10 posts categorized "Legal Business Development"

January 15, 2020

Case Study: An Integrated Approach to Providing Clients with Greater Value (Part 1 of 2)

By Tim Batdorf and Jim Hassett

This post is based on a recent interview with Melissa Prince, the Chief Client Value and Innovation Officer at Ballard Spahr, a nationwide firm with more than 650 attorneys in 15 offices. She oversees the firm’s award-winning Client Value and Innovation Program, which focuses on creating a customized client experience centered on value, cost predictability, and efficiency. Under Melissa’s leadership, Ballard Spahr was named to the Financial Times’ “Most Innovative Law Firms: Business of Law” list, a BTI Consulting innovation “Mover and Shaker,” and a finalist for the American Lawyer Industry Awards for best law firm/client team and best business team.

Q: Let’s start with a 10,000-foot view of how your group is organized, and your role.

A: I head Ballard Spahr’s Client Value and Innovation Program, and oversee the pricing, matter management, practice technology, and data management teams at the firm. Our group includes more than 20 business professionals with legal, finance, technology, data science, and project management backgrounds and certifications.

Q: And how does the Client Value and Innovation Program fit into Ballard Spahr’s organizational chart?

A: We are a stand-alone department that reports to the Executive Director and works closely with the firm’s Chair, Managing Partner of Finance and Operations, Strategic Planning Partner, Board, and Executive Team. The degree of support we have at the top is a key factor in the department’s success. We engage in rigorous planning when we take on new clients and engagements. We perform detailed scoping exercises, select diverse team members to handle each matter, prepare budgets, and provide clients with fee arrangement options. Each new arrangement is reviewed and approved by our Managing Partner and legal department leadership. Since we started our program several years ago, the team has earned the respect and trust of our attorneys. They understand that the process has leadership support and is tied to the firm’s long-term goals and strategy. 

Q: Before we get into the details of how this works, let’s briefly jump to the bottom line: Has your group been able to produce clear evidence of financial success?

A: Absolutely. One of the easiest places to see this is in our role in growing existing and new client partnerships. For example, several years ago one of our clients—a Fortune 500 company that was working with several hundred law firms at the time—decided to increase efficiency and cost predictability by consolidating all of its legal work with just a few firms. It put out a request for proposal (RFP) to select the firms that would handle all its legal work.

Ballard Spahr was chosen as a finalist. The client selected us not only because of our legal experience but also because of our sophisticated capabilities in pricing, matter management, and client technology, which other firms did not have. Much of what we talked about in the client interview meetings was how we intended to price and manage matters, because that was incredibly important to the client. We made a commitment to budgeting and managing the client’s matters and thinking innovatively about the service we could deliver.

The client named Ballard Spahr to a panel of just three firms to handle all its legal work. At the time we responded to the RFP, we had done a limited amount of work with this client. Within the first year after the RFP, however, the work quadrupled. It is a huge success story for our group and the firm. And it is one of many success stories I can point to that demonstrate the value of what Client Value and Innovation is doing.

Q: Did the process of working with this client change your approach in any way?

A: We customize our approach to each client’s needs, and the experience with this client definitely helped us realize that we need to focus more heavily on managing client relationships for larger firm clients.

The problem with law firms is that administrative functions often are siloed, and it’s hard to get everyone to work together closely and communicate about what’s happening. When we started to onboard new matters for this client, we quickly realized that we needed a single point of contact at our firm to ensure that matters were set up properly, to develop budgets, report on monthly accruals, and to help with matter management.

Our matter management team stepped in and now plays a central role in overseeing this process. We understand what’s going on in every matter. We work with the lawyers to manage each matter to make sure we stay within budget, comply with the client’s outside counsel guidelines, and bill the matter the right way. We developed real-time budget-to-actual reporting so that the client can see exactly what's going on at all times, and can be proactively involved in making decisions about its matters. We also worked with the client to develop a quarterly financial report template used by all of the client’s law firms, which provides portfolio- and matter-level details and compares financial performance and cost savings. The client also can see the value-adds that firms are providing, such as secondments, CLEs, pro bono work, advice and counseling, and technology.

The matter management group has direct contact with the client and has, in essence, become the client relationship manager on the business side. We also work directly with the attorneys managing the legal work to ensure that we are doing everything we can to develop the client relationship.  

