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For a decade firms have invested in client relationship management, installing software, building databases and creating teams. However, clients often report that they don’t see any appreciable change in the way legal services are delivered, and firms that purport to espouse a client-centered approach are still plagued by client hoarding. Why does CRM continue to underwhelm? And what can firm leaders do about it? Many firms speak the language of CRM without understanding how it requires them to change the way they do business. When firms were first exposed to that language, in the early to mid-’90s, it was associated with software. CRM meant nothing more sophisticated than creating contact databases. More recently it has come to refer to the building of multidisciplinary teams of lawyers to create a structured, systematic and team-based approach to client relationships. Both are important, but neither goes to the heart of the behavioral and attitudinal differences between the way in which teams, rather than individuals, serve clients. Effective CRM involves concurrently meeting the needs of clients, the firm and individual partners. Therefore, in designing programs, firm managers must pay attention to three distinct types of relationships — those between the client and the firm, the partner and the firm, and the partner and the client. THE CLIENT-FIRM RELATIONSHIP Firms focus on this relationship, largely as a response to lateral activity: Having particular clients closely tied to individual partners is risky. Firms have made considerable progress here; typically, most of their effort has gone into constructing processes and structures that strengthen their relationships with clients. Firms have created programs that give priority to strategically important clients, built teams that encourage collaboration, coordination and planning, and developed financial analysis systems that provide profitability assessment at the client and matter levels. But pitfalls remain. Firms often spread their efforts too thin by designating too many core clients or client teams. Starting small, with four or five clients, allows a firm to prioritize partner time, gain support internally and ensure that the process really works. Otherwise a firm’s efforts may collapse, tarnishing the concept of CRM within the firm. From the beginning the roles and responsibilities of relationship partners need to be made clear. Particular attention should be paid to their responsibilities within the firm. They often underestimate how important it is to spend time on such things as choosing the right lawyers for their teams, helping team members build relationships with the client and motivating team members. Finally, client relationships must be client-centered, not product-centered. Firms tend to focus on what they can sell to a client, rather than discovering what a client values and determining how to deliver it. Client interviews can help: They allow firms to create plans that are based on evidence, not guesswork. Another useful technique is the client relationship audit. In it, the client team works as a group through questions about such things as the client’s business objectives, legal needs and key decision makers. This allows team members to pool resources. Often they are surprised to find out how much more they collectively know about the client than they did as individuals. THE PARTNER-FIRM RELATIONSHIP Relationships within the firm, either between partners and firm management or between individual partners, have a real effect on how client relationships are managed. Firm management has two imperatives here. The first is creating an atmosphere in which effective client relationship management can flourish. That means securing agreement throughout the firm about the value of teamwork, and then recognizing and rewarding appropriate behavior. The way a firm evaluates and compensates its partners can have a significant impact on its ability to encourage teamwork. If a firm’s evaluation and compensation process is perceived to discourage teamwork, then its firmwide CRM initiatives are unlikely to flourish, beyond the efforts of a few good citizens. I recommend that firms make a realistic assessment about whether their evaluation and compensation processes encourage and support the behaviors that they seek from their partners. Firms can take several steps to modify their processes. For instance, they can periodically reassess their origination credit system to ensure that it reflects the real reasons that clients stay with the firm. They also can institute sharing of origination credits and allocate them at the matter level rather than the client level. Bonuses can be used to recognize exceptional team behavior. (Firms should exercise caution on that point, though — it is easy to overestimate the motivational value of team-based compensation, and such incentives can end up creating competing factions with a firm.) In addition, firms should recognize the importance of nonmonetary efforts, such as public recognition and prestige. The second imperative for firm management in the partner-firm relationship is finding alternate ways to meet the needs of the partners that are currently being satisfied primarily by the client-partner relationship. If partners’ identity and status are tied to client relationships, the firm needs to provide a new source of fulfillment, for example, by prizing the role of team leader — a role that depends on team performance, not individual performance. If partners’ main source of feedback is their clients, firm management should publicly praise them for their teamwork. THE CLIENT-PARTNER RELATIONSHIP This area is where the biggest challenges in implementing CRM usually lie. It concerns underlying attitudes and factors that motivate behavior, not processes and structures. Many partners find great fulfillment in their relationships with clients. Their peers often define partners by their client relationships. Some lawyers have a greater sense of connection with their clients than they do with their own firms. There is a practical dimension to As firms increase their emphasis on performance and profitability, many partners see their client relationships as a source of security. Consequently, partners often see CRM as a threat, and they resist it. They may fail to attend team meetings, decline to share information about the client, or neglect to introduce team members to the client. Imposing greater structure through CRM only entrenches the resistance. I recommend a four-step method for breaking this pattern. • Make the case for changing the behavior. This goes beyond appealing to logic. Research shows that people change their behavior only through a combination of rational and emotional engagement. At the emotional level, the most powerful voice is the client’s. Again, client interviews are useful because they produce tangible feedback that has real meaning to partners. Hearing directly from a client that it wants the firm to show that it is grooming young talent to ensure the continuity of the relationship can provide a skeptical partner with the reason he needs to become more inclusive. • Consider the reason for the individual partner’s fulfillment from the relationship. Why, for instance, would a partner resist attempts to introduce colleagues to a client? Is the partner worried about losing status within the firm? Or is the relationship the partner’s biggest source of professional affirmation? Only after learning the reason can firm management find more constructive ways to meet the partner’s needs. • Show the partner how to change safely. Reducing the risks associated with a change in behavior is key. Rather than asking a partner to radically change the way he manages a client relationship, encourage small steps. For example, having a partner delegate more significant work to a trusted associate shows the client that the firm has a bench — and for the partner, it is a lot less threatening than asking him to introduce the client to a high-profile partner from a different office. • Lock in the changes. Once a partner starts to make changes, institutionalize them. Use client plans and personal objective statements to make them part of the new way of doing things. CRM still has much to offer firms. I believe that the limited success of firms in the area is the result of the need to go beyond improvements in structures and processes. Human behavior and needs are the essence of effective CRM. For firm managers, therein lies the challenge. By paying attention to the specific needs of individual partners, firms can design and implement client relationship programs that are likely to provide long-term benefits, while moving the focus from the individual to the team. Julia Hayhoeis a director of Hildebrandt International, specializing in strategic and management issues facing professional services firms. She primarily advises law firms, but also consults with in-house law departments and investment banks. She can be reached at [email protected]. This article was originally published in The American Lawyer, a Recorder affiliate based in New York City.Practice Center articlesinform readers on developments in substantive law, practice issues or law firm management. Contact News Editor Candice McFarland with submissions or questions at [email protected]or go to www.therecorder.com/submissions.html.

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