boost to success as accountability drives implementation. The large firms show a bias towards focusing on a more targeted group of markets and clients than their smaller brethren—which may seem counter intuitive but—shows the discipline associated with a well crafted strategic plan.

Smaller firms express concerns about their strategic plans being less robust—lacking a client voice and the analytical rigor which drives firms to prioritize one opportunity over another with conviction. In effect, the plan becomes hard to implement as designed or ends up with all opportunities being close to equal. At the same time, smaller firms are routing resources into capturing a wider group of clients and markets than the larger firms. We are also seeing renewed activity in lead generation, which is a much lower priority at larger firms. The majority of strategies outside the largest 100 are less focused.

Both sets of firms can learn from each other and improve their implementation and plans. Lessons from the most successful firms—small and large—include:

Focus:

More than 3 goals reduces any sense of priority—defeating the point of strategic planning.

Client Feedback:

Any firm who develops a strategic plan without client feedback takes on great risk by overlooking the best and lowest risk opportunities right in front of them—and missing the needs of the clients they already have.

Accountability:

Names, dates and how much—anything less is not measurable, and not enforceable, and can lead your firm astray.

Strategy is the new centerpiece for growth because the market itself offers very little. Law firms now have to outsmart each other. In a profession with enormous brainpower the battle for clients and share will go to those who can not only develop the right strategy but can develop the culture to make it happen. A good plan is proven to drive culture—as well as market gains. All the more reason to engage in some healthy worry to avoid basing your firm's future on false hope.

MBR

PS. BTI helps you sort healthy worry from false hope and assess your options to find the growth best suited to your firm: from least risk to highest return and anything in between. Contact me today for more information.