As the partner conference season gets under way (now online rather than in rather pleasant hotels around the globe) it is interesting to see the topics that firms are requesting for presentations. A quick survey last week produced the following (in this order):
- Pricing in a pandemic
- Business Development in isolation
- Leadership now
- Wellness – Dealing with isolation stress and zoom fatigue
My expertise has been around the first two of these – luckily, I have many University colleagues who can help with the other two. Due to a series of recent panel events I have also had a great opportunity to interview some big clients and ask them what they are experiencing, and what they are going to need from their lawyers across the next 12 months or so.
Law firms are asking me two main questions – for pricing many have already started to see some client push back (although not as much as they expected) and they are really worried that this is a sign that there are cracks in the dam that may cause a flood of price demands soon. How should they respond?
Then for BD, partners worry that the usual touch points that they used to have with clients – events, seminars, lunches, coffees – have all gone. What was acceptable now – how to stay in touch?
Pricing in a pandemic – key issues
So far, we are seeing a real similarity to what happened after the Global Financial Crisis. At first clients just need advice to get them through really difficult times. They go to their trusted advisor firms – the ones who really know and understand them. But as time passes, clients move from surviving the disruption, into thinking longer term. That is the phase that many clients are transitioning into now. The immediate crisis has passed, and they now face their new reality – for most that means reduced budgets and a tough market environment. To prosper in this new reality – and a more competitive legal environment – law firms need to have a strategic approach to their clients and absolutely avoid one by one deals cut by individual partners.
There is well establish segmentation exercise that firms can carry out that identifies their most valuable clients (the ones competitors will be chasing!). Firms need to understand what they can do to increase these clients’ loyalty and lock them in. It will also identify clients where the firm has real opportunities for more work. It is not all about downside – there are benefits too.
The bigger clients will often have well developed Legal Operations so this is a time when partners need support in how to handle what could be some upcoming difficult conversations. Fortunately, we already have some great examples from the USA (where there were some of the first price challenges) of how pretty good outcomes can be achieved. But there are real risks for your firm here – give one Legal Operations team a great deal and they may tell others!! Can you cope with all big clients getting that same deal?
Can you BD now?
Business Development is an important mid-term investment for partners. Over the years I have coached so many partners who regretted doing too little BD. It gets put aside when short term issues come to the fore.
Most partners that I talk to now are concerned that the traditional touch points with clients have disappeared, at a time when the law firm is inevitably focused on utilisation and cash retention. But they know that neglecting clients now could have very serious consequences. We are entering a more competitive legal landscape caused by an excess of capacity compared to demand in many areas of legal work. Just a couple of weeks ago the highly regarded BTI Consulting saw a trend of clients moving to RFPs to drive cost savings and certainty after a period when they had just reached out to their existing advisors during the start of this crisis*.
Having just run a series on workshops entitled “BD in Isolation” what became clear was that the principles behind growing a firm’s existing clients stay the same. But the implementation is very different, and the clients declare that some partners are performing much better than others. Why? Clients gave a number of reasons. Most commonly cited was a complete failure to keep in contact and check how the client was doing during the pandemic (but shout out to partners in the USA who were rated rather good on this).
The second most common complaint was that the client felt bombarded with pdf updates from law firms. Mostly the clients said that they received too many (bearing mind that so many firms emailed them) and that they were impersonal. “If the partner cared about me at all I would expect a personal email setting out the key points” was a common response.
Top praise went to partners who made informal contact, listened and looked for simple ways to support the clients. Life in house can be even more siloed then being in a law firm, especially during lockdown. Offers to connect clients to peers, host round tables and run discussion groups went down really well. Top rated were partners who made regular contact and always added value during the call – spreading sector knowledge, helping with team support and freely giving their ideas. Two clients gave examples of fun events run by the law firm to connect the client’s whole team – remember fun?
Can you win new clients while working from home? My team already worked with a law firm who had an RFP presentation in Zoom and that could be the norm for the immediate future, maybe even for years ahead. Most interesting to us was that the main task on this project was to get the practicalities right. Good lighting, separate microphones and new cameras make a huge difference – we don’t think talking into a laptop is the right way to go. And partners who live in areas of poor broadband may need to accept that could prevent them working from home.
At a time when most clients stayed committed to their existing lawyers, we did come across two occasions when clients had tried a completely new firm. Both were really clever approaches by the law firms concerned. One had found a really surprising way to cut the project cost for a client by 50% (a hard offer to refuse). The other came about when a firm used underutilised lawyers in quiet areas of the firm to create research of real value to a target client.
And what’s next?
My prediction for “the next big thing” is for law firms to revisit and completely restructure their existing key client programmes. A useful piece of recent research found that almost all existing programmes failed a crucial test which was this – “Do your key clients receive a different level of service from your other clients?” After reassuring partners that this was not about giving some of the smaller client a worse level of legal advice (!) we showed how it’s about giving considerable added value, outside of your core legal advice. If there is really nothing in it for the client to favour you over your competitors, then why should they? A good key client programme creates huge client loyalty and is an important defence at a time when we expect lawyers to face a more competitive market. The smart firms are doing all they can to lock in their most valuable clients now.
Kevin Doolan. August 2020
Kevin Doolan is a Partner in the Professional Service Firms Group at The Møller Institute based at Churchill College, University of Cambridge. He is Guest Faculty teaching Pricing and Business Development on the Executive Education Program at Harvard Law School and is the author of The Financial Times Guide to Mastering Services Pricing, published by Pearson.
At the moment he is focused on delivering workshops and conference presentations online from sunny London.
Kevin.Doolan@MollerInstitute.com