By: 13 November 2017
Fight the system

Law firms need to revolutionise their client relationship management in today’s disruptive business environment, argues Dave Harris

Recent research conducted by LexisNexis has found a disconnect between solicitors and their clients.

40% of clients claim that the firms they have instructed had little more than only a basic understanding of their business. And not a single client interviewed for the research was satisfied with the service that firms provide. In today’s fast-paced business environment, this is inexplicable.

Firms need to be a step ahead. They need to be able to anticipate business risks for clients. Only then will lawyers be viewed as trusted legal advisors and gain client loyalty in an ever-increasing competitive world.

Businesses are not merely evolving, they are rapidly changing

It’s now widely acknowledged that regardless of the traditional or historical nature of a business, it’s a matter of time before many components of organisations transform into technology businesses.

Customer demand and the digitisation of business are enabling this; and there are already several examples of players in the so-called gig economy who are disrupting traditional industries, such as Uber, Airbnb and Deliveroo.

The lines are blurring between what a company has historically delivered to its customers and what it might deliver to them in the future.

In such a swiftly diversifying business environment, a change in the cultural mindset of firms is required that will move them towards a more dynamic approach to relationship management. The traditional one-to-one style approach and transaction-based relationship management is obsolete.

Firms need to shift the focus away from the transaction and more towards the relationship to build growth and opportunities for the future. Contrary to preconceived beliefs, relationship management doesn’t have to be time-consuming and laborious. It also doesn’t need to take lawyers out of their comfort zone.

Technology, in the form of Customer Relationship Management (CRM) systems, can help lawyers undertake slick, business-orientated, long-term relationship management to help them meet revenue and growth targets – both individually and for their firm as a whole. Many firms already have some form of CRM system in place (even if it is in the form of a spreadsheet or two), but there are very few who use sophisticated relationship intelligence technology that allows them to undertake business-driven relationship management initiatives.

Clients, on the other hand, are desperate for a long-term, relationship-driven partnership with their lawyers. The research from LexisNexis also found that partner interactions with clients are often superficial. Additionally, clients feel that their voice is not communicated to the wider firm because the task is expensive and time consuming.

Routine business-driven relationship management

A deep understanding of clients, their organisations’ needs and extended networks is essential to relationship management.

For instance, merely by looking at a client’s information in a firm’s CRM system, a lawyer should be able to learn about who else in the firm knows the individual, the strength of that relationship (scored between 1- 10), the level of engagement with the executive, and new areas that the client’s business is looking to venture into.

But this is just the start.

This information then serves as a prompt for lawyers to act on it. A lawyer might decide that with contact X, because there has been minimal engagement, the firm would lose almost every proposal.

The firm’s efforts might be better spent in developing a relationship with contact Y instead, whose organisation is the firm’s client in the finance practice area. The company is foraying into shipping – an industry in which the lawyer has extensive expertise. This sort of thinking it commonly referred to as horizon scanning and should be part of a lawyer’s day-to-day activity.

The lawyer can then be proactive and initiate a discussion about a possible future risk for the business. This provides the client with the assurance that the firm is working two steps ahead to offer a timely solution in the interest of the client’s business. Such an approach is bound to help strengthen the relationship and potentially result in new business.

It’s worth noting that, contrary to common belief, lawyers don’t have to physically input the data into the CRM system. The technology today is sophisticated – it automatically mines the information from emails, phone calls, calendar invites and recorded business development activities to provide the insight – all while protecting the privacy of lawyers’ relationships.

To undertake business-driven relationship management, lawyers must also have effortless access to intelligence on contacts and relationships.

With a good CRM system, a lawyer preparing to meet a prospect should be able to gather who knows whom in the organisation and understand the complex connections between the individual, the organisation, as well as both parties’ expertise and experience – from anywhere, on any device, and at any time.

Furthermore, technology exists today that allows for seamless information access between interfaces too. A lawyer researching a prospect on the internet can have visibility of the relationship-related data residing in the law firm’s CRM system without the need to move out of the browser. So, in effect, a lawyer can have combined insight (external and internal) on the individual, prior to the meeting.

Do clients value your work?

Firms must know whether or not clients value their work. A common marker is if clients pay the firm’s invoices in full.

Determining the realisation rate of the firm’s work and combining it with activity analysis, relationship strength and the actual wins and losses is potentially a better way of assessing the same. This can be enabled by integrating the CRM system with the firm’s practice or enterprise resource planning system.

For argument’s sake, if a client has always queried the invoices and never paid in full or on time; it’s possibly an indication of dissatisfaction with the firm. Clients want value from their lawyers; it’s rare that the cheapest price is the primary reason for employing a firm.

Research carried out by BTI Consulting shows that “providing value” is the second most important differentiation factor for businesses choosing a firm, second only to showing “commitment to help”. Interestingly, the LexisNexis research shows that firms lack an appreciation of client cost pressure in this context. There is apparently little desire to help clients improve their operations to save costs.

Firms must remember that when the value is clear and the relationships exist, then the buyer will buy.

Moving away from the traditional transaction and matter-based approach to relationship management in favour a more wholesome, deliberate and business-led approach to building long-term relationships may sound daunting to some lawyers.

But it is immensely achievable – all it requires is a cultural change in mindset, a recognition for a best practice, business-led approach to the discipline and technology support.

Dave Harris is a principal consultant at LexisNexis Enterprise Solutions

This article first appeared in Leeds & Yorkshire Lawyer (Issue 148)