Q: Do you think that this kind of client-facing role for Legal Project Management (LPM) teams will grow at your firm and at others?

A: I do. In the world we live in, clients are driving change at law firms. Clients with larger legal departments now have legal operations people who expect law firms to have business people in similar roles who speak their language and help manage their matters. Clients with smaller legal departments or “teams of one” that don’t necessarily have a dedicated legal operations function also appreciate that firms like Ballard Spahr have invested in resources, like our team has, to provide support. Our team is much more client-facing than we were even a couple of years ago. I now meet with several clients a week to hear about their needs and work with them to develop pricing, matter management, and technology solutions. I think the importance and the client-facing nature of my role and others like mine will only continue to grow.

In part 2 of this blog series, we will spotlight how the matter management team and other teams at Ballard Spahr operate to provide award-winning client value and innovation.

January 01, 2020

Legal Project Management: 2019 Year-In-Review (Part 2 of 2)

According to law firm leaders, efficiency is here to stay.  86% say that a focus on practice efficiency is a permanent change in the legal marketplace.  Efficiency ranked number one among 18 different trends (p. 1, LFiT).  

So, what tactics do law firms use to increase efficiency?  It appears that the most effective tactic is rewarding efficiency and profitability in compensation decisions.  A solid majority (62%) report that they experienced a significant improvement in firm performance when using this tactic (p. 23, LFiT).  This is also consistent with common sense.  If you pay someone to do something, they’re more likely to do it.

But digging deeper into the details presents a more nuanced story.  When asked about several different efficiency tactics, a large percentage of law firm leaders said it was “too soon to tell” (p. 22, LFiT) which means they didn't have sufficient information to respond in a meaningful way.

If we eliminate those respondents who said it was “too soon to tell,” and if we focus exclusively on those who have sufficient experience to provide a knowledgeable response, we find that:

  • The LPM tactic of systematically reengineering work processes is highly effective, with 91% saying it resulted in a significant improvement in firm performance.
  • This is closely followed by the tactic of rewarding efficiency and profitability in compensation decisions, at 89%.
  • Providing ongoing project management training and support is also highly effective, with 86% of law firm leaders saying it resulted in a significant improvement in firm performance.
  • Other tactics such as: (i) using technology tools to replace human resources, (ii) using non-law firm vendors, and (iii) implementing a formal knowledge management program were also found to be effective at rates of 81%, 80%, and 76%, respectively.

In essence, what this data tells us is that each one of these efficiency tactics works the vast majority of the time.

But despite these successes, very few law firms are serious about changing the way they deliver legal services.  Based upon responses from law firm leaders, only a small handful of firms (less than 2%) are doing everything they can to change the way they deliver legal services.  Roughly one-third of law firms (34%) are moderately serious about changing their behavior, and nearly two-thirds of law firms (64%) show little to no interest in changing how they deliver legal services (p. 42, LFiT). 

Why are so many firms so slow to change?  First and foremost, partners don’t want to change.  69% of law firm leaders say that partners resist change efforts.  Even when partners are willing to change, a solid majority (60%) say that partners are unaware of what they might do differently (p. 44, LFiT).  And when a law firm attempts to implement LPM, it takes time to determine whether the program is working.  A slim majority of law firm leaders (53%) said it is “too soon to tell” whether their ongoing project management training and support programs have resulted in a significant improvement in firm performance (p. 22, LFiT).  Despite these challenges, most law firm leaders (54%) say that the urgency to change has increased over the past two years (p. 43, LFiT).

*****

At LegalBizDev, we believe that if a law firm aggressively seeks to implement an LPM program and works to change lawyer behavior, it can make great strides towards resolving the challenges described in this blog series.  For example, understanding what the client wants and communicating value to the client improves client service.  Being a leader in LPM serves as a differentiator.  Actively managing legal matters using a variety of LPM tactics helps ensure that financial data is used correctly and that AFAs are profitable.  LPM coaching helps lawyers overcome resistance to change and understand what they can do differently to become more efficient and profitable.

Even without considering any of the data presented here, it is crystal clear to most law firm leaders that clients want lower costs and greater efficiency.  Our experience is that LPM helps law firms provide these benefits to clients, and this is supported by independent survey data.  The firms that provide these benefits effectively are the ones that are most likely to be profitable in coming years.

