Bullet-Proofing®

WHAT IS THE POTENTIAL THREAT OF ONE OF YOUR SIGNATURE CLIENTS DEFECTING?

Edge has conducted numerous personal interviews with senior executives and General Counsel at over 100 of the Fortune 1000 companies, across an international landscape. As we compare our findings with those obtained from our colleagues at the premier research firm: BTI Consulting in Boston, we have been able to draw some interesting conclusions.

Today, the typical Fortune 1000 company is likely to spend somewhere in the area of $14 million with outside law firms. However, a much larger portion of this increased spending is and will go, to far fewer firms!

Why? Our research discloses that General Counsel of Fortune 1000 companies just aren’t too overwhelmed by the level of client service they receive. They claim that far too many of their law firms meet only the minimum requirements. Law firms continue to do enough to just maintain relationships, but nowhere near enough to exceed expectations . . . and General Counsel’s are becoming more collectively resolved to only continuing to use and to recommend those firms that exceed their expectations. The disequilibria in law firm performance and General Counsel expectations is now driving remedial steps.

The steps taken are known as “convergence,” a lumbering bit of jargon referring to how in-house counsel are actively reducing the number of law firms on their approved lists. The idea is to establish strong “preferred provider” relationships with a drastically smaller number of select firms. The result is that the number of outside law firms used by Fortune 1000 companies has already been reduced from 75 in 2001 and expected to contract to less than 40 firms in total by 2006. Translate this to mean: Certain law firms are going to get cut from client rosters. Every law firms is vulnerable. Your firm may be vulnerable to losing millions in revenues over the next few years if you don’t take decisive action.

Concurrently, a large majority of General Counsel report that they are open to, and accepting entirely new firms to their roster – as replacements for some of their existing firms. So not only are you exposed to being cut from the roster through attrition, you are also at risk of being replaced by an outside firm that can demonstrate that they can provide a higher level of client service. In fact, 63.1% of Fortune 1000 companies have hired a new major credible law firm in the last year.
All of this has profound implications for your firm:

• there is a significant and growing amount of revenue available to those select firms that can manage to stay on a Fortune 1000 client roster;
• there is the potential, (in fact high probability) under the right circumstances, to be added to a Fortune 1000 roster and displace one of the existing firms that is not satisfying General Counsel’s expectations;
• there is an even greater win achievable to any firm that can find the way to leverage their position to a higher category – e.g. be able to move from a Second-Tier provider to displace one of the Dominant players; or alternatively,
• your firm is vulnerable to losing any one of these significant clients and then suffering the pains of how to restore your lost revenues, partner profitability, status, and attractiveness to laterals.

WHY CLIENT SERVICE TEAMS ARE FAILING

The dictates of a fiercely competitive marketplace have led firms throughout the country to examine constituting Client Teams – – relatively small groups of lawyers formed and linked by a common interest in serving the same client. The motivation for this seems logical and unassailable: in virtually every law firm, 80% of the firm’s revenues come from 20% or fewer of its clients. But unfortunately, many of these noble efforts at forming effective Client Teams are failing to achieve initial expectations.

* Too many law firms have launched far too many teams, far too quickly.

A 300-attorney Texas-based firm that bragged of launching 50 client teams in their first year was soon eclipsed by a 750-attorney California firm launching 120 client teams – Sounds simple. We now know it isn’t.

* Too many of these Client Teams invest all of their available time in formulating plans designed only to secure more work.

Client service teams mean much more than marketing. Indeed, the term “service” suggests this should be the primary focus. But all too often we look at our client’s situation through the lens of our own offerings and our desire for another sale. Little wonder increasing numbers of General Counsel sense that when your firm talks about “building relationships” it becomes nothing more than a euphemism for “give us more work,” while “providing added value” becomes interpreted to mean, “at higher rates!”

While forming client teams remains an exciting and viable concept, questions and management issues abound.

Our Bullet-Proofing(R) initiative is a series of action planning meetings, designed to help winning law firms and their Client Teams. These sessions complete with Work Plans and Discussion Materials will help you develop invaluable knowledge about your clients’ business, deliver the value-added that clients are looking for and competitors haven’t yet thought of, deepen your client relationships, and essentially freeze out competition as you differentiate yourself in ways that are hard for any other firm to replicate, once developed.

Meeting One:
Gathering Intelligence (half day per team)

We subscribe to the view that you really can’t understand how to get more and better business from your key client, until you truly understand that key client. We are firmly of the belief that the more you know about your client, the better you can be at marketing to them. Thus, client knowledge is critical to the effective building of relationships and to learning how you might differentiate yourself from competitive firms.

THE CHALLENGE IN CONVENTIONAL CLIENT TEAMS:

To develop an effective client strategy requires that you truly understand your client. This sounds like a rather obvious and even trite observation, but it is a self-evident fact that many attorneys today have at best a superficial understanding of the dynamics of their client, and its industry.

