CRM

Does your firm include client feedback sessions as part of its client agreement?

80% of firms believe they provide a great client experience. Only 8% of clients believe the experience is great.

In last week’s PSM podcast David Lecours (from whom the title this post is taken) and Josh Miles have a great chat about the issue of ‘Client Feedback’.

It’s a brilliant 28 minute chat – with loads of insight and tips and my 5 big take-outs were (in no particular order):

does your firm include client feedback interviews/sessions as part of its engagement letters? – if not, how serious is your firm about this?
clients who rate you between 2 and 3 (out of 5) are the ones you need to speak to the most because they’re the ones who will give you the most honest feedback.
never forget to ask the interviewee: what service do you wish we could offer you that we’re not currently offering you?’, and
what didn’t I ask you today that you’ve been dying for me to ask you?

So that’s 4, where’s number 5?

This comment by Josh Miles:

“even if a client is not having the best experience, just the fact that they have been asked at this point sometimes the flattery or the thought of that makes them develop a little more affinity towards the firm just by virtue of having been identified as someone that their feedback matters.”

Go over and spend 28 minutes of your life listening to a great chat on the most important part of our business – our clients!

As always though, interested in your thoughts/views/feedback.

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The pointlessness of the ‘billable hour’ set out in two charts

Overnight, Australia-time, the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute, relying on data from Thomson Reuters Peer Monitor, published the findings of its ‘2018 Report on the State of the Legal Market‘. Reviewing the performance of U.S. law firms in 2017, as well as looking at the trends expected in 2018, this annual report is typically the “first” big report publication of the year and so a trendsetter of where we may be going as an industry over the next 12 months.

As has been the case in other years, the first chart I typically like to see in this annual report is the one setting out ‘Collection Realization against Standard Rates by Law Firm Segment‘ – Chart 9 in this year’s publication – to hopefully give me an indication of how an industry that largely relies on increases in hourly rates each year to boost top-line revenue is fairing.

As you can see, yet again the results here can best be described as ‘disappointing’:

Chart 9

AM Law 100 firms are tracking an ever declining realised recoveries of circa 80 cents in the dollar. All others aren’t doing all that much better at circa 85 cents in the dollar.

Either way, those levels of realisation would have most bank managers in a panic. And the reason they don’t comes down to one small issue: in law firms this collection rate – other than telling you that the market doesn’t see your hourly value as highly as you do – is absolutely meaningless.

What it is, is pie in the sky internal budgetary metrics against market reality cash in the bank.

So we turn to my second “go-to” chart: ‘Collection Realization against Worked (Agreed) Rates‘. This year this is represented in Chart 10:

Chart 10

As the name suggests, what this chart is showing us is “Collected v Worked (Agreed)”. I’m assuming the “agreed” here is upfront, and I’m accepting that the picture is far from perfect, but there is a far better flatline realisation rate here of 90-ish per cent, or 90 cents in the dollar.

So, what’s my take-out from the two charts?

If you want to try and get a better handle on your projected cashflow, no doubt better to have an upfront conversation with your client about how much you are going to be charging them – however that is (fixed fee, hourly rates, etc) – than having an arbitrary, and less and less meaningful, ‘billable hourly rate’.

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Medibank Idea Exchange

For my sins I am a member of Medibank Private Health Insurance. I understand it has something to do with having a young family and the Medicare rebate. Anyhow, regardless the reason I get a lot of emails from Medibank that have always gone to straight to my trash folder. That is, until this morning.

What makes this morning any different? Well, I received an email inviting me to join the Medibank Idea Exchange community. In part wondering why they were suggesting the singular rather than the plural, I thought I would take a look.

What did I find?

Well, while I have no intention of joining, what I found was an offer to join an ‘invite only’ community where I will be able to share my thoughts and ideas on a variety of different topics and issues and:

Contribute to discussions and surveys – so you can tell Medibank what you think and help shape future business decisions,
Talk with other members – so you can share experiences and handy tips,
Earn rewards for participating – that you can redeem on a great range of products and services.

and I thought to myself: “there might be something in this for law firms to learn from“.

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Are law firms going to replace Client Account Managers with Client Project Managers?