LegalBizDev is currently offering complimentary “LPM trends” webinars to LPM decision-makers to discuss this information in more detail, including new data as it is released in 2020.  If you’re interested in a complimentary 30-minute webinar, email us at info@legalbizdev.com or call 800-49-TRAIN today.

December 18, 2019

Legal Project Management: The Year-In-Review (Part 1 of 2)

In 2019, three major papers were published summarizing data collected from over 500 law firms and 250 law departments: 

  1. Altman Weil’s Law Firms in Transition survey (“LFiT”)
  2. Altman Weil’s Chief Legal Officer survey (“CLO”)
  3. The CITI Client Advisory report (“CITI”)

Based upon these reports, and also upon the multiple webinars, interviews, and informal discussions that we held with LPM decision-makers in 2019, we believe that law firm leaders should concentrate on five key issues to improve profitability, as discussed below.  One of our major takeaways from 2019 is that, if a law firm aggressively seeks to implement an LPM program and works to change lawyer behavior, it can make great strides towards resolving the challenges described in this blog series.

(1) For non-hourly alternative fee arrangements (AFAs), increase efficiency to reduce costs

It’s difficult to obtain unanimous agreement on anything, particularly among law firm leaders.  But not a single leader predicted that there would be a decline in the use of AFAs in 2020 (p. 8, CITI).  A huge majority (87%) predicted that the use of AFAs will increase in 2020, while 13% said that the use of AFAs will remain about the same (p. 8, CITI). 

From the client perspective, CLOs consistently report that one of the best management techniques for improving outside counsel performance is to negotiate fixed, capped, or alternative fees.  Over 75% of CLOs say that the use of AFAs significantly improves outside counsel performance (p. 47, CLO).  This too suggests that the use of AFAs will increase in 2020.

But any firm that has ever offered a fixed fee knows how easy it is to lose money on them.  The key to maintaining financial performance is to increase efficiency, so that the work can be completed at or below what it would have cost at standard hourly rates.  And this in turn will require significant improvements in LPM at most firms.

(2) To reduce discounting, law firms must accelerate the use of LPM

We were floored when we read the statistics on the percentage of legal fees that are derived from discounted hourly rates.  “Nearly one in five law firms (18%) receive 50% or more of their legal fees from discounted hourly rates” (p. 27, LFiT) [emphasis added].

Altogether, just over 75% of law firms receive a substantial portion (11% or more) of their legal fees from discounted hourly rates.  A paltry 2% of firms receive the full amount that their lawyers charge.  Amazingly, 3% of law firms do not collect this data and have no idea what percentage of their legal fees are derived from discounted hourly rates (p. 27, LFiT). 

Large firms offer more discounting than smaller firms.  The median for firms with 250 lawyers or more is that 41% to 50% of legal fees are derived from discounted hourly rates, while the median for firms under 250 lawyers is 11% to 20% (p. 27, LFiT). 

These results are validated by CLOs.  The number one strategy for controlling law department costs (at 57%) is to receive reductions on hourly rates from outside counsel (p. 26, CLO).

If law firms want to reduce discounting, their lawyers must embrace LPM.  The more efficient a lawyer or legal team becomes, the more valuable their time becomes (when compared to lawyers at other firms), which reduces discounting.  Moreover, the LPM tactic of properly delegating work ensures that the right person is handling the work, which again establishes efficiency and reduces discounting.  And even when clients are simply unwilling to pay standard hourly rates, LPM allows firms to increase profitability by embracing fixed fee work and using LPM tactics to ensure that matters are managed profitably. 

(3) Use LPM to better utilize financial data and increase profitability

Survey results confirm that most law firms are investing time and money obtaining better financial data.  For example, 52% of law firms have invested money to develop data on the cost of services sold, though only about one-third of those firms report any clear corresponding improvement in performance (p. iv, LFiT).  The data shows that merely gathering data does not necessarily translate into improved performance.  Instead, as Altman Weil notes: “Real achievements can and must be made in using cost data and project management techniques to improve matter profitability.” (p. iv, LFiT) [emphasis added]. 