To our astonishment, a number of the client teams that we have come across do little to no in-depth research on the client company. It’s almost as if the attorneys share a view that if you have to resort to doing research, it is a tacit admission that you don’t know your client.

In discussions with attorneys, we have found a great deal of variability in the levels of client knowledge. Some have a very deep knowledge and understanding of their client, what we would refer to as client insight. Other attorneys think they know their client, but the client does not. Still others know about their clients, without truly knowing the intricacies of this particular company.

THE GOAL OF OUR MEETING:

The goal is not to simply compile a great deal of data. One of the key messages that attorneys need to hear is that data do not represent knowledge. Data at best represents information. Our first meeting with your client team is intended to progress the team’s collective understanding of its key client, one that moves through four stages – from client data, through information and knowledge to insight.

WHY THIS STEP IS CRITICAL TO SUCCESS:

The key to building deeper relationships is to learn more about your clients, their strategies, their organizations, their industry – than any of your competitors. This depth of knowledge will then ensure that you are the first to learn about the clients emerging needs, determine their potential problems, and be in the best position to offer new ideas and suggestions.

Meeting Two:
Interviewing Your Client (half day per team)

To create real meaning for clients, attorneys must have a keen understanding of the needs and expectations of both corporate counsel and the executive group. To understand how well we are doing, we need to know not only how we are doing on the predictable, functional, technical things; but we need also to know how the client feels they are being treated, how they feel about dealing with us, what we can help them with, and what we can take off their hands. This requires some “different” thinking about what we need to know in order to create value for them, and about the kinds of needs they may have that are not currently being met.

THE CHALLENGE IN CONVENTIONAL CLIENT TEAMS:

It’s not enough just to meet with your client and interview them. What is important is the questions that you ask. Asking the same old questions, is guaranteed to elicit the same old answers.

Traditional client satisfaction surveys, irrespective of how they are conducted, can be misleading. These surveys most often ask questions that seek left brain rational responses. Thus, when we ask a client a simple question like “how have we been performing?” we elicit a rational response based on a forced answer of what the client might expect that we want to hear. However, if we were to ask, “what could we be doing to earn more referrals from you?” we now engage our client’s emotions and feelings.

The key to obtaining client insight lies not in asking the predictable questions, but also in proposing questions that the client would not have expected you to raise. A lot of the problems with understanding clients, results from the questions we ask and what perspective we bring to the definition of what we can do to improve or deliver our services more innovatively.

THE GOAL OF OUR MEETING:

To unearth what is really important to the client and what issues they face requires insight that can rarely be obtained through survey research. One-on-one client interviews are far superior for unearthing such insights. Interviews can reveal problems and needs that the client has, to which the client team can develop solutions. Our second meeting focuses on what questions to ask, both of General Counsel and of

Senior Management; and how to conduct the interview process with these key client contacts.

WHY THIS STEP IS CRITICAL TO SUCCESS

In order to better serve and to cultivate greater revenues, we must develop a thorough understanding of the client’s hierarchy of needs (routine, explicit, unmet, and latent).

DEVELOPING YOUR CLIENT STRATEGY

Components:

1. Your ‘Value-Added’ Action Plan

This plan has one or more of three intentions:
a) to improve your position with the client;
b) to strengthen the value you add and thus increase your differentiation;
c) to satisfy the client’s unmet and emerging needs.

2. Your ‘Relationship Enhancement’ Action Plan

This plan specifies your goals for building and deepening key relationships between your team members and the client’s organization. Your action plans will usually focus on specific client executives and indicate what actions need to be taken to enhance the existing relationships.

3. Your ‘Business Development’ Action Plan

This plan identifies fiscal targets for the particular client and may include overall client revenue goals, revenue goals by service offering, revenue goals by client location, and growth targets for expanding into other practice areas. These business development / revenue goals are always quantitative.

These three action plans are like your master “to do” lists in that they enable the Client Team to identify what is required, determine responsibility for action, set deadlines, track progress, and dynamically recreate the plan as you go. 

Meeting Three:
Client Strategy – Value Added Action Plans (half-day per team)

Real client relationships, those that result in the client feeling a genuine sense of loyalty to your firm, are predicated on a series of satisfying experiences. The single most important contributor that leads from client satisfaction to retention and on to loyalty and relationship is value. Without value having been created for the client, there is no possibility that he or she will be satisfied to the point where a truly solid working relationship might emerge.

