Legal Business Blogs

Guest post – Client retention: give credit where credit’s due

Winning a new client for the firm—there’s little that can match that for excitement, sense of accomplishment and visible contribution to the firm. More so if the client is big or prestigious. A pitch is often a hard-fought battle against many worthy foes. There are numerable, maddening unknowns in pitching a new client: which lawyers at which levels should be presented? What’s the optimal pricing? What services will distinguish your firm from the others? etc., etc.

But now you’ve done it – landed a big new client for the firm. Congratulations. Crack open the champagne. Get your photo with the pitch team in the firm’s internal newsletter. Read the blurbs that the PR group has placed in the press.

Now, fast forward a few years.

What is the current state of the relationship with that client? Is it still on the firm’s roster? BTI has reported that on average, in-house counsel fire two of their primary law firms each year. Perhaps revenue has frittered away to life-support levels? Are you getting assignments less and less frequently or those that you do get are more commoditized in nature? Studies by LexisNexis and Redwood have found that the annual attrition of existing clients’ hours averages -15%; so that business you fought so hard for just a few years ago may be long gone.

Or is the relationship on a more positive trajectory? Has the firm’s revenue from this client continued to grow? Do you have a larger share of their legal wallet? Have you added practice areas or expanded the geography where you serve the client? Are you receiving the client’s higher-end matters? If yes to any or all of these your successes should be recognized by the firm – beyond getting a pat on the back or a hearty “good job!.”

Several studies have confirmed what seems to be intuitive. Law firms with more robust relationships with clients tend hold onto those clients longer; they suffer less client attrition. Less client attrition leads to a more stable, sustainable firm. The benefits of enhanced stability accrue across the firm. There’s the ability to more effectively plan for and allocate the firm’s not-infinite resources.

And, importantly enhanced client retention makes the firm less dependent upon the uncertainties, expense and disruption that inevitably surround pitching new clients. Winning business from a new client is estimated to be 10x more expensive than adding the same amount of growth from current clients. Therefore, growth from current clients is more profitable – and more profitable sooner – than gains from landing new clients. Firms with greater client continuity can be more discriminating about which new clients they do choose to go after – those with a better likelihood of success and compatibility with the firm. You will always need to pitch new clients – that will never go away, but a more stable roster of clients will provide your firm more choices and the advantage of pitching more strategically and selectively.

Higher client retention is correlated with the engagement of more than one practice area and more partners involved in the relationship as shown in the following, provided by Redwood’s Think Tank. The first shows the attrition rate, as a percentage of clients (left axis) mapped against the number of areas of law the client uses the firm for (bottom axis).

The second again shows client attrition mapped against the number of partners who give that client at least 5% of their time during a given year:


It may sound tautological, but lower client attrition is also associated with the longevity of the relationship. All of these are good for the firm; they also appear to be good for and sought by clients.

That said, the glory and laurels, financial or otherwise, generally accrue to that select group of lawyers who bring in the business – the rainmakers – with less recognition or prestige for those who patiently nurture deeper client relationships over the long term. These are the individuals who provide excellent counsel every day, introduce clients to other partners, practice areas and offices, invest the time to really understand their client’s business and deliver added value that is important to their clients.

Why is this so? – and why should it ever be thus?

The answer as to why this is so is fairly obvious. Winning new clients is exciting and newsworthy. The angst and adrenaline surrounding a big pitch often ripple through the entire firm. Many participate in the pitch – virtually all are aware the pitch is going on. Nurturing a client is, simply, less dramatic; seemingly less “life and death.” Generally, beyond those who work directly on the client’s business, few are aware of what’s actually going on with that client.

So, while it is undeniable that there will never be as much glory in maintaining clients as winning them – firms should take steps to meaningfully reward and recognize those who do build solid, profitable, long-term relationships with key clients. If not, firms are missing a key strategic opportunity. And, these steps should be institutionalized – not ad hoc.

What form might these steps take?

Firms have available a substantial arsenal of mechanisms and processes that serve to induce, incent, reward and recognize desired outcomes and activities. Key is to have a sub-set of these that are intended specifically for successful client management. These include inducements that are either ‘soft’ or ‘hard’ – qualitative or quantitative. In the ‘soft’ area are, for example, awards – given out quarterly – with the ‘year’s best of’ handed out at the awards ceremony which is often a part of firms’ annual retreats or partners’ meetings.

Effective client management should be woven into all discussions about firmwide strategies and goals, including part of the agenda of every firm-wide and practice group meeting – with accomplishments, learning and best practices identified and discussed. Further, ensure that new, positive developments are regularly featured in internal communications. In the quantitative arena, well, nothing sends a firmwide message as loudly as money. Meaningfully recognizing excellent client stewardship in compensation speaks volumes.

The point is, look how your firm currently rewards new business or other positive outcomes and apply these to those who develop and nurture stable, expanding client relationships. In this new world order with stagnant to declining demand, where a market-share battle has replaced nearly unfettered growth your current clients are both more valuable and vulnerable than ever before.

Understand this and act on it.


Janet Stanton is a partner at Adam Smith, Esq. You can read her blog here.