One project management technique that could improve matter profitability is to use collected profitability data in conjunction with the firm’s LPM efforts.  For example, only 55% of law firms that collect profitability data currently use that data to manage their practice groups (p. v, LFiT).  If profitability data is readily available, the natural next step is to use that data to actively manage practice groups in conjunction with LPM efforts.    

(4) To increase new business, law firms must differentiate themselves

Anyone with a marketing background can attest to the importance of differentiation in the marketplace when selling goods and services.  Differentiation is what allows one law firm to stand out from another. But nearly half of law firm leaders cannot point to a single compelling differentiator that significantly elevates their firm above others (p. iii, LFiT).  

Using the old standby “our lawyers are better than theirs” doesn’t cut it anymore.  True differentiation allows one law firm to contrast its services with competing services and emphasize the unique aspects that make its services superior. As Altman Weil writes: “Establishing a credible means of differentiation should be a key area of attention for all firms and each group within a firm” (p. iii, LFiT).  Using the LPM tactic of client communication (e.g., conducting “lessons learned” reviews with clients) may be a good place to start if a law firm wants to identify the ways in which it separates itself from other firms.

(5) Be realistic about how clients perceive the quality of your firm’s services

When it comes to the delivery of client service, perception often does not match reality.  Firms tend to overestimate the quality of their services.

53% of law firm leaders say that their firms are significantly ahead of the competition in terms of delivering client service (p. iii, LFiT).  In summarizing this data, Altman Weil notes: “It is mathematically impossible and logically inconsistent for most firms to lead the pack on these or any other factors.  If everyone’s ahead, there’s no pack to lead” (p. iii, LFiT).

Of course, overestimating the quality of client service likely means that many firms do not take appropriate action to improve the delivery of client service when, in fact, they should.  The tendency for law firm leaders to inaccurately assess client service is highly significant because unsatisfactory client service has consistently been one of the top reasons that clients shift a large portfolio of work ($50,000 or more) from one law firm to another (p. 50, CLO).

*****

In Part 2, we will examine the tactics that law firms use to become more efficient and why the LPM change process has been so slow at some firms.

August 21, 2019

How to deal with difficult clients and situations (Part 2 of 2)

By Gary Richards, LegalBizDev

In Part 1 of this series, we discussed one healthy option for dealing with clients and situations that are extremely demanding and/or require substantial write-offs:  Changing the Situation.  We outlined a script that can be used in discussions with clients and presented a sample of how that script might be used.

In this post, we will discuss options 2 and 3: Accept the Situation and Leave the Situation. Again, all three of these options involve financial risks which could negatively impact the individual lawyer or the entire firm. Therefore, we strongly recommend that the lawyer consult with appropriate colleagues and firm management and obtain their concurrence before taking any action.


Option 2: Accept the Situation

If you decide you need the work and are not in a position to negotiate a change in what your client is doing, or you try to change the situation and fail, then ask whether there are sufficient reasons to accept the situation.  Continuing the example from Part 1 of this blog series, the following reasons to accept the situation may be valid:

  • We have little chance to replace this loan business with more profitable loan business
  • We have little likelihood of getting more profitable non-loan business of this caliber or size
  • We need these partial payments to cover firm overhead
  • We need this low-realization revenue to keep our people busy

If you decide to accept the situation, keep these reasons in mind to help you cope better the next time a challenging situation occurs.


Option 3: Leave the Situation

If it is too costly to accept the situation and all your efforts to change it fail, then it may be appropriate to leave the situation.  In our example, the lawyer could notify the bank client that she will not be able to handle any further loan business from them if the adverse situation happens again. (According to ABA Model Rules of Professional Conduct, Rule 1.16 DECLINING OR TERMINATING REPRESENTATION (b), “A lawyer may withdraw from representing a client if…(6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client.”)

Using any one of the three healthy options described in this blog series is better than the unhealthy alternative of suffering and complaining.

This blog series was adapted from the fifth edition of the Legal Project Management Quick Reference Guide, a frequently updated online library of LPM tools and templates.

