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April 09, 2008

The most important trends in legal business development (Part 5 of 5)

Value.  At one level, everything comes back to price.  But at a more fundamental level, the price that clients think is fair is based on their perception of value.

Lawyers typically believe that the quality of their legal work is a competitive differentiator. Clients do not. At the LMA panel, Mary K. Young put it this way:  “Quality of legal work is a given, but truly responsive client service is hard to find.”  It includes:
• “Solutions that achieve business needs, not legalistic responses
• Meeting or exceeding deadlines, and
• Projecting costs and managing the billing process...”

To win in this tougher environment, law firms must change the very way they do business and, according to panelist Leigh Dance it requires firms to:
• “Prepare to be one step ahead: measure and prove your value proactively
• Improve transparency in budgets and estimates and allocation of resources
• Demonstrate and promote efficiencies
• Offer value added services free”

Wait a minute.  Did she say free? Yes she did.  LMA panelist Norm Rubenstein also talked about the competitive benefits of offering “a host of unbilled products and services dedicated to relationship development, including CLEs, intellectual property, and loaned staff.”

Predicting the future.  These are hard pills for law firms to swallow, since what is free for the client comes straight out of the partners’ profits. Why give away something for free, if you don’t have to?

As Nobel prize winner Niels Bohr famously put it, “It is very hard to predict, especially the future.”  It is human nature to deny that there is a need to change.  The experts may be wrong about the future payoff from free services, but you can be 100% certain that you can increase profits per partner in the present by avoiding free giveaways.

Over the next few years, we’ll see who’s right.  I side with the many observers who think that these critical trends will continue to transform the legal profession:

Past

Future

Clients are loyal

Clients look for the best deal

Social relationships are critical

Value relationships are critical

Process can be hidden

Process must be transparent

Price is a given   

Price is constantly re-negotiated

Value is assumed   

Value must be proven


What about the present?  Where do law firms stand today on these issues?  There is no simple answer, because we are living in a time of transition.  The emphasis varies from client to client, from firm to firm, and from one practice group to another.

Some lawyers will refuse to accept this argument until it is too late.  Who wants to believe that firms should spend much more on client satisfaction?  And maybe spend much less on season tickets, expensive dinners, and golf junkets? 

So some lawyers will continue to operate as they always have, until the day that they lose the large clients who have been paying the rent.  Then there will be weeping, gnashing of teeth, and calls to the business development department.  But it will be too late.  As Steve Barrett, the Chief Marketing Officer at Drinker Biddle put it, “Once you lose the trusted advisor role, it can take five years to get back in.”

This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development."  To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.

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Comments

Well written article, and I agree entirely. Thank you for your fresh point of view. Keep up the good work.

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