THE CHALLENGE IN CONVENTIONAL CLIENT TEAMS:
The creation of increased value for the client must lie at the heart of any effective client strategy. Yet we encounter Client Teams who talk about creating value, but what they are really doing is trying to make the client more valuable to the firm by cross-selling them more services and increasing their wallet share. While there is nothing inherently wrong with creating more valuable clients, it can only be accomplished once your team has established a solid relationship with the client. And you can only establish a solid relationship, after you have delivered more value than that client has been accustomed to receiving from any of your competitors.

THE GOAL OF OUR MEETING:
We believe that this is the most critical step in the process and that there are countless ways in which your Client Team can work together to create value for their client. Utilizing our proprietary Client Value Chain Analysis, we examine literally dozens of different ways to create value for the client at each “touchpoint” and develop a specific action plan for moving forward

The focus of our work at this meeting is not simply doing better what we are already doing. Our focus, and true lasting competitive advantage comes in both having listened to the clients expectations, problems and needs (from our Client Interviews) and in doing for this client what the competitors haven’t yet thought of doing. The objective is to explore ways in which the client team can mean more to the client than just being another provider of legal services – to rise above the role of a legal provider to become a strategic partner in the creation of value.

WHY THIS STEP IS CRITICAL TO SUCCESS
Once a client has experienced the art of the possible, it is difficult for them to settle for less. He who creates the most value has the competitive advantage of contributing the most lasting form of client satisfaction. If you can get these things right, we are convinced that your Client Team can become that client’s preferred firm and steal business away from nearly any competitor. And, to the degree that we can create more value for this client, we may be able to take their eye completely off fees to the point where they are quite prepared to pay more.

Meeting Four:
Client Strategy-Relationship Enhancement Action Plans (half-day per team)

Many attorneys believe that they already have relationships, but the client (if asked) may disagree. A relationship is more than the retention of the client or the client’s propensity to keep using our firm. It is the client who ultimately decides when a relationship has been formed, not our firm. This is a discomforting revelation to many attorneys who persist in the view that they can decide with whom to have a relationship, and on what terms.

THE CHALLENGE IN CONVENTIONAL CLIENT TEAMS:
We have learned over time that different contacts within a client organization want quite different types of relationships. And there are many different types of client contacts to be considered; from those that occupy the Legal Department, to those in mid or senior management, to even those who might be considered the organization’s “rising stars” (an influential group that is often overlooked by most law firms).

THE GOAL OF OUR MEETING:
Our fourth session (involving a healthy dose of interpersonal skills training) is designed to boost effective communications and interpersonal skills, avoid personality clashes, and achieve instant rapport. Our intent is to help your attorneys better understand the notion that a relationship is an emotional concept and that a client relationship must involve, therefore, an emotional connection with someone on the client team.

We need to help attorneys realize that they cannot build relationships simply on the strength of their personal expertise and functional performance. Although these are fundamentally critical, they are what researchers observe as necessary but not sufficient.

We conclude our meeting with a specific action plan that identifies key decision makers in the client organization, the current status of existing relationships, and what specifically needs to happen in order to develop new key contacts and deepen personal relationships with existing contacts

WHY THIS STEP IS CRITICAL TO SUCCESS
Attorneys can delude themselves into thinking that they have a relationship with some particular client contact simply because the client chooses to retain their services on a regular basis. But clients understand the difference between repeat transactions, which may be based on convenience or other factors, and situations where the client returns because they feel something special toward the attorney.

Meeting Five:
Client Strategy – Business Development Action Plans (half-day per team)

All of the preceding meetings lead up and contribute to the final session wherein the Client Team will now develop their action plans for how we can address this client’s higher level needs and come to occupy a special place in the client’s minds.

THE CHALLENGE IN CONVENTIONAL CLIENT TEAMS:
In many client teams, the emphasis is limited to how we can cross sell this client to other areas of the firm and increase our share of the client’s total spend on outside legal services.

What is often missing is a thorough identification of the clients key issues (either known or anticipated) and which are of the highest priority; how we might be able to address those issues and what benefits any proposed course of action will provide the client.

There is also little thought given to how we might actually recruit this client (our strategic partner) in actively helping us through providing introductions, referrals and references.

THE GOAL OF OUR MEETING:
Dependent upon the assessment of the client team at this point in time as to the current strength or improvement in our relationship with this client, this session will focus on either:

• enlisting the client contact(s) to participate with your Client Team in assisting our marketing efforts – both through exploring issues that their organization faces as well opportunities they may have, to open doors to us;
• conducting a thorough team assessment to anticipate the client’s future problems by identifying the most likely issues that will block the success of this client achieving their stated objectives; and / or
• identifying potential problems (that the client has not considered) based on experience with similar clients

WHY THIS STEP IS CRITICAL TO SUCCESS
The strength of the client relationship is the extent to which your firm is viewed by the client as a strategic partner. The payback to your firm is repeat business, higher share of wallet, more longevity in the relationship, and a willingness to refer others.

For more information, contact Gerry Riskin.