Law firms have had, for some time now, a Client Account Manager support role within their Business Development and Marketing teams. Typically reporting to the Head of Business Development and the Client Relationship Partner, these roles have historically been focussed around a number of “key” client programs (aka Key Account Management programs or “KAM”) and can also be sector specific – for example, financial services, energy and resources and government. In the larger firms, the Client Account Manager may be required to look after up to three to four large client accounts, but normally the role is inward looking with little (in real terms) direct interaction with the client themselves (although in some cases you do find the law firm CAM and support personnel at the client talking to each other regularly).

There is little doubt these roles have served a significant purpose. One could even go so far as to say they have increased cross pollination (cross selling) among practice groups significantly. But, in these changing times, with law firms having significantly increased their investment in Client Relationship Management (CRM) tools and software, the following question does need to be asked:

is it now time to move on from the Client Account Manager role?

I recently watched an interesting video (27 minutes and 2 seconds) of a panel discussion filmed at the Briefing Operational Leaders In Legal 2014 conference (November 2014) that talked about, among other things, “client-facing account managers and better management information“.

Moderated by Julia Chain of JSC Associates, the panel included Jonathan Beak (chief counsel – legal, UK and Ireland, Thomson Reuters), Sarah Spooner (head of legal, Vodafone), Angela Williams (head of legal, global cash management and debt advisory, Barclays) and David Symonds (VP, regional general counsel EMEA, Tyco International).

The whole discussion is extremely informative and if you are a business developer looking for insight into how the leaders of some of the biggest in-house teams out there think, then you should watch it.

But, for the purposes of this post the most crucial part is the commentary by David Symonds who, discussing why Tyco appointed the law firm Eversheds as sole legal provider (in the now famous annual fixed fee arrangement tender), states that Tyco instigated what he calls certain grounds rules with Eversheds, including that only one lawyer acted for them and that the work was carried out at the appropriate level depending on what the matter is.

Nothing ground-breaking there. Until you get to 11 minutes and 53 seconds into the video. Here a general discussion is going on among the panel about what law firms do (or need to do) to differentiate themselves (the Holy Grail) and Symonds states that Eversheds were the only firm to offer a full time dedicated Project Manager to manage Tyco’s caseload.

Very interesting, but all the more so given today’s exclusive in The Lawyer by Tabby Kinder that Herbert Smith Freehills (HSF) (the merged international firm of Herbert Smith and Australian firm Freehills) is to “roll out legal project managers across firmwide practice groups this summer.”

Now this really is big news, because it cannot be long now before the rest of the international firms follow suit (Clifford Chance and Linklaters are already being mooted as implementing legal project manager roles later this year and, in addition to Eversheds, Hogan Lovells and Freshfields Bruckhaus Deringer are understood to already have these roles in place).

So, what can we expect from a Client Project Manager?

According to The Lawyer article:

HSF project managers will work with project teams and be involved in pricing negotiations with clients as well as providing coaching to partners on efficiency and best practice when managing complex cases.

which doesn’t sound all that different to the Client Account Manager role.

But, according to the team at The Project Management Hut, in addition to monitoring client matters against acceptable outcomes and strategy to ensure the relationship produces substantial benefits to both side, your typical Client Project Manager should also provide your law firm with the following five (5) sources of competitive advantage:

a better client service
better time management
better people management and supervision skills
better profitability, through project management (LPM) and process improvements (LPO), and
provide the team with client-based business thinking.

and it is #3 and #4 in that list that law firms really could benefit from.

Now all we need to decide is: do these roles sit in the finance department, the practice groups, or marketing and business development?

Does your firm have a ‘Customer Loyalty Program’?

Interesting post on the Harvard Business Review blog today: ‘Why Your Customer Loyalty Program Isn’t Working’ by Michael Schrage.

I found the following particularly relevant to law firms:

Organizations need to identify the loyal behaviors that most deserve explicit recognition, reward, and investment. How should loyalty from the best and/or most valuable customers be recognized and rewarded differently from that of typical or average customers?

Precisely.

However, leaving aside internal facing Client Account Teams, which are typically created for cross-selling or cross-serving purposes, or even client facing Client Listening Programs – both of which I strongly advocate – I do wonder how many law firms run a client loyalty program? And if so, what does that entail and what are the criteria used to qualify for the program (and are clients aware of how they can qualify for the program?)?