August 07, 2019

How to deal with difficult clients and situations (Part 1 of 2)

By Gary Richards, LegalBizDev

When clients are extremely demanding and/or require substantial write-offs, lawyers face difficult choices, especially in the current competitive marketplace. In many cases, lawyers choose the unhealthy option of simply suffering and complaining. This section outlines three healthier alternatives:

  1. Change the Situation
  2. Accept the Situation
  3. Leave the Situation

Obviously, all three of these choices involve financial risks which could negatively impact not only the individual lawyer, but also the entire firm. Therefore, we strongly recommend that the lawyer consult with appropriate colleagues and firm management and obtain their concurrence before taking any action.


Option 1: Change the Situation

If the situation is simply not acceptable, then the best first step could be to try to change it. The simplest and least controversial approaches are the ones that are strictly internal and do not require discussion with the client, such as applying legal project management to increase efficiency and client satisfaction, or brainstorming with others in your firm regarding steps you or your practice group could take.

If changing the situation requires negotiating with the client to change what they are doing, it is important to recognize that the simple act of talking to a client about how to improve things is not free of risk in the current marketplace, where competing firms are aggressively seeking new clients. Therefore, the way you pursue this option, or even whether you pursue it, depends on your relationship with the client and the business objectives of the firm. There are times when a large client with significant write-offs is far preferable to no client at all.

If you decide to pursue change with the client, you could consider calling in your firm’s managing partner or a practice group leader so that he or she can appeal directly to the client.  Obviously, however, that step must be taken very cautiously if at all, since escalating the problem could backfire.

If you wish to handle this yourself, you could begin from the script below. Even if the client does not agree to help, it will provide you with new information regarding how they value the relationship and your best next steps.

Create a script from this outline:
  • I need your help re: [state the topic]…
  • When [the recent, undesirable event (STATE SPECIFICS)] occurs…
  • The result is [SPECIFICALLY state the undesirable results]
  • And my concern about that is [state your negative situation, feelings, predicament, etc.]…
  • Can you commit to [SPECIFICALLY state the different, better actions you want the listener to take]…?
  • Thanks for agreeing to help me in this way…
  • I look forward to our next deal…
Sample script:

Note: the narrator in this scenario is an outside lawyer in a discussion with her bank client, “Bill,” regarding problems with borrowers applying for loans:

Bill, I need your help to avoid so many fee write-offs with your borrowers. I truly appreciate your business and want to continue working with you, but when a borrower like Anycorp, Inc. agrees upfront to reimburse our [standard/reasonable/ customary] fees and yet ends up requiring a substantial write-off, the result is that I find myself in a difficult position when our work is done. In the last year we had to write off over $50,000:

Blog_Table_AvoidDifficultClients
My concern about that is that I feel like no matter how well I keep you posted, and how good a job I do, I am often not paid in full. That puts me under pressure from my partners, who don’t expect me to work for free.

Can you commit to showing your borrowers my detailed budgets and work assumptions and get them to sign off on each material change in scope before I resume work, a procedure they can agree to in the term sheet?

Thanks, Bill. I really appreciate your strengthening these steps to help manage your borrower’s fee expectations so we can avoid ill will to your bank and protect my efforts. I really look forward to our next deal, when we can begin this new approach for our mutual benefit.

Of course, if Bill does not agree to this or some other mutually satisfactory solution, then you must reevaluate the relationship and whether it is worth the frustration and lost income. For instance, the bank may complain about your work or just show indifference to anything but low fees keeping their borrower happy. In any case, a business decision will be needed.

In Part 2 we will discuss options 2 and 3 (Accept the Situation and Leave the Situation).

This blog series was adapted from the fifth edition of the Legal Project Management Quick Reference Guide, a frequently updated online library of LPM tools and templates.

June 12, 2019

How to Improve Statements of Work

15 questions to ask clients to help define scope
By Gary Richards, LegalBizDev

  1. What outcomes would you consider to be wins/successes for this matter?
  2. Are any other outcomes acceptable?
  3. If, unexpectedly, your objectives for this matter become unattainable, what would you do?
  4. What deadlines matter to you?
  5. How will you know when you are done?
  6. Do you have strict budget limits for this matter?
  7. During work on this matter, who will be the ultimate decision-maker?
  8. Can you envision anything that you or others in your organization could do to help ensure success of this matter?
  9. Do you have any fears or concerns about any special risk in this matter?
  10. Are there any dos or don’ts that you want to point out for us to observe during our legal work?
  11. What are the primary business effects of succeeding with this matter?
  12. Are there other stakeholders in your organization or other business activities or strategies that will be affected by the outcome of this matter?
  13. Do you have any other ongoing legal matters that could affect this matter in any way?
  14. Do you want to make progress reports on this matter to others in your organization? If so, when?
  15. Are there other related business problems you want to solve?

