Putting Clients First

By Wendy L. Tice-Wallner

We have entered a new era in client relations, similar to the new era in our financial markets. The credit markets and the stock market succeed when investors can count on reasonable price-to-value ratios, stability, predictability, and trustworthy advisors. But the greed and profiteering of the past decade have undermined trust in our financial institutions, and this has not gone unnoticed by in-house counsel, who have watched their legal bills rise alongside published profits per partner. Though the financial markets are surely headed for greater governmental regulation, law firms are going to face a buyer?s market for services, with a different form of regulation. Clients will ?vote with their feet? in selecting firms that meet their expectations of service and value.

Here are a few points to consider in your efforts to attract and retain clients in these challenging times.

1. Explore Creative Billing Methods
When it comes to innovative billing methods, most lawyers have their heads buried in the sand. Most often, it is the client who suggests an alternative to traditional hourly billing. Reliance on billable hours alone tells a prospective client very early in the relationship that the firm is either not very creative or is thinking more about its own needs than those of the client. The Association of Corporate Counsel (ACC), whose membership includes 25,000 in-house attorneys, is intent on pushing outside counsel toward considering alternatives. ACC?s ?value challenge? steering committee has as its goal reconnecting the ?value to costs? for legal services. Although the billable hour continues to hold a place on the pricing menu, the proactive suggestion of alternatives by law firms provides clients with an immediate differentiator from firms that simply wait for the client to raise the topic. For example, providing flat-fee rates for transactional services lets a client budget more effectively, and it also allows a firm to profit from its expertise and efficiency. Or offering a specified amount of free phone advice to the client adds value and can generate additional work for a firm. In addition, in this difficult financial climate, even agreeing to hold the line on billing rates for at least two years can be enough to attract or retain business.

2. Make the Client Comfortable
A firm and a client are like a couple on a perennial second date. Before the client makes a commitment, it wants to know that you are in it for the long haul and can be trusted. The concept of trusted advisor is given a great deal of lip service among professionals, but it is not always considered in the staffing and assignment of client matters. We know that clients often come to a law firm because of a trusted relationship with a single lawyer. Indeed, law firms tend to reward that lawyer for bringing the client in the door, sometimes indefinitely by giving the business generator a portion of the ongoing fees. Yet in this era of legal specialization, that particular attorney often is missing in action when the client has a matter that falls outside the ?trusted advisor?s? area of expertise. That trusted attorney should be at the table on any case or project of the client, regardless of the firm?s ability to bill the client for that specific attorney?s time. The value to the client of having a long-standing counselor inside the law firm should not be underestimated, and it can offset the impact of the all too common departures of others within the firm who are handling specific matters for the client.

3. Know Your Clients? Priorities
Corporate clients generally are far ahead of their law firms in adjusting to societal and business change. Many law firms were caught by surprise in 2004 when they received a letter from their largest clients requesting information on the race and gender of attorneys assigned to their cases. Companies such as Wal-Mart indicated they would terminate the services of law firms unwilling or unable to meet the corporation?s diversity goals. This ?Call to Action? was the second, and far more punitive, iteration of the diversity initiative that started in 1999 as a ?Statement of Principle? to which 500 U.S. corporations ascribed. In 2008 the proponents mapped out concrete steps for achieving their goals. The message is clear: Diversity is important to corporate clients.

However, diversity is not the only blip on their radar screen. Others include environmental and technology initiatives. It is the job of every law firm that wishes to attract or retain business to understand these priorities and incorporate them into the firm?s practice.

4. Decline Unsuitable Projects
Though it may be painful, the best thing you can do to build trust with your clients is to refuse representation in a matter where the firm has only minimal qualifications, or lacks the resources or appropriate team to handle the matter. Referring the work to a more qualified firm is better than faking a capability you do not have. If you do decide to accept the matter, you should be up front with the client about your level of experience, and then adjust your fees to allow for additional study and ramp-up time. In today?s buyer?s market, firms that oversell their services are likely to lose more than a client?s allegiance. With the increasing connectivity of in-house counsel through the Internet, and with other firm-specific information on the Web, potential clients are likely to steer clear of firms that have a reputation for exaggeration.

There are further positives to turning down work for which you are not highly qualified. These gaps in firm expertise and resources become grist for the firm?s strategic-planning process. Eliminating weak practice areas, or making the investments necessary to build expertise in neglected areas, becomes a priority when the firm is honest about its capabilities.

5. Keep Clients Updated on the Law
At the outset of the ?knowledge management? era, firms were looking for ways to recoup the significant cost of providing updated legal information to clients or prospective clients through technology portals. Though some firms have subject-area expertise and market position that enable them to charge subscription fees for legal seminars (or webinars), many clients have come to expect free-of-charge legal updating. Most in-house attorneys receive such information electronically from several firms, and they are most impressed with the firms that get the information to them first. The most prized communications are those that not only inform clients of upcoming changes to the law but also analyze those changes and make practical recommendations about compliance for the company.

6. Conduct Due Diligence with Clients
According to a recent survey by ALM Research, almost 63 percent of law firms rated client interviews and surveys as a ?very effective? strategy for business development. Everyone knows that seeking feedback from clients is a good idea, but not all client surveys are created equal. Frequently the impetus for surveys is the firm?s marketing department?a department often devoid of a key ingredient in the client- relations mix: lawyers. But even when lawyers are brought into the process, they may not be familiar with the client, or with the types of projects being handled by the firm for that client. Resulting problems with survey design can cause clients to question not only the purpose of the survey but even the competency of the firm itself. Also, given the limited time that lawyers are willing to devote to nonbillable work, firms tend to limit their survey targets to the clients with the largest receipts. This leaves the majority of clients out of the loop, and makes it impossible to discover and remedy the problems of smaller but growing clients who might otherwise become larger consumers of the firm?s services.

The best course of action is to not over-rely on the survey process. Firms should differentiate between seeking client input on specific projects and relationship building. The former should be handled by the firm on a regimented basis, such as including a survey with the first month?s bill, at regular intervals thereafter, and upon completion of the project. Relationship building should be handled through a client-development program focused on clients who are being underserviced relative to their size and the firm?s offerings. The effort should utilize attorneys and firm marketers who have studied the client?s business and are knowledgeable about the firm?s current and prior services to that client.

Keeping these six guidelines in mind will go a long way toward helping your law firm through lean times. If you are wondering why the list doesn?t include results of representation as a client?s key consideration, that?s because sophisticated in-house counsel, of which there are growing numbers, are realistic about potential results and build them into their budgets from the outset of an engagement. Clients also take quality and responsiveness as a given, rather than as a differentiator between firms.

With so many high-quality firms and lawyers available in today?s market, clients selecting counsel will focus on pricing, value-added services, and trustworthiness. Firms that hope to successfully navigate this time of financial instability will put their clients? needs ahead of their quest for increased profits, and recognize that what is good for the client is ultimately good for the firm.

Wendy L. Tice-Wallner is president of The Tice-Wallner Group, which provides strategic and business-planning advice to professional service firms.

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