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Why process efficiency, project management and relationship data are now the keys to success in law firm client relationships

By Ryan Steadman posted 12-09-2016 15:42


Today’s law firm clients are more interested in value than ever before and have never been less loyal to outside counsel. Ryan Steadman, Customer Value Engineer at Tikit North America, argues that in response, firms urgently need to up their game across a handful of business critical disciplines including data security, process efficiency, project management, relationship data science, and matter transparency and collaboration if they want client relationships to prosper. In this blog he addresses some of these themes.

I’m seeing a sizeable shift in how legal services delivery is changing. It’s true that the old certainties of cryptic matter management and old school tie loyalty are being dissolved. The billable hour, for example, is becoming an endangered species as more and more clients want greater and predictive control of their legal spend and to explore alternative fee arrangements. As well, the dissatisfaction that clients feel when presented with opaque bills is hardening into open rebellion. Clients are now much more likely to challenge bills than before.

I’m also seeing that today’s clients are looking for more collaborative ways of working with all of their suppliers, and that includes outside counsel. In line with the wider business and societal climate, they also want more transparency – which is to say that they want a clearer understanding at all times of what exactly it is that firms are doing on their behalf.

Across the board, then, traditional client relationships are eroding and firms can no longer afford to be complacent. The question is, are they able to respond?

The problem with value

I certainly see a fistful of leading innovative firms who are on top of (or at least being proactive in) addressing the disruptive forces at play in the delivery of legal services. They’re following the lead of other professional services providers in tackling the information systems deficits that are holding the legal sector back. They are leveraging technology platforms and fine tuning process and service delivery. It must be said, though, that this advance guard is in the minority.

There are still many, many firms who struggle with fundamental issues. They don’t actually know what their services really cost or have an idea where the inefficiencies lie. They don’t really understand how their costs are made up. More concerning yet, some of these firms don’t understand the concept of value and haven’t grasped that clients now want firms to demonstrate value much more convincingly. In particular, clients want to know that they are paying for legal expertise and the application of cerebral legal brilliance, and not process inefficiency. I know, for example, of a large firm that will take three days to generate an international conflict of interest check, simply because it runs 17 incompatible systems across the globe. Inefficiency of this magnitude is no longer acceptable.  

Going forward, the successful firms will be those that make a point of investing in process improvements, leveraging patterns of data science, and implementing the concept of smart law (i.e. using professional consumerized digital toolkits to create internal process efficiencies at internet scale). Some of that will be about changing behaviors to embrace technology and a lot will be about getting the right systems in place around data collection and data management.

Driving great client relationships and business development

Another area that needs attention is project management and a scientific approach to client relationship data across a firm (the latter is particularly critical during law firm mergers).

Alongside process efficiencies, effective project management sits at the heart of healthy client relationships. For their own sake as well as that of their clients, many firms need to first and foremost recognize their role in the service delivery model and then get good, no – get GREAT – at it.

This means that they need to be able to grasp the full lifecycle cost of what they’re doing so that they can price projects accurately. They must be able to tell their clients with reasonable certainty how long projects will take so that their clients can understand the journey.

Firms must also understand the blend of resources needed to deliver in a timely and efficient way. As well as accurate costing, this can enable the client’s internal counsel to contribute and collaborate much more efficiently and effectively, which is increasingly what they want to do.

The successful firms will be those that are able to deliver high quality project management planning and costing because they have the capacity to capture and analyse the data that brings visibility to all of their activities. This means not only applying effective project management against a single matter but across a portfolio of matters and delivering positive outcomes using established metrics across the whole portfolio. The volume and quality of that portfolio of matters is almost always directly proportional to the quality and volume of relationships with the client.

Making sure the price is right

The final piece in the jigsaw is price. This goes back to value for money, remember, not cost. Clients need to see efficiency improvements and competent project management. Then they need to see that the price reflects the value they feel they’re getting. This means they need to see bills that break activities down and explain where the costs lie. It’s no longer enough to charge for, say, ‘Email received from client’. The client now wants to know what the email was about, who read that email, how long they took, and what they did as a result of reading it.

They also don’t want surprises and shocks. So ideally clients would like real-time visibility of how their fees are clocking up. This takes secure systems and discipline around contemporaneous timekeeping to make it work. However, the reward is that the client relationship is strengthened because it instils trust, transparency and a greater probability of future revenue. Also bear in mind that contemporaneous timekeeping is the fountainhead of all the data the firm will subsequently rely on.

The takeaway is that to thrive in today’s highly competitive legal services world, firms need to move the needle forward for process efficiency by leveraging their existing technology or introducing new disruptive technology. Unfortunately senior partners are often loath to make the necessary investment, so a strong business case needs to be made that demonstrates a reasonably rapid return on investment.

The alternative though is stark. If you’re not at the table communicating, collaborating and partnering with clients, it may be because you’re on another, smarter law firm’s menu. And about to be eaten up.