2018 Legal Executive Forum: How to Craft Better Client Relationships

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Legal Executive Forum

NEW YORK — The more something costs, the better it must be — or so goes one school of thought.

Dan Currell, managing director of AdvanceLaw, doesn’t necessarily disagree, saying that cost is one method by which humans assign value. “High prices are one way that people discern value when all else looks the same,” Currell said, adding that “cost becomes a proxy that informs brand choice” when a market doesn’t supply enough information to allow buyers to choose based on quality.

Speaking at Thomson Reuters Legal Executive Institute’s 2018 Legal Executive Forum last week, Currell presented some of the key findings of AdvanceLaw’s 18-month Thought Leaders Experiment to better understand what factors really cement a relationship between a law firm and a client.

And while Currell used the rising cost of a college education as an example of the correlation between higher prices and perceived value, it was pretty obvious that the same could be said of the legal market, although Currell cautioned that higher prices were “a very bad way of choosing the right law firm.”

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Indeed, according to AdvanceLaw’s study of more than 1,400 legal matters and hundreds of law firms, the main three factors that turn clients into law firm loyalists are:

  1. Lawyers that are solution-focused;
  2. A high quality of work; and
  3. A high degree of legal expertise.

Although quality of work and degree of legal expertise are factors to which almost all law firms can lay claim (at least to a certain point), it was the more amorphous solution-focused factor that most resonated with clients, Currell said. “Solution focus seems to be a characteristic that is prioritized by a client’s senior management, who, counterintuitively, are less concerned about cost and more eager to establish a trusted advisor relationship with a law firm,” he explained.

However, this sets up an internal pull within the client’s mindset between the desire for law firms to fulfill this trusted advisor role and for law firms to fulfill their promised value proposition and become a cost-effective, efficient provider of legal services. “This internal pull demonstrates the difficulty of dealing with individuals who have human emotions and desires, but who also think they’re being completely rational in their expectations and decision-making,” Currell said.

Even using different strategies around things like pricing and billing, for example, didn’t really produce dramatically better client satisfaction results, Currell noted. Flat fee work showed to be about the same quality as per-hour billed work, but the cost effectiveness of the flat fee work was much better from the client’s perspective at first, and then ultimately was better even for the law firm. “If a client works more with flat fee arrangements, or any type of alternative fee arrangement, it will become more cost effective simply because the in-house lawyers get better at doing it,” he said.

Legal Executive Forum

Insight from the presentation by AdvanceLaw’s Dan Currell during the Legal Executive Forum in New York City.

Interestingly, the study also showed that even the best client relationships may not be lasting ones. While it’s commonly thought by clients and lawyers that the longer a law firm serves a particular client, the better that firm will become at providing quality service to that client; however, this was shown not always to be the case.

After two years of service, the average quality of law firm performance — at least as far as clients were concerned — dropped off noticeably. But after three years, the percentage of law firms performing well in clients’ eyes started trending back upward, Currell explained.

Why is this? Currell has several theories, most notably being that in the first two to three years, some firms perform poorly, dragging the average client satisfaction down sharply.  A year or so after that, better performing firms began filling the void after low-performing law firms are no longer used by the client. “It’s like being in a marriage,” Currell explained. “It may be great when it starts, then later you’re sleeping in separate beds.  Something has to change, and with low-performing law firms, it does.”

Communication seems to go a long way to prevent poor law firm performance, the study showed, with clients citing several important weapons that law firms need to include in their communications arsenal, such as: i) agree on goals up-front; ii) create a safe space for specific feedback; and iii) hold a postmortem when it matters.

Overall, the main takeaway from Currell’s presentation may be that there is a yawning chasm between what clients say they want, and what their action — demonstrated by how clients are spending their legal dollars — say they prefer. For example, clients prefer solution-focused legal partners, but they don’t necessarily buy that way, Currell said, adding that clients often have a preference for elite, larger and potentially more expensive law firms even though those firms have weaker scores on solutions focus and responsiveness, two key firm attributes.

“Is larger better? It’s not clear — but 57% of general counsel said that the most elite law firms are actually less responsive,” Currell said. “As a result, clients end up spending the most dollars on firms that are actually less communicative and potentially less solutions-focused.”