Reproduced with permission from the Legal Project Management Quick Reference Guide, Fourth Edition (© LegalBizDev, 2017).

 

April 03, 2019

LPM steps in the lifecycle of a legal project (Part 1 of 3)

By Fred Kinch, Gary Richards, Jim Hassett, and Tim Batdorf

In this three-part blog series, we summarize the most important LPM issues to consider when planning a new matter. Unless your firm has established formal LPM guidelines, feel free to decide which sections to focus on for each matter and which can be ignored. Note that while some of these may at first sound like more work, they quickly add value to the client. They represent a win-win given that the lawyer can bill most or all of these activities, but at the end of the day the client will pay less because of the increased efficiency.

  • Talk to the client to determine objectives for the matter:
    • What problem does the client want to solve?
    • Are several outcomes acceptable?
    • What deadlines matter to the client?
    • Are there strict budget limits?
    • Who is the ultimate decision maker?
    • How does the client define success?
    • How will you know when you are done?
  • Draft statement of matter objectives and a clear statement of work (scope) and share with client, along with exclusions and assumptions:
    • Avoid listing so many assumptions that the client will consider working with another firm that is easier to do business with
    • Matter objectives should be stated as results/outcomes desired, not steps to be taken to reach the objectives
    • Was the SMART model (Specific, Measureable, Achievable, Relevant, Timed) used for the statement of matter objectives?
  • Develop a matter plan and budget. The level of detail required will depend on the size of the matter and your relationship with the client. Remember that what you consider a rough estimate may be treated as a fixed price by some clients, and act accordingly.
    • For large or important matters, check your matter plan and budget with key team members
    • Should large matters and phases be subdivided into smaller discrete tasks and subtasks?
    • Which tasks are on the critical path? That is, which tasks must be completed before others can start and which must be completed on time to avoid delay of the overall schedule?
    • What deadlines will best align the client’s needs with the firm’s interests?
    • Estimate the hours needed for each task and prepare the budget, preferably with the input of the individual who will do the work
    • Establish and confirm the method that will be used to obtain actual cost information routinely and periodically during the matter
    • Establish milestones and other appropriate methods of measuring matter progress
    • Review any special fee arrangements with firm management
  • Review the following as needed and get the client to sign off before beginning work to gain agreement/alignment:
    • Matter objectives
    • Client expectations
    • Scope
    • Deliverables
    • Schedule
    • Fees
    • Exclusions and assumptions
    • Change order process
    • Engagement letter (with SOW attachment, if appropriate)

Reproduced with permission from the Legal Project Management Quick Reference Guide, Fifth Edition (© LegalBizDev, 2019).

March 20, 2019

Lessons Learned Reviews: A Key to LPM Implementation (Part 3 of 3)

By Jim Hassett, Gary Richards, and Tim Batdorf

The following list of questions was inspired by the ACES (Alliance Counsel Engagement System) Report Card, a system Jeff Carr developed when he was General Counsel at FMC Technologies. ACES was used to calculate performance fees awarded to outside counsel, based on their grades on six key factors:

  • Understands goals
  • Expertise
  • Efficiency
  • Responsiveness
  • Predictive accuracy
  • Effectiveness

If you plan a longer review, some or all of these questions could be adapted to your situation:  

  • Would you ask us again to do this kind of work?
  • How likely is it that you would recommend that a colleague hire us?
  • How well did we understand and meet your legal objectives?
  • How well did we understand your business strategy and help you meet business objectives?
  • Did we provide practical real-world advice and solutions?
  • How would you describe our substantive legal knowledge and expertise?
  • Did we use the best team to meet your needs?
  • Were all deadlines met?
  • Did we handle changes in your needs promptly and effectively?
  • Were team members available when you needed them?
  • Did we proactively take the lead when needed?
  • How well did we communicate?
  • Did we do a good job of explaining risks?
  • Did we keep you informed and avoid surprises?
  • Did we manage fees and expenses well?
  • Were our original budgets and estimates as accurate as possible?
  • Was the total project cost fair and appropriate?
  • How could we do a better job of delivering value?
  • Did our work meet or exceed your expectations?
  • How would you rate our overall performance?

