MPF/FT report “Lessons for law firms: Putting clients at the heart of your management”

Posted on: August 10, 2011

This report by the Managing Partners Forum http://www.mpfglobal.com/ and the Financial Times was published in June – and was then the subject of a national roadshow – and you can download it here: http://ftcorporate.ft.com/resources/

The purpose of the on-line research into the views of 433 people (17% CEO/chairs of companies and 10% Managing/Senior Partners) was to track the effectiveness of the corporate relationship between professional firms and their clients. 60% of the firms replying had annual sales of over $10m compared with 44% of clients.

The first questions explored the extent to which clients and firms were coping with external factors. The conclusions appeared to show:

  • Firms are more confidence over their effectiveness in dealing with environmental and competitive changes
  • Firms are more positive about effectiveness in dealing with legislation/regulation but not with external markets
  • Clients are more adverse to outsourcing and more concerned about the restructuring of the legal industry
  • Clients are more positive about relying on emerging markets and keeping pace with global restructuring

The next questions related to targeting:

  • Firms are more negative about the impact of the economic downturn and less positive about impact of recovery on prospects
  • There were net increases in instructions in the past year for all types of work, with basic work more stable than complex work (interestingly, basic work increased by 19% whereas complex work increased by 27%)
  • Clients and firms report good prospects for revenue growth
  • Modest reductions in the number of firms instructed and legal spend. More incumbent reviews and more stringent performance management.
  • Firms anticipate far more pressure for fixed fees and new types of services. Clients agree but to a lesser extent

The next questions related to selection:

  • CEOs are incredibly influential in appointing firms – 76% replied that CEOs are primarily responsible and 11% General Counsel and 3% procurement officer (but notice the size of the firms above)
  • For complex work, specialist legal expertise counts far less to clients than understanding the industry and international focus
  • For basic work, pricing is the most critical factor to clients but not as important as firms believe it to be. Other factors included: ability to address immediate needs, transparency of fee structure, understanding of industry, existing relationships, specialist legal expertise, potential for long term relationship, recommendations from peers, international focus, cutting-edge thinking, strong brand and reputation, accessibility of senior partners and deep resources

The next questions related to relationships:

  • For clients, healthy relationships thrive on quick solutions, know-how, trust, communication, transparency and ‘C’ level links
  • Slow response, lack of transparency, inappropriate advice and a sales oriented approach damage relationships
  • Firms believe better communication from clients and focus on long term relationship would most help them meet client needs
  • Clients welcome a broader dialogue. The C-suite relationships are most valued by clients.

The next questions related to know-how:

  • 46% of firms agree that their firm is being encouraged to share its know-how with clients through non-traditional channels
  • Understanding the client’s business is a key aspect of know-how underpinning an effective relationship
  • Channel effectiveness and planned know-how investment by firms are poorly correlated. Social and digital media are least effective.
  • Improvements to deliver of know-how sought by firms are not in the areas where clients are dissatisfied

The final questions related to performance:

  • Firms are strongest in technical know-how. Firms underrate their performance, especially for communications and account handling
  • Informal discussions are the CEOs preferred way to track client satisfaction
  • 40% of firms are not tracking individual fee-earner performance in terms of client satisfaction
  • Management of performance and client satisfaction by their main firm is not at all effective say 30% of clients

The report ends with quotes from CEOs on what they would most like to change:

“Help my business to do the work rather than finding reasons not to do the work.”
(Western Europe – sales $500m to $1bn)

“Be conscious of the total legal costs and stop using too large teams who all bill!”
(Asia Pacific – sales $10m to $100m)

“I do not see that it is my job to instruct lawyers more than once. If they do not confirm to my needs, I will go elsewhere.”
(Western Europe – sales $5m -$10m)

“Stop trying to educate us about changes in the law. We haven’t got the time or background knowledge to understand the technicalities of the law. When a major bill is passed, which is a once in a decade event, let us know.”
(North America – sales $10m to $100m)

“More basic interest in the industry sector rather than just responding to briefs and taking the fees.”
(Western Europe – sales $10m to $100m)

“Less socialising and more getting on with the work so we get faster, better advice and file completion.”
(North America – sales $1bn to $10bn)

There are few surprises here. The relationships and performance sections perhaps merit the closest attention. And the message that firms need to work harder to get closer to clients and really understand their business and sector needs so that service can be aligned is stressed. Again.

 

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