The following article is by Janet Stanton, Partner, Adam Smith, Esq.
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Now that we are squarely in an era of new possibilities and are thoroughly inoculated to the notion that, yes, things really can change, we wanted to introduce the concept of “strategic client management.” This will be the first of a don’t-know-yet-how-many-part series exploring the topic. We’ll start broadly – with definitions, why this matters, and underlying principles.
What is strategic client management?
Put simply, strategic client management is the intentional servicing of your clients to nurture longer-term, more profitable relationships. Because this is more about how lawyers and firms approach their work, there is not a strict “canon” of what’s included as part of strategic client management at firms. That said, without a true client service orientation, no set of initiatives under the aegis of a “strategic client management” will succeed.
The primacy of client service is supported in many studies. This data set is from research out of Altman Weill.
|Reasons for switching law firms|
|Managing matter efficiency||26.6%|
To be clear, what this says is that inadequate client service is worse in clients’ eyes than inadequate legal expertise. Put another way, a brilliant practitioner may lose a client if he is a jerk. The truth of the matter is that there are lots of very good lawyers out there who will also provide good client service – so why should anyone put up with so-so servicing?
Moreover, as you see here and below (and in many other studies), despite all the hand wringing we hear from firms about client push back on fees, higher-order aspects of client service significantly outweigh lower fees in importance to clients.
What is the goal of strategic client management?
It is intended to institutionalize key clients by being more intentional in all aspects of client service – which includes, but goes well beyond the expert practice of law. In an era of sluggish, if any, growth, and, more recently sky-high economic uncertainty, firms need to treat their clients as the assets they are – or other firms will happily step in. And, what clients are looking for are business solutions that go beyond expert legal opinions.
The following graph, using data from AdvanceLaw underscores the paramount importance to clients of a “solutions focus” which outranks “quality of work,” “legal expertise” (again!) and “responsiveness;” trouncing “cost efficiency” and “low hourly rates.”
Strategic client management is a mechanism to deliver these more comprehensive solutions.
How does it benefit law firms and individual practitioners?
A substantial body of research and case studies strongly support the value of strategic client management to enhance the financial performance and sustainability of law firms. This approach benefits law firms in many ways. Certainly growth in revenue and profitability is key. Further, it is well recognized (both in Law Land and many other industries) that revenue from current clients is more profitable than that from new clients. Strategic client management increases client retention and, therefore, leads to a more stable and sustainable firm. There is, therefore, less reliance on pitching elusive new clients. Also firms are more likely to pre-empt RFPs from their current clients – therefore firms can be more strategic about which new clients they do choose to pursue.
This approach also offers training and leadership development opportunities for junior partners, associates, paralegals and business professionals.
Gardner’s research neatly distills the financial benefits of collaboration into one chart.