Internal Review Meetings

In addition to your lessons learned discussion with clients, it can also be helpful to have a meeting with your internal team to increase team efficiency and morale. For firms that have a formal knowledge management system in place, meetings like this can be especially helpful in capturing insights and experiences that can be of great value to the firm in the future. Obviously, some of the questions you ask in an internal meeting will be different from those you would ask a client. In the book, Implementing Value Pricing (p. 317), Ron Baker provides a long list of questions for such meetings, including:  

  • What could we do better next time?
  • Did we add value for this customer?
  • Did we have the right team on this engagement?
  • Did this engagement enhance our relationship with this customer?
  • What other needs does this customer have and are we addressing them?
  • Did we learn any new intellectual capital that we could leverage across other customers?
  • Should we communicate the lessons on this engagement to our colleagues and how?

The last two questions can yield important knowledge management results, including exhibit formats, checklists, briefs, innovative arguments, and more. Also, as noted on the web page, Knowledge Management Online:

Effective knowledge management should dramatically reduce costs. Most individuals, teams and organizations are today continually “reinventing the wheel.” This is often because they simply do not know… what is already known, or they do not know where to access the knowledge. Continually reinventing the wheel is… a costly and inefficient activity.… Knowledge management… should also dramatically increase our speed of response as a direct result of better knowledge access and application.

A Final Thought

Given the potential benefits of a lessons learned discussion at the end of every important matter and at critical junctures in large matters, why would anyone ever skip this step?

Because you are already too busy on the next matter? Because you feel awkward about discussions like this?

In the long run, these are terrible answers. As the legal profession becomes ever more competitive, lawyers who fail to find time to understand what clients want and need today may find themselves with a whole lot of free time tomorrow.

Reprinted with permission from “Of Counsel, The Legal Practice and Management Report,” December 2018.

March 06, 2019

Lessons Learned Reviews: A Key to LPM Implementation (Part 2 of 3)

By Jim Hassett, Gary Richards, and Tim Batdorf

In our previous post, we suggested two simple questions you could ask clients as part of a lessons learned review.  If your time is limited, and your clients’ time is too, stop there. But if you want to consider two more questions, read on:

Two More Questions You Could Ask

If you have time to probe deeper, you can also add one or both of these optional questions:

  1. Working together, how can we improve the value you receive in the future on matters like this?
  2. On a scale from 1 to 10, how satisfied are you with our firm?

The third question is optional and focuses on the issue which is most likely to lead to new business: how to increase perceived value. This is a slight rephrasing of a key question suggested in the Association of Corporate Counsel’s “Value Challenge Briefing Package.” Note the phrase “working together,” which stresses the need to align interests and collaborate more closely.

The fourth question is also optional. There are many ways to phrase effective questions about client satisfaction, but the best way is to ask for a numerical rating, because it forces clarity and frankness.

We ask our own clients this question, and to be honest, many shy away from giving a number. The client is always right, so if they don’t want to be pinned down with a number, we go with the flow. The important thing is to begin a genuine conversation about satisfaction, and to encourage clients to talk about the things you really need to hear, rather than more comfortable vague praise.

If clients do give you a number, there’s a good chance it will be lower than you expected. The reason is that most people overrate themselves. Psychologists call this the “Lake Wobegon effect,” named after Garrison Keillor’s fictional community in which “all the women are strong, all the men are good-looking, and all the children are above average.”

The best place to see this effect in the legal community is in a series of surveys published in Inside Counsel magazine (July 2008; archived on LexisNexis) comparing ratings of satisfaction from clients and the law firms who serve them. In one such survey, 43 percent of lawyers thought they were earning an A for their work, but only 17 percent of their clients agreed. So, if you think you deserve an A, you’re probably wrong.

Another way to get at this fundamental issue is to ask, “On a scale from 1 to 10, how likely is it that you would recommend us to a friend or colleague?”

