In a previous column, I warned Big Law: Your clients just aren’t that into you. Noting that in an era where corporate law departments are being asked to do more, law firms risk alienating their client base if they are not responsive to client needs and concerns.

How can law firms adequately develop a value proposition that meets, or better yet, exceeds the expectations of their law department clients? Step one. Ask them.

It may seem extraordinarily obvious, but many firms aren’t taking this simple first step. One third of respondents to ALM Intelligence’s Law Firm Leaders survey reported that their firm does not have a formal client feedback program.

Let that sink in for a moment.

We are living in a time of tremendous technological innovation and political and economic disruption. As a result, client needs and mechanisms for service delivery are constantly in flux. Yet, according to our survey results, in this uncertain environment, there are firms that aren’t formally collecting feedback from their clients.

In a worst case scenario, firms aren’t collecting feedback at all, either formally or informally. They are proceeding into the future assuming that what worked yesterday, will work today and tomorrow.

In a second scenario, firms rely on informal or ad hoc collection of client feedback which leads to stats such as this. In the same ALM Intelligence survey, 72% of firm leader respondents reported that, over the previous year, they met with less than half of their firm’s top 20 billing clients to discuss the client’s satisfaction with the firm’s performance. Where the solicitation of client feedback is done on the fly, firms risk only getting a partial picture. Or, they may not have proper mechanisms for sharing key lessons learned that could be applicable across the entire enterprise.

Alternatively, firm leaders and marketing professionals need to remember, whether or not they ask clients what they want, the performance of the firm itself is, more than ever, subject to measurement and evaluation. Through the application of data analytics, law departments have achieved an unprecedented level of price and performance transparency with regard to the delivery of outside legal services. General Electric’s proprietary Select Connect system is one such example, permitting GE lawyers to internally gather and share information about issues related to law firm performance and pricing.

As a result, law departments are increasingly looking for predictability and value from their outside counsel, but are left wanting. ALM Intelligence’s Corporate Counsel Agenda survey asked law department leaders about their plans for using outside counsel in the coming year, and 43% plan to reduce their use with 85% citing cost savings as the reason.

Moreover, ALM Intelligence asked law department leaders to consider what irritates them the most about their most valued law firms, and 49% percent of respondents cited issues related to cost. These included: overstaffing matters (22%), total cost (18%), and pricing uncertainty (9%). And, keep in mind, this is what law departments found irritating about the firms they valued the most.

Meanwhile, according to the aforementioned Law Firm Leaders survey, the same survey where firms revealed their paltry efforts in soliciting feedback on client satisfaction, 94% of law firm respondents reported plans to raise billing rates this year with 11% looking to raise rates by more than 5%.

For firms, the market has not yet hit a tipping point, though there are signs of cracks. Growth is slowing, but firms have been able to remain stable through maneuvers like de-equitization, mergers and acquisitions, and lateral hiring as well as the fact that law departments, in an increasingly interconnected and regulated world, are being asked to do more.

Beyond pricing concerns, clients, broadly speaking, want expertise and efficiency. However, this extends beyond legal expertise. They want industry expertise as well as a firm that truly understands the business’s culture and strategic goals. Additionally, law departments are becoming hyper-focused on the efficient delivery of that outside expertise. Heading into 2017, 40% of law department leaders saw implementing operational improvements to enhance efficiency and create standards (e.g. task automation, project management) as their biggest opportunity.

Firms can deliver on this by adopting a lean, process-orientated approach to service delivery. Law firms that don’t adopt these methods, and continue to rely on a billable hour based pricing model, and marketing efforts that are little more than pointing to the firm’s name on the shingle, will continue to lose market share.

The customer, or in this case, the client is king. Firms that don’t actively solicit client feedback and adjust their service delivery model accordingly do so at their own peril.

ALM Intelligence Notes:

  • Public Notice:  According to ALM’s Legaltech News, as part of an effort to make public information regarding data breaches affecting state residents, the Massachusetts Office of Consumer Affairs and Business Regulation released all 10 of the agency’s annual reports, with each compiling information on the breached organization; date of the breach; number of state residents affected; and type of breach. A scan of the report for 2016 revealed at least six law firm victims, including two members of the Am Law 200.
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