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The nature of the legal industry is changing. Traditional notions of client loyalty have all but evaporated in recent years as clients have demanded more from their counsel than simply zealous representation. At the forefront of a new focus on client relationships is customer relationship management (CRM) and the software that makes it happen. Most law firms dedicate the vast majority of their client development resources to increasing the pipeline of new clients, with relatively few resources committed to analyzing and improving the client relationship to make it more profitable. For instance, most midsize and large firms have implemented sophisticated and costly Web sites, advertising campaigns, direct-mail programs and seminars. Individual lawyers, too, traditionally have focused their activities primarily on bringing new clients in the door. Schmoozing at cocktail parties, sitting on charitable boards and securing country club memberships represent just a few traditional practice development tactics. Law firms have been far less focused, however, on the client relationship as a source of new revenues. Full-service firms, for instance, have enormous opportunities to cross-sell services — if only all firm members had the information they needed, when they needed it, to spot opportunities and then to respond effectively. CLIENT HAPPINESS IS KEY The numbers bear out this misallocation of resources: 85 percent of firms’ revenues usually derive from existing clients, while only 15 percent come from new clients. (1) At the same time, most firms agree that it is substantially more costly to find new clients than to build relationships with existing ones. Increasingly, client satisfaction is linked not only to obtaining the desired outcome on a matter, but also to the quality of the client’s overall experience with the firm. If clients are not kept well-informed and treated respectfully and knowledgeably by all firm members with whom they interact, then they will cut their ties and seek representation elsewhere. A new breed of technology has been designed to increase goodwill and to ensure that a customer once will be a customer for life. CRM software was developed to provide companies with the technological infrastructure necessary to have a real impact on their ability to forge and maintain long-lasting bonds. These systems provide a centralized database in which all customer information, preferences and interactions are stored and maintained. All employees who deal with the customer in any way — including salespeople, customer service and administrative staff — have easy access to this information, which they can use to ensure a more positive customer experience. INFO AT YOUR FINGERTIPS According to the technology market analysis firm AMR Research, CRM software works. The need for service will spark the CRM market to grow to $16.8 billion by the year 2003. (2) Yet until 1996, CRM software was virtually unknown in the legal marketplace, the primary reason being that until that time, no software vendor had developed a product that was tailored to the unique needs and requirements of law and other professional services firms. Most CRM products are complex, have steep learning curves and are designed primarily for midlevel salespeople and customer-support representatives to help them sell more product. Law firms, on the other hand, have an entirely different business model and culture, which warrant an entirely different type of CRM tool. Law firms provide intellectual capital, expertise and judgment — a very different type of “product” than that of the typical manufacturing-oriented corporation. Moreover, firms do not employ sales forces to attract new clients and customer-support representatives to maintain relationships. Instead, the attorneys themselves are responsible for networking and relationship management. Finally, lawyers have unique confidentiality concerns that do not exist outside the professional-services arena and that warrant special security mechanisms in CRM products. To meet the new demand, CRM tools geared for professional services firms have emerged. Software products place a new spin on a technology that corporate America has been embracing for years. These products eliminate the emphasis on sales-force automation, pipelines, forecasting, call centers and the host of other functions that professional-services firms do not need. Instead, they focus on the high-level relationship-building that is essential to ensure long-term revenue streams. KNOW THY CLIENTS WELL For instance, consider how lawyers form relationships and use their business contacts to identify revenue opportunities: A lawyer meets a prospective client at a cocktail party, and they discuss a matter for which the attorney would like to provide legal counsel. Business cards are exchanged. Under the old model, the lawyer’s next step would be to send out a broadcast e-mail or go from door to door, to see whether other firm members were acquainted with this new contact. Getting feedback could take days or weeks. In contrast, with a CRM tool, the attorney can simply click on an icon to retrieve the names of any firm member who has had any interactions with that prospect. Within seconds, the lawyer is prepared to take this relationship to the next level. Imagine that this contact works for a large corporation, such as Corp. X. The firm already has contacts with Corp. X — but who are they? Manually determining this is virtually impossible — especially at a large firm with multiple offices. However with a CRM tool, a “company personnel” feature instantly retrieves a list of all Corp. X contacts known to the firm, along with a chronology of nonconfidential notes and activities relating to each of those contacts found. The system might reveal that Corp. X is already a client — that an attorney from another office represented it on an unrelated matter. To build the firm’s credibility, third-party references can be essential. Another client or contact that does not work at Corp. X, for example, might be acquainted with a top-level executive at this new prospective client. Perhaps they sit on the board of the same charitable institution, or they worked together previously. Uncovering this subtle relationship would be very difficult and probably not worth the lawyer’s nonbillable time if done manually. But using a CRM tool that harnesses the power of a centralized relational database, identifying this contact is simply a question of clicking on the appropriate icon. These products quickly uncover the complex webwork of interrelationships among contacts. At this point, only rainmakers seem to have developed the skills and diligence necessary to make these connections. But CRM tools deliver this power to all professionals, regardless of their people skills. With access to this wealth of institutional knowledge, the lawyer now has a clearer understanding of the firm’s larger relationship with its clients and is armed with the information and references that will be vital to success in cross-selling and maintaining the relationship over the long run. One note of caution: Security is an important consideration that must be explored in searching for CRM tools. Attorneys frequently obtain confidential information that cannot be shared firmwide, such as private phone numbers and notes from privileged conversations. Certain CRM tools offer “ethical wall” security, which gives users complete flexibility as to which data will be shared and which will be kept private. These capabilities are essential to a successful CRM strategy. John S. Lipsey is an attorney and director of communications at Interface Software in Oak Brook, Ill. FOOTNOTES (1) Altman Weil survey conducted among Fortune 500 general counsel. See www.altmanweil.com. (2) AMR Research, “Customer Relationship Management Software Report, 1998-2003,” www.amrresearch.com.

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