If I haven’t been clear, I believe very few firms indeed have achieved Phase III, emulated my friend, or even grasped the reality that with stagnant/declining demand for legal services from traditional law firms, and excess capacity in our sector, we’re now in a battle for market share. In this environment, we have to treat our existing clients like gold because acquiring new clients means stealing them from some other firm where (one can only assume) they’ve been perfectly content heretofore.
Altogether too many of us lack any focus on what the implications of this are. I never want you just to take my word for it, so consider these findings from an ALM Survey released about two weeks ago:
- We’re not serious about measuring client or partner profitability: Just 44% of those questioned said they were hitting their profit targets with individual clients and 46% with individual partners. These are flunking grades.
- We’re not serious about requiring new measures of productivity and client pricing arrangements. Respondents’ “top three” financial measurements included nothing but old school data: Firm revenue (52%), firm profit (44%), PPP (37%), utilization (30%), and operating margins (24%). Where is client satisfaction?
- Actually, ALM also told us how much we care about client satisfaction: A bare majority of firms even deign to track it. Although we all may declare with self-satisfaction that client service is crucial to our competitive advantage, only 56% reported that their firm has a plan in place to measure, track, and build client satisfaction and loyalty.
- And get this, which I found the most shocking finding of all: Four out of five respondents (78%) could not honestly say that their firm leaders were “extremely knowledgeable” about their top 20 clients’ businesses.
I find the last point tantamount to client management misfeasance. Yet consider whether the reality might be even worse than our law firm respondents reported; they might just have an optimistic bias. Here’s an example, from an Inside Counsel survey, of two quite distinct report cards on the “overall service level” of law firms:
|Grade||In-house counsel||Law firm|
Or this: “Outside counsel always or usually understand the business issues.” Agree:
- Clients: 22%
- Law firm partners: 92%
While we’re at it, here’s a roster of “value added” offerings from law firms to clients, and how clients rank the importance of the offerings vs. how law firms perform on them. In a nutshell, we do poorly on the important and we do just fine on the unimportant.
Offerings where clients grade importance more highly than law firms’ performance (all listed in order of importance):
- Seminars at the client’s office
- Regular service review meetings
- Seminars at the law firm’s office
And offerings where clients grade the law firms’ performance more highly than importance:
- One on one lunches
- Pitching proactively for new work
- Corporate hospitality
- Seeing a firm’s name in the press
See a pattern emerging?