For example, are discounts offered on volume work a form of client loyalty program?

You may initially think this to be the case, but I if I were to run an audit of your firm’s client files I bet I would discover that partners offer NEW clients much better discount offers than they do EXISTING and LOYAL clients.

If so, then volume discounts aren’t a loyalty program as I could probably do better going somewhere new (even with you) than I do staying with you.

Are invites to golf days a means of a client loyalty program then? Again, possibly, but by what criteria are invites to such events made? I’m not sure there are any – in which case, they aren’t a form of client loyalty program really.

All of which is to say, I think it will be interesting to see whether or not law firms adapt to implement formal ‘client loyalty programs‘ in the future as I definitely see them as being a differentiator.

As Schrage says:

True loyalty doesn’t just serve and preserve valuable customer relationships; it creates and inspires more valuable customers. Loyalty is a mutual investment, not just an exchange.

If you haven’t read the post, I would like to suggest you do.

And if you are a law firm thinking of implementing a client loyalty program, then my cousin just happens to run one of the very best in the world.

Can a falling A$ make selling Australian legal services easier overseas?

As regular readers will know, I have written a fair amount in the past (see here and here) about how a depreciating Australian Dollar (A$) is likely to be unkind to the Australia-based partners of international law firms operating here. It was, therefore, pleasing to see a post ( ‘Will international ﬁrms still call Australia home?’) on the Australasian Lawyer website yesterday that largely echoed many of the comments I had previously made.

So, with (1) the Australian legal press and a number of eminent managing partners echoing my views, and (2) an A$ hovering around the 87c on the US$ mark, a new question now comes to mind:

Can a falling A$ make selling Australian legal services easier overseas?

The answer here will depend on your law firm, its culture and client base. But, assuming that your firm actively encourages cross-border collaboration (and there is a whole different post there), the short answer should be yes.

If that’s the case, then some of things you need to be considering include:

How recently did I update my website profile/CV? Are all my deals Australian-based? Am I showing regional experience? Indeed, am I using regional keywords in my website profile or only local Australian used ones?
What sectors in Australia are likely to benefit from a falling A$ (tourism?)? Do I have expertise or a story to sell here?
A falling A$ should make assets in Australia more attractive to international purchasers (case in point: pension funds looking at real estate?). What am I and my colleagues doing about this?
What is the Australian Government’s current policy towards a falling A$ and foreign direct investment (FDI)? Is there a story to tell here (and there most likely is if you look closely enough)?
Are there regional developments that I could take advantage of (for example, development of arbitration courts in Singapore and HK?)?
Are there any free trade agreements (FTAs) in pace that make the falling A$ attractive (export markets?)?
When was the last time I talked with my clients to see how they were being affected by market/currency fluctuations and what steps they are putting in place to get the most out of this (manufacturing/FMCG?)?
Is there any way I can help my clients out with the current environment (put them in contact with clients in Asia?)? Maybe I can/should attend a regional trade or industry conference.
How often am I communicating with my colleagues in Asia, US and Europe to discuss work opportunities (including the chance to work in US$s?)? [time differences may have put this off before; but if I can bill in US$s, suddenly 2am conference calls don’t look so bad!]
What local or regional opportunities (tenders, capability statements, etc) are my business development team working on? Is there any way I can get in on this?
What regional panels are my firm on and can I look to develop these? If so, who is the relationship partner?
Should I be considering a secondment to another office in our firm network or to a client outside Australia (Asia, Europe, US) [especially if I can charge US$ for it!]?

Clearly you will need to make sure that you are meeting your clients’ expectations. You will also need to make sure you have in place a fee mechanism that is considerate of the exchange rate, while being beneficial to you and your firm, and also allowing everyone to prosper from the situation.

But, at 87c on the US$, the value proposition of an Australian lawyer active outside of Australia (such as in Asia) should have become a lot easier to communicate today than it was a year ago.

Now for a word of caution:

if you have been billing a client (especially one outside Australia) for several years in A$s, now is not the time to suddenly, and without notice, start billing that same client in US$s.

Strange as it may seem, clients will quickly see through this move. So make sure you give this issue careful consideration (as clients have also been known to talk with each other!).