In his business bestseller, The Ultimate Question, Fred Reichheld argues that companies should focus more attention on loyalty by measuring the response to this one simple question. Reichheld and his colleagues at Bain have published several books and many studies which demonstrate that companies with high customer loyalty rates grow revenues twice as fast as their competitors. They have also shown that companies can increase profits by 25% to 100% simply by increasing customer retention by 5%.

Clients who rate the likelihood at 9 or 10 out of 10 are called “promoters” and are responsible for generating sustainable growth. You might think 7 or 8 on this 10-point scale would also be pretty good, but Reichheld has found that these people are motivated more by inertia than by enthusiasm. He calls this middle group “passives” and notes that they will often jump to another company at the first sign of a better deal.

The most serious business risk comes from “detractors,” people who rate the likelihood of referrals at 0 to 6 on that 10-point scale. From a strict financial view, many of these detractors may be profitable in the short term, but Reichheld notes that, “Customers who feel ignored or mistreated find ways to get even. They drive up service costs by reporting numerous problems. They demoralize frontline employees with their complaints and demands” (p. 6).

Eighty percent of negative comments come from this detractor group, and in this age of email and internet ratings, a single complaint can reach hundreds of potential clients in the time it takes to hit the send button. In short, detractors “suck the life out of a firm.” (p. 30)

Reprinted with permission from “Of Counsel, The Legal Practice and Management Report,” December 2018.

 

February 20, 2019

Lessons Learned Reviews: A Key to LPM Implementation (Part 1 of 3)

By Jim Hassett, Gary Richards, and Tim Batdorf

It is widely agreed that many clients are demanding greater value these days through the application of legal project management (LPM). There is, however, still controversy about the best way to apply LPM. When we interviewed managing partners and senior executives at 50 AmLaw 200 firms for the book Client Value and Law Firm Profitability, they ranked client communications as one of the most important elements of LPM. (The only factor that was considered more important was “defining scope.”)

One of the best ways to assure effective communication is to hold a meeting at the end of every significant matter to review what worked, what didn’t, and what could be done better the next time. In large matters, lawyers may also conduct these “lessons learned” reviews after completing each significant milestone or phase.

These discussions are a learning opportunity and a marketing opportunity. Such a discussion can enhance your relationship, help you learn more about what an existing client values most, and enable you to provide more value. If a large matter is at a pivotal point, a mid-course review and redirection could be the difference between success and failure. Could you possibly think of a better way to develop new business?

The lessons learned review could be long or short. You could hold a formal group meeting and send the questions in advance, or you could simply ask your client some of the questions below. If you think of this as marketing, it will be obvious that it is better to have the discussion in person, maybe even over lunch. The phone can be a good second choice, but email is a distant third. You want to get people to open up and speak freely, and that is unlikely to happen via email.

The length and formality of the process should depend on the size and significance of the matter, your relationship with the client, and on how much work they are likely to have for you in the future. This article lists a number of different questions you might ask. In many cases, the first two will be enough.

The Two Most Important Questions

Unless there is a major open issue requiring an immediate joint review, or a client requests a lengthy discussion, we recommend that you assume that clients have little time to spare. This may mean limiting the debrief to two simple questions:

  1. What did you like about the way we handled this matter?
  2. What could we do better?

The first question is a classic “easy to answer” opening. Ask this one first, because it will get people talking freely.

The second question is the one you really care about, since you are likely to learn far more from criticism than from praise. No matter how much clients like your work, they can always like it more. Also, in today’s highly competitive environment, it is in your interest to turn every client into a raving fan.

If the second question opens the door to a laundry list of complaints, do not get defensive. Do not argue, disagree or explain your position. In fact, at most lessons learned meetings you should say very little and listen more than 90 percent of the time. Keep probing for more information. These meetings are designed not to understand reality, but rather to understand the client’s perception of reality. Because when it comes to client satisfaction and new business, perception is everything.

When clients raise problems, you need to reassure them that things will be better in the future. In most cases, however, you should not get into the details at the initial discussion. You need time to think about the best way to solve the problem, and to assure client satisfaction. So be prepared to say something like, “That is an important issue. Let me talk to a few people about the best way of preventing that from happening again, and then I will get back to you.”

Of course, if you do promise to get back to your client with a solution, you must put a high priority on completing follow-up as soon as possible.

Reprinted with permission from “Of Counsel, The Legal Practice and Management Report,” December 2018.