Engineers and theologians know how to find out. I listened with great interest last week to a presentation about a soon-to-be released survey of client attitudes.
It was another parade of horribles for law firms: In-house departments were getting bigger, bringing more tasks inside, experimenting with alternative service providers, and preparing, again, to drive down outside spending.
But as I listened I suffered pangs of cognitive dissonance. I’ve just finished six months of in-depth interviews with some of the best clients in the nation. While all were interested in getting more for their money and had strong views about their outside counsel, they weren’t abandoning their traditional firms or radically changing their buying habits or bringing their high-value, high-fee work in-house. They had problems to be solved but turning the legal marketplace inside out wasn’t high on most of their agendas.
My point here is that while what clients think in the aggregate is interesting and in the long run important, what matters immediately is what your clients are thinking and doing today.
There seems to be general agreement that we are in a market with growing legal needs (thanks to cheap money, aggressive regulators, an interconnected economy, and a world that refuses to simplify) but flat demand, at least as expressed by hours purchased and fees paid, especially when adjusted for inflation. Whatever else a law firm might measure to gauge its performance—gross, growth, net, pipeline, profitability, utilisation, realisation, retention, or, if you like, revenue per process management officer – the critical missing metric in this market is what the clients think of the firm’s performance and, its corollary, how likely are they to use that firm in the future.
This is astounding to outsiders who are learning the ways of the legal market. Listen to Ron Dolin at a recent Thomson Reuters conference on law firm financial performance. Dolin, a computer scientist at Google before going to law school, now serves as a senior research fellow at Harvard Law School’s Center on the Legal Profession. He asked why firms didn’t conduct post-mortem reviews with their clients after every engagement. ‘Coming in as an engineer,’ he said with a grimace, ‘this is just crazy.’
His observation rests on the unstated premise that legal work is done through systematic processes and that by asking clients about their experiences, their responses can be used to tweak and improve those methods. At many if not most firms there aren’t such systematic processes to adjust and improve. Methodology varies from partner to partner; no two deals are done the same; idiosyncrasy is the order of the day. For some clients and some practice groups, that needs to change. When clients demand more efficiency, or lower costs, or smarter service, they are asking for better and more consistent methods.
Dolin’s blunt observation is an invitation for law firms to address their process issues. By asking clients regularly what has been effective, what has disappointed, and why, firms will collect some of the data they’ll need to understand and then reconfigure their work habits. It’s a backwards method of course but nonetheless useful. If a firm can’t or won’t—for any number of reasons—re-examine its workflow, it can instead ask its customers what satisfied them. Yes, this will require some assistance from the clients. Most will help, gladly.
These programs will vary. Some need to be deeply detailed inquiries into work methods. Others can be higher-level satisfaction measurements that ask clients to compare your firm to others or ask the client’s willingness to recommend your firm to another in-house lawyer. Some can be quantified as ratings; others need qualitative commentary. What they have in common are two great benefits. Firms that engage in these efforts will understand their business better and also that of their clients. As clients will say, if you ask, they really want you to understand their business.
At many firms asking clients for feedback will be controversial. It’s a tactic that can be dismissed as old hat, or divisive, or threatening. But in my view it’s essential. For your clients, urban legend and aging anecdote just won’t suffice now.
Easier than an elaborate feedback loop is the one-off program: let’s hire someone to talk with our 20 fastest-growing clients or our 20 clients whose spending with us has slipped the most in the last three years. This is serious work for firm chairs and for folks like me. Firms gain insight and new business from these efforts. They develop a new and important habit. And they’re no longer stuck in the past.
In this market it’s just not enough to cash their check, throw a party, and hope the phone rings again. Pope Francis was just in town and it’s hard to resist turning to Scripture for client-listening advice. The context is different but the teaching is correct. Seek and you shall find; the truth will set you free.
Aric Press is a partner at the legal consultancy Bernero & Press and the former editor-in-chief at ALM. You can read his blog here.